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EXHIBIT 1
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As of: February 12, 2023 10:16 PM Z
Irwin Seating Co. v. IBM
United States District Court for the Western District of Michigan, Southern Division
February 14, 2007, Decided
FILE NO. 1:04-CV-568
Reporter
2007 U.S. Dist. LEXIS 10472 *; 2007 WL 518866
mediation statements and accompanying
IRWIN SEATING COMPANY, Plaintiff, v.
documents, highlighting those portions of the
INTERNATIONAL BUSINESS MACHINES
exhibits the parties believed to be most important.
CORP. et al., Defendants.
Plaintiff later provided defendant corporations'
Subsequent History: Summary judgment granted mediation statements and accompanying
by, Summary judgment denied by, Without highlighted documents to two experts who were
prejudice, As moot Irwin Seating Co. v. IBM, 2007 expected to testify for plaintiff at trial on the issues
U.S. Dist. LEXIS 59847 (W.D. Mich., Aug. 15, of liability and damages. Although plaintiff
2007) contended that the sanction was unduly harsh, the
court found that the magistrate's factual
Prior History: Irwin Seating Co. v. IBM, 2006 determinations were not clearly erroneous and that
U.S. Dist. LEXIS 86988 (W.D. Mich., Nov. 29, the striking of plaintiff's experts was not contrary to
2006) law. The magistrate properly found that the
mediation documents were intended to be
Core Terms confidential and for settlement purposes only
pursuant to the order of the mediator, W.D. Mich.
mediation, confidential, magistrate judge, Civ. R. 16.2(e), and Fed. R. Evid. 408. Regardless
settlement, judge's order, disclosure, parties, of whether plaintiff acted in bad faith, the
settlement negotiations, expert witness, magistrate found that plaintiff intentionally released
proceedings, circumstances, discovery, sanctions, the information and that the exposure of defendants'
exhibits, reasons case theory to plaintiff's experts could not simply
be forgotten by those experts. Further, the
Case Summary information was inherently prejudicial to
defendants.
Procedural Posture
Outcome
Plaintiff company appealed the magistrate judge's
The court affirmed the order of the magistrate judge
order striking plaintiff's expert witnesses as a
striking plaintiff's experts. The court, however,
remedy for plaintiff's breach of mediation
permitted plaintiff to designate new experts.
confidentiality.
Overview LexisNexis® Headnotes
After the court referred the action to voluntary
facilitative mediation, the parties furnished
Irwin Seating Co. v. IBM
Civil Procedure > Judicial Civil Procedure > Appeals > Reviewability of
Officers > Magistrates > Pretrial Referrals Lower Court Decisions > Preservation for
Review
HN1[ ] Magistrates, Pretrial Referrals
Civil Procedure > Judicial
See Fed. R. Civ. P. 72(a). Officers > Magistrates > Pretrial Referrals
HN5[ ] Reviewability of Lower Court
Civil Procedure > Judicial Decisions, Preservation for Review
Officers > Magistrates > Pretrial Referrals
Under Fed. R. Civ. P. 72(a), a party may not
HN2[ ] Magistrates, Pretrial Referrals thereafter assign as error a defect in the magistrate
judge's order to which objection was not timely
Fed. R. Civ. P. 72(a) implements 28 U.S.C.S. § made. Moreover, the United States Court of
636(b)(1)(A). Appeals for the Sixth Circuit repeatedly has
recognized that arguments raised for the first time
in a party's reply brief are waived.
Civil Procedure > Appeals > Standards of
Review > Clearly Erroneous Review
Business & Corporate
HN3[ ] Standards of Review, Clearly Compliance > ... > Pretrial
Erroneous Review Matters > Alternative Dispute
Resolution > Mediation
A factual finding is clearly erroneous when the
reviewing court on the entire evidence is left with HN6[ ] Alternative Dispute Resolution,
the definite and firm conviction that a mistake has Mediation
been committed. The question before the court is
not whether the finding is the best or only See W.D. Mich. Civ. R. 16.2(e).
conclusion that can be drawn from the evidence, or
whether it is the one which the reviewing court
would draw. Rather, the test is whether there is Business & Corporate
evidence in the record to support the lower court's Compliance > ... > Pretrial
finding, and whether its construction of that Matters > Alternative Dispute
evidence is a reasonable one. Resolution > Mediation
Civil Procedure > Settlements > General
Civil Procedure > Judicial Overview
Officers > Magistrates > Pretrial Referrals
HN7[ ] Alternative Dispute Resolution,
HN4[ ] Magistrates, Pretrial Referrals Mediation
A magistrate is afforded broad discretion in the The United States Court of Appeals for the Sixth
resolution of nondispositive discovery disputes, Circuit repeatedly has recognized that there exists a
which the district court will overrule only if that strong public interest in favor of secrecy of matters
discretion is clearly abused. discussed by parties during settlement negotiations.
Irwin Seating Co. v. IBM
This is true whether settlement negotiations are For J.D. Edwards World Solutions Company,
done under the auspices of the court or informally defendant: Stephen J. Rosenfeld, LEAD
between the parties. The ability to negotiate and ATTORNEY, Kristin Lee Lingren, Suzanne
settle a case without trial fosters a more efficient, Miriam Scheuing, Natalie A. Harris, Mandell
more cost-effective, and significantly less burdened Menkes LLC, Chicago, IL; Earle I. Erman, Erman
judicial system. In order for settlement talks to be Teicher Miller Zucker & Freedman PC, Southfield,
effective, parties must feel uninhibited in their MI.
communications. For Facilitative Mediator, mediator: Bruce W.
Neckers, LEAD ATTORNEY, Rhoades McKee,
Grand Rapids, MI.
Evidence > Admissibility > Statements as
Evidence > Compromise & Settlement For International Business Machines Corporation,
Negotiations counter-claimant: Charles E. Chamberlain, Jr.,
LEAD ATTORNEY, Willey & Chamberlain LLP,
HN8[ ] Statements as Evidence, Compromise Grand Rapids, MI; Mary Laura Swietnicki, Todd C.
& Settlement Negotiations Jacobs, Grippo & Elden LLC, Chicago, IL.
