Hays v. Equitex, Inc. (In Re RDM Sports Group, Inc.)

ORDER

Before the Court is the Motion to Compel filed by Smith, Gambrell & Russell L.P., David Harris P.C., and David Harris (hereinafter the “SGR Defendants”) in the above-captioned adversary proceeding. The plaintiff, William G. Hays, Jr. (hereinafter the “Plaintiff’), in his capacity as Liquidating Agent for the consolidated bankruptcy estates of RDM Sports Group, Inc., et al. (hereinafter the “Debtors”), opposes the SGR Defendants’ motion. Also before the Court are the Motions for Protective Order, filed by Arthur Andersen (hereinafter “Andersen”) and General Electric (hereinafter “GE”), which have been joined by the Plaintiff.

Background

In August 2000, the Plaintiff initiated the instant adversary proceeding by filing a complaint against the SGR Defendants. The complaint seeks damages for breach of fiduciary duty, legal malpractice and negligence, civil conspiracy/acting in concert with others, and the receipt of preferential payments. 1 Essentially, the Plaintiff alleges that the SGR Defendants should be held liable for actual and punitive damages for their role in causing the Debtors’ financial demise.

The Plaintiff filed a lawsuit against GE for damages resulting from allegedly defective motors, which were sold to the Debtors by GE and were placed in certain treadmills manufactured and sold by the Debtors. The Plaintiff hired special counsel to litigate the case. At some point during the litigation of the GE matter, the parties agreed to mediate their dispute with a third-party, neutral mediator, which eventually resulted in their reaching a settlement. The Plaintiff also pursued claims against Andersen for damages arising from the accounting and auditing services provided to the Debtors by Andersen and for the recovery of certain potentially preferential transfers. The Plaintiff did not file a lawsuit against Andersen, but the parties worked toward settlement of the dispute and eventually entered mediation. Both the GE mediation and the Andersen mediation were conducted under the rules and terms of the American Arbitration Association. Prior to entering the mediation, all parties agreed to maintain the confidentiality of the mediation discus *420 sions, including any documents that were generated during the mediation.

The Andersen mediation resulted in a settlement agreement, under which Andersen agreed to pay $18 million. However, the agreement was contingent upon the entry by this Court of an order that would prevent the SGR Defendants and the SGR Defendants’ co-defendants (hereinafter collectively referred to as the “Nonsettling Defendants”), from seeking contribution or indemnification from Andersen in the event the Nonsettling Defendants were found liable to the Plaintiff for damages. The Nonsettling Defendants objected to the entry of an injunction against their interests (hereinafter the “Bar Order”). To deal with these objections, the Plaintiff filed an adversary proceeding, in which he asked the Court to grant his request for injunctive relief (hereinafter the “Bar Order Proceeding”). However, the Nonset-tling Defendants continued to object to the entry of the Bar Order on the ground that the Bar Order required them to relinquish their rights to pursue Andersen for its share of the damages. The Nonsettling Defendants and the Plaintiff agreed that the Court could not approve the settlement and enter the Bar Order without making a finding that the entry of the Bar Order would be fair to the affected parties. On that ground, the parties agreed that the Bar Order should include a judgment reduction credit provision, which would provide that, in the event the Nonsettling Defendants were determined to be liable for damages, the Nonsettling Defendants would be entitled to a reduction of those damages to account for the fact that the Plaintiff had already recovered a portion of the damages from Andersen. While the parties agreed that a judgment reduction credit was required, they could not agree as to how the credit should be determined. The Plaintiff was willing to give the Non-settling Defendants a credit that would either be equivalent to the $18 million received from Andersen, or could be based on Andersen’s share of the liability, as determined at trial. The Nonsettling Defendants, however, insisted upon a credit that would be equal to the greater of $18 million or an amount based on Andersen’s share of the liability.

Since the terms of the settlement agreement between Andersen and the Plaintiff were contingent upon the entry of the Bar Order by a certain date, which was fast approaching at the time the Plaintiff filed the Bar Order Proceeding, the Court approved an expedited trial schedule. This schedule required the Nonsettling Defendants to file an answer and conduct discovery in a very short time. The Nonsettling Defendants served the Plaintiff with five interrogatories and requests for production of documents. These requests sought the production of any and all documents related to the Plaintiffs settlement agreement with Andersen (hereinafter collectively referred to as the “Mediation Documents”). The Plaintiff refused to produce the Mediation Documents, claiming that the documents were protected by a mediation privilege, attorney-client privilege, and the work product doctrine.

