Fleisher et al v. Phoenix Life Insurance Company

Filing 72

MEMORANDUM AND ORDER: For the reasons set forth above, the plaintiffs' motion to compel (Docket no. 42) is granted to the extent that Phoenix shall complete the production of documents responsive to the Plaintiffs' First Document Request by February 28, 2013. Phoenix's application to shift the costs of that production to the plaintiffs is denied. (Signed by Magistrate Judge James C. Francis on 12/27/2012) Copies Mailed By Chambers. (ago) (Main Document 72 replaced on 12/28/2012) (cd).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

(ECF)

MARTIN FLEISHER, as trustee of
11
the Michael Moss Irrevocable
fe

Insurance Trust II and JONATHAN
BERCK, as trustee of the John L.

Loeb Jr. Insurance Trust, on behalf:

of themselves and all others

similarly situated,

. 8405 (CM)

(JCF)

MEMORANDUM

Plaintiffs,
- against ­
PHOENIX LIFE INSURANCE COMPANY,
Defendant.
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
This case involves c

that Phoenix Life Insurance Company

("Phoenix") violated contractual obligations by improperly
the

("COl")

cost-of insurance

universal life insurance

rates

("PAUL")

on

policies.

sing

premium adjus
The plaintiffs now

move pursuant to Rule 37 of the Federal Rules of Civil Procedure
for an order compell
respons i ve to the p

Phoenix to complete production of documents
iffs'

first

set of requests within two

weeks.
Background
The facts relating to the plaintiffs' substantive claims are
set forth

detail in a decision in a re

1

case,

U.S.

Bank

6811,

2012

WL

5395249

(S.D.N.Y.

summarized only briefly here.

Nov.

5,

2012),

and

will

be

The PAUL policies at issue allow

policyholders to choose the amount they pay into their policy
accounts each month as long as the account balance is sufficient to
cover policy charges, including a cost of insurance charge.

The

policies permit the insurer to adjust cost of insurance rates, but
only based on certain specified factors, the most significant of
which is mortality.

The plaintiffs allege that Phoenix has

increased its cost of insurance rates notwithstanding the fact that
life expectancy has increased.
Phoenix

has

done

this

to

According to the plaintiffs,

inflate

its

fees

and

to

prompt

policyholders to allow their policies to lapse, thus relieving
Phoenix of the risk of ever having to pay out on the policies.
The plaintiffs served their First Set of Document Requests
Directed to Defendant Phoenix Life Insurance Company (“Plaintiffs’
First Document Requests”) on December 21, 2011.

(Exh. 1 to

Declaration of Seth Ard dated Nov. 19, 2012 (“Ard Decl.”)).

Since

that time, Phoenix has produced over 600,000 pages in response.
(Defendant Phoenix Life Insurance Company’s Memorandum of Law
Opposing Plaintiffs’ Motion to Compel Production of Documents By a
Date Certain (“Def. Memo.”) at 1; Declaration of Jason H. Gould
dated Dec. 5, 2012 (“Gould Decl.”), ¶ 8).

It has yet to review

approximately 130,000 documents that have been collected.
2

(Gould

Decl., ¶ 15). According to the plaintiffs, production has not been
completed in several major categories, including (1) communications
with

New

York

State

regulatory

agencies

concerning

the

COI

increases at issue, (2) documents exchanged with outside actuarial
firms relating to the COI increases, (3) experience studies used by
Phoenix to evaluate the necessity of a COI increase, and (4)
documents concerning the methodology used by Phoenix to determine
the appropriate interest rate.

(E-mail from Jason H. Gould to

Steven G. Sklaver dated Nov. 9, 2012, attached as Exh. 2 to Ard
Decl.).
Although the plaintiffs served their document request in
December 2011, Phoenix first proposed search terms for collecting
electronically stored information on April 13, 2012. (Letter of
Jason H. Gould dated April 13, 2012, attached as Exh. 3 to Ard
Decl.).

