Idahoan Foods LLC v. Allied World Assurance Company (US), Inc

Filing 69

MEMORANDUM DECISION AND ORDER - Idahoans Motion to Compel (Dkt. 42 ) is GRANTED in PART and DENIED in PART as outlined above. Allied Worlds Motion for Extension (Dkt. 43 ) is GRANTED. Allied Worlds Motion to Amend/Correct (Dkt. 46 ) is deemed MOOT . Allied Worlds Motion to Strike Johnson Affidavit (Dkt. 47 ) is DENIED. Allied Worlds Motion to Strike Damages is DENIED. Signed by Judge David C. Nye. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jd)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
IDAHOAN FOODS, LLC,

Case No. 4:18-cv-00273-DCN

Plaintiff,

MEMORANDUM DECISION
AND ORDER

vs.
ALLIED WORLD ASSURANCE
COMPANY (U.S.), Inc.,
Defendant.
I. INTRODUCTION
Pending before the Court are numerous motions filed by the parties in this case.
Each motion involves discovery and comes on the heels of various informal discovery
dispute conferences between the Court and counsel.
Having reviewed the record and briefs, the Court finds the facts and legal arguments
are adequately presented. Accordingly, in the interest of avoiding further delay, and
because the Court finds the decisional process would not be significantly aided by oral
argument, the Court will decide the Motions without oral argument. Dist. Idaho Loc. Civ.
R. 7.1(d)(1)(B). The Court will address each motion in turn.
II. ANALYSIS
A. Motion to Compel (Dkt. 42)
On October 17, 2019, Plaintiff Idahoan Foods, LLC (“Idahoan”) filed a Motion to

MEMORANDUM DECISION AND ORDER - 1

Compel. Dkt. 42. Idahoan asserts that Defendant Allied World Assurance Company (U.S.),
Inc. (“Allied World”) has redacted and/or improperly withheld reserve and reinsurance
information relative to the claims at issue in this case.
For context, some background information is appropriate.
In 2016, Idahoan had an ongoing contract with Idaho Supreme Potatoes (“ISP”) to
process potatoes into flake and slices and to package products for delivery to Idahoan’s
customers. On September 5, 2016, a fire at the ISP facility stopped all production. The ISP
facility was down for three months for repairs. Idahoan was unable to process
approximately 927,000 hundred-weight pounds of potatoes during those three months.
Idahoan closed out its fiscal year in August 2017, producing 16 million fewer pounds of
potato products compared to previous years and with significantly less in sales.
Idahoan notified its insurance broker immediately after the fire, who in turn notified
Allied World. Allied World contracted with McLarens Global Claims Services
(“McLarens”), an independent adjustor, to review the claim. McLarens hired Hagen Strieff
Newton & Oshiro (“HSNO”), a forensic accounting firm, to assist in reviewing the claim.
After Idahoan closed out its fiscal year, it provided final numbers and documents
supporting the losses it had suffered as a result of the fire. The information provided
showed Idahoan had suffered business interruption and extra expenses covered by its
insurance policy. Allied World denied the majority of Idahoan’s claim. Idahoan filed this
case in May 2018 to recover the remainder of its insured losses from Allied World.
During the course of discovery, Idahoan served multiple requests for production on

MEMORANDUM DECISION AND ORDER - 2

Allied World seeking information relative to reserves and reinsurance. Reserves1 are set
by an insurance company as an estimate of the amount it may ultimately have to pay on a
specific claim. Reinsurance, on the other hand, is a form of insurance purchased by
insurance companies to mitigate risk and spread the burden of indemnification across
multiple insurance carriers.
Allied World refused to produce information related to either request, claiming it
was confidential and proprietary. Idahoan then served subpoenas seeking similar
information on HSNO and McLarens. HSNO provided written responses and objections to
the subpoena; McLarens did not. In the end, Allied World provided redaction and privilege
logs for itself, HSNO, and McLarens, and, while it withheld some documents altogether, it
produced some in redacted form.
The question of whether reserves and reinsurance information is discoverable is
muddy at best. While it is true that reserve information is usually not discoverable, in
cases—as here—where a party has alleged bad faith, Courts throughout the nation have by
a slim margin found that reserve information should be produced. See generally, PennDion Corp. v. Great Am. Ins. Co. of New York, No. CV 17-4634, 2019 WL 3202503, at *5
(E.D. Pa. July 16, 2019) (“District courts within the Third Circuit are split on the question
of whether insurance reserves are discoverable in bad faith cases.”); Catholic Mut. Relief
Soc’y of Am. v. Arrowood Indem. Co., No. 17-CV-3141 (JRT/LIB), 2019 WL 4897159, at
*5 (D. Minn. Jan. 9, 2019) (“specific reserve information . . . is privileged and thus not

1

Reserves are sometimes known as loss reserves or case reserves.

