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Cima v. Wellpoint Healthcare Networks

April 6, 2007


The opinion of the court was delivered by: Gilbert, District Judge


This matter comes before the Court on defendants' appeal of Magistrate Judge Wilkerson's Order granting in part and denying in part defendants' motion to strike complaint exhibits and references thereto (Doc. 106). Defendants filed a memorandum in support of their appeal (Doc. 109), plaintiffs responded (Doc. 111), and defendants replied to their response (Doc. 115). The Court heard oral argument on the appeal on March 30, 2007. Having considered the record and the parties' arguments, the Court is now prepared to rule.

I. Standard of Review

Southern District of Illinois Local Rule 73.1(a) sets forth the standard of review for an appeal of a Magistrate Judge's order on a non-dispositive matter. It provides as follows: "A District Judge of the Court shall reconsider the matter and shall set aside any portion of the Magistrate Judge's order found to be clearly erroneous or contrary to law. The District Judge may also reconsider sua sponte any matter determined by a Magistrate Judge under this rule."

II. Background

This litigation began its fourth year on March 21, 2007. Plaintiffs originally filed suit in state court, but defendants removed it to federal court on June 28, 2005 after plaintiffs filed an amended complaint. On February 3, 2006, this Court denied plaintiffs' motion to remand, finding defendants properly removed the case under the Class Action Fairness Act of 2005, Pub.L. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.).

While this action was in state court, the parties engaged in mediation. Defendants provided certain documents to plaintiffs in the course of the mediation (Mediation Documents), which, pursuant to a confidentiality agreement (Agreement), plaintiffs and their counsel agreed to use solely for purposes of mediation. Under the Agreement, plaintiffs and their attorneys agreed not to disclose any "Confidential Business Information"*fn1 for any purpose other than settlement. Plaintiffs also agreed to return the Mediation Documents after the mediation concluded. (Doc. 109, Ex. 3 at 1).

On August 26, 2004, the state court entered an agreed protective order (Protective Order) governing confidential information disclosed during discovery. On April 20, 2006, Judge Wilkerson held that the Protective Order remains in effect in this case. (Doc. 79).

Plaintiffs attached two bound volumes of exhibits to their amended complaint, which, along with the complaint, they filed under seal. These exhibits contain, according to defendants, confidential information covered by both the Agreement and Protective Order.

On September 21, 2005, Unicare Illinois Services, Inc. (Unicare), one of the defendants in this case, filed a separate action in state court (the TRO Litigation) against the original plaintiffs in this case (Greg Cima, Diana Peek and Linda McMahon), their attorneys (Clinton Krislov and Jeffrey Friedman), and their attorneys' law firms (Krislov & Associates, Ltd. and The Law Offices of Jeffrey Friedman, P.C.) (collectively, the Cima Group) asserting claims for breach of contract and conversion. Essentially, Unicare claimed the Cima Group violated the Agreement by failing to return the Mediation Documents and attaching them to the amended complaint in this case. Among other things, Unicare sought a TRO requiring the Cima Group to return the Mediation Documents. The next day, defendants filed a motion to enforce the Protective Order in this case and asked this Court to defer ruling until after the state court ruled on Unicare's request for the TRO.

On September 29, 2005, the state court entered a TRO directing the Cima Group to return the Mediation Documents, destroy all electronic reproductions of the Mediation Documents, and file affidavits attesting to the return and destruction of these documents. The court also stated, in a provision of the order written by hand and initialed by Judge Gamber, that the Agreement "was not superceded by the Protective Order." (Doc. 109, Ex. 1 at 3). Sometime after the entry of the TRO, Unicare filed a petition for a show cause hearing, in which it asked the court to hold the Cima Group in contempt for failing to comply with the TRO. In this pleading, Unicare claimed the Cima Group returned only 125 pages of the requested 4,000 documents and failed to provide the required affidavits. One day after Unicare filed this petition, the Cima Group removed the TRO Litigation to this Court. The Court remanded the TRO Litigation on February 24, 2006.

In his April 20, 2006 Order, Judge Wilkerson denied plaintiffs' request to vacate the state court TRO, ordered the parties to meet to resolve their disputes over the documents attached to the amended complaint, and denied plaintiffs' motion to unseal the complaint. (Id.).

Defendants filed their motion to strike complaint Exhibits 8, 9, 11, 12, 13, 15, 16, 24, 25, 26, 27, 28, 29, and 48, on August 14, 2006. (Doc. 92). Pursuant to Rule 12(f), defendants asked Judge Wilkerson to strike these exhibits (and the references to them in the amended complaint), claiming they contain confidential information protected by both the Agreement and Protective Order. See Whitehead v. Gateway Chevrolet, No. 03-C-5684, 2004 WL 316413, at *4 (N.D. Ill. Feb. 2, 2004); Johnson v. Am. Online, Inc., 280 F.Supp.2d 1018, 1027 (N.D. Cal. 2003); Mitchell Health Techs. v. Naturewell, Inc., Case No. 02-C-0439-C, 2003 WL 23200260, at *3 (W.D. Wisc. Mar. 10, 2003).

In their response, plaintiffs argued that the documents are not confidential and that defendants waived their right to complain of the use of these documents in a variety of ways. (Doc. 97). Specifically, they claimed defendants waived their right to a remedy under Rule 12(f) by failing to move within the 20-day period contemplated in the Rule, failing to include their Rule 12(f) objections in their previously filed ...

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