Friday, December 20, 2013
Litigation Happens Over Coffee: Northern District of California Finds No Settlement Privilege in Class Action Against Starbucks
Following up on yesterday's post today I wanted to post an entry that deals directly with the question of whether Federal Rule of Evidence 408 creates a federal settlement privilege. To answer that question, let's take a look at Vondersaar v. Starbucks Corp., 2013 WL 1915746 (N.D.Cal. 2013), a putative class action against the coffee chain.
In Vondersaar, Timothy Vondersaar brought a putative class action against Starbucks. The action alleged that the height of the hand-off counters at certain Starbucks stores in California violated the Americans with Disabilities Act. Previously,
attorneys from Disability Rights Advocates ("DRA") made substantially similar allegations about the height of California Starbucks hand-off counters, and threatened to bring a lawsuit. As a result, the parties entered into settlement talks and eventually reached a settlement agreement. Vondersaar believes that this settlement agreement included promises to change the height of the hand-off counters at some, but not all, Starbucks stores in California.
Vondersaar issued subpoenas to DRA and one of its attorneys, Larry Paradis. The document subpoenas requested "[a]ll documents regarding litigation or contemplated litigation with Starbucks Corporation, including...settlement agreements," and the deposition subpoena requested testimony regarding "[a]ll matters you have been involved in that concerned the height of counters at Starbucks locations."
When Vondersaar later served Starbucks notice of the third party subpoenas, the coffee chain to moved "to quash the subpoenas, arguing that they were improperly noticed and seek information protected under a 'settlement privilege.'"
In response, the Northern District of California began by noting that "[o]ther courts, including courts in this district, have held that there is no federal privilege preventing the discovery of settlement discussions." The court then held that
Federal Rule of Evidence 408 provides that evidence of conduct or statements made during settlement negotiations is “not admissible” when offered to prove liability; but such evidence maybe admitted when offered for other purposes, such as proving a witness's bias or prejudice....Thus, it is “plain that Congress chose to promote this goal [in Rule 408 to promote settlements] through limits on the admissibility of settlement material rather than limits on their discoverability. In fact, the Rule on its face contemplates that settlement documents may be used for several purposes at trial, making it unlikely that Congress anticipated that discovery into such documents would be impermissible.”...Moreover, the Advisory Committee Notes to Rule 408 contemplate the discovery of settlement materials, and warn against using admissibility to prevent discovery: “evidence, such as documents, is not rendered inadmissible merely because it is presented in the course of compromise negotiations if the evidence is otherwise discoverable. A party should not be able to immunize from admissibility documents otherwise discoverable merely by offering them in a compromise negotiation.” Fed.R.Evid. 408, advisory committee's note.
This analysis in turn led the court to conclude that it was
not persuaded that the public policy favoring settlements and the potential unreliability of statements at settlements is enough to create a federal settlement privilege. Congress struck its desired balance between encouraging settlements but allowing access to evidence in Rule 408 when it barred admissibility of settlement information to prove liability, but allowed it to prove other disputed facts. Moreover, the unreliability of evidence from settlement materials is more properly an admissibility or jury issue, not as a bar to discovery. The Ninth Circuit favors broad discovery, and settlement material may reasonably lead to persuasive or relevant evidence.