On April 12, the United States District Court for the Southern District of California upheld a magistrate judge’s discovery order requiring the production of settlement agreements containing confidentiality provisions.   

In Kenneth J. Moser v. Health Insurance Innovations, Inc., consumer plaintiff Kenneth Moser brought putative class action claims against Health Insurance Innovations (“HIIQ”) under the Telephone Consumer Protection Act.  During discovery, HIIQ requested production of documents and information regarding past TCPA lawsuits filed and settled by the plaintiff. Specifically, HIIQ requested that Moser identify and describe all communications he had involving TCPA violations, the amounts of any monetary settlements he had received, and the identities of parties with whom he had settled. Further, HIIQ requested the production of any settlement agreements he had entered into that contained confidentiality provisions. The magistrate judge, siding with HIIQ, issued a discovery order finding that HIIQ’s requests were relevant to Moser’s credibility.

Moser objected to the judge’s order, arguing that HIIQ’s requests were extremely burdensome, especially in light of the relevance and potential value of the responses. HIIQ, on the other hand, maintained that the information it was seeking was relevant to Moser’s motive, state of mind, or credibility. According to HIIQ, Moser’s credibility was a material issue and central to the claims brought in the case. 

The district court upheld the magistrate judge’s ruling, finding that HIIQ’s requests were proportional to the needs of the case under Rule 26 of the Federal Rules of Civil Procedure. Recognizing the potential for interference with privacy rights of third parties, the Court required that Moser produce the settlement agreements for an in camera inspection by the magistrate judge to determine what notice and rights must be afforded to such third parties.

In light of this decision, TCPA defendants should be reminded that a confidentiality provision will not necessarily shield settlement agreements from production in subsequent litigation. Parties should consider including notice provisions when drafting confidential settlement agreements, requiring any party compelled by court order to produce a confidential settlement agreement to provide notice to all parties to the agreement and bear any costs and fees associated with protecting the confidentiality of settlement.