Hafizov v. BDO USA, LLP
- John Cronan
- 1:22-cv-08853
- U.S. District Court · Southern District of New York
- 2
In Hafizov v. BDO USA, LLP, Judge Lehrburger denied BDO’s motion to seal settlement discussions and impose Rule 11 sanctions.
The ruling affected BDO, Hafizov, Plaintiff’s counsel, and the publicly filed settlement-related letter. The court left the letter unsealed and denied the requested sanctions based on its public filing.
What happened
In Hafizov v. BDO USA, LLP, BDO objected to Plaintiff’s counsel publicly filing a letter that described settlement communications, including a monetary offer. Counsel had included those details to respond to BDO’s assertion that Hafizov’s claims were frivolous and warranted sanctions.
BDO relied on Federal Rule of Evidence 408, which generally limits the use of settlement discussions to prove or disprove a claim or its value. The court explained that the rule concerns whether settlement materials may be admitted as evidence; it does not generally prohibit publicly discussing them. BDO also did not identify an agreement requiring the settlement communications to remain confidential.
The court denied BDO’s motion to seal the letter and seek Rule 11 sanctions based on counsel’s failure to file it under seal. Judge Robert W. Lehrburger also directed the Clerk of Court to terminate the motion.
The detailed version
- Hafizov v. BDO USA, LLP · No. 1:22-cv-08853
- John Cronan
- Sept. 25, 2023
Background
The order addressed BDO’s September 19, 2023 letter accusing Plaintiff’s counsel of sanctionable conduct. Counsel had publicly filed a letter describing settlement communications, including a monetary offer, to rebut BDO’s contention that Hafizov’s claims were frivolous and warranted sanctions under Federal Rule of Civil Procedure 11.
BDO sought to seal the filed letter and requested Rule 11 sanctions because the settlement communications had not been filed under seal. BDO based its request on Federal Rule of Evidence 408.
Court’s Analysis
The court explained that Rule 408 generally prevents statements made during settlement discussions from being admitted to prove or disprove the validity or amount of a disputed claim, or for impeachment. The rule does not prohibit using settlement communications for every other purpose. The court also stated that Rule 408 is an evidence rule, not a confidentiality rule, and does not govern whether parties may discuss settlement matters publicly. BDO had not suggested that the parties agreed to keep the communications confidential.
The court criticized counsel’s use of the settlement discussions to show that Hafizov’s claims had merit and value, describing that as the purpose Rule 408 protects against. But the court said that the issue before it was public disclosure, not admissibility into evidence. Rule 408 therefore did not support sealing the letter or imposing sanctions for filing it publicly.
Disposition
BDO’s motion to seal Dkt. 113-1 and seek Rule 11 sanctions based on counsel’s failure to file under seal was DENIED. Judge Robert W. Lehrburger directed the Clerk of Court to terminate the motion at Dkt. 117.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.