MEMORANDUM DECISION AND ORDER - 3

discoverable in this case.”); Hunter v. GEICO Gen. Ins. Co., No. CV 17-05070, 2018 WL
4352823, at *17 (E.D. La. Sept. 12, 2018) (“reserve information is discoverable where, as
here, a claim of bad faith is asserted.”).
The situation is no clearer in the Ninth Circuit. There is nothing from the Circuit
itself, thus the Court must look within the Circuit to other district courts for guidance. In
Western Surety Co. v. United States, the District of Arizona summarized the quandary this
question places on courts by noting that, “while case law discussing the discoverability of
reserve information exists, that case law is limited to the context of insurance bad faith and
courts are not in agreement on the issue.” No. CV-16-00761-TUC-CKJ, 2018 WL
6788665, at *2 (D. Ariz. Dec. 26, 2018).
The case before the Court today involves allegations of bad faith, therefore, it stands
to reason the information is relevant. Even then, however, the Court is cognizant of the fact
that “whether evidence of loss reserves is discoverable depends upon the issues presented
in a given case.” Spahr v. Amco Ins. Co., No. CV 09-9174-PA (AGRX), 2010 WL
11459909, at *2 (C.D. Cal. Sept. 29, 2010) (internal citations and quotations omitted)
(emphasis added).
Upon review of Idahoan’s Complaint, the Court finds that the reserve information
is necessary and discoverable in this specific case. The claims at issue are all for breach of
contract and bad faith—i.e. claims specifically directed at whether the insurer (Allied
World) reasonably denied payment. Having reserve information could help Idahoan—and
the Court—understand why Allied World denied payment. To be sure, setting a reserve is
not an admission of liability, nor does it affect the legal question of coverage, but the
MEMORANDUM DECISION AND ORDER - 4

information is nonetheless germane to these issues and should be turned over. See RKF
Retail Holdings, LLC v. Tropicana Las Vegas, Inc., No. 214CV01232APGGWF, 2017 WL
2292818, at *8 (D. Nev. May 25, 2017) (“Reserve information is relevant in an insurance
bad faith lawsuit because the insurer has the contractual duty to defend and indemnify its
insured, which also encompasses the duty to reasonably evaluate and settle claims within
the policy’s coverage.”); Miller v. York Risk Servs. Grp., No. CV-13-01419-PHX-JWS,
2014 WL 11515634, at *5 (D. Ariz. June 20, 2014) (finding that “federal District Courts
have generally held that an insurance company’s reserve information and aggregate claims
information is relevant and discoverable in cases alleging bad faith.”); Paul Johnson
Drywall, Inc. v. Phoenix Ins. Co., No. CIV. 13-8124-PCT-PGR, 2014 WL 1764126, at *3
(D. Ariz. May 5, 2014) (explaining that in insurance bad faith cases, policyholders often
seek information pertaining to loss reserves to show “what [the insurer] actually knew and
thought, and what motives animated its conduct, which are critical areas of inquiry in bad
faith cases and fully fair game for discovery”) (internal quotations and citations omitted);
Isilon Sys., Inc. v. Twin City Fire Ins. Co., No. C10-1392MJP, 2012 WL 503852, at *2–3
(W.D. Wash. Feb. 15, 2012) (noting that “because decisions related to reserves in this case
were not ‘made by persons without knowledge of the insured’s actual policies,’ but were
instead specifically authorized on a case-by-case basis, reserve information is likely
relevant.”); Flintkote Co. v. Gen. Acc. Assur. Co. of Canada, No. C 04-01827 MHP, 2009
WL 1457974, at *4 (N.D. Cal. May 26, 2009) (holding that because “reserves are set for
claims that the insurer might be liable to pay, the reserves may indicate an estimate of the
amount that defendant believed or knew it would have to pay for plaintiff’s [] claims. This
MEMORANDUM DECISION AND ORDER - 5

