Graham & Company, LLC et al v. Liberty Mutual Fire Insurance Company

Filing 50

MEMORANDUM OPINION. Signed by Judge James H Hancock on 4/5/2016. (JLC)

FILED
2016 Apr-05 AM 11:48
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

GRAHAM & COMPANY, LLC, and BP
GRAHAM, LLC,
Plaintiffs,
v.
LIBERTY MUTUAL FIRE INSURANCE
COMPANY,
Defendant.

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Case No.: 2:14-cv-02148-JHH

MEMORANDUM OPINION
I.

Introduction
This case is before the court on Plaintiffs’ Motion To Compel Liberty To Respond To

Bad Faith Discovery (Doc. # 38), filed August 31, 2015. The Motion is fully briefed. (Docs. #
38, 42, 46). For the following reasons, the Motion is due to be denied in part and granted in part
with modifications to discovery requests, and is moot in part.
II.

Background Facts and Procedural History
Plaintiffs assert claims for insurance recovery and bad faith arising from Defendant’s

denial of coverage for an electrical loss at one of Plaintiffs’ coastal properties, 550 Water Street.
(Doc. # 1). In their Complaint, Plaintiffs contend that they thereafter learned that all nine of their
coastal properties were erroneously omitted from the first-party insurance policy issued by
Defendant 1 (the “Policy”) during the underwriting process.

(Id.).

Thus, Plaintiffs sought

coverage for their coastal properties under the Policy’s Errors and Omissions Insuring Clause
1

That is, the Equipment Breakdown Insurance Policy No. YB2-L9L-462217-014 for the period March 1,
2014, to March 1, 2015. (See Doc. # 1-1).

(the “E&O Clause”), which they argue is intended to cover an “error or unintentional omissions”
resulting in a “failure through error to include any premises owned or operated” by Plaintiffs.
(See id.). Defendant concluded that there was no failure through error to schedule 550 Water
Street on the Policy, and, even if there was such a failure through error, that an exception to the
E&O Clause applies (that is, a failure by Plaintiffs “to report values”). (Id.). Plaintiffs allege
that Defendant’s analyst, Dwight Hinton, failed to conduct a good faith investigation of the claim
under the E&O Clause, “and improperly coordinated with the Liberty underwriter to
manufacture a bogus reason for its denial.” 2 (Docs. # 1, 38). And, Plaintiffs aver that Defendant
erroneously concluded that the E&O Clause does not apply. (Doc. # 1).
On February 5, 2015, Plaintiffs served Defendant written discovery concerning the bad
faith claim.

(Doc. # 38). Defendant timely responded with objections to many of Plaintiffs’

requests. (See id.). This Motion followed. (Id.).
III.

Legal Standards
Pursuant to the Federal Rules of Civil Procedure, a party may obtain discovery

“regarding any non-privileged matter that is relevant to any party’s claim or defense. . . .” Fed.
R. Civ. P. 26(b)(1). 3

Information sought in discovery does not need to be admissible at trial “if

the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”
Id.; see also Adkins v. Christie, 488 F.3d 1324, 1330 (11th Cir. 2007). “The party resisting
2

To prevail on a bad faith cause of action in a first-party insurance claim (which also allows for punitive
damages), Plaintiffs must prove that Defendant intentionally refused “to settle a direct claim where there is either (1)
no lawful basis for the refusal coupled with actual knowledge of that fact or (2) intentional failure to determine
whether or not there was any lawful basis for such refusal.” Franklin v. Natl. Gen. Assur. Co., 2015 WL 350633, at
*13 (M.D. Ala. Jan. 23, 2015) (quoting Chavers v. Natl. Sec. Fire & Cas. Co., 405 So.2d 1, 6 (Ala. 1981))
(emphasis in original); see also Mueller v. Hartford Ins. Co. of Ala., 475 So.2d 554, 556 (Ala. 1985) (citations
omitted) (same). “Or, stated differently, the plaintiff must show that the insurance company had no legal or factual
defense to the insurance claim.” Mueller, 475 So.2d at 556.
3

The 2015 amendments to Rule 26 took effect December 1, 2015. Plaintiffs’ discovery requests and
Motion To Compel were filed prior to that time. (See Doc. # 38). Therefore, the pre-December 1, 2015 version of
the Federal Rules of Civil Procedure is applicable here.

