Dziadek v. The Charter Oak Fire Insurance Company

Filing 70

OPINION AND ORDER granting in part and denying in part 49 Motion to Compel and granting 45 Fourth MOTION to Continue. Signed by U. S. District Judge Roberto A. Lange on 3/3/14. (SKK)

7
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
LAURA DZIADEK,

os

CIV11-4134-RAL

Plaintiff,
OPINION AND ORDER

vs.

GRANTING IN PART

THE CHARTER OAK FIRE

AND DENYING IN PART

INSURANCE COMPANY, doing

SECOND MOTION

business as Travelers,
Defendant.
I.

TO COMPEL
*

INTRODUCTION

Plaintiff Laura Dziadek (Dziadek) sued Defendant The Charter Oak Fire Insurance
Company, doing business as Travelers (Charter Oak) alleging entitlement to certain insurance
benefits and for bad faith refusal to pay. Doc. 1; Doc. 15. This case has a protracted discovery

history. This Court has observed that "[i]t appears that both parties share blame for the sluggish
pace of discovery." Doc. 36 at 1. Dziadek has filed her Second Motion to Compel, Doc. 49,

seeking to compel responses to fourteen Requests for Production (Requests) and six
Interrogatories. Dziadek also seeks attorney's fees. Doc. 49. Charter Oak opposes the motion.
Doc. 58. For the reasons stated below, this Court grants in part and denies in part Dziadek's
Second Motion to Compel. This Court denies Dziadek's motion for attorney's fees.
II.

FACTS PERTINENT TO DISCOVERY DISPUTE

Dziadek's Second Motion to Compel seeks to compel responses beyond what Charter
Oak thus far has provided in "Defendant's Response to Plaintiffs Request for Production of
Documents (Third Set)," Doc. 59-2, and "Defendant's Responses to Interrogatories (First Set),"

Doc. 59-17.' Dziadek made fifty-six requests for production and propounded seventeen
interrogatories. Doc. 59-2; Doc. 59-17. Defendant's Responses were provided to Dziadek's
former counsel on December 6,2012. Doc. 59-2 at 31; Doc. 59-17 at 12. This Court's Second
Amended Scheduling Order, Doc. 32, was in place at that time.

The Second Amended

Scheduling Order stated:

1.

All

discovery, including

expert discovery, shall be

commenced in time to be completed by May 1, 2013. . . .
Disputes with regard to discovery shall be called promptly to
the Court's attention by the making of an appropriate motion
and shall not be relied upon by any party as a justification for
not adhering to this pretrial schedule.

2.

Motions to compel discovery should be filed within 14 days
after the subject matter of the motion arises. Motions to
compel discovery shall not be filed until the parties have
complied with Local Civil Rule 37.1.

Doc. 32 (emphasis in original).

Charter Oak made unjustified objections to the discovery requests, such as objecting

because Charter Oak believed that Dziadek's bad faith claim lacked merit and because Charter
Oak believed nearly every discovery request was vague, ambiguous, overly broad, irrelevant and
not reasonably calculated to lead to admissible evidence. See Doc. 59-2; Doc. 59-17. Charter

Oak responded to many of the discovery requests substantively, but withheld some information

being sought. On December 27,2012, Dziadek's former counsel sent Charter Oak's counsel a

letter regarding shortcomings in Defendant's Responses. Doc. 51-1. Counsel agreed to a meetand-confer on January 8, 2012, after which Charter Oak disclosed additional documents,
supplemented some responses, and maintained objections to others. Doc. 35-1 at 130.

These documents will be referred to collectively as "Defendant's Responses.'
2

The parties met and conferred again on April 16,2013, after which they exchanged letters

blaming each other for a lack of progress. See Doc. 35-1 at 140 (claiming that Dziadek was
unwilling to engage in a genuine effort to resolve discovery issues); Doc. 51-3 (claiming that

Charter Oalc continued to assert improper objections despite Dziadek's efforts to resolve
discovery issues). On April 30, 2013, the day before discovery was set to close, Dziadek's
former counsel filed Dziadek's Third Motion to Continue, Doc. 34. Dziadek's former counsel
stated that they "anticipate and expect... to file a second motion to compel in the coming

days." Doc. 34-1 at 2. Charter Oak resisted the continuance. Doc. 35. This Court granted in
part Dziadek's Third Motion to Continue, set the new discovery deadline as August 15, 2013,

and ordered again that disputes "shall be called promptly to the Court's attention by the maldng
of an appropriate motion" and that "[m]otions to compel discovery should be filed within 14
days after the subject matter of the motion arises." Doc. 36 at 2.

Dziadek's former counsel did not file a second motion to compel within "the coming

days" as presaged. See Doc. 34-1 at 2. The next filings related to deposition subpoenas issued
by Charter Oak seeking to depose Dziadek's former counsel, which were served on June 25,
2013.

Doc. 38.

On July 18, 2013, Dziadek's former counsel filed a Motion to Modify

Subpoena, Doc. 37. This Court stayed the scheduled depositions of Dziadek's former counsel
until after a hearing on the issue could be had because deposing counsel could trigger counsel's

disqualification. Doc. 42; Doc. 38. This Court's Order, however, required that, except for the
possible depositions of Dziadek's former counsel, "all other discovery shall be completed by
August 15, 2013." Doc. 42 at 1.

On August 12, 2013, Dziadek's former counsel filed Dziadek's Fourth Motion to

Continue, Doc. 45, which Charter Oak resisted, Doc. 53. OnAugust 15,2013, the day discovery
was to close, Dziadek's former counsel filed a Second Motion to Compel, Doc. 49.

On

September 5, 2013, this Court held a hearing on all three pending motions—the Motion to
Modify Subpoenas, the Fourth Motion to Continue, and the Second Motion to Compel. At the

hearing, Dziadek's former counsel recognized that they were fact witnesses on certain matters
relating to this case and offered to withdraw as counsel once Dziadek could obtain substitute
counsel. Doc. 56 at 1. This Court granted in part Dziadek's Motion to Modify Subpoenas,

granted Dziadek's Fourth Motion to Continue, and reserved ruling on Dziadek's Second Motion
to Compel until after Dziadek's new counsel could meet and confer with Charter Oak's counsel

in an attempt to resolve discovery disputes and obviate the need for a ruling. Doc. 56 at 2.
On October 22, 2013, Dziadek's new counsel filed his notice of appearance. Doc. 57.

Shortly thereafter, Dziadek's new counsel and Charter Oak's counsel met and conferred,
resolved some discovery issues, failed to resolve other discovery issues, and thereafter resumed
briefing Dziadek's Second Motion to Compel. Dziadek's motion seeks to compel discovery of
material relating to eleven different issues and requests an award of attorney's fees. Doc. 50 at
2,52.

On January 29, 2014, after briefing was completed and after this Court had begun its

consideration of these issues, Charter Oak filed a Second Memorandum in Opposition, Doc. 66,
which is not contemplated by this Court's local rules. See D.S.D. Civ. L.R. 7.1(B). Attached
to that Memorandum was an exhibit listing different documents that Charter Oak produced.

Dziadek disputes whether Charter Oak has produced all responsive documents. Because the
extension of the discovery deadline was at hand, this Court advised counsel informally that an

opinion and order was forthcoming that would grant in part and deny in part the motion to
compel and would enlarge the discovery deadline further. Thereafter, counsel had a spat over
one attorney's response to this Court's email message and wanted to argue discovery issues to

this Court. This Court then conducted a telephonic hearing on February 19,2014, to address the
motions ripe for discussion.

II.

DISCUSSION
A.

Timeliness of Motion to Compel

Charter Oak argues that Dziadek's Second Motion to Compel is untimely. Doc. 58. The
Scheduling Order stated that "motions to compel discovery should be filed within 14 days after

the subject matter of the motion arises" and that disputes regarding discovery "shall be called
promptly to the Court's attention."

Doc. 32.

Charter Oak argues that Dziadek is not in

compliance with the Order because she waited over eight months from the time the subject
matter of this motion arose before seeking relief. Doc. 58 at 1-2. Dziadek counters that this

Court's Scheduling Order did not mandate that motions to compel must be filed within fourteen
days of the dispute arising and thus that her motion was timely filed prior to the discovery
deadline. Doc. 59 at 8-10. Dziadek also argues that her delay in filing her motion was due to
the meet-and-confer requirement and her efforts to resolve the discovery disputes which Charter
Oak frustrated. Doc. 59 at 8-10.