information may be relevant to showing the difference between what defendant thought it
would have to pay and its communications with plaintiff regarding its evaluation of the
scope of the loss.”); Hoey-Lees v. USAA Cas. Ins. Co., No. C08-5231RJB, 2009 WL
10676511, at *2 (W.D. Wash. Jan. 7, 2009) (determining that “reserve information is
relevant to bad faith disputes because such information would assist the plaintiff in
evaluating the bad faith case and in preparing for trial.”) (internal quotations and citations
omitted); Bernstein v. The Travelers Insurance Company, 447 F. Supp. 2d 1100, 1116
(N.D. Cal. 2006) (finding reserve information relevant and requiring the party turn over
the same subject to a protective order).2
Despite such caselaw, Allied World contends that even though bad faith claims are
at issue in this case, reserve information is of marginal relevance. This objection is best left
for a later time. “Relevance is rarely a proper grounds in a bad faith case for refusing to
produce documents contained in the insurer’s claims file.” Lexington Ins. Co. v. Swanson,
240 F.R.D. 662, 668 (W.D. Wash. 2007); accord, Hoey-Lees, 2009 WL 10676511, at *2;
see also Paul Johnson Drywall, Inc., 2014 WL 1764126, at *3 (holding the objections
raised “relate to the weight of the evidence and not its relevancy for purposes of discovery”)
(internal citations omitted). Relevancy may play a role later during trial, but for purposes
of discovery, the Court finds that the information is necessary for Idahoan’s claims and

2

Also persuasive to the Court is the fact that Idahoan is not simply a third-party in this action,
but the insured party itself. See Bernstein, 447 F. Supp. 2d at 1105 (discussing reserves in third party
vs first party insurance cases and finding that ultimately it is the Court’s duty “to determine whether
disclosure is appropriate in the specific circumstances presented by the case at bar.” Here, the Court finds
that the parties in this case are directly, contractually linked and because the claims at issue are
all related to bad faith, reserve information should be shared with the insured (Idahoan).

MEMORANDUM DECISION AND ORDER - 6

defenses.3 See Fed. R. Civ. P. 26 (b)(1) (“Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense and proportional to the
needs of the case . . . .”).
The Court’s finding above, however, does not extend to reinsurance information.
Reinsurance information is a contractual agreement between insurance carriers. While the
contracts themselves are discoverable, see Heights at Issaquah Ridge Owners Ass’n v.
Steadfast Ins. Co., No. C07-1045RSM, 2007 WL 4410260, at *4 (W.D. Wash. Dec. 13,
2007), the Court finds any discussions between Allied World and its reinsurance carrier
regarding reinsurance amounts is too far removed from this case. See Flintkote Co., 2009
WL 1457974, at *6 (“the reinsurance information is less relevant to determining the ‘state
of mind’ or actual knowledge of the insurer.”); Heights, 2007 WL 4410260, at *4 (denying
discovery on reinsurance based on Plaintiff’s failure to demonstrate relevance of
reinsurance to the claims of bad faith). While the two topics are related, the Court finds
that for purposes of bad faith and breach of contract, there is little reason to involve another
party that had essentially an “arms-length” transaction with Allied World.
Accordingly, the Court will GRANT in PART and DENY in PART Idahoan’s
Motion to Compel. Reserve information must be turned over. The reinsurance policies
themselves (including declaration sheets and policy limits) must be turned over, but

3

Allied World also expresses concerns about confidentiality and about this information going to a jury.
The Court understands Allied World’s concerns; however, confidentiality should be a non-issue as there is
a robust protective order in this case that would protect the inappropriate dissemination of this information.
As for jury confusion, the Court can craft appropriate instructions should such become necessary.

