SUPERIOR COURT OF THE DISTRICT OF COLUMBIA

CIVIL DIVISION

ALEX MANDL, ::

Plaintiff, :: Case No. 2008 CA 004032 M

v. : Judge Burgess: Calendar 3

K&L GATES, LLP, ::

Defendant. :

MEMORANDUM AND ORDER DENYING IN PARTK & L GATES, LLP’S AMENDED MOTION TO COMPEL

This case is before the court on Defendant K & L Gates

Gates’ Amended Motion to Compel Production of Alleged

Mediation and Settlement Discovery and Certain Deposition

Testimony.

Plaintiff Alex Mandl has sued K & L Gates (“K & L”) for

legal malpractice arising out of K & L’s representation of

Mandl in an Adversary Proceeding in the Bankruptcy Court of

the Southern District of New York. In that proceeding,

Savage & Associates (“Savage”), the Unsecured Claims

Representative of Teligent, Inc., sought to recover a $12

million loan that Teligent had made to Mandl, its chief

executive officer. After a trial, the court entered

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judgment against Mandl. Mandl filed a motion seeking

relief under Fed. R. Civ. P. 59. Thereafter, the parties

entered into mediation and ultimately settled the

underlying action. As part of the settlement agreement,

Mandl agreed to file a malpractice action against K & L and

to give Savage 50% of the proceeds of any recovery.

In the present action, K & L sought discovery of

documents and deposition testimony. Savage objected,

arguing that protective orders issued by the bankruptcy

court prohibited disclosure of the communications during

the mediation process that would be disclosed by responsive

documents and testimony. K & L filed a motion to compel in

this court, but also filed a motion in the bankruptcy court

to modify the protective orders to allow for disclosure of

the communications it seeks. This court withheld action on

K & L’s motion, pending decision by the bankruptcy court.

The bankruptcy court denied K & L’s motion, but stated

that its ruling was

not intended to foreclose K & L’s right to argue before the DC court that a specific communication is not covered by the confidentiality provisions of the Mediation Orders (e.g., that it was not made ‘during the mediation process’), or that the court should nevertheless order

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disclosure of a specific communication under applicable law.

In re Teligent, Inc., 417 B.R. 197, 209 (Bankr. S.D.N.Y.

2009) (“Teligent I”).1 The United States District Court

affirmed the bankruptcy court’s judgment. In re Teligent,

Inc., 2010 U.S. Dist. LEXIS 49010 (S.D.N.Y. May 13, 2010)

(“Teligent II”). The Court of Appeals affirmed. In re

Teligent, Inc., 640 F.3d 53 (2d Cir. 2011) (“Teligent

III”). K & L filed an amended motion to compel, which

prompted Savage to return to the bankruptcy court, seeking,

among other things, an injunction forbidding K & L from

pursuing that motion. The bankruptcy court denied the

motion. In re Teligent, Inc., 459 B.R. 190 Bankr. Ct.,

S.D.N.Y. Oct. 3, 20ll) (“Teligent IV”). The bankruptcy

court further suggested that Savage could pursue its

objections in this court. Id. at 199-200.

Mandl himself does not object to producing the

documents to which Savage objects. But this court allowed

Savage to intervene to assert its interest in protecting

the communications from disclosure and required Savage to

1 For the sake of conciseness, the court uses short form citations for case names (e.g., In re Teligent, inc., rather than Savage & Assocs., P.C. v. Mandl (In re Teligent, Inc.)).

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create a “privilege log” of the documents – mostly e-mails

– that it refuses to disclose. See Jan. 18, 2012 Mem. and

Order Granting in part and Denying in Part Savage &

Associates, P.C.’s Motion to Intervene.

The foregoing summarizes the procedural context of the

present motion. For further factual background, the reader

is referred to the opinions cited above.

Discussion

In the Adversary Proceeding, the bankruptcy court

issued a mediation order that (along with a protocol

attached to it) provided as follows:

Any statements made by the Mediator, by the Parties or by others during the mediation process shall not be divulged by any of the participants in the mediation (or their agents) or by the mediator to the court or to any third party unless otherwise ordered by the Court. All records, reports, or other documents received or made by a mediator while serving in such capacity shall be confidential and shall not be provided to the court, unless they would be otherwise admissible . . . .

See Teligent I, surpa, 417 B.R. at 208. That mediation

order substantially tracked the bankruptcy court’s general

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order. The court will refer to these orders collectively

as the “General Order”2.

Principles of comity would ordinarily prevent this

court from modifying the General Order. See Dushkin Pub.

Group, Inc. v. Kinko’s Serv. Corp., 136 F.R.D. 334, 335

(D.D.C. 1991). Accordingly, this court will not modify

the order except to the extent explicitly allowed by the

bankruptcy court. See Teligent I, supra, 417 B.R. at 209.

The court now turns to the issues that the bankruptcy court

granted this court the authority to address.

