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Commercial Litigation and Arbitration

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Rule 408 as a Prudential Limitation on Discovery of Settlement Communications: Six Views

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No. 1.  In re MSTG, Inc., 675 F.3d 1337, 1347 (Fed. Cir. 2012):

[T]he district court has discretion to limit discovery of material that is not itself admissible and that was not utilized by the opposing party to protect settlement confidentiality. *** We note that other courts have imposed heightened standards for discovery in order to protect confidential settlement discussions. In the context of confidential mediation communications, the Second Circuit has held that because”‘confidentiality in [mediation] proceedings promotes the free flow of information that may result in the settlement of a dispute,” a party seeking discovery of confidential communications must make a heightened showing “demonstrat[ing] (1) a special need for the confidential material, (2) resulting unfairness from a lack of discovery, and (3) that the need for the evidence out-weighs the interest in maintaining confidentiality.” In re Teligent, Inc., 640 F.3d 53, 57-58 (2d Cir. 2011) (internal quotation mark omitted). Many district courts also require heightened showings for discovery of settlement negotiations. See, e.g., Eisai Inc. v. Sanofi-Aventis U.S., LLC, No. 08-4168, 2011 U.S. Dist. LEXIS 128447, 2011 WL 5416334, at *8 (D.N.J. Nov. 7, 2011) (finding that party seeking discovery “failed to make a heightened, more particularized showing of relevance” (internal quotation mark omitted)); Atchison Casting Corp. v. Marsh, Inc., 216 F.R.D. 225, 226-27 (D. Mass. 2003); Young v. State Farm Mut. Auto. Ins. Co., 169 F.R.D. 72, 76 (S.D. W. Va. 1996); Servants of Paraclete, Inc. v. Great Am. Ins. Co., 866 F. Supp. 1560, 1576 (D.N.M. 1994).

No. 2.  Implicit Networks, Inc. v. Juniper Networks, Inc., No. No. C 10-04234 IS, 2012 U.S. Dist. LEXIS 103884, at *3 (N.D. Cal. July 23, 2012) (“courts have discretion to limit discovery of material that is not admissible (e.g., Rule 408 communications) and courts must tread carefully when ordering disclosure of documents that could undermine the sanctity and efficacy of settlement negotiations”)

No. 3.  Wu v. Pearson Educ., Inc., No. 09 Civ. 6557 (KBF) (JCF), 2012 U.S. Dist. LEXIS 51882, *3-4 (S.D.N.Y. Apr. 12, 2012) (“Settlement of similar claims has consistently been found to be evidence of willfulness in copyright infringement actions. .... Accordingly, documents sought by the plaintiff that reflect the final settlement of overrun claims are discoverable. ... By contrast, documents concerning the negotiation process that led to the settlement of overrun claims need not be produced.   [T]he plaintiff has not articulated how documents reflecting, for example, the ‘bid and ask’ in negotiations concerning other claimants could plausibly lead to admissible evidence on any issue in this litigation”)

No. 4.  ABT Sys., LLC v. Emerson Elec. Co., No. 4:11CV00374 AGF, 2012 U.S. Dist. LEXIS 178619, *8-9 (E.D. Mo. Dec. 18, 2012) (“this court ‘has discretion to limit discovery of material that is not itself admissible and that was not utilized by the opposing party’ in order to protect settlement confidentiality”).

No. 5.  Avocent Redmond Corp. v. Rose Electronics, No. C06-1711RSL, 2012 U.S. Dist. LEXIS 74800, 2012 WL 4903272 at *2 (W.D. Wash. May 29, 2012) (denying discovery of settlement discussions and noting that “[i]n the absence of a showing that statements made in the settlement discussions would be admissible, ‘the district court has discretion to limit discovery of material that is not itself admissible and that was not utilized by the opposing party’ in order to protect settlement confidentiality.”).

No. 6.  Auto-Owners Ins. Co. v. Mid-Am. Piping, Inc., No. 4:07CV00394 DJS, 2008 U.S. Dist. LEXIS 48779, 2008 WL 2570820, at *2 (E.D. Mo. June 26, 2008) (“When the requested discovery concerns a confidential settlement agreement, the majority of courts considering the issue have required the requesting party to meet a heightened standard, in deference to Federal Rule of Evidence 408, and the public policy to encourage settlements and to uphold confidentiality provisions.”)

 

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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