MEMORANDUM DECISION AND ORDER - 7

communications between Allied World and its reinsurance carrier need not be turned over.4
Allied World shall provide unredacted copies of HSNO and McLarens’ discovery
responses within seven (7) days of the date of this order.
B. Motion for Extension of Time (Dkt. 43)
In this Motion, Allied World asked the Court to extend fact discovery approximately
two weeks so that it could have adequate time to review a voluminous production of
documents it received from Idahoan on the eve of the close of fact discovery.5 Allied World
requests this brief extension so they can have an opportunity to review Idahoan’s responses
and determine if Idahoan adequately complied with the discovery requests.
Idahoan did not oppose the request. Dkt. 45, at 3. While there have been discovery
disputes that have arisen since this time—some of which arguably touch on topics and
discovery produced on October 18, 2019, neither party has filed any further motions to
alter or amend fact discovery as it relates to this round of production. Accordingly, the
Court can only assume that Allied World reviewed Idahoan’s documents and found them
sufficient. This assumption, coupled with Idahoan’s non-opposition, weighs in favor of
GRANTING the Motion.

4

Idahoan requests an award of attorney fees in connection with its Motion to Compel, arguing that under
Federal Rule of Civil Procedure 37, the court must award fees if a motion to compel is granted unless there
was a failure to meet and confer in good faith, the nondisclosure was substantially justified, or other
circumstances make an award of expenses unjust. In this case, the Court finds that an award of attorney
fees is not appropriate. This is not a settled area of law in the Ninth Circuit. Even though the Court ultimately
disagreed with Allied World, its position was not without merit.
5

Fact Discovery was set to close on October 18, 2019. Idahoan produced 10,000+ pages of documents after
5:00 p.m. on the 18th.

MEMORANDUM DECISION AND ORDER - 8

C. Motion to Amend/Correct (Dkt. 46)
Similar to the prior motion, Allied World filed this motion to ask the Court to enter
an amended scheduling order to allow the parties additional time to sort out certain
disagreements. Specifically, it appears that on or about August 30, 2019, Idahoan served
its Responses to Allied World’s Fifth Set of Request for Production of Documents. Allied
World found the response lacking and sought additional time to sort through the matters
and/or file a motion to compel. Idahoan opposed the motion. In its reply, however, counsel
for Allied World represented that the parties had engaged in further conferencing and that
Idahoan agreed to supplement its responses. At the time it filed its reply, Allied World
noted this supplemental production had not yet occurred. Again, however, no follow up
motions were filed in this matter so the Court can only assume Allied World found the
supplementation sufficient.
Accordingly, the Court finds Allied World’s Motion to Amend is MOOT.6
D. Motion to Strike Johnson Affidavit (Dkt. 47)
In support of its Motion to Compel (Dkt. 42) Idahoan relied on the affidavit of one
of its purported experts, Stephen Johnson (Dkt. 42-2). Allied World argues that Johnson’s
opinions should be stricken since they do not meet the requisite standards under Daubert
v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. (1993) and Federal Rule of Evidence 702
(“Rule702”) because Johnson (1) failed to establish an area of expertise, and (2) did not

6

To a certain extent, the Court is granting the Motion by allowing the parties to go beyond the agreed
scheduling order to complete discovery. That said, the Court finds that the request is ultimately moot as the
parties were able to work the matter out themselves.

MEMORANDUM DECISION AND ORDER - 9

rely on scientific methods or procedures to support his opinions.
Under Rule 702, the court must satisfy itself that the proposed expert testimony is both
reliable and relevant.
Idahoan counters that Rule 702 does not apply to discovery disputes—rather only
during summary judgment or at trial—but that even if Rule 702 did apply, Johnson has set
forth sufficient information to satisfy Daubert and Rule 702. Idahoan cites to a single
district case—Pinal Creek Grp. v. Newmont Mining Corp., 352 F. Supp. 2d 1037, 1039 (D.
Ariz. 2005)—which suggests a Rule 702 challenge during discovery is premature. Allied
World disagrees, arguing that the Court can address the relevancy and reliability of an
expert’s opinion at any point during a case. More importantly, however, Allied World
points out that it has not moved to wholesale exclude Johnson as an expert, but simply
objects to these opinions in this specific affidavit.
Rule 702 of the Federal Rules of Evidence provides:
If scientific, technical, or other specialized knowledge will assist the trier of
fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or education,
may testify thereto in the form of an opinion or otherwise, if (1) the testimony
is based upon sufficient facts or data, (2) the testimony is the product of
reliable principles and methods, and (3) the witness has applied the principles
and methods reliably to the facts of the case.
The Court takes no position on whether Rule 702 applies at this stage of the case or
not. However, assuming Rule 702 and Daubert do apply, the Court still finds Johnson’s
affidavit is admissible at this time. While it is light on details, it sufficiently establishes his
background and sets forth the methodology he used in coming to his conclusions. In
analyzing the issues of insurance reserves and reinsurance, the Court relied on available
MEMORANDUM DECISION AND ORDER - 10

