## Facts

- Donna Conlin Olam sued Congress Mortgage Company and related parties over alleged consumer-law and related violations arising from foreclosure and loan servicing.
- The parties participated in a federal court-sponsored mediation conducted by the court’s ADR program counsel acting as mediator.
- After a lengthy session that extended past midnight, the parties signed a written Memorandum of Understanding (MOU) stating it was “intended as a binding document itself.”
- Olam later did not perform obligations required by the MOU.
- Defendants moved to enforce the MOU as a settlement agreement; Olam opposed, asserting her consent was not valid due to undue influence and her physical and emotional condition.
- The enforceability dispute required the court to decide whether it could consider evidence about what occurred during the mediation, including mediator testimony, given confidentiality protections.

## Issues

1. Whether state mediation-confidentiality law or federal evidentiary law governs admissibility of mediation communications in federal court when enforcing a mediated settlement.
2. Whether the court may admit and consider evidence from the mediation, including mediator testimony, to resolve a good-faith dispute over settlement formation and consent.
3. Whether the MOU was enforceable or invalid due to undue influence, lack of understanding, or compromised consent.

## Decision

- The court received and considered evidence about the mediation proceedings, including testimony from the mediator, for the limited purpose of deciding enforceability of the MOU.
- After an evidentiary hearing and factual findings, the court granted defendants’ motion and enforced the MOU as a binding settlement contract.
- The court rejected Olam’s claims of undue influence and incapacity, finding insufficient proof that her will was overborne or that she lacked capacity to understand the agreement.

## Legal Principles

- When a dispute centers on whether a settlement was validly formed in mediation, a federal court may, in narrowly controlled circumstances, admit otherwise confidential mediation evidence if necessary for fair adjudication.
- Mediator testimony is not routine and carries risks to mediation; it may be permitted under exceptional conditions such as party agreement, mediator willingness, a serious good-faith formation dispute, and careful limits on scope.
- A written mediation agreement stating present intent to be bound is generally enforceable under ordinary contract principles absent a strong showing of legal invalidity (e.g., undue influence or incapacity).
- Representation by counsel, opportunity to consult, and evidence that terms were explained weigh against claims that consent was involuntary or uninformed.

## Conclusion

The court permitted limited penetration of mediation confidentiality to resolve a disputed settlement-formation question, then found that the plaintiff’s consent was voluntary and informed and enforced the mediation MOU as a binding settlement agreement.


Olam v. Cong. Mortg. Co., 68 F. Supp. 2d 1110 (N.D. Cal. 1999)