White v. Kenneth Warren & Son, Ltd.

203 F.R.D. 364, 2001 U.S. Dist. LEXIS 16994, 2001 WL 1246792
District Court, N.D. Illinois·Decided October 17, 2001·No. No. 99 C 1740·Published·Cited by 20 cases

Opinion

MEMORANDUM OPINION AND ORDER

MORTON DENLOW, United States Magistrate Judge.

This case presents the issue of whether a settlement agreement, its accompanying documents and negotiation documents between a plaintiff and a former defendant are discoverable by a co-defendant. This Court holds the settlement agreement and related agreements, if any, are discoverable pursuant to a protective order; however, any documents or [366]*366discovery directed to the settlement negotiations are not to be produced.

I. BACKGROUND FACTS

Plaintiffs are the executors of the Estate of Gerald Segelman. Segelman, a resident of London, England, died in 1992, leaving a collection of classic violins in his estate. Plaintiffs retained Peter Biddulph, an international violin dealer, to sell the estate’s musical instruments. Biddulph sold a portion of the estate’s instruments to the three defendants in this litigation, Kenneth Warren & Son, Ltd., (“Warren”), Bein & Fushi, Inc. (“B & F”) and Howard Gottlieb (“Gottlieb”). Warren and B & F are dealers of classical violins. Gottlieb is an accomplished concert violinist.

Plaintiffs allege that Warren, B & F and Gottlieb conspired to purchase certain classical violins from Biddulph and one another at a price substantially below market value. Plaintiffs seek to recover the difference between what they believe was the true value of the instruments and the amounts for which the instruments were actually sold. There is some overlap in the instruments involving the defendants. The defendants deny any wrongdoing.

On June 5, 2001, Judge Wayne R. Andersen granted the joint motion of Plaintiffs and Gottlieb to dismiss the complaint against Gottlieb with prejudice. As a result, Gottlieb is no longer a party to this lawsuit. Warren served Plaintiffs with a second request for production of documents which seeks the production of:

Any and all documents, including any and all settlement agreements, releases, contracts, correspondence or any other documents of any kind whatsoever, related to the settlement reached between Howard Gottlieb and the plaintiffs with respect to this lawsuit. (Second Request, ¶ 1).

Gottlieb has refused to produce any documents responsive to the request. Warren has filed a motion to compel which B & F has joined. Oral argument was held on September 24, 2001. A protective order governing this litigation was previously entered by Judge Andersen. Gottlieb has provided the Court with in camera copies of the documents giving rise to Gottlieb’s dismissal.

II. MOTION TO COMPEL

To determine whether Warren is entitled to disclosure of the requested 'documents, this Court will examine the competing interests involved in allowing liberal discovery and promoting settlements to analyze how these principles can be harmonized.

A. DISCOVERY PRINCIPLES

Liberal discovery is permitted in federal courts to encourage full disclosure before trial. Federal Rule of Civil Procedure 26(b)(1) states:

Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge 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.

For the purpose of discovery, relevancy will be construed broadly to encompass “any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 2389, 57 L.Ed.2d 253 (1978). Relevancy for discovery is flexible and has a broader meaning than admissibility at trial. See Eggleston v. Chicago Journeymen Plumbers’ Local Union No. 130, U.A., 657 F.2d 890, 903 (7th Cir.1981).

Warren argues that the settlement documents are relevant to the claim against it and should be produced for several important reasons. First, Warren asserts the settlement is relevant because it may reduce Warren’s potential liability because there is an overlap of claims by Plaintiffs against Gottlieb and Warren. For example, a portion of Warren’s alleged liability is premised [367]*367upon Plaintiffs’ assertions that Warren undervalued certain instruments that were subsequently purchased by Gottlieb. Courts have allowed discovery of settlement documents in order to allow parties to ascertain the extent of their liability. U.S. Equal Employment Opportunity Commission v. Rush Prudential Health Plans, 1998 WL 156718 (N.D.Ill.1998). See also Bennett v. La Pere, 112 F.R.D. 136 (D.R.I.1986).

■ In EEOC v. Rush, the EEOC filed a motion to compel the production of documents relating to a settlement agreement between the intervening plaintiff and the defendant. Id. at 1. The EEOC argued that the amount was relevant to its analysis of whether it should continue the litigation in the public interest. Id. This Court found that discovery of the settlement was important to the EEOC for the purpose of determining settlement and litigation strategy. Id. at 2. Discovery requests for settlement agreements were analogized to the disclosure of insurance coverage required by Federal Rule of Civil Procedure 26(a)(1)(D), which provides for mandatory initial disclosure of insurance that may satisfy all or part of a judgment. In notes to the amendment that now permits disclosure, the Advisory Committee found that “ [disclosure of insurance coverage will enable counsel for 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 to 1970 Amendment, Subdivison (b)(2). Similarly, the discovery of any settlement agreement between Gottlieb and Plaintiffs would allow Warren to enter into settlement negotiations and formulate a litigation strategy without speculating as to whether its potential liability has been partially satisfied. This level of certainty is important because “the remaining defendant should not be left to grope blindly in the dark.” Bennett 112 F.R.D. at 141.

In addition, the discovery could foster settlement talks, which in turn promotes judicial economy. For example, in a claim for $1,000,000 involving overlapping claims against multiple defendants, the fact that one defendant has settled for $0, $100,000 or $750,000 has great strategic significance to the remaining defendants.

Free access — add to your briefcase to read the full text and ask questions with AI

White v. Kenneth Warren & Son, Ltd., 203 F.R.D. 364, 2001 U.S. Dist. LEXIS 16994, 2001 WL 1246792 (N.D. Ill. 2001).

203 F.R.D. 364 (White v. Kenneth Warren & Son, Ltd.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Griffin v. City of Chicago
N.D. Illinois, 2024
Anaya v. Birck
N.D. Illinois, 2022
Burke v. Regalado
935 F.3d 960 (Tenth Circuit, 2019)
Jo Ann Howard & Associates, P.C. v. Cassity
303 F.R.D. 539 (E.D. Missouri, 2014)
United States ex rel. Baltazar v. Warden
302 F.R.D. 256 (N.D. Illinois, 2014)
Matthew v. Laudamiel
Court of Chancery of Delaware, 2014
In Re Enron Corp. Securities
623 F. Supp. 2d 798 (S.D. Texas, 2009)
Wrangen v. Pennsylvania Lumbermans Mutual Insurance
593 F. Supp. 2d 1273 (S.D. Florida, 2008)
Milinazzo v. State Farm Insurance
247 F.R.D. 691 (S.D. Florida, 2007)
Sanyo Laser Products, Inc. v. Arista Records, Inc.
214 F.R.D. 496 (S.D. Indiana, 2003)
Chavez v. Daimlerchrysler Corp.
206 F.R.D. 615 (S.D. Indiana, 2002)
Cano v. Davis
193 F. Supp. 2d 1177 (C.D. California, 2002)
Graham v. Casey's General Stores
206 F.R.D. 251 (S.D. Indiana, 2002)