For Irwin Seating Company, counter-defendant:
Fed. R. Evid. 408 provides in part that evidence of
Joseph [*2] Goldberg, LEAD ATTORNEY,
conduct or statements made in compromised
Freedman Boyd Daniels Hollander & Goldberg PA,
negotiations is not admissible. Rule 408 does not
Albuquerque, NM.
require the exclusion of any evidence otherwise
discoverable merely because it is presented in the Judges: Robert Holmes Bell, CHIEF UNITED
course of compromised negotiations. STATES DISTRICT JUDGE.
Opinion by: Robert Holmes Bell
Civil Procedure > Sanctions > General
Overview Opinion
HN9[ ] Civil Procedure, Sanctions
This matter is before the Court on Plaintiff's appeal
Sanctions determinations are to be based on the (Docket # 313) of the Magistrate Judge's order
totality of the circumstances. striking Plaintiff's expert witnesses (Docket # 310).
For the reasons that follow, the order of the
Counsel: [*1] For Irwin Seating Company,
Magistrate Judge is affirmed.
plaintiff: Aaron M. Phelps, LEAD ATTORNEY,
Varnum Riddering Schmidt & Howlett LLP (Grand
Rapids), Grand Rapids, MI; John W. Boyd, Joseph I.
Goldberg, LEAD ATTORNEYS, Freedman Boyd
Daniels Hollander & Goldberg PA, Albuquerque, This matter was referred to voluntary facilitative
NM. mediation by this Court on October 21, 2005. The
notice of appointment of facilitative mediator
For International Business Machines Corporation,
outlined the procedures for mediation and, among
defendant: Todd C. Jacobs, LEAD ATTORNEY,
other things, provided that "all information
Shannon J. Cassell, Gary Michael Miller, Mary
disclosed during the mediation session, including
Laura Swietnicki, Paul A. Sheldon, Grippo & Elden
the conduct and demeanor of the parties and their
LLC, Chicago, IL; Charles E. Chamberlain, Jr.,
counsel during the proceedings, must remain
Willey & Chamberlain LLP, Grand Rapids, MI.
Irwin Seating Co. v. IBM
confidential, and must not be disclosed to any other specifics of their recollection would itself expose
party nor to this court, without consent of the party confidential information, the Magistrate Judge
disclosing the information." (Notice of concluded that the only appropriate remedy was to
Appointment of Facilitative Mediator, at 2, docket strike Plaintiff's expert witnesses.
# 94.)
Plaintiff now appeals the Magistrate Judge's order,
Subsequently, at the direction of the mediator, the contending that the sanction is unduly harsh and
parties furnished mediation statements and unsupported by law.
accompanying documents, highlighting those
portions of the exhibits the parties believed to
be [*3] most important. The Magistrate Judge II.
found, and Plaintiff Irwin has not disputed, that
Under 28 U.S.C. § 636(b)(1)(A) and FED. R. CIV.
Irwin later provided Defendants' mediation
P. 72(a), a federal magistrate judge may be
statements and accompanying highlighted
designated to hear and determine nondispositive
documents to two experts expected to testify for
pretrial matters. Id. Rule 72(a) provides in relevant
Plaintiff at trial.
part:
On April 18, 2006, Plaintiff produced two expert
HN1[ ] A magistrate judge to whom a pretrial
reports, one by Jeff Hagins assessing the liability of
matter not dispositive of a claim or defense of a
the Defendants, and the other by Marianne
party is referred to hear and determine shall
DeMario assessing damages. Each expert report
promptly conduct such proceedings as are
declared that the expert had reviewed the mediation
required and when appropriate enter into the
briefs and exhibits produced by Defendants.
record a written order [*5] setting forth the
DeMario's report extensively cited to portions of
disposition of the matter. Within 10 days after
the mediation attachments. All of the attachments
being served with a copy of the magistrate
to the mediation statement were otherwise
judge's order, a party may serve and file
produced during discovery. However, the
objections to the order; a party may not
mediation attachments were highlighted to identify
thereafter assign as error a defect in the
those portions Plaintiff believed to be significant to
magistrate judge's order to which objection was
the case.
not timely made. The district judge to whom
The Magistrate Judge held that the mediation the case is assigned shall consider such
proceedings and documents were intended to be objections and shall modify or set aside any
confidential and for settlement purposes only, portion of the magistrate judge's order found to
pursuant to the order of appointment of mediator, be clearly erroneous or contrary to law.
W.D. MICH. LCIVR 16.2(e), FED. R. EVID. 408 FED. R. CIV. P. 72(a). 1
and established Sixth Circuit case law. The
HN3[ ] A factual "finding is clearly erroneous
Magistrate Judge reasoned that, regardless of
when the reviewing court on the entire evidence is
whether Plaintiff [*4] acted with bad faith,
left with the definite and firm conviction that a
Plaintiff was solely at fault for the breach of
mistake has been committed." Heights Cmty.
confidentiality and had acted intentionally to
Congress v. Hilltop Realty, Inc., 774 F.2d 135, 140
release the information. The Magistrate Judge
(6th Cir. 1985). [*6] The question before the court
further concluded that the exposure by Plaintiff's
experts to Defendants' case theory could not simply
be forgotten by those experts. Moreover, since any 1 HN2[ ] Rule 72(a) of the Federal Rules of Civil Procedure
attempt to cross-examine those experts as to the implements 28 U.S.C. § 636(b)(1)(A). Massey v. City of Ferndale, 7
F.3d 506, 509 (6th Cir. 1993).