I. The Duration of the General Order

The bankruptcy court explicitly stated that K & L could

argue before this court that a specific document was not

protected from disclosure because it was not made “during

the mediation process.” Id. K & L argues that there

exists a whole category of unprotected documents and

communications because they were made not during mediation,

but rather during settlement negotiations that occurred

either before or after at the mediation process. (Mot. 39-

2 All cites to the “General Order” refer to Order M-390 signed by Chief Judge Bernstein on Dec. 1, 2009 unless stated otherwise.

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41, 51-53.) To consider that argument, the court reviews

the pertinent facts and law.

On February 3, 2004, the bankruptcy court appointed

retired Judge Erwin I. Katz as mediator for some 1,000

adversary proceedings commenced by Savage in connection

with Teligent, including the one against Mandl. Before

trial, Savage and Mandl engaged in unsuccessful mediation

pursuant to that order. Savage understandably does not

argue that that mediation process continued after that

point because thereafter the parties went to trial and

judgment was entered. After the bankruptcy court entered

judgment on January 24, 2008, however, the parties engaged

in a second round of mediation, which is at issue in the

present case.

When activity related to the second mediation began is,

based on the record before the court, unclear. Savage

represents in its brief that the mediation process began on

February 18, 2008. (Opp’n 38.) This date, according to

Savage, is “based upon dated emails to [Judge Katz].”

(Id.) Nothing in either its privilege log, or in the log

submitted by Mandl’s attorneys, however, supports that

assertion. The date of the first communication on those

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logs is an email dated February 27, 2008, authored by

Melanie Cyganowski (one of Mandl’s attorneys), and

addressed to attorneys for other participants in the

mediation process. The e-mail is entitled “Mandl and

Denise [Savage, principal of Savage & Associates].” (Mandl

Ex. 69 at 31, Savage Bates No. 4090.) Savage has not

pointed to any other information in the evidentiary record

that would suggest communications related to a mediation

process before that date.

In any event, it is agreed that the parties met with

Judge Katz for a mediation that occurred over March 25-26,

2008. After that session ended, Judge Katz returned to his

home in Chicago. Settlement discussions continued,

however, and the parties reached an agreement. On May 29,

2008, Judge Katz signed a “Report of Mediator.” In it, he

stated in relevant part:

In accordance with [the] Order Approving Mediation Procedures and Appointing a Mediator, . . . the undersigned mediator reports that mediation pursuant this Court’s General Order . . . was begun on March 25, 2008 and completed on May 13, 2008 (“the Mediation”). The respective principals and counsel for the Representative and the Defendant (together, “the Parties”), were present at the Mediation. The parties acted in

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good faith and complied with the General Order at and in connection with the Mediation.

(K & L Ex. 24 at Mandl - 009338.) Judge Katz’s report was

filed with the bankruptcy court on June 6, 2008, as an

attachment to Savage’s Application under Federal Rule of

Bankruptcy Procedure 9019 in Support of Entry of Order

Approving Settlement Agreement and Settling All Claims and

Defenses in an Adversary Proceeding.

The General Order holds confidential only

communications made “during the mediation process”. The

court agrees with Savage that the word “process” has

significance. (See Opp’n 35-38.) K & L spends some of its

brief concentrating on the term “mediation” – its cost, its

site, its scheduling. (Mem. 51.) While the General Order

does use “mediation” in these contexts, the confidentiality

provision covers the entire “mediation process”.

Savage argues that the mediation process began on

February 18, 2008, and ended on June 6, 2008, when the

Mediator’s report was filed. (Opp’n 37.) K & L argues

that only what occurred during the mediation session, March

25-26, is protected. The parties focus most of their

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arguments on when the mediation ended, and the court will

turn first to that issue.

Savage makes a relatively straightforward argument.

§ 3.5 of the General Order provides:

Termination of Mediation. Upon receipt of the mediator’s final report, the mediation will be deemed terminated, and the mediator excused and relieved from further responsibilities in the matter without further court order.

(General order at 6.) Savage argues that since this order

provides that the “mediation” terminates when the mediator

files his or her report, and the report was filed on

June 9, communications up until that time are protected.

(Opp’n 37.)

The language and structure of Rule 83.9 of the Local

Rules of the United States District Court for the Southern

and Eastern Districts of New York (“Rule 83.9”) support

this argument.3 The rule first defines “mediation” as

a confidential (alternative dispute resolution) process in which a disinterested third party directs settlement discussions. By holdingmeetings, defining issues, diffusing emotions and suggesting possibilities of resolution, the mediation assists the

3 Rule 83.9 is applicable only in the Southern District of New York.

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parties in reaching their own negotiated settlement . . . .

Rule 83.9(a). The mediator “directs settlement

discussions,” but the rule does not say that those

discussions must occur in the presence of the mediator.

Though it might be argued that the following sentence,

beginning with “[b]y holding meetings,” limits the process

to the meetings themselves, this conclusion would fail to

give force to the phrases “suggesting possibilities of

resolution” and “assist[ing] the parties in reaching their

own negotiated settlement.” Id. A mediator might well

suggest possibilities for resolution that assist the

parties to reach a settlement after the session has ended,

but before the mediator is discharged from his duties.

