IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
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`FOOD LION, LLC, and MARYLAND
`AND VIRGINIA MILK PRODUCERS
`COOPERATIVE ASSOCIATION, INC.,
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`Plaintiffs,
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`DAIRY FARMERS OF AMERICA, INC., )
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`Defendant.
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`1:20-CV-442
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`ORDER
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`This matter is before the Court upon Plaintiffs Food Lion, LLC, and Maryland and
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`Virginia Milk Producers Cooperative Association, Inc.’s (“Food Lion and MDVA”) first
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`motion to compel and request for expedited consideration. (Docket Entry 46.) For the
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`reasons stated herein, the Court grants in part and denies in part Plaintiffs’ motion to compel
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`and orders Defendant Dairy Farmers of America, Inc. (“DFA”) to respond to Plaintiffs’
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`discovery requests as set forth below.
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`I. BACKGROUND
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`Food Lion and MDVA filed this action against DFA seeking injunctive relief pursuant
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`to Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 2 of the Sherman Act, 15 U.S.C.
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`§ 2. (See generally Compl., Docket Entry 1.) Plaintiff Food Lion is a North Carolina limited
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`liability company that operates approximately 600 supermarkets in the Carolinas, making it
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`one of the largest retail purchasers of fluid milk in the region. (Compl. ¶ 1.) Plaintiff MDVA
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`is a dairy cooperative with approximately 950 member farms throughout the Mid-Atlantic and
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`1
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`Southeast. (Id. ¶ 2.) Defendant DFA is the largest dairy cooperative in the United States, and
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`as of May 2020, the largest milk producer and largest milk processor in the United States. (Id.
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`¶¶ 3, 95.) Food Lion and MDVA allege that DFA has engaged in anti-competitive conduct
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`that will enable the monopolization of the dairy supply chain. (See id. ¶¶ 135-37.) More
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`specifically, Plaintiffs contend that DFA consolidated the dairy industry through the
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`enforcement of a twenty-year non-compete deal (the “Side Note”) made in 2001 with the
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`newly merged Dean Foods Company and subsequent supply agreements. (Id. ¶¶ 39-49.)
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`Plaintiffs allege that the most recent manifestation of DFA’s market consolidation is its May
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`1, 2020 acquisition of forty-four milk processing plants from Dean’s bankruptcy estate (“Asset
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`Sale”), including three plants in the Carolinas. (Id. ¶¶ 86-96.) Food Lion and MDVA seek an
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`injunction requiring DFA to divest at least one of these plants. (Id. ¶ 173.)
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`Food Lion and MDVA filed their Complaint on May 19, 2020. (Docket Entry 1.)
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`They then filed a motion to expedite discovery, which the Court granted. (Docket Entries 20,
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`28.) Food Lion and MDVA filed Plaintiffs’ First Set of Requests for Production on June 17,
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`2020. (Ex. 1, Docket Entry 56-1.) Plaintiffs subsequently filed a motion to compel the
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`discovery of certain documents responsive to Requests Nos. 1 and 3 of their requests for
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`production. (Docket Entry 46.) The matter came before the Court for a telephone conference
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`on September 21, 2020. (Minute Entry dated 9/18/2020.)
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`II. DISCUSSION
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`A. Legal Standard
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`Federal Rule 26 provides general rules regarding the scope of discovery:
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`Parties may obtain discovery regarding any nonprivileged matter that is relevant
`to any party’s claim or defense and proportional to the needs of the case,
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`2
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`considering the importance of the issues at stake in the action, the amount in
`controversy, the parties’ relative access to relevant information, the parties’
`resources, the importance of the discovery in resolving the issues, and whether
`the burden or expense of the proposed discovery outweighs its likely benefit.
`Information within this scope of discovery need not be admissible in evidence
`to be discoverable.
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`Fed. R. Civ. P. 26(b)(1). District courts generally have broad discretion in managing discovery,
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`including whether to grant or deny a motion to compel. Lone Star Steakhouse & Saloon, Inc. v.
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`Alpha of Virginia, Inc., 43 F.3d 922, 929 (4th Cir. 1995); Erdmann v. Preferred Research, Inc. of
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`Georgia, 852 F.2d 788, 792 (4th Cir. 1988). “[T]he party or person resisting discovery, not the
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`party moving to compel discovery, bears the burden of persuasion.” Carter Hughes v. Research
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`Triangle Inst., No. 1:11CV546, 2014 WL 4384078, at *2 (M.D.N.C. Sept. 3, 2014) (unpublished)
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`(citation omitted).