2

discovery has a heavy burden of showing why the requested discovery should not be permitted . .
. [with] ‘[t]he onus [] on the party resisting discovery to demonstrate specifically how the
objected-to information is unnecessary, unreasonable or otherwise unduly burdensome.” Rosen
v. Provident Life & Accident Ins. Co., 308 F.R.D. 670, 678 (N.D. Ala. 2015) (quoting Henderson
v. Holiday CVS, L.L.C., 269 F.R.D. 682, 686 (S.D. Fla. 2010)) (changes in Rosen).
District courts may limit discovery when “the burden or expense of the proposed
discovery outweighs its likely benefit. . . .” Fed. R. Civ. P. 26(b)(2)(c)(iii). But, courts must
“accord discovery a broad and liberal scope in order to provide parties with information essential
to the proper litigation of all relevant facts, to eliminate surprise, and to promote settlement.”
Giraldo v. Drummond Co., Inc., No. 09-cv-01041, 2012 WL 2358297, at *1 (N.D. Ala. June 15,
2012) (citing Hickman v. Taylor, 329 U.S. 495 (1947)). Stated otherwise:
[D]istrict courts have broad discretion in fashioning discovery rules, but they are
bound to adhere ‘to the liberal spirit of the [Federal] Rules.” Burns v.
ThiokolChem. Corp., 483 F.2d 300, 305 (5th Cir. 1973). The Federal Rules do
not give district courts “blanket authorization . . . to prohibit disclosure of
information whenever it deems it advisable to do so, but are rather a grant of
power to impose conditions on discovery in order to prevent injury, harassment,
or abuse of the court’s processes.” Williams v. City of Dothan, Ala., 745 F.2d
1406, 1416 (11th Cir. 1984) (quoting Bridge C.A.T. Scan Assocs. v. Technicare
Corp., 710 F.2d 940, 944-45 (2d Cir. 1983)).
Adkins, 488 F.3d at 1331.
A party may seek an order to compel discovery if an opposing party fails to respond to
discovery requests or has an evasive or incomplete response. Fed. R. Civ. P. 37(a)(3)(A), (B).
“In ruling on a discovery motion, courts consider the totality of the circumstances, weighing the
value of material sought against the burden of providing it, and taking into account society’s
interest in furthering the truth-seeking function in a particular case before the court.” Giraldo,

3

2012 WL 2358297, at *2 (citing Patterson v. Avery Dominion Corp., 281 F.3d 676, 681 (7th Cir.
2002)).
Further, a district court should consider the proportionality test inherent in Rule 26. See
Maxtena, Inc. v. Marks, 289 F.R.D. 427, 435 (D. Md. 2012). That test
requires the frequency or extent of discovery to be limited if: (i) the discovery
sought is unreasonably cumulative or duplicative, or can be obtained from some
other source that is more convenient, less burdensome, or less expensive; (ii) the
party seeking discovery has had ample opportunity to obtain the information by
discovery in the action; or (iii) the burden or expense of the proposed discovery
outweighs its likely benefit, considering the needs of the case, the amount in
controversy, the parties’ resources, the importance of the issues at stake in the
action, and the importance of the discovery in resolving the issues.
Id. at 434 (quoting Fed. R. Civ. P. 26(b)(2)(C)(i)-(iii) (internal quotation marks omitted).
“[C]ounsel (and ultimately the court) first must consider whether the desired information is
relevant to the claims and defenses in the action, and then ask whether the proposed discovery is
proportional to the needs of the case or unduly burdensome or expensive based upon an
assessment of various factors” not limited to those listed in Rule 26. Witt v. GC Servs. Ltd.
Partnership, 307 F.R.D. 554, 569 (D. Colo. 2014).

“Any application of the proportionality

factors must start with the actual claims and defenses in the case, and a consideration of how and
to what degree the requested discovery bears on those claims and defenses.” Id.
IV.