After unsuccessfully attempting to resolve the discovery dispute with the Plaintiff, the SGR Defendants filed a motion to compel production. The Court heard oral arguments from the parties’ counsel. By the conclusion of the hearing, the parties were largely in agreement that, subject to certain conditions, the Plaintiff would turn over the Mediation Documents, with the exception of certain inflammatory slides used in a presentation during the mediation. The Court then ordered the Plaintiff to turn over all of the documents, with the exception of the inflammatory slides, with the provision that the SGR Defendants could not use the documents for any pur *421 pose other than the Bar Order Proceeding. Subsequent to the entry of the Court’s Order, but before the Plaintiff produced the documents, the parties settled the Bar Order Proceeding. The Plaintiff agreed to give the Nonsettling Defendants the judgment reduction credit of their choice, and the Nonsettling Defendants dropped their opposition to the entry of the Bar Order. The parties presented a consent order, at which time the Court approved the settlement and granted the requested injunctive relief.

Shortly after the settlement of the Bar Order Proceeding, the SGR Defendants filed a motion to compel in the instant adversary proceeding, in which the SGR Defendants sought the production of the same documents. Following the settlement of the GE litigation, and after the SGR Defendants’ motion to compel had been set for a hearing, the SGR Defendants broadened the scope of their discovery to include documents pertaining to the GE mediation. In response, Andersen and GE filed similar motions for protective orders, seeking to maintain the confidentiality of any documents prepared for or during their respective mediations. Immediately prior to the hearing on the motions, the SGR Defendants reached a settlement with GE and Andersen, pursuant to which the SGR Defendants agreed to seek only those documents prepared by the Plaintiff and his counsel for or dining the mediation and to not seek any documents prepared by either GE or Andersen. At the hearing, the settling parties presented the Court with consent orders memorializing this agreement, and requested that the Court enter the orders. The Plaintiff opposed the entry of the consent orders; but, since the Court had not had sufficient time to read and consider the orders, the Court declined to enter the orders at that time.

The Court conducted an in camera review of the Mediation Documents. The Court understands that within the documents presented for its review are documents that have already been made available to the SGR Defendants, and that these documents were included only to give the Court a complete picture of what was submitted to the mediator. The Plaintiffs brief states that “any documentary evidence used during the negotiation process has already been disclosed and made available to the Defendants.” Additionally, many of the documents are matters of public record. Therefore, the Court assumes that most of the documents are not truly at issue.

For purposes of discussion, the documents that are at issue will be divided into broad categories. The first set of documents (Tab C) consists of those materials submitted by the Plaintiff to the mediator during the GE mediation session, specifically the GE Mediation Brief, which is a memorandum of law prepared by the Plaintiffs counsel that evaluates the strengths and weaknesses of the Plaintiffs case against GE. The GE Mediation Brief was created for the purpose of providing information to the mediator and was not shared with GE.

The second set of documents (Tab B-l) consists of those documents submitted by the Plaintiff during the Andersen mediation. Again, the Court notes that some of the Tab B-l documents provided for its review may have already been disclosed or otherwise made available to the SGR Defendants. Therefore, the Court will focus on the Andersen Mediation Briefs, which include two memoranda of law prepared by the Plaintiffs counsel, one of which was shared with only the mediator, while the other was given to both the mediator and Andersen. The documents found under Tab B-2 are related to the Tab B-l docu *422 ments and consist of copies of siides that were prepared for, and may have been presented by the Plaintiff during, the Andersen mediation.

The documents found under Tab A were previously disclosed to counsel for the SGR Defendants. These documents contain, inter alia, a letter written by Andersen’s counsel, which was intended to address the Plaintiffs claims in an effort to reach a settlement. The letter is a response to a letter written by Plaintiffs counsel outlining the Plaintiffs case. The remainder of the Tab A documents are various work papers utilized as exhibits to these letters. The Plaintiff has requested that the Court order the SGR Defendants to return these documents to the Plaintiff.

