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Craftwood Lumber Co. v. Interline Brands, Inc.

United States District Court, N.D. Illinois, Eastern Division

April 9, 2014

CRAFTWOOD LUMBER COMPANY, Plaintiff,
v.
INTERLINE BRANDS, INC., a Delaware corporation, and INTERLINE BRANDS, INC., a New Jersey corporation, Defendants.

MEMORANDUM OPINION

JOHN F. GRADY, District Judge.

Plaintiff has filed a motion to prohibit defendants from disclosing, relying on, or offering into evidence any document generated during the parties' mediation and from referring to statements and events that occurred during the mediation and to strike statements defendants made in court about the mediation. The motion is denied for the reasons explained below.

BACKGROUND

Plaintiff, Craftwood Lumber Company ("Craftwood"), brought this putative class action against two affiliated entities, Interline Brands, Inc., a Delaware corporation; and Interline Brands, Inc., a New Jersey corporation (collectively, "Interline" or "defendant"), alleging that Interline violated provisions of the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005, 47 U.S.C. ยง 227, and the regulations promulgated under the Junk Fax Prevention Act by the Federal Communications Commission, by sending at least 1, 500 advertisements in at least 735, 000 facsimile transmissions, some of which were received by Craftwood. The faxes advertised Interline's products.

On August 29, 2013, we entered an order granting Craftwood's motion for discovery sanctions pursuant to Federal Rule of Civil Procedure 37(b)(2)(A)(ii) and precluding Interline from asserting "prior express invitation or permission" ("PEP") and "established business relationship" ("EBR") defenses and from introducing evidence concerning PEP and EBR. Pursuant to Federal Rule of Civil Procedure 37(b)(2)(C), we further ordered that Interline and its counsel pay the reasonable expenses, including reasonable attorneys' fees, incurred by Craftwood in filing and briefing the motion for sanctions. We directed the parties to follow the procedures set forth in Local Rule 54.3 to try to agree on an appropriate amount.

On September 4, 2013, we held a status hearing. The parties informed the court that they wanted to stay Rule 54.3 proceedings while they attempted to settle the case through mediation, and we were amenable. We set an October 23 status hearing for a report on settlement efforts. On October 11, 2013, the parties participated in a mediation session in California with a private mediator. Before mediation began, the parties and counsel signed a written Confidentiality Agreement, which is the focus of the current dispute.

The next time we heard from the parties, it was a joint request to continue the October 23 status date to November 20, which was granted. Shortly before the November 20, 2013 status hearing, Craftwood filed an amended motion for class certification, while Interline filed a status report stating that the parties had reached a class-wide settlement as a result of the mediation. At the status hearing, Interline's counsel informed us that the parties had entered into a settlement agreement and attempted to show the court a copy of a "term sheet" that the parties had executed. Craftwood's counsel objected on the ground that it would be a violation of the parties' Confidentiality Agreement to show us the term sheet. We discussed the possibility of Interline filing a motion to enforce the settlement agreement but ultimately allowed Craftwood to first file a motion to bar Interline from introducing evidence in violation of the Confidentiality Agreement. That motion is now fully briefed.

DISCUSSION

Craftwood contends that we should enter an order barring Interline from introducing any "mediation evidence" because the parties' Confidentiality Agreement "unambiguously" bars such disclosure. Craftwood relies on the following provisions of the Confidentiality Agreement:

In order to promote communication among the parties and the mediator and to facilitate settlement of the dispute, all parties... agree as follows:
...
[2] All statements made during the course of the mediation or in mediator follow-up thereafter at any time prior to complete settlement of this matter are privileged settlement discussions... and are non-discoverable and inadmissible for any purpose including in any legal proceeding.
[3]... Disclosure of any records, reports or other documents, received or prepared by the mediator cannot be compelled. The mediator shall not be compelled to disclose or to testify in any proceeding as to... any records... or other documents received or prepared by the mediator....
[4] No aspect of the mediation shall be relied upon or introduced as evidence in any arbitral, judicial, or other ...

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