Analysis
In their Motion, Plaintiffs set forth five categories of discovery requests (to which

Defendant objected) relating to the bad faith cause of action: (1) discovery related to prior bad
faith claims against Defendant; (2) discovery concerning defendant’s adjustment of the claim; (3)
discovery related to performance goals and evaluations of Defendant’s claims department; (4)
discovery regarding quality assurance and claim dispute resolution; and (5) discovery concerning

4

the E&O Clause. 4 (Doc. # 38). Additionally, Defendant requested attorney’s fees if it prevails
in opposition.
A. Discovery Related to Prior Bad Faith Claims against Defendant
Plaintiffs submitted for the court’s consideration one interrogatory and four document
requests under the “prior bad faith claims” category. (See Doc. # 38). These discovery requests,
and Defendant’s corresponding objections, are:
Interrogatory 9. For every lawsuit arising out of a commercial property claim,
including but not limited to any claim for equipment breakdown coverage, where
Liberty (companywide) has been sued for bad faith and/or other tortious conduct
from 2005 to present, please state:
(a) Case name and CV number;
(b) The court and jurisdiction in which it was filed;
(c) The names, addresses, and telephone numbers of all parties, including the
plaintiffs and defendants;
(d) The names, addresses, and telephone numbers of all attorneys for the
plaintiffs and defendants;
(e) The present status or disposition of the lawsuit;
(f) The name and address of each person or entity having possession, custody
or control of any records relating to such action.
ANSWER: Liberty Mutual objects to this interrogatory on the grounds that it is
vague, ambiguous, overly broad, unduly burdensome, and not reasonably
calculated to lead to the discovery of admissible evidence. Liberty Mutual further
objects to the extent this interrogatory seeks information protected by the
attorney-client privilege and work product doctrine and on the basis that this
interrogatory seeks information related to claims other than the one at issue in this
litigation and claims not handled by Liberty Mutual.
Request 16. Copy of all Complaints and claims files from every lawsuit
involving a denial of a claim for commercial property coverage, included but not
limited to claims for equipment breakdown coverage where you have been sued
for bad faith and/or tortious conduct from 2005 to present.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to this
request to the extent it seeks information protected by the attorney-client privilege
4

In its reply brief, Plaintiffs state that Defendant provided adequate responses to Interrogatories 7, 12, and
13, and Requests 29, 36, and 37, after the filing of the subject Motion. (See Doc. # 46 at 3 n. 1). Accordingly, those
issues are moot and need not be addressed by the court.

5

and work product doctrine. Liberty Mutual further objects to the extent this
request seeks the production of confidential information and information related
to claims other than the one at issue in this litigation.
Request 19. Any and all correspondence with any State Department of Insurance
and/or Commission that involves alleged bad faith and/or tortious conduct in the
adjustment and payment of claims for commercial property coverage since 2005.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to the extent
this request seeks the production of confidential information and information
related to claims other than the one at issue in this litigation. Liberty Mutual
further objects to the extent it seeks information protected by the attorney-client
privilege and work product doctrine.
Request 43. Produce a list of all claims asserted against Liberty for bad faith or
tortious conduct in connection with Liberty’s handling, processing and adjusting
of claims.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to this
request to the extent it seeks information protected by the attorney- client
privilege and work product doctrine. Liberty Mutual further objects to the extent
this request seeks the production of confidential information and information
related to claims other than the one at issue in this litigation.
Request 47. Produce the complete claims file for each claim and/or case
responsive to Interrogatory Nos. 9 […].
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to this
request to the extent it seeks information protected by the attorney-client privilege
and work product doctrine. Liberty Mutual further objects to the extent this
request seeks the production of confidential information and information related
to claims other than the one at issue in this litigation.
(Id.).
Plaintiffs’ discovery requests on this topic are plainly overbroad and place a burden on
Defendant that outweighs the likely need for such a broad scope of information. This case
involves the denial of a single insurance claim in the state of Alabama. (Doc. # 1). It is not a
nationwide class action, nor do the events giving rise to Defendant’s liability occur before 2010.
6

(See id.). While Plaintiffs have a right to discovery on their bad faith claim, that right is not
unlimited. See, e.g., Fed. R. Civ. P. 26(b)(2)(c)(iii). The court will not compel Defendant to
respond to the requests as written. 5
To be sure, Plaintiffs have a right under Alabama law to conduct discovery concerning
aspects of past bad faith lawsuits filed against Defendant. See Ex parte Finkbohner, 682 So.2d
413 (Ala. 1996). With regards to Interrogatory 9, those aspects are limited to case name and CV
number, the court and jurisdiction in which the cases were filed, and the present status and
disposition of those cases. However, Plaintiffs must further narrow the scope of the information
sought, at the least, by specifying the meaning of “bad faith,” limiting the jurisdictional
geography to the state of Alabama, limiting the meaning of “companywide” to the actual
Defendant only (that is, Liberty Mutual Fire Insurance Company) and its affiliated entity or
entities handling underwriting, tailoring the bad faith suits to first-party policies only, and
shortening the temporal scope. (A four-year time range has been accepted by Alabama courts,
and this court accepts it now as a guideline. See id. (citing Ex parte Rowland, 669 So.2d 125,
127-28 (Ala. 1995))).