The Court will not address the documents found under Tabs B-3 and B-4, as the SGR Defendants are not seeking disclosure of these documents, as evidenced by the terms of the consent protective order negotiated between the SGR Defendants and GE and Andersen. 2

Conclusions op Law

1. The Standards of Federal Rule of Civil Procedure 26

Discovery in bankruptcy adversary proceedings is governed by the Federal Rules of Civil Procedure. See Fed.R.BanKrP. 7026-7037. Applicable to this controversy is Federal Rule of Civil Procedure 26(b)(1), which provides:

Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. The information sought need not be admissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

Fed.R.Civ.P. 26(b)(1). Thus, the general rule is that litigants are entitled to discover information that “appears reasonably calculated to lead to the discovery of admissible evidence.” Id. It should be noted, however, that discovery does have its boundaries and limitations. As the rule implies, any information that is privileged can be withheld from discovery.

The SGR Defendants assert that the documents sought in this case are crucial to their defense because they may contain relevant information as to the issues of causation and apportionment of damages between the various parties against whom the Plaintiff has sought damages. Under this theory, the SGR Defendants argue that the documents prepared by the Plaintiff and submitted to the mediator contain the Plaintiffs “official” position as to the parties responsible for causing RDM’s financial demise and the amount of damages caused by each party. The Court agrees that information pertaining to the damages sustained by RDM and their cause would be relevant to the issues in the SGR Defendants’ case. However, the Plaintiff, Andersen and GE argue that the Court should protect the materials from discovery because they are protected by a mediation privilege, they constitute work product, and they contain statements made during a settlement negotiation, which are *423 likely to be inadmissible at trial under Federal Rule of Evidence 408.

II. Waiver of Objections for Failure to Respond

As a preliminary matter, the SGR Defendants insist that the Plaintiff has waived any claim to privilege or the work-product doctrine to which he may have otherwise been entitled because he failed to timely respond to the SGR Defendants’ requests for production and motion to compel. Rule 34 controls the production of documents during discovery. Under Rule 34, any “party may serve on any other party a request ... to produce and permit the party making the request ... to inspect and copy, any designated documents.” Fed.R.Civ.P. 34.

The party upon whom the request is served shall serve a written response within 30 days after the service of the request. A shorter or longer time may be directed by the court or, in the absence of such an order, agreed to in writing by the parties, subject to Rule 29. The response shall state, with respect to each item or category, that inspection and related activities will be permitted as requested, unless the request is objected to, in which event the reasons for the objection shall be stated. If objection is made to part of an item or category, the part shall be specified and inspection permitted of the remaining parts. The party submitting the request may move for an order under Rule 37(a) with respect to any objection to or other failure to respond to the request or any part thereof, or any failure to permit inspection as requested.

Fed.R.Civ.P. 34(b).

In this case, the SGR Defendants served a request for production of documents on the Plaintiff in the main bankruptcy case of RDM (relating to the Motion to Settle Claim with Andersen) on August 10, 2001. They also served two almost identical requests on the Plaintiff in this proceeding on August 10, 2001 (Third Request) and August 31, 2001 (Fourth Request). The SGR Defendants claim that the Plaintiff did not serve his written response in this adversary proceeding until September 27, 2001, 22 days after the response to the Third Request was due. 3 Therefore, the SGR Defendants argue that the Plaintiffs failure to respond to a request within thirty days is a waiver of any objections, including one of privilege. See In re United States, 864 F.2d 1153 (5th Cir.1989) (agreeing that the general rule is that failure to respond results in a waiver, but finding no waiver where production of the documents sought would violate federal law); Davis v. Fendler, 650 F.2d 1154 (9th Cir.1981) (finding a waiver where the party refused to respond to interrogatories, or to even specify to the court which information was covered and by which privilege, and asserted the Fifth amendment privilege 15 months after the interrogatories were propounded); Coker v. Duke & Co., 177 F.R.D. 682 (M.D.Ala.1998) (stating the general rule that failure to file a written response constitutes a waiver of any objection, but finding no waiver where the party had not ignored the request, had produced some of the documents, and had told the party seeking discovery that others would not be produced). Additionally, the Plaintiff filed his response to the instant motion on October 26, 2001, which was seven days late.

The Plaintiff notes that his counsel sent a letter to the SGR Defendants’ counsel, *424 dated September 5, 2001, five days prior to the deadline for serving a response to the Third Request. The letter summarized a meeting that occurred between counsel for the parties and recounted the Plaintiffs counsel’s objection that the answers to interrogatories requested would invade the work-product doctrine and attorney-client privilege. The letter also offered to provide the documents requested (the Plaintiffs submissions to the mediator) if certain conditions were agreed to, one of which was an assurance by the SGR Defendants that they would not treat the disclosure as a waiver of these privileges. The Plaintiff also explains that his counsel spoke with counsel for the SGR Defendants on September 6, 2001 at the Plaintiffs deposition, at which time counsel raised the objection of privilege.