Moreover, the remainder of Rule 83.9 makes clear that the

process is not limited to a session.

“Entry into the Program” occurs when the court

“direct[s] that certain categories of cases . . .

automatically be submitted to the mediation program,” when

the court orders a case to mediation, with or without the

parties’ consent, or when the parties “notify the assigned

judge and the Mediation Supervisor of their desire to

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mediate by filing a stipulation to that effect . . . .”

Rule 83.9(e)(2), (3). The Mediation Supervisor assigns a

mediator, who “shall schedule the first mediation schedule

within thirty (30) days of the assignment of the mediator

. . . .” Rule 89.3(f) and (g).

The rule goes on to provide for the parties’ preparing

and delivering to the mediator, seven days before the

“first scheduled mediation session,” a memorandum setting

forth the contentions, the status of any settlement

negotiations, names of people with settlement authority,

and their “reasonable settlement range.” Rule 83.9(i)(l),

(2). The mediator, on receipt of these memoranda, may

“contact counsel to schedule either a joint or individual

preliminary case conference.” Id. Rule 83.9(j)(l)

provides that attorneys and those with full settlement

authority attend “each mediation session”. Rule 83.9(j)(2)

provides that the first “mediation session” take place in

the court’s “ADR Center” and the mediator decides, after

consulting with counsel, the place of “subsequent mediation

sessions.” Rule 83.9(j)(3) provides: “The mediation will

conclude when the parties reach a resolution of some or all

issues in the case or when the mediator concludes that

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resolution (or further resolution) is impossible.”

Rule 83.9(k) provides:

(1) If resolution is reached, a binding agreement shall be signed by all the parties, and a stipulation of discontinuance or other appropriate document filed promptly with the Clerk of Court.

(2) If resolution is not reached, the mediator shall promptly notify the Mediation Supervisor, who shall promptly notify the assigned Judge.

Finally, Rule 83.9(l)(1) provides in relevant part: “The

entire mediation process shall be confidential.”

K & L’s argument (supported in part by Mandl) that

confidentiality is limited to the “in-person mediation

sessions conducted on March 25-26, 2008” (Mem. 51.)4 is

inconsistent with the foregoing provisions of local Rule

83.9. It is also inconsistent with the termination

provision set forth in § 3.5 of the General Order.

Given the way mediations work at the practical level, it

is sensible policy to provide a cloak of confidentiality

over discussions before a mediation session, in between

sessions, and after a mediation session. Sometimes parties

4 Mandl argues that only the mediator’s communications are confidential after the mediation session ends. (Mandl Mem. 19-20.)

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will not reach a settlement at a session, but will agree to

continue their discussion, and be invited to contact the

mediator again if they need further help. That contact may

result in another in-person session, or one by

teleconference or electronic communications, or may result

in communications between the mediator and one party in the

absence of the other. Mediations can involve several

parties, and the opportunities for discussions after a

session are then multiplied. A subsequent mediation may be

scheduled, but not held because the parties, after

discussing the matter further, reach an agreement before

the scheduled date.

All of this is implicitly recognized in § 2(2) of the

Uniform Mediation Act (“UMA”), which provides:

“Mediation communication” means a statement, whether oral or in a record or verbal or nonverbal, that occurs during a mediation or is made for the purposes of considering, conducting, participating in, initiating, continuing, or reconvening a mediation or retaining amediator.

7A U.L.A. 127 (1999) (2006 Pocket Part). The comment to

that section states that “[this] provision makes clear that

other non-session communications that are related to a

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mediation are considered ‘mediation communications.’” Id.,

at 128 cmt. 2. The UMA was one of the sources to which the

court looked in Teligent III to determine what standard to

apply when a party seeks to discover communications

protected by the General Order. 640 F.3d at 58-59.

Accordingly, there is good reason to consult it in

connection with determining the duration of mediation.

The court in In re Anonymous, 283 F.3d 627 (4th Cir.

2002) also recognized that confidentiality was not limited

to mediation sessions. Holding that discussions just after

the parties left a mediation session were protected as

confidential, the court stated:

Although [the local applicable rule] does not specifically define the duration of ‘mediation’ for purposes of maintaining confidentiality, it is plain that the ‘mediation’ is not limited to the mediation conference, but continues until the mediated dispute has been either dismissed or is otherwise removed from the [Office of the Circuit Mediator](“OCM”). This conception of the duration of mediation is a practical necessity of the process itself, in that the mediated dispute is rarely conclusively resolved during the mediation conference. Instead, the parties to the dispute often resume mediation, or refine aspects of the settlement agreement, subsequent to the mediation conference, and many times do so outside the presence of the

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mediator. These conversations and the information disclosed therein are entitled to the same degree of confidentiality as disclosures made during the mediation conference. Accordingly, until a mediated dispute is dismissed or is otherwise removed from the OCM, all ‘statements, documents, and discussions’ relating to the mediation remain within the bailiwick of the OCM and, therefore, remain confidential.

Id. at 635.

