Griggs v. Vanguard Group Inc The et al

Filing 74

ORDER granting in part and denying in part 47 Plaintiff's Motion to Compel Discovery Responses as more fully set forth herein. Additional discovery responses or document production required by this Order shall be completed by Defendants within 14 days of the filing of this Order. The respective requests for payment of attorneys' fees and costs made by Plaintiff and Defendants are both denied. Signed by Honorable Scott L. Palk on 6/18/2019. (md)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
JANE B. GRIGGS, as Personal
)
Representative of the Estate of
)
Richard O. Bertschinger, Sr., deceased, )
)
Plaintiff,
)
)
v.
)
)
THE VANGUARD GROUP, INC., and
)
VANGUARD MARKETING CORP.,
)
)
Defendants.
)

Case No. CIV-17-1187-SLP

ORDER
Before the Court is Plaintiff’s Motion to Compel Discovery Responses [Doc. No.
47]. It is at issue. See Resp., Doc. No. 65; Reply, Doc. No. 69.1 After Defendants removed
this case to this Court, they requested that Plaintiff’s claims against Vanguard Marketing
Corp. be compelled to Financial Industry Regulatory Authority (“FINRA”) arbitration and
that Plaintiff’s claims against Vanguard Group, Inc. be dismissed. Plaintiff then put the
“making” of the alleged arbitration agreements at issue, so the Court authorized limitedscope discovery in advance of the determination required by 9 U.S.C. § 4. See Order of
Oct. 31, 2018, Doc. No. 27. The only question on which discovery has been authorized in
this case is whether Mr. Bertschinger lacked mental capacity to enter into the arbitration

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Plaintiff also filed a notice correcting a statement made in her motion. See Doc. No. 52.

clauses at issue—which were executed by Mr. Bertschinger on August 11, 1999 and on
September 4, 2001.2 See Doc. Nos. 10-2, 10-4.
I.

Relevant discovery standard
Federal Rule of Civil Procedure 26(b)(1) applies to Plaintiffs’ motion, and it

provides in relevant part:
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.
“When requested discovery appears relevant, the party objecting to production has the
burden of establishing the lack of relevance by demonstrating that the request falls outside
the scope set forth in Rule 26(b)(1), or that the requested discovery is of such marginal
relevance that the potential harm occasioned by discovery would outweigh the ordinary
presumption in favor of broad disclosure.” Shotts v. Geico Gen. Ins. Co., No. CIV-161266-R, 2017 WL 4681797, at *1 (W.D. Okla. Oct. 17, 2017) (citation omitted).

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Defendants have asserted that Mr. Bertschinger “again acknowledged his obligation to
arbitrate any dispute in May 2009” (Mot. to Compel Arbitration 7 n.8, Doc. No. 10), but
indicate that they will not rely on the “May 2009 reauthorization of the 2001 Margin
Agreement” in seeking to have arbitration compelled because it “has no bearing on whether
[Plaintiff] is obligated to arbitrate.” Resp. 8 n.3, Doc. No. 65. Based on Defendants’
current assertion, the Court does not intend to consider the May 2009 document in making
its decision of whether to compel arbitration. Accordingly, the Court will not compel
Defendants’ production of additional discovery materials based on the May 2009 document
because whether Mr. Bertschinger lacked mental capacity in May 2009 is not relevant to
the limited issues in this case at this time.
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II.

Discussion and analysis
Mental capacity to contract is evaluated as of the date of the contract’s execution.

