Gordon v. Virtumundo Inc et al, No. 2:2006cv00204 - Document 87 (W.D. Wash. 2007)
Court Description: SEALED MOTION TO COMPEL FURTHER TESTIMONY OF JAMES GORDON RE PRIOR SETTLEMENTS re 86 MOTION for Leave to File Under Seal a Motion to Compel Discovery by Defendants Virtumundo Inc, Adknowledge Inc. Noting Date 1/26/2007. (Attachments: # 1 Proposed Order Granting Motion to Compel Deposition Testimony from James Gordon re Prior Settlements)(Newman, Derek) Modified text on 5/15/2007 (CL, ). (Unsealed as per Order, docket no. 121 . (Entered: 01/11/2007)
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Gordon v. Virtumundo Inc et al Doc. 87 1 The Honorable John C. Coughenour 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 9 10 13 JAMES S. GORDON, Jr., a married individual, d/b/a ‘GORDONWORKS.COM'; OMNI INNOVATIONS, LLC., a Washington limited liability company, 14 Plaintiffs, 11 12 16 17 18 19 VIRTUMUNDO, INC, a Delaware corporation d/b/a ADNOWLEDGEMAIL.COM; ADKNOWLEDGE, INC., a Delaware corporation, d/b/a ADKNOWLEDGEMAIL.COM; SCOTT LYNN, an individual; and JOHN DOES, 1-X, 20 DEFENDANTS’ MOTION TO COMPEL DISCOVERY OF TESTIMONY RE SETTLEMENTS NOTE ON MOTION CALENDAR: January 26, 2007 v. 15 NO. CV06-0204JCC CONFIDENTIAL INFORMATION Defendants. 21 22 23 I. INTRODUCTION Defendants submit this motion to compel Plaintiffs James S. Gordon, Jr. 24 (“Gordon”) and Omni Innovations, LLC (“Omni”) (together, “Plaintiffs”) to provide 25 further testimony regarding Gordon’s prior settlement agreements in disputes involving 26 his alleged receipt of unsolicited commercial email. The information Defendants seek is 27 relevant for many reasons. In a recent deposition, Gordon admitted the settlement of 28 lawsuits provides his sole source of income and has for several years (except for state DEFS.’ MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 1 (CV06-0204JCC) NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 (206) 274-2800 Dockets.Justia.com 1 unemployment benefits). Further information concerning his prior settlements may 2 provide evidence of Gordon’s improper motives in filing lawsuits, including the case at 3 bar. For example, Gordon admitted in deposition that he can block emails from 4 Defendants but did not do so. He also admitted he encourages so-called clients to send 5 him messages from email marketers in exchange for a share of case settlements. Further 6 testimony relating to Gordon’s settlements will help to establish that Gordon makes no 7 efforts to mitigate alleged damages, but instead seeks to increase them to maintain his 8 sole source of income. Further testimony may also reveal admissions against interest in 9 Gordon’s previous settlement agreements, and may provide evidence relating to his 10 ability to pay a potential award of attorneys’ fees in favor of Defendants. 11 Defendants only seek discovery which may lead to the production of admissible 12 evidence, and will not offer the requested testimony to prove the invalidity of Gordon’s 13 previous claims, as prohibited by Fed. R. Evid. 408. Defendants will maintain the 14 confidentiality of information consistent with the protective order in this case. The 15 discovery rights created by the Federal Rules of Evidence are broad, and the requested 16 information is relevant to Defendants’ case. Accordingly, Defendants request this Court 17 allow them to question Gordon in deposition about his prior settlements, and compel Mr. 18 Gordon to testify truthfully and fully in response to such questions. 19 II. FACTS 20 A. Gordon’s sole source of income is settling cases like this one. 21 On January 9, 2007 and January 10, 2007, Defendants deposed Plaintiff James S. 22 Gordon, Jr. (“Gordon”) in the above-captioned lawsuit. (Declaration of Derek A. 23 Newman in Support of Defendants’ Motion to Compel Discovery (“Newman Decl.”) ¶ 2.) 24 Gordon testified that for years, he has made no income other than through settlement of 25 lawsuits (except for state unemployment benefits). (Id. ¶ 2 Ex. A at 31:12 - 32:21; 45:21- 26 23; 46:20-22.) Each of the lawsuits Gordon has settled were based upon allegations 27 relating to unsolicited commercial email, similar to Gordon’s allegations in this matter. 