Plaintiffs will be equipped with that information to uncover from court

filings the other information desired, such as the names and addresses of attorneys and the parties
in those cases. Likewise, Plaintiffs can recover the pleadings from those cases (which they asked
for in Request 16). But, whenever Plaintiffs are unable to locate pleadings (for whatever reason),
or the difficulty and expense for Plaintiffs to (possibly) travel across Alabama in search of court

5

Further, Plaintiffs’ attempts with their October 8, 2015 email to Defendant (sent after filing their Motion
To Compel) to voluntarily narrow the scope of the discovery requests (to 2009-2014, and make “companywide”
mean only Liberty Mutual Fire Insurance Company and any affiliates or companies handling underwriting,
adjustment, or bad faith litigation) do not salvage their request to this court to compel responses. (See Doc. # 46-1).
Even there, the proposed, narrowed requests are still overbroad and place too heavy a burden on Defendant to
produce “companywide.” Alabama state courts under state discovery rules (which are similar to the federal rules)
have not given such broad discovery on bad faith claims. See e.g., Ex parte Finkbohner, 682 So.2d 409, 413-14
(Ala. 1996).

7

filings outweighs the ease of Defendant to pull those filings from its records, Defendants should
supply Plaintiffs with these materials.

Accordingly, the court will grant these modified and

narrowly tailored aspects of Plaintiffs’ discovery requests.
Other aspects of the requests are due to be denied. 6 The Alabama Supreme Court, while
allowing discovery of bad faith lawsuits, upheld the denial of discovery of so-called “bad faith
claims.” Finkbohner, 682 So.2d at 413. That court reasoned as follows:
The term “bad faith” is a legal term corresponding to certain wrongful conduct on
the part of an insurer in denying a claim for benefits. For this reason, we
conclude that it would be unduly burdensome on [the insurer] for it to have to sift
through possibly hundreds, if not thousands, of letters or other items of
correspondence complaining of or challenging its denial of particular claims and
to have to decide whether any one of the complainants was charging it with a
“bad faith” denial of the claim. We also question how many complaints or
“claims” not resulting in legal action would be “reasonably calculated to lead to
the discovery of admissible evidence.”
Id. (citing Ala. R. Civ. P. 26(b)(1)). This court agrees. Thus, Request 43 is due to be denied.
And, for the same reasons, Request 19 is due to be denied.

Correspondence involving

allegations of bad faith claims does not mean that those claims resulted in legal action.
Likewise, the requests for claims files will not stand. The search for and through them would be
unduly burdensome, not only because many files may contain privileged information or
protected work product, but they may also have the private information of Defendant’s
customers. Even if these determinations cannot be made until the files are reviewed, the burden
and expense of that review outweighs the reasonable calculation of the request. Regardless, and
in any event, if certain of the claims files relate to discoverable bad faith lawsuits, they are still

6

Defendant’s request that Plaintiffs pay for any bad faith discovery is also due to be denied. (See Doc. #
42). With a sufficiently narrowed request, which the court orders pursuant to its “ample power” under Federal Rule
of Civil Procedure 34, Defendant’s concerns for excessive costs should largely be satiated.

8

not discoverable due to the foregoing reasons. 7 Accordingly, Request 16 is due to be denied in
part insofar as it relates to claims files, and Request 47 is due to be denied entirely. Also, Part (f)
of Interrogatory 9 is due to be denied. Locating that information would cause an undue burden
and expense outweighing the likelihood of discovery relevant information, and is not reasonably
calculated to lead to the discovery of admissible evidence.
B. Discovery Related to Defendant’s Adjustment of the Claim
Plaintiffs request the court to compel Defendant’s response to one interrogatory and one
document request (to which Defendant objected), which are related to Defendant’s adjustment of
the claim. 8 The interrogatory and objection to it are:
Interrogatory 19. State whether you set a reserve for the Claim, and the amount
of the reserve along the date(s) and details of any adjustments to the reserve.
ANSWER: Liberty Mutual objects to this interrogatory on the grounds that it
seeks information related to reserves that is outside the scope of discovery
pursuant to Fed. R. Civ. P. 26(b), that it is not relevant to any party's claim or
defense, and that is not reasonably calculated to lead to the discovery of
admissible evidence. Liberty Mutual further objects to this interrogatory on the
basis that it seeks information protected by the attorney-client privilege and work
product doctrine.
(Doc. # 38). The bad-faith claim at issue in this case arises from a first-party insurance policy.
(See Doc. # 1-1). The court was unable to locate case law from Alabama state courts or federal
courts employing Alabama law concerning first-party claims and loss reserves; thus, it will look
to law from other states. And, in this regard, although Plaintiffs cite a number of bad-faith cases
based on other states’ laws, which allowed discovery of first-party loss reserve information, this