See Evans v. First Nat’l Bank of Stillwater, 146 P.2d 111, 113 (Okla. 1944) (“[T]he test of
the capacity to make a contract is whether the party had the ability to comprehend in a
reasonable manner the nature and effect of the act in which he engaged and the business
he transacted.” (quotation marks and citation omitted) (citing Charley v. Norvell, 221 P.
255 (Okla. 1924))); cf. Charley, 221 P. at 257 (“It must be borne in mind that at the time
the release was executed in the case at bar the plaintiff was of full age, and the presumption
of contractual capacity cannot be overthrown merely . . . by the fact that a short time after
the release was executed a guardian was appointed by the county court on the ground of
improvidence.”). This time-of-transaction evaluation is applicable regardless of whether
New York, Oklahoma, or Pennsylvania law applies to the issue of mental capacity.3 See
Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46, 50 (Pa. Super. Ct. 2017) (“Where
mental capacity to execute an instrument is at issue, the real question is the condition of
the person at the very time he executed the instrument in question.” (quotation marks
omitted) (quoting Estate of McGovern v. Pa. State Emps. Ret. Bd., 517 A.2d 523 (Pa.
1986), overruling on other grounds recognized by Vine v. Pa. State Emps. Ret. Bd., 9 A.3d
1150 (Pa. 2010))); Sears v. First Pioneer Farm Credit, 850 N.Y.S.2d 219, 222 (N.Y. App.
Div. 2007) (“[T]o prevail, plaintiffs had to demonstrate that [the alleged-to-be3

The laws of these states are potentially applicable to issues in this case. The Court need
not, and does not, engage in a choice-of-laws analysis in order to settle the instant discovery
dispute. Neither Plaintiff nor Defendants urge the application of Pennsylvania law to the
issues addressed herein, so the Court does not address Pennsylvania law any further.
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incapacitated person’s] mind was so affected as to render him wholly and absolutely
incompetent to comprehend and understand the nature of the transaction and, further, that
such incompetency/incapacity existed when he executed the loan documents . . . .”
(quotation marks and citations omitted)).
Plaintiff asserts that the time period relevant to the issue of mental capacity is
broader, at least if New York law applies. Pointing to Ortelere v. Teachers’ Retirement
Board, Plaintiff stresses that case’s reliance on the Restatement (Second) of Contracts and
part of its test for a voidable contract: “(1) A person incurs only voidable contractual duties
by entering into a transaction if by reason of mental illness or defect . . . (b) he is unable to
act in a reasonable manner in relation to the transaction and the other party has reason to
know of his condition.” 25 N.Y.2d 196, 204 (1969) (quotation marks omitted).4 Under
this standard, Plaintiff asserts that Defendants’ knowledge of Mr. Bertschinger’s capacity

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This rule is now located at Restatement (Second) of Contracts § 15 (Am. Law Inst. 1981),
which states in full:
(1)
A person incurs only voidable contractual duties by entering into a
transaction if by reason of mental illness or defect
(a)
he is unable to understand in a reasonable manner the nature
and consequences of the transaction, or
(b)
he is unable to act in a reasonable manner in relation to the
transaction and the other party has reason to know of his condition.
(2)
Where the contract is made on fair terms and the other party is without
knowledge of the mental illness or defect, the power of avoidance under
Subsection (1) terminates to the extent that the contract has been so
performed in whole or in part or the circumstances have so changed that
avoidance would be unjust. In such a case a court may grant relief as justice
requires.
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is relevant, opening up the period before (and, according to Plaintiff, the period after) Mr.
Bertschinger executed the August 1999 and September 2001 documents to discovery.
Without reaching the issue of what State’s laws apply, the Court agrees with
Plaintiff that Defendants’ knowledge of Mr. Bertschinger’s mental capacity to enter into
the arbitration clauses at issue in August 1999 and September 2001 is relevant and is likely
to be revealed by communications between Defendants and Mr. Bertschinger, at least for
the periods before the agreements were executed—as well as, as previously determined,
for the period of time extending to three months after the latter of agreements at issue in
this case: December 4, 2001. See Order of May 7, 2019, at 6, Doc. No. 45. That is,
Defendants’ knowledge in August 1999 and September 2001—based on their prior
interactions with Mr. Bertschinger—is relevant regardless of whether Oklahoma or New
York law applies.
However, the Court does not see the relevance—as to the limited issues on which
discovery has been authorized—of communications between Defendants and Mr.
Bertschinger that took place after December 4, 2001.5 Such communications do not shed
light on Mr. Bertschinger’s mental capacity in August 1999 or September 2001; nor do
they show what knowledge of Mr. Bertschinger’s mental capacity Defendants had during
those same prior periods. In light of these general determinations, the Court turns to
Plaintiff’s individual discovery requests:
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The Court’s determination regarding after-agreement-execution communications might
be different if, e.g., Defendants were arguing sufficient performance of an agreement such
that avoidance was no longer possible or another qualifying circumstance. See Restatement
(Second) of Contracts § 15(2). Defendants make no such arguments in this case.
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A.

