Opinion
Case No. 2:10-cv-615
08-14-2014
WILLIAM F. SHEA, LLC, Plaintiff, v. BONUTTI RESEARCH, INC., Defendant.
Magistrate Judge Norah McCann King
OPINION AND ORDER
This matter is before the Court for consideration of Plaintiff William F. Shea, LLC's ("Shea") motion to clarify order preventing disclosure of settlement agreement and negotiations (ECF No. 227), Defendant Bonutti Research, Inc.'s memorandum in opposition (ECF No. 234), non-party A Communication Company's ("Acom") motion for leave to file response to Plaintiff's motion (ECF No. 235), Plaintiff's memorandum in opposition to Acom's motion (ECF No. 243), Plaintiff's reply in support of its motion to clarify (ECF No. 244), and Acom's reply in support of its motion for leave to file a response (ECF No. 245). For the reasons that follow, the Court GRANTS Acom's motion (ECF No. 235), GRANTS IN PART and DENIES IN PART Shea's motion (ECF No. 227), VACATES its June 17, 2014 Order (ECF No. 226), and issues the following order with respect to Shea's motion to prevent disclosure of settlement agreement and negotiations (ECF No. 225).
I. BACKGROUND
In June 2013, while this case was pending, the parties engaged in mediation. The mediation proceedings ultimately led to a Settlement Agreement and Mutual Release of Claims ("Settlement Agreement"). Because the proceedings were conducted under the authority of this Court, the communications made during those proceedings are confidential and subject to disclosure only if one or more of the exceptions set forth in Local Civil Rule 16.3(c)(3) is satisfied. See S.D. Ohio Civ. R. 16.3(c)(1).
The Settlement Agreement has been filed under seal with this Court at ECF No. 233.
Rule 16.3(c)(1) states:
In addition to Fed.R.Evid. 408, and any other applicable privilege, pursuant to 28 U.S.C. § 652(d), evidence of conduct or statements made in settlement negotiations is not admissible to prove liability for or invalidity of a claim or its amount. In order to promote candor and protect the integrity of this Court's [Alternative Dispute Resolution ("ADR")] processes, in addition to other protections afforded by law, all communications made by any person (including, but not limited to parties, counsel, and judicial officers or other neutral participants) during ADR proceedings conducted under the authority of this Court are confidential and are subject to disclosure only as provided in subsection (c)(3) of this Rule. Any participant in the process, regardless of whether that participant is a party to the case in which the ADR proceeding has been attempted to has occurred, may seek an order to prevent disclosure of any communication deemed confidential by this Rule.
Pursuant to section 3.5 of the Southern District of Ohio Supplemental Procedures for Alternative Dispute Resolution (eff. Feb. 21, 2013), the terms of the Settlement Agreement also are confidential unless all parties otherwise agree in writing. The parties agreed in the Settlement Agreement that each party could disclose the terms thereof only if certain exceptions to the confidentiality provision are satisfied.
On June 13, 2014, Shea filed a motion for an order to prevent disclosure of confidential communications that took place during settlement negotiations. (ECF No. 225.) The Court granted Shea's motion and issued an order stating that "[t]he settlement agreements and negotiations between the parties in this action are confidential under S.D. Ohio Civ. R. 16.3, and none of the exceptions in Civ. R. 16.3(c)(3) apply." (ECF No. 226 ("June 17, 2014 Order").) The June 17, 2014 Order further stated: "[T]he Court ORDERS defendant Bonutti Research, Inc. not to disclose the settlement agreements or negotiations to any third party." (Id.)
Shea now moves for an order clarifying that: (1) the other "Bonutti-affiliated entities and individuals who signed the Settlement Agreement" (in addition to Bonutti Research, Inc.) are prohibited from disclosing the Settlement Agreement and negotiations; and (2) any post-settlement documents revealing the terms of the Settlement Agreement, such as financial statements showing the amount of a settlement payment, are confidential and protected from disclosure under Local Civil Rule 16.3.
II. DISCUSSION
A. Acom's motion (ECF No. 235)
Having considered the parties' arguments, the Court GRANTS Acom's motion for leave to file a response to Shea's motion to clarify (ECF No. 235) and will consider that response (ECF No. 235-1) in addressing Shea's motion. The Court DENIES Shea's request for an additional twenty-one days to reply to Acom's brief.
B. Shea's motion (ECF No. 227)
As an initial matter, the Court addresses Acom's argument that both the Settlement Agreement and the communications underlying the parties' settlement negotiations should be produced because a judicial officer from the United States District Court for the Southern District of Illinois ordered their production. Acom argues that Judge Williams' discovery order in A Communications Co. v. Bonutti, No. 3:13-cv-1993 (S.D. Ill.) ("Acom Litigation") satisfies the exception set forth in Rule 16.3(c)(3)(E), which permits disclosure of confidential communications if such disclosure is "otherwise required by law," as well as an exception set forth in the Settlement Agreement's confidentiality provision. But even assuming, arguendo, that a court order would satisfy the aforementioned exceptions, the Court cannot conclude based on the facts before it that Judge Williams ordered the parties to the Acom Litigation to produce the information at issue. In its brief, Acom indicated that Judge Williams issued a bench order requiring production of the Settlement Agreement, issued a summary order incorrectly stating that a party to the Acom Litigation had agreed to produce the Settlement Agreement, and then issued a follow-up order suspending execution of his prior bench order until this Court ruled on Shea's pending motion. See ECF No. 235-1, at 2-3. As such, it appears that any applicable court order has been suspended pending action from this Court. The Court cannot conclude that there exists a court order in effect at this time that would satisfy the plain language of Local Civil Rule 16.3(c)(3)(E) or a similar exception to the Settlement Agreement's confidentiality provision.
