State Farm Mutual Automobile Insurance Company v. Universal Health Group, Inc. et al
Filing
161
MEMORANDUM OPINION and ORDER Denying Plaintiff's 157 Objections to Magistrate Judge's Order Granting Motion to Compel Production of Settlement Agreements Between Plaintiff and Clear Imaging, LLC and Horizon Imaging, LLC 155 - Signed by District Judge Judith E. Levy. (FMos)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
State Farm Mutual Automobile
Insurance Company,
Case No. 14-cv-10266
Plaintiff,
Judith E. Levy
United States District Judge
v.
Universal Health Group, Inc., et
al.,
Mag. Judge David R. Grand
Defendants.
________________________________/
OPINION AND ORDER DENYING PLAINTIFF’S OBJECTIONS
[157] TO MAGISTRATE JUDGE’S ORDER GRANTING MOTION
TO COMPEL PRODUCTION OF SETTLEMENT AGREEMENTS
BETWEEN PLAINTIFF AND CLEAR IMAGING, LLC AND
HORIZON IMAGING, LLC [155]
This Court referred defendant Joseph F. DeSanto’s September 16,
2016 motion to compel (Dkt. 141) to the Magistrate Judge. Defendant
DeSanto’s motion sought the production of settlement agreements
executed between plaintiff State Farm Mutual Automobile Ins. Co. and
former defendants Clear Imaging, LLC and Horizon Imaging, LLC,
which were dismissed from the case on April 1, 2016, pursuant to a
stipulated order among the settling parties. (Dkt. 134.) The Magistrate
Judge granted defendant DeSanto’s motion to compel (Dkt. 155), and
plaintiff filed the objections at issue here on November 11, 2016. (Dkt.
157.) For the reasons set forth below, plaintiff’s objections are denied,
and the Magistrate Judge’s order stands.
I.
Background
The Court has reviewed and adopts the background as described
in the Magistrate Judge’s opinion and order (Dkt. 155), in addition to
what is written below.
Plaintiff reached a settlement with defendants Clear Imaging and
Horizon Imaging on March 21, 2016, and a stipulated order dismissing
the claims as to those defendants was entered on April 1, 2016. (Dkt.
157 at 5; see Dkt. 134.) On May 13, 2016, defendant DeSanto served
plaintiff with a discovery request seeking “all settlement agreements,
and related documents, entered into between [plaintiff] and any
[d]efendant(s) in this matter.” (Dkt. 157 at 5; see Dkt. 141.)
Plaintiff objected to the request and thus did not produce the
documents, so defendant DeSanto filed a motion to compel, seeking the
Clear Imaging and Horizon Imaging settlement agreements with
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plaintiff.1 (Dkt. 141.) Defendant DeSanto argued that the agreements
are non-privileged and relevant, and thus discoverable, because they
may bias the testimony of multiple key witnesses, and also because they
will help defendant DeSanto calculate potential liability. (Dkt. 141 at
14-17.) The Magistrate Judge granted the motion to compel, finding
that the settlement agreements are relevant to possible witness bias
and to potential liability or damages, and declining to review them in
camera. (Dkt. 155 at 4-10.)
Plaintiff filed objections, arguing that the Magistrate Judge’s
decision is clearly erroneous and contrary to law. (Dkt. 157.) According
to plaintiff, the settlement agreements are irrelevant to the question of
bias, because neither the witnesses whose testimony is at issue nor
their counsel were at all involved in crafting or signing the agreements.
(Id. at 10-13.)
Plaintiff also argues that the agreements are only
relevant to ongoing parallel state court litigation, in which the
Pursuant to the Court’s Practice Guidelines, the parties first
requested a telephonic status conference on the issue, which was held
on August 29, 2016. The Court heard argument on the issue and was
unable to resolve the dispute. The Court did not, as plaintiff suggests,
make any findings relevant to the outcome of the issue. (See, e.g., Dkt.
157 at 14-15 (“In fact, this Court has already endorsed [inspecting the
agreements in camera] during the initial teleconference regarding
1
the present discovery dispute”.).)
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receivables from Clear Imaging and Horizon Imaging are at issue. (Id.
at 13-14.)
Plaintiff also argues that the Magistrate Judge’s decision not to
conduct an in camera review of the settlement agreements is contrary
to law. Plaintiff cites cases in which “a court exercised its discretion in
conducting in camera inspections of discovery documents for relevance.”
(Id. at 14-15.)
II.
