## Facts

- RDM Sports Group, Inc. and related entities filed Chapter 7 bankruptcy cases in the Northern District of Georgia.
- The Chapter 7 trustee sued the debtors’ former outside counsel (Smith, Gambrell & Russell, L.L.P., and related parties) for alleged malpractice and related wrongdoing connected to the debtors’ collapse.
- The trustee also pursued claims against General Electric (defective equipment) and Arthur Andersen (auditing/accounting misconduct); those disputes were resolved through mediated settlements.
- In discovery in the malpractice adversary proceeding, the law-firm defendants moved to compel production of documents created for and used during the GE and Andersen mediations.
- The disputed materials included a mediation brief and mediation memoranda/slide presentations prepared by trustee’s counsel that reflected case assessments, litigation theories, and settlement positions.
- The trustee resisted production, asserting a federal mediation privilege, work-product protection, and Federal Rule of Evidence 408.

## Issues

1. Whether federal common law recognizes a mediation privilege barring discovery of mediation submissions and communications.
2. Whether mediation briefs, memoranda, and presentation materials prepared by counsel for mediation are protected work product and, if so, whether the requesting party showed substantial need and undue hardship.
3. Whether Federal Rule of Evidence 408 operates as a discovery privilege preventing disclosure of materials generated in settlement negotiations.

## Decision

- The court granted the motion to compel in part and denied it in part.
- The court declined to recognize a broad, freestanding federal mediation privilege that categorically shields mediation materials from discovery.
- The court held that the trustee’s counsel-prepared mediation submissions largely constituted opinion work product and were protected from disclosure; the defendants did not make the showing necessary to overcome that protection.
- The court held that Rule 408 governs admissibility, not discovery, and therefore did not independently bar production.
- The court permitted discovery only to the extent the requests sought non-privileged factual materials, materials already produced, or information obtainable through other sources without invading counsel’s mental impressions.

## Legal Principles

- Federal courts are cautious in creating new evidentiary privileges; proposed privileges must be justified by “reason and experience” and are construed narrowly because they limit access to relevant evidence.
- Mediation confidentiality concerns can be addressed through existing protections (e.g., attorney-client privilege, work-product doctrine, protective orders, and confidentiality agreements) without recognizing a categorical mediation privilege.
- Materials prepared by counsel for mediation that reveal legal theories, case evaluations, and negotiating strategy generally qualify as opinion work product and receive near-absolute protection.
- Fact work product may be discoverable only upon a showing of substantial need and undue hardship in obtaining the substantial equivalent by other means; a desire to test an opponent’s damages theories or negotiation positions is typically insufficient.
- Federal Rule of Evidence 408 restricts certain uses of settlement-related evidence at trial but does not create a privilege against discovery.

## Conclusion

The bankruptcy court refused to adopt a broad federal mediation privilege, protected counsel’s mediation submissions as opinion work product absent a compelling need, and clarified that Rule 408 does not bar discovery, resulting in a partial denial of the motion to compel for strategy-laden mediation materials while allowing discovery of otherwise obtainable non-privileged facts.


Hays v. Equitex, Inc. (In re RDM Sports Grp., Inc.), 277 B.R. 415 (Bankr. N.D. Ga. 2002)