Klungvedt v. Unum Group et al

Filing 118

ORDER granting 59 Motion for Protective Order. Signed by Judge John W Sedwick on 2/13/13.(JWS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF ARIZONA

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DAVID N. KLUNGVEDT,
Plaintiff,

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vs.
UNUM GROUP and PAUL REVERE
LIFE INSURANCE COMPANY,

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Defendants.
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2:12-cv-00651- JWS
ORDER AND OPINION
[Re: Motion at Docket 59]

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I. MOTION PRESENTED
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At docket 59, defendants Unum Group (“Unum”) and Paul Revere Life Insurance
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Company (“Paul Revere”; collectively, “defendants”) move this court to preclude plaintiff
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David Klungvedt (“Klungvedt” or “plaintiff”) from deposing Mr. Jack McGarry (“McGarry”)
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because he is a high-ranking corporate official without any personal or relevant
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knowledge regarding the issues in this case. Plaintiff opposes at docket 67, and
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defendants reply at docket 77. Oral argument was not requested and would not assist
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the court.
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II. BACKGROUND

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Klungvedt purchased a disability insurance policy from Paul Revere in 1988.

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Unum is the parent company of Paul Revere. Plaintiff submitted a claim for disability

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benefits in March of 2006 after he was diagnosed with a cyst on his brain. Paul Revere

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accepted the claim and paid monthly benefits until December 2008, at which time it

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terminated Klungvedt’s benefits, asserting that the medical records did not support

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Klungvedt’s claim of disability.

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Klungvedt filed this lawsuit against defendants in state court. Defendants
removed the case to this court. Klungvedt’s second amended complaint sets forth a

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breach-of-contract claim and an insurance bad faith claim against defendants.

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Additionally, the complaint sets forth a claim for declaratory relief, asking the court to

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declare that ERISA does not apply to plaintiff’s individual disability insurance policy and

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that the appeals language Unum uses in its termination letters, including the one plaintiff

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received on December 2, 2008, is deceptive and inconsistent with Unum’s obligations of

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good faith and fair dealing and is deceptive and inconsistent with the policy itself. The

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language plaintiff contends is deceptive is as follows:

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If you do not have additional information, disagree with our determination,
and want to appeal this claim decision, you must submit a written appeal.
This appeal must be received by us within 180 days of the date of this letter.
. . . If we do not receive your written appeal within 180 days of the date of this
letter, our claim determination will be final.

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Plaintiff asserts that this language purposefully misleads denied claimants into believing

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that their policies are governed by ERISA and misleads them into believing that they

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may not be entitled to further relief if they do not submit to Unum’s appeal process. He

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asserts that the language does not adequately and clearly set forth a claimant’s rights

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and remedies.

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Defendants subsequently admitted that ERISA does not apply to plaintiff’s policy,

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and the court therefore disposed of that issue at docket 62. The only remaining issue

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for declaratory relief relates to the appeals language in the termination letter plaintiff

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received on December 2, 2008; namely, whether that language is deceptive and
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inconsistent with plaintiff’s policy and with Unum’s obligation of good faith and fair

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dealing.

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On September 24, 2012, plaintiff filed a notice of deposition of McGarry, who is

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currently Unum’s Executive Vice President of Individual Disability and Long Term Care

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Closed Block Operations, one of four executive vice presidents in the company with

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only Unum’s President/CEO ranking above him. Defendants filed this motion for a

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protective order to prevent the deposition from taking place under Rule 26(c) of the

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Federal Rules of Civil Procedure, arguing that the deposition of McGarry, a high-ranking

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or “apex” corporate official, is burdensome and unwarranted in that McGarry does not

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have any personal or relevant knowledge about the information sought and such

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information can be obtained through less burdensome methods, such as deposing a

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designated corporate representative under Rule 30(b)(6). Plaintiff disagrees and

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argues that McGarry has information relevant to: (1) the drafting or use of the appeals

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language used in benefit termination letters; (2) the decision whether to correct the

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appeals language used in termination letters once put on notice that it was confusing;

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(3) Unum’s initiative to use plain language in its products; and (4) the strategic decisions

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related to improving the company’s performance in the realm of individual insurance

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policies.

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III. STANDARD OF REVIEW

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Trial courts have broad discretion in matters related to discovery.1 While

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generally any matter relevant to a claim or defense is discoverable, Rule 26(b)(2) of the

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Federal Rules of Civil Procedure grants district courts the power to limit the scope of

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discovery if “the discovery sought is unreasonably cumulative or duplicative, or can be

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obtained from some other source that is more convenient, less burdensome, or less

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Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002) (noting that broad discretion is
vested in the trial court to permit or deny discovery).

