ELI LILLY AND COMPANY et al v. ARCH INSURANCE COMPANY et al
ORDER - The Court GRANTS in part and DENIES in part the Motion. The Court STRIKES the affidavits of Ian S. Pettman and Mike Brown, and all references thereto, as they appear in conjunction with Lilly's Second Amended Complaint and Cross Motion for Partial Summary Judgment, or any responses to such documents. Arch shall be permitted to take Rule 30(b)(6) depositions of JLT regarding JLT's involvement in procuring and managing the insurance policies at issue in this action, in accordance with the relevant Federal Rules of Civil Procedure. Furthermore, Lilly shall be required to pay Arch's costs in connection with this Motion. Arch shall file proof of its reasonable attorney's fees associated with the Motion within fourteen days from the date of this Order, and Lilly shall have ten days thereafter to file its objections to Arch's claimed fees. (See Order.) Signed by Judge Larry J. McKinney on 7/10/2017. (GSO)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
ELI LILLY AND COMPANY,
ARCH INSURANCE COMPANY,
This matter comes before the Court on Defendants’, Arch Insurance Company and
Arch Specialty Insurance Company’s (collectively, “Arch’s”), Motion to Compel the
Depositions of Ian S. Pettman and Mike Brown or, in the Alternative, to Strike the
Affidavits of Ian S. Pettman and Mike Brown, and Motion for Sanctions (the “Motion”).
Dkt. No. 631. In the Motion, Arch seeks to compel the depositions of two British citizens
that submitted affidavits on behalf of Plaintiffs, Eli Lilly and Company and Eli Lilly do Brasil,
Ltda. (collectively, “Lilly”), or alternatively, to strike their affidavits in connection with Lilly’s
Second Amended Complaint and Cross Motion for Summary Judgment. Dkt. No. 632 at
Arch also requests that the Court order Lilly “to pay Arch’s costs incurred in
conjunction with this motion and [Arch’s] prior attempts to obtain” the desired depositions.
Id. For the reasons stated herein, the Court GRANTS in part and DENIES in part Arch’s
Generally, this case involves an insurance dispute that arises from claims against
Eli Lilly do Brasil (“Lilly Brasil”) for alleged environmental contamination and products
liability injuries related to a plant in Brazil. Dkt. No. 289, ¶¶ 10-55. In its Second Amended
Complaint, Lilly asserts that the liabilities of Lilly Brasil, a wholly-owned subsidiary of Eli
Lilly and Company (“Lilly U.S.”), are covered by certain primary and excess insurance
policies purchased by Lilly U.S. Id. at ¶¶ 56-98. Lilly also asserts that if Lilly Brasil is not
expressly covered, certain excess insurance policies should be reformed to allow for such
coverage based on the doctrine of mutual mistake. Id. at ¶¶ 99-175. In support of its
allegation regarding mutual mistake, Lilly attached affidavits (the “Affidavits”) of British
citizens, Ian S. Pettman and Mike Brown (collectively, the “JLT Witnesses”), to its First
Amended Complaint, Dkt. No. 211, Exs. I (“Pettman Aff.”) & J (“Brown Aff.”), and relied
on the Affidavits in its Cross Motion for Partial Summary Judgment. Dkt. No. 460 at 9-10.
While both of the JLT Witnesses are employees of the British company, JLT Specialty
Limited (“JLT”), the Affidavits were executed by the JLT Witnesses in their individual
capacities, rather than their official capacities for JLT. See generally, Pettman Aff; Brown
In the Affidavits, the JLT Witnesses explained that they have worked closely with
Lilly U.S. to provide and manage worldwide excess commercial general liability, employee
liability, and auto insurance coverage to Lilly U.S. and its subsidiaries. Pettman Aff., ¶¶
4-6; Brown Aff., ¶ 5. Because JLT is not licensed in the United States, JLT had to work
directly with insurance brokers in the United States (the “U.S. Brokers”), who had direct
contact with the insurers that provided such coverage to Lilly U.S. Pettman Aff., ¶ 7.
Although JLT could not directly obtain this worldwide coverage for Lilly U.S., it remained
heavily involved with the procurement of coverage by reviewing quotes from insurers and
communicating with the U.S. Brokers regarding the desired coverage. Id. at ¶ 9. In light
of their experiences working with Lilly U.S., the JLT Witnesses stated that they believe
that the insurers providing coverage to Lilly U.S., including Arch, “were aware, and
intended, that those policies [at issue] should cover Lilly [U.S.]’s world-wide operations,
including those at, or arising from the activities of Lilly [U.S.]’s wholly-owned subsidiary,
[Lilly Brasil].” Pettman Aff., ¶ 10; Brown Aff., ¶ 9. The JLT Witnesses further “affirm[ed]
under the penalties of perjury that [their] affidavit[s are] true and accurate, to the best of
[their] knowledge and belief[s].” Pettman Aff. at 4; Brown Aff. at 3.
