IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

EVELYN CLARK and BRADLEY ELDRED, )

)

Plaintiffs, )

)

v. ) No. 03 C 7882

)

EXPERIAN INFORMATION SOLUTIONS, INC., )

and CONSUMERINFO.COM, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

JAMES F. HOLDERMAN, District Judge:

On January 9, 2006, defendant Consumerinfo.com, Inc. (“Consumer”), filed the pending

objections (Dkt. No. 238), to Magistrate Judge Brown’s memorandum opinion and order of

January 6, 2006. (Dkt. No. 240). Consumer supplemented these objections on March 8, 2006. 

(Dkt. No. 251). For the reasons set forth below, this court denies Consumers’ objections to

Judge Brown’s decision of January 6, 2006. 

BACKGROUND

Plaintiffs Evelyn Clark and Bradley Eldred (collectively “plaintiffs”), filed a second

amended class action complaint on June 1, 2005 against defendants Experian Information

Solutions, Inc. and Consumer (collectively “defendants”), alleging a violation of the Illinois

Consumer Fraud Deceptive Practices Act, 815 ILCS 505/1 et seq., negligent misrepresentation

and unjust enrichment. Clark v. Experian Infor. Inc., 233 F.R.D. 508, 509 (N.D. Ill. 2005)

(Holderman, J). The plaintiffs alleged in their complaint that the defendants have lured

customers onto various websites with a promise of a free credit report, but in reality the

consumers are unknowingly enrolled in an automatically renewing credit monitoring service
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costing either $79.95 a year or $10.95 a month. Id. at 510. On December 15, 2005, this court

denied the plaintiffs’ motion for class certification and on January 31, 2006 the Seventh Circuit

denied the plaintiffs’ petition for permission to appeal the class certification decision pursuant to

Rule 23(f) of the Federal Rules of Civil Procedure. In re: Clark, No. 05-8038 (7th Cir. Jan. 31,

2006); (Dkt. No. 246).

In addition to the plaintiffs’ complaint, the Federal Trade Commission (“FTC”), had been

engaged in an investigation into comparable allegations made by consumers against the

defendants’ websites. In August 2005, the FTC “announced a settlement with [Consumer] and

entered into a Stipulated Final Judgment and Order for Preliminary Injunction regarding conduct

that is substantially similar to the subject of the plaintiffs’ complaint.” Clark v. Experian Info.

Solutions, Inc., No. 03 C 7882, 2006 WL 626820, at *1 (N.D. Ill. Jan. 6, 2006) (Brown, J). 

According to Judge Brown’s January 6, 2006 opinion, the plaintiffs seek through discovery all

documents produced by [Consumer] to the FTC in connection with the investigation that led to

the filing of the FTC’s complaint. Id. Consumer objected to the production of any of these

documents, whether preexisting documents produced to the FTC or documents created in

connection with the FTC settlement negotiations, because the documents were irrelevant and

therefore unlikely to lead to discoverable evidence and because they were protected under Rule

408. Id. at *1. 

A. Judge Brown’s January 6, 2006 Order

Judge Brown held in her January 6, 2006 decision that the “[d]efendants are simply

wrong in asserting that Rule 408 makes information relating to settlement negotiations off limits

for discovery. ... [T]he exclusion in Rule 408 is quite narrow, covering only: (a) evidence of
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offers or acceptances of valuable consideration for the purpose of proving liability for or

invalidity of a claim or its amount; and (b) evidence of conduct or statements made in

compromise negotiations.” Id. at *3. Rejecting the defendants’ “unsustainable blanket

approach,” Judge Brown subdivided the contested documents into three categories to facilitate

her analysis: (1) communications between the FTC and [Consumer] which Rule 408 suggests

should be subdivided between documents that contain discussions of attempts to compromise,

and those that do not; (2) business records that existed prior to the commencement of the FTC’s

investigation, but were furnished to the FTC following the instigation of the investigation; and

(3) documents, including data compilations, prepared by the defendants especially in response to

requests by the FTC for information. Id. Judge Brown also noted that her decision “relates

solely to discovery; decisions about admissibility of evidence are the prerogative of the judge

presiding at trial.” Id. at *6. 

Judge Brown held that only documents in Category 1 are protected from discovery under

Rule 408. Id. at *6. “Category 1 includes documents that actually reflect [Consumer] and the

FTC’s negotiations, that is, offers, counteroffers, acceptances, drafts of the proposed agreed

orders.” Id. Category 2 documents were not protected under Rule 408. The fact that the

documents might provide insight into the settlement negotiations or exchanged during a

settlement negotiation process is not sufficient to prevent the future discovery of the document

during discovery. Id. at *4. As for Category 3 documents, Judge Brown held that those

documents were voluntarily produced during the negotiation process and this waived any type of

privilege that the defendants might expected with these documents. Id. at *4-*6. 

Consumer seeks this court to set aside Judge Brown’s January 6, 2006 order or, in the
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alternative, to modify her order so as to prevent the discovery of all documents exchanged

between FTC and Consumer once the parties began settlement discussions in August 2002. 

