Johnson v. RLI Insurance Company

Filing 94

ORDER: granting in part and denying in part Johnson's Motion to Compel 45 (see order for full details). Signed by Judge Sharon L. Gleason on 08/31/2015. (AEM, CHAMBERS STAFF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA

KEITH C. JOHNSON,
Plaintiff,
v.
RLI INSURANCE COMPANY,
Defendant.
Case No. 3:14-cv-00095-SLG
ORDER RE MOTION TO COMPEL
At Docket 45 is Johnson’s Motion to Compel Discovery. The motion has been fully
briefed. 1

Oral argument was not requested and was not necessary to the Court’s

decision. For the reasons set forth below, the motion will be granted in part and denied
in part.
BACKGROUND
The facts relevant to this motion to compel are not in dispute. Keith Johnson was
one of three passengers in a 1999 Chevrolet Suburban driven by Robert Stenehjem, Sr.,
that left the road near Soldotna, Alaska on July 18, 2011. Mr. Stenehjem was killed in the
accident; Keith Johnson was severely injured. The Suburban was registered and titled to
PWC LLC, an Alaska Limited Liability Company. At the time of the accident, Robert’s
brother, John Stenehjem, held a 33 1/3 percent ownership interest in PWC LLC. At issue

1

See Docket 65 (Opp.), Docket 70 (Reply).

in this case is John Stenehjem’s Personal Umbrella Liability Policy (“PUP”) issued by RLI
Insurance Company. 2
In June 2012, Johnson filed suit against Kathleen Stenehjem as personal
representative of the estate of Robert Stenehjem in North Dakota state court over the July
2011 accident. 3 RLI denied that the PUP provided coverage for the accident and denied
a duty to defend or indemnify Kathleen Stenehjem in that suit. In April 2013, the North
Dakota case settled. 4 The settlement resulted in a judgment in Johnson’s favor against
Kathleen Stenehjem of approximately $2.29 million and the assignment to Johnson of
any claims Kathleen Stenehjem might have against RLI arising from the accident. 5
On April 29, 2014, Johnson filed this suit in Alaska state court, seeking a
declaratory judgment that Kathleen Stenehjem was entitled to a defense and indemnity
in the North Dakota suit and seeking damages for breach of contract and bad faith. 6 The
action was timely removed to the federal district court based on diversity of citizenship. 7
On July 15, 2014, Johnson submitted his First Discovery Requests to RLI. 8
Request for Production No. 1 stated:

2

Docket 1-1 (Compl.) at 2; Docket 65 (Opp.) at 8–9; Docket 43-2 (Neill Depo.) at 8.

3

Robert Stenehjem was a resident of North Dakota at the time of the accident.

4

See 43-17 (Order of Judgment).

5

Docket 1-1 (Compl.) at 3–4.

6

Id. at 5–8.

7

Docket 1 (Notice of Removal).

8

See Docket 46-10 (First Discovery Requests).

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 2 of 14

Please produce for inspection and copying any and all
documents and information accessible to you which constitute
the RLI claim file for John Stenehjem.
Without narrowing the above request, please note this request
is intended to encompass, at a minimum, but is not limited to:
any and all documents under the RU Claim Number
00268036, including the entire master paper and electronic
coverage issue files including but not limited to all Claim
Diaries, Claims Portfolio, Claims Memo Email, and Corporate
Referral Reports. Without narrowing the above request,
please note this request is intended to encompass all written
documents including correspondence; memoranda; letters;
account(s) statements; receipts; invoices; and all documents
which you can access online; all electronically stored
information; prior emails received or sent by any agent,
employee and/or contractor then at RU, and any redundancy
or ‘dummy file.’ 9
Request for Production No. 10 stated:
Please produce for inspection and copying the original
affidavit of John Stenehjem dated January 14, 2013, and any
draft, revision, and previous version of this affidavit. 10
On August 25, 2014, RLI submitted its responses to the First Discovery
Requests. 11 In response to Request for Production No. 1, RLI stated, in its entirety, “See
documents produced with RLI’s Initial Disclosure Statement, dated August 5, 2014.”12
Johnson represents that “RLI produced a heavily redacted version of the RLI claim file . . .
along with an accompanying privilege log. 13 In response to Request for Production No.
10, RLI stated:
RLI objects to this request as overbroad, unduly burdensome,
and not reasonably calculated to lead to the discovery of
9

Id. at 4-5.

10

Id. at 9–10.

11

Docket 46-12 (Responses to First Discovery Requests).