On December 2, 2016, Arch filed a Motion to Strike the Affidavits, pursuant to
Federal Rules of Civil Procedure 37(c)(1)(C) and 12(f). Dkt. No. 554. On February 8,
2017, the Court denied Arch’s Motion to Strike. Dkt. No. 603. The Court found that, even
though certain aspects of Lilly U.S.’s relationship with JLT were “troubling,” Arch
undoubtedly knew about the JLT Witnesses since the filing of Lilly’s First Amended
Complaint and could have approached the JLT Witnesses directly for discovery even
though they are British citizens. Id. at 4. The latter was suggested, in part, by Lilly in
response to Arch’s Motion to Strike. Dkt. No. 568 at 3, 7.
Following the Court’s ruling on Arch’s Motion to Strike, Arch proceeded to seek
depositions of the JLT Witnesses through the United Kingdom’s court system (the “UK
Court”), in accordance with the Hague Convention. Dkt. No. 632 at 8. On February 28,
2017, Master McCloud of the UK Court initially ordered that Arch may take the oral
evidence of the JLT Witnesses for up to seven hours each, including time for crossexamination and re-direct examination of the JLT Witnesses. Dkt. No. 632, Ex. 5.
JLT objected and sought to set aside Master McCloud’s order. Dkt. No. 652 at 10.
Prior to the hearing that was to take place on JLT’s motion to set aside, Arch and JLT
negotiated several terms regarding the process by which the JLT Witnesses would be
deposed, including limiting the scope of questioning, providing the JLT Witnesses with a
summary of the lines of questioning seven days in advance, and treating the depositions
as trial depositions, as opposed to discovery depositions. Id. However, on the morning
of the hearing, Arch indicated that it did not wish to proceed with the depositions without
the ability to cross-examine the JLT Witnesses and admitted that such cross-examination
is not permitted under English law. Id. at 11. On March 16, 2017, Senior Master Fontaine
set aside Master McCloud’s order in its entirety, finding that Arch is not entitled to crossexamine the JLT Witnesses under English law. Dkt. No. 652, Ex. A-1 at 11. Senior
Master Fountaine further ordered Arch to pay fees to JLT. Id. at 12.
In light of the orders issued in the UK Court, Arch now seeks to either compel the
JLT Witnesses’ depositions in the United States, or alternatively, to strike the Affidavits
altogether. See generally, Dkt. No. 632. Arch asserts that Lilly has sufficient control over
the JLT Witnesses to compel them to appear for depositions under the Federal Rules of
Civil Procedure (the “Rules”). Id. at 9-13. Arch further argues that, if the Court were to
find that the JLT Witnesses could not be compelled to testify in depositions, the Affidavits
should be stricken because the JLT Witnesses do not have personal knowledge of the
information contained within the affidavits and because, without the ability to subject the
JLT Witnesses to cross-examination or to otherwise test the Affidavits’ veracity, the
Affidavits amount to inadmissible hearsay. Id. at 15-22. Arch also requests that the Court
require Lilly to pay Arch’s costs associated with this Motion and Arch’s prior attempts to
obtain the depositions of the JLT Witnesses. Id. at 23-30.
Lilly opposes the Motion because it lacks control over the JLT Witnesses. Dkt. No.
652 at 11-14. Lilly further argues that, while the Court cannot compel cross-examination
of the JLT Witnesses, Arch can still obtain its desired testimony through direct
examination under English law, and that the Affidavits should not be rendered
inadmissible simply because the JLT Witnesses cannot be cross-examined. Id. at 14-20.
II. CONTROL AND PERSONAL JURISDICTION OVER THE JLT WITNESSES
Although there is a clear relationship between Lilly and JLT, there is no evidence
that Lilly has sufficient control over JLT for this Court to compel Lilly to produce the JLT
Witnesses for depositions.
Arch correctly points out that Lilly U.S. had several
agreements with JLT, through which JLT agreed to provide insurance brokering services
to Lilly U.S. and agreed to encourage the JLT Witnesses to assist Lilly U.S. throughout
this litigation. See Dkt. No. 632 at 10-13, Ex. 8. However, none of these agreements
forfeit JLT’s status as an independent, British company, completely distinct from Lilly U.S.
Because JLT remains an independent entity and because none of its agreements with
Lilly U.S. allow Lilly to demand that the JLT Witnesses appear for depositions, Lilly lacks
control over JLT and the JLT Witnesses and the Court cannot compel Lilly to produce the
JLT Witnesses for depositions in either the United States or the United Kingdom.
Furthermore, the Court may only compel the JLT Witnesses’ depositions if it has
personal jurisdiction over them. A district court must have personal jurisdiction over a
non-party in order to compel its compliance with a discovery request. See Leibovitch v.
