Suljanovic v. State Farm Mutual Automobile Insurance Company

Filing 38

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Defendant State Farm Mutual Automobile Insurance Company's Motion for Protective Order Concerning 30(b)(6) Deposition Topic No. 9 (ECF No. 32 ) is GRANTED in part and DENIED in part; the Motion is GRANTED to the extent that Plaintiffs Rule 30(b)(6) deposition Topic No. 9 will be limited in time to the period between the date of the motor vehicle accident described in Plaintiffs Petition and the date this lawsuit was filed. The Motion is DENIED in all other respects.. Signed by District Judge Ronnie L. White on 02/18/2021. (KCD)

Case: 4:20-cv-00534-RLW Doc. #: 38 Filed: 02/18/21 Page: 1 of 10 PageID #: 139

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

EDISA SULJANOVIC,
Plaintiff,
V.

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.

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No. 4:20-CV-534 RLW

MEMORANDUM AND ORDER

This matter is before the Court on Defendant State Farm Mutual Automobile Insurance
Company's ("State Farm") Motion for Protective Order Concerning 30(b)(6) Deposition Topic
No. 9 (ECF No. 32) filed pursuant to Rule 26(c), Federal Rules of Civil Procedure. Plaintiff
Edisa Suljanovic ("Plaintiff') opposes the Motion and it is fully briefed.

After careful

consideration of the motion papers, the Court will deny State Farm's Motion for Protective Order
except as to the time period of the discovery request at issue.
Background

Plaintiff filed this action in the Circuit Court of the City of St. Louis and State Farm
removed it to this Court on the basis of diversity of citizenship jurisdiction under 28 U.S.C.
§ 1332(a). The case arises out of a motor vehicle accident on June 18, 2019. Plaintiff alleges
she was injured as a result of the carelessness and negligence of a third party driver. Plaintiff
brings this first-party breach of insurance contract claim for underinsured motorist benefits under
her State Farm automobile policy. Plaintiff also asserts a claim for statutory vexatious refusal to
pay her claim under§ 375.420 of the Missouri Revised Statutes.

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Plaintiff served a Rule 3 0(b)( 6) notice of deposition on State Farm, specifying nine topics
for examination. State Farm seeks a protective order to preclude 30(b)(6) deposition testimony
regarding topic No. 9, which seeks the following documents and information:

"Copies of

financial incentives or bonuses that could be awarded to or earned by Defendant's claim
personnel and adjusters based upon the amount of money paid or not paid in settlement of
uninsured and underinsured motorist claims." State Farm asserts this information is not relevant
to any claim or defense in this case and states it was previously subject to unchallenged
objections during written discovery. Plaintiff responds that the topic is relevant to her statutory
vexatious refusal to pay claim because if State Farm's adjusters and claims personnel are
incentivized to deny claims, they may have denied her claim on that basis rather than on its
merits.
Legal Standards

A. Scope of Discovery
The scope of discovery for actions filed in federal court is set forth in Federal Rule of
Civil Procedure 26:

Scope in General. Unless otherwise limited by court order, the
scope of discovery is as follows: Parties may obtain discovery
regarding any nonprivileged matter that is relevant to any party's
claim or defense and proportional to the needs of the case,
considering the importance of the issues at stake in the action, the
amount in controversy, the parties' relative access to relevant
information, the parties' resources, the importance of the discovery
in resolving the issues, and whether the burden or expense of the
proposed discovery outweighs its likely benefit. Information
within this scope of discovery need not be admissible in evidence
to be discoverable.
Rule 26(b)(l), Fed. R. Civ. P.
"The scope of discovery under Rule 26(b) is extremely broad." Gowan v. Mid Century
Ins. Co., 309 F.R.D. 503, 508 (D.S.D. 2015) (citing 8 Charles A. Wright & Arthur R. Miller,
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Federal Practice & Procedure§ 2007, 3637 (1970)). "Mutual knowledge of all the relevant facts
gathered by both parties is essential to proper litigation. To that end, either party may compel
the other to disgorge whatever facts he has in his possession." Hickman v. Taylor, 329 U.S. 495,
507 (1947). Relevancy in this context "has been construed broadly to encompass any matter that
bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may
be in the case." Jo Ann Howard & Assocs., P.C. v. Cassity, 303 F.R.D. 539, 542 (E.D. Mo.
2014) (citation and quotation omitted).
After the proponent of discovery makes a threshold showing of relevance, the party
opposing it has the burden of showing its objections are valid by providing specific explanations
or factual support as to how each discovery request is improper. Id. (citing Hofer v. Mack
Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1993), and St. Paul Reins. Co. v. Commercial Fin.
Corp., 198 F.R.D. 508, 511-12 (N.D. Iowa 2000)). The opposing party must demonstrate "that
the requested documents either do not come within the broad scope of relevance defined
pursuant to Rule 26(b)(l) or else are of such marginal relevance that the potential harm
occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure."
Id. (quoted case omitted). "Rule 26 requires 'a particular and specific demonstration of fact, as
distinguished from stereotyped and conclusory statements."' Vallejo v. Amgen, Inc., 903 F.3d
733, 743 (8th Cir. 2018) (quoting Gen. Dynamics Corp. v. Selb Mfg. Co., 481 F.2d 1204, 1212
(8th Cir. 1973)).
Rule 26(b)(l) was amended in 2015 to include a "proportionality" requirement for the
parties and the court to consider in resolving discovery disputes. Fed. R. Civ. P. 26 advisory
committee's notes to 2015 amendment. The amendment does not "alter the basic tenet that Rule
26 is to be liberally construed to permit broad discovery." Prime Aid Pharmacy Corp. v. Express