caselaw (limited as it was) and not necessarily on any singular affidavit or document
submitted by Idahoan. To that end, the Court will not strike Johnson’s affidavit, but will
give it the weight it deems appropriate.
Allied World’s Motion to Strike Johnson’s Affidavit is DENIED.
E. Motion to Strike Damages (Dkt. 55)7
The parties first brought this issue to the Court’s attention in an informal manner.
After participating in the Courts’ discovery dispute process—and an agreement having not
been reached—the parties filed supplemental briefs on the issue.
In essence, this dispute is best styled as a motion by Allied World to strike certain
damages claimed by Idahoan based upon Idahoan’s failure to comply with Federal Rule of
Civil Procedure 26.
Under Rule 26, as part of its initial disclosures, a party must provide:
A computation of each category of damages claimed by the disclosing
party—who must also make available for inspection and copying as under
Rule 34 the documents or other evidentiary material, unless privileged or
protected from disclosure, on which each computation is based, including
materials bearing on the nature and extent of injuries suffered.
Fed. R. Civ. P. 26(a)(1)(A)(iii). In this case, Idahoan’s initial disclosures outline8 the
following in regard to the damages it requests:

7

This is technically not a stand-alone motion. The parties filed supplemental briefing on this issue after an
informal discovery dispute conference with the Court. Thus, the moving papers are not styled as a motion
on the docket but are “linked” to various other pending motions. While it was not brought as a formal
motion, the Court will couch it as such—for organizational purposes—and because the Court is
substantively ruling on the underlying issue.

8

In the District of Idaho discovery documents—including initial disclosures—are not filed with the Court.
The Court received a copy of Idahoan’s initial disclosures as part of the informal discovery dispute process.

MEMORANDUM DECISION AND ORDER - 11

Idahoan Foods seeks the following damages for the claims asserted against
the Defendant:
1. Damages for claims of : (1) breach of contract; (2) breach of contract – good
faith and fair dealing; (3) bad faith breach of duty; and (4) negligent breach
of duty in an amount to be determined at trial, however such amount shall
not be less than the sum of $3,000,000.00.
2. All costs and expenses incurred in this action, including reasonable
attorneys’ fees.
It is believed that Idahoan Foods’s damages are supported by the following
documents:
1. Documents submitted to Allied in support of Idahoan’s claim and the
documents identified above.
2. Allied’s claim file.
3. The insurance policy or policies at issue.
Allied World did not object to Idahoan’s initial disclosures on damages.
On October 25, 2019—before the close of fact discovery—Idahoan supplemented
its initial disclosures in order to claim time spent by two individuals (Aaron Oberhansley
and Aaron Bagley) analyzing the bad faith claims and reviewing information compiled by
Allied World, HNSC, and McLarens. This time amounts to roughly $32,000 in additional
damages.
On November 6, 2019—after the close of fact discovery—Idahoan disclosed one of
its expert witnesses, Scott Kimber, of Lone Peak Valuation Group. Kimber analyzed
Idahoan’s claims, agreed that Allied World should have paid more on Idahoan’s claims
than it did, and identified an additional $1,380,333 for normal operating expenses due to
Idahoan as a component of its business interruption and/or extra expense losses. Allied
World objects to this amount, claiming it is a “new category” of damages not previously
disclosed. Allied World also objects to the damages for Oberhansley and Bagley’s work.

