October 19, 2012
In order for a case to proceed to trial in Florida, mediation between the parties must be had. I am routinely asked whether a party is required to attend mediation in Florida or whether the mediation rule is permissive, meaning that a party can send a replacement or party representative to attend on the party's behalf. Of course, this is important in maritime cases where the parties can hail from all over the world and it seems to some outside of this jurisdiction to be onerous to have to physically attend mediation.
On January 1, 2012, Florida’s Rules of Civil Procedure regarding mediation required each party to file a notice 10 days before the mediation identifying who will physically attend on behalf of each party. Pursuant to amendments to Rule 1.720, an insured defendant must identify the party representative of the defendant and the insurance representative of the defendant who will physically attend the mediation. The amendments also require the defendant’s attorney to certify that the party representative has (1) full authority to settle without further consultation and (2) authority to bind the party to a potential settlement and that the insurance representative attending on behalf of the insured has full authority to settle up to the amount of the plaintiff’s last demand or policy limits “without further consultation.” See Opinion No. SC10-2329.
The rule always required the attendance of each party or a party representative having “full authority to settle,” however, the amendment adds a “final decision maker” requirement and makes the parties certify to the court who is going to be present. These amendments increase the court’s ability to enforce the appearance requirements of Rule 1.720.
Of course, this Rule applies in state court proceedings. What about federal court proceedings? The U.S. District Court for the Southern District of Florida Local Rule 16.2 provides as follows:
"(e) Party Attendance Required. Unless otherwise excused by the presiding Judge in writing, all parties, corporate representative, and any other required claims professionals (insurance adjusters, etc.), shall be present at the mediation conference with full authority to negotiate a settlement. If a party to a mediation is a public entity required to conduct its business pursuant to Florida Statutes Chapter 286, and is a defendant or counterclaim defendant in the underlying litigation, that party shall be deemed to appear at a mediation conference by the physical presence of a representative with full authority to negotiate on behalf of the entity and to recommend settlement to the appropriate decision-making body of the entity. The mediator shall report non-attendance and may recommend that the Court enter sanctions for non-attendance. Failure to comply with the attendance or settlement authority requirements may subject a party to sanctions by the Court."
Thus, under both the state court and federal court procedural requirements, all parties and their insurers should be present at mediation.
Final Decision Maker Requirement
With the addition of subsection (c) of the state rule, a “party representative having full authority to settle” is defined as “a final decision maker with respect to all issues presented by the case who has the legal capacity to execute a binding settlement agreement on behalf of the party.” The comments section points out that this is a two-part definition: (1) the party representative must be the final decision maker and (2) the party representative must have the legal capacity to execute a binding settlement agreement. These are objective standards that can be determined without reference to confidential mediation communications.
By adding the “final decision maker” requirement, the amendments create some difficulty for insurance companies. The practice of sending an independent adjuster to mediation and having that adjuster call the insurance company for further guidance, even under the prior rule, was a violation. However, enforcement of the rule was problematic due to the mediation confidentiality requirements of section 44.405, Florida Statutes. The amendments, however, require that a statement be made outside of the cloak of confidentiality and directly to the court on the record. In fact, even sending an adjuster who has limited authority will not comply with the rule because it requires the “final decision maker” to be at the mediation. A strict interpretation of the amendments may make it necessary for claims managers or supervisors to physically attend the mediation to comply with the “final decision maker” requirement.
Certificate of Authority Requirement
The state rule amendments also require a new filing called a “Certificate of Authority” to be filed at least 10 days before the mediation. Subsection (e) states as follows:
“Unless otherwise stipulated by the parties, each party, ten days prior to appearing at a mediation conference shall file with the Court and serve all parties a written notice identifying the person or persons who will be attending the mediation conference as a party representative or as an insurance carrier representative and confirming that those parties have the authority required by sub-section (b).”
The Certificate of Authority was meant to make enforcement of the appearance rules easier. Without the amendments, the parties or the mediators had no way to point out another party’s failure to follow the appearance requirements without breaching the confidentiality of mediation rules. Since 2006, the Supreme Court Committee on Alternative Dispute Resolution Rules and Policy has been exploring ways to resolve the tension between the appearance rules and the confidentiality rules governing mediation. They settled on the “Certificate of Authority” method for several reasons: (1) the Certificate of Authority filed with the court before the mediation puts all involved on notice as to who will actually be at the mediation (2) it puts in the court file a record document unrelated to confidential “mediation communications” and (3) “the proposed confirmation in advance of the mediation session encourages parties and lawyers to begin thinking seriously about settlement early in the process.” See Petition of the Committee on Alternative Dispute Resolution Rules and Policy to Amend the Florida Rules of Civil Procedure.
The new subsection (f) does not change the type of sanctions available under the rule, but it does add that the failure to file the confirmation of authority or the failure of the persons actually identified in the confirmation to appear at the mediation conference creates a rebuttable presumption of a failure to appear.
Practical Considerations
This rule change will require significant pre-mediation preparation by insurers. An insurer must identify the appropriate representative at least 10 days before the mediation conference. That representative must have full policy limit authority or full authority up to the amount of the last demand, whichever is less. Committee notes to the rule amendment state: "First, the party representative must be the final decision maker with respect to all issues presented by the case in question. Second, the party representative must have the legal capacity to execute a binding agreement on behalf of the settling party."
Before scheduling the mediation, opposing attorneys need to discuss any practical problems with physical attendance of decision makers and how they can revise Rule 1.720’s requirements to accommodate each other. A sophisticated plaintiff’s attorney may understand that insurance companies have various levels of authority or a claims committee process that makes the “final decision maker” requirement problematic. In those cases, plaintiff’s attorney may agree to alter the “final decision maker” requirement. The Rule does not specifically address issues relating to multiple layers of insurance.
The insurance defense attorney needs to discuss with plaintiff’s attorney the possibility of excusing an insured client’s physical appearance at mediation when it is clear that the insured has no decisions to make at the mediation. When there are no issues relating to coverage, punitive damages, self-insured retention or possibility of judgments in excess of policy limits, having the client sitting at the mediation table is unnecessary, and the plaintiff’s attorney should be willing to excuse the requirement.
Undoubtedly, there will be an opposing counsel who insists that all of the technical requirements be met regardless of the inconvenience or lack of necessity. Parties should consider moving the court to revise the requirements of either the state or federal rule in those situations. However, in the past, courts were apt to require strict compliance with the rules and that tendency may continue even with the stricter requirements.
Also, defense counsel should consider if there are issues related to plaintiff’s appearance at mediation. For example, in cases involving a minor, are both parents going to be at the mediation? Does a guardian ad litem need to be at the mediation?
The amendments to Rule 1.720 have simply made the process of scheduling mediation more complicated and should force the parties and their attorneys to pay more attention to the process of setting mediation.
If you wish to contact me, please feel free to do so at mov@chaloslaw.com.