In the present case, K & L makes an appealing argument,

based on the limited evidentiary record, that

communications after the March session should not be

protected. (Mot. 32.) It points out that there exists no

evidence that Judge Katz ever met again with the settling

parties after the March session or that the parties even

scheduled another session. (Id.) It further observes that

the mediator only filed his report when the parties had

reached their settlement after discussions among

themselves. (Id.) It points to an affidavit by Jacques

Semmelman, a Savage associate, submitted to the bankruptcy

court in connection with a discovery dispute. The

affidavit represented that “[t]he mediation took place on

March 25-26 . . . . No resolution was reached. The

mediator . . . returned home . . . . The mediation is over

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. . . . The parties are engaged in ongoing settlement

negotiations, and are scheduled to meet for that purpose

. . . on April 24 (without any mediator).” (K & L Ex. 50,

¶¶ 24-25.)5

K & L also cites Folb v. Motion Picture Indus. Pension

& Health Plans, 16 F. Supp. 2d 1164 (C.D. Cal. 1998), and

several other cases that confine confidentiality to the

mediation sessions themselves. The court in Folb

concluded:

Subsequent negotiations between the parties . . . are not protected even if they include information initially disclosed in the mediation. To protect additional communications, the parties are required to return to mediation. A contrary rule would permit a party to claim the privilege with respect to any settlement negotiations so long as the communications took place following an attempt to mediate the dispute.

5 Savage is not judicially estopped by this affidavit. One of the factors courts commonly consider in considering the doctrine of judicial estoppel is whether “‘the party [against which estoppel is sought] has succeeded in persuading a court to accept that party’s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled . . . .’” Mason v. United States, 956 A.2d 63, 66 (D.C. 2008) (quoting New Hampshire v. Maine, 532 U.S. 742, 749 (2001)). K & L produced no evidence that the bankruptcy court was persuaded by this statement in making any decision it was called on to make. K & L urges this court to find that this is an admission of fact, but for reasons explained in the text, the court concludes that a fact-based inquiry into when, after the March mediation sessions concluded, the mediation process ended is not warranted.

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Id. at 1180. See also RDM Holdings v. Equitex (In re RDM

Sports Group), 277 B.R. 415, 431 (Bankr. N.D. Ga. 2002)

(“The mediation privilege should operate to protect only

those communications made to the mediator, between the

parties during mediation, or in preparation for

mediation”); Yaekle v. Andrews, 195 P.3d 1101, 1104 (Colo.

2008) (interpreting statutory term “mediation

communication” to include only communications “made in the

presence or at the behest of the mediator”).

Whenever one party tries to prevent another from

getting relevant information that might be protected by a

privilege,6 courts, in determining the scope of the

privilege, will often need to balance the public and

requesting party’s interest in full disclosure of the facts

against the policy interests underlying the privilege. The

courts in the cases K & L cites did that in reaching their

judgments as to the scope of the privilege – in the federal

cases, the mediation privilege implied in Fed. R. Ev. 501,

and in the Colorado case, the privilege erected by statute.

6 The court here uses “privilege” in the broad sense to include a rule protecting a person from disclosing information in a judicial or administrative proceeding.

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See e.g., Folb, supra, 16 F. Supp.2d at 1170-1180

(balancing interests in formulating an evidentiary

mediation privilege); Yaekle, supra, 195 P.3d at 1104

(discussing § 13-22-308 of the Colorado Dispute Resolution

Act).

This court is of the opinion, however, that the General

Order and Rule 83.9 have struck that balance, at least with

respect to when the mediation process ends. Those

provisions apply to the “entire mediation process,” and the

“mediation is deemed terminated” when the mediator files

his report.7 This bright-line rule promotes the sound

policy of giving certainty to parties in mediation as to

which communications are protected, and thereby encourages

candid expressions. True, it has the disadvantage of

allowing the parties to claim that mediation still goes on

despite the fact that, for all practical purposes, the

mediator’s role has terminated. That disadvantage is

mitigated, however, by the requirement that the mediator

“promptly” notify the Mediation Supervisor when the

7 The court places no significance on the use of “mediation” rather than “mediation process” in paragraph 3.5 of the General Order. The order earlier protects communications made during the “mediation process”, and that term is used in Rule 83.9

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mediation is unsuccessful. In the present case, Judge Katz

did not provide any notification after the March 25-26,

2008, mediation sessions ended, but instead filed his

report over two months later, after the parties settled the

case.

K & L makes of this that Judge Katz simply filed his

report to accommodate the parties once they had reached

their agreement.8 But that assumes that the “mediation

process” was indeed over after the March sessions ended.

K & L points to the Mediation Order, which provides that

“[a]ll mediations shall be limited to one day or less,

unless otherwise agreed by the participants.” (K & L Ex.

19 at 18.) A mediation “conclude[s] when the parties reach

a resolution . . . or when the mediator concludes that

8 As K & L puts it:

Savage’s attempt to argue that the mediation would continue as a matter of law until Savage and Mandl chose to file the mediator’s Report is not well-taken . . . . While that might be hold true as to parties that filed the Report promptly upon conclusion of the mediation, nothing in the Mediation Orders countenances the gamesmanship here – that the parties arranged to submit a Report to the mediator for his signature months after the actual mediation concluded and chose to file it later still.