MEMORANDUM DECISION AND ORDER - 12

Allied World begins by arguing that Idahoan’s Rule 26 initial disclosures were
insufficient at the outset of this case and that any “supplementation” now is untimely. These
are two separate issues but work in tandem.
First, the question of whether Idahoan’s initial disclosures are sufficient is
somewhat convoluted because Allied World believes Kimber’s damages are “new,”
whereas Idahoan believes they are simply an extension of damages under a previously
disclosed theory. The Court will address this quandary in greater detail below, but notes
that, generally speaking, whether a party has sufficiently complied with Rule 26 is
extremely case specific, and—like the above reserve/reinsurance issue—not well settled in
the Ninth Circuit. See, e.g., Dillon v. W. Pub. Corp., 409 F. App’x 152, 155 (9th Cir. 2011)
(affirming lower court’s ruling that allowed plaintiff to submit a new damage calculation
for the second trial on damages even though it was not included in original Rule 26
disclosures); compare Ingenco Holdings, LLC v. Ace Am. Ins. Co., 921 F.3d 803, 822 (9th
Cir. 2019) (affirming lower court’s ruling that Plaintiff could not put on evidence of
damages in light of his failure to comply with Rule 26 even though such resulted in the
dismissal of those claims); but see Toyrrific, LLC v. Karapetian, 606 F. App’x 365 (9th
Cir. 2015) (affirming lower court’s ruling that party failed to comply with rule 26, but
reversing the court’s subsequent finding that that information was, therefore, inadmissible,
stating that, absent bad faith, a less drastic sanction was necessary). In short, this
determination is discretionary and case specific.
The Court has reviewed Idahoan’s initial disclosures and the cases cited by both
parties. All things considered, the Court finds that while Idahoan could have been more
MEMORANDUM DECISION AND ORDER - 13

detailed in its initial disclosures,9 what was provided is sufficient to comply with the
purposes of Rule 26 which is to “accelerate the exchange of basic information . . . needed
in most cases to prepare for trial or make an informed decision about settlement.” City &
County of San Francisco v. Tutor-Saliba Corp., 218 F.R.D. 219, 221 (N.D. Cal. 2003).
This is not a situation where Idahoan wholly failed to disclose damages, but rather,
what appears to be a misunderstanding or assumption about what exactly was included in
those damage requests. Additionally, litigation evolves, and the Court would expect to see
some changes in calculations and theories as the case progresses. As Magistrate Judge
Ronald E. Bush aptly noted:
[B]oth in the underlying nature of the type of claims and in the particular
details of the alleged damages associated with such claims, it does not strike
the Court as unusual that the description of such claims will evolve from the
early date of initial disclosures through the completion of the usual sort of
forensic claim assessment done by experts in such cases. In other words, any
deviation in the amount of damages sought over time—particularly this far
ahead of the trial date—is not necessarily an indication of a litigant’s intent
to deceive the other side through some sort of procedural sleight of hand.
Diversified Metal Prod., Inc. v. Bechtel Nat’l, Inc., No. 09-451-EJL-REB, 2011 WL 98540,
at *4 (D. Idaho Jan. 6, 2011). See also Silicon Knights, Inc. v. Epic Games, Inc., No. 5:07CV-275-D, 2012 WL 1596722, at *1 (E.D.N.C. May 7, 2012) (“[A] party may supplement
its Rule 26(a)(1)(A)(iii) ‘computation’ by producing an expert report (including
documents) that complies with Rule 26(a)(1)(A)(iii).”).
Second, as for Allied World’s timing argument, the Court notes that most of the
cases cited by Allied World for the proposition that the Court must strike a lately disclosed

9

After all, there is arguably always a way to be “more detailed” or “more specific.”

MEMORANDUM DECISION AND ORDER - 14

damages calculation are inapplicable as each disclosure in such cases occurred much later
than the circumstances present here. See, e.g., Jacked Up, LLC v. Sara Lee Corp., No. 3:11CV-3296-L, 2019 WL 1098992 (N.D. Tex. Mar. 8, 2019) (striking damages that were
identified three years after summary judgment and more than four years after the close of
discovery); Brandt Industries, Ltd. v. Pitonyak Machinery Corp., No. 1:10-cv-0857-TWPDML, 2012 WL 4027241, *2 (S.D. Ind. Sept. 12, 2012) (striking damage calculation
disclosed three weeks before trial); Apple, Inc. v. Samsung Electronics Co., Ltd., No. 11CV-01846-LHK, 2012 WL 3155574, *4-5 (N.D. Cal. Aug. 2, 2012) (striking new damages
theory and documents because they were first revealed in rebuttal expert reports).
Again, even assuming arguendo the Court found Idahoan’s disclosure late, expert
discovery had only just begun when Idahoan produced Kimber’s report. Allied World had
an opportunity to respond accordingly. Moreover, were the Court to determine Allied
World had suffered some prejudice, because fact discovery had [at that time] only recently
closed, the remedy would be to either extend discovery or simply preclude Idahoan from
presenting non-disclosed evidence at trial, not strike the damages claim outright.
Relatedly, Allied World also claims that the underlying information Kimber used
was never disclosed. This is a slightly different argument than the above, but ultimately
comes out the same. Idahoan explains that all the information Kimber relied on was turned
over during either fact or expert discovery. Should Allied World disagree, they have two
options: first, they could move to reopen discovery solely for the purpose of deposing
Kimber, or (2) they can argue the information is inadmissible at trial. See Warnecke v.
Nitrocision, LLC, No. 4:10-CV-00334-CWD, 2012 WL 5987429, at *18 (D. Idaho Nov.
MEMORANDUM DECISION AND ORDER - 15