Irwin Seating Co. v. IBM
"is not whether the finding is the best or only argues that the Magistrate Judge should have
conclusion that can be drawn from the evidence, or imposed a less [*7] severe sanction. Plaintiff
whether it is the one which the reviewing court contends that it did not act in bad faith to release
would draw. Rather, the test is whether there is the mediation materials, believing that disclosure to
evidence in the record to support the lower court's its own retained experts was disclosure to agents of
finding, and whether its construction of that itself, the represented party, and therefore was not a
evidence is a reasonable one." Id. breach of confidentiality. While Plaintiff no longer
asserts that its disclosure was not a violation of the
HN4[ ] A magistrate is afforded broad discretion mediation order and the local rules, it asserts that
in the resolution of nondispositive discovery the reason for the disclosure did not amount to bad
disputes, which this Court will overrule only if that faith. Further, Plaintiff argues that the information
discretion is clearly abused. See Dayco Prod., Inc. contained in the mediation attachments was
v. Walker, 142 F.R.D. 450, 454 (S.D. Ohio 1992) otherwise disclosed during discovery and fully
(citing Snowden v. Connaught Laboratories, Inc., available to the experts from other sources. For
136 F.R.D. 694, 697 (D. Kan. 1991); Detection both reasons, Plaintiff contends that the harsh
Systems, Inc. v. Pittway Corp., 96 F.R.D. 152, 154 sanction of striking experts was not warranted.
(W.D.N.Y. 1982); Sil-Flo, Inc. v. SFHC, Inc., 917
F.2d 1507, 1514 (10th Cir. 1990)). [*8] As the Magistrate Judge fully discussed, the
local court rules specifically provide for the
confidentiality of ADR procedures such as
III. voluntary facilitative mediation:
In its objections to the Magistrate Judge's HN6[ ] Confidentiality -- information
determination, Plaintiff argues only that the striking disclosed during the ADR process shall not be
of its expert witnesses is an excessive sanction, not revealed to any one else without consent of the
warranted by the nature of the violation. 2 Plaintiff party who disclosed the information. All ADR
proceedings are considered to be compromised
2 In its reply brief, Plaintiff raises two additional issues not raised negotiations within the meaning of Federal
before either the Magistrate Judge or in Plaintiff's initial timely Rules of Evidence 408. 3
objections. First, citing First Bank of Marietta v. Hartford
Underwriters Ins. Co., 307 F.3d 501, 519 (6th Cir. 2002), Plaintiff W.D. MICH. LCIVR 16.2(e). In addition, as
argues that a finding of bad faith is legally required to support the HN7[ ] the Sixth Circuit repeatedly has
imposition of a sanction under the Court's inherent authority.
recognized,
Second, Plaintiff argues that the Magistrate Judge lacked evidence to
support a finding that Plaintiff's disclosure of mediation materials to There exists a strong public interest in favor of
the experts had an adverse impact on Defendants or on the mediation secrecy of matters discussed by parties during
process. Neither argument was raised in Plaintiff's objections. settlement negotiations. This is true whether
HN5[ ] Under FED. R. CIV. P. 72(a), "a party may not thereafter
settlement negotiations are done under the
assign as error a defect in the magistrate judge's order to which
objection was not timely made." Id. Moreover, the Sixth Circuit auspices of the court or informally between the
repeatedly has recognized that arguments raised for the first time in a
party's reply brief are waived. See United States v. Lopez-Medina,
461 F.3d 724, 743 (6th Cir. 2006) (citing McPherson v. Kelsey, 125 first time") (citation omitted)). For both reasons, the arguments
F.3d 989, 995-96 (6th Cir. 1997) (deeming arguments that are not raised in Plaintiff's reply brief are waived, and the Court declines to
raised in the appellant's main brief, or raised merely in a perfunctory address either argument.
manner, as waived)); see also Lexicon, Inc. v. Safeco Ins. Co. of
America, Inc., 436 F.3d 662, 676 (6th Cir. 2006) (a district court 3 HN8[ ] Rule 408 provides in relevant part that "[e]vidence of
properly declines to consider an issue raised for the first time in a conduct or statements made in compromised negotiations is likewise
reply brief) (citing, Sundberg v. Keller Ladder, 189 F. Supp. 2d 671, not admissible. This rule does not require the exclusion of any
682-83 (E.D. Mich. 2002) (noting, in the context of summary evidence otherwise discoverable merely because it is presented in the
judgment, "it is not the office of a reply brief to raise issues for the course of compromised negotiations. . . ."
Irwin Seating Co. v. IBM
parties. The ability to negotiate and settle a content of the mediation briefs or the highlighting
case without trial fosters a more efficient, more of specific portions of the otherwise discoverable
cost-effective, and significantly less burdened exhibits, the Magistrate Judge's reasons for
judicial system. In order for settlement talks to discrediting the experts' claims are reasonable. The
be effective, parties must feel uninhibited in Court finds no basis for concluding that the finding
their communications. is [*11] clearly erroneous. Accepting, therefore,
that the experts did remember the mediation
Goodyear Tire & Rubber Co. v. Chiles Power positions and that they were, consciously or
Supply, Inc., 332 F.3d 976, 980 (6th Cir. unconsciously affected by that information, the
2003). [*9] Magistrate Judge's decision to exclude the experts
In determining that the sanction of striking experts was reasonable and sound.
was appropriate, the Magistrate Judge made a Further, contrary to Plaintiff's argument, the
number of factual determinations. First, he noted Magistrate Judge's decision to strike Plaintiff's
that Plaintiff conceded that its attorneys had experts is not inconsistent with other federal
provided copies of Defendants' mediation briefs decisions. In Goodyear Tire & Rubber, applying
and exhibits to the experts, and both experts the mediation confidentiality privilege, the Sixth
acknowledged reading the materials. Indeed, Circuit upheld the district court's refusal to permit
Plaintiff's damages expert repeatedly referred to the discovery about settlement negotiations to support a
mediation exhibits in her expert report. Although plaintiff's claim that a witness had been bribed. 332
both experts averred that they did not recall F.3d at 983. The court recognized that disclosure of
Defendants' mediation positions and further averred settlement negotiations, even long after those
that their opinions were not influenced by their negotiations had failed, would undermine the
knowledge of those positions, the Magistrate Judge public policy underlying settlement. Id. at 980. The
found those averments unpersuasive. The court further held that, because settlement
Magistrate Judge noted that the experts had negotiations "are typically punctuated with
used [*10] essentially identical language in their numerous instances of puffing and posturing since
affidavits and that the averments in question they are 'motivated by a desire for peace rather than
appeared to have been drawn up by the same hand. from a concession of the merits of the claim,'" the
The Magistrate Judge further found that, regardless use of "these sort of 'facts' would be highly
of Plaintiff's intent in disclosing the documents, the misleading if allowed [*12] to be used for
experts had received confidential information. The purposes other than settlement." Goodyear Tire &
Magistrate Judge concluded that no adequate means Rubber, 332 F.3d at 981 (quoting United States v.