Islamic Republic of Iran, 188 F. Supp. 3d 734, 745 (N.D. Ill. 2016) (citing Reinsurance Co.
of Am. v. Administratia Asigurarilor de Stat, 902 F.2d 1275, 1281 (7th Cir. 1990); Gucci
Am., Inc. v. Weixing Li, 768 F.3d 122, 141 (2nd Cir. 2014); In re Uranium Antitrust Litig.,
480 F. Supp. 1138, 1145 (N.D. Ill. 1979); 16 MOORE’S FEDERAL PRACTICE § 108.125
(3d ed. 2003)). A determination of personal jurisdiction involves two steps. The Court
must first determine whether the state’s “long-arm jurisdiction” statute allows jurisdiction
and, second, decide whether the exercise of jurisdiction comports with due process. See
NUCOR Corp. v. Aceros Y Maquilas de Occidente, S.A., 28 F.3d 572, 580 (7th Cir. 1994).
Indiana’s jurisdiction statute is Indiana Trial Rule 4.4(A), which states that “a court of this
state may exercise jurisdiction on any basis not inconsistent with the Constitutions of this
state or the United States.” Accordingly, this Court has personal jurisdiction to the extent
allowed by the Due Process Clause of the Fourteenth Amendment.
For a forum to have personal jurisdiction, the Due Process Clause requires that a
non-resident entity have “certain minimum contacts with [the forum state] such that the
maintenance of the suit does not offend ‘traditional notions of fair play and substantial
justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v.
Meyer, 311 U.S. 457, 463 (1940)). Personal jurisdiction under Indiana Trial Rule 4.4(A)
may be either general or specific. See Alpha Tau Omega v. Pure Country, Inc., 185 F.
Supp. 2d 951, 956 (S.D. Ind. 2002). General jurisdiction makes a non-resident entity
amenable to suit within a particular forum regardless of the subject matter of the suit,
based on an entity’s continuous and systematic contacts with the forum.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984). Specific
jurisdiction makes a non-resident entity amenable only to suits arising out of or related to
its contacts with the particular forum. Id. at 414. Specific jurisdiction may be based on
relatively modest contacts with the forum if such contacts have a substantial connection
to the litigation at issue. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-76
(1985). For specific jurisdiction, due process requires that a non-resident entity have
established contacts with the forum state by purposefully availing itself of the privilege of
conducting business there. See Asahi Metal Indus. Co. v. Superior Ct. of Cal., 480 U.S.
102, 112 (1987). To “purposefully avail” itself in a forum state, a non-resident entity’s
conduct and connection with the forum state should be such that it should reasonably
anticipate being hauled into court in that state. Burger King, 471 U.S. at 474. When
determining whether personal jurisdiction may be exercised, the Court engages in a three
step analysis: (1) identify the contacts an entity has with the forum; (2) analyze whether
these contacts meet constitutional minimums and whether jurisdiction on the basis of
these minimum contacts sufficiently comports with fairness and justice; and (3) determine
whether the sufficient minimum contacts, if any, arise out of or are related to the causes
of action involved in the suit. See GCIU-Employer Ret. Fund v. Goldfarb Corp., 565 F.3d
1018, 1023 (7th Cir. 2009).
The Court does not have either general or specific jurisdiction over the JLT
Witnesses in their individual capacities. Both of the JLT Witnesses are British citizens
working for a British company. While the JLT Witnesses worked with Lilly U.S. to help it
procure insurance and to manage its insurance claims, all of their work with Lilly U.S. was
performed in their official capacities as JLT employees. See generally, Pettman Aff.;
Brown Aff. There is no evidence in the record indicating that the JLT Witnesses had any
contact with the United States outside of their official roles for JLT. Therefore, the JLT
Witnesses, in their individual capacities, lack sufficient contacts with Indiana to support a
finding of personal jurisdiction in this Court.
However, the Court does have personal jurisdiction over the corporate entity, JLT.
Both parties acknowledge that JLT has a longstanding relationship with Lilly U.S., through
which JLT contracted to serve “both as [Lilly U.S.’s] consultant and agent” to provide Lilly
U.S. with insurance brokering services. Dkt. No. 632, Ex. 8 at 2. See also, Dkt. No. 652
at 12. Through its brokering services for Lilly U.S., JLT worked “as an extension” of Lilly
U.S.’s Risk Management department. Dkt. No. 584, Ex. 3 at 3. Furthermore, JLT worked
extensively through its employees to help Lilly U.S. obtain worldwide insurance coverage
and was intimately involved in procuring and managing the insurance policies at issue in
this litigation. Pettman Aff., ¶¶ 6-9; Brown Aff., ¶¶ 5, 7. In light of JLT’s relationship with
Lilly U.S., especially in relation to its work regarding the insurance policies at issue, JLT
could reasonably anticipate being hauled into court in Indiana, where Lilly U.S. is
headquartered. See Burger King, 471 U.S. at 474. As such, the Court maintains personal
jurisdiction over JLT as to its involvement with the insurance policies at issue in this action.
Because the Court has personal jurisdiction over JLT, it could compel a deposition
of JLT regarding its involvement with the insurance policies at issue. Under Rule 30(b)(6),
a party may name “a public or private corporation, a partnership, an association, a
governmental agency, or other entity” as a deponent in a deposition notice or subpoena
if that party “describe[s] with reasonable particularity the matters for examination.” The
organization named as a deponent “must then designate one or more officers, directors,
or managing agents,” or other consenting, designated individuals to “testify about
information known or reasonably available to the organization,” on the organization’s
behalf. Fed. R. Civ. P. 30(b)(6).