7

Further, the insureds in those lawsuits may not have even had access to their own claims files. Indeed,
oftentimes, an insured’s own claim file may not be available until coverage is first proven. See, e.g., Akpan v.
Farmers Ins. Exchange, Inc., 961 So.2d 865, 875 (Ala. Civ. App. 2007). While that particular issue is not settled in
federal court, it is irrelevant to other insureds’ claim files. See, e.g., St. Joe Co. v. Liberty Mut. Ins. Co., No. 051266, 2006 WL 3391208, at *3 (M.D. Fla. Nov. 22, 2006).
8

Interrogatories 7, 12, and 13, and Requests 36 and 37 were initially listed under this category but have
been resolved by the parties. See note 4, supra.

9

court is not persuaded by them. (See Docs. # 38 at 14, 46 at 6). Instead, this court joins with the
majority view in first-party claims “that reserve information is outside the scope of discovery
because the information is not relevant as to what an insurer thought of the merits of a claim. . .
.” 9 Ann F. Ketchen, Reserve and Reinsurance Information: Is It Discoverable?, 38-SPG Brief
40, 41 (2009); see also, e.g., Safeguard Lighting Sys, Inc. v. N. Am. Specialty Ins. Co., 2004 WL
3037947, at *3 (E.D. Pa. Dec. 30, 2004) (reiterating that “there is a ‘tenuous link between
reserves and actual liability given that numerous considerations factor into’ the calculation of
reserves in accordance with statutory requirements” (citations omitted)).

Accordingly,

Plaintiffs’ request as to Interrogatory 19 is due to be denied.
Plaintiffs’ document request and Defendant’s objection concerning claim adjustment are:
Request 18. All claim files handled by Dwight Hinton from 2005 to present that
involved a claim for coverage on a commercial property.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, ambiguous, overly broad, unduly burdensome, and not reasonably
calculated to lead to the discovery of admissible evidence. Liberty Mutual further
objects to this request to the extent it seeks information protected by the attorneyclient privilege and work product doctrine. Liberty Mutual further objects to the
extent this request seeks the production of confidential information and
information related to claims other than the one at issue in this litigation.
(Doc. # 38). Plaintiffs have reason to believe Dwight Hinton made the decision on their claim,
and his investigation into the facts of the claim under the policy would accordingly be relevant.
(See id.).

However, discovery must be proportional to the likelihood of discovering relevant

evidence. See Fed. R. Civ. P. 26(b)(2)(c)(iii). Request 18 is overbroad and probable to lead to
undue expense.

Defendant is thus entitled to a narrowed scope on Request 18. Therefore,

similar to the narrow tailoring discussed in Part A above, Plaintiffs should restrict the year range
9

Another rationale behind the majority view is that loss reserve information is often protected under the
attorney-client privilege or the work product doctrine. Ketchen, 38-SPG Brief at *41. While Defendant also raised
that objection, the court determines that reserve information is simply not relevant (at least here), and not reasonably
calculated to lead to the discovery of admissible evidence, concerning either policy interpretation or bad-faith
investigation.