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`B. Food Lion and MDVA’s Motion to Compel
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`Plaintiffs seek document productions relating to two discovery requests served on
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`DFA. Specifically, Food Lion and MDVA seek responses to Plaintiffs’ First Requests for
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`Production Nos. 1 and 3. (Docket Entry 46 at 1.) Request No. 1 seeks “[a]ll documents
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`previously produced by DFA or Dean to the U.S. Department of Justice and/or state
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`Attorneys General in connection with their investigation(s) and review(s) of the Asset Sale.”
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`(Ex. 1, Docket Entry 56-1 at 8.) Request No. 3 seeks “[a]ll communications between DFA on
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`the one hand and any third party on the other, including Dean, regarding potential antitrust or
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`competition issues associated with the Asset Sale.” (Id.) Both of these requests exclude
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`documents relating exclusively to milk processing plants outside of the Carolinas. (Id.)
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`DFA initially raised multiple objections to these requests but did produce 2,500
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`responsive documents from the DOJ investigation. (Ex. 2, Docket Entry 56-2 at 8-11;
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`McDonald Decl. ¶ 6, Docket Entry 56 at 2.) However, from the DOJ productions, DFA
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`withheld settlement communications between DFA and the Department of Justice (“DOJ”)
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`and thirty-two documents from In re Southeastern Milk Antitrust Litigation, 739 F.3d 262 (6th
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`Cir. 2014) (“Southeastern Milk”). (McDonald Decl. ¶ 7.) It is these two sets of documents that
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`Plaintiffs now seek through their motion to compel. (Docket Entry 47 at 4, 7.)
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`C. Plaintiffs are not entitled to the settlement communications.
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`DFA contends that Federal Rule of Evidence 408 creates an outright privilege or
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`otherwise bars Plaintiffs from discovering documents relating to the settlement negotiations
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`between DFA, the DOJ and state Attorney Generals following the DOJ’s antitrust review of
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`the Asset Sale. (Docket Entry 55 at 8.) In support of this argument, DFA relies on Goodyear
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`Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976 (6th Cir. 2003). In Goodyear, the Sixth
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`Circuit Court of Appeals recognized a settlement privilege in the context of discovery based
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`in part on the public policy that underlies Rule 408. 332 F.3d at 980-81 (“The public policy
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`favoring secret negotiations, combined with the inherent questionability of the truthfulness of
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`any statements made therein, leads us to conclude that a settlement privilege should exist.”).
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`In the alternative, DFA urges this Court to adopt a heightened relevancy standard for
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`discovery related to confidential settlement agreements. (Docket Entry 55 at 13.) See also Reist
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`v. Source Interlink Co.’s, 2010 WL 4940096, at *3 (M.D. Fla. Nov. 29, 2010) (unpublished).
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`District courts in the Fourth Circuit have consistently declined to recognize a
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`settlement privilege, based on the policy underlying Rule 408 or otherwise, in discovery
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`disputes. Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. Porter Hayden Co., No. CIV. CCB-03-3408,
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`2012 WL 628493, at *3 (D. Md. Feb. 24, 2012) (unpublished) (“[T]he Fourth Circuit, like the
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`4
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`majority of courts, has declined to recognize a federal settlement privilege, and courts in this
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`district have declined to apply a settlement privilege in discovery disputes.”); Polston v. Eli Lilly
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`& Co., No. 3:08-3639, 2010 WL 2926159, at *1 (D.S.C. July 23, 2010) (unpublished) (“The
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`Fourth Circuit has never recognized a settlement privilege.”).
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`This Court has also declined to apply Rule 408 to discovery requests, holding instead
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`that relevance, not admissibility, is the proper inquiry. Volumetrics Med. Imaging, LLC v. Toshiba
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`Am. Med. Sys., Inc., No. 1:05CV955, 2011 WL 2470460, at *11 n. 7 (M.D.N.C. June 20, 2011)
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`(unpublished) (“[Federal] Rule [of Evidence] 408 does not warrant protecting settlement
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`negotiations from discovery. On its face, [Federal Rule of Evidence 408] applies to the
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`admissibility of evidence at trial, not to whether evidence is discoverable.”) (citing Phoenix Sol.’s
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`Inc. v. Wells Fargo Bank, N.A., 254 F.R.D. 568, 584 (N.D. Cal. 2008)); Kaplan Co.’s v. Peoplesoft
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`USA, Inc., No. 1:03CV1014, 2006 WL 8447846, at *1 (M.D.N.C. Mar. 15, 2006) (unpublished)
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`(“Plaintiff relies heavily on Fed. R. Evid. 408 to support its contention that settlement
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`agreements should remain confidential. That rule, however, does not protect documents from
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`discovery, but only determines whether such matters are admissible into evidence.”).
