Smith et al v. ComputerTraining.com, Incorporated et al
Filing
211
OPINION AND ORDER GRANTING PLAINTIFF'S 202 Motion to Overrule Garnishee Hartford Casualty Insurance Company's Objections to Subpoena for Production of Documents and to Compel Production Thereof. Signed by Magistrate Judge R. Steven Whalen. (Ciesla, C)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ANDREW SMITH, ET AL.,
Plaintiffs,
No. 10-11490
v.
District Judge Victoria A. Roberts
Magistrate Judge R. Steven Whalen
COMPUTERTRAINING.COM, INC.,
ET AL.,
Defendants.
/
OPINION AND ORDER
For the reasons discussed below, Plaintiffs’ Motion to Overrule Garnishee
Hartford Casualty Insurance Company’s Objections to Subpoena for Production of
Documents and to Compel Production Thereof [Doc. #202] is GRANTED, under the
terms set forth below.
I.
BACKGROUND
This case originated as a class action seeking damages on behalf of Plaintiffs who
enrolled in computer training programs offered by the Defendants. The complaint alleged
that after collecting “millions of dollars in tuition from Plaintiffs,” the Defendant schools
abruptly closed in December of 2009, leaving the Plaintiffs high and dry. The Plaintiffs
brought claims of negligence (Count I), breach of fiduciary duty (Count II), negligent
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misrepresentation (Count III), innocent misrepresentation (Count IV), promissory
estoppel (Count V), unjust enrichment/breach of quasi-contract (Count VI), equitable
estoppel (Count VII), breach of contract (Count VIII), fraud (Count IX), civil conspiracy
(Count X), and concert of action (Count XI). See Third Amended Class Action Complaint
[Doc. #53]. On April 15, 2011, the Clerk of the Court entered defaults as to Defendant
schools, and on November 22, 2011, the Court granted Plaintiffs motion for default
judgment, determining the total tuition portion of the judgment to be
$113,947,255.00,excluding interest [Doc. #154].
During the post-judgment proceedings, Plaintiffs learned that certain insurance
companies, including Hartford Casualty Insurance Company (“Hartford”)1, provided a
general liability policy to the ComputerTraining.com Defendants. Plaintiffs then served
writs of garnishment and document subpoenas on Hartford, which objected to the
document requests.
In their subpoena, the Plaintiffs requested production of 26 categories of
documents, including policies, notices, correspondence, reports, and other material, all
related to the ComputerTraining.com Defendants and/or the present lawsuit, the
complaint, and notices of the lawsuit. The Plaintiffs also requested files on the
1
The four insurance companies that received subpoenas were Hartford, the
Continental Casualty Company, the Houston Casualty Company, and Insurance
Incorporated. In terms of the documents that Plaintiffs requested, the subpoenas are
substantially identical.
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Defendants as to claims and matters other than this lawsuit. Hartford objected to all
categories.
On August 27, 2014, the Court entered an order granting Plaintiffs’ motion to
overrule Continental Casualty Company’s (“CCC’s”) objections to its subpoena [Doc.
#210], as well as a stipulated order resolving a number of discovery issues between
Plaintiffs and CCC [Doc. #209].
II.
LEGAL PRINCIPLES
It is well established that “the scope of discovery is within the sound discretion of
the trial court.” Lavado v. Keohane, 992 F.2d 601, 604 (6th Cir. 1993); Chrysler Corp. v.
Fedders Corp., 643 F.2d 1229, 1240 (6th Cir. 1981). In exercising its discretion, the court
should first consider Fed.R.Civ.P. 26(b)(1), which states, in pertinent part:
“Parties may obtain discovery regarding any matter, not privileged, that is
relevant to the claim or defense of any party...For good cause, the court may
order discovery of any matter relevant to the subject matter involved in the
action...All discovery is subject to the limitations imposed by Rule
26(b)(2)(i), (ii), and (iii).” (Emphasis added).
The same principles apply when discovery is sought from a non-party under Rule
45. “A subpoena issued under Rule 45 is ‘subject to the general relevancy standard
applicable to discovery under [Rule 26(b)(1) ].’” Vamplew v. Wayne State University Bd.
of Governors, 2013 WL 3188879, *2 (E.D.Mich. 2013)(Cohn, J.)(quoting Syposs v.
U.S.A., 181 F.R.D. 224, 226 (W.D.N.Y.1998)).
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III.
DISCUSSION
The bulk of Harford’s objections are based on relevance. In its response to this
motion [Doc. #203], Hartford asserts that “[t]here is absolutely no possible nexus between
Plaintiffs’ claim for coverage and the Hartford policies at issue,” arguing that “the last of
the Hartford policies expired October 2006, more than three years prior to the time any
party could have possibly suffered any loss of tuition or other economic injury.” Id. at 1.
Hartford also states that the subpoena at issue was the first notice it received of the
underlying action and default judgment against Defendants. Id. Notwithstanding its
objections, Hartford agrees to produce the Computertraining.com policies, subject to a
protective order.
While the Plaintiffs’ Reply Brief [Doc. #204] compares Hartford’s resistance to
discovery to both Watergate and the Battle of Thermopylae, it does offer the following
less hyperbolic reply to Hartford’s claim that the subpoena was its first notice of this
matter:
“If the first notice of the claims were this subpoena, then, no problem, there
will be no documents that exist and the procedure worked out with the other
insurers to furnish Affidavits followed by Depositions to sort out and to test
such nonexistence would be the easiest way to resolve the matter.” Id. at 6.
