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State Farm Mutual Automobile Insurance Co. v. Universal Health Group, Inc.

United States District Court, E.D. Michigan, Southern Division

November 18, 2016

State Farm Mutual Automobile Insurance Company, Plaintiff,
v.
Universal Health Group, Inc., et al., Defendants.

          David R. Grand Mag. Judge.

          OPINION AND ORDER DENYING PLAINTIFF'S OBJECTIONS [157] TO MAGISTRATE JUDGE'S ORDER GRANTING MOTION TO COMPEL PRODUCTION OF SETTLEMENT AGREEMENTS BETWEEN PLAINTIFF AND CLEAR IMAGING, LLC AND HORIZON IMAGING, LLC [1551

          JUDITH E. LEVY United States District Judge.

         This Court referred defendant Joseph F. DeSanto's September 16, 2016 motion to compel (Dkt. 141) to the Magistrate Judge. Defendant DeSanto's motion sought the production of settlement agreements executed between plaintiff State Farm Mutual Automobile Ins. Co. and former defendants Clear Imaging, LLC and Horizon Imaging, LLC, which were dismissed from the case on April 1, 2016, pursuant to a stipulated order among the settling parties. (Dkt. 134.) The Magistrate Judge granted defendant DeSanto's motion to compel (Dkt. 155), and plaintiff filed the objections at issue here on November 11, 2016. (Dkt. 157.) For the reasons set forth below, plaintiffs objections are denied, and the Magistrate Judge's order stands.

         I. Background

         The Court has reviewed and adopts the background as described in the Magistrate Judge's opinion and order (Dkt. 155), in addition to what is written below.

         Plaintiff reached a settlement with defendants Clear Imaging and Horizon Imaging on March 21, 2016, and a stipulated order dismissing the claims as to those defendants was entered on April 1, 2016. (Dkt. 157 at 5; see Dkt. 134.) On May 13, 2016, defendant DeSanto served plaintiff with a discovery request seeking "all settlement agreements, and related documents, entered into between [plaintiff] and any [d]efendant(s) in this matter." (Dkt. 157 at 5; see Dkt. 141.)

         Plaintiff objected to the request and thus did not produce the documents, so defendant DeSanto filed a motion to compel, seeking the Clear Imaging and Horizon Imaging settlement agreements with plaintiff.[1] (Dkt. 141.) Defendant DeSanto argued that the agreements are non-privileged and relevant, and thus discoverable, because they may bias the testimony of multiple key witnesses, and also because they will help defendant DeSanto calculate potential liability. (Dkt. 141 at 14-17.) The Magistrate Judge granted the motion to compel, finding that the settlement agreements are relevant to possible witness bias and to potential liability or damages, and declining to review them in camera. (Dkt. 155 at 4-10.)

         Plaintiff filed objections, arguing that the Magistrate Judge's decision is clearly erroneous and contrary to law. (Dkt. 157.) According to plaintiff, the settlement agreements are irrelevant to the question of bias, because neither the witnesses whose testimony is at issue nor their counsel were at all involved in crafting or signing the agreements. (Id. at 10-13.) Plaintiff also argues that the agreements are only relevant to ongoing parallel state court litigation, in which the receivables from Clear Imaging and Horizon Imaging are at issue. (Id. at 13-14.)

         Plaintiff also argues that the Magistrate Judge's decision not to conduct an in camera review of the settlement agreements is contrary to law. Plaintiff cites cases in which "a court exercised its discretion in conducting in camera inspections of discovery documents for relevance." (Id. at 14-15.)

         II. Standard

         A magistrate judge's nondispositive order is reviewed for clear error. 28 U.S.C. § 636(b)(1)(A) ("A judge of the court may reconsider any [nondispositive] pretrial matter . . . where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law."); see Vogel v. U.S. Office Prods. Co., 258 F.3d 509, 515 (6th Cir. 2001). A magistrate judge's decision is clearly erroneous "when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).

         III. Analysis

         The terms of a settlement agreement, even when marked confidential, are not protected from discovery by privilege. State Farm Mut. Auto. Ins. Co. v. Physiomatrix, Inc., No. 12-cv-11500, 2014 U.S. Dist. LEXIS 184665, at *4-5 (E.D. Mich. Apr. 24, 2014) (citing Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 981 (6th Cir. 2003)). The only constraint is whether, under Ruled 26 of the Federal Rules of Civil Procedure, the material "is relevant to any party's claim or defense and proportional to the needs of the case." Fed.R.Civ.P. 26(b)(1); see Physiomatrix, Inc., 2014 U.S. Dist. LEXIS 184665, at *2.

         Plaintiff argues that the Magistrate Judge committed clear error by finding that the agreements are relevant, because the witnesses whose testimony is at issue and their counsel did not participate in ...


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