Gardiner v. Kelowna Flightcraft, Ltd

Filing 63

ORDER granting 42 Motion to Compel. However, the Court is mindful of the wishes of Plaintiff that the settlement agreement remain confidential. The parties are ORDERED to, w/in ten (10) days of the date of this order, prepare and submit to Magistr ate Judge Abel's chambers a draft protective order which will address the means by which the settlement agreement is to be kept confidential in this proceeding. Upon the Court's entry of protective order, Plaintiff is ORDERED to produce the settlement agreement she reached with Air Tahoma. Signed by Magistrate Judge Mark R. Abel on 05/23/2011. (sr)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Karen Gardiner,

:

v.
Kelowna Flightcraft, Ltd.,
Defendant

:

Civil Action 2:10-cv-947

:

Plaintiff

Judge Sargus

:

Magistrate Judge Abel

:
ORDER

This action arises out of a September 1, 2008 plane crash involving a Convair
FV-580 airplane owned and operated by nonparty Air Tahoma, Inc. (“Air Tahoma”).
Defendant Kelowna Flightcraft, Ltd. (“Kelowna”) is the Type Certificate Holder for
this airplane. Plaintiff previously brought suit against Air Tahoma, which had
performed the incorrect maintenance that caused the crash, and entered into an
out-of-court settlement.
Now before the Court is Kelowna’s motion pursuant to Fed. R. Civ. P. 37 to
compel Plaintiff to produce the confidential settlement agreement that she entered
into with Air Tahoma. (Doc. 42.) Kelowna argues that the settlement agreement,
and the settlement amount, are relevant to the question of damages in this case. If
the finder of fact should ultimately determine that Kelowna is liable for the
accident, Kelowna may be entitled under Ohio Revised Code §2307.28 to a damages
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setoff based upon Plaintiff’s earlier recovery from Air Tacoma. It also argues that it
is entitled to disclosure of the settlement agreement to determine whether there has
been collusion between the settling parties (i.e., whether the settlement is a Mary

Carter agreement), which may be relevant to the potential bias or prejudice of
witnesses at trial.
Plaintiff rejoins that the amount and nature of the settlement is relevant
only to the ultimate determination of damages in the event that a jury enters a
verdict against Kelowna, and that it is irrelevant to the claims Plaintiff has
brought. She invites the Court to examine the settlement agreement in camera to
determine for itself whether the agreement contains any collusive provisions.
Plaintiff also states that she must respect her contractual obligation with Air
Tahoma to maintain the confidentiality of the settlement.
In the first place, Plaintiff’s argument that she is contractually bound to keep
the settlement agreement confidential is not well taken. Plaintiff has not shown, or
even argued, that any recognizable privilege exists to cover the settlement
agreement, and contract cannot of itself create privilege. “Simply put, litigants may
not shield otherwise discoverable information from disclosure to others merely by
agreeing to maintain its confidentiality.” Oberthaler v. Ameristep Corp., 2010 WL
1506908 at *1 (N.D. Ohio Apr. 13, 2010). Parties can of course move for the entry of
protective orders to safeguard sensitive information, but application of a general
principle that confidential documents cannot be had in discovery would permit
litigants to create privilege at their whim.
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Furthermore, the Sixth Circuit Court of Appeals has recognized that
settlement agreements are not covered by the privilege applied to settlement
negotiations. Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d
976, 981 (6th Cir. 2003), citing Bank Brussels Lambert v. Chase Manhattan Bank,

N.A., 1996 WL 71507 at *6 (S.D.N.Y. Feb. 20, 1996). See also Grupo Condumex,
S.A. de C.V. v. SPX Corp., 331 F.Supp.2d 623, 629 (N.D. Ohio 2004) (existence of the
settlement and/or its terms generally not privileged), citing Goodyear, supra.
However, as one court applying Goodyear recognized:
It goes without saying, however, that a party seeking the discovery
still has the burden of proving that any settlement agreement sought
must contain information relevant to the claim or defense of any party
and must be either admissible at trial, or reasonably calculated to lead
to the discovery of admissible evidence.