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`Accordingly, when considering the admissibility of the settlement negotiations at issue
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`here, the correct initial inquiry considers their relevance. The question remains, however,
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`whether policy favoring the confidentiality of negotiations nonetheless warrants a heightened
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`showing of relevance for disclosure. Several courts in the Fourth Circuit have expressly
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`declined to impose “any special form of burden” on parties seeking disclosure of final
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`settlement agreements. See Volumetrics, 2011 WL 2470460 at *4 n.5; Polston, 2010 WL 2926159,
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`at *1. But see Kaplan, 2006 WL 8447846, at *2 (closely scrutinizing discovery requests for
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`settlement agreements on public policy grounds, but ordering disclosure after noting the
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`“special relevance” of the “direct connection” between the defendant and the agreements
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`sought).
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`However, in the context of pre-settlement negotiations, at least one district court in the
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`Fourth Circuit found it appropriate to “apply enhanced protections to settlement documents
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`and communications sought in discovery.” Wyeth v. Lupin Ltd., Civil No. WDQ-07-632, 2008
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`U.S. Dist. LEXIS 132943, at *9 (D. Md. Mar. 28, 2008) (unpublished) (disallowing discovery
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`of settlement communications because the party seeking such communications had “not
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`demonstrated that injustice will result from non-disclosure, nor demonstrated a particularized
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`showing of the likelihood that the discovery will generate admissible evidence”). Furthermore,
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`in In re Anonymous, considering whether confidential communications made during mediation
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`should be disclosed, the Fourth Circuit itself found that courts “must balance the public
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`interest in protecting the confidentiality of the settlement process and countervailing
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`interests.” 283 F.3d 627, 637 (4th Cir. 2002). To balance those interests, the Court required
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`the party seeking disclosure of mediation communications to show that “manifest injustice”
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`would result from nondisclosure. Id.
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`Although Anonymous arose in a different context (a mediation conference governed by
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`additional confidentiality provisions), this Court agrees that public policy warrants judicial
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`caution in exposing communications made during the negotiations leading up to a final
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`settlement. Id. at 630. As noted in Kaplan, “[o]nce an agreement has been reached, there is a
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`lesser interest in protecting the settlement agreement as opposed to the negotiations
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`themselves.” 2006 WL 8447846, at *2. Because parties engaging in settlement negotiations
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`may be “motivated by a desire for peace rather than from a concession of the merits of the
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`claim . . . [they] may assume disputed facts to be true for the unique purposes of settlement
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`negotiations,” the discovery of which would be misleading if used for other purposes.” Wyeth,
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`2008 U.S. Dist. LEXIS 132943, at *13.
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`Accordingly, the Court finds that when the disclosure of settlement negotiations is at
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`issue, a particularized showing of relevance by the party seeking such documents is
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`appropriate. Plaintiffs have not made such a showing. Accordingly, the Court denies Food
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`Lion and MDVA’s Requests for Production Nos. 1 and 3 to the extent that they pertain to
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`pre-settlement communications and compromise offers between DFA, the DOJ and state
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`Attorney Generals following the DOJ’s antitrust review of the Asset Sale.
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`D. Plaintiffs are entitled to the Southeastern Milk documents, insofar as they relate
`to the Side Note and supply agreements between Dean and DFA.
