Frazier, et al v. Calille, et al

Filing 78

ORDER Regarding Motions to Compel and Briefing Schedule 67 , 71 . Signed by District Judge Denise Page Hood. (LSau)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
TYRONE FRAZIER, LAURENCE
HARWOOD, DANIEL THARP and
INTERNATIONAL UNION OF
UNITED AUTOMOBILE, AEROSPACE
AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA,
Plaintiffs,
Case No. 96-73419
v.
HON. DENISE PAGE HOOD
STATE OF MICHIGAN, DEPARTMENT
OF LICENSING & REGULATORY AFFAIRS,
UNEMPLOYMENT INSURANCE AGENCY,
SHARON MOFFETT-MASSEY, DIRECTOR OF
THE MICHIGAN UNEMPLOYMENT INSURANCE
AGENCY,
Defendants.
____________________________________________/
ORDER REGARDING MOTIONS TO COMPEL
AND BRIEFING SCHEDULE
I.

BACKGROUND/FACTS
This matter is before the Court on two Motions to Compel Discovery filed by

Plaintiff International Union of United Automobile, Aerospace and Agricultural
Implement Workers of America. Responses to the motions have been filed and a
hearing held on the motions.
On July 30, 1996, Plaintiffs United Automobile, Aerospace and Agricultural

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Workers of America (“UAW”) and three individual plaintiffs filed a Complaint for
Injunctive and Declaratory Relief against what was then called the Michigan
Employment Security Commission, the State of Michigan’s body tasked with
administering the State’s Unemployment Insurance Program (the “Agency”).
Plaintiffs alleged three claims under the Social Security Act, 42 U.S.C. § 303 and one
claim under 42 U.S.C. § 1983 for violating the Due Process Clause of the Fourteenth
Amendment. Plaintiffs alleged that the Agency failed to properly handle situations
where claimants for unemployment were paid money, and a subsequent determination
was made that the claimants were not entitled to the unemployment benefits.
Plaintiffs asserted that even though appeals were pending and no final determination
had been made on the claimants’ eligibility to benefits, the Agency sent multiple
collection and delinquency notices were sent to the claimants. The parties thereafter
reached a Settlement Agreement and a Stipulated Judgment of Dismissal was entered
by the Court on April 29, 1997. (ECF No. 6).
Sixteen years later, on August 20, 2013, Plaintiffs filed a Motion to Enforce
Settlement Agreement and for a Permanent Injunction claiming that the Agency
breached the Settlement Agreement. The primary issue in the underlying case
involved the Agency’s procedures regarding the collection of overpaid unemployment
insurance. Plaintiffs argue that under the Settlement Agreement, once an overpayment
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has been determined, no collection activity would be taken by the Agency until
appeals were concluded.

