Blue Cross Blue Shield of Minnesota et al v. Wells Fargo Bank, N.A.

Filing 217

ORDER. 1. Magistrate Judge Jeanne J. Graham's September 17, 2012 order (Doc. No. 203 ) and September 27, 2012 order (Doc. No. 209 ) are AFFIRMED and 2. Plaintiffs' Consolidated Objections to Magistrate Judge Jeanne J. Graham's September 17, 2012 order and September 27, 2012 order (Doc. No. 210 ) are OVERRULED. (Written Opinion). Signed by Judge Donovan W. Frank on 11/9/2012. (BJS)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Blue Cross Blue Shield of Minnesota as Administrator
Civil No. 11-2529 (DWF/JJG)
of the Blue Cross and Blue Shield of Minnesota
Pension Equity Plan; CentraCare Health System, on
Behalf of Itself and the Sisters of the Order of
Saint Benedict Retirement Plan; Supplemental Benefit
Committee of the International Truck and Engine
Corp. Retiree Supplemental Benefit Trust, as
Administrator of the International Truck and
Engine Corp. Retiree Supplemental Benefit Trust;
ORDER
Jerome Foundation; Meijer, Inc., as Administrator
of the Meijer OMP Pension Plan and Meijer Hourly
Pension Plan, Participants in the Meijer Master
Pension Trust; Nebraska Methodist Health System,
Inc., on Behalf of Itself, and as Administrator of the
Nebraska Methodist Hospital Foundation, the
Nebraska Methodist Health System Retirement
Account Plan, and the Jennie Edmundson Memorial
Hospital Employee Retirement Plan; North Memorial
Health Care, on Behalf of Itself and as Administrator
of the North Memorial Health Care Pension Plan;
The Order of Saint Benedict, as the St. John’s University
Endowment and the St. John’s Abbey Endowment;
The Twin City Hospitals-Minnesota Nurses Association
Pension Plan Pension Committee, as Administrator of
the Twin City Hospitals-Minnesota Nurses Association
Pension Plan; Administrative Committee of the Joint
Hospitals Pension Board, as Administrator of the
Twin City Hospitals Pension Plan for Licensed
Practical Nurses; The Board of Trustees of the
Tuckpointers Local 52 Pension Trust Fund, as
administrator of the Tuckpointers Local 52 Pension
Trust Fund; and the Board of Trustees of the Chicago
Area Joint Welfare Committee for the Pointing,
Cleaning and Caulking Industry Local 52, as administrator
for the Chicago area Joint Welfare Committee for the
Pointing, Cleaning and Caulking Industry Local 52;
and The El Paso County Retirement Plan,
Plaintiffs,

v.
Wells Fargo Bank, N.A.,
Defendant.

This matter is before the Court upon Plaintiffs’ Consolidated Objections to
Magistrate Judge Jeanne J. Graham’s September 17, 2012 order and September 27, 2012
order insofar as the Magistrate Judge granted Defendant Wells Fargo Bank, N.A.’s
(“Defendant”) motion for a protective order and denied Plaintiffs’ request for leave to
move for reconsideration. (Doc. Nos. 203, 209, 210.) Defendant filed a response to
Plaintiffs’ appeal on October 15, 2012. (Doc. No. 213.)
The Court must modify or set aside any portion of the Magistrate Judge’s order
found to be clearly erroneous or contrary to law. See 28 U.S.C. § 636(b)(1)(A); Fed. R.
Civ. P. 72(a); D. Minn. LR 72.2(a). This is an “extremely deferential standard.” Reko v.
Creative Promotions, Inc., 70 F. Supp. 2d 1005, 1007 (D. Minn. 1999). “A finding is
‘clearly erroneous’ when although there is evidence to support it, the reviewing court on
the entire evidence is left with the definite and firm conviction that a mistake has been
committed.” Chakales v. Comm’r of Internal Revenue, 79 F.3d 726, 728 (8th Cir. 1996)
(quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). Having
reviewed the record and the submissions of counsel, the Court finds that Magistrate Judge
Graham’s orders are neither clearly erroneous nor contrary to law.

2

In August 2009 in Workers’ Compensation Reinsurance. Assoc. v. Wells Fargo
Bank, N.A. No. 62-CV-08-10825 (Minn. Dist. Ct. Ramsey Cnty.) (“the WCRA action”),
the Special Master found that John G. Stumpf, Chairman, President, and Chief Executive
Officer of Wells Fargo & Company (“Stumpf”) had “unique personal knowledge not
otherwise available” regarding the risks Defendants’ Securities Lending Program
(“SLP”) participants faced and his concurrence with a decision not to support the SLP’s
losses. (Doc. No. 189, Moccio Aff. ¶ 3, Ex. A at 4–5.) In 2010, Stumpf testified at the
punitive damages stage of the jury trial. 1
In the instant action, Plaintiffs seek to depose Stumpf regarding his knowledge of
changes to Defendants’ SLP after October 2009 and anticipate that his deposition would
last less than two hours. Defendant moved for a protective order, which the Magistrate
Judge granted, reasoning, in part, that though Stumpf had “information relevant to how
the SLP evolved,” the court would not “allow Plaintiffs to depose the most senior
corporate executives where there is insufficient evidence that such executives represent
the only source of the information sought.” (Doc. No. 203 at 6.) The Magistrate Judge
found that Plaintiffs could obtain this information from “other corporate designees”
through Rule 30(b)(6) depositions. (Id.)
In Defendant’s Rule 30(b)(6) deposition, Roger W. Adams (“Adams”) testified
that with respect to knowledge of changes to the SLP after October 2009, “there wasn’t a
whole lot of preparation to do” and that four other deposition topics “cover a great deal of
1