Westlake Vinyls, Inc. v. Goodrich Corp., 2007 WL 1959168 at *3 fn 1 (W.D. Ky.
June 29, 2007).1 In Thomas & Marker Const. Co. v. Wal-Mart Stores, Inc., 2008 WL
3200642 (S.D. Ohio August 6, 2008), this court addressed a matter in which a
construction firm had been hired by a retailer to construct a store. When it was
discovered that extensive rock excavation would be required, the construction firm
sued the retailer for various claims, including failing to pay for project alterations,
and sued a subcontractor for failing to complete certain related work. Following the
close of discovery, the construction firm entered into a settlement agreement with

It is worthy of note that the courts in both Westlake Vinyls and Grupo
Condumex expressed misgivings with the propriety of the Goodyear rule as having
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failed to apply the controlling state’s law of privilege in a diversity case, but
maintained that they were bound by governing Sixth Circuit precedent.
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the subcontractor. The retailer sought to compel the production of the agreement,
on grounds that its terms might be relevant to the damages at issue and to the
credibility of witnesses at trial, and that it might be a discoverable Mary Carter
agreement. The construction firm rejoined that the agreement was not relevant to
any of the retailer’s counterclaims or defenses, and invited the Court to inspect the
agreement in camera to determine whether it was a Mary Carter agreement. The
Court declined to conduct an in camera inspection of a document for which no
privilege was claimed, and, applying the principle that relevance is to be broadly
construed when applying the discovery rule, found that the agreement may be
relevant to the retailer’s claims and defenses, to the credibility of witnesses at trial,
and to the question of whether the parties had entered into a Mary Carter
agreement. Id. at *3, citing Herbert v. Lando, 441 U.S. 153, 177 (1979).
Plaintiff has likewise here requested an in camera review of the settlement
agreement, conceding that potential witness bias could be relevant:
To shorten this response, Plaintiff will acknowledge that the various
other bases that Kelowna lists as potential grounds for the relevance of
the settlement agreement – collusion, witness bias, a Mary Carter
agreement – would be valid reasons to require production of the
document, if they existed in it. Of course, Plaintiff does not fault
Kelowna for speculating about the contents of a document it has not
seen, but notably, Kelowna cites nothing other than its speculation as
a basis for these potential grounds of relevance.
(Doc. 48 at 12, emphasis in original.) The Court will apply the same principles here
as it did in Thomas & Marker Const Co. It will not conduct the in camera review
Plaintiff requests. Despite Plaintiff’s insistence that the contract is not lengthy and

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would take little time for the Court to review, she asks that the Court make a
determination as to the practical and legal effect of the agreement (as opposed to
whether it is covered by some sort of privilege). The Court will not construe or
interpret a document without affording Kelowna its say. Instead, in keeping with
the principles of our adversarial legal system, it will compel the disclosure of the
document and permit the parties to dispute its meaning and significance.2
Accordingly, the motion to compel (Doc. 42) is GRANTED. However, the
Court is mindful of the wishes of Plaintiff (and of Air Tahoma) that the settlement
agreement remain confidential. The parties are ORDERED to, within ten (10) days
of the date of entry of this order, prepare and submit to my chambers a draft
protective order which will address the means by which the settlement agreement
is to be kept confidential in this proceeding (or, if the parties cannot agree, their
own separate drafts). Such protective order may, if the parties wish, cover
documents other than the settlement agreement. Upon the Court’s entry of such
protective order, Plaintiff is ORDERED to produce the settlement agreement she
reached with Air Tahoma.
Under the provisions of 28 U.S.C. §636(b)(1)(A), Rule 72(a), Fed. R. Civ. P.

The Court is also unpersuaded by Plaintiff’s insistence that the relevancy of
the settlement amount to an offset for damages is contingent upon the eventual
entry of a verdict. The cases Plaintiff cites originate from the federal district courts
of another circuit, and must necessarily be affected by the absence of the
jurisprudence of district courts guided here by Goodyear. The Court will follow
Oberthaler and Thomas & Marker Const Co. in finding the settlement agreement,
including the settlement amount stated, relevant at this stage of the proceeding.
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and Eastern Division Order No. 91-3, pt. F, 5, either party may, within fourteen
(14) days after this Order is filed, file and serve on the opposing party a motion for
reconsideration by the District Judge. The motion must specifically designate the
order, or part thereof, in question and the basis for any objection thereto. The
District Judge, upon consideration of the motion, shall set aside any part of this
Order found to be clearly erroneous or contrary to law.

s/Mark R. Abel
United States Magistrate Judge

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