Homeland Insurance Company of New York v. Health Care Service Corporation
MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 2/16/2021.Mailed notice.(jlj, )
Case: 1:18-cv-06306 Document #: 141 Filed: 02/16/21 Page 1 of 5 PageID #:3687
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
HOMELAND INSURANCE COMPANY OF NEW
HEALTH CARE SERVICE CORPORATION,
18 C 6306
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
The background of this coverage suit is set forth in the court’s prior opinion, 330 F.R.D.
180 (N.D. Ill. 2019), familiarity with which is assumed. Now before the court is a motion by
Health Care Service Corporation (“HCSC”) for a protective order as to a Rule 30(b)(6)
deposition notice served in December 2020 by Homeland Insurance Company of New York.
Doc. 127; Doc. 136-4 (“Second Further Modified 30(b)(6) Notice”). HCSC challenges only one
topic in the notice—Topic 8, which encompasses “[t]he negotiation, application, purchase,
PLACEMENT, UNDERWRITING, and renewal of the 2012-2013 Managed Care Errors and
Omissions Liability Insurance Policies (“E&O Policies”) issued by Homeland, AWAC and/or
Travelers to HCSC.” Doc. 128 at 3; Doc. 134 at 4.
Rule 30(b)(6) provides that a party may name an organization as a deponent, but “must
describe with reasonable particularity the matters for examination.” Fed. R. Civ. P. 30(b)(6).
Upon receiving a Rule 30(b)(6) notice, “[t]he named organization must designate one or more
officers … to testify on its behalf … about information known or reasonably available to the
organization.” Ibid. A Rule 30(b)(6) deposition is cabined by the scope of discovery permitted
under Rule 26(b)(1), which provides in pertinent part that “[p]arties may obtain discovery
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regarding any nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). A court may issue a protective
order “to protect a party … from annoyance, embarrassment, oppression, or undue burden or
expense” if “good cause” exists. Fed. R. Civ. P. 26(c)(1).
HCSC submits that good cause exists to relieve it of any obligation to produce a witness
to testify on Topic 8, arguing that the topic is objectionable on three grounds—relevance,
proportionality, and reasonable particularity. Doc. 128 at 3, 11-13; Doc. 137 at 2-13.
Relevance. HCSC contends that Topic 8 is not relevant because “[t]here is no dispute
between the parties regarding the negotiation, application, purchase, placement, underwriting or
renewal of the 2012-2012 E&O Policies, or over what the actual terms of any of the policies
say.” Doc. 128 at 11. HCSC adds that Homeland in any event already has that information
because “it is the insurer, not the insured, which underwrites the policy.” Id. at 5, 11-12.
According to HCSC, Topic 8’s irrelevance is confirmed by the fact that Homeland “agreed to
drop” the topic in a letter dated December 6, 2019. Id. at 4; Doc. 137 at 8.
Topic 8 is relevant. Homeland’s position in this suit is that the E&O Policies do not
cover certain antitrust suits brought against HCSC due to the operation of three policy
provisions—the Related Claim provision, the Prior Pending Litigation Exclusion, and the
Cooperation Clause. Doc. 59 at ¶¶ 68-71. What the parties understood those provisions to mean
before entering into the policies may ultimately bear on how the provisions are interpreted. See
Ne. Commc’ns of Wis., Inc. v. CenturyTel, Inc., 516 F.3d 608, 611 (7th Cir. 2008) (“Ambiguity
in a contract permits resort to parol evidence—whether usages of trade or exchanges between the
contracting parties.”); Davis v. G.N. Mortg. Corp., 396 F.3d 869, 878 (7th Cir. 2005) (“[Under
Illinois law,] even when a contract is integrated on its face, if the contract is ambiguous, as a
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matter of law, then extrinsic and parol evidence is admissible to explain the terms of the
ambiguous contract.”) (internal quotation marks omitted). Indeed, HCSC itself deposed
Homeland’s “underwriting” witness for a full day to inquire into Homeland’s then-understanding
of those provisions, Doc. 136-5 at 6 (141:1-3), 12 (147:8-9); whether she communicated with
anyone regarding the Cooperation Clause when underwriting the policy, id. at 24-25 (159:15160:3); and whether she had learned of other claims potentially related to the underlying antitrust
litigation during the underwriting of the policy, id. at 4 (139:20-24).
