Fleisher et al v. Phoenix Life Insurance Company
Filing
77
MEMORANDUM AND ORDER granting 45 Motion to Compel. For the reasons set forth above, the plaintiffs' motion to compel Towers Watson to produce the documents identified in the subpoena for documents due July 23, 2012 (Docket no. 45) is granted, provided that the plaintiffs pay the costs incurred by Towers Watson with the exception of review costs.(Signed by Magistrate Judge James C. Francis on 1/3/2013) Copies Mailed By Chambers. (ago)
UNITED STATES DISTRICT COURT
(ECF)
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -:
MARTIN FLEISHER, as trustee of
: 11 Civ. 8405 (CM) (JCF)
the Michael Moss Irrevocable Life :
Insurance Trust II and JONATHAN
:
MEMORANDUM
BERCK, as trustee of the John L.
:
AND ORDER
Loeb Jr. Insurance Trust, on behalf:
of themselves and all others
:
similarly situated,
:
:
Plaintiffs,
:
:
- against :
:
PHOENIX LIFE INSURANCE COMPANY,
:
:
Defendant.
:
- - - - - - - - - - - - - - - - - -:
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
The plaintiffs in this case allege that Phoenix Life Insurance
Company (“Phoenix”) violated contractual obligations by improperly
raising the cost-of-insurance (“COI”) rates on premium-adjustable,
universal life insurance (“PAUL”) policies.
The plaintiffs now
move pursuant to Rule 45(c)(2)(B)(i) of the Federal Rules of Civil
Procedure for an order compelling non-party Towers Watson to
produce documents in compliance with a subpoena.
Background
The facts relating to the plaintiffs’ claims are described in
U.S. Bank National Association v. PHL Variable Insurance Co., No.
12 Civ. 6811, 2012 WL 5395249 (S.D.N.Y. Nov. 5, 2012), and in a
prior decision in this case (Order dated Dec. 27, 2012).
1
The
owners of the policies at issue choose the amount they pay into
their PAUL policy accounts each month as long as the account
balance remains sufficient to cover policy charges, including a
cost of insurance charge.
Phoenix may adjust COI rates based on
certain specified factors including, most importantly, mortality.
The plaintiffs allege that Phoenix has increased its COI rates even
though life expectancy has risen and has done so in order to
increase its fees and encourage policyholders to let their policies
lapse.
In
2010,
Towers
Watson
provided
consulting
services
to
Phoenix, analyzing the COI increases at issue here. (A Proposal to
Provide Universal Life Re-determination of Cost of Insurance Rates
Support to Phoenix Life Insurance Company, attached as Exh. B to
Engagement of Towers Perrin for Consulting Services, attached as
Exh. C to Declaration of Gina Collopy O’Connell dated Dec. 5, 2012
(“O’Connell Decl.”), at 6). In a subpoena dated June 20, 2012, and
returnable on July 23, 2012, the plaintiffs requested production by
Towers Watson of all documents relating to the COI increases,
including documents provided to the New York State Department of
Insurance.
(Subpoena dated June 20, 2012, attached as Exh. A to
Declaration of Seth Ard dated Nov. 19, 2012 (“Ard Decl.”); Proof of
Service dated June 22, 2012, attached as Exh. B to Ard Decl.).
At
the same time, the plaintiffs provided notice of the subpoena to
2
Phoenix.
(E-mail of Helen Danielson dated June 20, 2012, attached
as Exh. C to Ard Decl.).
On July 2, 2012, Towers Watson objected
to the subpoena on a variety of grounds, including that the
requested documents might include communications subject to the
attorney-client privilege or covered by the work product doctrine.
(Letter of Paul A. Meyer dated July 2, 2012, attached as part of
Exh. D to Ard Decl., at 3).
Thereafter, it indicated that it had
provided the documents at issue to counsel for Phoenix, who had
concluded that many, if not all, of the documents were immune from
discovery. (E-mail of Paul Meyer dated Sept. 26, 2012, attached as
Exh. I to Ard Decl.).
privilege log.
On
October
Towers Watson did not, however, supply a
(Ard Decl., ¶ 10).
23,
2012,
Phoenix’s
counsel
indicated
in
a
telephone conference with the plaintiffs’ attorneys that Phoenix
was asserting privilege with respect to all of the Towers Watson
documents.