Rule 37 of the Federal Rules of Civil Procedure governs motions to compel discovery.
Rule 37 does not contain an outer time limit for when a motion to compel must be filed by in
order to be deemed timely. Voter v. Avera Brookings Med. Clinic. No. CIV. 06-4129-KES,
2008 WL 4372707, at *1 (D.S.D. Sept. 22, 2008). Some district courts limit by local rule the

time period within which a motion to compel must be filed. See e.g.. United States ex rei.
Becker v. Westinehouse Savannah River Co.. 305 F.3d 284, 290 (4th Cir. 2002) ("Local Rule
37.01 of the District Court for the District of South Carolina states that '[mjotions must be filed

within twenty (20) days after receipt of the discovery response to which the motion to compel
is directed.'"); Haviland v. Catholic Health Initiatives-Iowa. Corp.. 692 F. Supp. 2d 1040,1044
(S.D. Iowa 2010) (noting that Local Rule 37 of the District Court for the Southern District of
Iowa "permits Motions to Compel to be filed up to fourteen days after the close of discovery").

This District has no such rule. Soltesz v. Rushmore Plaza Civic Ctr.. No. CIV. 11-5012-JLV,
2013 WL 175802, at *4 (D.S.D. Jan. 16, 2013).

District courts have broad discretion in managing discovery, establishing and enforcing

discovery deadlines, and maintaining compliance with discovery and pretrial orders, Williams
v. TESCO Servs.. Inc.. 719 F.3d 968, 976 (8th Cir. 2013), and may direct in scheduling orders

the date by which motions to compel must be filed, Soltesz. 2013 WL 175802, at *4-5; see also
Voter. 2008 WL 4372707, at * 1 (stating that district courts can set limits on motions to compel

in its scheduling order). Ultimately, when deciding the timeliness of a motion to compel, a court
must inquire into the "entire complex of circumstances that gave rise to the motion, and what is

untimely in one case may not be in another." In re Sulfuric Acid Antitrust Litig.. 231 F.R.D.
331, 333 (N.D. 111. 2005); see also Haviland. 692 F. Supp. 2d at 1044 ("Because no single rule

or deadline can encompass the myriad of variations in discovery,. . . judges are given broad
discretion to manage the overall process in the interests of dispatch and fairness.").
Generally, a court "may conclude that a motion to compel is untimely if the movant has

unduly delayed." Soltesz, 2013 WL 175802, at *4 (citing 8B Charles A. Wright, et al., Federal

6

Practice & Procedure § 2285 (2d ed. 1994)).

When there is no "specific directive in the

scheduling order," in the District of South Dakota, motions to compel may be considered timely
if filed before discovery closes, but untimely if filed after discovery closes. Voter. 2008 WL
4372707, at *1: Soltesz. 2013 WL 175802, at *4 ("If a motion to compel is filed prior to the
expiration of the discovery deadline, it is generally considered timely."); see also In re Sulfuric
Acid Antitrust Litie.. 231 F.R.D. at 332 ("In one regard, however, a line of sorts has been

sketched by a series of decisions: motions to compel filed after the close of discovery are almost
always deemed untimely

Greater uncertainty occurs where the motion is made very close

to the discovery cut-offdate.").2 In Soltesz. 2013 WL 175802, the scheduling order required that
motions to compel "shall" be filed within fourteen days of the dispute's origin. Id. at *4-5. The

defendant in Soltesz filed the motion to compel outside ofthe fourteen-day period. Id. Although
the motion was untimely as it was not in "strict compliance" with the scheduling order's "14-day
time frame for filing" a motion to compel, Magistrate Judge Veronica L. Duffy of this District
nevertheless permitted the untimely motion to proceed because there was "good cause" for the
delay. Id. at *5. The delay was not "undue" as the motion was filed just three weeks outside the
fourteen-day time frame and the non-moving party did not suffer prejudice. Id Magistrate Judge
Duffy reasoned that a contrary ruling in Soltesz may encourage "parties to file 'hair-trigger'

2 Counsel who wait to file a motion to compel until the discovery deadline or close to the

discovery deadline run the peril of having the motion considered to be untimely as being brought
with undue delay. See e.g.. Haviland. 692 F. Supp. 2d at 1044 (holding that magistrate judge did
not commit clear error when he determined that a motion to compel filed before the close of
discovery and within the time period permitted by the local rules for filing a motion to compel
was untimely because it was made "far too late in the discovery process"); In re Sulfuric Acid
Antitrust Litig., 231 F.R.D. at 337, 341 (rejecting as untimely a motion to dismiss filed on the
day discovery was to close and eight months after the dispute arose).

discovery disputes" and because correspondence between the parties could have misled the
moving party to delay in a mistaken belief that production was forthcoming. Id.

The language of this Court's Scheduling Order did not mandate that motions to compel

be filed within fourteen days of the dispute, but stated that motions "should" be filed within
fourteen days. Dziadek's Second Motion to Compel, filed much more than fourteen days after

the dispute arose, thus is not in violation of the language of the Scheduling Order, although it is
in violation of the spirit of the Scheduling Order, which required that discovery disputes "shall
be called promptly to the Court's attention." Doc. 32. However, because the Scheduling Order's
language was not a "specific directive[,]" the motion may be considered timely if filed before
the discovery period closes. Voter. 2008 WL 4372707, at * 1. Dziadek's motion was filed on
the final day of the discovery period and is timely.

Dziadek was aware of these disputes as early as December 6,2012. Her former counsel
obtained a continuance while threatening a motion to compel on April 30, 2013. Her former
counsel then waited another four months from that date to file her Second Motion to Compel as

the discovery window was closing on August 15, 2013.

Dziadek is correct in that the

requirement to meet and confer "shows that the rules do not encourage hair trigger-motions."
Doc. 59 at 9 (citing Soltesz. 2013 WL 175802, at *4). Nevertheless, timeliness is still an

"important consideration[,]" 8B Wright et al, supra § 2285 (3d ed. 2010), and the meet-andconfer requirement should not be used to justify long delays before bringing motions to compel.
See In re Sulfuric Acid Litig.. 231 F.R.D. at 341 ("Nor am I persuaded that the approximately

eight-month delay stemmed from the plaintiffs' wish 'to bring a single, focused motion

'");

Haviland, 692 F. Supp. 2d at 1044 (u[T]he Court sees no reason why Plaintiffs could not have

upheld their ethical duty to attempt to resolve the discovery conflict without court action, yet still

have made this motion at a much earlier date.")- Dziadek could have satisfied the meet-andconfer requirement and still raised these issues much more promptly.

Under these

circumstances, the delay in bringing the motion to compel influences the decision on the
propriety of sanctions under Rule 37(a)(5) ofthe Federal Rules of Civil Procedure and the scope
ofrelief ordered, rather than prompting a refusal to consider the merits of the motion to compel.
See 8B Wright et al., supra § 2288 (3d ed. 2010) ("If the motion is granted in part and denied in
part the court is given more discretion under Rule 37(a)(5) and may apportion the reasonable
expenses incurred in relation to the motion among the parties and persons in a just manner.").
B.

Scope of Discovery

The scope of discovery under Rule 26(b) ofthe Federal Rules ofCivil Procedure is broad.
Black Hills Molding. Inc. v. Brandom Holdings. LLC. No. CIV. 12-5051, 2013 WL 6092215,
at *5 (D.S.D. Nov. 19, 2013) (citing 8B Wright et al., supra § 2007 (3d ed. 2010)). "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. Tavlor. 329 U.S. 495, 507 (1947). A party may "obtain discovery regarding any
nonprivileged matter that is relevant to any party's claim or defense." Fed. R. Civ. P. 26(b)(l).

Relevancy is construed broadly and encompasses "any matter that could bear on, or that
reasonably could lead to other matter that could bear on, any issue that is or may be in the case."

Kirschenmanv. Auto-OwnersTns..280F.KT). 474 481 m R n ?m?) (internal T,»tnti»n marks
and citation omitted).