(Reply 26.)

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resolution (or further resolution) is impossible.” Rule

83.9(j)(3).

Did the parties agree to another session? Did the

mediator conclude that resolution was impossible? It

would seem from the Semmelman affidavit that the parties

and the mediator understood that the mediator’s services

were no longer needed after March 26, but there might be no

reliability in that conclusion, especially given the

Mediator’s Report stating that the mediation ended on May

13. (K & L Ex. 50 at 7; Ex. 24.)

An accurate answer to these questions of fact would

require evidence from the parties or the mediator, but they

are prohibited from “disclos[ing] information regarding the

process, including settlement terms, to the assigned Judge

or to third persons unless all parties agree or the

assigned Judge orders in connection with a judicial

settlement conference.” Rule 83.9(l)(1). Further, the

“mediator is disqualified as a witness . . . in any

proceeding or future action relating to the dispute

. . . .” Rule 83.9(l)(2). K & L’s fact-based standard for

determining when the mediation process ended is flawed by

the need to breach the confidentiality provisions in order

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to find the answers. While an in camera inquiry, sometimes

necessary in areas where privilege is invoked, might well

provide the answer, a sounder approach is to adhere to the

plain terms of the General Order and the local rule.

Turning to the question of when the mediation process

began, the court faces the fact that neither the General

Order nor the local rules precisely define that starting

point. K & L argues that the court need not decide this

point since Savage admitted before the Second Circuit that

the General Order applied to documents from the March 25-26

session to execution of the settlement agreement. (Mem.

42; see Ex. 49 at 97.) For the reasons already expressed,

see supra n.5, Savage is not bound by the doctrine of

judicial estoppel, since the Second Circuit made no ruling

as to the duration of the mediation.

Because the memorandum required to be filed seven days

before the first mediation session is explicitly part of

the “mediation process,” it is protected, and the process

must have begun at the latest at that point.9 But protected

9 The District Court in Teligent II stated that Mandl could waive confidentiality with respect to this memorandum to the extent it did “not reveal confidential mediation communications of Savage.” 2010 U.S. Dist. LEXIS at *22, n.1.

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communications are not limited to that point and

thereafter.

For guidance, this court turns again to the UMA, which,

as noted, protects communications made “for the purposes of

considering, conducting, participating in . . . or

retaining a mediator.” UMA § 2(2), 7A ULA at 127 (2006

pocket part). Savage represents that prior to March 25

“contact was made with the Mediator by the parties . . . to

retain his services and to discuss mediation protocols and

positions and delivery of the parties’ respective mediation

position statements.” (Opp’n 14-15 n.8.) These kinds of

communications would be protected under the UMA and, in

this court’s judgment, should be considered part of the

“mediation process.” As noted, the court cannot discern,

from the privilege log or otherwise, when the first

communication to Judge Katz – presumably to retain his

services – occurred, other than to note it was “prior to

March 25.” But the court will accept from Savage a

representation as to the date on which Savage or Mandl, or

their agents, first communicated to Judge Katz in order to

obtain his services, and mark the beginning of the

mediation process from that point. The court agrees with

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the comment to the UMA: “Most statutes are silent on the

question of whether [confidentiality provisions] cover

conversations to initiate mediation. However, candor

during these initial conversations is critical to insuring

a thoughtful agreement to mediate, and the Act therefore

extends confidentiality to these conversations to encourage

that candor.” 7A ULA at 128 cmt. 2 (2006 pocket part).10

II. Disclosure of Specific Communications

The court now turns to the other area of inquiry

allowed by the bankruptcy court: whether to order

disclosure of “specific communications” either because they

are not covered by the confidentiality provisions of the

Mediation Order or because under “applicable law” they

should be disclosed. The court has largely addressed the

first part of this inquiry by determining the duration of

the mediation process. Savage has conceded that several

communications are not covered by the confidentiality

provisions – for example, because Mandl-created documents

10 Statutes in several states explicitly protect conversations initiating mediation. See Rebecca H. Hiers, Navigating Mediation’s Uncharted Waters, 57 Rutgers L. Rev. 531, 541 (2005).

24

do not reflect communications by Savage. Accordingly, the

court turns to the second part.

The bankruptcy court allowed this court to disclose

“specific communications” if required “under applicable

law.” K & L, however, argues that all the communications

as to which Savage has asserted a privilege should be

disclosed. This argument is clear from the motion itself

in which K & L asks the court to order the production of

“each document . . . that has been withheld based on any

asserted mediation or settlement confidentiality or

‘privilege’ protection . . . ,” and to order that any

confidentiality privilege “not provide a basis for any

witness to refuse to answer any question . . . .” (Mot.

