Blount v. Major, et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that the motion of defendants to compel production of the terms of the settlement agreement (ECF No. 115 ) is SUSTAINED. The only terms required to be disclosed are those related to witness testimony and the settlement amounts paid, including the disbursement of net proceeds to plaintiff after the deduction of attorneys' fees and costs. Plaintiff must produce the requested information not later than November 18, 2016.IT IS FURTHER ORDERED tha t dismissed defendants' motions for protective orders (ECF Nos. 116 and 119 ) are SUSTAINED, in that the settlement terms must be produced under seal for Attorneys' Eyes Only and under any other condition (s) agreed to by the parties. I T IS FURTHER ORDERED that a status conference is set for December 6, 2016, at 9:30 a.m. ( Response to Court due by 11/18/2016., Status Conference set for 12/6/2016 09:30 AM in Courtroom 17N before Magistrate Judge David D. Noce.) Signed by Magistrate Judge David D. Noce on 11/1/2016. (CLO)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
JAMES P. BLOUNT
KEITH S. MAJOR, et al.
No. 4:15 CV 322 DDN
MEMORANDUM AND ORDER
This action is before the court on the motion of defendants Matthew Miller, Albert
Napier, and Zachary Nicholay to compel discovery. (ECF No. 115).
defendants Miller, Napier, and Nicholay seek to compel plaintiff to disclose the terms of
the settlement agreements he made with defendants dismissed from this case. The court
heard oral argument on September 21, 2016.
On March 16, 2015, plaintiff James P. Blount filed his First Amended Complaint
before this court, naming Casino One Corporation, Ezell Cody, Hudson Services,
Matthew Harmon, Keith Major, Matthew Miller, Albert Napier, and Zachary Nicholay,
Nicholas Shelton, and Erich VonNida, among others, as defendants. (ECF No. 41). In
their responsive pleadings, defendants Miller, Napier, and Nicholay each pled set-off as
an affirmative defense to plaintiff’s claims:
If a defendant or another party or entity makes a settlement with Plaintiff, or if
Plaintiff receives anything of value from any party, individual or entity, the
amount of such payment or consideration should be treated as a payment in full
satisfaction of the damages of Plaintiff, or in the alternative, that the amount of
such payment or consideration should be a set off against any judgment that may
be entered herein.
(ECF Nos. 28 at 14; 29 at 14; 53 at 16; 54 at 26; and 55 at 26). On August 31, 2016,
plaintiff filed a motion to dismiss the following defendants with prejudice, pursuant to
one or more settlement agreements: Casino One Corporation, Ezell Cody, Hudson
Services, Matthew Harmon, Keith Major, Nicholas Shelton, and Erich VonNida. (ECF
No. 111). On September 16, 2016, plaintiff made a settlement demand of defendants
Miller, Napier, and Nicolay. Remaining defendants Miller, Napier, and Nicolay have
requested the terms of the settlement agreements. Plaintiff has resisted production on the
grounds that (1) the settlement agreements contain confidentiality clauses and (2) the
agreements are not relevant to a pre-judgment defense of set-off. The parties have
conferred in good faith, and plaintiff now moves to compel the disclosure of the
II. LEGAL STANDARD
Federal Rule of Civil Procedure 26 allows for the discovery of any “nonprivileged
matter that is relevant to any party’s claim or defense and proportional to the needs of the
case.” Fed. R. Civ. P. 26(b)(1). Plaintiff has not claimed privilege as a protection from
discovery. A concern for protecting confidentiality does not equate to privilege, and
several courts have found that settlement agreements are not shielded from discovery
simply because they are confidential. See, e.g., Transp. All. Bank, Inc. v. Arrow Trucking
Co., 2011 WL 4964034, at *1-2 (N.D. Okla. Oct. 19, 2011); Heartland Surgical Specialty
Hosp., LLC v. Midwest Div., Inc., No. 05-2164-MLB-DWB, 2007 WL 1246216, at *5 (D.
Kan. Apr. 27, 2007); Cadmus Commc'ns Corp. v. Goldman, 2006 WL 3359491, at *3-4
(W.D.N.C. Nov. 17, 2006); DIRECTV, Inc. v. Puccinelli, 224 F.R.D. 677, 684 (D. Kan.
2004); Bennett v. La Pere, 112 F.R.D. 136, 140 (D.R.I. 1986).
The cardinal question, therefore, is whether the terms of the settlement agreements
are relevant to this lawsuit. “Relevancy is broadly construed, and a request for discovery
should be considered relevant if there is any possibility that the information sought may
be relevant to the claim or defense of any party.” Puccinelli, 224 F.R.D. at 684 (citations
omitted). The party seeking discovery must make a threshold showing of relevance,
Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1992), at which time the party
resisting discovery “must demonstrate to the court that the requested documents either do
not come within the broad scope of relevance defined pursuant to Fed. R. Civ. P. 26(b)(1)
or else are of such marginal relevance that the potential harm occasioned by discovery
would outweigh the ordinary presumption in favor of broad disclosure.” Frey v. Fed.