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expensive.”2 Furthermore, under Rule 26(c) a party from whom discovery is sought

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may move for a protective order, and if good cause is found, the court may “issue an

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order to protect a party or person from annoyance, embarrassment, oppression, or

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undue burden or expense.” The party seeking the protective order has the burden of

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showing good cause by demonstrating harm or prejudice that will result from the

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requested discovery.3
IV. DISCUSSION

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Defendants argue that the court should issue a protective order to prevent the

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deposition of McGarry because he is a high-level or “apex” executive without personal

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knowledge of the issues in this case whom plaintiff seeks to depose in order to discover

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general strategic corporate information that could more appropriately be obtained using

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less burdensome methods of discovery, like a Rule 30(b)(6) deposition. Based on the

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affidavits of McGarry, the court concludes that he is clearly a high-level executive

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because he is one of the top five executives in the company.4 “Virtually every court that

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has addressed deposition notices directed at an official at the highest level or ‘apex’ of

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corporate management has observed that such discovery creates a tremendous

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potential for abuse or harassment.”5 This potential for abuse presents the court with a

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situation where it may be appropriate for it to exercise its discretion to limit discovery

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under the federal rules. In considering whether to allow a deposition of an apex

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executive, the court considers whether the executive has unique, first-hand, non-

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

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Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004).

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See, e.g., Groupion, LLC v. Groupon, Inc., 2012 WL 359699, at *3 (N.D. Cal. Feb. 2,
2012) (referring to a company’s senior vice presidents as “apex deponents”).

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Celerity, Inc. v. Ultra Clean Holding, Inc., 2007 WL 205067, at *3 (N.D. Cal. Jan. 25,

2007).

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repetitive knowledge of the facts at issue in the case and whether the party seeking the

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deposition has exhausted other less intrusive discovery methods.6

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As for McGarry’s unique personal knowledge, plaintiff does not dispute that

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McGarry was not involved in the handling of plaintiff’s disability claim or the decision to

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terminate his benefits. Thus, McGarry has no personal knowledge about plaintiff’s

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individual claim.

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Plaintiff does, however, assert that McGarry will have information about Unum’s

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institutional practices related to termination decisions and to the appeals language in

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benefit termination letters. But the court is not convinced that McGarry’s knowledge on

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these subjects will be unique and personal. There is no reason to believe McGarry had

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a role in drafting the allegedly deceptive language in termination letters or in any

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subsequent decision to clarify confusing language in its products, if any such decision

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has in fact been made, especially given McGarry’s affidavits that show he has no

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personal knowledge about such matters. Also, even assuming McGarry had a personal

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role in the plain language initiative described in plaintiff’s response, other than being a

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corporate spokesperson, the relevance of this initiative is unclear to the court given that

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this initiative occurred years after plaintiff received his termination letter. Indeed,

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McGarry’s affidavit states that the initiative was related to Unum UK’s income protection

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products, not disability insurance. As for plaintiff’s assertion that McGarry’s role as

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Executive Vice President of Individual Disability and Long Term Care necessarily means

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he will have information regarding the company’s strategic decisions related to the

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improvement of the company’s performance in the area of its “closed block” individual

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insurance policies is not well-taken given that McGarry has only held this position since

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September of 2012 and plaintiff’s benefit termination occurred in 2008. To the extent

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plaintiff argues that McGarry’s role as Senior Vice President of Unum’s U.S. Risk

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Management Organization during the time his benefits were terminated necessarily

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Affinity Labs of Texas v. Apple, Inc., 2011 WL 1753982, at *15 (N.D. Cal. May 9, 2011).

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implies he would know whether Unum had a strategic plan that improperly influenced

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the decision in his specific insurance case, the court concludes that such knowledge is

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not unique to McGarry and other less intrusive means of discovery are available to

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plaintiff on this front.7

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As for plaintiff’s exhaustion of other methods of discovery, plaintiff had not

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undertaken other methods of discovery before noticing the deposition of McGarry.

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Other less intrusive methods, such as a Rule 30 (b)(6) deposition, should have been

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undertaken if plaintiff wanted to discover evidence related to the drafting of the

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language in the termination letter or evidence related generally to termination of benefits

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under individual policies. Without having conducted other means of discovery first,

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plaintiff’s request to depose McGarry was made without a solid basis for believing

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McGarry had some unique and personal knowledge related to these issues which

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makes his deposition more than marginally relevant and enough to outweigh the

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burden. While discovery may currently be ongoing, plaintiff has not filed any

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supplement to suggest that some evidence has been discovered to support his

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argument that McGarry has unique knowledge related to the issues at hand.

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In sum, defendants have made the requisite showing of good cause for a

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protective order by suggesting that the proposed deponant, an “apex” executive, has no

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unique and personal knowledge of the issues involved in this case and by noting that

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plaintiff has not conducted less intrusive means of discovery to obtain the general

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corporate information he seeks.

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V. CONCLUSION

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For the foregoing reasons, defendants’ motion for protective order is GRANTED.

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Plaintiff is precluded from taking the deposition of McGarry at this time. However, in the

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event plaintiff develops a detailed and specific basis upon completion of other

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See id. (“Where a high-level decision maker removed from the daily subjects of the
litigation has no unique personal knowledge of the facts at issue, a deposition of the official is
improper.” (internal quotations omitted)).

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discovery, including a Rule 30(b)(6) deposition, to suggest that McGarry has unique,

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relevant, personal knowledge, he can renew his request for a deposition. The court

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notes that a valid basis for such a request seems unlikely given the affidavits of

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Mr. McGarry, which suggest he was not involved in the drafting or inclusion of the

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appeals language at issue or in any initiative to rewrite or clarify language in benefit

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termination letters.

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DATED this 13th day of February 2013

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/s/
JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

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