Rule 34, unlike Rule 33, which deals with interrogatories, does not specify that a failure to respond within the time provided will result in a waiver of any objections. Compare Fed.R.CivP. 34(b), with Fed.R.Civ.P. 33(b)(4) (“Any ground not stated in a timely objection is waived unless the party’s failure to object is excused by the court for good cause shown.”). Rule 37(d) provides that “[i]f a party ... fails ... to serve a written response to a request for inspection submitted under Rule 34, after proper service of the request, the court in which the action is pending on motion may make such orders in regard to the failure as are just, and among others it may take any action authorized under subpara-graphs (A), (B), and (C) of subdivision (b)(2) of this rule.” Fed.R.Civ.P. 37(d). To address a failure to respond to a request for documents, a court may, pursuant to the available sanctions referenced by Rule 37(d), order that the matters contained in the withheld documents be taken to be established; refuse to allow the non-responsive party to support or oppose claims or defenses related to the withheld documents; strike the nonresponsive party’s pleadings in whole or in part; stay the proceedings until the documents are turned over; or either dismiss the action or render judgment against the nonre-sponsive party. Fed.R.Civ.P. 37(d); (b)(2)(A); (b)(2)(B), (b)(2)(C). Furthermore, Rule 37 states that the “failure to act described in this subdivision may not be excused on the ground that the discovery sought is objectionable unless the party failing to act has a pending motion for a protective order as provided by Rule 26(c).” Fed.R.CivP. 37(d).

However, it has been noted that “waiver of privilege is the most extreme sanction that a court can impose for failure to follow required procedure,” and courts should reserve it for cases of unjustifiable delay, inexcusable conduct, and bad faith in responding to discovery requests. Moore’s Fed.Prac. and P. § 26.90[1]; see also In re Andover Togs, Inc., 231 B.R. 521 (Bankr.S.D.N.Y.1999) (“ ‘To the extent feasible, sanctions should be tailored to fit the circumstances in which the disobedi ence occurs.’ ”). In Smith v. MCI Telecommunications, the court held that a magistrate judge should have considered the merits of a party’s objection to a document request, despite the party’s failure to timely respond, because “the interests embodied in the work product doctrine and the attorney-client privilege are paramount.” 124 F.R.D. 665, 686-87 (D.Kan.1989). Similarly, in First Sav. Bank v. First Bank System, Inc., the court ex plained that the rule on waiver of a privilege is generally that, while the “failure to object to a discovery request in a timely fashion may constitute a waiver of the objection .... it is within the Court’s discretion not to compel discovery which is patently improper.” 902 F.Supp. 1356, 1361 (D.Kan.1995) (citations omitted). The court also noted that, while a waiver is *425 often imposed as an appropriate sanction for those objections that “relate solely to the relevance or burdensomeness of the discovery requests .... [courts]” “have been more circumspect in finding a waiver of a privilege objection.” Id. (citations omitted); see also Godsey v. United States, 133 F.R.D. 111, 113 (S.D.Miss.1990) (“This Court notes that an Order of complete compliance with discovery sought would be within its power ...; [h]owever, it is of the opinion that the more advisable and prudent course is to sanction the plaintiffs attorneys and to order that the U.S. Magistrate examine the discovery sought to see if it is relevant or ‘otherwise patently improper.’ ”).

While the Plaintiffs counsel’s letter and his discussions with opposing counsel may not have constituted a sufficient response to the SGR Defendants’ requests, the Court finds that the letter, the discussions, and the pleadings filed and the hearing held on the Plaintiffs motion to settle with Andersen clearly put the SGR Defendants on notice that the Plaintiff was objecting to the disclosure of these documents on the basis of the asserted privileges. The Court does not believe that the failure of the Plaintiff to more formally assert these privileges or to respond timely to the Motion to Compel has seriously prejudiced the SGR Defendants. 4 A finding of a waiver in this situation appears to the Court to be too severe a sanction for the Plaintiffs late responses, and the Court prefers to address the issue of the asserted privileges on the merits.

