Relevance Required to Discover Funding Agreements

• Author: Martha L. Kohlstrand
• Pages: 24-24

Some Section leaders believe the

court’s use of o bjective factors in its

evaluation of severing c laims could

result in an increa se in hostile work

environment claims. “There is no

doubt that this rul ing makes it easier

for plaintis to ad vance claims of

hostile work environ ment, which are

traditionally ver y dicult claims to

prove,” predicts J anea J. Hawkins,

Reston, VA, newslet ter editor for the

Employment & Lab or Relations Law

Committee. A s a result, employers

should take appropriate action when

evaluating discrimination claims. “It

would be in employer s’ best inter-

ests to give heighten ed attention to

workplace harassment complaints,

investigatecomplai nts promptly and

thoroughly, and take prompt action

under the company’s anti-harassment

policy when warranted,” advises

Hawkins.

Relevance Required

to Discover Funding

Agreements

By Martha L . Kohlstrand, Litig ation

News Associa te Editor

Litigants must have specif‌ic rea-

sons for the disclo sure of informa-

tion about their o pponents’ litigation

funding arra ngements, the U.S .

District Cour t for the District of New

Jersey has rule d. In In re Valsartan

N-Nitrosodimethylamine (NDMA)

Contamination Pro ducts Liability

Litigation, the cour t opined that

absent special circumstances, litiga-

tion funding de als are not subject to

discovery since they a re generally

irrelevant to the mer its of a case.

The plaintis a lleged that the

defendants ’ drug contained car-

cinogens and c aused them personal

injuries and e conomic losses. The

defendants requested “all documents

and communications related to fund-

ing or f‌inancin g, if any, you or your

counsel have obtain ed to pursue this

litigation.” The pl aintis objected to

this request, a rguing that their private

f‌inancial info rmation was irrelevant to

their claims an d defenses. However,

the plaintis a greed to produce some

documents fo r in camera review so

the court could determine whether

the litigation fun ding company had

control or input into li tigation deci-

sions. Other t han this possibility,

though, the pl aintis contended that

the defendant s had no legitimate

need for the information.

The defendant s f‌iled a motion to

compel, arguing that any third-party

funding was rel evant to discover-

ing the real par ty in interest as to the

plaintis’ cla ims. They contended that

the funding inf ormation was relevant

to determining ( 1) the plaintis’ cred-

ibility and bia s, (2) the scope of pro-

portional di scovery, (3) the scope of

potential sanc tions, and (4) the medi-

cal necessity and reasonableness of

plaintis’ treatments.

The court beg an by consider-

ing Federal Rul e of Civil Procedure

26(b)(1), which per mits discovery

regarding “any nonprivileged matter

that is relevant to any par ty’s claim

or defense and proportional to the

needs of the cas e[.]” The court noted

that the majorit y of courts address-

ing the issue have hel d that discovery

regarding litigat ion funding is irrele-

vant. Agreeing with t hose rulings, the

court denie d the motion to compel.

However, the court emph asized

that discovery concerning litigatio n

funding may sometimes be appropri-

ate. In cases whe re it can be shown

that a party ac ted unethically or that

the litigation fun der made ultimate lit-

igation or settle ment decisions—sac-

rif‌icing the plaintis’ interests—then

such discovery cou ld be relevant.

Litigation fund ing, according to the

court, will be di scoverable only if

there is good ca use to show that the

discovery is relevan t to the claims

and defenses in t he case. In this case,

however, the defendants h ad made

no such showing. M oreover, even if

the discovery had b een relevant, the

defendants’ requests would not be

proportion al to the needs of the case,

the court concluded.

ABA Section of Liti gation leaders

agree that relevan ce is a key issue

for courts con sidering this type of

discovery request. “Remember, the

key issue is how the requ ested dis-

covery aects c laims or defenses in

the lawsuit,” advise s Angela Foster,

North Brun swick, NJ, cochair of the

Section of Litigati on’s Trial Evidence

Committee. “Although courts vary

on how they interpret rel evance, the

decision wheth er to allow discov-

ery ultimately co mes down to this,”

agrees Alex Cha n, San Francisco,

CA, cochai r of the Section's Minority

Trial Lawyer Committe e. “There are a

few circumstance s in which litigation

funding could be relevant, and the

court acknowl edges this. But it needs

to clearly tie to the issu es in the case,”

he adds.

Even if the party who s eeks the

discovery can sh ow relevance, there

are other hurdle s. “Some courts have

found that the work-pro duct doctrine

applies to docum ents related to liti-

gation fundin g,” Chan explains. “And

that’s a really hig h bar to overcome,”

he notes.

Foster has some id eas for man-

aging litigation in w hich a funder is

involved. “If you are a p lainti, make

sure you have a nondiscl osure agree-

ment in place with you r litigation

funder,” she advise s. “Also, be carefu l

about what you sha re with the litiga-

tion funder,” Foster recommends.

Prevailing Employee

Not Entitled to

Recoup Union Dues

By Anthony R. Mc Clure, Litigation

News Tea m Edi tor

An employee who protes ted the

deduction of “ fair-share” union fees

from his paycheck is n ot entitled to

damages for the a mount he paid,

despite the Supre me Court of the

United States’ dec ision that requir-

ing such fees viol ates the First

Amendment. Because the fees were

paid before that de cision, the union

successfully i nvoked a “good faith”

defense that it ha d reasonably relied

on establish ed law, according to a

federal circuit co urt.

In the 1977 decis ion of Abood

v. Detroit Board of Edu cation, the

Supreme Cour t “authorized state-

government entitie s and unions to

enter into agreements under which

the unions could r eceive fair-share

fees from nonm embers to cover the

24 | SECTION OF LITIGATION

Published in Litigation News Volume 46, Number 2, Wint er 2021. © 2021 by the Americ an Bar Association. Re produced with per mission. All rights res erved. This infor mation or any portio n thereof may not be c opied or disseminated in any

form or by any means or sto red in an electronic da tabase or retrieval sy stem without the ex press writt en consent of the Amer ican Bar Associatio n.

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