Zurich American Insurance Company v. Andrew et al

Filing 36

ORDER that Defendants' Objection to Notice of Subpoena 27 is sustained. Plaintiff's Motion to Allow Issuance of Subpoenas 29 is denied. Ordered by Magistrate Judge F.A. Gossett. (JSF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
ZURICH AMERICAN INSURANCE
COMPANY, a New York
Corporation,
Plaintiff,
v.
RICHARD ANDREW, JANE
ANDREW, LUKE ANDREW,
and BRYCE ANDREW,
Defendants.

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8:15CV403
Order

This matter is before the court on the Objection to Notice of Subpoena (Filing No.
27) filed by the defendants, Richard Andrew, Jane Andrew, Luke Andrew, and Bryce
Andrew (collectively, “Defendants”) and the Motion to Allow Issuance of Subpoenas
(Filing No. 29) filed by the plaintiff Zurich American Insurance Company (“Zurich”).
For the following reasons, the court will grant Defendants’ objections and deny Zurich’s
motion.

BACKGROUND
Zurich filed this subrogation action to recover amounts it paid pursuant to an
insurance policy with Magellan Midstream Partners, LP (“Magellan”) to clean-up and
remediate gasoline and fuel released from pipelines under real property in Nemaha County,
Nebraska. Zurich alleges that on December 10, 2011, two defendants, Luke Andrew and
Bryan Andrew, negligently struck two of Magellan’s pipelines while engaged in
excavation activities on the property, causing the release of approximately 2,167 barrels of
mixed gasoline and jet fuel and 643 barrels of diesel fuel. (Filing No. 6 at p. 2 ¶ 16).
Magellan was required by state and federal law to clean-up and remediate the release.
(Filing No. 6 at pp. 2-3 ¶¶ 13-14, 17).

Defendants allege Luke was engaged in

farming-related activities authorized by Magellan at the time of the pipeline strike.
(Filing No. 14 at pp. 2-3 ¶¶ 11-14).
Zurich alleges that pursuant to its insurance policy with Magellan, Zurich has paid
more than $3 million on behalf of Magellan and anticipates future damages of more than
$1.1 million related to the clean-up and remediation of the release from the pipeline strike.
(Filing No. 6 at pp. 3-4, ¶¶ 19, 26-28). Zurich seeks to recover more than $4 million in
damages from Defendants and to impute negligence to all Defendants, alleging they were
agents of each other, engaged in a joint venture and partnership, and acting in the course
and scope of the joint venture at the time of the pipeline strike. (Filing No. 6 at p. 2).
Defendants deny the existence of any agency, partnership, or joint venture. (Filing No. 14
at pp. 1-2 ¶¶ 8-10 and Filing No. 16 at p. 2 ¶¶ 8-10).
On February 22, 2016, pursuant to Fed. R. Civ. P. 45 and NECivR 45.1, Zurich filed
its notice of intent to issue subpoena to produce documents on a third-party, Farmers
Alliance Mutual Insurance Company (“Farmers”). (Filing No. 26). The notice directs
Farmers to produce documents and communications related to Defendants’ insurance
policy with Farmers between December 23, 2010 and December 23, 2011 (“the Farmers
Alliance Policy”). Namely, the notice requests Farmers produce, from the time period of
January 1, 2011, to the present:
(1) any and all communications between Farmers and counsel for Defendants
concerning the Farmers Alliance Policy;
(2) any and all documents reflecting or relating to any claims made by any of the
Defendants against the Farmers Alliance Policy;
(3) any and all communications between Farmers and Defendants concerning the
Farmers Alliance Policy;
(4) any and all documents reflecting or relating to any communications between
Farmers and “Auto-Owners Insurance Company” concerning any claims submitted
by any of the Defendants;

(5) all documents comprising the complete claim file of any claim with a date of loss
occurring in December of 2011;
(6) all documents comprising Farmers’ complete underwriting file relating to the
Farmers Alliance Policy;
(7) any and all insurance cancellation notices relating to the Farmers Alliance
Policy;
(8) any and all documents reflecting or relating to Farmers’ decision to issue the
Farmers Alliance Policy;
(9) any applications for insurance submitted in relation to the Farmers Alliance
Policy;
(10) copies of all checks and/or drafts issued to any of the Defendants;
(11) any and all documents reflecting or relating to any agreement between Farmers
and “Auto-Owners Insurance Company;”
(12) any and all documents reflecting or relating to any contract or agreement
between Farmers and any of the Defendants;
(13) any and all contracts or agreements between Farmers and any of the
Defendants reflecting or referring to the surrender and/or release of the Farmers
Alliance Policy;
(14) any and all contracts or agreements between Farmers and any of the
Defendants reflecting or referring to a policyholder’s buy-out or similar
arrangement concerning the Farmers Alliance Policy;
(15) any audio or transcribed statements of Defendants; and
(16) any audio or transcribed statements of any employee or agent of Magellan.
(Filing No. 26-1 at pp. 7-9). Defendants timely informed Zurich of their objections.
(Filing No. 29). The parties conferred but were unable to resolve their dispute. On
February 24, 2016, Defendants filed the instant objection to the notice of subpoena on the
grounds that it seeks irrelevant, privileged, and confidential information. (Filing No. 27).