Plaintiffs assert the Agency violated the Settlement

Agreement since it has undertaken collection activities against claimants even though
the appeal process had not been completed. Plaintiffs claim that this Court should
issue a permanent injunction for the Agency to adhere to the terms of the Settlement
Agreement. Defendants respond that the motion should be denied because the
Settlement Agreement was executed more than 16 years ago and the permanent
injunction request is without merit as to today’s Unemployment Insurance Agency.
Defendants assert that no federal law has been breached as to the current claimants.
Defendants argue the Court should abstain from exercising any jurisdiction over the
claims by Plaintiffs.
This Court initially denied Plaintiffs’ Motion to Enforce the Settlement
Agreement and Permanent Injunction finding that the UAW lacked standing to
enforce the settlement agreement. ECF No. 36, 3/31/14 Order. On appeal, the Sixth
Circuit Court of Appeals reversed and remanded the matter, finding that the UAW had
standing to enforce the settlement agreement. ECF No. 40, 1/21/15 Opinion.
On remand, the Court entered an order addressing various motions filed by the
parties. ECF No. 61, 2/6/19 Order. Specifically, the Court granted the UAW’s
Motion to Compel Discovery, holding:
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As this Court ruled on the record, discovery will be
taken in this matter as to whether Defendants violated the
Settlement Agreement, specifically as to whether
Defendants violated ¶7. As ruled by the Sixth Circuit, the
UAW does have standing in this matter. Paragraph 7 (b)
provides that if a timely appeal has been filed, “the
Defendant shall hold the adjudication of the restitution
determination in abeyance until the appeal on the
underlying issue(s) on the merits becomes final.”
Settlement Agreement, ¶(b). Discovery may be taken as to
how Defendants are violating the Settlement Agreement by
instituting collection activity before appeals have become
final.
However, because this is not a new action with new
claims alleged, the Court will not review an individual
claimant’s situation and whether the claimant is entitled to
hardship waivers, other than as evidence to support whether
Defendants breached the Settlement Agreement. The main
focus of the discovery will be to what extent Defendants
breached its duties under the Settlement Agreement.
Paragraph 7 sets forth Defendants’ duties as it relates to
hardship waivers. It is noted that there is no language in
the Settlement Agreement as to how a claimant may appeal
a denial of any hardship waivers. Defendants argue that
there is a statute relating to this issue.
The Court will not allow discovery regarding the
review of an individual claimant’s situation and whether the
claimant is entitled to a hardship waiver. Paragraph 7 of
the Settlement Agreement provides that the claimant has a
right to request an indigency waiver “at any time during the
collection process and the Agency will advise the claimant
of this right in every notice regarding collection or recovery
of non-fraud overpayment.” Settlement Agreement, ¶7.
Plaintiffs may conduct discovery on whether Defendants
advised the claimants of the right to request an indigency
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waiver in the notices sent to the claimant regarding any
collection effort or request for recovery of non-fraud
overpayment. Plaintiffs’ Motion to Compel Discovery,
considered as a Motion to Allow Discovery, is granted, but
not as a review of whether an individual claimant is entitled
to a hardship waiver.
ECF No. 61, PageID.966-.967. The parties initially agreed to four months of
discovery, which was later extended as agreed to by the parties. The parties are now
before the Court on the UAW’s two Motions to Compel Discovery, which are
addressed below.
II.

ANALYSIS
A.

UAW’s Motion to Compel Discovery and for Attorney’s Fees and
Costs

The UAW served discovery requests on Defendants on January 18, 2019,
requesting information on: 1) information about individual claimants for whom the
Defendants had violated the Agreement; 2) information the Agency relied on to
produce the response to the Gongwer FOIA request; 3) information about claims for
restitution; 4) information about fraud findings; 5) information about collection
activity; 6) information about unemployment appeals; and, 7) information about
hardship waivers, reasons for denials, and how the Agency reviews application for
hardship waivers. The UAW argues that Defendants answered the discovery requests
on March 13, 2019, but failed to respond substantively to nearly all of the UAW’s
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Defendants provided copies of some of Defendants’ policies and