Consumer argues that Judge Brown’s holding that Rule 408 applies to only evidence of offers or

acceptances of valuable consideration for the purpose of proving liability for or invalidity of a

claim or its amount and evidence of conduct or statements made in compromise negotiations is

contrary to law. The plaintiffs argue that Judge Brown is correct and should be affirmed. 

STANDARD OF REVIEW

As a nondispositive matter, this court’s review of Judge Brown’s decision is governed by

Rule 72(a) and 28 U.S.C. § 636(b)(1). See Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d

926, 943 (7th Cir. 1997). A party may serve and file objections to a magistrate judge’s order

within 10 days of being served with a copy of the order. Fed. R. Civ. P. 72(a). This court must

modify or set aside any portion of the magistrate judge’s order found to be clearly erroneous or

contrary to law. Id. “A finding is clearly erroneous when although there is evidence to support

it, the reviewing court on the entire evidence is left with the definite and firm conviction that a

mistake has been committed.” Fid. Nat’l Title Ins. Co. of New York v. Intercounty Nat’l Title

Ins. Co., No. 00 C 5658, 2002 WL 1433584, at *2 (N.D. Ill. July 2, 2002) (quoting United States

v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). This court’s review is deferential and

the court will only set aside and modify a decision that “contains some clearly apparent

mistake.” F.T.C. v. Pacific First Ben., LLC, 361 F. Supp. 2d 751, 754 (N.D. Ill. 2005) (citing

Weeks, 126 F.3d at 943; Chavez v. Illinois State Police, 27 F. Supp. 2d 1053, 1066 (N.D. Ill.

1998)). 
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ANALYSIS

A. Time Period for Filing of Objections

This court must first consider whether Consumer has complied with the ten day filing

requirement set forth in Rule 72(a). Judge Brown’s initial order granting the plaintiffs’ motion

to compel was dated on December 13, 2005 and was entered on the court’s docket on December

14, 2005. (Dkt. No. 228). The parties received notice of the order on December 14, 2005 via the

court’s electronic filing system CM-ECF. Consumer did not file its initial objections until

January 9, 2006 beyond the ten day period set forth in Rule 72(a). (Dkt. No. 238); see Lerro v.

Quaker Oats Co., 84 F.3d 239, 241-42 (7th Cir. 1996) (setting forth the method for calculating

the date objections are due to a magistrate judge’s recommendation). 

Judge Brown, however, did state in open court on December 13, 2005 that she would be

providing a written opinion and she provided that opinion on January 6, 2006. (Tr. 12/13/05 at

pg. 12). Thus, it was appropriate for Consumer to wait until Judge Brown issued her written

ruling before filing any objections to her decision. Alternatively, Rule 72(a)’s ten day filing

requirement is not jurisdictional and this court has the discretion to consider late objections. See

Anderson v. Hale, 159 F. Supp. 2d 1116, 1117 (N.D. Ill. 2001) (citing Krugel v. Apfel, 215 F.3d

784 (7th Cir. 2000)). Therefore, this court believes it is appropriate to consider Consumer’s

objections, even if they are not timely under Rule 72(a), in light of the need to wait until Judge

Brown had issued her written opinion. 

B. The Merits of Consumers Objections to Judge Brown’s Opinion

A party may “obtain discovery regarding any matter, not privileged, that is relevant to the

claim or defense of any party, including the existence, description, nature, custody, condition and
1

 Rule 408 of the Federal Rules of Evidence states:

Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or

promising to accept, a valuable consideration in compromising or attempting to compromise a

claim which was disputed as to either validity or amount, is not admissible to prove liability for

or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise

negotiations is likewise not admissible. This rule does not require the exclusion of any evidence

otherwise discoverable merely because it is presented in the course of compromise negotiations. 

This rule also does not require exclusion when the evidence is offered for another purpose, such

as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an

effort to obstruct a criminal investigation or prosecution.

Fed. R. Evid. 408. 

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location of any books, documents, or other tangible things.” Fed. R. Civ. P. 26(b)(1). “Relevant

information need not be admissible at the trial if the discovery appears reasonably calculated to

lead to the discovery of admissible evidence.” Id. As Judge Cole recently explained in Murata

Mfg. Co., Ltd. v. Bel Fuse Inc., 

The Federal Rules of Civil Procedure authorize the broadest scope of discovery

and relevance under Rule 26(b)(1) is construed more broadly for discovery than

for trial. Indeed, given the minimal notice pleading system established by the

Federal Rules of Civil Procedure, discovery is not even limited to issues raised by

the pleadings, because discovery itself is designed to help define and clarify what

the issues are. Nor is discovery limited to the merits of the case, for a variety of

fact-oriented issues may arise during litigation that are not related to the merits. 

– F. Supp. 2d –, No. 03 C 2934, 2006 WL 687172, at *8 (N.D. Ill. Mar. 14, 2006) (internal

citations and quotations omitted). The plaintiffs have a right to seek discovery of materials from

Consumer related to the FTC’s investigation and the settlement negotiations between the FTC

and Consumer because these items are relevant under Rule 26 unless discovery is prohibited in

some other manner under the Rules. 