In light of their extensive involvement in managing and procuring the insurance
policies at issue, the JLT Witnesses may serve as JLT’s corporate representatives for a
properly-noticed Rule 30(b)(6) deposition in this case. If the JLT Witnesses were to act
as JLT’s Rule 30(b)(6) representatives, the Court could compel the JLT Witnesses to
appear for depositions in this forum on JLT’s behalf, despite the Court’s lack of personal
jurisdiction over them in their individual capacities. However, such depositions of the JLT
Witnesses would be limited to only “information known or reasonably available” to JLT
and the JLT Witnesses’ official roles as employees of JLT. Fed. R. Civ. P. 30(b)(6). Arch
still could not question the JLT Witnesses regarding the Affidavits made in their individual
capacities in such a Rule 30(b)(6) deposition. See Kessler v. Palstar, Inc., No. 3:11-cv35, 2011 WL 4483775 at *3 (S.D. Ohio Sept. 27, 2011) (finding that it is improper for a
party to expand upon an affidavit made in an affiant’s individual capacity in a Rule 30(b)(6)
deposition of the affiant).
III. TRUSTWORTHINESS OF THE AFFIDAVITS
Arch also argues that, if the Court cannot compel the depositions of the JLT
Witnesses, the Affidavits should be stricken because Arch has no way to test their
veracity. Specifically, Arch asserts that the Affidavits cannot be considered because they
are not notarized and do not comply with the requirements of 28 U.S.C. § 1746. Dkt. No.
632 at 17-19. Arch further claims that it has no way to test the veracity of the Affidavits
because it cannot cross-examine the JLT Witnesses, which renders the Affidavits
inadmissible as hearsay. Id. at 20-22. In response, Lilly argues that the Affidavits
substantially comply with the requirements of 28 U.S.C. § 1746 because they were made
“under the penalties of perjury” and “to the best of [the JLT Witnesses’] knowledge and
belief.” Dkt. No. 652 at 24. See also, Pettman Aff. at 4; Brown Aff. at 3. Lilly also asserts
that even though Arch is not entitled to cross-examine the JLT Witnesses, Arch could
have obtained all of the information it needed to test the truthfulness of the Affidavits
through direct examination and that Arch’s refusal to perform such direct examination
does not render the Affidavits inadmissible. Dkt. No. 652 at 15-20.
A. REQUIREMENTS FOR AFFIDAVITS AND DECLARATIONS
Arch claims that the Affidavits cannot be considered by the Court in part because
they do not comply with the notary requirement of Federal Rule of Evidence 902(8) (“FRE
902(8)”) or the requirements of 28 U.S.C. § 1746(1) for declarations executed outside of
the United States. Dkt. No. 632 at 17-19; Dkt. No. 657 at 13-14. Under FRE 902(8), an
affidavit can be self-authenticating if it is “accompanied by a certificate of
acknowledgment that is lawfully executed by a notary public or another officer who is
authorized to take acknowledgments.” Additionally, a particular matter may be supported
by an individual’s sworn declaration, verification, certificate, statement, oath, or affidavit
made in writing if the writing states that the unsworn declaration, verification, certificate,
statement, oath, or affidavit is true under penalty of perjury and dated in substantial
compliance with the applicable form. 28 U.S.C. § 1746. If such a declaration is executed
outside of the United States, it must substantially comply with the following form: “I declare
(or certify, verify, or state) under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct. Executed on (date). (Signature).” 28
U.S.C. § 1746(1). If the statement is executed within the United States, or any of its
territories, possessions, or commonwealths, the declaration must substantially comply
with this form: “I declare (or certify, verify, or state) under penalty of perjury that the
foregoing is true and correct. Executed on (date). (Signature).” 28 U.S.C. § 1746(2).
Neither of the Affidavits have been notarized by a notary public or other qualifying
officer; therefore, the Affidavits are not self-authenticating in accordance with FRE 902(8).
Furthermore, although the Affidavits provide that they are made under penalty of perjury,
Pettman Aff. at 4; Brown Aff. at 3, they do not indicate that they were made subject to the
penalties of perjury “under the laws of the United States,” as required by 28 U.S.C. §
1746(1). As stated by Lilly, the Affidavits were drafted and executed in the United
Kingdom. Dkt. No. 568, Ex. A, ¶¶ 13-15. Therefore, while the Affidavits need not contain
the exact language found within 28 U.S.C. § 1746(1), they must substantially follow the
form set forth in that section. 28 U.S.C. § 1746. In 28 U.S.C. § 1746, the form used for
declarations or affidavits executed outside the United States is only distinguishable from
those executed within the United States by requiring language specifying that the affiant
or declarant is subject to the penalties of perjury “under the laws of the United States of
America.” See id. Therefore, a declaration or affidavit executed outside of the United
States must include substantially similar language in order to comply with 28 U.S.C. §
Counsel for Lilly presented two cases to the Court during oral argument, Ty, Inc.
v. MJC-A World of Quality, No. 93 C 3478, 1994 WL 36880 (N.D. Ill. Feb. 4, 1994), and
Matsuda v. Wada, 101 F. Supp. 2d 1315 (D. Haw. 1999), to contend that the Court may
still consider the Affidavits even though the JLT Witnesses did not specifically subject
themselves to the penalties of perjury “under the laws of the United States of America.”
