Gaedeke Holdings VII LTD et al v. Thrower et al

Filing 588

ORDER granting 584 Defendants' Motion to Compel Discovery from Plaintiff (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 5/27/2015. (ks)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
GAEDEKE HOLDINGS VII, LTD., and
GAEDEKE OIL & GAS OPERATING,
LLC,
Plaintiffs,
vs.
DAVID MILLS, et al.,
Defendants.

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Case No. CIV-11-649-M

ORDER
Before the Court is defendants Todd Baker, Landon Speed, and Baker Petroleum and
Investments, Inc.’s (collectively, “Defendants”) Motion to Compel Discovery from Plaintiff, filed
April 17, 2015. On May 8, 2015, Plaintiffs filed their response, and on May 13, 2015, Defendants
filed their reply. Based upon the parties’ submissions, the Court makes its determination.
I.

Introduction
On November 17, 2014, Defendants mailed their third set of interrogatories and requests for

production of documents to Plaintiffs, in care of their attorneys. On January 12, 2015, Defendants
received Plaintiffs’ discovery responses. After reviewing Plaintiffs’ responses, Defendants’ counsel
requested a conference with Plaintiffs’ counsel to discuss their alleged deficiencies. The parties
were able to resolve certain discovery issues, but not all discovery issues. As a result, Defendants
now move this Court for an order compelling Plaintiffs to fully answer interrogatories 1, 2, 4, 9 and
10 and to respond to requests for production nos. 1, 2, 3, 4, 7, and 9.1

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These discovery requests can be grouped into two general areas of inquiry: (1) Plaintiffs’
settlement agreements with other entities which Plaintiffs claimed misappropriated the Sales
Brochure at issue in this case, and (2) Plaintiffs’ claimed damages.

II.

Discussion
Federal Rule of Civil Procedure 26(b)(1) provides, in pertinent part:
Unless otherwise limited by court order, the scope of discovery is as
follows: Parties may obtain discovery regarding any nonprivileged
matter that is relevant to any party’s claim or defense – including the
existence, description, nature, custody, condition, and location of any
documents or other tangible things and the identity and location of
persons who know of any discoverable matter. For good cause, the
court may order discovery of any matter relevant to the subject matter
involved in the action. Relevant information need not be admissible
at the trial if the discovery appears reasonably calculated to lead to
the discovery of admissible evidence.

Fed. R. Civ. P. 26(b)(1).
A.

Settlement Agreements

In interrogatories 1, 2, and 4, Defendants ask Plaintiffs to describe in detail the terms of the
settlement agreement between Plaintiffs and Mayhem Oil & Gas, Inc., the terms of the settlement
agreement between Plaintiffs and the defendants in Gaedeke v. Shawn P. Hannifin, et al., Case No.
CIV-14-586-M, and the terms of a settlement between Plaintiffs and any defendant, including Steven
Ellsworth, in Gaedeke v. Ellsworth, Case No. 3:13-CV-04178-L (N.D. Tex.). Requests for
production nos. 1, 2, 3, 4, and 7 seek copies of the above-referenced settlement agreements.
Defendants contend these settlement agreements are discoverable because Defendants need to know
how the settlements limit their potential liability in damages, as Plaintiffs have claimed the
defendants in this case, including Mayhem Oil & Gas, Inc., are jointly and severally liable for all
damages, as well as any perceived unjust enrichment. Additionally, Defendants contend they are
entitled to discover the settlement agreements to ascertain whether there is evidence of a quid pro
quo between Plaintiffs and any settling party who may be a witness in this case. Further, Defendants
assert that the settlement agreements may expose the bias or prejudice of the settling parties as
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witnesses, whether or not they were defendants in this lawsuit, and, thus, the settlement agreements
are discoverable.
In response, Plaintiffs state that they agreed to keep confidential the terms of each of the
three settlement agreements sought by Defendants, and Plaintiffs want to honor that agreement.
Additionally, Plaintiffs assert that Defendants’ discovery requests are premature because the amount
of any offset will only come up post-trial, if Plaintiffs obtain a damages judgment, and at that time,
the Court can consider whether or not to order Plaintiffs to violate the confidentiality provisions of
its agreements. In their response, Plaintiffs do not respond to Defendants’ assertion that the
settlement agreements are discoverable in relation to any bias or prejudice of the settling parties as
witnesses.
Numerous courts have found that settlement agreements are discoverable.