Standard
A magistrate judge’s nondispositive order is reviewed for clear
error. 28 U.S.C. § 636(b)(1)(A) (“A judge of the court may reconsider
any [nondispositive] pretrial matter . . . where it has been shown that
the magistrate judge's order is clearly erroneous or contrary to law.”);
see Vogel v. U.S. Office Prods. Co., 258 F.3d 509, 515 (6th Cir. 2001). A
magistrate judge’s decision is clearly erroneous “when although there is
evidence to support it, the reviewing court on the entire evidence is left
with the definite and firm conviction that a mistake has been
committed.”
United States v. U.S. Gypsum Co., 333 U.S. 364, 395
(1948).
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III.
Analysis
The terms of a settlement agreement, even when marked
confidential, are not protected from discovery by privilege. State Farm
Mut. Auto. Ins. Co. v. Physiomatrix, Inc., No. 12-cv-11500, 2014 U.S.
Dist. LEXIS 184665, at *4-5 (E.D. Mich. Apr. 24, 2014) (citing Goodyear
Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 981 (6th
Cir. 2003)).
The only constraint is whether, under Ruled 26 of the
Federal Rules of Civil Procedure, the material “is relevant to any
party’s claim or defense and proportional to the needs of the case.” Fed.
R. Civ. P. 26(b)(1); see Physiomatrix, Inc., 2014 U.S. Dist. LEXIS
184665, at *2.
Plaintiff argues that the Magistrate Judge committed clear error
by finding that the agreements are relevant, because the witnesses
whose testimony is at issue and their counsel did not participate in
drafting or signing the settlement agreements. (Dkt. 157 at 10-13.)
That the witnesses and counsel were not involved in drafting or
signing the agreements does not necessarily mean they cannot be
biased by the agreements’ terms. The witnesses are direct or indirect
owners of Clear Imaging and Horizon Imaging, so it is not “clearly
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erroneous” to conclude that the terms of the settlements with those
companies might influence the witnesses, even if the witnesses and
their
counsel
were
not
involved
in
crafting
the
settlements.
“[S]ettlement agreements frequently are found to be discoverable in
order to allow the requesting party to explore these issues [of bias and
credibility] with respect to witnesses.” Wagner v. Mastiffs, No. 2:08-cv431, 2013 U.S. Dist. LEXIS 68349, at *18 (S.D. Ohio May 14, 2013).
Evidence is “relevant” to a party’s claim or defense if it has “any
tendency to make the existence of any fact that is of consequence to the
determination of the action more probable or less probable than it
would be without the evidence.” See Bowman v. Skyview Apts., No.
3:07-0417, 2008 U.S. Dist. LEXIS 119580, at *2 (M.D. Tenn. Sep. 3,
2008) (citing Fed. R. Civ. P. 26(b)(1) and Fed. R. Evid. 401). Even if it
turns out not to be particularly probative, defendant DeSanto is entitled
to see whether the agreements with Clear Imaging and Horizon
Imaging might bias the direct and indirect owners, at least some of
whom are likely to be witnesses in this case.
The Court finds that the Magistrate Judge did not commit clear
error in finding that the settlement agreements may be relevant to
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witness bias, and therefore does not need to address whether the
agreements are relevant in the parallel state court litigation or whether
they are relevant to damages.
Plaintiff also argues that the Magistrate Judge’s decision not to
conduct an in camera review of the settlement agreements is contrary
to law.
(Dkt. 155 at 14-15.)
But plaintiff only argues that the
Magistrate Judge “ignored the numerous cases cited by [plaintiff] where
a court exercised its discretion in conducting in camera inspections of
discovery documents for relevance.” (Id. at 15.) The Magistrate Judge’s
decision not to exercise its discretion as other courts have done is not by
default an abuse of discretion, i.e., contrary to law. As set forth in the
Magistrate Judge’s order, the reviewing court might not glean “the
practical and legal effects of the agreement” in the same manner as the
lawyers. (Dkt. 155 at 8 (citing Gardiner v. Kelowna Flightcraft, LTD,
No. 2:10-cv-947, 2011 U.S. Dist. LEXIS 55331, at *6 (S.D. Ohio May 23,
2011).) Without more, the Court denies plaintiff’s objection.
IV.
Conclusion
For the reasons set forth above, plaintiff’s objections to the order
on the motion to compel (Dkt. 157) is DENIED.
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The Magistrate Judge’s order granting defendant DeSanto’s
motion to compel (Dkt. 155) is ADOPTED.
IT IS SO ORDERED.
Dated: November 18, 2016
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on November 18, 2016.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager
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