Cason v. Federated Life Insurance Company

Filing 99

ORDER Re OSC Hearing Re Civil Contempt 50 . Signed by Judge Edward M. Chen on 6/20/2011. (emcsec, COURT STAFF) (Filed on 6/20/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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CHERYL CASON,

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For the Northern District of California

United States District Court

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No. C-10-0792 EMC

Plaintiff,
v.
FEDERATED LIFE INSURANCE
COMPANY,

ORDER RE OSC HEARING RE CIVIL
CONTEMPT
(Docket No. 50)

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Defendant.
___________________________________/

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Plaintiff Cheryl Cason has filed suit against Defendant Federated Life Insurance Co.

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(“Federated”), asserting, in essence, a claim for disability insurance bad faith. As a part of

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discovery, Federated issued a subpoena to a third party, Optimum Health Institute (“OHI”). OHI

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objected to the subpoena, claiming various privileges. In an order issued on May 20, 2011, the

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Court rejected the claims of privilege and ordered OHI to produce documents. See Docket No. 83

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(order). OHI did not fully comply, withholding documents marked OHI 20-41. Pursuant to the joint

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request of Federated and OHI, the Court set an expedited OSC hearing regarding contempt to

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address OHI’s failure to comply. In its papers, OHI conceded its due process rights were satisfied

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and waived an evidentiary hearing. The Court heard the matter on June 8, 2011. The Court turns to

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the merits of the contempt proceeding.

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To the extent OHI has, in essence, asked the Court to reconsider its prior order, the request is

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denied. OHI has made no attempt to show that reconsideration is appropriate under the standards

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laid out in Civil Local Rule 7-9. See Civ. L.R. 7-9(b) (providing that a party seeking leave to file a

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motion to reconsider must show, e.g., “[t]he emergence of new material facts or a change of law

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occurring after the time of such order”). Moreover, the Court has reviewed the substantive

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arguments presented by OHI in its papers, see Docket No. 88 (OHI’s response), and sees no reason

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to change its prior ruling. For example, even if OHI did not voluntarily produce a missionary

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application, the document still is not privileged for the other reasons discussed in the Court’s May

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20 order. Also, even if Ms. Cason was not an OHI employee and did not seek medical treatment at

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OHI, that does not mean that her level of activity as a missionary is irrelevant.

with the Court’s order of May 20. The Court’s May 20 order, with which OHI refused to comply,

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was issued as a result of the subpoena process. Accordingly, the Court shall apply the standards of

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For the Northern District of California

The only issue remaining is whether OHI should be held in contempt for failure to comply

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United States District Court

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Federal Rule of Civil Procedure 45. Cf. 9-45 Moore’s Fed. Prac. – Civ. § 45.62[3] (noting that some

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courts “have refused to award contempt sanctions unless the party serving the subpoena has obtained

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an order enforcing the subpoena and the recipient still has not complied”). Under Rule 45(e), a

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“court may hold in contempt a person who, having been served, fails without adequate cause to obey

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the subpoena.” Fed. R. Civ. P. 45(e). Here, OHI has not provided any excuse for not complying

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with the subpoena other than to say that it stands by its position that the documents at issue are

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privileged. A simple disagreement with the Court does not constitute an adequate excuse justifying

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a failure to comply. Accordingly, the Court finds that OHI is in civil contempt for failure to comply

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with the May 20 order.

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Upon a finding of civil contempt, the Court may impose sanctions. See General Signal

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Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986). “Sanctions for civil contempt may be

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imposed to coerce obedience to a court order,[] or to compensate the party pursuing the contempt

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action for injuries resulting from the contemptuous behavior,[] or both.” Id. As a general matter, a

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“district court ‘should apply the least coercive sanction (e.g., a monetary penalty) reasonably

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calculated to win compliance with its orders.’” United States v. Alfredofllores, 628 F.2d 521, 527

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(9th Cir. 1980).

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In the instant case, the Court concludes that sanctions in the form of a monetary penalty are
appropriate for the purpose of compensating Federated for the expenses incurred in seeking the

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discovery from OHI. Federated’s counsel has submitted two declarations in support of Federated’s

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request for fees and costs in the amount of $4,665.50. See Docket Nos. 95, 98 (Costa declarations).

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The declarations indicate that Federated incurred costs in the amount of $134 and fees in the amount

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of $4,531.50. Since the hourly rate of counsel is $145, see Docket No. 98 (Costa Decl. ¶ 2), it

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appears that counsel spent more than 30 hours on this discovery matter. While the Court

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acknowledges that this discovery matter did require, e.g., meeting and conferring and supplemental

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briefing, it still concludes that the more than 30 hours spent by counsel was not reasonable. That is,

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the hours billed were excessive given the nature of the work. Having reviewed the matters for which

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counsel billed, the Court finds that a reasonable sanction is $4,000, representing the reasonable fees
and costs incurred by Federated in connection with its effort to enforce the subpoena.

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For the Northern District of California

United States District Court

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OHI seeks a stay of the enforcement of the sanction pending its attempt to seek an expedited

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appeal. In order to allow OHI to do so without first incurring a financial penalty, the Court grants a

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stay of the sanction pending appeal.

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IT IS SO ORDERED.

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Dated: June 20, 2011

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_________________________
EDWARD M. CHEN
United States District Judge

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