12

Id. at 2.

13

Docket 45 (Motion) at 6; Docket 46-11 (Privilege Log).

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 3 of 14

admissible evidence. RLI further objects that this request
seeks information protected by attorney-client privilege or
attorney work-product document. Without waiving said
objections, see documents produced with RLI’s Initial
Disclosure Statement, dated August 5, 2014. 14
On January 28, 2015, Johnson submitted his Second Discovery Requests to RLI. 15
Request for Production No. 15 stated:
Please produce, in their original electronic format with all
metadata intact, all drafts, created at any time, of the "Affidavit
of John Stenehjem" and identify the author of each and every
draft.
Without narrowing the above request, please note this request
is intended to encompass, at a minimum, but is not limited to:
all drafts created by, or attached to email generated by, any
of the following individuals: . . [list of individuals omitted]. 16
Requests for Production Nos. 16–20 sought the following documents “in their original
electronic format with all metadata intact, and without any information redacted”: (1) all
drafts of RLI’s coverage denial letters of September 19, 2012 and January 18, 2013; (2)
the “running summary” of claim #00268036 (previously produced in redacted form); (3)
email exchanged relating to claim #00268036 (previously produced in paper form); (4)
email related to claim #00268036 not saved in RLI’s “Tower” document management
system and not previously produced; and (5) documents created by or reviewed by Betsy
McLaughlin or any other person within RLI’s claims counsel department related to claim
#00268036. 17 Requests for Production Nos. 22–26 sought RLI’s files related to other

14

Docket 46-12 (Response to First Discovery Requests) at 6.

15

Docket 46-13 (Second Discovery Requests).

16

Id. at 6–7.

17

Id. at 7–9.

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 4 of 14

insurance claims “from the time period of 2005 to present involving the same legal
questions as that presented in the case at bar.” 18
On March 2, 2015, RLI responded to the Second Discovery Requests by objecting
to the production of any additional documents. 19 On March 23, 2015, the parties met and
conferred on the disputed discovery requests but were unable to resolve their dispute. 20
DISCUSSION
I.

Production of the file for claim #00268036
Johnson moves the Court to compel RLI to “disclose the selected portions of its

claim diary, claim file, and correspondence between in-house counsel and adjuster it
improperly redacted or withheld.” 21 Clearly, the discovery that is sought is relevant to
Johnson’s claims. 22

At issue is whether the attorney-client privilege applies to all

communications between RLI’s insurance adjuster, Laina Heathman, and RLI’s in-house
counsel, Elizabeth McLaughlin. In civil cases, “state law governs privilege regarding a
claim or defense for which state law supplies the rule of decision.” 23 Here, while the
parties agree that state law applies in this diversity action, they dispute which state law is
applicable. Johnson brought this suit in Alaska and asserts that Alaska privilege law

18

Docket 45 (Motion) at 6; Docket 46-13 (Second Discovery Requests) at 9–12.

19

Docket 46-16 (Response to Second Discovery Requests) (dated March 2, 2015); Docket 45
(Motion) at 8.

20

Docket 45 (Motion) at 9.

21

Docket 45 (Motion) at 10.

22

See Fed. R. Civ. P. 26(b)(1).

23

Fed. R. Evid. 501.

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 5 of 14

applies. 24 RLI asserts that North Dakota privilege law applies because North Dakota law
“applies to issues of performance,” and “[c]laim handling related communications bear on
performance.” 25
Choice of law is a contested issue in the parties’ summary judgment motions now
pending before this Court. As to the specific attorney-client privilege issue, Alaska and
North Dakota law have substantially similar evidence rules that create a privilege that
applies to “confidential communications for the purpose of facilitating the rendition of
professional legal services to the client.”26

As such, the Court need not decide which

state’s law applies on this one issue, for the law in both states limits the attorney-client
privilege to “confidential communications made for the purpose of facilitating the rendition
of legal services.” Neither state creates a privilege so broad that it would permit the
withholding of otherwise relevant discovery whenever an attorney performed an otherwise
non-legal function or whenever an attorney was simply one of many copied on a string of
inter-office emails.
In light of the foregoing, the Court will direct RLI to review its privilege log and
produce those documents that are not “confidential communications made for the

24

Docket 45 (Motion) at 11–12.

25

Docket 65 (Opp.) at 13; see Docket 50 (Opp. to Johnson Motion for Summary Judgment) at
17–19 (setting out RLI’s choice-of-law argument).