III. Are the Documents Privileged?

A. Existence and Applicability of a Mediation Privilege

The parties appear to agree that the federal law of privilege applies in this case. See Hancock v. Hobbs, 967 F.2d 462 (11th Cir.1992) (holding that the federal law of privilege applies where the court’s jurisdiction is premised on a federal question, even if the evidence sought is relevant to pendent state law claims). Therefore, any state law mediation privileges are not applicable to the instant controversy. In *426 stead, the Court must look to Federal Rule of Evidence 501 (hereinafter referred to as “FRE 501”), which provides, in relevant part:

Except as otherwise required by the Constitution of the United States or provided by Act of Congress or in rules prescribed by the Supreme Court pursuant to statutory authority, the privilege of a witness, person, government, State, or political subdivision thereof shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience.

Fed.R. op Evid. 501.

The Plaintiff urges the Court to adopt a privilege to protect from discovery statements, communications, and documents prepared for or made during mediation. The Plaintiff concedes that neither the Eleventh Circuit Court of Appeals nor any federal district court in the Eleventh Circuit has recognized such a privilege, but asks the Court to consider the reasoning and analysis undertaken by the District Court for the Central District of California and the District Court for the Western District of Pennsylvania in adopting a mediation privilege. See Folb v. Motion Picture Industry Pension & Health Plans, 16 F.Supp.2d 1164 (C.D.Cal.1998), aff'd, 216 F.3d 1082, 2000 WL 420636 (9th Cir.); Sheldone v. Pennsylvania Turnpike Comm’n, 104 F.Supp.2d 511 (W.D.Pa.2000).

In Jaffee v. Redmond, the United States Supreme Court established the framework for analyzing the issue of whether a federal court should recognize an evidentiary privilege pursuant to FRE 501. Jaffee v. Redmond, 518 U.S. 1, 116 S.Ct. 1923, 135 L.Ed.2d 337 (1996). In recognizing a federal psychotherapist-patient privilege, the Court noted that Rule 501 “did not freeze the law governing privileges of witnesses in federal trials ..., but rather directed federal courts to ‘continue the evolutionary development of testimonial privileges.’ ” Id. at 9, 116 S.Ct. 1923 (quoting Trammel v. United States, 445 U.S. 40, 47, 100 S.Ct. 906, 63 L.Ed.2d 186 (1980)). Furthermore, the legislative intent of Congress directs federal courts to determine the recognition of privileges on a case-by-case basis. Id. at 8, 9 n. 7, 116 S.Ct. 1923 (citing S.Rep. No. 93-1277 at 13 (1974), U.S.Code Cong. & Admin.News 1974, 7051, 7059-60) (noting that Congress specifically rejected proposed Rules 501-513, which would have established specific federal privileges).

In conducting its analysis, the Court began with the “fundamental maxim” that the public is entitled to “every man’s evidence.” Id. at 9, 116 S.Ct. 1923 (internal citations omitted). While federal courts generally disfavor testimonial privileges, exceptions may be justified when the public policy supporting a privilege outweighs the need to ascertain the truth. Id. In balancing this public policy against the desire to provide the parties with access to all available evidence, the Court considered several factors.

First, the Court determined that a psychotherapist privilege would serve the important public purpose of encouraging individuals with mental health problems to seek treatment. Second, the Court considered the evidentiary benefit that would likely result from refusing to apply the privilege. Because rejection of the privilege would chill confidential communications between therapists and their patients, the Court concluded that “much of the desirable evidence ... is unlikely to come into being”; and therefore, the resulting evidentiary benefit would be “modest.” Id. at 11-12, 116 S.Ct. 1923. Third, the Court noted that all fifty states had adopted the privilege, which indicated that *427 “reason and experience,” within the meaning of FRE 501, supported the recognition of the privilege, and reasoned that the failure to apply a federal psychotherapist privilege would frustrate the purpose of the state legislatures in enacting a state privilege. Finally, the Court appeared to be persuaded to recognize a new federal privilege by the fact that the Judicial Advisory Committee on Rules of Evidence had proposed that Congress enact a statutory psychotherapist privilege. Id.; see e.g., United States v. Gillock, 445 U.S. 360, 367-68, 100 S.Ct. 1185, 63 L.Ed.2d 454 (1980) (declining to recognize a legislative privilege, in part, because the Advisory Committee failed to include such a privilege in its draft of proposed privileges). 5

