Summary
admonishing attorney for disclosing in summary judgment submissions confidential settlement communications from court-sponsored settlement conference
Summary of this case from Lee v. Grand Sichuan E. (N.Y.) Inc.Opinion
00 Civ. 8670 (LTS) (GWG)
October 23, 2003
OPINION AND ORDER
Background
On January 21, 2003, plaintiff E-Z Bowz, L.L.C. ("E-Z Bowz") filed a motion for partial summary judgment seeking to dismiss certain counterclaims filed by defendant Professional Product Research Co., Inc. ("PPR"). On February 6, 2003, PPR filed a brief in opposition to E-Z Bowz's motion. See Professional Product Research Co., Inc.'s Memorandum of Law in Opposition to the Several E-Z Bowz, L.L.C. Defendants' Motion for Summary Judgment, filed February 6, 2003 (Docket #120) ("PPR Mem."). In that brief, PPR disclosed a settlement offer purportedly made by E-Z Bowz during "Court-sponsored settlement discussions." PPR Mem. at 8 n. 14.
As reflected in an Order to Show Cause issued by this Court on September 5, 2003, the settlement discussions took place at a conference held before the undersigned on February 5, 2002. Prior to the conference, counsel for all parties were provided with a copy of this Court's standing order regarding settlement conferences. This Order states that "[a] 11 communications made as part of the conference process are strictly confidential." Standing Order In Cases Referred for Settlement to Magistrate Judge Gabriel W. Gorenstein ¶ 1. The Court noted in its Order to Show Cause that, even in the absence of such a directive, offers of settlement are inadmissible under Fed.R.Evid. 408 and are therefore inadmissible under Fed.R.Civ.P. 56(e).
As a result, PPR was ordered to show cause why a sanction should not be imposed for referring to the purported settlement offer in the brief it filed with this Court. Such sanctions have been imposed in other instances where litigants revealed settlement offers made during court-sponsored discussions. See, e.g., Bernard v. Galen Group, Inc., 901 F. Supp. 778, 782-84 (S.D.N.Y. 1995). PPR submitted a brief and a declaration of one of its attorneys in response to the Order to Show Cause, See Professional Product Research Co., Inc/s Memorandum in Response to Order to Show Cause, dated September 29, 2003 ("PPR OSC Mem."); Declaration of Christopher M. Collins, dated September 27, 2003 ("Collins Decl."). Discussion
PPR filed its submissions under seal, invoking the Protective Order on Consent issued in this matter on April 26, 2002 (Docket #79). In fact, the submissions contain no "trade secret or other confidential research, development, or commercial information." Protective Order on Consent, ¶ 2. Nor do they contain material otherwise protectable under Fed.R.Civ.P. 26(c). Accordingly, these items, filed together as Docket #173 on September 29, 2003, are ordered unsealed.
PPR makes several arguments in an attempt to excuse its conduct. One of its arguments is that — apart from any constraints imposed by the Court's Order requiring confidentiality — the purported settlement offer is in fact admissible under Fed.R.Evid. 408 because it was not offered to prove the invalidity of E-Z Bowz's claim but for some other purpose allowable under Fed.R.Evid. 408. The Court will not adjudicate this issue, however, and thus — for purposes of this Opinion and Order only-will assume arguendo that PPR is correct in its contention. Accordingly, what remains to be determined is whether — independent of any arguments regarding admissibility under Rule 408-PPR violated the Court's Order directing that "[a]ll communications made as part of the conference process are strictly confidential." PPR has two arguments on this score.
Nonetheless, it is strange that PPR would not have set forth this allegedly admissible evidence in affidavit form (the only form permissible under Fed.R.Civ.P. 56(e)), rather than as an unsupported footnote in a memorandum of law. Also, PPR should have provided an explanation in the brief of why the existence of such an offer was admissible under Fed.R.Evid. 408.
First, PPR argues that its only error was that it mistakenly failed to request to have the memorandum of law sealed. PPR OSC Mem. at 4-6. It describes at length the various "reviews" that were undertaken at the firm of Stevens, Davis, Miller Mosher, L.L.P. to determine whether there was confidential information contained in its submissions to the Court. See Collins Decl. ¶¶ 7-14. The thrust of PPR's argument thus appears to be that had PPR merely filed the memorandum of law under seal, no violation of the Court's Order would have occurred.
This argument is meritless, however, because sealing would not have maintained the confidentiality of the purported settlement offer. At least one purpose of the Court's Order was to prevent a party's settlement offer from being made part of the record and hence available to the District Judge and to the judges of the United States Court of Appeals (or any other reviewing court). While PPR assumes that the undersigned would have recalled the purported offer even had it not been contained in the memorandum of law, this assumption does not alter the fact that these other judicial officers would have been unaware of the purported offer except for its disclosure by PPR in its brief. Obviously, even a statement in a sealed record is available to these judges and thus sealing would not have maintained the confidentiality of the purported settlement offer.
Second, PPR argues that the Court's Order did not prohibit its conduct because the Order stated only that the communications during settlement were "strictly confidential" without further elaboration. PPR OSC Mem. at 6-7. PPR argues that the phrase "strictly confidential" did not prevent PPR from "placing settlement information into evidence." Id. at 7. While this interpretation would appear to completely vitiate the Court's Order, it appears that PPR is arguing that the phrase "strictly confidential" prevented PPR only from making the purported offer known publicly (and thus that filing such information under seal would not have violated the Order).
But the Court's Order on this point-stating that "[a]ll communications made as part of the conference process are strictly confidential" — was worded broadly and comprehensively. The notion that this Order unambiguously gave PPR's attorneys leave to reveal the purported settlement offer in a Court filing is frivolous. While the Court's choice of language was perhaps open to claims of ambiguity from a clever practitioner (as is true for virtually any wording), the Court expects more of the attorneys who practice before it. It should have been obvious to an attorney faced with an order of this kind that settlement offers could not have been included in any filings with the Court, whether in a sealed record or not. In the unlikely event that an attorney believed some extraordinary basis existed for revealing the purported settlement offer, the attorney should have made an application to the Court for permission to do so. Any bona fide claim of ambiguity likewise could have been resolved by application to the Court.
In sum, the Court finds that PPR's counsel violated the Court's Standing Order In Cases Referred for Settlement. The Court concludes, however, that it is unnecessary to impose a financial sanction in order to deter PPR's counsel from engaging in this sort of conduct in the future. As a consequence, it is hereby ORDERED that PPR and the attorneys representing it — Stevens, Davis, Miller Mosher, L.L.P. of Washington, D.C., and Janvey, Gordon, Herlands, Randolph, Rosenberg Cox, L.L.P. of New York, New York — are admonished to adhere carefully in the future to this Court's and any other court's orders regarding the confidentiality of settlement discussions.