Missouri Supreme Court Refuses to Impose an Obligation to Preserve Discovery Documents Upon Settling Defendant
 
February 14, 2006
 
Troy D. Hoyt- Chicago

Yogi Berra put it best when he said, “It ain’t over till it’s over.” In a product liability case that appeared to be over and settled with only a few loose ends to tie up, the plaintiffs’ counsel asked the court to compel the defendant to index and preserve confidential documents that had been produced during discovery. Much to the surprise of the defendant, the court granted the plaintiffs’ request, and the parties in this “settled” case suddenly found themselves mired in further heated motion practice. It was left to the Missouri Supreme Court to resolve the issue of a defendant’s obligation to preserve discovery documents following the settlement of a case.

In Lavelock v. Cooper Tire & Rubber Co., 169 N.W.3d 865 (Mo. 2005), the plaintiffs were injured in an automobile accident and sued Cooper Tire, claiming that the accident had been caused by the failure of a defective Cooper tire. After significant negotiation, the parties reached a settlement, and in accordance with typical procedure, the plaintiffs agreed to release defendant Cooper Tire from all liability. During the course of the litigation, Cooper Tire had produced confidential corporate documents which were subject to a protective order entered by the court. Pursuant to the express terms of the protective order, the confidential documents were to be returned to Cooper Tire following any resolution of the case, including a settlement. Almost six months after the parties finalized their agreement regarding the terms of a confidential settlement, and after the plaintiffs had signed the settlement agreement and release, counsel for the plaintiffs filed a motion with the court seeking to force Cooper Tire to indefinitely retain and preserve the confidential corporate documents returned by the plaintiffs. At that point the plaintiffs had not yet dismissed the case and accordingly, Cooper Tire had not yet released the settlement funds. In their motion, the plaintiffs asserted their “fear that defendant Cooper Tire & Rubber Company will destroy the returned materials to avoid having to produce them in other lawsuits.” Amazingly, as justification for such an extraordinary request, the plaintiffs explained the preservation of the documents was “very likely to ease the discovery process in other cases.”

Despite Cooper Tire’s objection, and despite the fact that a settlement agreement and release had already been executed (which made no mention of such an obligation by Cooper Tire), the court ordered Cooper Tire to create an index of the confidential corporate documents that they had produced in the case and file the index with the court. Practically speaking, by virtue of that court order, Cooper Tire was obligated to maintain the documents indefinitely and would in effect be required to suspend its document retention policy regarding those documents.

Cooper Tire moved to vacate that portion of the court’s order requiring it to file the index of confidential documents, arguing that the court lacked jurisdiction to enter such an order which contradicted and exceeded the scope of the parties’ settlement agreement. The court heard oral argument on Cooper Tire’s motion, after which it found Cooper Tire in contempt for failing to file the index as previously ordered, and further ordered Cooper Tire to pay a per diem fine of $1,000 for each subsequent day it did not file the index. Cooper Tire sought appellate relief and ultimately ended up before the Missouri Supreme Court. The appeal remained pending for several months during which time the per diem fine of $1,000 continued to mount.

During oral argument¹ before the Missouri Supreme Court, the justices seemed taken aback by the fact that Cooper Tire was found in contempt and ordered to pay the per diem fine when they were merely seeking, but had not yet received, appellate review of the trial court’s decision. As to the new terms the plaintiffs sought to add to the settlement agreement, the justices speculated as to whether the plaintiffs had any right to seek such relief after the terms of the settlement had been agreed upon and the agreement had been executed. The justices’ most poignant observations as to the lower court’s ruling addressed the trial court’s willingness to impose an obligation on a party to preserve documents when the underlying case had settled. One justice remarked that such logic dictated that all courthouses would have to keep all discovery on file in every case indefinitely for potential use by subsequent litigants.

Thereafter, in a very concise opinion, the Missouri Supreme Court overturned the trial court’s order and found in favor of Cooper Tire, holding that after a settlement, a trial court must enter its judgment based on the terms expressed in the settlement agreement and not impose terms that were neither contemplated nor negotiated by the parties. Lavelock v. Cooper Tire & Rubber Co., 169 S.W.3d 865 (Mo. 2005). Moreover, the Supreme Court found the contempt order to be an abuse of discretion and noted that, “[a] contempt judgment cannot be based on willful disobedience of an order not lawfully made by the trial court.” State of Missouri ex rel. Cooper Tire & Rubber Co. v. The Honorable W. Stephen Nixon, 169 S.W.3d 867 (Mo. 2005). Accordingly, Cooper Tire was relieved of the per diem fine. Based on the Supreme Court’s decision, the settlement was finalized in accordance with the terms initially agreed upon by the parties and memorialized in the settlement agreement.

Holland & Knight attorneys assisted in the defense of Cooper Tire in this case.

For more information, e-mail Troy D. Hoyt at troy.hoyt@hklaw.com or call toll free, 1-888-688-8500.

¹ A recording of the oral argument before the Missouri Supreme Court can be found at http://supremecourt.missourinet.com/audio_archive/

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