Milby v. Liberty Life Assurance Company of Boston

Filing 73

MEMORANDUM OPINION AND ORDER signed by Magistrate Judge Colin H. Lindsay on 8/31/2016. For the reasons set forth, Defendant's 61 Motion for Protective Order is DENIED, and Plaintiff's 67 Motion to Compel is GRANTED IN PART AND DENIED IN PART. Parties shall PROCEED WITH DISCOVERY. Parties to file a Joint Proposed Amended Scheduling Order by 9/23/2016. cc: Counsel(RLK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:13-CV-487-CRS

SAMATHA MILBY,

Plaintiff,

v.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON,

Defendant.

MEMORANDUM OPINION AND ORDER
This matter is before the Court on two motions related to the efforts of Plaintiff Samantha
Milby (“Milby”) to take discovery. First, Defendant Liberty Life Assurance Company of Boston
(“Liberty”) filed a motion for protective order (DN 61) that would shield it from participating in
a Rule 30(b)(6) deposition noticed by Milby or that would, in the alternative, limit the scope of
such deposition. Milby filed a response in opposition and Liberty filed a reply. (DN 63, 66.)
Second, Milby filed a motion to compel related to her written discovery requests and three
desired depositions (DN 67). Liberty filed a response in opposition and Milby filed a reply.
(DN 70, 72.) Both motions are ripe for review. For the following reasons, Liberty’s motion for
protective order (DN 61) is denied and Milby’s motion to compel (DN 67) is granted in part
and denied in part.
BACKGROUND
Both Liberty’s motion for protective order and Milby’s motion to compel relate to the
permissible scope of discovery in cases brought under the Employee Retirement Income Security
Act (“ERISA”). Milby alleges that she became disabled while covered under a long-term
disability policy issued and underwritten by Liberty. (See DN 52 at ¶¶ 13, 15.) She alleges that
Liberty approved her claim effective September 10, 2011 and that she received a monthly

disability income benefit until Liberty abruptly terminated her benefits effective February 21,
2013. (Id. at ¶¶ 16-17.) Milby further alleges that in terminating her benefits, “Liberty failed to
consider all of [her] medical information, instead selectively focusing on information favorable
to Liberty’s objective of finding a reason to terminate her monthly disability income benefits.”
(Id. at ¶ 20.)
Milby filed suit in Jefferson Circuit Court, asserting a number of claims under Kentucky
law. (See generally DN 1-1.) Liberty removed the case to this court. (DN 3.) Milby filed a
motion to remand (DN 8). Following extensive briefing, Senior United States District Judge
Charles R. Simpson, III denied the motion to remand and concluded that ERISA completely
preempts Milby’s asserted state law claims, permitting the exercise of federal question
jurisdiction. (DN 46 (memorandum opinion); DN 47 (order).) Milby then filed an amended
complaint (DN 52) in which she reasserted her state law claims “for the sole purpose of
preserving her right to pursue said claims at such future time as the court allows” and also
reframed her claims in the context of ERISA. (DN 52 at 4 n.1.) Specifically, Milby’s amended
complaint contains a breach of contract claim under Section 1132(a)(1)(B), a breach of fiduciary
duty claim under Section 1132(a)(3), a claim for “make whole relief” also under Section
1132(a)(3), and a claim for attorney’s fees under Section 1132(g).

(Id. at 7-9.)

Liberty

responded with an answer and counterclaim1 (DN 53).
DISCUSSION
1.

Recent Case Law from the Western District of Kentucky

A significant amount of the briefing on both motions now before the Court relates to the
1

The counterclaim relates to alleged overpayments of disability benefits to Milby in light of her receipt of
Social Security disability payments. It is not relevant for purposes of the discovery-related motions now before the
Court.