Once the requesting party has made its threshold showing that the

evidence sought is relevant, the burden shifts to the resisting party who must "show specific facts

demonstrating that the discovery is not relevant, or how it is overly broad, burdensome, or
oppressive." Id. The mere statement that an interrogatory or request for production was overly

broad, burdensome, oppressive, or irrelevant is not adequate to prevail on such an objection.
Lillibridge v. Nautilus Ins. Co.. No. CIV. 10-4105-KES, 2013 WL 1896825, at *6 (D.S.D. May
3,2013).

Charter Oak objected to nine of the fourteen Requests for Production and to three of the

six Interrogatories at issue here by arguing that the documents sought were irrelevant because
Charter Oak did not believe that Dziadek had a reasonable bad faith claim. Doc. 59-2 at 7-11,
24-25,28-29; Doc. 59-17 at 6,7-8 (raising the same substantive objection to the Interrogatories
as was raised to the Requests). As noted in this Court's Order on Dziadek's First Motion to
Compel, "[e]ven if the insurer ultimately paid a claim, it 'may still be liable under a bad faith

claim for unreasonably delaying payment of a claim if the insured suffered compensable loss as
a result.'" Doc. 30 at 3 (quoting Lvon v. Bankers Life & Cas. Co.. No. CIV. 09-5070-JLV, 2011
WL 124629, at *7 (D.S.D. Jan. 14,2011)). "'[Discovery is not to be denied because it relates
to a claim or defense that is being challenged as insufficient.'" Alexander v.F.B.L. 194 F.R.D.
316,326 (D.D.C. 2000) (quoting 8B Wright et al., supra § 2008 (2d ed. 1994)). Following this
Court's Order, Charter Oak initially maintained this objection. See Doc. 51-4 at 6 (noting in a

letter to Dziadek's former counsel that "[the claims handler's] personnel files are clearly
irrelevant, given the absence of any claim under South Dakota law" because the "claim was paid
promptly in full"). Charter Oak appropriately appeared to abandon this objection in its briefing,

but Charter Oak's counsel focused a good share of his argument during the February 19, 2014

hearing on why Charter Oak believes Dziadek's bad faith claim to be unfounded. This sort of

10.

objection and argument is one for summary judgment or trial; it is not proper as a discovery
objection.
C.

Discovery Issues

1.

Request Number 6 - Organizational Chart

Dziadek seeks to compel production of an organizational chart or other "documents
. showing the chain of command of Travelers claims office in Naperville, Illinois, including the
personnel who handled or reviewed matters" concerning Dziadek. Doc. 59-2 at 7; Doc. 50 at 16;
Doc. 59 at 18;. Dziadek argues, and this Court agrees, that organizational charts and documents
showing the chain of command for the years 2009 through 2012 are relevant because the alleged
bad faith occurred between 2009 and 2012 and those documents will show the organizational
structure of the claims department. Doc. 59 at 19-20.

Charter Oak in its brief does not argue that discovery of such organizational charts would
be burdensome and does not contend that the documents sought in Request Number 6 are
irrelevant. Rather, Charter Oak represents that no organizational chart exists and ultimately that
it produced a "directory for that Unit as of 2011, the relevant time frame

" Doc. 58 at 5.

The years 2009 through 2012 are the years during which the alleged bad faith is claimed to have
occurred. Charter Oak must produce organizational charts for the Naperville claims office for
2009 through 2012, including those who handled Dziadek's claim if it has any such documents,
or alternatively must produce the directory for the claims unit that handled Dziadek's claims for

the time frame of 2009 through 2012, if Charter Oak somehow has no organizational charts, for
those years.

2.

Request Number 5 - Personnel Files

11

a.

Claims Handlers and their Direct Supervisors

Request Number 5 seeks the "personnel files of Travelers employees who handled,
reviewed, supervised, and/or audited Dziadek's claim, including persons in the chain of
command above these individuals up to the head ofthe claims department." Doc. 59-2 at 6; Doc.
59 at 18; Doc. 59-2 at 7. Specifically, Dziadek requested production in Request Number 5 of

the personnel files for the following persons: Faith Styles, Dana Barron, Brian Koerner, Diane
Olson, Heather Wilken, Tara Walters, Timothy Westbrook, Amy Hennessy, and Dawn Midkiff.
Doc. 59-2 at 6-7; Doc. 59 at 19-29. Dziadek also seeks the personnel files for claims handler

Patricia Palaniuk, supervisor Phillip Castignet, and persons "in the chain of command." Doc.
50 at 21. Dziadek now has agreed not to seek the personnel files for administrative personnel
Dana Barron, Diane Olson, Heather Wilken, and Tara Walters. Doc. 59 at 22. This section deals

with the request for the persons who were involved in the handling or supervising of Dziadek's
claim—Faith Styles, Brian Koerner, Timothy Westbrook, Amy Hennessy, Philip Castignet, and
Patricia Palaniuk. Subsequent sections will address the discoverability of the personnel file for
Dawn Midkiff and personnel files for individuals up the "chain of command."

Faith Styles handled Dziadek's claim in 2009.

She was supervised by Timothy

Westbrook and Brain Koerner. Doc. 58 at 5-6. Patricia Palaniuk handled Dziadek's claim at the

time it was paid, much later than Dziadek desired it to be paid. Doc. 58 at 6. Patricia Palaniuk
and Faith Styles reported to Brian Koerner. Doc. 58 at 5-6. Brian Koerner reported to Amy
Hennessy, and Amy Hennessy reported to Philip Castignet. Doc. 58 at 6.
Dziadek argues that personnel files of claims handlers and their supervisors are always

relevant in bad faith cases to determine how claims handlers and the insurance company reward

12

the handling of claims. Doc. 59 at 20. In order to prove a bad faith denial of an insurance claim
under South Dakota law, the plaintiff must show that the insurer denied a claim knowing there
was no reasonable basis for the denial, or that the defendant acted with reckless disregard as to

whether a reasonable basis existed to deny the claim. Lvon. 2011 WL 124629, at *7; see also
Champion v. United States Fid. & Guar. Co.. 399 N.W.2d 320, 324 (S.D. 1987); Anderson v.
W. Nat. Mut. Ins. Co., 857 F. Supp. 2d 896, 903 (D.S.D. 2012) ("The Supreme Court of South
Dakota first recognized a cause of action for insurance bad faith in Champion v. United States

Fid. & Guar. Co., 399 N.W.2d 320 (S.D. 1987)."). Even if the insurer ultimately paid a claim,
it "may still be liable under a bad faith claim for unreasonably delaying payment of a claim if the
insured suffered compensable loss as a result." Doc. 30 (citing Lvon. 2011 WL 124629, at *7).
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.

See Anspach v. United of Omaha Life Ins. Co.. No. CIV. 10-5080-JLV, 2011 WL

3862267, at *6 (D.S.D. Aug. 31, 2011) (citing Roth v. Farner-Bocken Co.. 667 N.W.2d 651,

665-66 (S.D. 2003)). Much of the personnel file is likely of limited relevance and the protective
order and evidentiary rules applicable at trial will protect and screen personal material not
relevant to any issue, or more unfairly prejudicial than probative, from disclosure or misuse.
"[CJourts in the District of South Dakota have routinely found personnel files in

insurance bad faith cases to be relevant and discoverable." Lillibridee. 2013 WL 1896825, at

*9; see also Lvon. 2011 WL 124629, at *8. "However, personnel files also typically contain
documents such as health care documents, life insurance, wages or salary, W-4s, I-9s, retirement
account information, information about employees' banlc accounts for purposes of electronic

13

deposits, and counseling information regarding employee assistance programs." Nvev. Hartford
Accident & Indem. Co.. No. CIV. 12-5028-JLV, 2013 WL 3107492, at *11 (D.S.D. June 18,
2013) (internal quotation marks and citation omitted). At some point, however, delving into
personnel files becomes the sort of fishing expeditions that the discovery rules do not permit.

