Local Rule 9019-5: Mediation

Rule 9019-5 Mediation.

(a) Types of Matters Subject to Mediation. The Court may assign to mediation any dispute arising in an adversary proceeding, contested matter or otherwise in a bankruptcy case. Except as may be otherwise ordered by the Court, all adversary proceedings filed in a business case will be referred to mandatory mediation, except an adversary proceeding in which (i) the U.S. Trustee is the plaintiff; (ii) one or both parties are pro se; or (iii) the plaintiff is seeking a preliminary injunction or temporary restraining order. Parties may also stipulate to mediation, subject to Court approval.

(b) Effects of Mediation on Pending Matters. The assignment of a matter to mediation does not relieve the parties to that matter from complying with any other Court orders or applicable provisions of the Code, the Fed. R. Bankr. P. or these Local Rules. Unless otherwise ordered by the Court, the assignment to mediation does not delay or stay discovery, pretrial hearing dates or trial schedules.

(c) The Mediation Process.

(i) Cost of Mediation. Unless otherwise ordered by the Court, or agreed by the parties, (1) in an adversary proceeding that includes a claim to avoid and recover any alleged avoidable transfer pursuant to 11 U.S.C. §§ 544, 547, 548 and/or 550, the bankruptcy estate (or if there is no bankruptcy estate, the plaintiff in the adversary proceeding) must pay the fees and costs of the mediator and (2) in all other matters, the fees and costs of the mediator must be shared equally by the parties.

(ii) Time and Place of Mediation Conference. After consulting with all counsel and pro se parties, the mediator must schedule a time and place for the mediation conference that is acceptable to the parties and the mediator. Failing agreement of the parties on the date and location for the mediation conference, the mediator must establish the time and place of the mediation conference on no less than 21 days' written notice to all counsel and pro se parties.

(iii) Submission Materials. Unless otherwise instructed by the mediator, not less than 7 days before the mediation conference, each party must submit directly to the mediator and serve on all counsel and pro se parties such materials (the "Submission") in form and content as the mediator directs. Any instruction by the mediator regarding Submissions must be made at least 21 days in advance of a scheduled mediation conference. Prior to the mediation conference, the mediator may talk with the participants to determine what materials would be helpful. The Submission must not be filed with the Court and the Court will not have access to the Submission.

(iv) Attendance at Mediation Conference.

(A) Persons Required to Attend. Except as otherwise provided herein or excused by the Mediator upon a showing of hardship, which, for purposes of this subsection means serious or disabling illness to a party or party representative; death of an immediate family member of a party or party representative; act of God; state or national emergency; or other circumstances of similar unforeseeable nature, the following persons must attend the mediation conference personally:

(1) Each party that is a natural person;

(2) If the party is not a natural person, including a governmental entity, a representative who is not the party's attorney of record and who has full authority to negotiate and settle the matter on behalf of the party;

(3) If the party is a governmental entity that requires settlement approval by an elected official or legislative body, a representative who has authority to recommend a settlement to the elected official or legislative body;

(4) The attorney who has primary responsibility for each party's case, including Delaware counsel if engaged at the time of mediation regardless of whether Delaware counsel has primary responsibility for a party, unless Delaware counsel requests to be and is excused from attendance by the mediator in advance of the mediation conference; and

(5) Other interested parties, such as insurers or indemnitors or one or more of their representatives, whose presence is necessary for a full resolution of the matter assigned to mediation.

(B) Failure to Attend. Willful failure to attend any mediation conference, and any other material violation of this Local Rule, must be reported to the Court by the mediator and may result in the imposition of sanctions by the Court. Any such report of the mediator must comply with the confidentiality requirement of Local Rule 9019-5(d).

(v) Mediation Conference Procedures. The mediator may establish procedures for the mediation conference.

(vi) Settlement Prior to Mediation Conference. In the event the parties reach a settlement in principle after the matter has been assigned to mediation but prior to the mediation conference, the plaintiff must advise the mediator in writing within one (1) business day of the settlement in principle.

(d) Confidentiality of Mediation Proceedings. Confidentiality is necessary to the mediation process, and mediations are confidential under these Local Rules and to the fullest extent permissible under otherwise applicable law. The provisions of this Local Rule 9019-5(d) apply to all mediations occurring in cases, contested matters and adversary proceedings pending before the Court, whether such mediation is ordered or referred by the Court or voluntarily undertaken by the parties provided that such mediation is approved by the Court. Without limiting the foregoing, except as may be otherwise ordered by the Court, the following provisions apply to any mediation under these rules:

(i) F.R.E. 408. To the fullest extent applicable, Rule 408 of the Federal Rules of Evidence (and any applicable federal or state statute, rule, common law or judicial precedent relating to the protection of settlement communications) applies to the mediation conference and any communications with the mediator related thereto. In addition to the limitations of admissibility of evidence under Federal Rule of Evidence 408, no person may rely on or introduce as evidence in connection with any arbitral, judicial or other proceeding, including any hearing held by this Court in connection with the referred matter, whether oral or written, (i) views expressed or suggestions made by a party with respect to a possible settlement of the dispute, including whether another party had or had not indicated a willingness to accept a proposal for settlement, (ii) proposals made or views expressed by the mediator, or (iii) admissions made by a party in the course of the mediation.