Consumer argues that Rule 408 of the Federal Rules of Evidence1

 bars the plaintiffs’
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discovery requests. Consumer’s position is incorrect because “Rule 408 ‘only applies to the

admissibility of evidence at trial and does not necessarily protect such evidence from discovery;’

therefore, the rules governing discovery are applicable to settlement documents.” White v.

Kenneth Warren & Son, Ltd., 203 F.R.D. 364, 368 (N.D. Ill. 2001) (quoting Morse/Diesel, Inc. v.

Fid. and Deposit Co., 122 F.R.D. 447, 449 (S.D.N.Y. 1998)); see e.g., McNally Tunneling Corp.

v. City of Evanston, Illinois, No. 00 C 6979, 2001 WL 1246630, at *1 (N.D. Ill. Oct. 18, 2001)

(citing Coltec Indus., Inc. v. Am. Motorists Ins. 197 F.R.D. 368, 372 (N.D. Ill. 2000); City of

Wichita v. Aero Holdings, Inc., 192 F.R.D. 300, 301-02 (D. Kan. 2000)). The plain language of

Rule 408 speaks of admissibility of evidence but Rule 26(b)(1) definition of the permissible

scope of discovery speaks of “relevant information.” Relevant information is a broader set of

information than admissible evidence because under the Rule 26(b)(1)’s definition relevant

information need only be “reasonably calculated to lead to the discovery of admissible

evidence.” Fed. R. Civ. P. 26(b)(1). Thus, the plaintiffs may be able to obtain discovery of

items that could be precluded from admission at trial under Rule 408. Additionally, Rule 408

contains exceptions to its limitations on admissibility. Rule 408 allows admission of evidence

that “is offered for another purpose, such as proving bias or prejudice of a witness, negativing a

contention of undue delay, or proving an effort to obstruct a criminal investigation or

prosecution.” Thus, Judge Brown properly rejected Consumers’ broad based assertion that Rule

408 prevents discovery of any documents related to its negotiations with the FTC.

Consumer cites to this court’s decisions in Vardon Gold Co., Inc. v. BBMG Golf Ltd., 156

F.R.D. 641 (N.D. Ill. 1994), to support its position that Rule 408 bars the plaintiffs’ discovery
8

requests. In Vardon, this court did recognize that “allowing discovery regarding negotiations

between parties to ongoing litigation could very easily have a chilling effect on the parties’

willingness to enter into settlement negotiations.” 156 F.R.D. at 652. In light of this policy

concern, the Vardon court refused to compel discovery. However, this court cannot read Vardon

the way proposed by Consumer. Vardon never held that Rule 408 creates a broad based

prohibition on the discovery of settlement information as argued by Consumer. Instead, the

Vardon court held that it wished to implement the policy set forth in Rule 408 to foster

negotiations. 

The result is that a court should engage in a balancing of interests between Rule

26(b)(1)’s liberal scope of permissible discovery and the policy desire of attempting to prevent

the chilling of settlement negotiations. See White v. Kenneth Warren & Son, Ltd., 203 F.R.D.

364, 368-69 (N.D. Ill. 2001) Judge Brown’s January 6, 2005 decision properly recognized both

interests and her resulting order attempts to strike the proper balance in this case. Judge Brown’s

January 6, 2006 decision properly considers the law and then attempts to take a reasonable

course to resolve the discovery dispute. Her actions were appropriate and there is “no clearly

apparent mistake.” F.T.C. v. Pacific First Ben., LLC, 361 F. Supp. 2d 751, 754 (N.D. Ill. 2005)

(citing Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d 926, 943 (7th Cir. 1997); Chavez v.

Illinois State Police, 27 F. Supp. 2d 1053, 1066 (N.D. Ill. 1998)). 

This court also must note that Consumer can only look to itself for any dissatisfaction

that it might have with Judge Brown’s January 6, 2006 ruling. Consumer initially failed to

provide Judge Brown with a privilege log or an in camera submission of the disputed

documents. Instead, Consumer “made a strategic decision to object to producing all documents
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that, in Defendants’ opinion, ‘relate to settlement,’ regardless of when created or what those

documents contain.” Clark v. Experian Info. Solutions, Inc., No. 03 C 7882, 2006 WL 626820,

at *3 (N.D. Ill. Jan. 6, 2006) (Brown, J). Judge Brown, aware of the then forthcoming date for

the close of discovery, did her best to balance the competing interests of Rule 26(b)(1)’s liberal

discovery policy with the desire to prevent the chilling of future settlement negotiations and

arrived at the three document categories that she distilled from the parties’ discussion in their

briefing. This court can find no error in her actions.

CONCLUSION

For the reasons set forth above, this court denies Consumers’ objections to Judge

Brown’s decision of January 6, 2006. (Dkt. Nos. 238, 251). The parties are to comply with

Judge Brown’s order forthwith so as to not delay the previously set schedule for this case. The

parties are also encouraged to discuss settlement.

ENTER:

_______________________________

JAMES F. HOLDERMAN

United States District Judge

DATE: April 10, 2006