Zurich filed a motion to allow issuance of the subpoenas. (Filing No. 29). Defendants’
objection and Zurich’s motion are presently before the court.

DISCUSSION
Under Fed. R. Civ. P. 45(d)(3)(A), a district court must quash or modify a subpoena
if the subpoena requires the disclosure of privileged matter or other protected matter, if no
exception or waiver applies. Fed. R. Civ. P. 45(d)(3)(A). “The court need not reach the
issue of privilege or burden, however, unless the information sought is discoverable
pursuant to Fed. R. Civ. P. 26.” Sampson v. Schenck, No. 8:07CV 155, 2009 WL 484224,
*3 (D. Neb. Feb. 23, 2009). In other words, a subpoena must seek relevant information.
See Roberts v. Shawnee Mission Ford, Inc., 352 F.3d 358, 360-62 (8th Cir. 2003). “[An]
adverse party has standing to object to a third-party subpoena on grounds of relevance or to
protect a personal right or privilege in the information requested.” Jenkins v. Pech, No.
8:14CV41, 2015 WL 728305, at *3 (D. Neb. Feb. 19, 2015) (quoting Streck, Inc. v.
Research & Diagnostic Sys., Inc., No. 8:06CV458, 2009 WL 1562851, at *3 (D. Neb. June
1, 2009)).
“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[.]” Fed. R. Civ. P.
26 (b)(1). 1 Although relevance is to be broadly construed for discovery issues, the
proponent of discovery must make “[s]ome threshold showing of relevance . . . before
parties are required to open wide the doors of discovery and to produce a variety of
information which does not reasonably bear upon the issues in the case.” Prism Techs.,
1

Because this case was filed on November 3, 2015, (Filing No. 1) the parties discuss whether the amendments to the
Federal Rules of Civil Procedure effective December 1, 2015, apply. The 2015 amendments “shall govern in all
proceedings in civil cases [commenced after December 1, 2015] and, insofar as just and practicable, all proceedings
then pending.” See Fed. R. Civ. P. Refs & Annos. (Order of April 29, 2015). Although this case commenced prior
to December 1, 2015, this court finds it just and practicable to apply the Rules as amended. In particular, although
Rule 26 was amended to include the word “proportional,” the concept of proportionally existed under the prior Rule.
See Fed. R. Civ. P. 26(b)(1) advisory committee note to 2015 amendment (“Restoring the proportionality calculation
to Rule 26(b)(1) does not change the existing responsibilities of the court and the parties to consider proportionality,
and the change does not place on the party seeking discovery the burden of addressing all proportionality
considerations.”).

LLC v. Adobe Sys., Inc., 284 F.R.D. 448, 449 (D. Neb. 2012) (quoting Hofer v. Mack
Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1992). Mere speculation that information might
be useful will not suffice; litigants seeking to compel discovery must describe with a
reasonable degree of specificity the information they hope to obtain and its importance to
their case. See Cervantes v. Time, Inc., 464 F.2d 986, 994 (8th Cir. 1972). If the
relevancy of the discovery request is not readily apparent on its face, the party seeking the
discovery has the burden to show the relevancy of the request. Moses v. Halstead, 236
F.R.D. 667, 671 (D. Kan. 2006).
Zurich alleges the items requested in the subpoena are relevant because they “will
aid in the determination of whether a potential agency relationship or joint venture
relationship or partnership relationship exists or existed between Defendants.” (Filing
No. 30 at p. 8). Under Nebraska law, the party alleging the existence of a partnership has
the burden of proving that the parties’ voluntary actions form a relationship in which they
carry on as co-owners of a business for profit. See In re KeyTronics, 744 N.W.2d 425,
439 (Neb. 2008). Nebraska law provides that the essential elements of a joint venture are:
“(1) an agreement, express or implied, among the members of the group; (2) a common
purpose to be carried out by the group; (3) a community of pecuniary interest in that
purpose, among the members; and (4) an equal right to a voice in the direction of the
enterprise, which gives an equal right of control.” Winslow v. Hammer, 527 N.W.2d 631,
635-36 (Neb. 1995) (quoting Restatement (Second) of Torts, § 491, comment c. at 548
(1965)). The court finds that the relevance of the documents sought from Farmers by
Zurich is not readily apparent and Zurich has not met its burden to show relevancy of such
requests. For example, it is unclear how Farmers’ communications and agreements with
third parties, its complete underwriting file, or its decision to issue or cancel an insurance
policy is relevant to show the existence of a joint venture or partnership among the
Defendants. At this time, Zurich’s overbroad requests directed at a third-party insurance
company do not appear relevant or proportional to the needs of the case. See Fed. R. Civ.
P. 26 (b)(1). As such, the court will not allow the issuance of the subpoena directed to

Farmers. See Fed. R. Civ. P. 26(b)(2)(C) (A court must limit the extent of discovery if it is
outside the scope permitted by Rule 26(b)(1)). Accordingly,
IT IS ORDERED:
1.

Defendants’ Objection to Notice of Subpoena (Filing No. 27) is sustained.

2.

Plaintiff’s Motion to Allow Issuance of Subpoenas (Filing No. 29) is denied.

DATED: May 4, 2016.
BY THE COURT:
s/ F.A. Gossett
United States Magistrate Judge