Plaintiff’s Interrogatory No. 1 and Request for Production No. 1

Plaintiff seeks recordings of communications between Mr. Bertschinger and
Defendants’ employees or representatives from January 1, 1998, through October 4, 2016
(Mr. Bertschinger’s date of death), along with “identification of the software requirements
for accessing such data, and the manner of storage and backup of all such data.” Pl.’s
Interrog. No. 1, Doc. No. 47-1. The Court is inclined to grant Plaintiff’s request for
production of communications—but only as to communications had from January 1, 1998,
through December 4, 2001 (three months after Mr. Bertschinger executed the second
agreement at issue in this case). As Defendants have indicated that they do not have any
recordings from before November 2010—due to their document destruction policy that
was in place prior to them being served with this lawsuit—no recordings exist for the Court
to compel production of. Plaintiff’s request is therefore denied.
As to Plaintiff’s request for Defendants’ audio recording policies and data storage
policies, the Court does not see any relevance between them and the issues on which
discovery has been authorized. Even if Defendants (i) had policies in place that they
violated (as Plaintiff seems to hypothesize) or (ii) did not have policies in place that they
should have had under FINRA regulations, such violations do not reveal any relevant
information regarding Mr. Bertschinger’s mental capacity at the relevant times, or even
Defendants’ knowledge about his mental capacity at such times.6 Plaintiff’s request is
therefore denied.
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The Court’s ruling regarding Plaintiff’s request for software and data policies applies to
all of Plaintiffs’ discovery requests in which she requests such policies.
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B.

Plaintiff’s Interrogatory Nos. 2-3 and Request for Production
Nos. 2-3

Plaintiff requests production of “notes, diaries, memoranda, or other documentation
of any conversations, telephone calls, or other communications” between Mr. Bertschinger
and Defendants’ employees or representatives from January 1, 1998, through October 4,
2016.

Pl.’s Interrog. No. 2, Doc. No. 47-1.

Plaintiff also seeks “all written

communications” between Mr. Bertschinger and Defendants’ employees or representatives
from the same period. Pl.’s Interrog. No. 3, Doc. No. 47-1. Plaintiff asserts that all
communications between Mr. Bertschinger and Defendants are relevant because “records
of later communications . . . and [Defendants’] records of later perceptions regarding
[their] communications [with Mr. Bertschinger] could show what [Defendants] knew or
should have known during the time [period from which they] have no records.” Mot. 8,
Doc. No. 47.
The Court agrees that Defendants should produce communications or
documentation of communications between Mr. Bertschinger and Defendants’ employees
or representatives created from January 1, 1998, through December 4, 2001, as well as any
later-in-time records explicitly referencing communications that occurred during the period
of January 1, 1998, through December 4, 2001 (to the extent any exist which have not been
produced previously). The Court anticipates that Defendant will be able to search its
written records using terms agreed to between Plaintiff’s and Defendants’ counsels to
determine whether any such later-in-time references exist. In compelling production of
limited later-in-time records, the Court is not ordering Defendant to review or produce the

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194 audio records from during or after November 2010; the burden or reviewing all such
audio recordings outweighs any benefit from the slim likelihood of references therein to
Mr. Bertschinger’s capacity more than nine years prior. See Fed. R. Civ. P. 26(b)(1).
Plaintiff’s argument for production of all communications or records from the postDecember-2011 period based on the chance that some record could theoretically reference
an earlier-in-time period is too tenuous to use as a basis to compel production of additional
documents except to the limited extent indicated immediately supra. Instead, it is closer
to the proverbial fishing expedition based on nothing more than a hunch and potential,
which is insufficient to pull the requests within the realm of appropriate proportionality per
Rule 26(b)(1). See Grynberg .v Ivanhoe Energy, Inc., 490 F. App’x 86, 105 (10th Cir.
2012) (unpublished). Plaintiff’s request is therefore granted in part and denied in part.
C.