10

on this document request and keep it to claims in the state of Alabama for policies like the one at
issue in this case.
C. Discovery Related to Performance Goals and Evaluations of Claims Department
Plaintiffs move the court to compel a response to seven document requests related to
performance goals and evaluations of the claims department, to which Defendant objected. Two
of the requests (and objections) are as follows:
Request 20. A complete and genuine copy of any and all documents relating to
the creation, implementation, and application of any cost containment, pay,
bonus, or incentive programs for the claims department and/or claims handling
employees and supervisors from 2005 to the present.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, ambiguous, overly broad, unduly burdensome, and not reasonably
calculated to lead to the discovery of admissible evidence. Liberty Mutual further
objects to the extent this request seeks the production of proprietary or
confidential information.
Request 21. All forecasts and claims payment goals and/or performance criteria
of any type that apply to the claims department overall and its personnel for years
2005 to present. This should include, but is not limited to all claims payment
goals, claims targets, ratios, percentages, and any other goal or target that would
apply to either the claims department overall or to its employees.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, ambiguous, overly broad, unduly burdensome, and not reasonably
calculated to lead to the discovery of admissible evidence. Liberty Mutual further
objects to the extent this request seeks the production of proprietary or
confidential information.
(Doc. # 38). Although there is a strong public policy against the discovery of personnel files,
Coker v. Duke & Co., Inc., 177 F.R.D. 682, 685 (M.D. Ala. 1998), the court does not view these
requests as asking for information strictly on personnel files. To the contrary, these requests
seek information on financial (and similar) incentives for employees. Such employee incentives
are indeed relevant or reasonably calculated lead to the discovery of admissible evidence in a bad
faith case such as this one. See Royal Bahamian Assn., Inc. v. QBE Ins. Corp., 268 F.R.D. 692,

11

694 (S.D. Fla. 2010) (citing Buckley Towers Condo., Inc. v. QBE Ins. Corp., 2008 WL 2645680,
at *3-5 (S.D. Fla. June 26, 2008)) (“In general, such evidence is only relevant to a bad faith case,
not a first party coverage case.”). Nonetheless, the requests as worded are too overbroad and
must be narrowed, at the least, in temporal scope, to the individuals who worked on the claim at
issue, and to the claims department as a whole (i.e., not individuals unrelated to the claim in this
case) if such department-wide incentives exist.
Plaintiffs also requested materials related to, and including, personnel files:
Request 22. All performance evaluation reports, performance plans, performance
checklists, performance reviews, PP&Rs or other documents that evaluate the
claims department and its personnel for the years 2005 to present.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to the extent
this request seeks the production of proprietary or confidential information or
information protected by the attorney-client privilege and work product doctrine.
Request 23. A full and complete copy of all personnel files for any person
involved in the handling of any aspect of the Claim, including but not limited to
all evaluations or reviews for every adjuster, claims manager, supervisor or other
employee who ever reviewed or evaluated any aspect of the Claim. Please note:
If there is any confidential information in these personnel files, that information
should be pointed out with specificity before the due date for answering these
requests in an effort to obtain agreement on redaction or protection.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to this
request to the extent it seeks information protected by the attorney client privilege
and work product doctrine and to the extent it seeks the production of confidential
information.
Request 24. With regard to every adjuster, claims manager, supervisor or other
employee who ever reviewed or evaluated any aspect of the Claim, produce all
documents concerning a review of each person’s job performance for the years
2005 to present.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to the extent
this request seeks the production of confidential information.
12

(Doc. # 38).
Unlike Requests 20 and 21, these requests are due to be denied entirely for impermissibly
seeking discovery of personnel files. Because public policy strongly disfavors the discovery of
personnel files, they are discoverable “only if ‘(1) the material sought is clearly relevant and (2)
the need for discovery is compelling because the information sought is not otherwise readily
obtainable.’” Coker, 177 F.R.D. at 685 (quoting Cooperman v. One Bancorp, 134 F.R.D. 4 (D.
Me. 1991)). Here, these materials are not clearly relevant, and are not as reasonably calculated
to lead to admissible evidence as financial-type incentives. And, in any event, the fact that some
information concerning an individual employee might be recorded in personnel files is not
enough to usurp the public policy against disclosing those files. Plaintiffs have “not shown that
any information in any particular employee’s personnel file is directly relevant for any other
reason, such as impeachment,” and that it cannot be obtained in other ways (such as at
deposition). Royal Bahamian, 268 F.R.D. at 694; see also Tolz v. Gieco Gen. Ins. Co., 2010 WL
298397, at *3-4 (S.D. Fla. Jan. 19, 2010) (finding production of personnel file improper in badfaith action where no evidence it is necessary for a specific purpose, such as impeachment). It is
not enough that Defendant holds the files; Plaintiffs can seek the information they want via other
means allowed under the Federal Rules of Civil Procedure.
Plaintiffs

also requested the

following materials

concerning Defendant’s

relationship with individuals who handled Plaintiffs’ claim:
Request 31. Any and all contracts or other documentation governing the
relationship between Liberty and any employee, agent, adjuster, investigator, or
representative who had any role in the investigation or handling of the Claim.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad and not reasonably calculated to lead to the discovery of
admissible evidence. Liberty Mutual further objects to the extent this request
seeks the production of confidential information.
13