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extent to which discovery is permitted in relation to a claim for breach of contract brought
pursuant to § 1132(a)(1)(B). This has become a hotly disputed issue in our district. In short,
Liberty’s position is that a court’s review of a denial of benefits under ERISA is limited to the
administrative record and that discovery outside of the administrative record is not permitted or
is, at the very least, strictly confined. By contrast, Milby argues that she is entitled to extensive
discovery because she has alleged a structural conflict of interest -- that is, she alleges that
Liberty is inherently biased against approving long-term disability claims like hers because it is
both the evaluator of such claims and the payor on such claims. These arguments permeate the
parties’ briefing on both Liberty’s motion for protective order and Milby’s motion to compel.
As both parties are aware, in a number of recent cases, this District has consistently held
that “the mere existence of an evaluator/payor conflict of interest [is] sufficient to allow
discovery outside the administrat[ive] record.” Blackwell v. Liberty Life Assur. Co., 2016 U.S.
Dist. LEXIS 73317, *20 (W.D. Ky. May 19, 2016);2 see also Scott-Warren v. Liberty Life Assur.
Co. of Boston, 2016 U.S. Dist. LEXIS 90730 (W.D. Ky. July 12, 2016); Myers v. Anthem Life
Ins. Co. 2016 U.S. Dist. LEXIS 37411 (W.D. Ky. March 21, 2016); Owens v. Liberty Life Assur.
Co. of Boston, 2016 U.S. Dist. LEXIS 51350 (W.D. Ky. Jan. 15, 2016); Davis v. Hartford Life &
Accident Ins. Co., 2015 U.S. Dist. LEXIS 158313 (W.D. Ky. Nov. 24, 2015); Gluc v. Prudential
Life Ins. Co. of Amer., 309 F.R.D. 406 (W.D. Ky. Aug. 5, 2015). This rule is rooted in the
Supreme Court’s decision in Metro Life Ins. Co. of North America v. Glenn, 554 U.S. 105
(2008). See Gluc, 309 F.R.D. at 412 (“With the rendition of Glenn, the Supreme Court held that
a plan administrator that both evaluates a claim and pays claims operates under a per se conflict

2

Milby’s two attorneys of record in this case also represented the Blackwell plaintiff, and two of the three
attorneys of record for Liberty in this case also defended Liberty in Blackwell.

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of interest in making discretionary benefit determinations.”) (citation omitted). After identifying
this rationale for permitting discovery beyond the administrative record, the courts of our district
then typically identify certain “permitted areas of inquiry,” as well as “categories of inquiry that
are not within the areas of permitted discovery,” and go on to analyze the propriety of specific
discovery requests served by the ERISA plaintiff. See, e.g., Myers, 2016 U.S. Dist. LEXIS
37411 at *17-19 (discussing permitted and impermissible areas of inquiry in relation to the
allegation of conflict of interest or bias standard); see generally id. (analyzing individual
discovery requests).
2.

The Parties’ Arguments Regarding Milby’s Breach of Fiduciary Duty Claim

After significant consideration, the Court concludes that the analytical framework set
forth above should not be applied to the discovery dispute in this case, at least at this time. The
reason for this conclusion is set out in Milby’s amended complaint: she currently has a pending
breach of fiduciary duty claim pursuant to Section 1132(a)(3). (DN 52 at 8 (Count “B”).) Milby
raises this argument --albeit briefly -- in her response to the motion for protective order, as well
as in her motion to compel, before moving on to frame her argument in terms of what is
permitted under a Section 1132(a)(1)(B) breach of contract claim as in the recent cases described
above. (See DN 63 at 2 (“Further, Ms. Milby has brought an ERISA [1132](a)(3) claim, which
does not suffer from any discovery limitation other than Rule 26.”) (citing Jones v. Allen, 2014
U.S. Dist. LEXIS 37446 (S.D. Ohio Mar. 21, 2014)); DN 67 at 2-3 (“Further, Ms. Milby has also
brought ERISA [1132](a)(3) claims. Because [such a] claim does not concern the contents of a
claim file (administrative record), it does not suffer from any discovery limitations other than