(Ard Decl., ¶ 11; E-mail of Steven G. Sklaver dated
Nov. 1, 2012 (“Sklaver 11/1/12 E-mail”), attached as Exh. J to Ard
Decl.).
It reiterated this position on November 9, 2012.
(E-mail
of Jason H. Gould dated Nov. 9, 2012, attached as Exh. K to Ard
Decl.).
Although the plaintiffs asked that Phoenix submit a
privilege log to support its position (Sklaver 11/1/12 E-mail),
none was forthcoming until after the plaintiffs had filed the
instant motion
(Letter of Jason H. Gould dated Dec. 5, 2012
3
(“Privilege Log”), attached as Exh. H to Declaration of Jason H.
Gould dated Dec. 5, 2012).
The plaintiffs now move for an order compelling Towers Watson
to comply with the subpoena.
They argue that the documents are
neither privileged nor protected from discovery by the work product
doctrine because they involve an actuarial analysis that was not
performed “because of” litigation.
(Memorandum of Law in Support
of Plaintiffs’ Motion to Compel Towers Watson to Produce Documents
in Compliance with Subpoena for Documents Due July 23, 2012 (“Pl.
Memo.”) at 4-8).
Furthermore, the plaintiffs contend that Phoenix
waived (or, more accurately, forfeited) any privilege or work
product protection by (1) failing to make a timely motion to quash,
(2) failing to provide a privilege log, and (3) voluntarily
disclosing the documents to the New York Insurance Department.
(Pl. Memo. at 8-12).
Both Phoenix and Towers Watson oppose the
motion, and Towers Watson maintains that if it is required to
comply, the cost should be borne by the plaintiffs.
(Non-Party
Towers Watson’s Response and Objection to Plaintiffs’ Motion to
Compel Towers Watson to Produce Documents in Compliance with
Subpoena for Documents Due July 23, 2012 (“Towers Watson Memo.”) at
5-6; Non-Party Towers Watson’s Sur-Reply to Plaintiffs’ Motion to
Compel Towers Watson to Produce Documents in Compliance with
Subpoena for Documents Due July 23, 2012 (“Towers Watson Sur4
Reply”)).
I will address each of these issues, though not in the
order in which they were raised by the parties.
Discussion
A. Privilege Log
Rule 45(d)(2)(A) of the Federal Rules of Civil Procedure
requires that an entity responding to a subpoena raise any claim of
privilege or work product protection “expressly” and “describe the
nature of the withheld documents . . . in a manner that . . . will
enable the parties to assess the claim.”
Thus,
[a] party receiving a discovery request who asserts a
privilege or work product protection but fails to
disclose the nature of that claim and provide a
description is at risk of waiving the privilege or
protection. Courts consistently have held that such a
party is required to produce a document index or
privilege log, and that the failure to produce a log of
sufficient detail constitutes a waiver of the underlying
privilege or work product claim.
9A Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure (“Wright & Miller”) § 2464 (3d ed. 2008); see In re
Chevron Corp., 749 F. Supp. 2d 170, 180-86 (S.D.N.Y. 2010);
OneBeacon Insurance Co. v. Forman International, Ltd., No. 04 Civ.
2771, 2006 WL 3771010, at *4 (S.D.N.Y. Dec. 15, 2006); In re
Application for Subpoena to Kroll, 224 F.R.D. 326, 329 (E.D.N.Y
2004).
Here, Phoenix’s privilege log was both tardy and inadequate.
To be sure, generating a log may be time-consuming, and parties
5
responding to wide-ranging discovery demand should be given some
leeway.
But here, Phoenix received notice of the subpoena in June
and produced nothing to support its claims of privilege and work
product until December, more than five months later, after the
plaintiffs had moved to compel compliance.
Nor did Phoenix seek
relief from the Court in the interim.
Even if I were to excuse Phoenix’s delay, the log that it has
now submitted is wholly insufficient.
The purpose of a log is to
permit the opposing party and the court to evaluate claims of
privilege or work product protection.
to
the
potential
privilege
log,
burden
and
so
of
Again, courts are not blind
generating
have
a
authorized
document-by-document
parties
purportedly privileged documents by category.
to
identify
See GenOn Mid-
Atlantic, LLC v. Stone & Webster, Inc., No. 11 Civ. 1299, 2011 WL
5439046,
at
*11
(Nov.