26

Compare Alaska R. Evid. 503(b) (“A client has a privilege to refuse to disclose and to prevent
any other person from disclosing confidential communications made for the purpose of facilitating
the rendition of professional legal services to the client.”), with N.D. R. Evid. 502(b) (“A client has
a privilege to refuse to disclose and to prevent any other person from disclosing a confidential
communication made for the purpose of facilitating the rendition of professional legal services to
the client.”). The Court sees no meaningful distinction between the fact that Alaska’s rule refers
to “communications,” whereas North Dakota’s rule refers to “a communication.”
3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 6 of 14

purpose of facilitating the rendition of legal services.” RLI will then produce for in camera
review the remaining documents responsive to Request for Production No. 1 over which
it continues to assert an attorney-client privilege. 27
The work product privilege is a federal evidentiary privilege applicable in diversity
cases. 28 Although both parties address work product to some extent in their briefing, the
Court’s review of RLI’s response to Request for Production No. 1 and privilege log shows
no assertions of that privilege, and the Court finds any objection on that basis with respect
to RFP #1 to have been waived. 29
II.

Production of documents in original form with metadata
At issue between the parties regarding Requests for Production Nos. 15–20 is

whether the documents that have been produced by RLI in paper or .pdf format satisfied
Federal Rule of Civil Procedure 34(b)(2)(E)’s requirements that electronically stored
information be produced “as they are kept in the usual course of business” and “in a form
or forms in which [the information] is ordinarily maintained or in a reasonably usable form
or forms.” Johnson seeks to have responsive documents provided to him in native
formats with all accompanying metadata, while RLI asserts that the documents in paper

27

RLI asserts that the case Alaska Interstate Const., LLC v. Pac. Diversified Invs., Inc., 279 P.3d
1156, 1179 (Alaska 2012), stands for the proposition that under Alaska law, Johnson must make
a prima facie showing that RLI’s attorneys were consulted to assist in the perpetration of a crime
or fraud. Docket 65 (Opp.) at 20. But that case addressed when a decidedly privileged
communication is nonetheless discoverable; it did not address the issue here, which is what
constitutes a privileged attorney-client communication in the first instance.
28

See Fed. R. Civ. P. 26(b)(3); Holmgren v. State Farm Mut. Auto. Ins. Co., 976 F.2d 573, 576–
78 (9th Cir. 1992) (discussing and applying federal rule in diversity action).
29

See Docket 46-11 (Privilege Log); Fed. R. Civ. P. 34(b)(2)(B) (“Responding to Each Item. For
each item or category, the response must either state that inspection and related activities will be
permitted as requested or state an objection to the request, including the reasons.”).
3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 7 of 14

or .pdf form that it has already provided are reasonably usable and no further production
should be required.
The Ninth Circuit has not provided significant guidance on the application of Rule
34(b)(2)(E) to the production of metadata. However, numerous persuasive authorities
provide helpful guidance on how to address issues of metadata discovery and the format
in which electronically stored information is produced in discovery.
First, the advisory committee note to Rule 34(b) states that although a party may
produce electronically stored information in a “reasonably usable form” other than in the
information’s native form, this does not mean “that a responding party is free to convert
electronically stored information from the form in which it is ordinarily maintained to a
different form that makes it more difficult or burdensome for the requesting party to use
the information efficiently in the litigation.” 30 Second, the Sedona Conference, a nonprofit
legal policy organization relied upon by numerous state and federal courts on electronic
discovery issues, 31 includes a commentary to its Principle 12 which provides
criteria for deciding whether metadata should be produced in
a given case. The commentary advises parties to consider:
(i) “what metadata is ordinarily maintained”; (ii) the relevance
of the metadata; and (iii) the “importance of reasonably
accessible metadata to facilitating the parties' review,
production, and use of the information.” In selecting a form of
production, the two “primary considerations” should be the
need for and probative value of the metadata, and the extent

30

Fed. R. Civ. P. 34(b), advisory committee’s note, 2006 amendment.