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Rule 26.”) (citing Jones, supra); id. at 10 (“Again, Ms. Milby’s [1132](a)(3) discovery is not
limited in scope.”).)
In response, Liberty repeatedly represents that it intends to file a motion for partial
judgment on the pleadings that would dispose of Milby’s fiduciary duty claim. Indeed, in its
response to Milby’s motion to compel, Liberty goes so far as to provide what is essentially a
mini-brief arguing that the breach of fiduciary duty claim should be dismissed. (DN 70 at 3-6.)
Liberty argues that any discovery to which Milby would be entitled as a result of her fiduciary
duty claim will no longer exist following a ruling in its favor that would dispose of such claim.
(See, e.g., DN 61-1 at 3 (“Moreover, counsel for Plaintiff advised that he is filing a motion to
compel discovery responses in this case, and Liberty will soon file a motion for partial judgment
on the pleadings with respect to Plaintiff’s claim for breach of fiduciary duty.”); id. at 3-4
(requesting that if the Court does not grant the motion for protective order, it instead withhold a
ruling on the propriety of a 30(b)(6) deposition “until after the Court rules on Plaintiff’s
anticipated motion to compel and Defendant’s soon-to-be filed motion for partial judgment on
the pleadings regarding Plaintiff’s breach of fiduciary duty claim.”).) In making this argument,
Liberty appears to concede that if Milby’s breach of fiduciary duty claim survives, discovery will
not be limited to the administrative record. (See, e.g., DN 61-1 at 3 (“The Court’s ruling on [a
motion to compel and a motion for partial judgment on the pleadings] will also impact the
availability and scope of discovery in this matter.”).)
The thrust of Liberty’s argument is that based on the Sixth Circuit’s recent decision in
Rochow v. Life Insurance Company of America, 780 F.3d 364 (6th Cir. 2015), Milby’s fiduciary
duty claim cannot survive. In Rochow, the Sixth Circuit held that an ERISA plaintiff may not
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maintain a breach of contract claim and a breach of fiduciary duty claim where both are based on
the same conduct by the defendant-insurer. The Sixth Circuit stated as follows:
A claimant can pursue a breach-of-fiduciary-duty claim under §
502(a)(3), irrespective of the degree of success obtained on a claim
for recovery of benefits under § 502(a)(1)(B), only where the
breach of fiduciary duty claim is based on an injury separate and
distinct from the denial of benefits or where the remedy afforded
by Congress under § 502(a)(1)(B) is otherwise shown to be
inadequate.
Rochow, 780 F.3d at 372 (citing Gore v. El Paso Energy Corp. Long Term Disability Plan, 477
F.3d 833, 840-42 (6th Cir. 2007)).
In recent months, several ERISA plaintiffs within this District have seen their fiduciary
duty claims dismissed in reliance upon Rochow. For example, in Quarles v. Hartford Life &
Accident Insurance Company, 2016 U.S. Dist. LEXIS 65188 (W.D. Ky. May 17, 2016), United
States District Judge David J. Hale squarely addressed this issue.

After finding that the

complaint raised claims under both Sections 1132(a)(1)(B) and (a)(3), the Quarles court
concluded that the latter claim must be dismissed “because Quarles failed to allege an injury
separate and distinct from the denial of his benefits.” Id. at *4 (citation to record omitted). The
court reasoned as follows:

An ERISA plaintiff may pursue a claim under § 1132(a)(3), but
only when it “is based on an injury separate and distinct from the
denial of benefits or where the remedy afforded by Congress under
§ [1132](a)(1)(B) is otherwise shown to be inadequate.” Rochow
v. Life Ins. Co. of N. Am., 780 F.3d 364, 372-73 (6th Cir. 2015)
(citing Gore v. El Paso Energy Corp. Long Term Disability Plan,
477 F.3d 833, 840-42 (6th Cir. 2007)). In Myers v. Anthem Life
Ins. Co., 2015 U.S. Dist. LEXIS 143475 (W.D. Ky. Oct. 22, 2015),
the court dismissed the plaintiff's § 1132(a)(3) claim, finding that it
was “impossible for [it] to infer a plausible claim for relief under §
1132(a)(3)” because the complaint lacked “the necessary facts and
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allegations that should be included in a well-pled complaint.”
2015 U.S. Dist. LEXIS 143475 at *7 (internal quotation marks
omitted).
Here, as in Myers, Quarles alleges numerous flaws in Hartford's
claims process, but only one injury: the denial of benefits. He
contends that without discovery, it is impossible to determine what
remedies are adequate. [citation omitted] But Quarles's alleged
injury—the denial of benefits—can be remedied by §
1132(a)(1)(B), which allows Quarles “to recover benefits due to
him.” 29 U.S.C. § 1132(a)(1)(B). No discovery is necessary to
make this determination. Thus, because Quarles has failed to allege
“an injury separate and distinct from the denial of benefits” or
show why “the remedy afforded by Congress under §
[1132](a)(1)(B) is . . . inadequate,” the Court will dismiss his §
1132(a)(3) claim. Rochow, 780 F.3d at 372-73.

Id. at *5-6.
3.

Discovery in Relation to ERISA Breach of Fiduciary Duty Claims

Notwithstanding its repeated statements regarding its future filings, Liberty has not filed
a motion for partial judgment on the pleadings. Accordingly, the task now before the Court is to
address Liberty’s motion for protective order and Milby’s motion to compel in light of the scope
of discovery where the cause of action is an ERISA breach of fiduciary duty claim. As is evident
from the discussion below, to address this issue, the Court must look to other jurisdictions.
a. Analysis of Related Case Law
It appears that the only case from our district expressly discussing this question is not on
point factually and was issued in 2001, several years before the flurry of recent cases regarding
the scope of ERISA discovery. It is, nonetheless, worth noting. In Kulkarni v. Metro Life Ins.
Co., 187 F. Supp. 2d 724, 729 (W.D. Ky. 2001), the Court stated that its “conclusion that [the]
Plaintiff has standing to assert a breach of fiduciary duty claim entails her right to discovery of
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documents relating to that claim.” The Court did not address the plaintiff’s right to discovery in
contrast to the scope of discovery if her only claim was for breach of contract.
District courts from outside of the Sixth Circuit can additional provide guidance. In
Malbrough v. Kanawha Insurance Company, 943 F. Supp. 2d 684 (W.D. La. 2013), the Western
District of Louisiana examined the issue now before this Court. The court first noted that the
Fifth Circuit had not yet addressed the issue of the scope of discovery in a Section 1132(a)(3)
case, stating that “while some district courts in the Fifth Circuit have allowed discovery to
proceed in a case that may include a[] § 1132(a)(3) claim, they do not express the exact scope of
said discovery.” Id. at 692 (citations omitted). The court then identified several decisions of
district courts outside of the Fifth Circuit that “squarely addressed” the issue. Id. In particular,
the Malbrough court looked to the following analysis from the District of Wyoming:
[In] Jensen v. Solvay Chemicals, Inc., 520 F. Supp. 2d 1349 (D.
Wyo. 2007), [ . . . ] a district court reversed [a magistrate judge’s]
finding, holding that while discovery was limited in §
1132(a)(1)(B) cases, [ . . . ] “[c]ase law does not constrain
discovery under ERISA [§ 1132(a)(3) actions. The limited
discovery ordered by [the magistrate judge] and proscribed by Hall
[v. Unum Life Ins. Comp. of Am., 300 F.3d 1197 (2002)] is limited
to claims arising under ERISA [§ 1132(a)(1)(B)]. This is logical
as these actions do not benefit from the administrative process.
Courts are not required to give difference to plan committees or
fiduciaries in [§ 1132(a)(3)] actions and therefore limitations to the
administrative record are not required. Section [1132(a)(3)]
actions are to enforce rights not arising under ERISA plans, but
rather arising from ERISA itself. Therefore, a finding that claims
arise from ERISA § [1132(a)(3)] reverts discovery into the
traditional realm and is governed under traditional federal circuit,
and local procedure.”
Id. (quoting Jensen, 520 F. Supp. 2d at 1349) (internal citations omitted).