10,
2011);
In
re
Rivastigmine
Litigation, 237 F.R.D. 69, 87 (S.D.N.Y. 2006).
Patent
Here, however, the
catalogue proffered by Phoenix falls far short of an acceptable
categorical log.
It lists only four broad classes of documents:
“documents defining scope of Towers Watson engagement,” “policy
data,” “draft reports,” and “Towers internal project administration
materials.”
(Privilege Log).
Only within the draft report
category are any individual documents identified, but even there,
the
description
that
purports
to
6
apply
to
all
of
them
is
exceedingly general and unhelpful.
By failing to provide a
meaningful log, then, Phoenix has forfeited any claim of privilege
or work product protection.
B. Timeliness
The plaintiffs argue that Phoenix also waived its privilege
claims by not moving to quash the subpoena in a timely fashion.
(Pl. Memo. at 8-10).
Towers Watson did object to the subpoena and
asserted potential claims of privilege within the time allowed.
Fed. R. Civ. P. 45(c)(2)(B) (“The objection must be served before
the earlier of the time specified for compliance or 14 days after
the subpoena is served.”).
Normally, this would suffice to shift
the burden to the plaintiffs to move to compel compliance with the
subpoena.
Wright & Miller § 2464.
However,
inadequate.
Towers
Watson’s
objection
was
substantively
The Second Circuit has stated:
While we are mindful that the investment of time
necessary to review all responsive documents for
privileged material does not lend itself to the limited
fourteen (14) day time period, a person responding to a
subpoena should at least assert any privileges within the
14 days provided in Rule 45(c)(2)(B). A full privilege
log may follow within a reasonable time, or if more time
is needed an extension may be sought from the trial
court.
In re DG Acquisition Corp., 151 F.3d 75, 81 (2d Cir. 1998)
(internal quotation marks, citations, and alterations omitted).
Since, as discussed above, neither Towers Watson nor Phoenix has
7
ever submitted an adequate privilege log, Towers Watson did not
object properly within the time permitted.
C. Determination of Privilege or Work Product Protection
“It is axiomatic that the burden is on a party claiming the
protection of a privilege to establish those facts that are the
essential elements of the privileged relationship, a burden not
discharged by mere conclusory or ipse dixit assertions.”
In re
Grand Jury Subpoena Dated Jan. 4, 1984, 750 F.2d 223, 224-25 (2d
Cir. 1984) (citations and internal quotation marks omitted); accord
von Bulow by Auersperg v. von Bulow, 811 F.2d 136, 144 (2d Cir.
1987); Schanfield v. Sojitz Corp. of America, 258 F.R.D. 211, 214
(S.D.N.Y.
2009).
protection
bears
applicability.
Similarly,
the
the
“heavy
proponent
burden”
of
of
work
product
establishing
its
In re Grand Jury Subpoena Dated July 6, 2005, 510
F.3d 180, 183 (2d Cir. 2007).
A
party
considering
a
course
of
conduct
with
legal
consequences may wish to evaluate its exposure to future litigation
and, in doing so, generate attorney-client communications and work
product.
See, e.g., RLS Associates, LLC v. United Bank of Kuwait,
PLC, No. 01 Civ. 1290, 2003 WL 1563330, at *3-5 (S.D.N.Y. March 26,
2003).
However, documents created for business purposes would not
be privileged, see In re County of Erie, 473 F.3d 413, 419 (2d Cir.
2007); Fox News Network, LLC v. United States Department of the
8
Treasury, No. 09 Civ. 3045, 2012 WL 5931808, at *4 (S.D.N.Y. Nov.
26, 2012), and those that “would have been created irrespective of
the anticipated litigation” would not receive protection as work
product, RLS Associates, 2003 WL 1563330, at *5.
Because Phoenix has failed to provide more than the most
general arguments in favor of its privilege and work product
claims, it has failed to carry its burden.
While some of the
documents at issue may indeed be immune from discovery, others are
likely not; indeed, it would be surprising if Phoenix had not
obtained
an
actuarial
analysis
in
connection
with
the
COI
increases, even if it had no concerns about its legal exposure.