procedures–including significant redactions, but refused to produce aggregate data or
individual data that Plaintiff could use to create aggregate data. The UAW claims
Defendants refused to produce claim files for individuals for whom the UAW had
identified violations of the Settlement Agreement, claiming disclosure of individual
claims was contrary to the Court’s Order and prohibited under 20 C.F.R. § 603.7(a).
Defendants also refused to produce aggregate information in response to Plaintiff’s
requests for all UIA Form 1055s, documents showing total restitution recovered from
UIA claimants, total restitution recovered from UIA claimants who had submitted
hardship waivers or had an appeal pending, or total restitution recovered through tax
intercepts or wage garnishment.
The UAW argues that the discovery requests seek information relevant to
determine whether Defendants engaged in collection activity against claimants who
are pursuing timely appeals and information relevant to determine whether Defendants
adequately notified claimants of their right to apply for a hardship waiver. The UAW
argues that the Settlement Agreement provides that Defendants “hold the adjudication
of the restitution determination in abeyance until the appeal on the underlying issue(s)
on the merits becomes final” and that the “Agency will advise the claimant of [the]
right [to apply for a hardship waiver] in every notice regarding collection or recovery
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of non-fraud overpayment.” Agreement, ¶¶7(b) & (e). The UAW claims that the
requested documents are relevant to whether Defendants held in abeyance
adjudication of the restitution determination until the appeal was final and whether
Defendants advised the claimants the right to apply for a hardship waiver in every
notice regarding collection or recovery of non-fraud overpayment. Specifically, the
Document Requests Nos. 1, 2, 6, 21, 22, 23, 24, 25, 26, 27, 28, 29, 31, 31, 33, 34 and
Interrogatory Nos. 5, 6, 7, 8 are relevant according to the UAW.
The UAW further argues that Defendants’ “boilerplate objections” to these
requests are not permissible. The UAW claims that Defendants misinterpreted the
Court’s Order regarding discovery since the Court indicated that although individual
claimant’s situations are not reviewed, such evidence is relevant to whether
Defendants breached the Settlement Agreement. The UAW asserts that 20 C.F.R. §
603.7(a) does not prohibit discovery because it does not prevent such production when
“a subpoena or other compulsory legal process has been served and a court has
previously issued a binding precedential decision that requires disclosures of this
type.” The UAW argues that the Court’s February 6, 2019 Order allowing discovery
falls under this provision.
The UAW further asserts that Defendants have not engaged in good faith
discussions related to their production. The UAW provided proposed search terms as
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requested by Defendants, but only a subset of the proposed search terms were used
and produced only a hit. Defendants refused to produce any emails to the UAW.
As to the redacted information, the UAW argues that Defendants failed to
produce a privilege log along with the redacted pages as required by the federal rules.
The UAW asserts that Defendants must provide a privilege log to accompany the
redacted materials.
Defendants respond that the requested discovery far exceeds the scope of
discovery permitted by the Court’s Order. Defendants have properly responded and
objected to the discovery requests. Defendants argue that the UAW’s requests are
overly broad and that discovery seeks information regarding the number of, or reasons
for, denials of hardship waivers, including those related to fraud. The requests to
produce “all documents showing or discussing the amount of restitution recovered
from claimants through tax intercepts during the relevant time period” encompass
documents from every unemployment claimant from whom the Agency intercepted
tax returns for the past 10 years, which is likely in the tens or hundreds of thousands
and the number of documents could very well be in the millions. Defendants also
claim these are not relevant to this litigation. The UAW also seeks admissions and
information regarding the methods used to calculate eligibility for hardship waivers
and waiver of repayment. Defendants assert that “how” the Agency decides to
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adjudicate a hardship waiver application is not a topic in the Settlement Agreement,
only that the Agency will advise a claimant of the right to a hardship waiver in every
notice regarding collection or recovery of non-fraud overpayment. The UAW’s
argument that the Agency is violating the MES Act when it grants or denies hardship
waivers is not an issue in the Settlement Agreement.
As to the confidentiality of the files, Defendants argue that none of the
requested disclosures for individual unemployment compensation files, fall under the
exceptions to the confidentiality requirements under 20 C.F.R. § 603.4 and under
Mich. Comp. Laws § 421.11(b). Defendants claim the UAW seeks the “full”
individual unemployment compensation files of 44 non-parties, only five of which are
UAW members. Defendants have not received any releases by individuals to disclose
the confidential information of these 44 individuals, nor have protected orders been
offered.
Defendants respond further that the Agency should not have to produce
documents not in its possession. They argue that some of the individuals are no
longer employed by the Agency and that the Agency no longer has possession of their
emails. The individuals have transferred to other agencies and this Agency has no
authority over those emails.
The Agency’s duties are set forth in Paragraph 7 which provides,
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Whenever the first decision that unemployment benefits
have been improperly paid is made by a Referee, the Board
of Review or a court, the Defendant agrees to the following
policies and practices:
(a) The Defendant agrees to issue a determination of
restitution which (1) establishes amount of overpayment,
(2) state the week(s) of benefits involved in the
overpayment in question and, (3) addresses all issues of
administrative waiver of the overpayment. The restitution
determination shall include a notice that failure to appeal
the restitution determination will render it final and may
require repayment of the overpayment if the claimant loses
the appeal on the merits.
(b) If a timely appeal of the restitution determination is
made, the Defendant shall hold the adjudication of the
restitution determination in abeyance until the appeal on the
underlying issue(s) on the merits becomes final. Upon
finality of the appeal on the merits, if the claimant does not
prevail, the Defendant shall issue a redetermination of
restitution. Upon finality of the restitution (re)determination, the Defendant may begin collection activity. If
a timely appeal of the restitution determination is not made,
the claimant wins on appeal of the merits, the Defendant
will not collect on the restitution determination, even
though it has become final.
(c) All notices to claimants concerning collection of the
overpayment shall notify the claimant that if they disagree
with the amount of the restitution, they may contact the
Agency to discuss the matter which may include a seated
interview.
(d) After discussion, if the Agency agrees with the claimant
that an error has been made, appropriate adjustments will
be made in the amount to be collected, even if the
restitution determination had become final. If the Agency
does not agree with the claimant, the Agency will collect
the amount stated in the final restitution determination.
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Collection under these circumstances presumes a final
adverse decision to the claimant as to the merits of the case
as well as finality with respect to the restitution
determination.
(e) The claimant has a right to request an indigency waiver
at any time during the collection process and the Agency
will advise the claimant of this right in every notice
regarding collection or recovery of non-fraud overpayment.
(Settlement Agreement, ECF No. 9, Ex. A, ¶7)
As this Court noted in its Order granting the UAW’s request, “Paragraph 7 (b)
provides that if a timely appeal has been filed, ‘the Defendant shall hold the
adjudication of the restitution determination in abeyance until the appeal on the
underlying issue(s) on the merits becomes final.’ Settlement Agreement, ¶7(b).
Discovery may be taken as to how Defendants are violating the Settlement Agreement
by instituting collection activity before appeals have become final.” The Court further
held that it will not allow discovery regarding the review of an individual claimant’s
situation and whether the claimant is entitled to a hardship waiver. Paragraph 7 of the
Settlement Agreement provides that the claimant has a right to request an indigency
waiver “at any time during the collection process and the Agency will advise the
claimant of this right in every notice regarding collection or recovery of non-fraud
overpayment.” Settlement Agreement, ¶7. The Court’s order allowed discovery may
be had on whether Defendants advised the claimants of the right to request an