28 (Id. ¶ 2 Ex. A at 36:1-25; 41:6 - 42:8; 49:16 - 50:8.) DEFS.’ MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 2 (CV06-0204JCC) NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 (206) 274-2800 1 In this lawsuit, Gordon seeks statutory damages, and admits he suffered no actual 2 damages, from the unsolicited commercial email he allegedly received from Defendants. 3 (Dkt. #15 at 19:18-20.) However, at his deposition he admitted that the receipt of 4 unsolicited commercial email actually benefits him. (Newman Decl. ¶ 2 Ex. A at 218:3 - 5 219:3 (“I'm doing research on the spam that I receive, and there is a benefit in receiving 6 spam because of that.”).) Indeed, Mr. Gordon was asked: “[t]he receipt of spam benefits 7 you, correct?” (Id. at 218:3). After several objections from his lawyer, Mr. Gordon 8 answered, “[y]es insofar as research and yes insofar as there have been settlement 9 agreements”. (Id. at 219:1-3.) Gordon also admitted he solicits unsolicited commercial 10 email from so-called “clients” for the purpose of collecting statutory damages, and shares 11 his litigation awards with them. (Id. ¶ 2 Ex. A at 416:5 - 417:6.) 12 B. 13 14 Gordon refuses to answer questions about his previous settlements without a court order. Unless this Court orders him to do so, Gordon refuses to answer questions about 15 the terms of his settlements in other cases involving his alleged receipt of unsolicited 16 commercial email. (Newman Decl. ¶ 2 Ex. A at 33:7-8.) Gordon will not reveal this 17 information even though the parties have negotiated a protective order which would 18 ensure his settlement information remains confidential. (Id. ¶ 2 Ex. A at 34:3-6; see also 19 Dkt. #37.) During Gordon’s deposition, the parties sought the Court’s guidance regarding 20 this matter. (Newman Decl. ¶ 2 Ex. A at 43:18-25.) At that time, the Court indicated 21 Defendants could file a motion to compel further deposition inquiry regarding Gordon’s 22 prior settlement agreements. (Id. ¶ 2 Ex. A at 71:17 - 72:17.) 23 III. ARGUMENT & AUTHORITY 24 A. 25 The requested information may lead to the discovery of admissible evidence. 26 This Court should grant the relief Defendants seek. “The Federal Rules of 27 Evidence create a ‘broad right of discovery’ because ‘wide access to relevant facts serves 28 the integrity and fairness of the judicial process by promoting the search for the truth.’” DEFS.’ MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 3 (CV06-0204JCC) NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 (206) 274-2800 1 Epstein v. MCA, 54 F.3d 1422, 1423 (9th Cir. 1995) citing Shoen v. Shoen, 5 F.3d 1289, 2 1292 (9th Cir. 1993). “Litigants ‘may obtain discovery regarding any matter, not 3 privileged, that is relevant to the claim or defense of any party.’” Survivor Media, Inc. v. 4 Survivor Productions, 406 F.3d 625, 635 (9th Cir. 2005), quoting FED. R. CIV. P. 26(b)(1). 5 For purposes of discovery, relevance is defined broadly to include “all information 6 ‘reasonably calculated to lead to the discovery of admissible evidence’”. Brown Bag 7 Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992), quoting FED. R. CIV. P. 8 26(b)(1). Parties may obtain information which is inadmissible, provided there is a 9 reasonable chance that information will lead to the discovery of other evidence which is 10 admissible. FED. R. CIV. P. 26(b)(1). In this case, information concerning Gordon’s 11 prior settlements may well lead to the discovery of admissible evidence. 12 B. 13 As provided by FED. R. EVID. 408, information regarding Gordon’s previous The requested information may be admissible for specific purposes. 14 settlements may be admissible for certain purposes at trial. FED. R. EVID. 408 bars the 15 admission of settlement evidence “to prove liability for or invalidity of the claim or its 16 amount”, but does not “require the exclusion of any evidence otherwise discoverable 17 merely because it is presented in the course of compromise negotiations.” 