See Hackett v. Standard Ins. Co.. No. CIV. 06-5040,2009 WL 3062996, at *8 (D.S.D. Sept. 21,
2009) adopted as modified, No. CIV. 06-5040-JLV, 2010 WL 1494772 (D.S.D. Apr. 14,2010)

(denying the discoverability of certain personnel files and stating that "[w]hile all discovery is
a fishing expedition of sorts, 'the Federal Rules of Civil Procedure allow the Courts to determine
the pond, the type of lure, and how long the parties can leave their lines in the water." (quoting
Myers v. Prudential Ins. Co. of Am.. 581 F. Supp. 2d 904, 913 (E.D. Term. 2008))); see also
Surles ex rel. Johnson v. Greyhound Lines. Tnc. 474 F.3d 288, 305 (6th Cir. 2007) ("Although

a plaintiff should not be denied access to information necessary to establish her claim, neither
may a plaintiff be permitted 'to go fishing'

" (internal quotation marks omitted)).

Based on the cases decided previously in this Court, Dziadek has met her burden to show

that personnel files sought in Request Number 5 for the claims handlers and their immediate
supervisors—Faith Styles, Timothy Westbrook, Brian Koerner, Amy Hennessy, Philip Castignet,

and Patricia Palaniuk—may contain relevant material. The burden shifts to Charter Oak to

"show specific facts demonstrating that the discovery is not relevant, or how it is overly broad,
burdensome, or oppressive." Kirschenman. 280 F.R.D. at 481. Charter Oak does not argue that
these files are irrelevant or argue that production would be burdensome. Instead, Charter Oak
states that it has produced all personnel files for Faith Styles, Timothy Westbrook, and Brian

Koerner. Dziadek disputes that Charter Oak has done so. With regard to the personnel files for

14

Patricia Palaniuk and Philip Castignet, Charter Oak states that it has produced Patricia Palaniuk
and Philip Castignet's "performance evaluations" which "contain all relevant personnel file
information concerning claim handling performance for Ms. Palaniulc and Mr. Castignet, a fact
explained to [Dziadek's] counsel. There is no other relevant information in their, or any
employee's, personnel file

This issue has been resolved." Doc. 58 at 6. From Dziadek's

perspective, the issue has not been resolved.

The personnel files and not simply the

"performance evaluations" of these individuals are discoverable, and Charter Oak has not met

its burden to limit discovery ofcertain personal material to "performance evaluations." Concerns
regarding the confidential nature of these documents may be addressed under the protective

order. Charter Oak must produce the complete personnel files (redacting Social Security
numbers, home addresses and personal phone numbers of current employees, employee bank
account information, employer sponsored benefit plans not providing incentives based on claims

handling or profitability, and any medical benefits or treatment information) for Faith Styles,3
Timothy Westbrook, Brian Koerner, Amy Hennessy,4 Patricia Palaniuk, and Philip Castignet.
At the hearing on February 19, 2014, the parties continued to debate whether all such
personnel files have been produced. After repeated questions from this Court, Charter Oak's

3 This Court in its First Order on Motion to Compel, Doc. 30, compelled production of

"Faith Styles' personnel file" as well as "all documents relating to, describing, or promoting
incentive plans in effect with respect to Faith Styles, including periodic updates to the plans
(subject to protective order, if necessary)." Doc. 30 at 5. Charter Oak was permitted to redact
Social Security numbers only and "withhold production of documents regarding Ms. Styles that
relate to employer sponsored benefit plans, unless those plans provide any incentives based on
how Ms. Styles handles claims. Defendant may mark appropriate materials as 'confidential'"
Doc. 30.

4 Charter Oak does not dispute the discoverability of Amy Hennessy's personnel file and

it has agreed to produce her file. Doc. 58 at 6.

15

counsel ultimately acknowledged that there was a "scorecard" for Faith Styles's claims handling
during the relevant period that has not been produced but will be. Charter Oak is to produce
"scorecards" for the above-listed individuals and any information about any bonuses the abovelisted individuals received from 2006 through 2012 and how such bonuses were calculated,
regardless of whether that information was kept in their personnel files or elsewhere.
b.

Personnel File of Dawn Midkiff

Request Number 5 seeks personnel files for those persons who "handled, reviewed,
supervised, and/or audited" Dziadek's claim including Dawn Midkiff.

Doc. 59-2 at 6.

Dziadek's claims file states Faith Styles "met with cov counsel to discuss" and that "it appears

driver would not be insured under our policy." Doc. 59-9 at 1. In its Rule 26(a)(l) initial
disclosures, Charter Oak listed "As yet to be identified Coverage Counsel" at Travelers as a
person likely to have discoverable information. Doc. 59-8 at 2-3. The Rule 26(a)(l) initial
disclosures state that "In house Counsel consulted by Faith Styles - can confirm that requested
coverage information was related to liability coverage

not UIM claim." Doc. 59-8 at 3.

Discovery revealed that the in-house counsel whom Faith Styles consulted at Travelers was
Dawn Midkiff. Doc. 59-3 at 6. Dziadek argues that Dawn Midkiff s personnel file is relevant

because she is the attorney who told the claims handler that the policy did not provide coverage

in the first instance. Doc. 59 at 22. Her file, Dziadek argues, could show for example incentives
to reduce claim payouts. Doc. 59 at 23.

Charter Oak raises two separate issues in this section. First, Charter Oak objects to the

discoverability of Dawn Midkiff s personnel file. Doc. 58 at 6. Second, Charter Oak attempts
to claw back its previous disclosures about Dawn Midkiff. Doc. 5 8 at 6. This Court initially will

16

address Charter Oak's attempts to claw back its previous disclosures before addressing the
discoverability of her personnel file.

Charter Oak disclosed through the claims notes that Faith Styles consulted with an in-

house counsel, who was later identified as Dawn Midkiff, and what Dawn Midkiff s opinion
was. Doc. 58 at 6. The parties dispute whether this allegedly inadvertent disclosure waived the
attorney-client privilege related to that communication. Doc. 58 at 7; Doc. 59 at 24. Rule 502

of the Federal Rules of Evidence governs when an inadvertent disclosure of privileged

documents during a federal proceeding operates to waive that privilege. Rule 502(b) provides
as follows:

When made in a federal proceeding or to a federal office or agency, the
disclosure does not operate as a waiver in a federal or state proceeding
if:

(1) the disclosure is inadvertent;

(2) the holder of the privilege or protection took reasonable steps to
prevent disclosure; and

(3) the holder promptly took reasonable steps to rectify the error,
including (if applicable) following Federal Rule of Civil Procedure
26(b)(5)(B).

Fed. R. Evid. 502(b).

The disclosure by Charter Oak of the fact that Faith Styles communicated with, and
received advice on coverage from, in-house counsel who was identified as Dawn Midkiff may
not have been inadvertent.

Charter Oak listed in-house counsel as having discoverable

information in its initial disclosures. Doc. 59-9 at 3. Charter Oak in this case has asserted:
Charter Oak obtained and reviewed the Billion Policy provisions
deemed relevant to evaluating whether Ms. Peterson qualified as an
insured under the Garagekeeper's coverage form. Charter Oak reviewed
17

those terms with representatives for Billion and with in-house counsel.
All concurred that Ms. Peterson did not qualify as an insured under the

Policy.

Doc. 26-36 at 3 (internal citations omitted). Charter Oak during the February 19,2014 hearing
advised that Midkiff will not be a witness at trial and that Charter Oak does not assert an adviceof-counsel defense, which represents a different course than what Charter Oak previously took.
Nevertheless, there exists doubt here whether the disclosure ofMidkiff s advice was inadvertent.
Even if the disclosure of Dawn Midkiff s opinion in the claims notes was inadvertent,

Charter Oak has not met the second or third elements of Rule 502(b). Charter Oak has not
established that it took reasonable steps to prevent the inadvertent disclosure. Charter Oak also
did not take reasonable steps to rectify in a timely manner its disclosure. The disclosure that
"[a]s yet to be identified Coverage Counsel" (who was later identified as Dawn Midkiff) had
discoverable information was made on December 1,2012. Dziadek avers that Charter Oak did
not raise this issue in any of the meet-and-confer sessions.

Doc. 59 at 24.

Charter Oak

apparently raised this issue for the first time in its brief in resistance to this motion on December
8, 2013. A delay of more than two years since the disclosure before raising the issue is not a
reasonable step made to rectify the error. Therefore this disclosure does not meet Rule 502's
requirements and operated as a waiver of the privilege related to the disclosure.