Topic 8’s relevance perhaps would be undermined if Homeland in fact had “agreed to
drop” it over a year ago. But the parties never reached any such agreement. In its December 6,
2019 letter, Homeland stated that it was “willing to narrow [the prior version of Topic 8] to the
sole issue of reporting of Claims” under the E&O Policies in exchange for concessions on
HCSC’s part. Doc. 130-4 at 7. HCSC rejected Homeland’s proposal, Doc. 130-10 at 8, so it
cannot now suggest that Homeland has gone back on its word by including Topic 8 in the Rule
30(b)(6) deposition notice.
Proportionality. HCSC next argues that Topic 8 is not “proportional to the needs of the
case,” Fed. R. Civ. P. 26(b)(1), because it is unduly burdensome and duplicative of other
discovery that Homeland already has taken, Doc. 128 at 12-13; Doc. 137 at 3, 9-11. In so
arguing, HCSC focuses on two categories of discovery that Homeland has taken: (1) receiving
the placement file from HCSC’s insurance broker; and (2) deposing that broker and various
HCSC employees. Doc. 128 at 12-13. A Rule 30(b)(6) deposition on Topic 8 would not
duplicate that discovery. As to the broker’s placement file, Homeland correctly notes that
document production is no substitute for the testimony of a Rule 30(b)(6) deponent, who can
clarify and expand upon the produced documents. See Great Am. Ins. Co. of N.Y. v. Vegas
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Const. Co., 251 F.R.D. 534, 541 (D. Nev. 2008) (“Producing documents and responding to
written discovery is not a substitute for providing a thoroughly educated Rule 30(b)(6)
deponent.”); Lessert v. BNSF Ry. Co., 2019 WL 3431282, at *4 (D.S.D. July 30, 2019) (same).
And as to the depositions already taken, fact depositions of individual witnesses often cannot
substitute for the testimony of a Rule 30(b)(6) deponent whose representations bind the
corporation. See Baxter Int’l, Inc. v. Becton, Dickinson & Co., 2020 WL 424918, at *13 (N.D.
Ill. Jan. 27, 2020) (“[Fact witness] testimony is not the testimony of the corporation but of the
individual. … [Plaintiff] is entitled to obtain [Defendant’s] corporate testimony about relevant
topics, even if it has already obtained similar or related testimony from an individual.”) (internal
quotation marks and citations omitted).
HCSC’s argument as to undue burden is equally unavailing. HCSC submits that it
“would be unduly burdensome … for [it] to be required to prepare a corporate designee to testify
about such a broad topic[.]” Doc. 128 at 12-13. True enough, reviewing the pertinent
documents and preparing a designee will require additional effort. But the governing standard is
“undue burden or expense,” and HCSC does not show that the task would be especially onerous
or expensive. Fed. R. Civ. P. 26(c)(1) (emphasis added). Taking account of other pertinent
factors under Rule 26(b)(1)—including “the parties’ relative access to relevant information”
(only HCSC knows how it understood the pertinent policy provisions) and “the amount in
controversy” ($20 million)—including Topic 8 in the Rule 30(b)(6) deposition is plainly
proportional to the needs of this case. See Fed. R. Civ. P. 26(b)(1).
Reasonable Particularity. Finally, HCSC argues that Topic 8 does not “describe with
reasonable particularity the matters for examination.” Fed. R. Civ. P. 30(b)(6). According to
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HCSC, Topic 8 seeks “unbounded” testimony “untied to any of the issues or policy provisions
involved in this coverage dispute.” Doc. 128 at 12-13. That argument fails to persuade.
Granted, Topic 8 could have been drafted more elegantly. Homeland represents that
Topic 8 is addressed essentially to one topic—the “underwriting” process—with several subtopics—negotiation, application, purchase, placement, and renewal. Doc. 131; Doc. 134 at 4.
Some confusion arises because “underwriting” is a defined term in the E&O Policies, as is
“placement.” Doc. 130-18 at 31, ¶ 20 (“‘PLACEMENT’ means the process of negotiating the
terms of any E&O POLICY, including all endorsements and the selling of the E&O POLICY.”),
¶ 23 (“‘UNDERWRITING’ means the process of evaluating the risk and exposure of HCSC,
evaluating and determining the amount of insurance coverage to be provided to HCSC, the
negotiating or determination of particular language to be incorporated into a policy, and
negotiating and determining the premium to be paid for the insurance coverage to HCSC.”).
Still, it is clear enough what testimony fairly comes under Topic 8: HCSC’s view of the facts and
circumstances of the underwriting process, including its then-understanding (if any) of the
pertinent policy provisions. That is specific enough for purposes of Rule 30(b)(6).
For the foregoing reasons, HCSC’s motion for a protective order is denied.
February 16, 2021
United States District Judge
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