existed for undoing the experts' improper Contra Costa County Water Dist., 678 F.2d 90, 92
knowledge. As the Magistrate Judge noted, the (9th Cir. 1982)).
facts upon which an expert relies are not required to
Similarly here, permitting Plaintiff's experts to
be admissible. However, the factual basis for the
testify after having had access to Defendants'
expert's opinion is subject to inquiry and cross-
confidential representations has the potential to
examination. FED. R. EVID. 703. Because the undermine the willingness of parties to engage in
information in issue is confidential, Defendants will
future settlement negotiations. Further, the "facts"
be unable to fully challenge the experts' assertions
upon which those experts rely in such briefing have
that their opinions were not influenced by the potential to be misleading because of the
confidential settlement knowledge. purpose for which they are presented. They
Although Plaintiff continues to argue that the therefore may color the expert's conclusions based
experts were not influenced by the confidential on a characterization of the facts distorted by the
Irwin Seating Co. v. IBM
goal of settlement. In any event, the information circumstances, the Magistrate Judge's order striking
provides the expert with information about the Plaintiff's expert witnesses, is both reasonable and
other party's view of the significance of particular consistent with the analysis of Frank.
evidence.
In In re Anonymous, 283 F.3d 627 (4th Cir. 2002),
The fact that the Sixth Circuit did not approve the the Fourth Circuit addressed breaches of the
identical sanction does not demonstrate the confidentiality of the appellate mediation process.
unreasonableness of the sanction imposed in this The court found that the client, current counsel and
case. The facts of Goodyear Tire & Rubber did not local counsel had all violated the confidentiality
call for the striking of an expert. Instead, the requirements of the appellate mediation process
problem was fully able to be addressed by the during their subsequent bar-mediated fee dispute.
denial of discovery. Here, in contrast, [*13] The court, however, weighing the totality of the
Plaintiff cannot identify an alternate sanction that circumstances, declined to issue sanctions for
will adequately address these experts' improper several reasons. The court found that none of the
knowledge. No admonition, reprimand, mediation participants had acted in bad faith. The court
training or assessment of costs can remove from the further found that the disclosures to another
experts' minds the information to which they have confidential forum did not severely impact the
been exposed. And, because of the ongoing effectiveness of the mediation [*15] process.
confidentiality of the mediation process, such Further, the court noted that, in light of the
alternatives cannot remove the obstacle to breaches by all parties, no single party was harmed
Defendants' cross-examination of the experts. by the disclosures. Id. at 635-36.
The remaining cases cited by Plaintiff are equally The In re Anonymous decision is fully consistent
unpersuasive. For example, in Frank v. L.L. Bean with the Magistrate Judge's determination in the
Inc., 377 F. Supp. 2d 233 (D. Me. 2005), the court instant case. The case endorses the notion that
declined to exclude the fruits of an ex parte HN9[ ] sanctions determinations are to be based
interview with a potential witness in which the on the totality of the circumstances. Id. Here, unlike
opposing party's settlement position was revealed. in In re Anonymous, the only party breaching
The court instead imposed financial sanctions. In confidentiality is the party with the opportunity to
Frank, however, the party violating settlement benefit from that breach. Moreover, the breach did
confidentiality revealed information to a former not occur within the confines of another
employee of the opposing party, who shared the confidential process, but instead permitted an
opposing party's interests. As a result, the opposing expert to offer an opinion influenced by
party could not demonstrate prejudice arising from confidential information upon which he could not
the breach of confidentiality. The court expressly be fully cross-examined. As the Magistrate Judge
noted that, "[h]ad Defendant been able to found, such a breach has the potential to seriously
demonstrate such prejudice, such a sanction might undermine the effectiveness of the mediated
have been an [*14] appropriate remedy to settlement proceedings, thereby undermining
counteract Plaintiff's ill-gotten advantage." Frank, important public policy.
377 F. Supp. 2d at 240-41.
A review of Plaintiff's remaining citations to
Here, Plaintiff disclosed Defendants' settlement unpublished decisions in which sanctions have been
positions to its own expert witnesses. That denied reveals substantial differences in the totality
information is inherently prejudicial to Defendants of the circumstances from those before this Court.
and is an "ill-gotten advantage," even if the extent See Frazier v. Layne Christensen Co., No. 04-C-
of the prejudice is not precisely measurable. In such 315-C, 2005 U.S. Dist. LEXIS 2358, 2005 WL
Irwin Seating Co. v. IBM
372253 (W.D. Wis. Feb. 11, 2005); [*16] addressed in the scheduling conference to be held
Concerned Citizens v. Belle Haven Club, No. after resolution of the dispositive motions.
3:99CV1467, 2002 U.S. Dist. LEXIS 26117 (D.
Conn. Oct. 25, 2002). Plaintiff has identified no Dated: February 14, 2007
comparable disclosure to that in issue here. /s/ Robert Holmes Bell
Moreover, the fact that any other district court may CHIEF UNITED STATES DISTRICT JUDGE
have decided a sanctions question differently than
the Magistrate Judge does not in itself suggest that
the Magistrate Judge's decision constituted an End of Document
abuse of discretion. See Heights Cmty. Congress,
774 F.2d at 140 (question is not whether the
determination is the best or only conclusion that
can be drawn but whether it is a reasonable one.)
The Court finds that the factual determinations of
the Magistrate Judge were not clearly erroneous
and that the striking of Plaintiff's experts is not
contrary to law. Accordingly, the Court will affirm
the Magistrate Judge's order to strike.
Having agreed that the Magistrate Judge properly
struck Plaintiff's expert witnesses as a remedy for
Plaintiff's breach of mediation confidentiality, the
Court must determine whether Plaintiff may retain
other experts. The Court has reviewed the totality
of the circumstances and finds that [*17] a
complete denial of expert witnesses would be an
excessive sanction, not warranted by the nature of
Plaintiff's conduct. The harm to Defendants is fully
mitigated by the exclusion of the testimony of those
experts exposed to the confidential information.