However, the Court does not find either of these cases persuasive. First, while the court
in Ty noted that the absence of the phrase “under the law of the United States of America”
did not “substantially alter” the form provided by 28 U.S.C. § 1746(2) for statements
executed within the United States, 1994 WL 36880 at *1-2, that court did not address how
such an omission would affect an affidavit executed outside of the United States, such as
the Affidavits. Furthermore, the text of 28 U.S.C. § 1746(2) quoted by the Ty court does
not accurately reflect the current language of 28 U.S.C. § 1746(2). Id.
With regard to Matsuda, the court in that case found that a plaintiff’s declaration
substantially complied with 28 U.S.C. § 1746 without including language similar to “under
the laws of the United States of America.” 101 F. Supp. 2d at 1322-23. However, unlike
this action where the Court lacks personal jurisdiction over the non-party JLT Witnesses
in their individual capacities, the court in Matsuda had personal jurisdiction over the
plaintiff to enforce the penalties of perjury applicable under the laws of the United States,
even without including such language. See Trade Well Int’l v. United Cent. Bank, 825
F.3d 854, 859 (7th Cir. 2016) (finding that a plaintiff that files suit in a particular forum
purposefully avails itself to that forum’s jurisdiction).
Because the Affidavits do not substantially state that they were made pursuant to
the penalties of perjury “under the laws of the United States of America,” the Affidavits do
not comply with the requirements of 28 U.S.C. § 1746. The absence of this language is
critical because without it, the JLT Witnesses have not subjected themselves to the
perjury laws of the United States, and there is no way for the Court to enforce such perjury
laws to ensure the veracity of the Affidavits.
Arch also claims that the Affidavits lack sufficient guarantees of trustworthiness
because it is unable to cross-examine the JLT Witnesses, which renders the Affidavits
inadmissible hearsay that cannot be considered on summary judgment. Dkt. No. 632 at
20-22. The Court agrees.
Hearsay is defined as a statement that is made outside of “the current trial or
hearing” that “a party offers in evidence to prove the truth of the matter asserted in the
statement.” Fed. R. Evid. 801(c). Generally, such a statement is “not admissible unless
it falls within an exception to the hearsay rule.” United States v. Hawkins, 803 F.3d 900,
901 (7th Cir. 2015). See also, Fed. R. Evid. 802. The parties do not dispute that the
Affidavits are hearsay. Therefore, the Affidavits must fall under an exception to the
general rule against hearsay to be considered admissible evidence.
Under Rule 56, “[a]n affidavit or declaration used to support or oppose a motion
[for summary judgment] must be made on personal knowledge, set out facts that would
be admissible in evidence, and show that the affiant or declarant is competent to testify
on the matters stated.” Fed. R. Civ. P. 56(c)(4). All evidence submitted for summary
judgment purposes must generally be admissible at trial. See McFeely v. United States,
700 F. Supp. 414 n.1 (S.D. Ind. 1988); Bortell v. Eli Lilly and Co., 406 F. Supp. 2d 1, 8
(D.D.C. 2005). While there is no specific requirement in Rule 56 that an affiant be crossexamined in order for his or her affidavit to be used on summary judgment, such an
“affidavit would not be admissible at trial unless [the opposing party] were able to crossexamine [the affiant] as to its contents.” Oto v. Metro. Life Ins. Co., 224 F.3d 601, 604
(7th Cir. 2000). Therefore, if an affiant cannot be subjected to cross-examination either
in a pre-trial deposition or at trial, his or her affidavit generally will not be considered on
summary judgment. See Bortell, 406 F. Supp. 2d at 9 (“Without [the affiants’] availability
to testify and undergo cross-examination either at trial or in a pre-trial deposition, the
Court cannot credit the affidavits as anything more than hearsay.”).
Just as the Court lacks personal jurisdiction to compel the JLT Witnesses to appear
for depositions or cross-examination in their individual capacities, supra Part II, the Court
similarly cannot compel the JLT Witnesses to testify or be cross-examined in their
individual capacities at trial. Although the JLT Witnesses may be hauled into this Court
to appear as corporate representatives of JLT under Rule 30(b)(6), their Affidavits were
executed in their individual capacities, rather than their official capacities for JLT.
Because the JLT Witnesses may only be compelled to testify and to be cross-examined
as Rule 30(b)(6) representatives for JLT, they cannot be compelled to testify regarding
the Affidavits executed in their personal capacities. See Kessler, 2011 WL 4483775 at *3.
Therefore, the Affidavits constitute inadmissible hearsay that cannot be considered by the
Court on summary judgment unless they fall under an exception to the rule against
FRE 804 provides exceptions to the rule against hearsay when a declarant is
unavailable as a witness.