Yet, Phoenix has given me no basis for differentiating between
those documents that might be related to its legal concerns and
those that are business-oriented.
Although it has produced five
documents for in camera review (O’Connell Decl., Exhs. A, B, C, D,
E), there is no reason to believe that they are in any way
representative. Accordingly, even if Phoenix had not forfeited its
claims of privilege and work product, it has failed to establish
them.
D. Waiver by Disclosure
After Phoenix implemented the COI increases, it received
requests
for
information
Department (“NYSID”).
from
the
New
York
State
Insurance
(E-mail of Ruth Gumaer dated Jan. 4, 2011,
9
attached as Exh. F to O’Connell Decl.). Phoenix initially resisted
divulging the Towers Watson report on the ground that it was
privileged and confidential.
(Letter of Kathleen H. McGah dated
Feb. 8, 2011, attached as Exh. G to O’Connell Decl., at 23).
Nevertheless, when NYSID rejected the claims of privilege, Phoenix
produced the report, albeit with the caveats that “the outside
actuarial
guidance
was
not
a
prerequisite
to
Phoenix’s
determination to increase the COI rate” and that it was not waiving
any privileges. (Letter of Kathleen H. McGah dated March 30, 2011,
attached as Exh. I to O’Connell Decl., at 2).
The plaintiffs now
argue that by disclosing the Towers Watson report to NYSID, Phoenix
waived any privilege both as to the report and as to any other
document relating to the same subject matter.
Because
Phoenix
has
both
failed
to
meet
its
burden
of
establishing its claims of privilege and work product protection
and because, in any event, it has forfeited such claims by failing
to submit a sufficient privilege log and to assert adequate, timely
objections, both the final Towers Watson report and the related
documents must be produced.
Whether Towers Watson’s disclosure of
the
compelled,
report
to
NYSID
was
whether
that
disclosure
constituted a waiver of privilege and work product immunity, and
what the scope of that waiver might be are issues that, therefore,
need not be decided.
10
E. Costs
Finally, Towers Watson contends that the plaintiffs should
reimburse it for the costs of responding to the subpoena.
(Towers
Watson Memo. at 5-6; Towers Watson Sur-Reply at 1-3).
“Cost-
shifting is particularly appropriate in the context of subpoenas,
since Rule 45 directs courts to minimize the burden on nonparties.”
U.S. Bank, 2012 WL 5395249, at *4.
Nevertheless, the
plaintiffs argue that Towers Watson has demonstrated bias in favor
of Phoenix by making the documents at issue available to it without
charge and therefore should be precluded from seeking costs from
the plaintiffs.
(Reply Brief in Support of Plaintiffs’ Motion to
Compel Towers Watson to Produce Documents in Compliance with
Subpoena for Documents Due July 23, 2012, at 10).
There has been no display of favortism.
Towers Watson
provided the documents to Phoenix as it was obligated to do in
order for Phoenix to review them for privilege.
Moreover, Towers
Watson did not agree to absorb the costs of producing the documents
to Phoenix. (Towers Watson Sur-Reply at 3 (“In fact, Towers Watson
has
an
existing
contractual
relationship
with
[Phoenix]
that
governs its obligations to reimburse Towers Watson for certain
costs.”)).
Accordingly, the plaintiffs shall bear the costs
incurred by Towers Watson in producing the subpoenaed documents to
it. That shall not include any expenses related to Towers Watson’s
11
review of the documents.
See
Conclusion
For the reasons set forth above,
the plaintiffs' motion to
compel Towers Watson to produce the documents identified in the
subpoena
for
documents
due
July
23,
2012
(Docket
no.
granted,
provided that the plaintiffs pay the costs incurred by
Towers Watson with the exception of review costs.
SO ORDERED.
~
~.~~7t-
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
Dated: New York, New York
January 3, 2013
Copies mailed this date:
Seth Ard, Esq.
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
12
45)
is
Stephen J. Jorden, Esq.
Jorden Burt LLP
175 Powder Forest Drive
Simsbury, CT 06089
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
Sharon L. Levine, Esq.
Paul Kizel, Esq.
Lownstein Sandler PC
1251 Avenue of the Americas
17th Floor
New York, NY 10020
13
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