Plaintiff’s Interrogatory No. 4 and Request for Production No. 4

Plaintiff seeks “internal communications (i.e., between or among [Defendants’]
employees, agents, or vendors) regarding Mr. Bertschinger’s age, mental capacity,
demeanor, hearing ability, and ability to understand information.” Pl.’s Interrog. No. 4,
Doc. No. 47-1.

The Court agrees with Plaintiff that Defendants should produce

communications or documentation of communications between Defendants’ employees or
representatives created from January 1, 1998, through December 4, 2001 referencing “Mr.
Bertschinger’s age, mental capacity, demeanor, . . . and ability to understand information.”
Id. The Court further agrees with Plaintiff that Defendant should produce any later-in-time
records explicitly referencing “Mr. Bertschinger’s age, mental capacity, demeanor, . . . and
ability to understand information” as such abilities or characteristics existed during the
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period through December 4, 2001, to the extent such records may be located by agreedupon search terms. See supra Part II.B.
Plaintiff’s request for internal communications, if any, regarding Mr. Bertschinger’s
hearing ability is denied; Plaintiff has not indicated how Mr. Bertschinger’s lack of hearing
ability, if any such lack of ability existed, impacted his mental capacity.
Plaintiff’s request is therefore granted in part and denied in part.
D.

Plaintiff’s Interrogatory Nos. 9-10 and Request for Production
No. 5

Plaintiff asks for identification of “every . . . representative, agent, or employee [of
Defendants] who had telephonic communication with Mr. Bertschinger from January 1,
1998, through his death on October 4, 2016.” Pl.’s Interrog. No. 9, Doc. No. 47-1. Plaintiff
further requests “[a]ll data regarding the time, date, and duration of all telephone
communications” between Mr. Bertschinger and Defendants’ employees or representatives
from the same period. Pl.’s Req. for Produc. No. 5, Doc. No. 47-1. The Court is inclined
to grant Plaintiff’s request for production of such information—but only as to those persons
engaging in communications had from January 1, 1998, through December 4, 2001. As
Defendants have indicated that they do not have any call data for the period prior to 2003,
no information exists for the Court to compel production of. Plaintiff’s request is therefore
denied.
Plaintiff also requests identification of “every Registered Representative . . .
assigned to Mr. Bertschinger’s accounts from 1998 until Mr. Bertschinger’s death in
October of 2016.” Pl.’s Interrog. No. 10, Doc. No. 47-1. Defendants have not indicated

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that they lack such information for the period of January 1, 1998, through December 4,
2001 (in contrast to how they indicated that they lack information regarding those persons
who communicated with Mr. Bertschinger during the same period). The Court agrees with
Plaintiff that this information is relevant to Plaintiff’s ability to determine Mr.
Bertschinger’s mental capacity, and the Court thereby compels Defendants’ production of
information responsive to Plaintiff’s Interrogatory No. 10 for the period of January 1, 1998,
through December 4, 2001. Plaintiff’s request is therefore granted in part and denied in
part.7
E.

Plaintiff’s Interrogatory No. 8 and Request for Production No. 7

Plaintiff seeks Defendants’ “supervisory manuals, policies, procedures, and
qualifications . . . [which were] in place on . . . August 4, 1999 through August 16, 1999
[or in] September 4, 2001, or [in] May 2009, regarding . . . (i) possible diminished capacity;
(ii) level of understanding of risks; (iii) level of understanding of documents, instruments,
or agreements; [or] (iv) engaging with and providing services to elderly persons, persons
with diminished capacity, vulnerable adults, or persons who require assistance in handling
their financial affairs.” Pl.’s Interrog. No. 8, Doc. No. 47-1. As indicated supra, even if
Defendants violated their own policies or policies that they should have had in place per

