Shields v. Federation Internationale De Natation

Background

Plaintiffs’ motion for class certification was pending. At a case-management conference, FINA received permission to file a 15-page sur-reply addressing what FINA characterized as a change in Plaintiffs’ expert’s damages theory. FINA filed the sur-reply on November 23, 2021.

The first pages of the sur-reply disclosed confidential settlement communications to argue that the named Plaintiffs were not adequate class representatives. After the disclosure, the settlement judge withdrew from further settlement discussions. Plaintiffs moved to strike the sur-reply and requested sanctions.

Reasons for the Ruling

The court identified two problems with the sur-reply. First, it contained purported factual statements that were not supported by citations to evidence. The court explained that it would not decide issues, including class certification, based on unsupported attorney arguments; facts presented for the court’s consideration must have admissible evidentiary support.

Second, the sur-reply violated Northern District of California Alternative Dispute Resolution Local Rule 7-4. That rule requires the parties, counsel, settlement judge, and others involved in a settlement conference to keep confidential the written statements, statements made, positions taken, and views of the case expressed during the conference. The rule also prohibits using that information for any purpose in a pending or future proceeding in the district.

The court found that FINA disclosed positions taken during settlement discussions facilitated by the assigned settlement judge and used those disclosures in the pending case. It rejected FINA’s reliance on cases involving Federal Rule of Evidence 408 because those cases did not address an intentional violation of the district’s settlement-confidentiality rule. The court also rejected FINA’s argument that the disclosed communications were outside the rule because they occurred between the parties or after settlement proceedings had ended, noting that the sur-reply purported to disclose communications from the settlement judge about a party’s settlement position and that settlement communications were continuing.

The court stated that a party believing disclosure was necessary should have sought the court’s permission before disclosing confidential information. It found no excuse for FINA’s unilateral disclosure.

Disposition

The court granted Plaintiffs’ motion to strike the entire section of FINA’s sur-reply discussing the settlement process, along with related portions of FINA’s opposition to the motion to strike. The court declined to strike the portions addressing expert testimony, concluding that Plaintiffs had adequately explained why they believed FINA’s expert-related arguments lacked merit.

The court also granted Plaintiffs’ request for sanctions. It characterized FINA’s unexcused disclosure as bad-faith conduct and ordered FINA to pay Plaintiffs’ attorneys’ fees and costs for preparing the motion to strike and the reply. Plaintiffs were ordered to provide declarations supporting their requested fees and costs by February 14, 2022. The order disposed of Docket No. 269; it did not decide the pending class-certification motion.