(ii) Protection of Information Disclosed to the Mediator or During Mediation. Subject to subparagraph (iv) herein, the mediator and the participants in mediation are prohibited from divulging, outside of the mediation, any oral or written information disclosed by the parties or witnesses to or in the presence of the mediator, or between the parties during any mediation conference.

(iii) Confidential Submissions to the Mediator. Subject to subparagraph (iv) herein, any submission of information or documents to the mediator, including any Submission (as defined in Local Rule 9019-5(c)(iii)), prepared by or on behalf of any participant in mediation and intended to be confidential are not subject to disclosure, regardless of whether such Submission is shared with other participants in the mediation during a mediation conference.

(iv) Information Otherwise Discoverable. Information, facts or documents otherwise discoverable or admissible in evidence do not become exempt from discovery or inadmissible in evidence merely by being disclosed or otherwise used in the mediation conference or in any Submission to the mediator.

(v) Discovery from the Mediator. The mediator may not be compelled to disclose to the Court or to any person outside the mediation any records, reports, summaries, notes, communications, Submissions, recommendations made under subpart (e) of this Local Rule, or other documents received or made by or to the mediator while serving in such capacity. The mediator may not testify, be subpoenaed or compelled to testify regarding the mediation in connection with any arbitral, judicial or other proceeding. The mediator may not be a necessary party in any proceedings relating to the mediation. Nothing contained in this paragraph shall prevent the mediator from reporting the status, but not the substance, of the mediation effort to the Court in writing, from filing a Certificate of Completion as required by Local Rule 9019-5(f), or from otherwise complying with the obligations set forth in this Local Rule.

(vi) Protection of Confidential Information. Nothing in this subpart of Local Rule 9019-5(d) is intended to or shall modify any rights or obligations any entity has in connection with confidential information or information potentially subject to protection under section 107 of the Code.

(vii) Preservation of Privileges. Notwithstanding Rule 502 of the Federal Rules of Evidence, the disclosure by a party of privileged information to the mediator does not waive or otherwise adversely affect the privileged nature of the information.

(e) Recommendations by Mediator. The mediator is not required to prepare written comments or recommendations to the parties. Mediators may present a written settlement recommendation memorandum to attorneys or pro se litigants, but not to the Court.

(f) Post-Mediation Procedures.

(i) Filings by the Parties. If a settlement is reached at a mediation, the plaintiff must file a Notice of Settlement or, where required, a motion and proposed order seeking Court approval of the settlement within 28 days after such settlement is reached. Within 60 days after the filing or the Notice of Settlement or the entry of an order approving the settlement, the parties must file a Stipulation of Dismissal dismissing the action on such terms as the parties may agree. If the plaintiff fails to timely file the Stipulation of Dismissal, the Clerk's Office will close the case.

(ii) Mediator's Certificate of Completion. No later than 14 days after the conclusion of the mediation conference or receipt of notice from the parties that the matter has settled prior to the mediation conference, unless the Court orders otherwise, the mediator must file with the Court a certificate in the form provided by the Court ("Certificate of Completion") showing compliance or noncompliance with the mediation conference requirements of this Local Rule and whether or not a settlement has been reached. Regardless of the outcome of the mediation conference, the mediator must not provide the Court with any details of the substance of the conference.

(g) Withdrawal from Mediation. Any matter assigned to mediation under this Local Rule may be withdrawn from mediation by the Court at any time.

(h) Termination of Mediation. Upon the filing of a mediator's Certificate of Completion under Local Rule 9019-5(f)(ii) or the entry of an order withdrawing a matter from mediation under Local Rule 9019-5(g), the mediation will be deemed terminated and the mediator excused and relieved from further responsibilities in the matter without further order of the Court. If the mediation conference does not result in a resolution of all of the disputes in the assigned matter, the matter will proceed to trial or hearing under the Court's scheduling orders.

(i) Modification of ADR Procedure. Any party seeking to deviate from, or propose procedures or obligations in addition to, the Local Rules governing ADR must file a motion with the Court for requested relief.

(j) Alternative Procedures for Certain Avoidance Proceedings. This subsection applies to any adversary proceeding that only includes a claim to avoid and/or recover an alleged avoidable transfer pursuant to 11 U.S.C. §§ 544, 547, 548 and/or 550 (collectively, "Avoidance Claims") from one or more defendants where the amount in controversy from any one defendant is equal to or less than $75,000. In any such proceeding, the defendant is entitled to request prompt mediation. On or within 28 days after the date that the Defendant's response is due under the Summons, the Defendant may opt-in to the procedures provided under this subsection by filing with the Court on the docket of the adversary proceeding and serving on the Plaintiff, a certificate in the form of Local Form 118 ("Certificate"). The time period to file the Certificate is not extended by the parties' agreement to extend the Defendant's response deadline under the Summons. If the Defendant files the Certificate under this Local Rule, the parties may agree to extend the Defendant's response deadline to 14 days after the date the mediation is concluded by stipulation filed with the Court. Plaintiff must pay the fees and costs of the mediator. The mediator must be appointed subject to Local Rule 9019-2(e). Within 7 days after the filing of the Certificate, the parties shall file a stipulation of appointment of a mediator in the form as provided under Local Form 119, if not the court will assign a mediator. The parties must participate in mediation in an effort to consensually resolve their disputes prior to further litigation. All claims under the avoidance proceeding must be mediated unless otherwise agreed by the parties. This Local Rule shall not apply to a proceeding in which the operative complaint includes claims in addition to Avoidance Claims.