31

See Lake v. City of Phoenix, 218 P.3d 1004, 1005 n.1 (Ariz. 2009) (explaining nature of Sedona
Conference); see, e.g., Automated Solutions Corp. v. Paragon Data Sys., Inc., 756 F.3d 504, 515
(6th Cir. 2014) (citing to Sedona Conference); U.S. ex rel. Carter v. Bridgepoint Educ., Inc., 305
F.R.D. 225, 238 (S.D. Cal. 2015) (same); Aguilar v. Immigration and Customs Enf’t Div. of U.S.
Dep’t of Homeland Sec., 255 F.R.D. 350, 355–60 (S.D.N.Y. 2008) (discussing metadata discovery
issues and discussing evolution of Sedona Conference Guidance).
3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 8 of 14

to which the metadata will “enhance the functional utility of the
electronic information.” 32
Finally, the Court found helpful the extensive discussion on the discovery of metadata in
Aguilar. 33 There, a Southern District of New York district court denied a request for the
production of emails in a format that captured metadata inconsistent with the documents
that had been previously produced in their final form because (1) the metadata had not
been requested in the original request for production; (2) there had been no showing that
additional facts “of real value” would likely be found within the metadata; and (3) the
volume of emails produced was not so large that metadata was necessary to manage the
production of the document that had already been received. 34 The district court did allow
for the re-production of certain Word and PowerPoint documents with metadata, but
required the costs to be borne by the moving party, because the .pdf documents that had
already been produced were text searchable and the moving party “failed to show that
the ‘who’ and ‘when’ of document creation or modification [was] relevant to their . . .
claims” and the additional information would be “at best, marginally relevant.” 35
With these principles in mind, the Court turns to the documents as to which
Johnson seeks the metadata to be compelled.
//
//

32

Aguilar, 255 F.R.D. at 356 (internal citations omitted).

33

Id. at 353–59.

34

Id. at 360.

35

Id. at 361–62.

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 9 of 14

A. Affidavit of John Stenehjem
Central to this case is whether Robert Stenehjem was covered by John
Stenehjem’s Personal Umbrella Liability Policy when the accident that injured Johnson
occurred. The PUP provides that:
PART II – WHO IS COVERED – INSUREDS
...
B. For Occurrences involving the use of Automobiles,
Recreational Vehicles, or Watercraft:
...
b. Anyone else who uses an Automobile . . . you own,
borrow, rent, or use as a temporary substitute is covered
if:
(1) they use it with your express or implied permission;
and,
(2) the use is for the purpose you intended. 36
In September 2012, RLI informally indicated to Johnson that it would not defend
or indemnify Robert’s estate. 37 On December 20, 2012, prior to RLI formally informing
Kathleen Stenehjem and the estate that it would not defend or indemnify in the North
Dakota case, RLI sent John Stenehjem a draft affidavit for his review. RLI has provided
a copy of this draft affidavit in discovery. 38 In that draft affidavit, John Stenehjem was to
have averred, among other things, that at the time of the accident (1) he did not own the
Suburban; (2) at the time of the accident, the Suburban was not being used with his
express or implied permission; and (3) he did not give and could not have given anyone

36

Docket 51-5 (PUP) at 6.

37

See Docket 46-1 at 1–3.

38

See Docket 46-4.

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 10 of 14

permission to drive or otherwise use the Suburban. 39 In short, the December 20, 2012
draft affidavit refuted key facts relevant to coverage under the PUP. John Stenehjem did
not sign that proposed affidavit. 40 RLI revised the draft affidavit and sent John Stenehjem
a new version on December 28, 2012. 41 The revised draft removed certain statements
related to John Stenehjem’s ability to give permission to drive the Suburban and his
knowledge of whether Robert Stenehjem had borrowed the Suburban from PWC LLC on
the day of the accident. 42 John Stenehjem signed the revised version of the affidavit
before a notary on January 14, 2013. 43 Johnson asserts that RLI’s drafting and revisions
of the affidavit reflect that RLI had a “pre-conceived position regarding its coverage
denial.”44 RLI formally notified Kathleen Stenehjem and the estate that it was declining
coverage on January 18, 2013. 45
Johnson’s Request for Production No. 10 requested “the original affidavit of John
Stenehjem dated January 14, 2013, and any draft, revision, and previous version of this
affidavit.” RLI has produced the draft proposed affidavits, along with John Stenehjem’s
signed affidavit, in .pdf format. In the context of this case, a fully responsive production
that included revisions and previous versions would implicitly include the draft affidavit

39

Docket 46-6.

40

Docket 46-2 (Heathman Depo.) at 25 ll.5–22.

41

Docket 46-7.

42

Compare Docket 46-6, with Docket 46-8.

43

Docket 46-9.

44

Docket 45 (Motion) at 2.

45

Docket 46-1 at 4–6.