Charter Oak's only objection to the discoverability of Dawn Midkiff s personnel file is

that it is not relevant because she "was not involved" in handling or reviewing Dziadek's claim.
See Doc. 58 at 7. Charter Oak's contention that Dawn Midkiff "was not involved" conflicts with

its previous disclosures that Faith Styles consulted in-house counsel Dawn Midkiff and that inhouse counsel has discoverable information. Doc. 59-8 at 3.

18

The relevance of Midkiff s

personnel file again centers on possible incentives she might have to counsel denial of claims.

While some claims representatives and managers at some insurance companies may receive such
bonuses or pay increases tied to claims handling, it would seem highly unlikely for in-house
counsel to be so compensated.

Dziadek has received information on how Charter Oak

employees are compensated, and there is apparently no suggestion there that Midkiff s
compensation gives her an incentive to counsel that claims be denied. This Court orders Dawn

Midkiff s personnel file to be submitted ex parte for the Court's in camera review, together with
any possible "scorecards" or material relating to bonuses, and pay increases to Midkiff and how
those bonuses or pay increases were calculated for the years 2006 through 2012.
c.

Chain of Command Personnel Files

Dziadek seeks additional personnel files for those further up the "chain of command."
Doc. 59-2 at 6-7. The rulings of this Court require production of the personnel files of the
claims handlers (Faith Styles and Patricia Palaniuk), the supervisor ofthe claims handlers (Brain
Koerner), the supervisor of the supervisor of the claims handlers (Amy Hennessy), and the
supervisor ofthe supervisor ofthe supervisor ofthe claims handlers (Phillip Castignet). Dziadek

has made no showing that this is not far enough up the chain of command to ferret out any

inappropriate incentive as a part of personnel/policies. At some point, the quest for personnel
files becomes too far attenuated from those people who dealt with the claim or supervised those

who dealt with the claim and thus no longer is "reasonably calculated to lead to the discovery
of admissible evidence" under Rule 26(b)(l) of the Federal Rules of Civil Procedure.
There is varying authority in this District on where to draw the line on production of
personnel files in insurance bad faith cases. In some instances, judges in this District have

19

ordered that the personnel files for all supervisors or for those persons in the chain of command
were subject to discovery. See e.g.. Burke v. Ability Ins. Co.. 291 F.R.D. 343, 351-52 (D.S.D.
2013) (compelling production of files for those "who handled, supervised, audited and/or

reviewed Plaintiffs claim, as well as the personnel files of all persons in the chain of command
above those persons"); Kirschenman. 280 F.R.D. at 482-83 (compelling production of the
personnel files, including bonuses and incentive information, for all supervisors up the chain of

command). Other times, judges in this District have required production only of personnel files
for "each employee, manager, supervisor... who was involved in plaintiffs claim." Seee.g..
DeKnikker v. Gen. Cas.. No. CIV. 07-4117, 2008 WL 1848144, at *2 (D.S.D. Apr. 23, 2008)
(refusing production of the personnel file of the supervisor of a claims handler because that
supervisor was not "directly involved in the decisions about plaintiffs claim"). The United
States Court of Appeals for the Tenth Circuit observed:
personnel files often contain sensitive personal information, just as
pharmacy files do, and it is not unreasonable to be cautious about
ordering their entire contents disclosed willy-nilly. Indeed, the
Supreme Court has underscored that "the requirement of Rule 26(b)(l)
that the material sought in discovery be 'relevant' should be firmly
applied, and the district courts should not neglect their power to restrict
discovery [to protect] 'a party or person from annoyance,
embarrassment, [or] oppression....'"Herbert v.Lando. 441 U.S. 153,
177 (1979) (quoting Fed. R. Civ. P. 26(c)(D); see also Gehring v. Case
Corp., 43 F.3d 340, 342 (7th Cir. 1994) (no abuse of discretion where
"privacy interests, coupled with [the district court's] determination to
keep the trial focused . . ., justified limiting [plaintiffs discovery of]
personnel files").

Regan-Touhv v. Walereen Co.. 526 F.3d 641,648-49 (1 Oth Cir. 2008) (internal quotation marks
omitted).

Here, the production of personnel files up to the supervisor of the supervisor of the

20

supervisor of the claims handlers is far enough. Dziadek has no information that anyone above
that level had anything to do with her claim. What Dziadek really is after is information on
financial incentives that may or may not exist to prompt Charter Oak employees to deny claims

that ought to be paid. Together with what else Dziadek is receiving and her opportunity to
conduct depositions, she will be able to ferret out whether Charter Oak had such an incentive
program without obtaining personnel files for those who had no part in handling her claim.

3.

Requests Number 11 and Number 13 - Bonus, Compensation, and
Incentives for Employees

Request Number 11 states "[pjroduce any and all documents that reference bonus or

award programs available to supervising personnel who handled or reviewed any matter
concerning [Dziadek] from January 1,2005 to the present. This includes supervisors, managers,
or any other individuals up to the head of the claims department." Doc. 59-2 at 10 (emphasis in

original). Request Number 13 states "[p]roduce any and all documents that related to the manner
in which personnel handling claims, including supervisory personnel, might receive increases
in salary, bonuses, commissions, or awards." Doc. 59-2 at 11. Charter Oak's brief in resistance
does not persist in objecting to these requests, but maintains that it produced all responsive

documents. Doc. 58 at 9. Dziadek argues that Charter Oak has made only a partial production
of responsive documents for low-level Charter Oak employees who handled her claim and has
produced no responsive documents for upper-level employees. Doc. 59 at 29-30. Dziadek
contends that Charter Oak has produced one sixteen-page document that outlines

i

Travelers/Charter Oak's compensation philosophy, has not produced information on any bonus
programs, and has withheld responsive documents identified within the sixteen-page document.

!

Doc. 59 at 29-31.

!
i

21

Dziadek argues that bonus plans and incentives for claims department employees,

including supervising personnel and those up the chain of command, are relevant to her bad faith
claim and her punitive damage request. Doc. 59 at 31. "It is well established in this district that

information about bonuses and increases for upper-level employees is generally discoverable in
cases alleging that an insurance company acted in bad faith in denying an insured's claim in
violation of South Dakota law."

Hurlev v. State Farm Mut. Auto. Ins. Co.. No. CIV.

10-4165-KES, 2012 WL 1600796, at *4 (D.S.D. May 7,2012); see also Lillibridge. 2013 WL
1896825, at *11 (granting request to compel production for any bonus, compensation, or

incentive documents for any "claim personnel [,]" incentive goals and how they relate to manager
bonuses, and "[a]ny and all documents which relate to incentives given to claims examiners or
managers" for any reduction in payouts); Kirschenman. 480 F.R.D. at 486 (requiring production
of information on "all bonus and awards which it made available for any person up the chain of
command"); Lvoa 2011 WL 124629, at * 9-10 (granting motion to compel request for "[a]ny and
all ... documents that reference bonus programs applicable to any long term care claims
department personnel..." and for all documents "which inform long term care claims personnel
of the manner in which they can expect to get increases in salary, bonuses, or commissions").

Thus, the documents sought, including for the supervising personnel in the claims department
who did not handle Dziadek's claim, are relevant and discoverable.

Charter Oak states that there is no dispute and that it "has produced the requested data

for all of the people who were involved with Plaintiffs claim." Doc. 58 at 9. This response is
only partly responsive to the Requests. Request Number 13 seeks documents related to how

"supervisors" receive bonuses. Charter Oak must produce any documents relating to how the

22

"personnel handling claims, including supervisory personnel, might receive increases in salary,
bonuses, commissions, or awards." Doc. 59-2 at 11.

4.

