CLEVELAND CONSTRUCTION INC v. STELLAR GROUP INCORPORATED et al

Filing 53

ORDER denying 52 Motion for Protective Order. Ordered by US DISTRICT JUDGE CLAY D. LAND on 10/23/2017 (tlf).

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
UNITED STATES OF AMERICA for
the use and benefit of
CLEVELAND CONSTRUCTION, INC.,

*
*

Plaintiff,

*

vs.

*

STELLAR GROUP, INC.and LIBERTY
MUTUAL INSURANCE COMPANY,

CASE NO. 4:16-CV-179(CDL)

*
*

Defendants.
*
O R D E R
Cleveland Construction, Inc. (“Cleveland”) provided labor
and

materials

on

a

construction

project

pursuant

to

a

subcontract with Stellar Group, Inc. (“Stellar”), the general
contractor

for

the

project.

Stellar,

blaming

Cleveland

for

delays in the project, has not paid Cleveland all that Cleveland
claims it is owed.
amounts

owed

counterclaims

under
for

Cleveland brings this action to recover
its

subcontract

damages

allegedly

with

Stellar.

caused

by

Stellar
Cleveland’s

delays.
Cleveland denies that it is responsible for the delays in
the project, and it seeks to obtain discovery of communications,
including

those

related

to

settlement

discussions,

between

Stellar and VOA Associates (“VOA”), the architectural firm for
the project.

Cleveland maintains that the communications are

1

relevant

because

they

would

quantify

Stellar’s

delay

claim

against VOA, thereby undermining the credibility of Stellar’s
delay-related counterclaim against Cleveland.
protective

order

communications.

preventing
Even

though

the
the

Stellar seeks a

disclosure

settlement

of

those

discussions

were

between Stellar and a third party who is not a party to this
action, Stellar argues that those settlement negotiations are
nevertheless not discoverable.
remainder

of

this

Order,

For the reasons explained in the

Stellar’s

motion

(ECF

No.

52)

is

denied.
DISCUSSION
The resolution of the pending motion is straightforward.
Federal Rule of Civil Procedure 26(b)(1) clearly describes the
scope

of

discovery

in

federal

courts:

“Parties

may

obtain

discovery regarding any nonpriviledged matter that is relevant
to any party’s claim or defense and proportional to the needs of
the case . . . .”

Proportionality is not an issue here, and

therefore, the resolution of the pending motion depends upon
whether

the

information

sought

is

“nonprivileged”

and

“relevant.”
According to the Federal Rules of Evidence, “[t]he common
law—as

interpreted

by

United

States

courts

in

the

light

of

reason and experience—[generally] governs a claim of privilege.”
Fed. R. Evid. 501.

“But in a civil case, state law governs

2

privilege

regarding

a

claim

or

defense

supplies the rule of decision.”
Court

to

Georgia

no

Eleventh

appellate

settlement
Instead,

Circuit

decision

communications
Stellar

Id.

argues

for

of

Appeals

recognizing

that

a

the

state

law

Stellar has pointed the

Court

between

which

party

a

decision

privilege

and

a

communications

or
for

non-party.
should

be

protected based upon the principles underlying Federal Rule of
Evidence 408.

Rule 408 governs whether evidence is admissible

at trial, not whether it is privileged in discovery.

Moreover,

the evidence that Cleveland seeks to discover would likely not
be excluded under Rule 408.

Rule 408 contemplates that the

compromise offers and negotiations that would not be admissible
relate to the disputed claim between the parties to the action,
not a disputed claim between one party to the action and a nonparty.
The

Court

acknowledges

that

at

least

one

recognized a “settlement negotiation privilege.”

Circuit

has

See Goodyear

Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976,
979-81

(6th

Cir.

2003)

(“The

public

policy

favoring

secret

negotiations, combined with the inherent questionability of the
truthfulness

of

any

statements

made

therein,

leads

us

to

conclude that a settlement privilege should exist . . . .”).
But others have not.

See In re MSTG, Inc., 675 F.3d 1337, 1342-

48 (Fed. Cir. 2012) (declining to recognize such a privilege for

3

a patent holder’s settlements with other alleged infringers); In
re Gen. Motors Corp. Engine Interchange Litig., 594 F.2d 1106,
1124

n.20

(7th

privilege).

Cir.

1979)

(declining

to

recognize

such

a

In light of the absence of any indication from the

Eleventh Circuit Court of Appeals or any Georgia appellate court
that such a “settlement privilege” exists in this Circuit, the
Court declines to invent one for this case.
Court

finds

that

the

discovery

sought

Accordingly, the
by

Cleveland

is

“nonprivileged.”
The

next

question

is

whether

the

information

seeks is relevant to any of the issues in the case.

Cleveland

A matter is

relevant if it has “any tendency to make a fact more or less
probable than it would be without the evidence” and the fact “is
of consequence in determining the action.”
& (b).
to

The information sought by Cleveland is clearly relevant

Cleveland’s

contends

Fed. R. Evid. 401(a)

that

defense
the

to

project

Stellar’s
was

counterclaim.

delayed

237

days,

Cleveland is responsible for 224 days of delay.

Stellar
and

that

If Stellar

and/or its expert has maintained elsewhere that other parties
are

responsible

for

more

than

13

days

of

delay,

then

that

evidence would be probative on the issue of whether Cleveland is
in fact responsible for the amount of delay that Stellar claims.1

1

Stellar argues that the Court should use a heightened “particularized
relevancy” standard in evaluating whether the information sought is

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CONCLUSION
Finding

that

Cleveland

seeks

discovery

of

nonprivileged

matters that are relevant to a claim or defense in this action,
the

Court

denies

Stellar’s

Second

Corrected

Motion

for

Protective Order (ECF No. 52).2
IT IS SO ORDERED, this 23rd day of October, 2017.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

discoverable.
The Court finds no support for a two-tiered relevancy
framework under Rule 26.
If the information is not subject to a
privilege, which the Court has concluded it is not, then the
traditional relevancy standard should apply.
2
As previously noted, Stellar makes no argument that the discovery
should be prohibited on proportionality grounds.

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