Almost every federal court requires parties to mediate their case before trial. The purpose of mediation is to place all interested parties in the same room to determine whether an amicable resolution of the case is possible.
A mediator is an individual who works with the parties to highlight strengths and weaknesses of the parties’ respective cases and facilitate settlement. Either the court or the parties may select the mediator. For the former, the court will appoint a district-approved mediator who has proven success in helping to resolve cases. If the parties select the mediator, both sides will have to agree on one person to serve.
Mediations must take place before the deadline outlined in the court’s case management order. The parties’ attorneys will coordinate the mediation date and location. Absent an extraordinary circumstance, mediations usually take place in the policyholder’s home county.
As insurers are corporate entities, they must certify with the court or with the mediator that the representative attending mediation has full settlement authority. That means that the individual representing the insurer must have the ability to make the final decision on whether to offer, reject, or accept settlement proposals. Usually, all named insureds on the policy must attend mediation. For cases involving businesses or condominium associations, the governing bodies of those entities normally appoint a single individual and provide him or her full settlement authority. Every member of the board of directors for a condominium is authorized to attend the mediation, but in practice this is rarely done.
Before attending mediation, it is important for policyholders to have a frank discussion with their attorneys about the merits of the case and a fair settlement figure. The final decision to settle a case always remains with the client.
At mediation, the mediator will convene all attorneys and the parties together in one room. The mediator will then discuss the strict requirement of confidentiality, their understanding of the case, and the general process. At that time, the mediator will invite counsel for the parties to make an opening statement. Counsel for each side will make a brief statement to the others explaining the reasons the other side’s position is untenable or unsustainable. Next, the mediator will place the parties in separate rooms, and the real negotiations begin.
As the party seeking relief, policyholders generally (but not always) make the first offer. The mediator will then take the offer back to the insurers for consideration. The insurers usually then counteroffer and provide the mediator with additional information for the policyholder to consider. This back-and-forth will continue until there is an agreement or it becomes clear that resolution is not possible. The hope for mediation is that the parties will reach a mutually satisfactory resolution through these exchanges and offers.
Eventually, the process will conclude, and the mediator will file a notice of settlement or notice of impasse with the court. If settlement is reached, federal courts will often administratively close the case while the settlement paperwork is finalized. If the mediation resulted in an impasse, the case will continue.
It is important to understand that federal courts may order multiple rounds of mediation, and many often require the parties to mediate a second time before trial. Moreover, although a case might not settle during the mediation conference, meeting together often provides the impetus to resolve the case in the coming weeks.