On April 23, 2012, the plaintiffs proposed additional

search terms (Letter of Steven G. Sklaver dated April 23, 2012,
attached as Exh. 4 to Ard Decl.), and on May 2, 2012, Phoenix
provided a list of the terms it agreed to run (Letter of Jason H.
Gould dated July 27, 2012 (“Gould 7/27/12 Letter”), attached as
Exh. 5 to Ard Decl., at 1).

At the end of July, Phoenix announced

that the stipulated search terms had returned too many documents
and that it would take several months to complete production based
on a reduced set of search terms.
3

(Gould 7/27/12 Letter).

In

addition, limitations in Phoenix’s search capabilities have come to
light.

For example, although “Project X” was the code name that

Phoenix assigned to the first COI increase, it did not suggest
“Project X” as a search term, apparently because its search engine
drops single characters like “X”, which would have resulted in a
search for “Project X” returning every document containing the word
“project.”

(Memorandum of Law in Support of Plaintiff’s [sic]

Motion to Compel Production of Documents By a Date Certain (“Pl.
Memo.”) at 5; “Update on Project X,” attached as Exh. 11 to Ard
Decl.; Def. Memo. at 10 n.5; Gould Decl., ¶ 14).
Additional factual background will be provided in connection
with the legal analysis below.
Discussion
Phoenix contends that the plaintiffs’ motion should be denied
on the ground that they did not comply with the requirement to meet
and confer in good faith.

(Def. Memo. at 3-5).

On the merits,

Phoenix maintains that the delay in completing production has
resulted from the sheer volume of information requested, and that
any prejudice to the plaintiffs can be ameliorated by prioritizing
the remaining disclosures.

(Def. Memo. at 5-7, 9-11).

Phoenix

argues that it cannot fully comply with Phoenix’s discovery demands
until it has completed production in the U.S. Bank case because one
of the categories of documents sought by the plaintiffs here is all
4

documents produced in that action.

(Def. Memo. at 7-8).

Further,

Phoenix notes that the plaintiffs have propounded a second set of
document requests and contends that its response to the first must
be coordinated with its response to this new demand.
at 8-9).

(Def. Memo.

Finally, Phoenix argues that the two-week deadline

proposed by the plaintiffs is unworkable and contends that if there
is to be any deadline, it should be set at May 31, 2012, with the
costs

of

completing

plaintiffs.

production

by

(Def. Memo. at 11-17).

that

date

shifted

to

the

I will address each of these

issues in turn.
A. Meet and Confer Requirements
A motion to compel discovery “must include a certification
that the movant has in good faith conferred or attempted to confer
with the person or party failing to make disclosure or discovery in
an effort to obtain it without court action.”
37(a)(1).

Fed. R. Civ. P.

Here, the plaintiffs satisfied that requirement.

As

early as July 2012, they conferred with Phoenix concerning the pace
of the production.

(Letter from Steven G. Sklaver dated July 6,

2012, attached as Exh. 6 to Ard Decl., at 1 (“This letter responds
to the issues addressed in our recent telephonic meet and
. . . .

confer

Plaintiffs served their document requests on Phoenix on

December 20, 2011.

It is now July 2012, six months later, and

Phoenix’s document production remains substantially incomplete.”)).
5

Immediately

prior

to

filing

the

instant

motion,

the

parties

communicated further, but Phoenix could only state that it would
take “several more months” to complete production.

(E-mail of

Steven G. Sklaver dated Nov. 1, 2012, attached as part of Exh. 2 to
Ard Decl.).

Phoenix argues that when the motion was filed, “the

parties had tentatively discussed plaintiffs’ concerns regarding
Phoenix’s document production timetable, but they had not discussed
Phoenix’s proposals to alleviate plaintiffs’ concerns and to avoid
formal motion practice.”

(Gould Decl., ¶ 4).

This is not

surprising, since Phoenix had not made any such proposal during the
months that the parties had been negotiating.

(Gould Decl., ¶ 5

(“Phoenix intended to propose . . . .”)).
A failure to meet and confer may be excused when to do so
would be futile.

See Gibbons v. Smith, No. 01 Civ. 1224, 2010 WL

582354, at *2 (S.D.N.Y. Feb. 11, 2010); Metrokane, Inc. v. Built
NY, Inc., No. 06 Civ. 14447, 2008 WL 4185865, at *3 (S.D.N.Y. Sept.
3, 2008); Myers v. Andzel, No. 06 Civ. 14420, 2007 WL 3256865, at
*1 (S.D.N.Y. Oct. 15, 2007).
lightly presumed.

