What Happens When Co-Defendants Hold Divergent Interests?

Types : Bylined Articles

By Leslie Berkoff and Edward Schnitzer

This article addresses some of the issues that can arise when parties at a mediation are codefendants but are not fully aligned because some or all of their interests conflict with one another. These competing interests can include (1) a potential settlement where one defendant would be required to cooperate with the plaintiff in pursuing claims against the other defendant, and/or (2) the exhaustion of an insurance policy through a settlement that could adversely affect the nonsettling defendant’s ability to defend the ongoing litigation.

Summary of Variables
In a multi-defendant mediation, it is not uncommon for defendants to be in vastly different positions for a variety of reasons, including the nature of their claims, defenses and economic wherewithal. The validity and merits of the claims against each defendant could be disparate from the plaintiff’s perspective and/or even based on the facts of the underlying case. While several defendants may be sued in one action because there is a factual connection among the claims, this does not mean that the predicate facts for each of them are equally well established. In addition, each defendant could hold different views as to the merits and value of the claims being asserted against them.