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`Plaintiffs seek thirty-two documents relating to the Southeastern Milk litigation that DFA
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`acknowledges were produced to the DOJ for its review of the Asset Sale. (Docket Entry 58
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`at 7; McDonald Decl. ¶ 8, Docket Entry 56.) Those thirty-two documents include “expert
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`reports, DFA’s responses to requests for admission and interrogatories, and summary
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`judgment materials.” (McDonald Decl. ¶ 8.) In its Brief in Opposition to Plaintiffs’ Motion
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`to Compel, DFA first contends that Plaintiffs’ Request for Production No. 1 is a “cloned”
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`discovery request (a request that replicates a discovery request made in another lawsuit) and is
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`therefore “presumptively irrelevant and immaterial.” (Docket Entry 55 at 13-14, citing
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`TravelPass Grp., LLC v. Caesars Entm't Corp., No. 5:18-CV-153-RWS-CMC, 2020 WL 698538,
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`at *6 (E.D. Tex. Jan. 16, 2020) (unpublished).) DFA asserts that Plaintiffs “cannot meet their
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`burden of showing threshold relevance by simply arguing that other cases and investigations
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`had some general ‘overlap’ with [their] case.” (Docket Entry 55 at 17.) DFA further argues
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`that these documents are irrelevant to Plaintiffs’ “prospective case seeking divestiture of a
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`single milk processing plant” because they related to “a case that alleged a different product
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`market, a different geographic market, different antitrust claims, and a time period that
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`stretched back almost twenty years from the present.” (Docket Entry 55 at 19.)
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`As the party resisting discovery of the documents Plaintiffs seek, DFA bears the burden
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`of showing that they are not relevant. See Carter Hughes v. Research Triangle Inst., No. 1:11CV546,
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`2014 WL 4384078, at *2 (M.D.N.C. Sept. 3, 2014) (unpublished) (citation omitted). This
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`Court does not find that a presumption of irrelevance is raised by Plaintiffs’ purportedly
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`“cloned” discovery request. This Court has not recognized such a presumption. Nor is this
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`Court convinced that such a presumption would bar discovery if applied here. The full
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`principal disfavoring “cloned” discovery requests described in TravelPass is that “requesting all
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`documents produced or received during other litigation or investigations, is irrelevant and
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`immaterial unless the fact that particular documents were produced or received by a party is
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`relevant to the subject matter of the subject case.” 2020 WL 698538, at *6 (citing King County
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`v. Merrill Lynch & Co., Inc., No. C10-1156-RSM, 2011 WL 3438491, at *3 (W.D. Wash. Aug. 5,
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`2011) (unpublished)) (emphasis added); see also Ludlow v. Flowers Foods, Inc., No. 18-CV-01190-
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`JLS-JLB, 2019 WL 6252926, at *18 (S.D. Cal. Nov. 22, 2019) (unpublished) (“Asking for all
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`documents produced in another matter is not generally proper.”); Midwest Gas Servs., Inc. v.
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`Indiana Gas Co., No. IP 99-690-C-D/F, 2000 WL 760700, at *1 (S.D. Ind. Mar. 7, 2000)
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`(unpublished) (denying discovery request for “any and all documents received from or
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`provided to the United States Justice Department from 1995 to the present”).
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`First, Plaintiffs’ Request for Production No. 1 did not request all documents produced
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`by DFA to the DOJ in its investigation. Plaintiffs limited their original request to documents
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`relating to the geographic area at issue in this case. (See Ex. 1, Docket Entry 56-1 at 8.) The
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`scope of Plaintiffs’ request is now further narrowed to a subset of thirty-two documents from
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`the Southeastern Milk litigation. Second, the fact that these documents were produced for the
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`DOJ’s antitrust investigation of the Asset Sale does suggest relevancy. Paralleling Plaintiffs’
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`allegations, the anticompetitive conduct at issue in Southeastern Milk was predicated on the 2001
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`Side Note and subsequent long-term supply agreements between DFA and Dean. (Docket
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`Entry 47 at 7-8; Compl. ¶¶ 39-49.) Because “extensive evidence was developed in Southeastern
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`Milk regarding the circumstances surrounding the negotiation and execution of the Side
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`Note,” Plaintiffs plausibly argue that the Southeastern Milk documents are needed to “provide
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`context for their Section 2 attempted monopoly claim.” (Docket Entry 47 at 9; Docket Entry
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`58 at 7.)
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`The Court cannot conclude that the Southeastern Milk documents are not relevant to
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`Plaintiffs’ claims based upon the age of the documents.1 “Particularly where allegations of
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`conspiracy or monopolization are involved … broad discovery may be needed to uncover
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`evidence of invidious design, pattern or intent.” Kellam Energy, Inc. v. Duncan, 616 F. Supp. 215,
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`217 (D. Del. 1985). “[T]he temporal scope of discovery in antitrust suits should not be
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`confined to the limitations period of the antitrust statutes.” Id. at 218 (citing Wilder Enterprises,
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`Inc. v. Allied Artists Pictures Corp., 632 F.2d 1135, 1143 (4th Cir.1980) (finding that discovery of
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`1 DFA has not disclosed the exact age of the thirty-two Southeastern Milk documents Plaintiffs seek.