Of course, futility should not be

But where, as here, a party has tried over an

extended period of time to obtain full compliance with discovery
demands and has received no firm commitment, it has no obligation
to continue negotiations that seemingly have no end.

See Bell v.

Lockheed Martin Corp., Civ. No. 08-6292, 2012 WL 1677240, at *1
6

(D.N.J. May 14, 2012); Bristol-Myers Squibb Co. v. Rhone-Poulenc
Rorer, Inc., No. 95 Civ. 8833, 1998 WL 2829, at *3 (S.D.N.Y. Jan.
6, 1998).
B. Cause and Effect of Delay
To be sure, the volume of discovery here is substantial.
Nevertheless, the delay in completing production appears largely
attributable to Phoenix’s inability to get a handle on its own
data.

Phoenix took four months even to suggest search terms.

Then, because of the limitations of its search tools, it could not
target critical documents, like those relating specifically to
“Project X.”

While the technical difficulties faced by Phoenix

might warrant some relaxation of a normal discovery timetable, they
do not excuse the extensive delay here.
Nor is the delay harmless.

The parties face a deadline of

June 4, 2013, to submit their expert reports in connection with the
merits of the case.
Phoenix

suggests

(Order dated Dec. 17, 2012, ¶ 2).

that

it

could

prioritize

discovery

Although
so

that

documents pertinent to expert testimony are produced first, it has
not

indicated

with

any

specificity

how

it

would

go

about

segregating such information.
C. Coordination of Discovery
Phoenix’s argument that it cannot complete document production
because that production is dependent on disclosures that it makes
7

in the U.S. Bank case is perplexing.

Phoenix can, of course,

produce now that which it has already produced in U.S. Bank and
then supplement its production here as it discloses additional
documents

in

that

case.

Indeed,

it

is

obligated

by

Rule

26(e)(1)(A) to do just that.
Phoenix’s contention that it must coordinate its responses to
the plaintiffs’ first document request with its responses to the
second is equally unavailing.

It is common for a party to be

required to respond to subsequent discovery demands before it has
completed production in response to earlier ones.

To the extent

appropriate, Phoenix can respond to the second request by referring
to or incorporating its responses to the first.
D. Deadline and Cost-Shifting
More than a year has passed since Phoenix was served with the
document requests at issue.
complete

document

unreasonable.

Its suggestion that it cannot now

production

for

another

five

months

is

But so, too, is the plaintiffs’ demand that Phoenix

do so in two weeks.

Balancing the time that Phoenix has already

had to respond to the plaintiffs’ requests against the work still
to be done, it is appropriate to require Phoenix to complete its
production by February 28, 2013.

That will allow a period for

follow-up discovery before the date that the expert reports are
due.
8

Relying on Boeynaems v. LA Fitness International, LLC, 285
F.R.D. 331 (E.D. Pa. 2012), Phoenix argues that the cost of its
completing production within any deadline other than one of its own
choosing should be shifted to the plaintiffs.
17).

(Def. Memo. at 14-

In Boeynaems, the court stated that
where (1) class certification is pending, and (2) the
plaintiffs have asked for very extensive discovery,
compliance with which will be very expensive, that absent
compelling equitable circumstances to the contrary, the
plaintiffs should pay for the discovery they seek. If
the plaintiffs have confidence in their contention that
the Court should certify the class, then the plaintiffs
should have no objection to making an investment. Where
the burden of discovery expense is almost entirely on the
defendant, principally because the plaintiffs seek class
certification, then the plaintiffs should share the
costs.

Id. at 341.

The presumption created by Boeynaems has never been

adopted in this circuit, and, more importantly, it runs counter to
the relevant principle announced by the Supreme Court: “Under [the
discovery] rules, the presumption is that the responding party must
bear

the

expense

of

complying

with

discovery

requests[.]”

Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1978).
Any presumption, of course, may be rebutted, and discovery
costs may therefore be shifted to the requesting party under
appropriate circumstances.
F.R.D.