4.) In its reply, K & L asks the court to “grant its

motion to compel and require production of all mediation

and settlement documents, as well as testimony respecting

mediation and settlement, and testimony respecting Mandl’s

transfer of assets to ASM and Susan Mandl.” (Reply 29-30.)

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A. Collateral Estoppel

The court agrees with Savage that K & L’s blanket

request for all mediation communications is barred by

collateral estoppel.

1. Mandl’s Arguments in the Court were Made and Rejected in the Federal Litigation

K & L argues that Mandl has explicitly waived his

confidentiality privilege and, by bringing this law-suit,

has impliedly waived it as well. (Mot. 35-44.) It argues

that these waivers can be attributed to Savage because the

settlement agreement, to which it is a party, required

Mandl to bring this action and gives Savage 50% of any

recovery Mandl gets in settlement or after a trial. K & L

also argues that, apart from Mandl’s waivers attributable

to Savage, Savage itself waived confidentiality when it

signed the agreement.

K & L made these arguments in the bankruptcy court and

that court answered them as follows:

Mandl’s willingness to waiveconfidentiality is immaterial because Savage, the other party to the Mediations, insists on it. The confidentiality provisions in the General Mediation Order and the Teligent

26

Mediation Order belong to the parties and the mediator, and Mandl cannot waive it on their behalf.

Teligent I, 417 B.R. at 209.

K & L argued specifically that this malpractice action

put the mediation communications at issue. (K & L would

need to establish that point to show that Savage, even

apart from Mandl’s waiver, waived confidentiality by

signing an agreement whereby it gets 50% of any recovery.)

The bankruptcy court, however, rejected K & L’s argument.

Id. On appeal to the Second Circuit, K & L argued that the

bankruptcy court had erred in concluding “as a matter of

law” that the malpractice action did not put the mediation

communications at issue and that that ruling “necessarily

infected the bankruptcy court’s application of the

balancing test.” (Opp’n Ex. H at 85-86.) The Second

Circuit rejected that argument. Teligent III, 640 F.3d at

62 (“We have considered Appellant and Cross-Appellant’s

remaining contentions and find them to be without merit

. . . .”).

Even apart from waiver, K & L asserts that “Mandl must

now produce the documents, because they are vital to

K & L’s defense in this case.” (Mot. 47.) Its argument is

27

based on the premise that Mandl must prove that K & L’s

negligence caused the damages which Mandl claims, and that

not only causation, but also mitigation of damages, will be

an issue at trial. K & L then argues that the

“negotiations leading to the Settlement Agreement are

essential to challenging Mandl’s claims.” (Mot. 49.)

K & L argues that these communications are needed to

address the following issues.

First, what factors motivated Mandl to forego his post-

trial motion and an appeal of any final judgment? K & L

points out that, according to evidence available to it,

Mandl had assets sufficient to pay only $1.4 million, yet

chose to pay Savage more than $6 million and half the

proceeds of the DC action. (Mot. 53.) It further points

to information it obtained in a deposition suggesting that

Savage threatened to provide information to the Internal

Revenue Service that might cause it to investigate Mandl

for tax or criminal violations. (Mem. 50.)

Second, did Savage and Mandl collude to inflate the

damages and attribute them solely to Mandl? K & L points

to evidence that, while the settlement released Mandl’s

wife, Susan Mandl, and ASM, a Mandl-related entity, both of

28

which Savage had sued post-trial to trace Mandl’s assets,

public filings show that these Mandl affiliates actually

paid most of the settlement. This, according to K & L,

suggests that Savage and Mandl colluded to characterize the

alleged damages as Mandl’s and inflate them, too. (Mem.

56.)

Third, K & L argues that it needs access to the

settlement negotiations in order to challenge the $16

million valuation that the parties to the settlement

agreement placed on that agreement when they reported the

agreement to the bankruptcy court to obtain its approval.

K & L argues that Mandl placed that number in issue when,

in response to interrogatories, he said that it was a

component of his damages, and contends it needs information

contained in the settlement negotiations that would cast

light on “how Mandl and Savage arrived at this figure; the

factors they considered; their analysis or the absence

thereof; and what information they submitted to the

mediator in support of this figure.” (Mem. 55.)

Finally, K & L argues that it needs the requested

information because the information is necessary to support

its argument that the malpractice claim should be dismissed

29

because an assignment of a legal malpractice claim offends

public policy. See, e.g., Edens Techs. LLC. v. Kile

Goekjian Reed & McManus, PLLC, 675 F. Supp.2d 75 (D.D.C.

2009). K & L says it needs to “supplement its legal

arguments with proof of collusion from the actual Savage-

Mandl discussions.” (Mem. 71-72.)

K & L also made all of these arguments in the federal

litigation. The bankruptcy court held that K & L had

failed to explain why the information was critical. It

held:

[A]though the Mediations communications may illuminate Mandl’s reasons for settling, and how the parties arrived at the Agreed Valuation of $16 million, K & L has failed to explain why this information is critical to the amount of damages that Mandl actually suffered . . . .