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Scripts, Inc., 2017 WL 67526, at *4 (E.D. Mo. Jan. 6, 2017) (quoted case and internal citation
omitted).

Also, "[T]he existing allocation of burdens to show undue burden or lack of

proportionality have not fundamentally changed."
omitted).

Vallejo, 903 F.3d at 742 (quoted case

"A party claiming requests are unduly burdensome cannot make conclusory

allegations, but must provide some evidence regarding the time or expense required."

Id.

(quoted case omitted).
B. Protective Order Standard
A party may move for a protective order pertaining to discovery requests in order to
"protect a party or person from annoyance, embarrassment, oppression, or undue burden or
expense[.]" Fed. R. Civ. P. 26(c)(l). "Because of liberal discovery and the potential for abuse,
the federal rules 'confer[ ] broad discretion on the [district] court to decide when a protective
order is appropriate and what degree of protection is required."' Misc. Docket Matter No. 1 v.
Misc. Docket Matter No. 2, 197 F.3d 922, 925 (8th Cir. 1999) (quoting Seattle Times Co. v.
Rhinehart, 467 U.S. 30, 36 (1984)). "The party moving for the protective order has the burden to
demonstrate good cause for issuance of the order." Buehrle v. City of O'Fallon, Mo., 2011 WL
529922, at *2 (E.D. Mo. Feb. 8, 2011) (citation omitted). To show good cause, "the parties
seeking protection must show that specific prejudice or harm will result if no protective order is
granted." Id. (citation omitted). The prejudice or harm Rule 26(c) will protect against includes
"annoyance, embarrassment, oppression, or undue burden or expense." See Fed. R. Civ. P.
26(c); Crawford-El v. Britton, 523 U.S. 574, 599 (1998).

Stereotypical and conclusory

statements are insufficient to establish good cause under Rule 26(c). Misc. Docket Matter No. 1,
1'97 F .3d at 926. "Rule 26(c) confers broad discretion on the trial court to decide when a

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protective order is appropriate and what degree of protection is required." Seattle Times, 467
U.S. at 36; Roberts v. Shawnee Mission Ford, Inc., 352 F.3d 358,362 (8th Cir. 2003).
Discussion

As previously stated, Topic 9 seeks: "Copies of financial incentives or bonuses that could
be awarded to or earned by Defendant's claim personnel and adjusters based upon the amount of
money paid or not paid in settlement of uninsured and underinsured motorist claims."
State Farm first asserts that Plaintiff sought the production of documents on this topic but
did not file a motion to compel after State Farm objected. This appears to be an argument that
Plaintiff waived the right to engage in further discovery on the topic. State Farm next asserts the
topic seeks information that is "clearly irrelevant" and "not proportional to the interests of the
case" because Plaintiffs Petition has not pied any facts to support a claim that "claim personnel
and adjusters" acted in contravention of his or her proper duties, or that the dispute between the
parties would somehow be more easily or readily resolved if Plaintiff were allowed to delve into
sensitive areas such as employee compensation. (ECF No. 33 at 3.) State Farm also asserts the
request is too broad because it (1) is not limited to the individuals who adjusted her claim but
rather seeks information concerning all State Farm employees in the stated classification, (2)
seeks information regarding both uninsured and underinsured motorist claims, and the instant
case concerns only an underinsured motorist claim, and (3) is not limited in time and any time
period beyond the date on which Plaintiffs claim was adjusted has no relevance to this suit.
Plaintiff responds that State Farm's argument the financial incentives it offers to its
employees who decide whether or not to pay claims are irrelevant ignores the purpose of
§ 375.420. Plaintiff contends any financial incentives State Farm offers its claims handling
personnel that incentivize the denial of legitimate claims is relevant to vexatious refusal under

