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RANDOLPH v. GALEN GROUP

November 1, 1995

PETER BERNARD and JAMES RANDOLPH, etc., Plaintiffs, against GALEN GROUP, INC., a Delaware Corporation, et al., Defendants.


The opinion of the court was delivered by: CHIN

 Chin, D.J.

 Before the Court are the requests of certain of the defendants for sanctions against Donald L. Cornwell, Esq., lead counsel for plaintiffs, for violating the confidentiality provisions governing the Court's Mediation Program (the "Mediation Program"). Following my referral of the case to the Mediation Program and the commencement of the mediation process, Mr. Cornwell wrote me a letter disclosing, among other things, the terms of certain settlement offers (including specific dollar amounts) that had been made during the mediation process. Since these disclosures clearly violated my order referring the matter to mediation as well as the Court's guidelines governing the Mediation Program, sanctions will be assessed.

 BACKGROUND

 A. The Mediation Program

 The Mediation Program was established in January 1992 as part of the Court's Civil Justice Expense and Delay Reduction Plan (the "Plan") adopted in December 1991. As described in the Guide to the Plan (the "Guide")

 
Mediation is a confidential ADR process in which a disinterested third party directs settlement discussions but does not evaluate the merits of either side's position or render any judgments. By holding meetings, defining issues, defusing emotions and suggesting possibilities of resolution, the mediator assists the parties in reaching their own negotiated settlement. The main benefit of mediation is that it can produce creative solutions to complex disputes often unavailable in traditional litigation.

 (Guide, Section V, paragraph A(1)) (emphasis added).

 The mediators in the Mediation Program are members of the bar who serve pro bono as a service to the Court. (Guide, Section V, paragraph A(3).

 Mediation sessions are subject to confidentiality provisions set forth in the Guide. Paragraph 5 of Section V, provides:

 
Discussions at the mediation conference, including any statement made by any party, attorney or other participants, should be confidential and not reported, recorded, placed in evidence, made known to the assigned judge, or construed for any purpose as an admission. No party should be bound by anything done or said at mediation conferences unless a settlement is reached.

 As of April 1995, 470 of the 590 cases that had gone through the Mediation Program had been settled. Daniel Wise, Dispute Resolution, Discovery Projects Set, N.Y.L.J., July 19, 1995, at 1, 2. Hence, after nearly three years of operation, mediators in the Mediation Program had settled 80% of the cases referred to them. Id. at 2. Indeed, 50% of the cases that had been classified as "standard" or "complex" that had been submitted for mediation were resolved within one year. Id. at 2.

 B. Procedural History

 This copyright, trademark and patent case was commenced on January 6, 1995. On January 17, 1995, plaintiffs filed a motion for a preliminary injunction and the appointment of a receiver.

 Mr. Cornwell, who is not a member of this Court, moved for admission pro hac vice. On February 15, 1995, I granted the motion and gave Mr. Cornwell leave to appear pro hac vice.

 An evidentiary hearing was held on plaintiffs' preliminary injunction motion on February 23 and 24 and March 17, 1995, and at the conclusion of the hearing on March 17th, I granted the motion, ruling from the bench. An order formalizing the preliminary injunction was issued on March 28, 1995, and, following submissions from the parties and an additional evidentiary hearing on April 10, 1995, the preliminary injunction was modified on April 12, 1995. At the hearing on April 10, 1995, I appointed John Flock, Esq. as receiver for Applied Axiomatics, Inc.

 C. Referral of the Case to Mediation

 By letter dated June 29, 1995, defendants Galen Group, Inc. ("Galen"), Doyle, Cowley, Bodner, Perler and Urbaniak requested that this case be referred for mediation pursuant to the Mediation Program. The Gilbert defendants joined in the request. Plaintiffs, however, objected; Mr. Cornwell submitted a letter to the Court dated June 30, 1995 ...


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