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indigency waiver in the notices sent to the claimant regarding any collection effort or
request for recovery of non-fraud overpayment.
The Court’s discovery order was intended to narrow the scope of discovery to
the specific language in the Settlement Agreement where the UAW alleges
Defendants have breached. The Court was clear that individual claimants’ situations
were not subject to discovery, but only to the extent these can support a breach. The
requested discovery by the UAW is overbroad and requires review of tens of
thousands of claimants’ files, including those non-UAW members, and, as Defendants
argue, millions of pages of documents. The issue is whether Defendants instituted
collection activities before the appeals were final. This does not include individual
claimant files if Defendants can produce data that show whether while on appeal
Defendants instituted collection activities. However, if Defendants cannot produce
such data, then Defendants must provide the underlying claimants’ files, redacting any
personal information. Such data and documents include non-UAW members since the
Settlement Agreement applies to non-UAW members.
As to whether hardship waivers were sent to every eligible claimant, discovery
can also be limited to those relevant documents. Defendants must provide the UAW
copies of the notices sent to the claimants to determine whether the notices provided
advised (or not) the claimants of the right to request an indigency waiver. The
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claimants’ personal information must be redacted.
The UAW’s Motion to Compel is granted in part and denied in part as set forth
above. The parties shall confer as to how to further narrow the discovery to be
provided by Defendants to the UAW in light of the Court’s ruling. Defendants shall
provide documents/data regarding whether collection activities were instituted while
an appeal was pending and the contents of the notices sent out as to hardship waivers
as noted above. The parties are reminded that the issue before the Court is the extent
of the scope of any breach by the Defendants regarding whether collection activities
were instituted while an appeal was pending and how the notices were sent out as to
hardship waivers as set forth in the settlement agreement. Whether the determination
of the amount sought to be collected was proper is not before the Court.
B.

