Protected Mediations and Filing Suit Against Court Clerks

Law firms accused of malpractice have one less tool in their defense, as they cannot sue the Court to reconsider subpoenas made by Court clerks. The present case illustrate a consequence of that holding- that the contents of mediation may now remain forever unknown to outside parties. In early August, the 3rd Circuit Court of Appeals ruled that McKissock & Hoffman-which was accused of turning down a $25 million settlement offer-could not take the deposition of the chief mediator. This mediator would, according to the firm, have testified that the $25 million offer was never made. 

The suit was based in McKissock & Hoffman's representation of the plaintiff in Polymer Dynamics inc. v. Bayer Corp. Polymer Dynamics argued that it was hampered by its legal representation as it attempted to secure around $500 million in damages, greatly in excess of the jury verdict of $12.5 million. Both sides were unhappy and appealed, with the 3rdCircuit upholding the jury's verdict but recalculating damages. Polymer Dynamics argued, however, that before the 3rd Circuit ruled, it had an opportunity to double its award during settlement negotiations. It was supposedly offered a $25 million settlement, but did not accept because McKissock & Hoffman failed to advise it to. Polymer alleged that the 3rdCircuit's chief mediator, Joseph Torregrossa, said, "I can get you $25 million today to settle the case."

In order to defend itself, McKissock & Hoffman sought to serve a subpoena on Torregrossa to take his deposition. This subpoena was rejected by 3rd Circuit Clerk Marcia Waldron who wrote "Permitting Mr. Torregrossa to disclose, much less under oath, what was said or not said during the mediation would eviscerate the vital principle of confidentiality and damage the integrity and viability of the court's mediation program." McKissock & Hoffman consequently sued Waldron under the Administrative Procedures Act, arguing that her refusal was arbitrary and an abuse of discretion and that the clerk and Administrative Office of the U.S. Courts do not have the power to adopt or administer subpoena regulations.

The U.S. Attorney's Office, alternatively, argued that the Court should not entertain McKissock's suit because the clerk and AOUSC are part of the federal judiciary, which is exempt from review under the APA. U.S. District Judge Mary McLaughlin agreed and dismissed the suit, holding that the APA does not apply to the courts after all, and quashing McKissock's best argument.

The APA confers a general cause of action upon persons "adversely affected or aggrieved by agency action." 5 U.S.C. § 702. Congress precluded judicial review of the US Courts under the APA by excluding them from the definition of agency. Furthermore, the majority of courts have endorsed a broad interpretation of "the courts" in interpreting the APA, encompassing the entire judicial branch, including, presumably clerks. In re Fidelity Mortgage Investors, 690 F.2d 35 (2d Cir. 1982). Wacker v. Bisson, 348 F.2d 602, 608 n. 18 (5th Cir. 1965). Several district courts have also held that the AOUSC is exempt from judicial review under the APA because it is part of "the courts." Novell, Inc. v. United States, 109 F. Supp. 2d 22, 26 (D.D.C. 2000). Tashima v. Admin Office of the U.S. Cts.,719 F. Supp. 881 (C.D. Cal. 1989).

McLaughlin also considered the nature of the decision challenged in the case. Defending Waldron, she wrote that her decision to reject the subpoena "cannot be challenged under the APA" because Waldron reports directly to the judges of the 3rd Circuit and her decision related directly to the handling of a case before the court.

McKissock argued, however, that even if the Clerk and the AOUSC are not agencies, their voluntary enactment of Touhy regulations makes them subject to judicial review under the APA. Thus, as McLaughlin summarized, they urge the Court to hold that an entity, which Congress has specifically excluded from the APA, can subject itself to judicial review under the statute if it enacts administrative procedures under Touhy.

Rejecting this argument, the Court noted that it was supported by no case law. The regulations upon which Waldron relied when denying the subpoena were promulgated by the Judicial Conference to govern federal judges and other employees of the federal judiciary. The Judicial Conference is a policy-making body, but not an agency. Even if the Judicial Conference enacted the regulations pursuant to Touhy, that alone does not make it an agency because it does not have power to bind the courts. Thus, McLaughlin was not convinced that, in abiding by the Judi8cial Conference's regulations for responding to subpoenas, a judge could become subject to the APA. That Waldron followed the same regulations does not, then, confer APA jurisdiction over her actions. As a result, she was immune from the suit at hand and McKissock will be unable to prove the existence or non-existence of the $25 million settlement via mediation negotiations.

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