Further,

settlement agreements “are not shielded from discovery merely because they are confidential.”
DirectTV, Inc. v. Puccinelli, 224 F.R.D. 677, 685 (D. Kan. 2004). Additionally, courts have found
that settlement agreements and information regarding their terms are relevant and discoverable
because they may establish the bias or prejudice of witnesses. See Heartland Surgical Specialty
Hosp., LLC v. Midwest Div., Inc., No. 05-2164-MLB-DWB, 2007 WL 1246216, at *4-5 (D. Kan.
Apr. 27, 2007); DirectTV, 224 F.R.D. at 684; In re CFS-Related Sec. Fraud Litig., Nos. 99-CV-825K(J), 00-CV-111-K(J), 99-CV-874-K(J), 00-CV-110-K(J), 99-CV-889-K(J), 00-CV-847-K(J), 02CV-961-K(J), 2003 WL 24136089 (N.D. Okla. July 31, 2003); White v. Kenneth Warren & Son,
Ltd., 203 F.R.D. 364, 367 (N.D. Ill. 2001). Courts have also found that settlement agreements are
relevant and discoverable in order to allow parties to ascertain the extent of their liability. See
Barclay v. Gressit, No. 2:12-cv-156-JHR, 2013 WL 3819937, at *3 (D. Me. July 24, 2013);

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Heartland, 2007 WL 1249216, at *4-5; White, 203 F.R.D. at 367 (finding that discovery of
settlement agreement would allow remaining defendant to formulate litigation strategy without
speculating as to whether its potential liability has been partially satisfied, and “this level of
certainty is important because the remaining defendant should not be left to grope blindly in the
dark”).
Having carefully reviewed the parties’ submissions, the Court finds that the settlement
agreements Defendants are seeking are relevant and discoverable. Specifically, the Court finds that
the settlement agreements are relevant because they may establish the bias or prejudice of witnesses
and are discoverable, in light of Plaintiffs’ allegations of joint and several liability, in order to allow
Defendants to ascertain the extent of their liability. The Court also finds the fact the parties to the
settlement agreements agreed to keep confidential the terms of the settlement agreements does not
bar discovery of them by Defendants. The Court finds any issues regarding confidentiality will be
adequately protected by the attorneys-eyes-only protective order which is already in place in this
case. Accordingly, the Court finds that Plaintiffs should be compelled to respond to interrogatories
1, 2, and 4 and requests for production nos. 1, 2, 3, 4, and 7.
B.

Plaintiffs’ Claimed Damages

Interrogatory 9 requests Plaintiffs to identify each and every cost incurred by each Plaintiff
in creating or compiling the Sales Brochure/Geological Study which is the subject of this lawsuit.
Interrogatory 10 requests Plaintiffs to identify all damages they claim to have sustained as the result
of any act or omission by Defendants. Finally, request for production no. 9 requests Plaintiffs to
produce a copy of each and every document supporting their claim for damages, including but not
limited to all documents evidencing a cost incurred by either Plaintiff in the creation or compilation

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of the Sales Brochure/Geological Study. In response, Plaintiffs referenced the entire trial testimony
of Mark Reed, certain exhibits introduced at the trial, and the report of Dr. Keith R. Ugone. In their
response to Defendants’ motion to compel, Plaintiffs, in essence, answer the discovery requests and
note that they have hired a new damages expert to further refine their damages calculation and the
expert’s report will be provided to Defendants by the July 1, 2015 deadline.
Having carefully reviewed the parties’ submissions, the Court finds that Plaintiffs cannot
simply rely upon their attorneys’ explanation set forth in their response to Defendants’ motion to
compel but must provide Defendants a verified response to their discovery requests. Additionally,
the Court finds that Plaintiffs cannot cite to the entirety of Mr. Reed’s testimony but must provide
specific information as it did in its response. Further, the Court finds that Plaintiffs’ responses to
these discovery requests can be supplemented by any expert report provided to Defendants by the
July 1, 2015 deadline.
III.

Conclusion
Accordingly, for the reasons set forth above, the Court GRANTS Defendants’ Motion to

Compel Discovery from Plaintiff [docket no. 584] and ORDERS Plaintiffs to fully and completely
answer interrogatories 1, 2, 4, 9, and 10 and respond to requests for production 1, 2, 3, 4, 7, and 9.2
Plaintiffs shall provide their answers/responses to Defendants on or before June 9, 2015.
IT IS SO ORDERED this 27th day of May, 2015.

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Plaintiffs’ responses to the discovery requests regarding settlement agreements shall be
produced to Defendants in accordance with the attorneys-eyes-only protective order which is already
in place in this case.
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