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The Malbrough court went on to cite “[m]any other district courts [that] have followed
this trend,” including our own district in the Kulkarni decision described above. Id. at 692-93
(citing Mainieri v. Bd. Of Trustees of Operating Engineer’s Local 825 Pension Fund, 2008 U.S.
Dist. LEXIS 71247 (D. N.J. Sept. 10, 2008); Jackson v. Rohm & Haas Co., 2007 U.S. Dist.
LEXIS 74555, *1 (E.D. Pa. Oct. 5, 2007); Kulkarni, 187 F. Supp. 2d at 728) (parenthetical
descriptions omitted). In Malbrough, the court found the reasoning of these other districts
persuasive and went on to reason that under the circumstances of that case, “[l]imiting the
parties’ ability to conduct discovery to the same extent that parties are limited in § 1132(a)(1)(B)
actions would thus preclude the[m] . . . from obtaining evidence necessary to defend against a
motion for summary judgment.” Id. at 693. After considering and rejecting other arguments by
the defendant in favor of constricted discovery, the court ordered the parties to proceed with
discovery.
Additionally, in Moran v. Life Insurance Company of North America, 2014 U.S. Dist.
LEXIS 119844 (M.D. Pa. Aug. 27, 2014), the Middle District of Pennsylvania came to the same
conclusion. After addressing the scope of discovery related to a Section 1132(a)(1)(B) claim, the
Moran court stated that the plaintiff’s discovery requests were appropriate for an independent
reason. Id. at *23. “In particular,” the court stated, the plaintiff “set forth a breach of fiduciary
duty claim against [the defendant] in this action.” Id. The court noted that while the defendant
opposed plaintiff’s request for discovery beyond the administrative record, the defendant
“fail[ed] to cite any authority indicating that the discovery restrictions applicable to ERISA
denial of benefits claims also apply to breach of fiduciary duty claims.” Id. at *23-24. The
Moran court stated that district courts within the Third Circuit “have concluded that ‘discovery
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concerning a breach of fiduciary duty claim does not fall prey to the same restrictions that govern
denial of benefits allegations.’” Id. at *24 (quoting Mainieri, 2008 U.S. Dist. LEXIS 71247 at
*4; citing Jackson v. Rohm & Haas Co., 2007 U.S. Dist. LEXIS 74555 at *1 (parenthetical
description omitted)). The court also examined cases, including Kulkarni and Malbrough, from
a number of other jurisdictions and found that they expressed a consistent view. See id. at *2425 (collecting cases). The Moran court concluded its discussion by stating that irrespective of
the standard of review applied to the defendant’s denial of benefits (an issue that was closely
related to the scope-of-discovery arguments put forth by the parties in this case in relation to
Milby’s Section 1132(a)(1)(B) claim), discovery on the breach of fiduciary claim was warranted.
Id. at *25.
b. Application to this Case
This Court finds persuasive the reasoning applied in Malbrough, Moran, and the cases
upon which they rely. The Court finds that where a claim arises from ERISA § 1132(a)(3),
discovery “reverts . . . into the traditional realm and is governed under traditional federal, circuit,
and local procedure.” Jensen, 520 F. Supp. 2d at 1356 (citation omitted). Despite Liberty’s
strenuous arguments in favor of the eventual dismissal of Milby’s breach of fiduciary duty claim,
it has not filed any motion that could potentially dispose of the claim. Even if Liberty might
succeed if it filed the long-promised motion for partial judgment on the pleadings, it cannot
escape the fact that Milby currently has a pending cause of action pursuant to Section 1132(a)(3).
Based on the analysis set forth above, the arguments in Liberty’s motion for protective order and
in Milby’s motion to compel are largely inapposite. The scope of discovery is not constrained by
the analytical framework proposed by Liberty that would limit discovery to the administrative
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record.