UAW’S EMERGENCY MOTION TO COMPEL DEPOSITIONS
AND EXTEND DISCOVERY DEADLINE
1.

Untimely Depositions

The UAW seeks to depose Sharon Moffett-Massey, Teresa Burns, Michelle
Beebe, Steve Gray and an agency representative for the Michigan Unemployment
Insurance Agency for depositions. On August 23, 2019, the UAW sent the notices of
depositions. The current deadline for discovery was September 3, 2019. The UAW
therefore sought an extension of 45 days to complete the depositions. Defendants

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responded on August 27, 2019 indicating it would not consent to extend the discovery
a third time and it would object to the notices of deposition.
Defendants argue that the UAW waited nearly six months to schedule the
depositions and failed to even attempt to do so until a week prior to the expiration of
the second discovery extension. Defendants claim that it is the UAW who has
exhibited a pattern of delay during discovery.
Although the UAW waited until the end of the second extension of the
discovery period agreed to by the parties to depose certain individuals, even though
the delay and untimeliness of the deposition notices is a factor, the UAW does indicate
the incompleteness of the Defendants’ responses in its discovery requests which
required the UAW to request depositions of these individuals. However, the UAW
must specifically identify which discovery request is incomplete. The UAW must
then indicate how each of the named individual may have the necessary information
to respond to any identified incomplete discovery request. The parties may then
confer to determine agreed to deposition dates.
2.

Steve Gray

In addition, Defendants argue that Steve Gray, who has been the Director of the
Michigan Unemployment Insurance Agency since June 3, 2019, was also the UAW’s
counsel related to this litigation. Defendants claim that Gray’s deposition should be
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barred under the Rules of Professional Conduct. Gray actively participated in this
litigation as the UAW’s counsel, including in settlement negotiations.
Rule 1.11(c) of the Michigan Rules of Professional Conduct state,
(c) Except as law may otherwise expressly permit, a lawyer
serving as a public officer or employee shall not:
(1) participate in a matter in which the lawyer participated
personally and substantially while in private practice or
nongovernmental employment, unless under applicable law
no one is, or by lawful delegation may be, authorized to act
in the lawyer’s stead in the matter; . . .
It appears there is a conflict and Gray should not be allowed to be deposed since
he was the UAW’s counsel in this litigation. However, because Gray is the Director
of the Agency, Defendants have not indicated anyone else who is authorized in Gray’s
stead. Gray may have also obtained relevant information since June 3, 2019 in his
current position. If Defendant can identify another official who is authorized to act
in Gray’s stead as the Director of the Agency and Gray is able to assert he has not
gained relevant information to the two issues before the Court as the Director since
June 3, 2019, Gray need not be deposed.
III.

CONCLUSION
For the reasons set forth above,
IT IS ORDERED that the UAW’s Motion to Compel is GRANTED IN PART

AND DENIED IN PART (ECF No. 67, 8/2/19) as more fully set forth above. The
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request for Attorney Fees and Costs is DENIED and will not be assessed at this time.
IT IS FURTHER ORDERED that the UAW’s Emergency Motion to Depose
Certain Individuals is GRANTED IN PART AND DENIED IN PART (ECF No. 71,
8/29/19) as more fully set forth above. The request for Attorney Fees and Costs is
DENIED and will not be assessed at this time.
IT IS FURTHER ORDERED that the following schedule governs this matter:
Additional discovery must be completed by:

October 5, 2020

Both parties must file supplemental briefs by:

November 9, 2020

Responses to the supplemental briefs must be filed by:

November 30, 2020

A hearing on the issues on remand is set for December 16, 2020, 2:30 p.m.
The Court is aware of the current COVID-19 pandemic. After conferring, if the
parties are unable to complete discovery within this time frame, the parties may
submit a proposed stipulated order indicating the discovery remaining and new dates.

s/Denise Page Hood
DENISE PAGE HOOD
CHIEF U.S. DISTRICT JUDGE
DATED: June 1, 2020

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