Teligent I, 417 B.R. at 208. It went on to reason that K &

L could obtain the information “by other means” – by

“ask[ing] Mandl why he chose to settle rather than pursue

his post-trial motions, and how he arrived at the Agreed

Valuation . . . .” Id. It pointed out that K & L could

also ask Savage about “how the parties decided on the

Agreed Valuation.” Id.

30

In its decision on K & L’s appeal, the District Court

summarized the argument K & L had made to the bankruptcy

court in support of its request to lift the requirement of

confidentiality. K & L had argued “that the

communications might be relevant to the issue of causation,

Mandl’s purported damages and Mandl’s mitigation of damages

-- or lack thereof.” Teligent II, 2010 U.S. Dist. LEXIS

49010 at *8. K & L had argued that it needed information

to challenge the $16 Valuation and Mandl’s “reasons for

deciding not to pursue the post trial motions or an appeal

. . . .” Id. at *8-9. K & L had further argued that

“Mandl may have decided to settle without properly

considering his actual exposure given his potential claims

against K & L, and because Savage might have threatened

Mandl with criminal and tax liability if he refused.” Id.

K & L had “questioned Savage’s willingness to release the

claims in the Virginia Action against Mrs. Mandl and ASM

Investments, LLC without a separate payment from those

parties.” Id. And, finally, it had argued the relevance

of the requested information to its defense that the

“Proceeds Assignment is invalid as a matter of public

policy.” Id.

31

The District Court held that the bankruptcy court had

not erred in ruling that K & L had “failed to satisfy its

burden of demonstrating a compelling need for the

information, that information sought was not otherwise

available, or that the need for the evidence was outweighed

by the public interest in maintaining confidentiality

. . . .” Id. at *22.

In its brief before the Court of Appeals, K & L

addressed these same issues. Its table of contents state

in part:

B. The Courts Below Erred in Finding that K&L Had Not Established a Special Need and Resulting Unfairness

1. Access to the Mediation Communications in Connection with Challenging Causation, Damages, and Mitigation

2. Access to Mediation Communications in Connection with Challenging the $16 Million “Agreed Valuation”

3. Access to Mediation Communications in Connection with Challenging the Validity of the Proceeds Assignment

32

(Opp’n Ex. H, at iii – iv.) The brief detailed these

arguments. (See id. at 86-101.)11 The Court of Appeals

affirmed the bankruptcy court’s holding that K & L had

“failed to submit any evidence to support its argument that

there was a critical need for disclosure of any specific

communication” and that it had “failed to demonstrate a

resulting unfairness from a lack of discovery, because the

evidence sought by K & L Gates was available through other

means . . . .” Teligent III, 640 F.3d at 59.

2. Mandl is Barred from Arguing for a Blanket Release of the Communications

“Collateral estoppel, also known as ‘issue preclusion,’

bars the re-litigation of issues determined in a prior

action ‘where (1) the issue was actually litigated; (2) was

determined by a valid, final judgment on the merits; (3)

after a full and fair opportunity for litigation by the

party; (4) under circumstances where the determination was

essential to the judgment.’” Dewitt v. District of

11 Indeed, some of the argument presented to this court is taken virtually verbatim from the argument presented to the Second Circuit. Compare id. at 94-95 with Mem. 69-70.

33

Columbia, 2012 D.C. App. LEXIS 160, at *21 (D.C. May 10,

2012) (quoting Wilson v. Hart, 829 A.2d 511, 514 (D.C.

2003)). With respect to K & L’s request in this court for

disclosure of all communications, K & L is barred from

relitigating this point under this doctrine.

K & L argues first that is not barred from arguing that

a “specific document” should be disclosed. That is true,

but K & L has largely addressed its argument to all

communications. That is the same argument it made in the

federal courts.

Second, K & L argues that in Teligent IV, the court

expressly stated in a footnote that the issue of Savage’s

waiver could be decided by this court. (Reply 4.) It

cites the bankruptcy’s court statement in a footnote that

“[t]he parties have discussed other threshold issues such as whether Savage waived a mediation privilege by entering into a settlement that required Mandl to commence the DC Action. The Court offers no view, and concludes that it more appropriate for Savage to defend against that argument in the DC Court.”

Teligent IV, 459 B.R. at 199 n.10.

This footnote came in the following context. Savage

had moved to enjoin K & L from bringing the very motion now

34

before this court, which had already been filed.12 The

bankruptcy court noted that K & L was, in this court,

“seeking, among other things, the same blanket relief” as

it had in the federal court litigation. Id. at 198. The

bankruptcy court held, however, that, “although K & L seeks

the same blanket relief from the Protective Orders in the

DC Court that was denied by the courts of this Circuit, its

Motion to Compel does not warrant an injunction.” Id. at

199. The court reasoned in part that it should not

“dictate to [this court] the preclusion consequences of its

own judgment.” Id. (citations omitted). It also said:

Furthermore, the DC Court is in a far better position to supervise discovery relating to any mediation communications. Among other things, the DC Court may be called upon to determine whether specific communications are relevant, whether their production is necessary, whether it is unfair to deny discovery, and whether compelling production of a mediation communication outweighs the interest in maintaining its confidentiality.