29, 2012) (“However, the parties should remain aware that they will not be allowed to
present evidence—concerning damages or otherwise—that was not provided in accordance
with Rule 26(a).”); Accord, Cmty. House, Inc. v. City of Boise, Idaho, No. 1:05-CV-00283CWD, 2012 WL 1205810, at *2 (D. Idaho Apr. 11, 2012). But see R & R Sails, Inc. v. Ins.
Co. of Pennsylvania, 673 F.3d 1240, 1247 (9th Cir. 2012) (We recognize that, in the
ordinary case, violations of Rule 26 may warrant evidence preclusion. Yet evidence
preclusion is, or at least can be, a “harsh[ ]” sanction. Yeti by Molly, Ltd. v. Deckers
Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). The Court is not in a position at this
time to ultimately rule on whether certain information relied on by Kimber is admissible
and defers such a finding until trial.
Lastly, the Court must address the idea that this claim for damages is “new.”10 Allied
World maintains that it had no idea Idahoan would be seeking “lost profits” or “continuing
operating expenses.” Dkt. 56, at 3. In its estimation, Idahoan “was only making a claim for
the loss of opportunity to purchase raw potatoes and the inability to purchase natural gas.”
Dkt. 56, at 4. In support of this conclusion, Allied World points—among other things—to
Idahoan’s response to Allied World’s First Set of Request for Admissions wherein Idahoan
stated:
As previously explained to Defendant and its representatives, Plaintiff’s
claim is based in part on the inability to purchase raw material, and the
inability to purchase additional volumes of natural gas, at reduced,
favorable, open market prices, thus decreasing the cost of goods sold and
10

This analysis might have been better at the outset of this motion rather than the conclusion, however, the
Court felt that the procedural and rule-based arguments were more relevant than the specific facts of this
case. While these specific facts add a unique element to this particular situation, the Court stands by its
analysis in light of all relevant caselaw.

MEMORANDUM DECISION AND ORDER - 16

being able to sell product on the open market at a higher margin, all due to
plant downtime resulting from the SEPTEMBER 5, 2016 INCIDENT.
Plaintiff’s damages also include extra expense incurred to make sure that a
customer did not cancel an order/contract.
Dkt. 56, at 4 (citing Dkt. 56-1, at 4-5) (bolding in original). To be sure, Idahoan
acknowledges the losses it has claimed since the beginning include raw materials and
natural gas, but notes its damages are not limited to those topics.
Pointing to the same response above, Idahoan counters that it is clear it has sought
more general losses from the outset of this case and that Allied World has been on notice
of the same. See underlining above. Thus, to some degree this is a disagreement of
semantics: Allied World feels that anything akin to “lost profits” is new, while Idahoan
feels that “lost profits” are subsumed in its “business interruption” damages and/or its
“other losses.”
While the Court may not agree with how either party titles these specific damages,
it does appear that Allied World has generally been aware of these claims—even if it
labeled them differently. Idahoan has used terms such as “lost margin,” “net profit
decrease,” and “decreased profit” in documents to Allied World since as early as November
2018. By all accounts these sorts of damages should not have been a surprise to Allied
World.
One thing seems clear: the parties may have been interpreting Idahoan’s damage
amounts differently—exclusive or inclusive of other damages—based upon their
individual understandings of certain phrases/categories. That said, the underlying
substance of these damages—i.e. what the monetary amount strives to reflect—is not so