The striking of experts is itself a harsh sanction and
should not be made greater by the exclusion of all
expert evidence in support of Plaintiff's case.
Accordingly, notwithstanding the late stage of these
proceedings, the Court will permit Plaintiff to
engage new experts.
IV.
For the foregoing reasons, the Court affirms the
order of the Magistrate Judge striking Plaintiff's
experts. The Court, however, will permit Plaintiff
to designate new experts. In accordance with the
Magistrate Judge's order denying clarification
(Docket # 323), deadlines for expert reports will be
Preview
EXHIBIT 1 Positive As of: February 12, 2023 10:16 PM Z Irwin Seating Co. v. IBM United States District Court for the Western District of Michigan, Southern Division February 14, 2007, Decided FILE NO. 1:04-CV-568 Reporter 2007 U.S. Dist. LEXIS 10472 *; 2007 WL 518866 mediation statements and accompanying IRWIN SEATING COMPANY, Plaintiff, v. documents, highlighting those portions of the INTERNATIONAL BUSINESS MACHINES exhibits the parties believed to be most important. CORP. et al., Defendants. Plaintiff later provided defendant corporations' Subsequent History: Summary judgment granted mediation statements and accompanying by, Summary judgment denied by, Without highlighted documents to two experts who were prejudice, As moot Irwin Seating Co. v. IBM, 2007 expected to testify for plaintiff at trial on the issues U.S. Dist. LEXIS 59847 (W.D. Mich., Aug. 15, of liability and damages. Although plaintiff 2007) contended that the sanction was unduly harsh, the court found that the magistrate's factual Prior History: Irwin Seating Co. v. IBM, 2006 determinations were not clearly erroneous and that U.S. Dist. LEXIS 86988 (W.D. Mich., Nov. 29, the striking of plaintiff's experts was not contrary to 2006) law. The magistrate properly found that the mediation documents were intended to be Core Terms confidential and for settlement purposes only pursuant to the order of the mediator, W.D. Mich. mediation, confidential, magistrate judge, Civ. R. 16.2(e), and Fed. R. Evid. 408. Regardless settlement, judge's order, disclosure, parties, of whether plaintiff acted in bad faith, the settlement negotiations, expert witness, magistrate found that plaintiff intentionally released proceedings, circumstances, discovery, sanctions, the information and that the exposure of defendants' exhibits, reasons case theory to plaintiff's experts could not simply be forgotten by those experts. Further, the Case Summary information was inherently prejudicial to defendants. Procedural Posture Outcome Plaintiff company appealed the magistrate judge's The court affirmed the order of the magistrate judge order striking plaintiff's expert witnesses as a striking plaintiff's experts. The court, however, remedy for plaintiff's breach of mediation permitted plaintiff to designate new experts. confidentiality. Overview LexisNexis® Headnotes After the court referred the action to voluntary facilitative mediation, the parties furnished Irwin Seating Co. v. IBM Civil Procedure > Judicial Civil Procedure > Appeals > Reviewability of Officers > Magistrates > Pretrial Referrals Lower Court Decisions > Preservation for Review HN1[ ] Magistrates, Pretrial Referrals Civil Procedure > Judicial See Fed. R. Civ. P. 72(a). Officers > Magistrates > Pretrial Referrals HN5[ ] Reviewability of Lower Court Civil Procedure > Judicial Decisions, Preservation for Review Officers > Magistrates > Pretrial Referrals Under Fed. R. Civ. P. 72(a), a party may not HN2[ ] Magistrates, Pretrial Referrals thereafter assign as error a defect in the magistrate judge's order to which objection was not timely Fed. R. Civ. P. 72(a) implements 28 U.S.C.S. § made. Moreover, the United States Court of 636(b)(1)(A). Appeals for the Sixth Circuit repeatedly has recognized that arguments raised for the first time in a party's reply brief are waived. Civil Procedure > Appeals > Standards of Review > Clearly Erroneous Review Business & Corporate HN3[ ] Standards of Review, Clearly Compliance > ... > Pretrial Erroneous Review Matters > Alternative Dispute Resolution > Mediation A factual finding is clearly erroneous when the reviewing court on the entire evidence is left with HN6[ ] Alternative Dispute Resolution, the definite and firm conviction that a mistake has Mediation been committed. The question before the court is not whether the finding is the best or only See W.D. Mich. Civ. R. 16.2(e). conclusion that can be drawn from the evidence, or whether it is the one which the reviewing court would draw. Rather, the test is whether there is Business & Corporate evidence in the record to support the lower court's Compliance > ... > Pretrial finding, and whether its construction of that Matters > Alternative Dispute evidence is a reasonable one. Resolution > Mediation Civil Procedure > Settlements > General Civil Procedure > Judicial Overview Officers > Magistrates > Pretrial Referrals HN7[ ] Alternative Dispute Resolution, HN4[ ] Magistrates, Pretrial Referrals Mediation A magistrate is afforded broad discretion in the The United States Court of Appeals for the Sixth resolution of nondispositive discovery disputes, Circuit repeatedly has recognized that there exists a which the district court will overrule only if that strong public interest in favor of secrecy of matters discretion is clearly abused. discussed by parties during settlement negotiations. Irwin Seating Co. v. IBM This is true whether settlement negotiations are For J.D. Edwards World Solutions Company, done under the auspices of the court or informally defendant: Stephen J. Rosenfeld, LEAD between the parties. The ability to negotiate and ATTORNEY, Kristin Lee Lingren, Suzanne settle a case without trial fosters a more efficient, Miriam Scheuing, Natalie A. Harris, Mandell more cost-effective, and significantly less burdened Menkes LLC, Chicago, IL; Earle I. Erman, Erman judicial system. In order for settlement talks to be Teicher Miller Zucker & Freedman PC, Southfield, effective, parties must feel uninhibited in their MI. communications. For Facilitative Mediator, mediator: Bruce W. Neckers, LEAD ATTORNEY, Rhoades McKee, Grand Rapids, MI. Evidence > Admissibility > Statements as Evidence > Compromise & Settlement For International Business Machines Corporation, Negotiations counter-claimant: Charles E. Chamberlain, Jr., LEAD ATTORNEY, Willey & Chamberlain LLP, HN8[ ] Statements as Evidence, Compromise Grand Rapids, MI; Mary Laura Swietnicki, Todd C. & Settlement Negotiations Jacobs, Grippo & Elden LLC, Chicago, IL. For Irwin Seating Company, counter-defendant: Fed. R. Evid. 408 provides in part that evidence of Joseph [*2] Goldberg, LEAD ATTORNEY, conduct or statements made in compromised Freedman Boyd Daniels Hollander & Goldberg PA, negotiations is