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§ 375.420, which provides for additional damages above policy limits where the insurer fails to
pay a loss "without reasonable cause or excuse." Plaintiff states the purpose of§ 375.420 is to
make the insured whole in a practical sense and to provide an incentive for insurance companies
to pay legitimate claims without litigation, citing Drury Co. v. Missouri United School Ins.
Counsel, 455 S.W.3d 30 (Mo. Ct. App. 2014). Plaintiff argues that if State Farm incentivizes the
denial of legitimate claims, a jury could reasonably believe the claims handlers who denied
Plaintiffs claim were motivated by the financial incentive rather than the merits of her claim.
To prove a vexatious refusal to pay claim under Missouri law, Plaintiff must prove: "(1)
she had an insurance policy with State Farm; (2) State Farm refused to pay; and, (3) State Farm's
refusal was without reasonable cause or excuse." Dhyne v. State Farm Fire and Cas. Co., 188
S.W.3d 454, 457 (Mo. 2006) (en bane). It is well settled under Missouri law that "direct and
specific evidence of vexatious refusal is not required and 'the jury may find vexatious refusal or
delay upon a general survey and a consideration of the whole testimony and all the facts and
circumstances in connection with the case."' Id. at 458 (quoting DeWitt v. American Family
Mut. Ins. Co., 667 S.W.2d 700, 710 (Mo. 1984) (en bane).

As stated above, the scope of

discovery under Rule 26(b) is extremely broad as to relevant evidence. Gowan, 309 F.R.D. at
508. Under Federal Rule of Evidence 401, evidence is relevant "if it has any tendency to make a
fact more or less probable than it would be without the evidence[.]" Fed. R. Evid. 401 (emphasis
added). Rule 401 sets a "extremely low burden" for relevancy. Kozlov v. Associated Wholesale
Grocers, Inc., 818 F.3d 380,396 (8th Cir. 2016).
The Court finds Plaintiff has established a threshold showing of relevance for the
requested discovery. Any State Farm documents reflecting a practice or program of providing
financial incentives to its claims handlers or adjusters for denying claims is relevant or

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reasonably calculated to lead to the discovery of admissible evidence, as it may contain
information about practices that were applied in the denial of Plaintiffs underinsured motorist
claim. Neither party cited the Court to any Missouri authority, but numerous federal trial courts
have ordered production of documents that may reflect an insurer's financial incentive to
employees in the context of bad faith claims. See,~. Vibal v. GEICO Cas. Co., 2018 WL
571948, at *4 (S.D. Cal. Jan. 26, 2018) (ordering defendant to produce documents concerning
"the existence or extent of any policies or practices relating to incentives to handle claims in a
specific manner."); Ingram v. Great Am. Ins. Co., 112 F.Supp.3d 934, 940 (D. Ariz. 2015)
(ordering defendant to produce adjustor personnel files, including participation in an incentive
plan, because "the potential probative value of the information contained in those records
outweigh[s] any privacy concerns" and " [e]vidence regarding whether Defendants 'set arbitrary
goals for the reduction of claims paid' and whether '[t]he salaries and bonuses paid to claims
representatives were influenced by how much the representatives paid out on claims' is relevant
to whether Defendants acted unreasonably and knew it."); Dziadek v. Charter Oak Fire Ins. Co.,
2014 WL 820049, at *7 (D.S.D. Mar. 3, 2014) ("Personnel files may be relevant in an insurance
bad faith case to show some distorted financial incentive encouraging claims denials and thus
may be relevant to a punitive damage claim as well."); Saldi v. Paul Revere Life Ins. Co., 224
F.R.D. 169, 185 (E.D. Pa. 2004) (finding discoverable information about awards and financial
bonus programs for which claims personnel could qualify).
State Farm thus has the burden of showing it is entitled to a protective order by providing
specific explanations or factual support as to how the discovery request is improper and will
cause it "annoyance, embarrassment, oppression, or undue burden or expense." See Fed. R. Civ.
P. 26(c). As an initial matter, State Farm cites no legal authority to support its argument that