Specifically, FRE 804(b) allows a declarant’s hearsay
statement to be considered admissible evidence if the statement: (1) was from testimony
the declarant previously provided “as a witnesses at a trial, hearing, or lawful deposition”
and “is now offered against a party [or its predecessor in interest] who had … an
opportunity and similar motive to develop it by direct, cross-, or redirect examination”; (2)
was made under the declarant’s belief of his or her imminent death; (3) was against the
declarant’s interests; (4) described the declarant’s personal or family history; or (5) was
“offered against a party that wrongfully caused—or acquiesced in wrongfully causing—
the declarant’s unavailability as a witness, and did so intending that result.” A declarant
may be considered to be an unavailable witness if he or she does not attend the trial or
hearing because “the statement’s proponent has not been able, by process or other
reasonable means,” to obtain the declarant’s attendance or testimony. Fed. R. Evid.
Although the JLT Witnesses may be considered unavailable witnesses
because they cannot be compelled to testify in their personal capacities “by process or
other reasonable means,” the Affidavits do not satisfy any of the exceptions listed in FRE
804(b). Therefore, FRE 804 does not excuse the Affidavits from the rule against hearsay.
Lilly argues that the residual exception in FRE 807 allows the Court to consider the
Affidavits even if they do not fall under any other exception to the rule against hearsay.
Dkt. No. 652 at 18-19. Under FRE 807, “a hearsay statement is not excluded by the rule
against hearsay,” even if it is not specifically covered by another hearsay exception, if the
statement (1) “has equivalent circumstantial guarantees of trustworthiness” to other
hearsay exceptions; (2) “is offered as evidence of a material fact”; (3) “is more probative
on the point for which it is offered than any other evidence that the proponent can obtain
through reasonable efforts”; and (4) “will best serve the purposes of [the Federal Rules of
Evidence] and the interests of justice.” Fed. R. Evid. 807. When applying FRE 807, “[a]
court must be ‘confident … that the declarant’s truthfulness is so clear from the
surrounding circumstances that the test of cross-examination would be of marginal
utility.’” Bortell, 406 F. Supp. 1 at 9 (quoting Lilly v. Virginia, 527 U.S. 116, 136 (1999)).
In this instance, the Court has no reasonable avenue to ensure the truthfulness of
the Affidavits. As discussed above, the veracity of the Affidavits cannot be ensured by
the penalties of perjury because the JLT Witnesses did not subject themselves to the
perjury laws of the United States. See supra Part III.A. The JLT Witnesses also cannot
be compelled to testify under cross-examination regarding the Affidavits because the
Court lacks personal jurisdiction over them in their individual capacities. See supra Part
II. Therefore, the Court lacks sufficient guarantees of the trustworthiness as to the
Affidavits. Furthermore, because the JLT Witnesses worked through the U.S. Brokers to
acquire the insurance coverage sought by Lilly U.S. and did not work directly with the
insurers to obtain the policies at issue, see Pettman Aff., ¶ 7, more probative evidence is
likely available regarding the intentions of the insurers involved from either the insurers
themselves or the U.S. Brokers directly involved in negotiating the policies. Based on
these circumstances, the residual exception in FRE 807 does not exempt the Affidavits
from the rule against hearsay. Because the Affidavits amount to inadmissible hearsay,
without any way to test their veracity, the Court must strike the Affidavits.
IV. PERSONAL KNOWLEDGE
Even if the Court could test the truthfulness of the Affidavits, the Court must still
strike the Affidavits because the JLT Witnesses lack personal knowledge of the
information contained within them. As stated above, Rule 56 requires that “[a]n affidavit
or declaration used to support or oppose a motion [for summary judgment] must be made
on personal knowledge…” Fed. R. Civ. P. 56(c)(4). Any statements made “ʻoutside the
affiant’s personal knowledge or statements that are the result of speculation or conjecture
or merely conclusory do not meet’” the personal knowledge requirement of Rule 56(c)(4).
Strong v. Del. Cty., 976 F. Supp. 2d 1038, 1043-44 (S.D. Ind. 2013) (quoting Stagman v.
Ryan, 176 F.3d 986, 995 (7th Cir. 1999)).
Generally, a witness may only testify regarding matters on which that witness has
personal knowledge and only if there is sufficient evidence to support the witness’s
personal knowledge of that matter. Fed. R. Evid. 602. However, expert witnesses, who
are qualified to testify on a particular subject based on their “knowledge, skill, experience,
training, or education” on that subject, may provide their opinions within their testimony.
Fed. R. Evid. 702. In accordance with Rule 26, each party must disclose the names of
the individuals serving as witnesses to the opposing party and must designate which
witnesses they intend to use as expert witnesses. See Tribble v. Evangelides, 670 F.3d
753, 759-60 (7th Cir. 2012) (finding that Rule 26 requires disclosure of each party’s fact
and expert witnesses and that the “duty to disclose a witness as an expert is not excused
[even] when a witness who will testify as a fact witness and as an expert witness is
disclosed as a fact witness.”) (emphasis in original).