In Folb v. Motion Picture Industry Pension and Health Plans, the court employed the reasoning and analysis used by the Supreme Court in Jaffee to determine whether federal courts should recognize a mediation privilege. Folb, 16 F.Supp.2d 1164 (C.D.Cal.1998). In that case, the plaintiff alleged that the defendant improperly discharged him in retaliation for his whistle-blowing activities. While employed by the defendant, the plaintiff was accused by a subordinate of sexual harassment. The plaintiff contended that the defendant had used the complaint as a pretext to discharge him. In an attempt to settle the subordinate’s claims against it, which arose out of the alleged sexual harassment, the defendant engaged in mediation with the subordinate. The mediation was entered by both parties on the condition that the mediation and all statements made therein would remain confidential. The plaintiff sought discovery of correspondence between the counsel for the subordinate and the defendant, file notes prepared by the subordinate’s counsel regarding settlement communications, and a mediation brief prepared for the mediation. Id. at 1166-67.

When the defendant’s counsel refused to turn over the brief, the plaintiff moved the court to compel disclosure. In response, the defendant claimed that the brief was privileged. The plaintiff argued that the documents were relevant to his claim because he believed that they would evidence an inconsistent position taken during the mediation, as opposed to that taken in the lawsuit at issue. The plaintiff speculated that the defendant would argue that it properly terminated the plaintiff because of the sexual harassment allegations, despite the fact that it may have argued during the mediation that the subordinate was never sexually harassed by the plaintiff. Mat 1167.

In determining whether a federal mediation privilege should protect the documents, the court applied the same factors considered by the Supreme Court in Jaf-fee: “(1) whether the asserted privilege is ‘rooted in the imperative need for confidence and trust’; (2) whether the privilege would serve public ends; (3) whether the evidentiary detriment caused by the exercise of the privilege is modest; and (4) whether the denial of the federal privilege would frustrate a parallel privilege adopted by the states.” Id. at 1171 (citing Jaffee, 518 U.S. at 9-13, 116 S.Ct. 1923).

As to the first factor, the court noted that, without recognition of a federal mediation privilege, information exchanged during a confidential mediation would be subject to liberal discovery. The court then considered the question of whether a mediation privilege would truly achieve the recognized federal policy of encouraging parties to attend mediation, as an alternative *428 to full-blown litigation, and to communicate openly and honestly in a manner that would facilitate settlement. After reviewing the academic literature on the subject, as well as several eases discussing the importance of confidential communications, the court concluded that the need for confidentiality and trust between participants in a mediation is “sufficiently imperative to necessitate the creation of some form of privilege.” Id. at 1175 (“rules protecting the confidentiality of mediation proceedings” encourage parties to “attend mediation and communicate openly and honestly in order to facilitate successful alternative dispute resolution”). This conclusion was further supported by the fact that many federal district courts rely on alternative dispute resolution to reduce their case loads and often require parties to attempt to settle their claims through some form of ADR, including mediation. Id. (also noting that many of the district court’s local rules regarding ADR prohibit the disclosure of confidential dispute resolution communications). The court essentially relied on the fact that “[t]he proliferation of federal district court rules purporting to protect the confidentiality of mediation and the ADR Bill now pending before the United States Senate indicate a commitment to encouraging confidential mediation as an alternative means of resolving disputes that would otherwise result in protracted litigation.” Id. at 1174. The court also noted that the absence of a rule protecting mediation communications gives parties an incentive to withhold sensitive information during the mediation session or to refuse to participate. Id. at 1172.

Second, the court stated that the “proposed blanket mediation privilege would serve public ends by encouraging prompt, consensual resolution of disputes, minimizing the social and individual costs of litigation, and markedly reducing the size of state and federal court dockets.” Id. at 1176. Therefore, the public end served by the proposed privilege was similar to that served by the recognition of an attorney-client privilege — “the benefit to the administration of justice.” Id. at 1177. The court reasoned that:

A privilege that promotes conciliatory dispute resolution and alleviates the press of cases on the formal judicial system also allows the courts to devote those limited resources to fairly adjudicating those cases that do result in protracted litigation. Rather than the hasty judgments born of overcrowded dockets, the courts are able to provide more carefully considered decisions in matters of sufficient public concern that the parties submit their disputes to a. court of law, having found it too difficult to reach a mutually agreeable settlement. Idealism aside, a mediation privilege would serve important public ends by promoting conciliatory relationships among parties to a dispute, by reducing litigation costs and by decreasing the size of state and federal court dockets, thereby increasing the quality of justice in those cases that do not settle voluntarily.

Id.