Request Number 12, Interrogatories Numbers 8 and 9 - Goals,
Targets, and Objectives

Document Request Number 12 states "[pjroduce any and all documents referring to
goals, targets, or objectives which are or have been communicated to claims personnel or
supervisory personnel involved with med pay, bodily injury or underinsured (UIM) claims from

January 1, 2005 to the present." Doc. 59-2 at 10-11. Interrogatory Number 8 states "[identify
each and every person responsible for the creation, setting, and management of goals for claims
personnel to improve average total costs (payments) per claim." Doc. 59-17 at 6. Interrogatory
Number 9 states "[ijdentify each and every person responsible for the creating, setting, and
management of all bonus programs for claims personnel or their supervisor." Doc. 59-17 at 6.
Documents referring to goals, targets, or objectives for claim payments are relevant to

bad faith claims and are discoverable in this District. Seee.g.. Lillibridge. 2013 WL 1896825,
at * 11; Lvon. 2011 WL 124629, at * 10 ("Claims ratios are inherently tied to bonus programs.").
Further, scorecards are discoverable in bad faith cases. See Fair v. Roval & Sun Alliance. 278
F.R.D. 465,476 (D.S.D. 2012). Charter Oak argues that Dziadek does not need answers to these
interrogatories because she already has the information. The documents sought in Request

Number 12 and Interrogatories Number 8 and Number 9 are discoverable, and the requests are
not overly broad. Charter Oak has not met its burden to show the documents are irrelevant or
their production will be unduly burdensome. Charter Oak shall produce documents responsive
to Dziadek's Document Request Number 12. Charter Oak shall supplement appropriately its
answers to Plaintiffs Interrogatories Number 8 and Number 9.
23

5.

Requests Number 7 and Number 8 - Targets, Cost Containment, and
Profitability

Request Number 7 states "[p]roduce any and all documents related to cost containment
programs or efforts to lower the cost with respect to handling claims since January 1, 2005."

Doc. 59-2 at 8. Dziadek, by using the term "cost containment," seeks "documents related to
containing indemnity costs (claim payments)" and not information about "programs to reduce

unallocated or allocated adjustment expense (general overheard for the claim department, or
specific claim handling expenses for any specific claim)." Doc. 59 at 37. The term "programs"

refers to "information related to general initiatives (many of which are given names by the
company) and not actions taken on a single claim." Doc. 59 at 37. Request Number 8 states

"[pjroduce any and all documents related to efforts to increase profitability with respect to claims
handling since January 1, 2005." Doc. 52 at 9.

In Kirschenman. 280 F.R.D. 474, Magistrate Judge Duffy of this District compelled
production of documents related to cost containment, profitability, and loss ratios in a case of
a similar nature. Id at 483-84. The plaintiff in Kirschenman did not seek "information about
attempts to save money in individual claim files or single instances, but rather . . . documents

related to company programs, campaigns, or initiatives designed to influence employee behavior
on a systematic and wide-spread basis throughout the company." Id at 483. Such material can
be relevant to insurance bad faith claims.

The burden therefore shifts to Charter Oak to "make a specific showing of facts from
which the court could conclude that the discovery ... is not relevant, or that the relevance is
marginal and outweighed by the expense, burden or embarrassment ofproviding the discovery."

Id at 485. Charter Oak resists discovery by arguing the requests are "vague, ambiguous, unduly
24

burdensome and overly broad fishing expeditition[s]." Doc. 58 at 10. Charter Oak argues that
discovery ofthese documents is improper because "Plaintiffis simply speculating that there were
some orchestrated efforts to increase profitability and/or lower costs" and "speculation is an

improper basis for her motion."

Doc. 58 at 10-11 (internal quotation marks and citation

omitted). Lastly, Charter Oak objects arguing that "[t]here was no such orchestrated effort to
increase profitability and/or reduce costs on decisions regarding coverage for Plaintiffs claims."
Doc. 58 at 11 (internal quotation marks and citation omitted). That all may be true, but Dziadek

is entitled to conduct discovery to satisfy herself of that. Charter Oak of course can avail itself

of the benefit of the protective order when producing any such documents. Charter Oak shall
produce documents responsive to Requests for Production Number 7 and Number 8, within the
refined definitions of "cost containment programs."

6.

Request Number 15, Number 39, and Number 47, and Interrogatory
Number 2 - Training Materials

Requests Number 15,39, and 47, and Interrogatory Number 2 seek to have Charter Oak

identify and produce any and all training materials used to train claims handlers; training
materials reviewed by Faith Styles, Tim Westbrook, and Brian Koerner; and manuals or policy

handbooks used to train Tim Westbrook, Brian Koerner, or others who supervised Faith Styles.
Doc. 59-2 at 11, 22, 24; Doc. 59-17 at 3. Dziadek presently seeks twenty-four documents in
satisfaction of these four discovery requests. Doc. 59 at 40-41 (requesting that Charter Oak be
required to produce "materials for the 24 training courses listed"). Charter Oak states that
Dziadek "modestly narrowed her 'training materials' discovery demands." Doc. 58 at 13.

Dziadek frames the issue differently, stating that "[m]ore recently Travelers agreed to produce
materials for 24 courses" but "now says it cannot produce 3 of them." Doc. 59 at 38. Thus,
25

Charter Oak does not object to the discoverability of twenty-one of the twenty-four items that
Dziadek seeks and therefore is ordered to search for and produce those documents if they exist.
Charter Oak indicates that it cannot produce two documents—"7189, Institutional Bad

Faith

and Written

Discovery" and

"12191,

Uninsured

-

Underinsured Motorist

Coverage"—because they "were online courses sponsored by an organization called Property
Loss Research Bureau (PLRB). Charter Oak does not have any documents from those online

courses."5 Doc. 58 at 13-14. If Charter Oak does not have possession or control of such
materials, it cannot produce them. Charter Oak has identified them sufficiently for Dziadek to

seek to subpoena them from the entity in possession of the materials if Dziadek really desires
them.

The final document at issue is Charter Oak's "Principles of Good Faith Claim Handling."
Charter Oak argues that this document is protected by the attorney-client privilege. Doc. 58 at
14. State law determines the applicability ofthe attorney-client privilege in diversityjurisdiction
cases such as this one.

Fed. R. Evid. 501.

The attorney-client privilege protects "the

confidentiality ofcommunications between attorney and client for the purpose of obtaining legal
advice." Brown Bear v. Cuna Mut. Grp.. 266 RR.n Tin 317 m s r> 9ono)

The party

asserting the privilege must establish the existence of four elements: '"(1) a client; (2) a

5 PLRB is an insurance industry trade association that is owned and operated by insurance

companies and underwriters. SR Int'l Bus. Ins. Co.. Ltd. v. World Trade Ctr. Props . Ltd No 02
C 8133, 2003 WL 145419, at *l-2 (N.D. 111. Jan. 21, 2003). PLRB offers a number of services to

its members. About PLRB. http://plrb.org/about/aboutus.html (last visited February 10, 2014).
PLRB's website states that the focus of its services "is the claims handling needs of member
insurers." Id Further, the PLRB "concern[s] itself with, and encourage[s] productivity and
efficiency in, the property and liability loss and claim adjustment processes of members and the

industry as a whole." Id.

26

confidential communication; (3) the communication was made for the purpose offacilitating the
rendition of professional legal services; and (4) the communication was made in one of the five

relationships enumerated in SDCL 19-13-3.'" Hurley. 2012 WL 1600796, at *3 (quoting State
v. Catch the Bear, 352 N.W.2d 640, 645 (S.D. 1984)). To carry its burden, the asserting party
must provide facts to establish the necessary elements. Signature Dev.. LLC v. Mid-Continent

Cas.Co.,No. CIV. 11-5019-JLV, 2012 WL 4321322, at * 24 (D.S.D. Sept. 18, 2012). "South

Dakota common law and the Federal Rules of Civil Procedure require a party to produce a
privilege log if the party believes that documents sought during discovery are protected by the
attorney-client privilege...." Black v. Pilot Travel Ctrs.. LLC. No. CIV. 09-4170-KES, 2011

WL 3421595, at *2 (D.S.D. Aug. 4,2011): see also Rabushka ex rel. U.S. v. Crane Co.. 122 F.3d
559, 565 (8th Cir. 1997) (holding that a party meets its "burden of providing a factual basis for
asserting the privileges when it produce[s] a detailed privilege log stating the basis ofthe claimed
privilege for each document in question, together with an accompanying explanatory affidavit
of its general counsel"); Hurley. 2012 WL 1600796, at *3 ("If a party claims that the attorney-

client privilege protects a document, then it must submit a privilege log to the requesting party.").
This Court has "reiterated the necessity ofproviding a privilege log when asserting the attorneyclient privilege in refusing to comply with a discovery request." Hurley. 2012 WL 1600796, at

*3; see also Black, 2011 WL 3421595, at *2-4 (holding that a party has a "mandatory obligation
to produce a privilege log" and failing to produce such a log until so ordered justified an award
of attorney's fees against the refusing party).

