## Facts

- Teligent, Inc. entered Chapter 11 bankruptcy in the Southern District of New York.
- The bankruptcy estate had claims involving Alex Mandl, a former Teligent executive, arising from a large loan arrangement tied to his employment termination.
- The bankruptcy court referred disputes between the estate and Mandl to mediation and entered two protective orders barring disclosure of mediation communications.
- Mandl and the estate resolved their dispute through a mediated settlement conducted under the protective orders.
- After settling, Mandl sued his former counsel, K&L Gates LLP, for legal malpractice related to the underlying transaction.
- K&L Gates, which did not participate in the mediation, sought discovery of all mediation and settlement communications to defend against the malpractice claims, asserting relevance to causation and damages.

## Issues

1. What standard governs a request to disclose confidential mediation communications protected by court-ordered confidentiality in a bankruptcy proceeding?
2. Whether K&L Gates met that standard to justify modifying or lifting the bankruptcy court’s protective orders for use in separate malpractice litigation.

## Decision

- The Second Circuit affirmed the district court’s order affirming the bankruptcy court’s denial of K&L Gates’s motion to lift or modify the protective orders.
- The court adopted a stringent three-part standard for disclosure of confidential mediation communications.
- Applying that standard, the court held K&L Gates failed to show a sufficiently specific need or that denial of access would be unfair in the malpractice action.
- The court emphasized K&L Gates’s request for the “entire universe” of mediation materials as inconsistent with the required particularized showing.
- The court concluded the strong interest in maintaining mediation confidentiality outweighed K&L Gates’s asserted need for the communications.

## Legal Principles

- Confidentiality is central to effective court-sponsored mediation because it encourages candid communications necessary for settlement.
- A party seeking disclosure of confidential mediation communications must demonstrate:
  - a special need for the confidential material,
  - resulting unfairness from a lack of discovery, and
  - that the need for the evidence outweighs the interest in maintaining confidentiality.
- General relevance to issues such as causation or damages, without a concrete and targeted showing, is insufficient to pierce mediation confidentiality.
- The availability of discovery from non-confidential sources weighs against modifying mediation confidentiality orders.
- Courts may deny disclosure requests that are broad or untailored because they threaten the integrity of mediation programs.

## Conclusion

The Second Circuit held that court-ordered mediation confidentiality should be preserved absent an exceptional, particularized showing of special need and unfairness, and it affirmed denial of a law firm’s attempt to obtain sweeping discovery of mediation communications for use in related malpractice litigation.


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