not admissible. Rule 408 does not Albuquerque, NM. require the exclusion of any evidence otherwise discoverable merely because it is presented in the Judges: Robert Holmes Bell, CHIEF UNITED course of compromised negotiations. STATES DISTRICT JUDGE. Opinion by: Robert Holmes Bell Civil Procedure > Sanctions > General Overview Opinion HN9[ ] Civil Procedure, Sanctions This matter is before the Court on Plaintiff's appeal Sanctions determinations are to be based on the (Docket # 313) of the Magistrate Judge's order totality of the circumstances. striking Plaintiff's expert witnesses (Docket # 310). For the reasons that follow, the order of the Counsel: [*1] For Irwin Seating Company, Magistrate Judge is affirmed. plaintiff: Aaron M. Phelps, LEAD ATTORNEY, Varnum Riddering Schmidt & Howlett LLP (Grand Rapids), Grand Rapids, MI; John W. Boyd, Joseph I. Goldberg, LEAD ATTORNEYS, Freedman Boyd Daniels Hollander & Goldberg PA, Albuquerque, This matter was referred to voluntary facilitative NM. mediation by this Court on October 21, 2005. The notice of appointment of facilitative mediator For International Business Machines Corporation, outlined the procedures for mediation and, among defendant: Todd C. Jacobs, LEAD ATTORNEY, other things, provided that "all information Shannon J. Cassell, Gary Michael Miller, Mary disclosed during the mediation session, including Laura Swietnicki, Paul A. Sheldon, Grippo & Elden the conduct and demeanor of the parties and their LLC, Chicago, IL; Charles E. Chamberlain, Jr., counsel during the proceedings, must remain Willey & Chamberlain LLP, Grand Rapids, MI. Irwin Seating Co. v. IBM confidential, and must not be disclosed to any other specifics of their recollection would itself expose party nor to this court, without consent of the party confidential information, the Magistrate Judge disclosing the information." (Notice of concluded that the only appropriate remedy was to Appointment of Facilitative Mediator, at 2, docket strike Plaintiff's expert witnesses. # 94.) Plaintiff now appeals the Magistrate Judge's order, Subsequently, at the direction of the mediator, the contending that the sanction is unduly harsh and parties furnished mediation statements and unsupported by law. accompanying documents, highlighting those portions of the exhibits the parties believed to be [*3] most important. The Magistrate Judge II. found, and Plaintiff Irwin has not disputed, that Under 28 U.S.C. § 636(b)(1)(A) and FED. R. CIV. Irwin later provided Defendants' mediation P. 72(a), a federal magistrate judge may be statements and accompanying highlighted designated to hear and determine nondispositive documents to two experts expected to testify for pretrial matters. Id. Rule 72(a) provides in relevant Plaintiff at trial. part: On April 18, 2006, Plaintiff produced two expert HN1[ ] A magistrate judge to whom a pretrial reports, one by Jeff Hagins assessing the liability of matter not dispositive of a claim or defense of a the Defendants, and the other by Marianne party is referred to hear and determine shall DeMario assessing damages. Each expert report promptly conduct such proceedings as are declared that the expert had reviewed the mediation required and when appropriate enter into the briefs and exhibits produced by Defendants. record a written order [*5] setting forth the DeMario's report extensively cited to portions of disposition of the matter. Within 10 days after the mediation attachments. All of the attachments being served with a copy of the magistrate to the mediation statement were otherwise judge's order, a party may serve and file produced during discovery. However, the objections to the order; a party may not mediation attachments were highlighted to identify thereafter assign as error a defect in the those portions Plaintiff believed to be significant to magistrate judge's order to which objection was the case. not timely made. The district judge to whom The Magistrate Judge held that the mediation the case is assigned shall consider such proceedings and documents were intended to be objections and shall modify or set aside any confidential and for settlement purposes only, portion of the magistrate judge's order found to pursuant to the order of appointment of mediator, be clearly erroneous or contrary to law. W.D. MICH. LCIVR 16.2(e), FED. R. EVID. 408 FED. R. CIV. P. 72(a). 1 and established Sixth Circuit case law. The HN3[ ] A factual "finding is clearly erroneous Magistrate Judge reasoned that, regardless of when the reviewing court on the entire evidence is whether Plaintiff [*4] acted with bad faith, left with the definite and firm conviction that a Plaintiff was solely at fault for the breach of mistake has been committed." Heights Cmty. confidentiality and had acted intentionally to Congress v. Hilltop Realty, Inc., 774 F.2d 135, 140 release the information. The Magistrate Judge (6th Cir. 1985). [*6] The question before the court further concluded that the exposure by Plaintiff's experts to Defendants' case theory could not simply be forgotten by those experts. Moreover, since any 1 HN2[ ] Rule 72(a) of the Federal Rules of Civil Procedure attempt to cross-examine those experts as to the implements 28 U.S.C. § 636(b)(1)(A). Massey v. City of Ferndale, 7 F.3d 506, 509 (6th Cir. 1993). Irwin Seating Co. v. IBM "is not whether the finding is the best or only argues that the Magistrate Judge should have conclusion that can be drawn from the evidence, or imposed a less [*7] severe sanction. Plaintiff whether it is the one which the reviewing court contends that it did not act in bad faith to release would draw. Rather, the test is whether there is the mediation materials, believing that disclosure to evidence in the record to support the lower court's its own retained experts was disclosure to agents of finding, and whether its construction of that itself, the represented party, and therefore was not a evidence is a reasonable one." Id. breach of confidentiality. While Plaintiff no longer asserts that its disclosure was not a violation of the HN4[ ] A magistrate is afforded broad discretion mediation order and the local rules, it asserts that in the resolution of nondispositive discovery the reason for the disclosure did not amount to bad disputes, which this Court will overrule only if that faith. Further, Plaintiff argues that the information discretion is clearly abused. See Dayco Prod., Inc. contained in the mediation attachments was v. Walker, 142 F.R.D. 450, 454 (S.D. Ohio 1992) otherwise disclosed during discovery and fully (citing Snowden v. Connaught Laboratories, Inc., available to the experts from other sources. For 136 F.R.D. 694, 697 (D. Kan. 1991); Detection both reasons, Plaintiff contends that the harsh Systems, Inc. v. Pittway Corp., 96 F.R.D. 152, 154 sanction of striking experts was not warranted. (W.D.N.Y. 1982); Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1514 (10th Cir. 1990)). [*8] As the Magistrate Judge fully discussed, the local court rules specifically provide for the confidentiality of ADR procedures such as III. voluntary facilitative mediation: In its objections to the Magistrate Judge's HN6[ ] Confidentiality -- information determination, Plaintiff argues only that the striking disclosed during the ADR process shall not be of its expert witnesses is an excessive sanction, not revealed to any one else without consent of the warranted by the nature of the violation. 