legal

(Doc. # 38). In its response brief, Defendant reported that, before the agreed upon date for it to
respond to Plaintiffs’ Rule 37 letter and the day after Plaintiffs filed the subject Motion, it
supplemented its response to Request 31. (Doc. # 42 at 42). Plaintiffs did not raise any issues
with this supplementation in their reply, and so the court concludes that the request is moot.
Finally, as follows, Plaintiffs requested materials related to Defendant’s corporate values:
Request 42. Any and all documents that relate to corporate values adopted by
Liberty as it relates to the treatment of insureds and principles to follow in dealing
with policyholders, including any and all guidelines that address Liberty’s
obligation to exercise utmost good faith in processing its insureds’ claims.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, ambiguous, overly broad, unduly burdensome, and not reasonably
calculated to lead to the discovery of admissible evidence. Liberty Mutual further
objects to this request to the extent that it seeks information protected by the
attorney-client privilege and work product doctrine.
(Doc. # 38). However, Plaintiffs offer no discussion concerning this request in their Motion and
reply. (Id., Doc. # 46). In its opposition brief, Defendant writes that it does not know what is
actually being requested, and that Plaintiffs have not articulated what information they seek.
(Doc. # 42 at 42). Nonetheless, Defendant offers (in an attempt to comply with the request) the
creed located on the wall at the entrance of its headquarters. (Id. at 43). Thus, the court
considers this request resolved and therefore moot.
D. Discovery Related to Quality Assurance and Claim Dispute Resolution
Plaintiffs wish the court to compel a response to their proffered and objected to document
request concerning quality assurance:10
Request 27. Copies of all quality assurance manuals and other documents and/or
communications that contain information about your claims handling practices.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
10

In their initial Motion brief, Plaintiffs moved to compel responses to two requests, but one has since been
answered and is moot. See note 4, supra.

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the discovery of admissible evidence. Liberty Mutual further objects to this
request to the extent it seeks information protected by the attorney client privilege
and work product doctrine and to the extent it seeks the production of proprietary
or confidential information.
(Doc. # 38). Plaintiffs argue that courts routinely support the discoverability of these types of
materials and cite to cases holding that training policies and manuals are discoverable. (Id. at 2122).

Defendant responds that Plaintiffs provide no legal basis for the discoverability of the

requested quality assurance information, but instead discuss claims manuals and training
materials, which Defendant already agreed to produce. (Doc. # 42 at 43). In their reply brief,
Plaintiffs specify that “quality assurance” means materials reflecting Defendant’s efforts to
ensure its employees adjust claims in compliance with the claims manuals and training materials
Defendant is producing. (Doc. # 46 at 8). They also contend that it logically follows the cited
case law that materials reflecting enforcement would be discoverable. (Id.). The court agrees.
Because Plaintiffs allege a bad faith cause of action, materials related to training policies and
manuals may be relevant or lead to the discovery of admissible evidence. But, as with many of
the other request the court is allowing, Plaintiffs must narrow the scope of the request to a set,
short timeframe, and to any relevant materials connected to the claims handlers who worked on
Plaintiffs’ claim.
E. Discovery Related to the E&O Clause
Plaintiffs additionally move this court to compel Defendant’s response to interrogatories
and document requests regarding the E & O Clause to which Defendant objected:
Interrogatory 10.
For every instance in which Liberty (companywide) has
handled a claim for coverage under the Errors & Omissions clause at issue, or any
similar Errors & Omissions clause, from 2005 to present, state:
(a) The date of the loss;
(b) The date the claim(s) was presented to you;