309,

317-18

See Zubulake v. UBS Warburg LLC, 217

(S.D.N.Y.

2003)

(“Zubulake

I”);

Rowe

Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421,

9

428-29 (S.D.N.Y. 2002).

However, to do so requires an analysis of

a range of factors, including (1) the degree to which the request
for information is designed to discover germane information, (2)
the availability of the same information from different sources,
(3)

the

cost

controversy,

of

(4)

production
the

cost

as

of

compared

production

to
as

the

amount

compared

to

in
the

resources of each party, (5) the parties’ relative abilities to
control discovery costs and their incentives to control costs, (6)
the degree of importance of the issues being decided in the
litigation, and (7) the relative benefits to each of the parties in
obtaining the information at issue. Zubulake I, 217 F.R.D. at 322.
Of those factors, Phoenix has addressed only two, and even its
analysis of those elements is incomplete.

Phoenix has identified

the costs of discovery it has incurred to date (Def. Memo. at 15),
but not the cost of the additional discovery that it seeks to
shift.

Moreover, it has not discussed either the amount in

controversy or its own resources.
to

the

resources

of

the

resources of their counsel.

It has alluded in general terms

plaintiffs

or,

more

(Def. Memo. at 15).

precisely,

the

However, it is

far from clear why the resources of counsel should be taken into
consideration.

Certainly, Phoenix has not suggested that the

wherewithal of the law firms that it has engaged should be weighed
in the balance. More importantly, if the assets of counsel were to
10

be taken into consideration, the ability of clients to engage an
attorney of their choice would likely be hampered. Even if Phoenix
had otherwise made its case for cost-shifting, which it has not, I
would not include the resources of counsel in the analysis.
Furthermore, Phoenix has represented that the bulk of the
costs for completing production relate to review for privileged and
confidential communications.

(Gould Decl., ¶ 16).

Generally, it

is not appropriate to shift such costs because “the producing party
has the exclusive ability to control the cost of reviewing the
documents.”

Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 290

(S.D.N.Y. 2003) (“Zubulake II”).

Nevertheless, I will enter an

order pursuant to Rule 502(d) of the Federal Rules of Evidence that
will preclude the disclosure of privileged documents in this case
from

constituting

a

waiver

of

privilege

or

of

work

product

protection in this or any other proceeding, state or federal.
Although Phoenix is, of course, free to engage in as exacting a
privilege review as it wishes, entry of a Rule 502(d) order will
protect against waiver if it opts to conduct a more economical
analysis.

In addition, I will entertain a protective order that

would restrict dissemination of commercially sensitive information
and thereby allow Phoenix to expedite its review.
Conclusion
For the reasons set forth above, the plaintiffs’ motion to
11

compel (Docket no. 42) is granted to the extent that Phoenix shall
complete the production of documents responsive to the Plaintiffs'
First Document Request by February 28, 2013.

Phoenix's application

to shift the costs of that production to the plaintiffs is denied.
SO ORDERED.

C. FRANCIS IV
STATES MAGISTRATE JUDGE
Dated: New York, New York
~ecember

27,

20:2

Copies mailed this date:
Seth Ard,

Susman Godfrey LLP

654 Madison Ave.

New York, NY 10065

Steven G. Sklaver, Esq.

Frances S. Lewis, Esq.

Susman Godfrey LLP

1901 Avenue of the Stars, Suite 950

Los Angeles, CA 90067

Brian Patrick Perryman, Esq.

Jason H. Gould, Esq.

Waldemar J. Pflepson, Esq.

Jorden Burt LLP

1025 Thomas Jefferson Street, NW

Suite 400 East

Washington, D.C. 20007

Stephen J. Jorden, Esq.

Jorden Burt LLP

175 Powder Forest Drive

Simsbury, CT 06089

12

Patrick J, Feeley, Esq.

Jonathan R. Montcalm, Esq.

Dorsey & Whitney LLP

51 West 52nd St.

New York, NY 10019

Paul Meyer, Esq.

Managing Counsel

E-Discovery & Data Management

901 North Glebe Road

Arlington, VA 22203

13