Here, Charter Oak has withheld "Principles of Good Faith Claim Handling" without

producing an accompanying privilege log, despite being ordered to do so by this Court. Doc. 58

27

at 5 (admitting that Charter Oak withheld the "Principles ofGood Faith Claim Handling" without

producing a privilege log to Dziadek); Doc. 59 at 39-40. Because ofthis failure, "[Charter Oak]
failed to meet its procedural duty under the federal rules." Hurley. 2012 WL 1600796, at *3.
Moreover, Charter Oak bears the burden to satisfy the four elements ofthe attorney-client

privilege, Brown Bear, 266 F.R.D. at 317, yet it has failed to present facts establishing the
elements necessary to extend the privilege to "Principles of Good Faith Claim Handling." The

basis of Charter Oak's privilege argument is a contention that "Item No. 12 titled 'Principles of
Good Faith Claim Handling' was prepared and presented by in-house Travelers counsel to
provide confidential legal advice to claim personnel. The attorney-client privilege applies to that

document." Doc. 58 at 14. Charter Oak's "mere assertion that documents exist that are so
privileged" is insufficient to carry its burden. Signature Dev..LLC. 2012 WL 4321322, at *24.
If Charter Oak has a "bonafide claim of privilege" to any of the documents contained in this
manual, then it shall produce to the Court for an in camera review within fourteen days of this
Order those portions of the document deemed privileged and shall produce the remainder to
Dziadek with a privilege log. Id.; see also Hurley. 2012 WL 1600796, at *3 (noting that the
attorney's "failure to follow clearly established procedure should not result in attorney-client

privileged documents being released to the detriment of the client"). If Charter Oak has no bona

fide claim ofprivilege, it shall produce the documents to Dziadek directly. Ifthis Court's review

ofwhatever portion of "Principles of Good Faith Claim Handling" that gets submitted in camera
reveals that the privilege assertion is bogus, this Court will order sanctions against Charter Oak.
7.

Screen Shots

The issue ofthe production of screen shots was resolved between the parties and is moot.

28

8.

Request Number 56 - Charter Oak's In-House Counsel Manual

Request Number 56 asks Charter Oak to "[p]roduce the 'in house' legal counsel policy,
personnel manual, or similar document, for 'in house' legal counsel such as Dawn Midkiff."

Doc. 59-2 at 29. Dziadek argues that legal manuals are relevant because Charter Oak disclosed
that Faith Styles consulted with in-house counsel, who was identified as Dawn Midkiff, before
denying the claim, and procedural guidelines could contain policy interpretations. Doc. 59 at 42.
Charter Oak maintains two objections. First, Charter Oak states that there was no "in house
claim manual in existence at that time." Doc. 58 at 15. Dziadek does not believe Charter Oak
in this regard. Second, Charter Oak maintains that even if there were responsive documents,

these documents would be protected by the attorney-client privilege. Doc. 58 at 15. Dziadek's
motion to compel is granted only to the extent that, if there is any such document responsive to

this request, Charter Oak shall produce to this Court within fourteen days of this Order the
documents and furnish a privilege log to Dziadek.
9.

Interrogatory Number 12 - Mitigation of Punitive Damages

Interrogatory Number 12 asks Charter Oak to "[ijdentify all facts and/or circumstances

concerning Travelers' action and those of its agents, including any mitigating circumstances,
which may operate to reduce, without wholly defeating, the award of punitive damages." Doc.
59-17 at 8. Charter Oak objects to this interrogatory. Doc. 59 at 44.

Dziadek argues that this is a proper contention interrogatory. A contention interrogatory
asks '"another party to indicate what it contends, to state all the facts on which it bases its
contentions, to state all the evidence on which it bases its contentions, or to explain how the law

applies to the facts.'" Black Hills Molding. Inc.. 2013 WL 6092215, at *8 (quoting In re Grand

29

Casinos. Inc.. Sec. Litig.. 181 F.R.D. 615, 618 (D. Minn. 1998)): see also B. Braun Med.. Inc.

v. Abbott Labs., 155 F.R.D. 525, 527 (E.D. Pa. 1994) ("Contention interrogatories ask a party:
to state what it contends; to state whether it makes a specified contention; to state all the facts

upon which it bases a contention; to talce a position, and explain or defend that position, with
respect to how the law applies to facts; or to state the legal or theoretical basis for a

contention."). A fact-based interrogatory, on the other hand, is one that seeks to identify
witnesses and documents. Black Hills Molding. 2013 WL 6092215, at *8. "As to requests for
opinions or contentions that call for the application of law to fact, [contention interrogatories]
can be most useful in narrowing and sharpening the issues, which is a major purpose of

discovery." Fed. R. Civ. P. 33 advisory committee notes, 1970 Amendment. For example, in
Twigs v. Pilgrim's Pride Corp.. No. 3:05-CV-40,2007 WL 676208 (N.D.W. Va. Mar. 1,2007),
an interrogatory asked the defendant to "[s]tate each fact upon which Defendant bases its
affirmative defense that Plaintiff failed to mitigate her damages."

Id. at * 11-12.

This

interrogatory was deemed a proper contention interrogatory. Id. Contention interrogatories are
not objectionable merely because the answer involves an opinion, but courts may defer requiring
an answer to contention interrogatories until the end of discovery. B. Braun. 155 F.R.D. at 527.

Dziadek's Interrogatory Number 12 is not asking for an explanation and facts supporting
a mitigation of damages defense. Although the failure of a plaintiff to mitigate compensatory

damages in an affirmative defense in South Dakota, Jurgensen v. Smith. 611 N.W.2d 439,442
(S.D. 2000), there is no such affirmative defense as a failure to mitigate punitive damages in
South Dakota. Schaffer v. Edward P. Jones & Co.. 552N.W.2d 801, 810 (S.D. 1996) (outlining

the factors used in reviewing a jury's punitive damage award and considering mitigating

30

circumstances within discussion of those factors). Punitive damages are to punish and deter
wrongdoers and turn on the defendant's conduct. Id at 810-11. Rather, Dziadek' s interrogatory
seeks to have Charter Oak assume that punitive damages will be awarded against Charter Oak,

which Charter Oak obviously contests. It is an interrogatory designed to induce an answer that
might imply that Charter Oak foresees punitive damage exposure and thus might be used at trial
to suggest Charter Oak contemplates punitive damage exposure; it is not an interrogatory

designed to obtain discoverable information. Dziadek knows full well why Charter Oak believes
that punitive damages ought not to be awarded. This interrogatory is one on which Dziadek
should have yielded during the meet-and-confer process. This Court is not going to compel
Charter Oak to attempt to answer a "catch-22" type interrogatory by which it must assume that
it will be liable for punitive damages.

10.

Request Number 55 - Prior Testimony of Employees

Request Number 55 asks Charter Oak to "[p]roduce all deposition transcripts and
affidavits prepared for or by Faith Styles, Tim Westbrook, Brian Koerner, Dawn Midkiff, or any
other person involved in matters concerning Laura Dziadek, regarding any other bad faith claim
against the Defendant or Travelers or any of its entities." Doc. 59-2 at 28. Employee deposition
testimony relating to prior bad faith claims is relevant in this bad faith suit. See e.g.. Lillibridee.
2013 WL1896825, at * 8; Kirschenman. 280 F.R.D. at 490. Deposition testimony from prior bad

faith litigation may be relevant to help determine the degree of reprehensibility of an insurer's
conduct if punitive damages should be awarded. Lillibridee. 2013 WL 1896825, at *5.
Charter Oak has produced no documents related to Request Number 55 because it

contends it does not have any. Originally, Charter Oak lodged blanket objections that are not

31

sufficient to defeat discovery. See Doc. 59-2 at 28-29. Now Charter Oak states "that records are
not kept identifying lawsuits in which employees or agents have testified as witnesses and that
Charter Oak does not maintain records identifying bad faith claims involving specific claim
personnel." Doc. 58 at 16 (internal quotation marks omitted). Charter Oak does not contend the

information is irrelevant. Dziadek doubts Charter Oak's assurance that responsive documents

do not exist. Charter Oak must produce documents responsive to Request Number 55 if it has
such documents. If Charter Oak has possession or control of any prior deposition testimony of
the employees listed, it must provide that testimony to Dziadek.