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(c) The names, addresses, and telephone numbers of all claimants and
insureds;
(d) The names, addresses, and telephone numbers of all attorneys for the
claimants and insureds (if applicable);
(e) The date of any denial of the claim;
(f) The date of any settlement or judgment;
(g) The disposition of the claim;
(h) The name and address of each person or entity having possession,
custody or control of any records relating to such claim.
ANSWER: Liberty Mutual objects to this interrogatory on the grounds that it is
vague, ambiguous, overly broad, unduly burdensome, and not reasonably
calculated to lead to the discovery of admissible evidence. Liberty Mutual further
objects to the extent this interrogatory seeks information protected by the
attorney-client privilege and work product doctrine and on the basis that this
interrogatory seeks information related to claims other than the one at issue in this
litigation and claims not handled by Liberty Mutual.
Interrogatory 11. For every instance in which Liberty (companywide) has
litigated a claim for coverage under the Errors & Omissions clause at issue, or any
similar Errors & Omissions clause, from 2005 to present, state:
(a) Case name and CV number;
(b) The court and jurisdiction in which it was filed;
(c) The names, addresses, and telephone numbers of all parties, including
the plaintiffs and defendants;
(d) The names, addresses, and telephone numbers of all attorneys for the
plaintiffs and defendants;
(e) The present status or disposition of the lawsuit;
(f) The name and address of each person or entity having possession,
custody or control of any records relating to such action.
ANSWER: Liberty Mutual objects to this interrogatory on the grounds that it is
vague, ambiguous, overly broad, unduly burdensome, and not reasonably
calculated to lead to the discovery of admissible evidence. Liberty Mutual further
objects to the extent this interrogatory seeks information protected by the
attorney-client privilege and work product doctrine and on the basis that this
interrogatory seeks information related to claims other than the one at issue in this
litigation and claims not handled by Liberty Mutual.

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Request 45: Any and all revisions adopted for equipment breakdown insurance
policies issued by Liberty which modify and/or amend the Errors & Omissions
clause made the basis of Plaintiffs’ Complaint.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague and unduly burdensome. Liberty Mutual also avers that the subject policy
is an ISO form that is revised by ISO, not Liberty Mutual.
Request 46: Any and all documents or other materials which in any way
reference, relate to or reflect the underwriting intent of the Errors & Omissions
clause made the basis of Plaintiffs’ Complaint.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague and unduly burdensome. Liberty Mutual further objects to this request to
the extent it seeks information protected by the attorney-client privilege and work
product doctrine.
Request 47. Produce the complete claims file for each claim and/or case
responsive to Interrogatory Nos. 9, 10, and 11.
RESPONSE: Liberty Mutual objects to this request on the grounds that it is
vague, overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence. Liberty Mutual further objects to this
request to the extent it seeks information protected by the attorney-client privilege
and work product doctrine. Liberty Mutual further objects to the extent this
request seeks the production of confidential information and information related
to claims other than the one at issue in this litigation.
(Doc. # 38). Even though it validly objected to, among other things, the overbreadth of these
discovery requests, Defendant indicated it would continue to search and supplement its
production if it finds anything, and stated its willingness to confer in good faith as to what
exactly Plaintiffs seek. (See Doc. # 42 at 46). Plaintiffs, in their reply brief, state that Defendant
“has indicated that it will search for this information, but to date [October 13, 2015] has not
supplemented its responses.” (Doc. # 46 at 8). Because of the amount of time that has passed
since the briefing cycle, and in light of the parties’ statements, the court will defer a ruling on
these discovery requests. Instead, it will order the parties to confer in good faith and file a joint
report concerning the status of these (and any other outstanding) discovery requests. There is no

17

reason the parties cannot act as the professionals they are and, without the court’s assistance,
work out these (and any other remaining) discovery issues. 11
F. Costs and Fees are Due to be Denied
Defendant requests prevailing party fees pursuant to Federal Rule of Civil Procedure
37(a)(5)(B). To be sure, while Defendant has prevailed in some part, it has not in others.
Moreover, and in any event, although the court believes the parties could have (likely) reached a
mutual outcome prior to filing the subject Motion, Plaintiffs are not unjustified in filing it.
Accordingly, no fees or costs are due to be awarded. Likewise, the court defers to the parties to
work out payment of complying with discovery costs.

With sufficiently narrowed requests,

many of Defendant’s cost concerns should be satisfied. 12
V.

Conclusion
For the reasons set out above, Plaintiffs’ Motion To Compel Liberty To Respond to Bad

Faith Discovery (Doc. # 38) is due to be granted in part with narrowed tailoring, denied in part,
and is moot in part. A separate order will be entered.

Done and ordered this 5th day of April 2016.

______________________________

SENIOR UNITED STATES DISTRICT JUDGE
11

When conferring, the parties should keep in mind the court’s reasoning set forth in this memorandum

opinion.
12

The parties are again encouraged to try to work through any and all discovery issues before coming to the
court with discovery motions. With the exception of any remaining issues in the joint status report the court is
ordering, there is no guarantee that the court will make the same determinations of costs and fees if resolving future
discovery disputes in this case.

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