Reserve Bank of St. Louis, No. 4:15 CV 737 CEJ, 2015 WL 8276932, at *2 (E.D. Mo.
Dec. 8, 2015) (citations omitted). Evidence need not be admissible to be discoverable.
Fed. R. Civ. P. 26(b)(1).
Defendants Miller, Napier, and Nicolay contend that plaintiff’s settlement amount
is critically important to their affirmative defense of set-off, and some or all of the
settlement may set off any claim against them, as provided by Mo. Rev. Stat. § 537.060.
They also argue that the settlement amount is discoverable to show what, if any, damages
plaintiff may still allege, as well as the defendants’ ability to respond to plaintiff’s
September 16, 2016 settlement demand. They assert that without this information, they
are unable to properly evaluate the demand. Finally, they argue that disclosure of the
settlement is necessary to evaluate witness bias.
Plaintiff responds that the set-off
defense applies only to judgments, not settlements, and compelling plaintiff to disclose
terms of the settlement would have a chilling effect on settlement negotiations.
Missouri’s contribution statute provides in part:
Defendants in a judgment founded on an action for the redress of a private wrong
shall be subject to contribution, and all other consequences of such judgment, in
the same manner and to the same extent as defendants in a judgment in an action
founded on contract.
Mo. Rev. Stat. § 537.060. This statute, and defendants’ set-off defense, is predicated on
the court issuing a judgment. The court agrees that defendants cannot invoke set-off
prior to a trial and its ensuing judgment.
However, this does not mean that the settlement amount is not relevant for
discovery purposes. Defendants have noted that that this amount will be helpful for them
in responding to a pending settlement demand and in evaluating the bias and credibility
of any dismissed defendant witnesses. Additionally, while set-off is a post-judgment
defense, knowing the amount plaintiff has already received will surely impact the
defendants’ strategy as they prepare for trial and any potential judgment against them.
Rule 26 does not distinguish between post-judgment and pre-judgment defenses in its
delineation of the scope of discoverable information. See Fed. R. Civ. P. 26(b)(1);
Gaedeke Holdings VII, Ltd. V. Mills, 2015 WL 3440222 *2 (W.D. Okla. 2015).
In granting a motion to compel, the Northern District of Illinois compared the
disclosure of a settlement amount for negotiation and litigation strategy purposes to the
pretrial disclosure of insurance coverage required by the federal rules. U.S. E.E.O.C. v.
Rush Prudential Health Plans, 1998 WL 156718, at *3 (N.D. Ill. Mar. 31, 1998). It cited
the advisory committee’s note to Fed. R. Civ. P. 26, which provides that “disclosure will
enable both sides to make the same realistic appraisal of the case, so that settlement and
litigation strategy are based on knowledge and not speculation.” Fed. R. Civ. P. 26
advisory committee’s note. The court finds that the settlement agreements defendants are
seeking are relevant and discoverable. They may establish the bias of witnesses, allow
defendants to ascertain the extent of their liability, and inform the defendants’ set-off
defense and settlement and litigation strategies.
Finally, while the court is sensitive to plaintiff’s desire to keep his confidentiality
agreement, it notes that the defendants with whom plaintiff settled have requested a
protective order limiting disclosure of the terms of the settlement agreement, putting the
terms under seal, and designating the terms for “attorneys’ eyes only.” (ECF Nos. 116, ¶
5; 119, ¶ 7). The court will sustain these requests. The court grants defendants’ motion
to compel, but limits the disclosure of the terms of the settlement only to those provisions
related to witness testimony and the settlement amounts paid, including the disbursement
of net proceeds to plaintiff after the deduction of attorneys’ fees and costs. Any issues
regarding confidentiality will be adequately protected by the attorneys-eyes-only
For the reasons stated above, unless otherwise agreed by the parties,
IT IS HEREBY ORDERED that the motion of defendants to compel production
of the terms of the settlement agreement (ECF No. 115) is SUSTAINED. The only
terms required to be disclosed are those related to witness testimony and the settlement
amounts paid, including the disbursement of net proceeds to plaintiff after the deduction
of attorneys’ fees and costs. Plaintiff must produce the requested information not later
than November 18, 2016.
IT IS FURTHER ORDERED that dismissed defendants’ motions for protective
orders (ECF Nos. 116 and 119) are SUSTAINED, in that the settlement terms must be
produced under seal for “Attorneys’ Eyes Only” and under any other condition(s) agreed
to by the parties.
IT IS FURTHER ORDERED that a status conference is set for December 6,
2016, at 9:30 a.m.
/S/ David D. Noce
UNITED STATES MAGISTRATE JUDGE
Signed on November 1, 2016.
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