11.

Interrogatory Number 6 - The Relationship Between Travelers and
Charter Oak

In Interrogatory Number 6, Dziadek sought a description of "the business relationship

between Charter Oak, its parent company, Travelers, and other Travelers subsidiaries." Doc. 5917 at 5. After several standard objections, Charter Oak announced that "Charter Oak is 100
percent owned by Travelers Indemnity Company." Doc. 59-17 at 5. This answer is partial and

Charter Oak readily should have provided a more complete answer through the meet-and-confer
process. Dziadek is entitled to more information on the "business relationship," but what

information Dziadek wants cannot be discerned by this Court based on reference to the
somewhat vague term "business relationship."

During the February 19, 2014 hearing, Charter Oak's counsel disclosed additional

information about the business relationship between Charter Oak and Travelers Indemnity
Company. During the hearing, it was apparent that Dziadek's counsel had some different notions

of Travelers Indemnity Company than did Charter Oak's counsel. Counsel are directed to meet

and confer, figure out if deposition questioning is a superior manner by which to obtain
32

information about Charter Oak and Travelers Indemnity Company, or if a more thorough

interrogatory answer is the way to resolve this dispute. If this Court has to revisit this issue,
some party is going to get sanctioned under Rule 37.

12.

Requests Number 44 and Number 46, and Interrogatory Number 15
- Recorded Statements or Conversations

Interrogatory Number 15 seeks answers as to whether Charter Oak has audio recordings

of conversations related to Dziadek's claim. Doc. 50 at 49. And if Charter Oak has such
recordings, Request Number 44 and Number 46 seek their production. Doc. 50 at 20. Charter

Oak responded to the Interrogatory by stating that "it has produced documents from which the
answer to the Interrogatory may be derived." Doc. 59-17 at 9. Charter Oak responded to these
Requests that seek "recorded statements" and "recordings that relate in any way to Laura

Dziadek, Lori Peterson, or the accident" by stating that it has produced the entire claims file
related to Dziadek's claim. Doc. 59-2 at 23-24.

Charter Oak in its brief states that "all

responsive documents would have been in the claim file, that the claim file was produced in its
entirety, and there are no other documents to produce." Doc. 58 at 17. Charter Oak says it has
confirmed "there is nothing else." Doc. 58 at 17.

Dziadek argues that recordings ofthe phone calls are relevant to contradict Charter Oak's
apparent defense that Dziadek's former counsel called to inquire whether the policy at issue
covered Lori Peterson, but did not inquire as to whether the policy provided UIM coverage for

Dziadek. Doc. 59 at 52. Apparently no recordings are preserved or included in claims files
according to Dziadek. Doc. 59 at 52. Charter Oak is ordered to search anew for any such
recordings and to produce any actual recordings if they still exist.
D.

Attorney's Fees
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If a motion to compel discovery is granted, "the court must. . . require the party or

deponent whose conduct necessitated the motion ... to pay the movant's reasonable expenses
incurred in making the motion, including attorney's fees." Fed R. Civ. P. 37(a)(5)(A). But,
expenses and fees should not be awarded if the non-moving party was substantially justified in

refusing discovery or if "other circumstances make an award of expenses unjust." Fed. R. Civ.
P. 37(a)(5)(A)(i-iii).

Dziadek has prevailed on some but not all of the Second Motion to Compel. As noted

above, Dziadek violated the spirit of the Scheduling Order in delaying bringing the motion to
compel. Dziadek's discovery requests were at times beyond the breadth of Rule 26 of the
Federal Rules of Civil Procedure, and Dziadek refused to compromise off of some of those
overbroad requests. Charter Oalc's boilerplate objections were inappropriate and Charter Oak
produced far less than it should have initially, stalled discovery, and was less forthcoming
through the meet-and-confer process than it should have been. Neither side has engaged in

discovery in a manner that this Court would expect. Accordingly, this Court declines to award
sanctions at this time, but defers that decision to see what, if anything, gets submitted in camera

and whether the parties cooperate to complete discovery, and, if not, which party is to blame.
IV.

CONCLUSION

For the reasons explained in this Opinion and Order, it is hereby

ORDERED that Dziadek's Second Motion to Compel, Doc. 49, is granted in part and
denied in part. It is further

ORDERED that Charter Oak must produce an organizational chart for the Naperville

claims office for 2009 through 2012 including those who handled Dziadek's claim, or if there are

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no such charts, the directory for that claims unit for 2009 through 2012 in response. It is further
ORDERED that, in response to Request for Production Number 5, to the extent that it has
not already done, Charter Oak shall produce the personnel files for Faith Styles, Timothy

Westbrook, Brian Koerner, Patricia Palaniuk, Amy Hennessy, and Philip Castignet. Charter Oak
may make the authorized redactions of all Social Security numbers, all medical benefits or
treatment information, employee bank account information, personal phone numbers, and home

addresses of current employees; may mark the documents as "confidential;" and may withhold
the production of documents regarding these individuals that relate to employer sponsored
benefit plans, unless those plans provide any incentives based on how employees handle claims.
The disclosure is to include any "scorecards" or information on bonus or incentive payments
from 2006 to 2012 and how that was calculated for the above-listed employees.

Such

information and personnel file information regarding Dawn Midkiff shall be provided to this
Court for in camera review within fourteen days of this Order. If any documents are withheld
under a claim of privilege, Charter Oak shall produce a privilege log to Dziadek. It is further

ORDERED that Charter Oak must produce documents responsive to Requests for

Production Number 11 and Number 13 if it has any. This includes documents related to how the
personnel handling claims, including their supervisory personnel, might receive increases in

salary, bonuses, commissions, or awards and includes any "scorecards" for those employees
listed in the paragraph immediately preceding this one. It is further

ORDERED that Charter Oak shall produce documents responsive to Request for
Production Number 12 and supplement its answer to Interrogatories Number 8 and Number 9.
It is further

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ORDERED that Charter Oak shall produce documents responsive to Requests for

Production Number 7 and Number 8 within the refined definition of "cost containment
programs" if it has responsive documents. It is further

ORDERED that Charter Oak shall produce the twenty-one ofthe twenty-four documents
sought by Dziadek in satisfaction of her training materials discovery requests in Requests for

Production 15, 39, and 47, as well as Interrogatory Number 2, that is reproduced at Doc. 50 at
37-38 and Doc. 58 at 13 that Charter Oak has agreed to search for and produce. Charter Oak
need not produce "7189, Institutional Bad Faith and Written Discovery" and " 12191, Uninsured Underinsured Motorist Coverage" unless Charter Oak has them in its possession or control.
Charter Oak must produce "Principles of Good Faith Claim Handling" unless it has a bona fide
claim of privilege. If it has a bona fide claim of privilege, it shall produce those parts of

"Principles of Good Faith Claim Handling" deemed privileged within fourteen days ofthis order
to this Court for in camera review and provide a privilege log to Dziadek. It is further
ORDERED that Charter Oak shall search anew and produce documents responsive to
Request for Production Number 55 if it has any such documents in its possession or control. It
is further

ORDERED that counsel meet and confer and determine the best method of Charter Oak

providing Dziadek with information on its "business relationship" with Travelers. It is further
ORDERED that Charter Oak shall produce documents responsive to Request for
Production Number 44 and Number 46 if it has them. It is further

ORDERED that Charter Oak supplement its discovery responses to comply with this
order within twenty-one calendar days hereof. It is further

36

ORDERED that the Fourth Motion to Continue, Doc. 45, is granted to enlarge the
discovery deadline by sixty-three calendar days hereof. It is further

ORDERED that Dziadek's Second Motion to Compel is otherwise denied. It is finally
ORDERED that Dziadek's request for attorney's fees is denied at this time and deferred
pending the completion of discovery.

Dated March 3_, 2014.
BY THE COURT:

5w<&-«-

ROBERTO A. LANGE

UNITED STATES DISTRICT JUDGE

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