I agree. While Hartford is not bound by my previous orders resolving the discovery
dispute between Plaintiffs and CCC, those orders provide a reasonable template for
efficiently and fairly governing the disclosure of relevant insurance information. If
policies, loss run information, reinsurance documents, or other information as to
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Computertraining.com exists, Plaintiffs are entitled to disclosure. As I stated in a
previous order [Doc. #210]:
“The Plaintiffs have a judgment against the ComputerTraining.com
Defendants in excess of $113,000,000. CCC insured those Defendants, who
may or may not be collectible themselves. While the requested information
as to claims or documents not directly involving this lawsuit may or may
not be directly relevant, it is at least likely to lead to the discovery of
relevant and admissible evidence, including the financial status of the
Defendants. CCC’s objections as to this material are overruled, and the
requested documents shall be produced.”
Accordingly, Plaintiff’s motion will be granted under the following terms.
A.
Protective Order
Hartford has agreed to produce its insurance polices issued to the
Computertraining.com Defendants, but only if a protective order is in place. In my
Opinion and Order as to CCC’ objections [Doc. #210], I stated:
“The Court’s January 21, 2011 protective order is specifically directed at
financial information, personal identifying information, ‘or trade secrets or
other confidential information.’ While phrased in general terms, it would
clearly allow CCC to assert confidentiality as to transcripts, deposition
testimony, or other material that would be deemed financial or trade secret
information. The existing order is both comprehensive and elegant in its
simplicity, and I see no reason to substitute CCC’s more densely worded
alternative.”
Likewise, I find here that the Court’s January 21, 2011 protective order sufficiently
protects Hartford’s confidentiality interests. Hartford will therefore produce the policies,
subject to that protective order.
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B.
Privilege Log
Fed.R.Civ.P. 26(b)(5)(A) requires the filing of a privilege log as follows:
“(5) Claiming Privilege or Protecting Trial-Preparation Materials.
(A) Information Withheld. When a party withholds information otherwise
discoverable by claiming that the information is privileged or subject to
protection as trial-preparation material, the party must:
(i) expressly make the claim; and
(ii) describe the nature of the documents, communications, or tangible
things not produced or disclosed--and do so in a manner that, without
revealing information itself privileged or protected, will enable other parties
to assess the claim.”
“A privilege log must contain the basis for withholding discovery of the document
and sufficient detail beyond conclusory allegations to demonstrate the fulfillment of the
legal requirements for application of the privilege.” Hi-Lex Controls Inc. v. Blue Cross
and Blue Shield of Michigan, 2013 WL 1303622, *3 (E.D.Mich. 2013)(Roberts, J.).
Hartford must therefore provide a sufficiently detailed privilege log as to any
documents as to which it claims privilege.
C.
Other Document Requests
Consistent with the order entered on August 27, 2014 with regard to CCC [Doc.
#209], Hartford will comply with the following procedure:
1. In addition to producing all Computertraining.com policies, Hartford shall,
within 30 days of the date of this Order, produce an affidavit under oath, signed and
sworn to by a Corporate Representative designated by Hartford, as to the completeness,
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scope, breadth, and extent of Hartford and its employees and agents in its and their search
efforts for all policy and endorsement materials.
2. If deemed further necessary by counsel for Plaintiffs, Hartford shall, within 45
days of the date of this Order, designate a Corporate Representative to testify on sworn
deposition as to the accuracy, completeness, and availability or unavailability of and
documents found and produced (including loss run documents and underwriters’ files) or
documents not produced or not located so as to examine the accuracy and completeness
of all the searches performed by Hartford in the production of these subpoenaed
documents, as well as to confirm the unavailability of all documents not produced.
3. Within 90 days after the entry of this Order, the person(s) designated by
Hartford to testify, if requested by Plaintiffs, shall be deposed under oath as to these
matters as to the breadth and scope of all searches and the results thereof as to the
availability or unavailability of subpoenaed documents found, produced, or, if not
produced, those which remain unavailable or incapable of being located. However, there
shall be no deposition testimony as to matters of insurance coverage or substantive policy
liabilities of Hartford as insurer under these policies by this witness or witnesses.
4. Hartford shall produce any existent underwriting files and loss run documents
that have been retrieved through Hartford’s search for documents responding to
Plaintiff’s subpoena requests A to Z, under the Court’s January 21, 2011 protective order
[Doc. #44].
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5. Within 30 days of the date of this Order, Hartford shall produce all requested
information as to any reinsurance policies with respect to Computertraining.com. If
Hartford did not contract for or otherwise purchase or obtain such reinsurance policies,
Hartford shall, within 30 days of the date of this Order, furnish an affidavit by a
Corporate Representative designated by Hartford as to whether such reinsurance
documents do not exist. Such corporate representative(s) shall be designated and made
available for deposition as set forth in ¶¶ 2-3, supra. However, there shall be no
deposition testimony as to matters of any insurance coverage or substantive policy
liabilities of Hartford as insurer under these policies by this witness or witnesses.
IT IS SO ORDERED.
Dated: September 26, 2014
s/R. Steven Whalen
R. STEVEN WHALEN
UNITED STATES MAGISTRATE JUDGE
I hereby certify that a copy of the foregoing document was sent to parties of record
on September 26, 2014, electronically and/or by U.S. Mail.
s/Carolyn Ciesla
Case Manager for the
Honorable R. Steven Whalen
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