MEMORANDUM DECISION AND ORDER - 17

far removed from any other category that Allied World should have been shocked or caught
off guard now that they have been explicitly brought forward. They are the type of damages
one would expect to see in a case such as this. Similarly, however, Idahoan should—if at
nothing more than a grammatical level—be able to see where Allied World is coming from
and recognize that it could have been a little more specific in its vernacular. Although,
again, while any dollar amounts could have changed during the course of litigation,
Idahoan could have delineated in some manner the various categories and sub-categories
of damages to ensure that all parties were on the same page.
Here, it seems the parties have been like ships passing in the night: Idahoan thinking
these types of damages were naturally included in the calculations and fair game; Allied
World thinking these types of damages are distinct from other categories and, absent being
explicitly listed, not at issue. Either way, the Court finds that the nature of the damages
here (however labeled) are not new. The Court will not strike the damages outlined by
Kimber in his expert report.
As the Court noted above—and because it does not know what, if anything,
transpired relative to these issues during the remainder of expert discovery—Allied World
has essentially two options at this point. It can move to reopen discovery on the limited
issue of “lost profit” damages, or it can move forward and seek to curb Idahoan’s evidence
at trial.
Relatedly, while it is true that Allied World represented that it would take the
deposition of Oberhansley and/or Bagley to remedy its concerns about the calculations
submitted by these individuals, it did so during the Court’s informal mediation process. As
MEMORANDUM DECISION AND ORDER - 18

the name suggests, those discussions were informal and non-binding on the parties. It is
Allied World’s prerogative to alter or amend its position. Idahoan had offered to produce
additional documents on the costs at issue and Oberhansley himself for a deposition should
Allied World so desire.11
In principle, however, the Court disagrees with Allied World that Oberhansley and
Bagley’s time is a “new claim component.” These individuals’ research and analysis costs
are subsumed in Idahoan’s damages request for “all costs and expenses incurred in this
action.” That said, these types of costs would, ordinarily, not be considered “damages”
within the underlying case, but rather costs of litigation. While they may be recoverable,
the Court finds the amount should be determined at a later date—such as via a motion for
fees and costs—after a trier of fact has ruled on the underlying issues.
But again, from a practical standpoint, if Allied World feels that it has been
prejudiced by the disclosure of this information, the remedy is not to strike the “claims,”
but simply to allow Allied World a fair opportunity to conduct the discovery it deems
necessary.
III. CONCLUSION
Each of the motions in this case represent issues regarding the scope and timing of
discovery. The Court has reviewed the record, the parties’ position papers, their moving
papers, and supplements, and finds that much of this could have been avoided by extending
certain courtesies to the other side.

11

Again, however, as substantial time has elapsed since the filing of these motions, the Court does not
know if any of the aforementioned actions took place.

MEMORANDUM DECISION AND ORDER - 19

In summary, the Court finds that reserve information is relevant to the claims at
issue and must be turned over in unredacted form; the reinsurance policies themselves are
likewise discoverable, but not any communications between Allied World and its
reinsurance carrier.
Idahoan’s Rule 26 disclosures were adequate, and the damages claim was neither
belated nor new. Accordingly, it will not be stricken.
The prior deadlines in this case have been moved—or have been retroactively
moved—to allow for the completion of fact discovery.
The only remaining issue is whether the Court’s decision today materially affects
the posture of the case and whether Allied World will need more time to complete fact or
expert discovery. If Allied World so desires, it should meet and confer with Idahoan on
these issues and then submit a report to the Court outlining precisely what narrow issues
remain as a result of the Court’s order. Idahoan will have an opportunity to weigh in on
whether additional discovery is appropriate, and the Court will then make its decision. Any
such motion to reopen discovery must be filed within 14 days of the date of this order.
IV. ORDER
IT IS HEREBY ORDERED:
1. Idahoan’s Motion to Compel (Dkt. 42) is GRANTED in PART and DENIED in
PART as outlined above.
2. Allied World’s Motion for Extension (Dkt. 43) is GRANTED.
3. Allied World’s Motion to Amend/Correct (Dkt. 46) is deemed MOOT.
4. Allied World’s Motion to Strike Johnson Affidavit (Dkt. 47) is DENIED.
MEMORANDUM DECISION AND ORDER - 20

5. Allied World’s Motion to Strike Damages is DENIED.

DATED: April 22, 2020
_________________________
David C. Nye
Chief U.S. District Court Judge

MEMORANDUM DECISION AND ORDER - 21