Nor is discovery in this case constrained by the comparatively broader scope of

discovery championed by Milby and largely employed in recent decisions of this circuit in
relation to § 1132(a)(1)(B) claims. Based on the foregoing, this Court finds that discovery is
permissible in this case due to the existence of a breach of fiduciary duty claim pursuant to §
1132(a)(3).
4.

Milby’s Request for Sanctions

Milby’s motion to compel (DN 67) is denied to the extent that she requests that the Court
sanction Liberty pursuant to Rule 37 of the Federal Rules of Civil Procedure. The law on the
scope of discovery in Section 1132(a)(1)(B) claims is far from settled in the Sixth Circuit, and
the Court expressly rejects Milby’s arguments that Liberty has intentionally and improperly
obstructed the discovery process. Moreover, in granting the motion to compel, the Court has
based its decision on the existence of the breach of fiduciary duty claim, which neither party
addressed in depth in briefing. The Court has not given Milby free rein to obtain discovery
limited only by her own imagination. On the contrary, discovery in this case, as in all other civil
matters, is limited by the Federal Rules of Civil Procedure, the Local Rules, and binding case
law.
5.

Milby’s Purported Instructions to Liberty

Finally, Liberty may disregard the purported instructions included by Milby at the top of
each page of her written discovery requests. (See DN 67-1, 67-2.) The instructions that Milby
and her counsel presume to impose upon Liberty go well beyond the requirements imposed by
the actual authorities on civil discovery -- the Federal Rules of Civil Procedure, Local Rules, and
orders of this Court. There is no need to go into greater detail on this issue, as the Court has
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recently addressed it with consistent rulings in several other cases involving Milby’s counsel of
record. See, e.g., Scott-Warren v. Liberty Life Assur. Co. of Boston, 2016 U.S. Dist. LEXIS
90745, *15-18 (W.D. Ky. July 12, 2016); Myers v. Anthem Life Ins. Co. 2016 U.S. Dist. LEXIS
37411 at *20-22.

ORDER
Accordingly, IT IS HEREBY ORDERED as follows:
(1)

Liberty’s motion for protective order (DN 61) is DENIED.

(2)

Milby’s motion to compel (DN 67) is GRANTED IN PART and DENIED IN

PART.
(a)

The motion to compel is GRANTED to the extent that Milby requests that

Liberty be compelled to respond to Milby’s discovery requests consistent with her
obligations pursuant to the Federal Rules of Civil Procedure, Local Rules, and binding
precedent.
(b)

The motion to compel (DN 67) is DENIED to the extent that Milby

requests that the Court sanction Liberty pursuant to Rule 37 of the Federal Rules of Civil
Procedure.
(3)

Liberty may disregard the instructions provided by Milby in the text boxes that

appear on Milby’s written discovery requests.
(4)

The parties shall PROCEED WITH DISCOVERY. No later than September

23, 2016, the parties shall file a JOINT PROPOSED AMENDED SCHEDULING ORDER.

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Disagreement as to the terms of such an order does not obviate the requirement that the proposed
order be submitted jointly.
(5)

Finally, IT IS HEREBY ORDERED that neither party shall file any discovery-

related motion without first (1) complying with the terms of LR 37.1 as to conferring in good
faith with opposing counsel; and (2) requesting and participating in a telephonic conference with
the Court. Either party may request such a conference by contacting Case Manager Theresa
Burch at [e-mail].
August 31, 2016

cc: Counsel of record

Colin Lindsay, MagistrateJudge
United States District Court

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