Id.

It is plain from this context that the bankruptcy court

did not hold that the federal court rulings as to Savage’s

12 Actually, the present motion is an amended motion of the earlier one.

35

waiver had no preclusive effect. Indeed, it understood

that it could not tell this court whether they did or did

not. All it did in footnote 10 was to say that it would

not rule on whether Savage waived her mediation privilege

by entering into the settlement. It left it to Savage

defend against that argument in this court, as Savage has

done, employing, among other arguments, the doctrine of

collateral estoppel. As the court agrees with Savage,

K & L is precluded from obtaining all the documents.

B. Specific Documents

The court ordered Savage to create a privilege log, and

it has done so. K & L argues that the privilege log is

inadequate, disabling it from making any argument as to

whether any specific document should be disclosed. (Mem.

26-29.)

In its opposition, Savage has largely remedied the

deficiencies K & L points out. (See Opp’n 21-22 n.9.)

Moreover, Savage could have solved other problems now

raised by K & L had K & L contemporaneously alerted it to K

& L’s concerns. K & L did send Savage an e-mail (dated

February 24) asking a “few questions” about the log, but

36

did not complain with the detail it now puts in its

memorandum of points and authorities. It filed its amended

motion and the memorandum a little over a week after this

e-mail.

Given these circumstances, this court will not impose

on Savage the extreme sanction of waiver because the

privilege log it prepared may be inadequate in some

respects.13 Even an adequately constructed privilege log

can leave the proponent of production, and the court, with

insufficient information on which to make an informed

decision. See John M. Facciola and Jonathan Redgrave,

Asserting and Challenging Privilege Claims in Modern

Litigation; The Facciola-Redgrave Framework, 2009 Fed. Cts.

L. Rev. 19, 32 (2009) (“[E]ven with guidance, privilege

logs are often useless to the court or the opposing party

because they still do not contain enough information to

make a determination of the accuracy of the privilege.”).

Here, the question is not whether there exists a

privilege. The “privilege” (i.e., mediation

confidentiality) applies; the issue is whether it is

13 The court observes that, unlike the Fed. R. Civ. P. 26(b)(5), Super. Ct. Civ. R. 26 does not prescribe the contents of a privilege log.

37

overcome by a showing of compelling need, and the court

agrees with Savage that K & L has the burden of showing

such a need. K & L asks the court to examine the documents

in camera in the event that the court refuses to order

disclosure of all of them. While it is arguable that K & L

has not met its burden of showing that the court should

view the documents in camera, the court of the opinion that

it should exercise its discretion and do so.

Where in camera inspection is sought to prove an

exception to a privilege, the court may conduct an in

camera inspection where there is a “factual basis adequate

to support a good faith belief by a reasonable person” that

the exception applies. United States v. Zolin, 491 U.S.

554, 572 (1989). Zolin involved the crime-fraud exception

to the attorney-client privilege. This is not that case,

but what needs to be shown here, a compelling need, could

be seen as an exception to the general rule that

confidentiality protects the information. The same

standards guiding the court’s discretion, see id., seem

appropriate to the instant case.

38

Here, the number of documents to be examined is

relatively small14 and if a compelling need is shown, then,

by definition, the information will be important to the

defense, particularly in relation to damages and proximate

cause. While the court cannot determine how likely it is

that a compelling need will be found, prudence counsels

that the court view the documents to see whether, in light

of a specific document and what K & L has and has not

demonstrated, a compelling need has been shown.

Accordingly, the court will order Savage to produce the

documents for in camera inspection.

For the foregoing reasons, Defendant K & L Gates

Amended Motion to Compel Production of Alleged Mediation

and Settlement Discovery and Certain Deposition Testimony

is DENIED IN PART, as follows:

1. To the extent that the motion asks the court to

lift the Order as to all documents generated during the

mediation period (other than documents the court previously

has ordered disclosed) and as to all deposition testimony

14 There are 420 documents contained in Savage’s log. Of these, Savage is “willing to produce” some 295. The remaining 125 documents should be submitted to the court for in camera review.

39

revealing a communication protected by confidentiality, the

motion is DENIED.

2. Savage shall file with the court a representation

as to the date on which a party first communicated with

Judge Katz to retain his services as a mediator. The

mediation period will be deemed to have begun on that date,

and have ended on June 6, with the filing of the mediator’s

report. Savage shall disclose to K & L all documents

withheld that were generated before the date on which a

party first communicated with Judge Katz to obtain his

services as a mediator, and after Judge Katz filed his

report.

3. Action on the motion insofar as other specific

documents and testimony are concerned is WITHHELD pending

Savage’s submission to the court, electronically and in

hard-copy, of the documents generated during the mediation

period, except those that have been turned over under prior

order and or that Savage determines that it wishes to

disclose voluntarily.

4. Savage shall comply with the order in paragraph 3

by July 3, 2012.

40

SIGNED IN CHAMBERS ________________________A. Franklin Burgess, Jr.

June 25, 2012 Judge

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