In the Affidavits, the JLT Witnesses state that, based on their experience,
education, and training, they believe that Lilly U.S., its insurance brokers, and the insurers
who sold the policies at issue to Lilly U.S. “were aware, and intended, that those policies
should cover Lilly [U.S.]’s world-wide operations, including those at, or arising from the
activities of Lilly [U.S.]’s wholly-owned subsidiary, Lilly [Brasil].” Pettman Aff., ¶ 10; Brown
Aff., ¶ 9. However, the JLT Witnesses were not directly involved in negotiating the
insurance policies at issue and instead relied the U.S. Brokers to directly communicate
with the insurers to procure such policies. Pettman Aff., ¶ 7. Because the JLT Witnesses
did not directly participate in the negotiations between the insurers and the U.S. Brokers
for the policies at issue, they do not have the necessary personal knowledge of such
communications to reasonably support their beliefs as to what the insurers understood
about these policies. While their testimony could potentially qualify as expert opinion
testimony, Lilly has not designated either of the JLT Witnesses as experts that can render
such opinions. See Fed. R. Evid. 702; Fed. R. Civ. P. 26. Because the JLT Witnesses
are not designated as expert witnesses and because they lack personal knowledge of the
negotiations for the policies at issue, the Court must strike the Affidavits for this additional
V. MOTION FOR SANCTIONS
In addition to seeking to compel the depositions of the JLT Witnesses, or
alternatively, to strike the Affidavits, Arch also requests that the Court require Lilly to pay
Arch’s attorneys’ fees and costs incurred for this Motion and all of its prior attempts to
obtain discovery from the JLT Witnesses. Dkt. No. 632 at 31. To support this motion for
sanctions, Arch argues that counsel for Lilly violated Rule 3.4 of the Indiana Rules of
Professional Conduct (“Rule 3.4”) by discouraging JLT from cooperating with Arch’s
discovery requests voluntarily. Id. at 23. Arch also asserts that Lilly improperly obtained
the Affidavits in exchange for Lilly agreeing to release and indemnify the JLT Witnesses
from any potential liability arising from this litigation. Id. at 24-26. Furthermore, Arch
claims that it is entitled to recover its fees because Lilly misled Arch and the Court
regarding its ability to control JLT and by suggesting to the Court that Arch proceed
through the Hague Convention to obtain its desired discovery from the JLT Witnesses.
Id. at 26-30.
Lilly, however, argues that its counsel did not violate Rule 3.4 because its counsel
never specifically requested that JLT resist Arch’s discovery requests. Dkt. No. 652 at
25-27. Lilly also states that it never “bribed” the JLT Witnesses to execute the Affidavits
through a release and indemnity contract because the agreement was in place before
Lilly’s counsel first met with the JLT Witnesses. Id. at 28-33. Lilly further asserts that it
did not mislead Arch or the Court with its prior recommendation to proceed through the
Hague Convention because Lilly had no way to predict how JLT would respond to Arch’s
Hague Convention proceedings. Id. at 33. Moreover, Lilly argues that it should not be
responsible for Arch’s decision to not take the JLT Witnesses’ depositions under the
restrictive terms negotiated by Arch and JLT. Id. at 34.
Arch’s claim regarding Rule 3.4 originates from an email sent by Lilly’s counsel to
JLT on January 18, 2016, addressing a subpoena for documents that Arch had sent to
JLT. Dkt. No. 556, Ex. 13 at 2. In this email, Lilly’s counsel advised JLT that it could
inform Arch’s counsel that all non-privileged documents sought through the subpoena
had already been produced by Lilly and noted that “[i]f it is otherwise [JLT’s] policy to also
insist on proper service, the combination of those things might be enough to make the
subpoena go away.” Id. Under Rule 3.4(f), a lawyer cannot “request a person other than
a client to refrain from voluntarily giving relevant information to another party unless” (1)
that person is a relative, employee, or other agent of the lawyer’s client, and (2) “the
lawyer reasonably believes that the person’s interests will not be adversely affected by
refraining from giving such information.” A lawyer also may not “unlawfully obstruct
another party’s access to evidence or unlawfully alter, destroy or conceal a document or
other material having potential evidentiary value” or otherwise “counsel or assist another
person to do any such act.” Ind. R. Prof. Cond. 3.4(a). Although this email certainly
suggests that Lilly’s counsel would like for JLT to make Arch’s subpoena “go away,” Lilly’s
counsel falls short of affirmatively “requesting” that JLT refrain from cooperating with the
subpoena. Because Lilly’s counsel did not actually request that JLT resist or obstruct
Arch’s subpoena, the Court finds that Lilly’s counsel did not violate Rule 3.4.
Furthermore, the release and indemnity agreement had no apparent impact on the
JLT Witnesses’ Affidavits. The Confidential Release agreement executed by Lilly and
JLT on November 10, 2014, in which Lilly releases and indemnifies the JLT Witnesses
from any liability associated with this litigation, was formed as a condition for JLT allowing
the JLT Witnesses to meet with Lilly’s counsel regarding their involvement with the
placement of Lilly U.S.’s excess liability coverages. Dkt. No. 556, Ex. 4; Dkt. No. 568, Ex.