As to the third Jaffee factor, the court concluded that the evidentiary detriment associated with withholding documents prepared solely for the purpose of presenting a party’s case to the mediator and the opponent would be modest because, absent the mediation, the information would not have come into being. Id. at 1178. The court explained that evidence, otherwise discoverable, that is presented to the mediator would continue to be accessible, even if a blanket mediation privilege applied. Addressing the concern that a blanket privilege would allow a party to “take inconsistent positions in related litigation,” the court noted that “evidence of that in *429 consistent position only comes into being as a result of the party’s willingness to attend mediation” and “[a]bsent a privilege protecting the confidentiality of mediation, the inconsistent position would presumably never come to light.” Id.

Finally, the court addressed the fourth factor — whether the privilege is supported by “reason and experience,” within the meaning of FRE 501. The court considered the fact that a consistent body of state legislatures and courts had enacted or recognized some form of mediation privilege, and concluded that this was a good indicator that reason and experience supported the recognition of a federal mediation privilege. Id. The court noted that not every state agreed as to the scope of the privilege — whether it protects the entire process or merely the communications made to the mediator — but noted that this fact “should not prevent the federal courts from determining that in light of reason and experience we should adopt a federal mediation privilege” and concluded that the “ ‘[djenial of the federal privilege ... would frustrate the purposes of the state legislation that was enacted to foster these confidential communications.’ ” Id. at 1179 (quoting Jaffee, 518 U.S. at 13, 116 S.Ct. 1923). After considering all of the factors outlined in Jaffee, the court recognized the existence of a federal mediation privilege. Id.

Similarly, in Sheldone v. Pennsylvania Turnpike Comm’n, the court followed the reasoning of the Folb decision and agreed that “[e]aeh of [the Jaffee ] factors weigh in favor of recognizing the mediation privilege in this case.” 104 F.Supp.2d 511 (W.D.Pa.2000). In Sheldone, the plaintiff employees filed a lawsuit against their employer for violations of the Fair Labor Standards Act. The plaintiffs sought production of documents generated during the mediation of grievances filed by other employees. The documents were sought essentially because the plaintiffs believed that they contained admissions that the defendant settled out of court because it realized that it had illegally paid the employees “straight time.” The defendant asserted that the documents were privileged and urged the court to recognize a federal mediation privilege.

The court addressed each of the four Jaffee factors. First, as did the Folb court, the court recognized that “it is beyond doubt that the mediation privilege is rooted in the imperative need for confidence and trust.” Id. at 514. Second, the court found that a lack of confidentiality would likely result in a reduction of those parties willing to participate in mediation and, for those who did agree to participate, the effectiveness of mediation would be adversely affected by the lack of confidentiality. Therefore, the public interest in encouraging settlements and preserving judicial resources supported the recognition of a mediation privilege. Id. Third, the court agreed with the Folb court’s assessment that the evidentiary detriment would be modest, given the fact that the information would not exist, but for the mediation. Id. at 515 (“This Court sees no reasoned basis for allowing the Plaintiffs to enjoy the benefit of an alleged admission arising through the mediation process when it seems doubtful that such an admission would have otherwise come into existence.”). Finally, the court noted that “the nearly unanimous voices of state legislatures from across the country adopting mediation privileges” supports recognition of the privilege, as does the fact that failure to recognize a federal mediation privilege would frustrate the public policy objectives of those states that have recognized such a privilege. Id. (“The states’ ‘promise[s] of confidentiality1 regarding mediation ‘would have little value if the [participants] were aware that the privilege would not be honored in ... federal court.’ ”).

*430 This Court agrees with the reasoning and analysis put forth by these district courts. 6 While it is impossible to know for certain whether the existence of a mediation privilege actually encourages settlements, the Court is persuaded that it does. Even a commentator who questioned whether confidentiality is essential to the process of ADR and settlements has acknowledged that “mediation has flourished,” most likely because the parties were assured that the information would remain confidential, that attempts to use the information provided during a mediation in a subsequent litigation are rare, and that a court would probably exclude the information from trial, pursuant to Federal Rule of Evidence 408. Eric Green, A Heretical View of the Mediation Privilege, 2 Ohio St.J. on Disp.Resol. 1, 32, (1986).

It would appear that, regardless of whether the confidentiality afforded to these communications arises in the form of a privilege or merely a prohibition on voluntary disclosure, the evidence is strong that parties engage in mediation with an expectation that the information will remain protected from future