Mediation: Uncool Wiles and Stratagems

We are crafty, we lawyers.  We often fancy ourselves as clever makers of legal strategy.  We employ wiles and stratagems on behalf of our clients.  Sometimes, a novel legal argument will carry the day.  However, at other times, we out think ourselves and utilize strategies which, though technically permitted by the rules, may actually be, for lack of a better word, uncool.  Sometimes, public policy suggests that these maneuvers, uncool as they are, are not permitted in the legal arena.  Such is the case with sham mediations designed to lure out-of-state defendants into the jurisdiction only to serve them with process if the mediation ultimately fails.

Imagine this situation: Two parties to a dispute begin to talk settlement or potential resolution before suit is filed.  This is probably a good thing.  The two parties, both from different states, agree to meet in an attempt to resolve the dispute.  Suppose that this attempt at resolution, a formal mediation, takes place in the forum state at the offices of one of the party’s attorneys.  None of this is unusual.  The mediation is scheduled, and one party, coming from out of state, travels to the forum state, presumably in good faith, in an attempt to resolve the dispute.  After all, the only reason they have to be in the state is to attend to newly scheduled mediation.  The mediation begins, with each party offering its opening statement, and then proceeds in the traditional fashion, with the mediator shuffling back and forth between the room in an effort to bring the parties closer together and resolve the dispute once and for all.

But the hosting party has a different idea.  Although it may prefer to resolve the dispute once and for all, it realizes that if the mediation fails, as they sometimes do, then it has an advantage in that its opponent is physically present in the forum where it would like to litigate the matter.  So, the hosting party develops a contingency plan:  it prepares a complaint and instructs a paralegal to hold steady at the local courthouse and stand ready to file it, if matters turn for the worse.  Further, a private process server lurks nearby the site of the mediation, ready to serve the corporate representative of its opponent as they leave the mediation, if it is unsuccessful.

At first glance, it may make sense.  After all, the foreign party is present and the jurisdiction, and therefore, subject to service of process.  Why not take advantage of this opportunity to file and serve the lawsuit during the mediation if things do not go as planned?

Though this seems technically permissible under the rules, it is frowned upon by South Carolina jurisprudence and is, as aforementioned, uncool. Where a plaintiff or someone acting on its behalf induces a defendant to enter the jurisdiction for the purposes of effecting the settlement of a controversy, and the defendant is then served with process while in the jurisdiction, the service will be set aside as having been fraudulently obtained and the complaint will be dismissed.  See generally Shaw v. Hughes, 303 S.C. 337, 400 S.E.2d 501 (Ct. App. 1991).  So, if you are the hosting party, don’t be uncool. And if you’re the visiting party, you may want to address this matter up front and agree with your opponent that no one will attempt to employ this strategy at a pre-suit mediation.