Mediation in Federal and State Court

Our Pittsburgh civil litigation lawyers have marveled at the federal court system's use of mediation to help avoid protracted litigation. In fact, in the Western District of PA, the federal rules require litigants to participate in mediation (or another form of alternative dispute resolution) at the beginning of every lawsuit. This forces the parties to -- early on -- put pettiness aside. 

A skilled neutral party (a mediator or third party case evaluator) gets involved. Early on, the parties must come to terms with the strengths and weaknesses of their case, before the case takes on a life of its own.    

The federal court's mediation requirement dates back to 1998, when Congress passed the Alternative Dispute Resolution Act, which obligated each federal district court to enact rules authorizing the use of alternative dispute resolution -- such as arbitration or mediation -- for all civil matters in federal court.  

What About State Court Cases?

The Alternative Dispute Resolution Act does not apply to state courts, however. Rather, in PA, there has been no mediation requirement, traditionally. Granted, for years, all counties in PA have had rules that compel the parties to attend something called a pretrial "conference." This can sometimes get a case settled.

However, the conference is hosted by a judge who is not necessarily trained as a mediator, which requires a unique skill set. Plus, the pretrial conference is often one of many scheduled that day.  It cannot compare to a 5+ hour mediation. There, parties have time to iron out their differences. Plus, they acquire a simulated "feeling"  of court, which can take days.  

Traditional Settlement Strategy 

In PA, if you wanted a speedy resolution of your case (and federal jurisdiction existed), you filed suit in federal court. Conversely, if your case was more shaky, you may have opted for state court, instead. There, you could expect to bludgeon your opponent and grind him down through written discovery and depositions -- without ever having to talk  settlement before trial. 

Mediation is Now Required in Allegheny County (State Court) 

On September 13, 2022, in Allegheny County, PA, Local Rule 212.7 came into existence, adding a mediation requirement to cases filed in Allegheny County (Pittsburgh). In general, rule 212.7 is a good thing. Only, there are some significant limitations and exceptions. 

Bad Timing

Unlike federal court, where the party filing suit must immediately start planning for ADR (alternative dispute resolution, which includes mediation), Rule 212.7 is different. Pursuant to Rule 212.7, no mediation is required until after the exchange of all discovery, namely, formal written questions and the recording of depositions.  The rule provides: 

(1) All parties shall participate in a formal mediation process no later than 45 days prior to commencement of the assigned trial term, as published in the Pittsburgh Legal Journal pursuant to Local Rule 212.1(3).

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Some might say, so what's the problem? Don't you need to conduct discovery to learn more about the case before you settle it?  Sometimes, yes. For this reason, in federal court, where alternate dispute resolution is required at the outset, the courts allow some discovery to take place.  However, the discovery must be narrowly tailored to help serve the goals of ADR. 

 

Ability to Wiggle Free From Allegheny County's Mediation Rule

In another key difference from the federal rules, Local Rule 212.7 allows the parties to opt out of it by consent. But wait, if mediation is so useful, why would parties opt out?  It comes down to money. Mediation is expensive. Importantly, Allegheny County does not pay for mediation.

Rather, the parties themselves share in paying the mediator's fees. These can be $350 (minimum) to over $500 dollars per hour. Thus, in smaller cases, mediation often makes no sense. In larger cases, it's the same thing: it makes no sense if the parties are too far apart in terms of the demand and the offer. For mediation to work, the parties must be in the same ballpark. Rule 212.7 takes the above into account, as follows: 

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This requirement [to mediate] shall apply unless:

(a) The Calendar Control Judge excuses the case from mediation upon motion and good cause shown; or

Note: At the discretion of the Calendar Control Judge, "good cause" may include, but is not limited to, the expense of mediation relative to a party's perceived valuation of the case, as well as a party's inability to afford the expense of mediation.

(b) All parties agree to waive mediation and file a Certification pursuant to Section (3)(a)(iii) of this rule.

 

This is totally unlike federal court, where the parties must engage in some form of alternative dispute resolution (ADR), such as mediation.     

Cases Governed by Local Rule 212.7

Allegheny County's mandatory mediation rule applies to most types of civil cases on the general docket, including: 

• • Motor vehicle accident cases, involving limited tort or full tort restrictions on damages,  
  • Bike or e-scooter injuries, from product defects or from motorists striking the bike rider, 
  • Breach of contract cases, including residential and commercial construction, non-payment of debt, and credit card debt, and 
  • Trade secret disputes, involving the misappropriation of confidential information.  

The courts should require the parties to engage in amicable discussion prior to going to trial.  Importantly, however, Rule 212.7 does not apply to small claims court cases or cases on the arbitration docket, where the amount at issue fails to exceed $50,000.  Nor does it apply to appeals from arbitration, even if the Plaintiff seeks an amount greater than $50,000 on appeal. In fact, Rule 212.7 expressly limits itself as follows:

(5) This rule does not apply to arbitration appeals [cases filed on the arbitration docket where the amount at issue is $50,00 or less], asbestos cases, or landlord-tenant cases.

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Another big exception involves non-compete agreement disputes. Those are never tried by jury, only by a judge. Non-compete cases typically go before Judge Christine Ward. She has her own rules. She makes her own trial calendar and conducts settlement conferences, herself. Judge Ward also retains jurisdiction over other issues related to the non-compete, such as employment disputes, including trade secrets or claims of solicitation of employees.  That said, Judge Ward encourages settlement. She has been very effective at getting cases resolved even without the use of mediation.   

Local Rule 212.7 Must Be Taken Seriously 

Notwithstanding the above, the parties to a case governed by Rule 212.7 must take it seriously. Rule 212.7 does have some teeth:   

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(4) The Calendar Control Judge may, upon motion, impose such sanctions as are deemed appropriate against counsel and/or the parties for failure to comply with this rule in good faith.

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Thus, let's say your claim for damages is $55,000 based on estimates you received.  The defendant offers $15,000.  Claiming your case is worth $200,000 -- with no basis in fact -- is not likely a good faith reason to avoid mediation.