7

To the extent Plaintiff intends to depose any persons identified by Defendants in their
answer to Interrogatory No. 10 (if any such persons exist), the Court does not rule on the
appropriateness of a deposition, which is not before the Court at this time. The Court does
not find Plaintiff’s request regarding Interrogatory No. 10 moot because it cannot
determine from the parties’ filings whether Defendants have identified registered
representatives, if any, for (i) only August 1999 and September 2001 (which is insufficient)
or (ii) the entire period of January 1998 through December 2001 (which is sufficient).
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FINRA regulations, such actions would not reveal any relevant information regarding Mr.
Bertschinger’s mental capacity or what Defendants knew about the same during relevant
periods. These discovery requests are merits-based requests upon which the Court has not
authorized discovery at this time.
Plaintiff also argues that these documents, and others she has requested from
Defendants, are necessary to combat four propositions urged by Defendants—(i) “Mr.
Bertschinger was a savvy and skilled investor,” (ii) his “brokerage account was entirely
self-directed,” (iii) “Mr. Bertschinger approached [Defendants] on his own volition and
opened his accounts,” and (iv) “Mr. Bertschinger initiated all contacts with [Defendants],
made all of the investments decisions in his account, and directed all of [his] trading
activity.” Reply 3-4, Doc. No. 69 (quotation marks omitted). As the Court does not see
how any of these assertions by Defendants is relevant to Mr. Bertschinger’s mental
capacity, the Court likewise does not see how documents allowing Plaintiff to combat
Defendants’ assertions are relevant at this time. Plaintiff’s request is therefore denied.
F.

Plaintiff’s Interrogatory Nos. 11-12 and Request for Production
No. 8

Plaintiff asks for identification of those “trades and transactions (including margin
transactions) in Mr. Bertschinger’s accounts prompted review by [Defendants] for
purposes of compliance, quality control, performance evaluation, or any other measure
used by [Defendants during certain periods of time],” as well as “all notices, reports,
indications, or suspicions of suspicious or unsafe activity in Mr. Bertschinger’s accounts
for [the same periods of time], including all actions taken upon such notice, report,

11

indication, or suspicion.” Pl.’s Interrog. Nos. 11-12, Doc. No. 47-1. Defendants now
indicate that no responsive information or documents exist, so Plaintiff’s request is denied
as moot.8 See Sithon Mar. Co. v. Holiday Mansion, No. Civ.A.96-2262-EEO, 1998 WL
638372, at *4 (D. Kan. Sept. 14, 1998) (“Although averments made under oath may be
preferable, they are not necessary to resolve every dispute regarding the existence of
documents.

Statements within the response [to a motion] suffice in [certain]

instance[s]. . . . The signature requirement of [Rule] 11 or 26(g) provides sufficient
verification for accepting the fact that the sought documents [do not] exist . . . .”).
III.

Rule 37(a)(5)(A) requests for attorneys’ fees and costs
Both Plaintiff (Mot. 18, Doc. No. 47) and Defendants (Resp. 25, Doc. No. 65)

request that the opposing side pay their attorneys’ fees and costs pursuant to Rule
37(a)(5)(A). The Court finds the parties’ respective positions to be substantially justified,
making no award of attorneys’ fees and costs to either side appropriate. See Fed. R. Civ.
P. 37(a)(5)(A)(ii).
IV.

Conclusion
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Compel Discovery

Responses [Doc. No. 47] is GRANTED IN PART and DENIED IN PART as set forth
herein. Additional discovery responses or document production required by this order shall
be completed by Defendants within 14 days of the filing of this Order. The respective

8

Defendants do not indicate why they did not simply state the lack of responsive
information or documents in responding to Plaintiff’s discovery requests in the first place
instead of doing so only upon the filing of a motion to compel.
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requests for payment of attorneys’ fees and costs made by Plaintiff and Defendants are
both DENIED.
IT IS SO ORDERED this 18th day of June, 2019.

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