2 Plaintiff party who disclosed the information. All ADR proceedings are considered to be compromised 2 In its reply brief, Plaintiff raises two additional issues not raised negotiations within the meaning of Federal before either the Magistrate Judge or in Plaintiff's initial timely Rules of Evidence 408. 3 objections. First, citing First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 519 (6th Cir. 2002), Plaintiff W.D. MICH. LCIVR 16.2(e). In addition, as argues that a finding of bad faith is legally required to support the HN7[ ] the Sixth Circuit repeatedly has imposition of a sanction under the Court's inherent authority. recognized, Second, Plaintiff argues that the Magistrate Judge lacked evidence to support a finding that Plaintiff's disclosure of mediation materials to There exists a strong public interest in favor of the experts had an adverse impact on Defendants or on the mediation secrecy of matters discussed by parties during process. Neither argument was raised in Plaintiff's objections. settlement negotiations. This is true whether HN5[ ] Under FED. R. CIV. P. 72(a), "a party may not thereafter settlement negotiations are done under the assign as error a defect in the magistrate judge's order to which objection was not timely made." Id. Moreover, the Sixth Circuit auspices of the court or informally between the repeatedly has recognized that arguments raised for the first time in a party's reply brief are waived. See United States v. Lopez-Medina, 461 F.3d 724, 743 (6th Cir. 2006) (citing McPherson v. Kelsey, 125 first time") (citation omitted)). For both reasons, the arguments F.3d 989, 995-96 (6th Cir. 1997) (deeming arguments that are not raised in Plaintiff's reply brief are waived, and the Court declines to raised in the appellant's main brief, or raised merely in a perfunctory address either argument. manner, as waived)); see also Lexicon, Inc. v. Safeco Ins. Co. of America, Inc., 436 F.3d 662, 676 (6th Cir. 2006) (a district court 3 HN8[ ] Rule 408 provides in relevant part that "[e]vidence of properly declines to consider an issue raised for the first time in a conduct or statements made in compromised negotiations is likewise reply brief) (citing, Sundberg v. Keller Ladder, 189 F. Supp. 2d 671, not admissible. This rule does not require the exclusion of any 682-83 (E.D. Mich. 2002) (noting, in the context of summary evidence otherwise discoverable merely because it is presented in the judgment, "it is not the office of a reply brief to raise issues for the course of compromised negotiations. . . ." Irwin Seating Co. v. IBM parties. The ability to negotiate and settle a content of the mediation briefs or the highlighting case without trial fosters a more efficient, more of specific portions of the otherwise discoverable cost-effective, and significantly less burdened exhibits, the Magistrate Judge's reasons for judicial system. In order for settlement talks to discrediting the experts' claims are reasonable. The be effective, parties must feel uninhibited in Court finds no basis for concluding that the finding their communications. is [*11] clearly erroneous. Accepting, therefore, that the experts did remember the mediation Goodyear Tire & Rubber Co. v. Chiles Power positions and that they were, consciously or Supply, Inc., 332 F.3d 976, 980 (6th Cir. unconsciously affected by that information, the 2003). [*9] Magistrate Judge's decision to exclude the experts In determining that the sanction of striking experts was reasonable and sound. was appropriate, the Magistrate Judge made a Further, contrary to Plaintiff's argument, the number of factual determinations. First, he noted Magistrate Judge's decision to strike Plaintiff's that Plaintiff conceded that its attorneys had experts is not inconsistent with other federal provided copies of Defendants' mediation briefs decisions. In Goodyear Tire & Rubber, applying and exhibits to the experts, and both experts the mediation confidentiality privilege, the Sixth acknowledged reading the materials. Indeed, Circuit upheld the district court's refusal to permit Plaintiff's damages expert repeatedly referred to the discovery about settlement negotiations to support a mediation exhibits in her expert report. Although plaintiff's claim that a witness had been bribed. 332 both experts averred that they did not recall F.3d at 983. The court recognized that disclosure of Defendants' mediation positions and further averred settlement negotiations, even long after those that their opinions were not influenced by their negotiations had failed, would undermine the knowledge of those positions, the Magistrate Judge public policy underlying settlement. Id. at 980. The found those averments unpersuasive. The court further held that, because settlement Magistrate Judge noted that the experts had negotiations "are typically punctuated with used [*10] essentially identical language in their numerous instances of puffing and posturing since affidavits and that the averments in question they are 'motivated by a desire for peace rather than appeared to have been drawn up by the same hand. from a concession of the merits of the claim,'" the The Magistrate Judge further found that, regardless use of "these sort of 'facts' would be highly of Plaintiff's intent in disclosing the documents, the misleading if allowed [*12] to be used for experts had received confidential information. The purposes other than settlement." Goodyear Tire & Magistrate Judge concluded that no adequate means Rubber, 332 F.3d at 981 (quoting United States v. existed for undoing the experts' improper Contra Costa County Water Dist., 678 F.2d 90, 92 knowledge. As the Magistrate Judge noted, the (9th Cir. 1982)). facts upon which an expert relies are not required to Similarly here, permitting Plaintiff's experts to be admissible. However, the factual basis for the testify after having had access to Defendants' expert's opinion is subject to inquiry and cross- confidential representations has the potential to examination. FED. R. EVID. 703. Because the undermine the willingness of parties to engage in information in issue is confidential, Defendants will future