394 F.Supp.3d 461
S.D.N.Y.2019Background
- Dispute arises from discovery in litigation over a failed restaurant investment; Hanford Holdings LLC (defendant) seeks settlement-related materials from prior litigation involving Watershed Ventures and others (collectively, Watershed).
- The prior matter produced a private settlement agreement containing a confidentiality clause; settlement discussions were not part of any court order and no court-ordered protective regime governed them.
- Watershed argued that the heightened three-part test from In re Teligent (special need; resulting unfairness; need outweighs confidentiality) should bar disclosure.
- Hanford argued the standard for discoverability is the usual Rule 26 relevancy/good-cause framework because no court promise of confidentiality exists.
- The court concluded that In re Teligent applies only when a court has promised confidentiality (e.g., court-ordered mediation protections); private agreements with confidentiality provisions are instead governed by Rule 26(c)’s good-cause standard.
- The court found Hanford showed relevance and Watershed failed to meet the burden to completely bar disclosure, but directed that the materials be produced subject to a protective order to limit public disclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the In re Teligent heightened three-part test governs discovery of private settlement communications/agreements not subject to a court order | In re Teligent should apply to private settlements and mediations; Hanford lacks a special or compelling need | The heightened test applies only when a court has promised confidentiality; absent that, Rule 26(c) good-cause standard governs | Court held In re Teligent applies only where a prior court promise of confidentiality exists; Rule 26(c) good-cause standard applies here |
| Whether a private confidentiality clause in a settlement agreement immunizes the agreement from discovery | Confidentiality clause should prevent disclosure under heightened protection | Private confidentiality clause does not preclude discovery; relevance and good cause govern | Court held private confidentiality provisions do not automatically shield materials; they are subject to discovery under Rule 26(c) |
| Whether Watershed met its burden to prevent disclosure entirely | Disclosure would harm privacy/interests of settling parties; sought complete protective order | Hanford demonstrated relevance; Watershed failed to show clearly defined, specific, serious harm warranting total nondisclosure | Court found Watershed did not meet burden to deny access entirely but established harm from public disclosure; materials to be produced under protective order |
| Proper scope of any protective measures | Broad protection required to preserve confidentiality | Narrow protection sufficient to allow use in litigation while limiting public dissemination | Court exercised discretion to limit public disclosure by making materials subject to the case protective order |
Key Cases Cited
- In re Teligent, Inc., 640 F.3d 53 (2d Cir. 2011) (articulates three-part test for disclosure of confidential mediation communications where a court promise of confidentiality exists)
- Gambale v. Deutsche Bank AG, 377 F.3d 133 (2d Cir. 2004) (party seeking protective order bears burden to show good cause)
- Dove v. Atl. Capital Corp., 963 F.2d 15 (2d Cir. 1992) (district court has broad discretion over scope and nature of protective orders)
- Small v. Nobel Biocare USA, LLC, 808 F. Supp. 2d 584 (S.D.N.Y. 2011) (majority view: no heightened showing required for discovery of settlement agreements; Rule 26 standard applies)
- Hasbrouck v. BankAmerica Hous. Servs., 187 F.R.D. 453 (N.D.N.Y. 1999) (where settlement confidentiality was not court-ordered, good-cause standard governs protective order decisions)