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 11 of 14

documents in the original Microsoft Word format in which they had been drafted, because
in that format revisions and the authors of those revisions could be visible within the
document metadata that would not be visible in another form. And the need for nativeformat documents and the accompanying metadata regarding the drafts is heightened
here, where John Stenehjem is deceased and RLI seeks to introduce his signed affidavit
into evidence under Federal Rule of Evidence 807’s residual hearsay exception. Unlike
in Aguilar, the additional information contained within each draft affidavit’s metadata could
be highly relevant to Johnson’s asserted claims. By converting the responsive documents
to .pdf format in its original response, RLI made it more difficult for Johnson to use the
produced documents efficiently in this litigation and has not enabled Johnson to have the
same ability as RLI to access, search, and display the relevant responsive information.
Accordingly, the Court will compel RLI to respond to Request for Production No. 15, which
seeks with greater specificity all draft affidavits in their original native format.
B. Requests for Production 16–20
Johnson seeks the production of numerous other documents (set out above)
already produced by RLI as part of the claim file in native format with metadata. Although
Johnson’s Request for Production No. 1 included “all electronically stored information,”
the request did not explicitly state that Johnson sought the production of metadata
embedded within the documents responsive to his discovery request. Nor does the Court
find that the need to produce documents in native format was obvious to be fully
responsive in the context of the claims at issue. And, unlike with the draft affidavits,
Johnson has not demonstrated the relevance of the metadata contained within the overall
claim file to the claims at issue in this case or what specific evidence might be revealed

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 12 of 14

by re-producing responsive documents in native format.

Rather, the requested

documents in the claims file and that are otherwise associated with the claims file, not
their metadata, are where the evidentiary value would be found. Therefore, the Court
finds that producing the documents in .pdf or paper form constitutes a “reasonably usable
form.” Any marginal potential benefit of re-production of these documents in native format
does not outweigh the additional burden of production, particularly in light of Rule
34(b)(2)(E)(iii)’s guidance that normally “[a] party need not produce the same
electronically stored information in more than one form.” Accordingly, the Court will not
compel RLI to produce any additional response to Requests for Production Nos. 16–20.
III.

Production of RLI case files involving similar legal issues
Finally, Johnson seeks production of RLI’s “other claim files involving similar legal

issues to the claim at bar” from 2005 to the present. 46 RLI represents that it has 3,690
Umbrella Policy claim files it would need to review for responsiveness and that the
resources necessary to properly review those files for responsiveness and applicable
privileges and statutory protections would be unreasonably burdensome. 47 The Court
finds that although relevant information might be derived from responses to these
discovery requests, RLI has demonstrated that “the burden or expense of the proposed
discovery outweighs its likely benefit,” particularly given that Johnson has not identified

46

Docket 45 (Motion) at 22.

47

See Fed. R. Civ. P. 26(b)(2)(C)(i); Docket 65 (Opp.) at 25, 29 (estimating 11,070 hours of work
to review all relevant files).

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 13 of 14

with specificity “the importance of the discovery in resolving” his claims. 48 Accordingly,
the Court will not compel RLI to respond to Requests for Production Nos. 22–26.
CONCLUSION
For the reasons set forth above, IT IS ORDERED that:
1. The Motion to Compel is GRANTED with respect to RFP #1 as follows: within 14
days of the date of this Order, RLI shall submit for in camera review all documents
that it has redacted or withheld on the basis of attorney-client privilege that are
responsive to Request for Production No. 1. Prior to making this submission, RLI
shall again review and revise as warranted its privilege log to ensure that it is
consistent with the terms of this Order, and provide any supplemental discovery to
Johnson. RLI shall submit two copies of the documents to the Court for in camera
review: one set with the redactions or withholdings marked and a second unredacted set of the same documents;
2. The Motion to Compel is GRANTED as to the production of the metadata
associated with all of the drafts and the signed affidavit of John Stenehjem. Within
14 days of the date of this Order, RLI shall produce all documents responsive to
RFP # 15. RLI may produce a privilege log asserting relevant privileges in lieu of
production as applicable, but shall submit two copies (redacted and unredacted)
for in camera review within 14 days of the date of this Order; and
3. Plaintiff’s Motion to Compel Discovery at Docket 45 is otherwise DENIED.
DATED this 31st day of August, 2015.
/s/ Sharon L. Gleason
UNITED STATES DISTRICT JUDGE

48

Fed. R. Civ. P. 26(b)(2)(C)(iii).

3:14-cv-00095-SLG, Johnson v. RLI Insurance Co.
Order re Motion to Compel
Page 14 of 14