settlement negotiations. Further, the "facts" be unable to fully challenge the experts' assertions upon which those experts rely in such briefing have that their opinions were not influenced by the potential to be misleading because of the confidential settlement knowledge. purpose for which they are presented. They Although Plaintiff continues to argue that the therefore may color the expert's conclusions based experts were not influenced by the confidential on a characterization of the facts distorted by the Irwin Seating Co. v. IBM goal of settlement. In any event, the information circumstances, the Magistrate Judge's order striking provides the expert with information about the Plaintiff's expert witnesses, is both reasonable and other party's view of the significance of particular consistent with the analysis of Frank. evidence. In In re Anonymous, 283 F.3d 627 (4th Cir. 2002), The fact that the Sixth Circuit did not approve the the Fourth Circuit addressed breaches of the identical sanction does not demonstrate the confidentiality of the appellate mediation process. unreasonableness of the sanction imposed in this The court found that the client, current counsel and case. The facts of Goodyear Tire & Rubber did not local counsel had all violated the confidentiality call for the striking of an expert. Instead, the requirements of the appellate mediation process problem was fully able to be addressed by the during their subsequent bar-mediated fee dispute. denial of discovery. Here, in contrast, [*13] The court, however, weighing the totality of the Plaintiff cannot identify an alternate sanction that circumstances, declined to issue sanctions for will adequately address these experts' improper several reasons. The court found that none of the knowledge. No admonition, reprimand, mediation participants had acted in bad faith. The court training or assessment of costs can remove from the further found that the disclosures to another experts' minds the information to which they have confidential forum did not severely impact the been exposed. And, because of the ongoing effectiveness of the mediation [*15] process. confidentiality of the mediation process, such Further, the court noted that, in light of the alternatives cannot remove the obstacle to breaches by all parties, no single party was harmed Defendants' cross-examination of the experts. by the disclosures. Id. at 635-36. The remaining cases cited by Plaintiff are equally The In re Anonymous decision is fully consistent unpersuasive. For example, in Frank v. L.L. Bean with the Magistrate Judge's determination in the Inc., 377 F. Supp. 2d 233 (D. Me. 2005), the court instant case. The case endorses the notion that declined to exclude the fruits of an ex parte HN9[ ] sanctions determinations are to be based interview with a potential witness in which the on the totality of the circumstances. Id. Here, unlike opposing party's settlement position was revealed. in In re Anonymous, the only party breaching The court instead imposed financial sanctions. In confidentiality is the party with the opportunity to Frank, however, the party violating settlement benefit from that breach. Moreover, the breach did confidentiality revealed information to a former not occur within the confines of another employee of the opposing party, who shared the confidential process, but instead permitted an opposing party's interests. As a result, the opposing expert to offer an opinion influenced by party could not demonstrate prejudice arising from confidential information upon which he could not the breach of confidentiality. The court expressly be fully cross-examined. As the Magistrate Judge noted that, "[h]ad Defendant been able to found, such a breach has the potential to seriously demonstrate such prejudice, such a sanction might undermine the effectiveness of the mediated have been an [*14] appropriate remedy to settlement proceedings, thereby undermining counteract Plaintiff's ill-gotten advantage." Frank, important public policy. 377 F. Supp. 2d at 240-41. A review of Plaintiff's remaining citations to Here, Plaintiff disclosed Defendants' settlement unpublished decisions in which sanctions have been positions to its own expert witnesses. That denied reveals substantial differences in the totality information is inherently prejudicial to Defendants of the circumstances from those before this Court. and is an "ill-gotten advantage," even if the extent See Frazier v. Layne Christensen Co., No. 04-C- of the prejudice is not precisely measurable. In such 315-C, 2005 U.S. Dist. LEXIS 2358, 2005 WL Irwin Seating Co. v. IBM 372253 (W.D. Wis. Feb. 11, 2005); [*16] addressed in the scheduling conference to be held Concerned Citizens v. Belle Haven Club, No. after resolution of the dispositive motions. 3:99CV1467, 2002 U.S. Dist. LEXIS 26117 (D. Conn. Oct. 25, 2002). Plaintiff has identified no Dated: February 14, 2007 comparable disclosure to that in issue here. /s/ Robert Holmes Bell Moreover, the fact that any other district court may CHIEF UNITED STATES DISTRICT JUDGE have decided a sanctions question differently than the Magistrate Judge does not in itself suggest that the Magistrate Judge's decision constituted an End of Document abuse of discretion. See Heights Cmty. Congress, 774 F.2d at 140 (question is not whether the determination is the best or only conclusion that can be drawn but whether it is a reasonable one.) The Court finds that the factual determinations of the Magistrate Judge were not clearly erroneous and that the striking of Plaintiff's experts is not contrary to law. Accordingly, the Court will affirm the Magistrate Judge's order to strike. Having agreed that the Magistrate Judge properly struck Plaintiff's expert witnesses as a remedy for Plaintiff's breach of mediation confidentiality, the Court must determine whether Plaintiff may retain other experts. The Court has reviewed the totality of the circumstances and finds that [*17] a complete denial of expert witnesses would be an excessive sanction, not warranted by the nature of Plaintiff's conduct. The harm to Defendants is fully mitigated by the exclusion of the testimony of those experts exposed to the confidential information. The striking of experts is itself a harsh sanction and should not be made greater by the exclusion of all expert evidence in support of Plaintiff's case. Accordingly, notwithstanding the late stage of these proceedings, the Court will permit Plaintiff to engage new experts. IV. For the foregoing reasons, the Court affirms the order of the Magistrate Judge striking Plaintiff's experts. The Court, however, will permit Plaintiff to designate new experts. In accordance with the Magistrate Judge's order denying clarification (Docket # 323), deadlines for expert reports will be