A, ¶¶ 7-13. The Confidential Release agreement specifies that it was formed largely
because Lilly wanted “to interview and/or obtain witness affidavits” from the JLT
Witnesses and sought their cooperation. Dkt. No. 556, Ex. 4 at 2. Although Arch argues
that the Confidential Release agreement improperly provided the JLT Witnesses with a
valuable benefit in exchange for their testimony in favor of Lilly’s position, there is no
evidence suggesting that the existence of this agreement swayed the JLT Witnesses’
testimony within the Affidavits in any way. Rather, the Confidential Release agreement
may have encouraged the JLT Witnesses to testify more freely, without the risk of any
potential liability to Lilly resulting from their statements. Therefore, the Confidential
Release agreement did not improperly provide value to the JLT Witnesses in exchange
for their testimony.
Notwithstanding these conclusions, Lilly must still be required to pay Arch’s fees
in relation to this Motion, in accordance with Rule 37(a)(5). When a court grants a motion
to compel, “the court must, after giving an opportunity to be heard, require the party or
deponent whose conduct necessitated the motion, the party or attorney advising that
conduct, or both to pay the movant’s reasonable expenses incurred in making the motion,
including attorney’s fees,” unless (1) “the movant filed the motion before attempting in
good faith to obtain the disclosure or discovery without court action;” (2) “the opposing
party’s nondisclosure, response, or objection was substantially justified;” or (3) “other
circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(A). If a court
grants in part and denies in part a motion to compel, that court “may, after giving an
opportunity to be heard, apportion the reasonable expenses for the motion.” Fed. R. Civ.
P. 37(a)(5)(C). In this instance, where the Court is granting in part and denying in part
the Motion and is striking the Affidavits, an award of fees pursuant to Rule 37(a)(5)(C) is
Based on Lilly’s actions in relation to Arch’s Hague Convention proceedings, Arch
is entitled to recover its fees for this Motion from Lilly. First, Lilly initially brought the
Affidavits into the suit by attaching them to its Second Amended Complaint and should
have anticipated that the defendants would seek to depose the JLT Witnesses regarding
them. When opposing Arch’s prior Motion to Strike the Affidavits, Lilly also encouraged
the Court to deny Arch’s motion and to direct Arch to pursue discovery directly from the
JLT Witnesses in accordance with the Hague Convention procedures, noting that the JLT
Witnesses “are available for deposition in London.” Dkt. No. 568 at 3, 7. Moreover, the
Confidential Release agreement between Lilly and JLT required JLT to “request and/or
encourage [the JLT Witnesses] to provide reasonable cooperation and assistance to Lilly
and its legal advisers in the conduct of the aforementioned existing proceedings
concerning Lilly [Brasil].” Dkt. No. 556, Ex. 4, ¶ 4. Therefore, if Lilly had desired for JLT
to comply with Arch’s requests in the UK Court, it appears that it could have had a great
deal of influence to encourage JLT to comply. Furthermore, Lilly now claims that it will
have to file its own application according to the Hague Convention’s procedures in order
to obtain the JLT Witnesses’ trial testimony. Dkt. No. 674 at 6. Although Lilly was not
directly involved in the prior UK Court proceedings, it remained aware of JLT’s
involvement in the UK Court and could have encouraged JLT’s cooperation with this
litigation in order to allow Arch to get the discovery it sought and to avoid a second
proceeding through the Hague Convention. See Dkt. No. 632, n.11. While Lilly correctly
points out that Arch could have conducted “U.S.-style” depositions of the JLT Witnesses
under terms negotiated with JLT, such terms, which greatly restricted the amount of time
in which Arch could question the JLT Witnesses and the subject matters that could be
addressed, would not have allowed Arch a sufficient opportunity to adequately test the
veracity of the statements made within the Affidavits. See Dkt. No. 674 at 3-5. Therefore,
in light of these circumstances, the Court awards Arch its fees in relation to this Motion.
For the foregoing reasons, the Court GRANTS in part and DENIES in part the
Motion. The Court STRIKES the affidavits of Ian S. Pettman and Mike Brown, and all
references thereto, as they appear in conjunction with Lilly’s Second Amended Complaint
and Cross Motion for Partial Summary Judgment, or any responses to such documents.
Arch shall be permitted to take Rule 30(b)(6) depositions of JLT regarding JLT’s
involvement in procuring and managing the insurance policies at issue in this action, in
accordance with the relevant Federal Rules of Civil Procedure. Furthermore, Lilly shall
be required to pay Arch’s costs in connection with this Motion. Arch shall file proof of its
reasonable attorney’s fees associated with the Motion within fourteen days from the date
of this Order, and Lilly shall have ten days thereafter to file its objections to Arch’s claimed
IT IS SO ORDERED this 10th day of July, 2017.
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana
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