Because none of the other exceptions set forth in Rule 16.3(c)(3) apply to the facts of this case, the Court concludes that the communications made by any person during the June 2013 mediation process are confidential and protected from disclosure under Local Civil Rule 16.3(c)(1). Accordingly, pursuant to Local Civil Rule 16.3(c)(1), the Court finds that "an Order to prevent disclosure of any communication deemed confidential by this Rule" is appropriate.
The Court reaches the same conclusion regarding the Settlement Agreement itself and any post-settlement documents reflecting its terms. Section 3.5 of the Southern District of Ohio Supplemental Procedures for Alternative Dispute Resolution, which are authorized under Local Civil Rule 16.3(e), state that the parties may not disclose the "terms of any agreed upon settlement" unless all parties agree in writing or one of the exceptions set forth in Local Civil Rule 16.3 applies. For the reasons stated above, the Court finds that neither of those conditions has been satisfied in this case. Accordingly, pursuant to Rule 16.3(c)(1), the Court finds that an Order preventing disclosure of the Settlement Agreement or its terms is appropriate.
Acom makes the additional argument that confidential information under Local Civil Rule 16.3(c)(1) is only confidential if it is being used to prove liability for or invalidity of a claim or its amount, but that argument is unpersuasive. The plain language of the Rule states that covered communications "are confidential, and are subject to disclosure only as provided in subsection (c)(3) of this Rule." This protection is afforded "in addition to other protections afforded by law" such as those set forth in Federal Rule of Evidence 408 and 28 U.S.C. § 652(d). S.D. Ohio Civ. R. 16.3(c)(1). Moreover, the exceptions set forth in subsection (c)(3) of Local Civil Rule 16.3 contemplate the use of confidential communications for reasons other than proving liability or invalidity of a claim or its amount. See, e.g., id. at (c)(3)(C)-(D). The Court acknowledges that dicta from its prior decision in Zep Inc. v. Midwest Motor Supply Co., No. 2:09-CV-760, 2010 WL 2105365, at *3 (S.D. Ohio May 25, 2010) supports Acom's argument, but that dicta is insufficient to overcome the plain language and obvious meaning of Rule 16.3(c). That dicta also is inconsistent with the Court's conclusion that its role in this dispute is simply to issue an order pursuant to Rule 16.3(c)(1) preventing disclosure of confidential communications and the Settlement Agreement's terms; it is not tasked with making evidentiary determinations in another case pending before another court. Any arguments regarding the admissibility of evidence in the Acom Litigation must be resolved by the judicial officer overseeing that proceeding.
Acom's argument that the Federal Rules of Civil Procedure trump Local Civil Rule 16.3 and mandate disclosure of the information at issue is similarly unpersuasive. Noticeably absent from Acom's argument is any mention of the first sentence of Federal Rule of Civil Procedure 26(b): "Unless otherwise limited by court order, the scope of discovery is as follows . . . ." Fed. R. Civ. P. 26(b)(1) (emphasis added). The court order Shea requested and Local Civil Rule 16.3 contemplates does not conflict with the Federal Rules or inappropriately limit the scope of discovery to which litigants are entitled under Federal Rule of Civil Procedure 26(b)(1).
As a final matter, Shea asks the Court to clarify that its June 17, 2014 Order applies to all signatories to the Settlement Agreement (William F. Shea, LLC, Avon Equity Holdings, LLC, Harwich Equity Holdings, LLC, Hawk Healthcare, LLC, William F. Shea, Bonutti Research, Inc., Unity Ultrasonic Fixation, LLC, the Bonutti 2003 Trust, Joint Active Systems, Inc., Marctec, LLC, P Tech, LLC, Multitak, LLC, Peter M. Bonutti, Boris P. Bonutti, and Dean A. Kremer) rather than just Bonutti Research, Inc. The Court finds this argument well taken and, pursuant to Rule 16.3(c)(1), ORDERS all signatories to the Settlement Agreement not to disclose any confidential communications covered by Rule 16.3(c)(1) and/or the terms of the Settlement Agreement unless and until one of the exceptions set forth in Rule 16.3(c)(3) is satisfied.
III. CONCLUSION
For the foregoing reasons, the Court GRANTS Acom's motion for leave to file a response (ECF No. 235), GRANTS IN PART and DENIES IN PART Shea's motion for clarification (ECF No. 227), VACATES its June 17, 2014 Order (ECF No. 226), and ORDERS all signatories to the Settlement Agreement not to disclose any confidential communications covered by Local Civil Rule 16.3 and/or the terms of the Settlement Agreement unless and until one of the exceptions set forth in Local Civil Rule 16.3(c)(3) is satisfied.
IT IS SO ORDERED.
/s/ Gregory L. Frost
GREGORY L. FROST
UNITED STATES DISTRICT JUDGE