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Plaintiff waived the right to conduct discovery on Topic 9. The Court is not aware of any
Federal Rule of Civil Procedure or legal principle to support such a waiver argument. And there
may be legitimate reasons Plaintiff chose not to file a motion to compel as to her request for
production of documents, including that she could obtain the information by other means.
To the extent State Farm argues that Topic No. 9 will require "employees to testify about
their compensation" (ECF No. 33 at 5), it attempts to attack a straw man. Topic No. 9 seeks
documents and information from a Rule 30(b)(6) corporate designee about possible State Farm
financial incentives offered to its claims adjusters and handlers to deny valid claims. Topic 9
does not seek to discover employee personnel files. Even if it did, these could be produced with
redactions or pursuant to an appropriate protective order. See,~' Vibal, 2018 WL 571948, at
*4; Ingram, 112 F.Supp.3d at 940.
The Court finds State Farm's objection that the requested discovery is too broad because
it is not limited to the adjusters who denied Plaintiffs claims fails to show specific prejudice or
harm. As previously stated, Topic No. 9 does not seek individual employees' personnel files but
rather information about whether State Farm has a company-wide practice of using financial
incentives to encourage its employees to deny or underpay claims. To the extent State Farm
argues Topic 9 is not proportional to the interests of the case, this generic and conclusory
argument is insufficient to meet State Farm's burden to show specific prejudice or harm. The
argument is also belied by State Farm's objection to Topic 9 that "[n]o such incentives and
bonuses were awarded or earned by Defendant's claims personnel or adjusters based upon the
amount of money paid or not paid in settlement of underinsured claims.

. . . . As such,

Defendant has no documents to produce in response to this inquiry." (ECF No. 33 at 3.)

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State Farm's objection that Topic No. 9 is too broad because it seeks information
concerning both uninsured and underinsured motorist claims lacks adequate specificity to
establish that the requested discovery is of such marginal relevance that the potential harm
occasioned by allowing it outweighs the ordinary presumption in favor of broad disclosure.
State Fann does not establish, for example, that its claims adjusters handle only uninsured or
underinsured claims, but never both; or that State Farm's policies as to financial incentives for
claims handlers or adjusters are different for uninsured and underinsured motorist claims.
State Fann asserts in its Reply that it produced the applicable documents governing
factors that can and cannot be considered in evaluating claims representatives' performance and
offered to stipulate to their authenticity, and that it offered to present the involved claims
representatives to testify in their individual capacities on the issues of what incentives were or
were not available to them and which may have affected the events in this case. (ECF No. 37 at
2-3.) The Court does not consider new arguments raised in a Reply, as Plaintiff does not have
the opportunity to respond. Further, this argument appears to contradict State Farm's waiver
argument. Finally, State Farm does not support its new argument with evidence, such as the
copies of the documents it references.

Attorney assertions in briefs to the Court do not

adequately substitute for affidavits and other forms of evidence. Vallejo v. Amgen, Inc., 903
F.3d 733, 743-44 (8th Cir. 2018).
State Farm's objection that Topic No. 9 is too broad because it is not limited in time is
valid. The topic will be limited to documents in effect between the time of the motor vehicle
accident described in Plaintiff's Petition and the date this lawsuit was filed.

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Accordingly,

IT IS HEREBY ORDERED that Defendant State Farm Mutual Automobile Insurance
Company's Motion for Protective Order Concerning 30(b)(6) Deposition Topic No. 9 (ECF No.
32) is GRANTED in part and DENIED in part; the Motion is GRANTED to the extent that
Plaintiffs Rule 30(b)(6) deposition Topic No. 9 will be limited in time to the period between the
date of the motor vehicle accident described in Plaintiffs Petition and the date this lawsuit was
filed. The Motion is DENIED in all other respects.

RONNIE L. WHITE
UNITED STATES DISTRICT JUDGE

Dated this

j!l!!:_

day ofFebruary, 2021.

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