18 19 20 21 In Fireman's Fund Ins. Co. v. City of Lodi, 296 F. Supp.2d 1197 (E.D.Cal. 2003), the court determined a settlement agreement was admissible because Rule 408 does not require exclusion when the evidence is offered for another purpose [aside from proving liability or the lack thereof], such as proving bias or prejudice of a witness . . . The use of the phrase “such as” . . . implies that the ensuing list is not exhaustive, but is only illustrative. 22 23 (Cites omitted.) 296 F.Supp.2d at 1208-09. The district court admitted the settlement 24 agreement in question because the document provided relevant evidence of the 25 obligations it imposed on the parties who signed it. Id. at 1209. See also Bennett v. La 26 Pere, 112 F.R.D. 136, 139 (D.R.I. 1986) (granting motion to compel disclosure of 27 settlement agreements because such discovery was the only method to determine whether 28 those documents were admissible pursuant to the exceptions in FED. R. EVID. 408). DEFS.’ MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 4 (CV06-0204JCC) NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 (206) 274-2800 1 The information Defendants request is relevant to the affirmative defenses they 2 allege in their Answer to the First Amended Complaint (Dkt. #31). For example, 3 Defendants allege failure to mitigate. (Id. ¶ 6.2.) Evidence pertaining to Gordon’s 4 previous settlements may indicate a strong motivation to create damages to increase his 5 income through settlements, rather than mitigating. Defendants also allege Gordon has 6 already been compensated for any damages he has allegedly suffered. (Id. ¶ 6.7.) It is 7 possible, for example, that Gordon released claims against the defendants in this case 8 through earlier settlement agreements. The information Defendants request may 9 substantiate that allegation. Unless Defendants have the opportunity to question Gordon 10 about his settlement agreements in past actions, Defendants cannot know what 11 exculpatory evidence or other relevant information is contained therein. Finally, 12 Gordon’s past settlements are germane to whether he has the ability to pay a judgment 13 against him, which is relevant to Defendants’ pending Motion for an Undertaking (Dkt. 14 No. 38). 15 C. 16 A party suffers prejudice if the opposing party’s failure to cooperate in discovery This Court should compel plaintiffs to produce the requested discovery. 17 “impair(s) the [discovering party’s] ability to go to trial.” Adriana Int’l Corp. v. Lewis & 18 Co., 913 F.2d 1406, 1412 (9th Cir. 1990); Henry v. Gill Industries, Inc., 983 F.2d 943, 19 948 (9th Cir. 1993) (A “defendant suffers prejudice if the plaintiff's actions impair the 20 defendant's ability to go to trial or threaten to interfere with the rightful decision of the 21 case”) (citation omitted). The information Defendants request is unquestionably relevant 22 to their defenses in this lawsuit, and Defendants will maintain its confidentiality to the 23 extent required by this Court and the parties’ prior agreements. However, unless this 24 Court orders Gordon to provide information relating to his prior settlement agreements, 25 Defendants’ ability to discover relevant evidence will be significantly impaired. This will 26 cause them substantial prejudice and interfere with the rightful decision of this case – 27 precisely the outcome the Ninth Circuit cautioned against in Adriana and Henry, supra. 28 /// DEFS.’ MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 5 (CV06-0204JCC) NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 (206) 274-2800 1 2 IV. CONCLUSION Defendants respectfully request that this Court order Plaintiffs to provide further 3 testimony regarding Gordon’s prior settlement agreements in cases involving his alleged 4 receipt of unsolicited commercial email, and specifically to order Gordon to answer any 5 questions regarding those past settlements and settlement agreements. 6 DATED this 11th day of January, 2007. 7 NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 8 9 /s/ Derek A. Newman 10 By: 11 Derek A. Newman, WSBA No. 26967 Roger M. Townsend, WSBA No. 25525 12 Attorneys for Defendants 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFS.’ MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 6 (CV06-0204JCC) NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 (206) 274-2800
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