`According to DFA, the consolidated Southeastern Milk cases were filed in 2007 and settled in 2018.
`(Docket Entry 55 at 15.)
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`agreements made two years prior to the limitations period should have been permitted because
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`of their relevance to the issue of conspiracy). Rather, “plaintiff is ordinarily permitted to
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`discover defendant’s activities for a reasonable period of time antedating the earliest possible
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`date of the actionable wrong.” B-S Steel of Kansas, Inc. v. Texas Indus., Inc., No. 01-2410-JAR,
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`2003 WL 21939019, at *3 (D. Kan. July 22, 2003) (unpublished) (internal quotations omitted).
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`To succeed on its Section 2 monopolization claim, Plaintiff must prove “the possession
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`of monopoly power” and “willful acquisition or maintenance of that power.” 15 U.S.C. § 2;
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`E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 441 (4th Cir. 2011). An
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`attempted monopolization claim requires “(1) the use of anticompetitive conduct; (2) with
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`specific intent to monopolize; and (3) a dangerous probability of success.” Id. Here, showing
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`acquisition of market power and anticompetitive conduct logically involves an investigation of
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`DFA’s past actions. Indeed, Plaintiffs’ Complaint alleges that DFA’s market consolidation
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`“began with a ‘corrupt bargain’ struck in 2001,” namely, a supply agreement between Dean
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`and DFA secured by the Side Note. (Compl. ¶¶ 39, 44, 47.)
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`Certainly DFA “should not be subjected to discovery from unreasonably remote time
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`periods.” Cyntegra, Inc. v. IDEXX Labs., Inc., No. CV 06-4170-PSG(CTX), 2007 WL 9701999,
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`at *5 (C.D. Cal. June 29, 2007) (unpublished). However, because Plaintiffs do not seek broad
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`historical discovery (but rather thirty-two documents that relate to agreements between Dean
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`and DFA contextualizing their claims), production is appropriate. See id. (holding that
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`“twenty-two years is not a reasonable period” for discovery in general, but permitting focused
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`discovery of exclusive dealing agreements dating back to 1995) (citing United States v. Grinnell
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`Corp., 30 F.R.D. 358, 360 (D.R.I. 1962) (allowing discovery of agreements between defendant
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`and competitors going back to 1907, but limiting scope of all other discovery to ten years prior
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`to the filing of the complaint)).
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`Neither does the Court find that the documents Plaintiffs seek will be unduly
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`burdensome to produce. “As a general rule, under Federal Rule of Civil Procedure
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`26(b)(2)(C)’s proportionality analysis, ‘the court must limit the frequency and extent of
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`discovery otherwise allowed by these rules . . . if it determines that . . . the burden or expense
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`of the proposed discovery outweighs its likely benefit.” CSX Transp., Inc. v. Peirce, No. 5:05-
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`CV-202, 2012 WL 12892735, at *5 (N.D.W. Va. July 18, 2012) (unpublished) (citation
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`omitted). The Court acknowledges the difficulties that may arise in noticing entities about the
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`disclosure of confidential Southeastern Milk documents. (See McDonald Decl. ¶ 12.) The Court
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`is also aware that discovery in this case is taking place on an expedited schedule. (Docket
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`Entry 28.) However, considering the relatively limited number of documents now at issue and
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`their recent production to the DOJ, the court does not find that the burden on DFA to
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`produce them outweighs their potential relevance to the case. Therefore, Plaintiffs are entitled
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`to these thirty-two documents insofar as they relate to agreements that allegedly enabled the
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`anticompetitive conduct that forms the basis of their case.
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`III. CONCLUSION
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`For the reasons stated herein, IT IS HEREBY ORDERED that Food Lion and
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`MDVA’s motion to compel (Docket Entry 46) is GRANTED IN PART AND DENIED
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`IN PART. DFA shall supplement its responses as stated herein no later than seven (7) days
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`from the date of this Order.
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`September 29, 2020
`Durham, North Carolina
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`___________________________
` Joe L. Webster
` United States Magistrate Judge
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