Rather than citing Stumpf’s testimony, Plaintiffs point to what appears to be a
portion of the WCRA plaintiff’s closing argument. (Moccio Aff. ¶ 3, Ex. M.)
3

the changes in the [SLP].” (Doc. No. 211, Moccio Aff. ¶ 3, Ex. 1 at 345.) When asked
about the SLP changes, Adams stated, as far as he was aware, that Stumpf’s involvement
was “none whatsoever.” (Id. at 347.) Adams testified that he did not investigate what
Stumpf may have known about this topic and acknowledged that he could not testify as to
Stumpf’s involvement with the SLP after October 2009. (Id.)
Plaintiffs argue that in granting Defendant’s motion for a protective order as to
Stumpf, the Magistrate Judge erred by applying the “apex” deposition rule, which
Plaintiffs contend is aimed at avoiding harassment in situations where a CEO or agency
head does not have any relevant special knowledge and did not play an active role in the
underlying disputed facts. Plaintiffs also assert that the Magistrate Judge misapplied the
“apex” deposition rule by inappropriately shifting the burden to Plaintiffs to show that
Stumpf had unique or special knowledge rather than requiring Defendant to meet its
heavy burden of demonstrating extraordinary circumstances justifying a protective order.
Plaintiffs contend that the Special Master’s August 2009 opinion in the WCRA action
establishes that Stumpf had unique and special knowledge and that Plaintiffs are entitled
to depose Stumpf on topics contained in his affidavit that are critical to the parties’
dispute about ongoing harm and punitive damages. Additionally, Plaintiffs emphasize
that there is no legal authority that requires Plaintiffs to show that they seek knowledge
from the least burdensome source and that the availability of this SLP information from
other sources does not preclude deposing Stumpf.

4

Defendant argues that the Magistrate Judge’s order was not clearly erroneous or
contrary to law given the court’s inherent authority to limit discovery under
Rule 26(b)(2)(C). Defendant points out that the Magistrate Judge acknowledged that
there is no per se bar to deposing top executives and that she accurately distinguished
between witnesses with some relevant knowledge and those with unique, personal
knowledge. Defendant contends that the Magistrate Judge’s finding that Stumpf lacked
“unique or special knowledge” was well-supported by key facts including Defendant’s
size and organizational structure, Stumpf’s repeated sworn statements in the WCRA
action as to his lack of knowledge about the SLP, and the availability of this information
from Defendant’s corporate designee. 2 (Doc. No. 203 at 7.) Defendant also asserts that
Plaintiffs asked only a limited amount of questions about this SLP topic at Defendant’s
30(b)(6) deposition, demonstrating that Plaintiffs did not seize the opportunity to
ascertain this information from a source other than Stumpf.
The standard for setting aside a Magistrate Judge’s order is deferential; Plaintiffs
have not met this high bar. Based on Adams’s testimony that Stumpf did not have
relevant knowledge of the SLP changes and Stumpf’s prior sworn statements in the
WCRA action, the Magistrate Judge reasonably applied the “apex” doctrine. (Doc. No.

2

Interestingly, Stumpf asserted lack of knowledge of the SLP or, in Stumpf’s own
words in his August 2009 Affidavit, “I am not familiar with any aspect of how that
program was created or run. . . . I have never been and am not familiar with the terms
and conditions of the documents that govern participation in the securities lending
program or of the rights and obligations of Wells Fargo Bank, N.A. or the participants
under those agreements.” (Doc. No. 214, Zamansky Aff. ¶ 2, Ex. 1 at ¶ 4.) A jury may
find Stumpf’s level of knowledge to be highly relevant to issues of liability.
5

203 at 5 citing Cardenas v. Prudential Ins. Co. of Am., No. 99-1421, 2003 WL 21293717,
at *1 (D. Minn. May 16, 2003); Bank of the Ozarks v. Capital Mortg. Corp.,
No. 4:12-mc-00021, 2012 WL 2930479, at *1 (E.D. Ark. July 18, 2012.) The Special
Master’s August 2009 finding regarding Stumpf’s knowledge of the SLP changes at that
time does not require a similar finding in the instant case about Stumpf’s purported
unique and personal knowledge of these SLP changes after October 2009. Moreover, the
Magistrate Judge’s decision to grant Defendant’s motion for a protective order as to
Stumpf was neither clearly erroneous nor contrary to law based on the court’s inherent
authority to limit discovery that may place a heavy burden on a party, particularly if it
can be obtained from other sources. See Fed. R. Civ. P. 26(b)(2)(C); Miscellaneous
Docket Matter No. 1 v. Miscellaneous Docket Matter No. 2, 197 F.3d 922, 925-26 (8th
Cir. 1999).
Adams’s deposition was taken the day after the protective order was issued. The
alleged inadequacy of Adams’s deposition preparation about Stumpf’s knowledge of the
SLP changes does not render the Magistrate Judge’s order clearly erroneous or contrary
to law. The Court finds that the Magistrate Judge’s denial of leave to move for
reconsideration based on an absence of compelling circumstances was not erroneous.
Based upon a review of the record and all of the arguments and submissions of the parties
and the Court being otherwise duly advised in the premises, the Court hereby enters the
following:

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ORDER
1.

Magistrate Judge Jeanne J. Graham’s September 17, 2012 order (Doc.

No. [203]) and September 27, 2012 order (Doc. No. [209]) are AFFIRMED and
2.

Plaintiffs’ Consolidated Objections to Magistrate Judge Jeanne J. Graham’s

September 17, 2012 order and September 27, 2012 order (Doc. No. [210]) are
OVERRULED.
Dated: November 9, 2012

s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge

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