Fair v. Royal & Sun Alliance et al
Filing
75
ORDER granting in part and denying in part defendants Sedgwick & Nash Finch's 48 Motion for Protective Order and Motion to Quash; granting in part and denying in part defendants' 52 Motion to Expedite; and denying defendants' 70 Motion for Protective Order. Signed by US Magistrate Judge Veronica L. Duffy on 01/11/12. (Duffy, Veronica)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
ANNA FAIR,
Plaintiffs,
vs.
ROYAL & SUN ALLIANCE and
ARROWPOINT CAPITAL CORP., as
successor in interest to
ROYAL & SUN ALLIANCE,
NASH FINCH COMPANY, and
SEDGWICK CMS,
Defendants.
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CIV. 11-5005-JLV
ORDER
GRANTING IN PART AND
DENYING IN PART
DEFENDANTS’ MOTIONS
TO QUASH AND FOR
PROTECTIVE ORDER
[DOCKET NOS. 48 and 70]
INTRODUCTION
This matter is before the court on plaintiff Anna Fair’s complaint alleging
bad faith denial of her worker’s compensation insurance claim. See Docket
No. 1. Jurisdiction is premised on diverse citizenship of the parties and an
amount in controversy in excess of $75,000 pursuant to 28 U.S.C. § 1332.
Ms. Fair served defendants Nash Finch Company and Sedgwick CMS with a
notice of deposition and two subpoenas duces tecum pursuant to Fed. R. Civ. P.
30(b)(6). These two defendants then moved the court for an order quashing
that notice of deposition, quashing one of the subpoenas duces tecum and for
a protection order. See Docket Nos. 48, 70.1 Ms. Fair opposes these motions.
The district court, the Honorable Jeffrey L. Viken, referred defendants’ motions
to this magistrate judge for decision pursuant to 28 U.S.C. § 636(b)(1)(A).
FACTS
The following are facts relevant to the instant motion. Plaintiff Anna Fair
was employed by defendant Nash Finch Company (“Nash Finch”). While so
employed on July 8, 2003, she suffered a work-related injury to her left ankle,
resulting in a recurrence of a stasis ulcer. At the time of the injury, Nash
Finch had procured worker’s compensation insurance through an insurance
policy sold to them by Royal & Sun Alliance. Sedgwick CMS (“Sedgwick”)
administered worker’s compensation claims for Royal & Sun Alliance. Ms. Fair
received worker’s compensation benefits from Royal & Sun Alliance for her
ankle injury prior to August, 2009.2
In August, 2009, Ms. Fair required additional medical treatment for her
work-related ankle injury. Defendants did not agree to pay for the care and
1
Plaintiff served defendants with these three discovery requests on
December 21, 2011. Defendants moved to quash the Rule 30(b)(6) deposition
on December 30, 2011, but stated in that motion that they did not object to
either of the subpoenas duces tecum. Then, on January 11, 2012, defendants
moved to quash one of the subpoenas duces tecum. The deadline for
responding to the subpoena is January 13, 2012.
2
Initially, defendants disputed whether Ms. Fair’s injury arose out of and
in the course of her employment and whether she was permanently and totally
disabled. These issues were decided adversely to defendants on February 14,
2007. See Fair v. Nash Finch Co., 2007 S.D. 16, 728 N.S.2d 623.
2
Ms. Fair’s medial care provider would not provide the treatment until payment
for the care was verified. Accordingly, Ms. Fair arranged for her treatment to
be covered by Medicare so that she could receive the treatment she needed.
Ms. Fair was treated in September, 2009. Medicare paid over $3,000 on
Ms. Fair’s medical expenses relating to her ankle for this 2009 treatment.
Ms. Fair was herself responsible for just under $500 of these medical expenses.
Ms. Fair’s attorney pursued payment from defendants for these medical
expenses. Defendants did not make the payment. Ms. Fair alleges that
defendants’ decision not to pay was a deliberate bad faith denial of her worker’s
compensation claim. Defendants allege that the failure to pay the claim was
due to inadvertence rather than design.
Ms. Fair’s attorney filed a petition on March 15, 2010, before the South
Dakota Department of Labor in an attempt to force defendants to pay
Ms. Fair’s worker’s compensation claim for the September, 2009, medical
treatment. Defendants answered the petition by stating that they had already
paid all bills on Ms. Fair’s claim and asking that Ms. Fair’s petition be
dismissed.
In April 2010, Ms. Fair’s medical care provider turned Ms. Fair’s account
over to a debt collection agency, which began attempting to collect the
approximately $500 from Ms. Fair that was still owed on her September, 2009,
treatment bill.
3
Approximately three months after Ms. Fair’s petition before the
Department of Labor was filed, defendants paid in their entirety the medical
expenses for Ms. Fair’s September, 2009, treatment–resulting in a
reimbursement of Medicare and payment of the additional $500 balance.
Ms. Fair filed her complaint in this matter on January 24, 2011.
Since the lawsuit was initiated, the parties have engaged in some
discovery. The deposition of Ms. Fair has been taken. Depositions of Cindy
Weingart, Dave Oertli, Patty Nylin, Beth Iacono, and Deborragh Woods were
taken. And written discovery requests have been served and, for the most part,
responded to.
On December 21, 2011, Ms. Fair’s counsel served on defendants a
deposition notice pursuant to Fed. R. Civ. P. 30(b)(6) and a subpoena duces
tecum. The deposition notice listed 18 separate and specific inquiries it wished
Sedgwick to provide representatives to answer questions regarding, and 13
separate and specific inquires it wished Nash Finch to provide representatives
to answer questions regarding. The 13 topics posed for Nash Finch are
identical to the first 13 topics posed for Sedgwick. The deposition was noticed
as a video deposition and set a date of January 20, 2012, for the deposition to
take place.
Ms. Fair simultaneously served Sedgwick and Nash Finch with a
subpoena duces tecum for three specific documents or sets of documents, to be
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produced to Ms. Fair’s attorney one week before the Rule 30(b)(6) deposition.
Sedgwick and Nash Finch also object to one of these subpoenas duces tecum.
Sedgwick and Nash Finch now seek to quash the notice of deposition,
quash one subpoena duces tecum, and they seek a protection order. Ms. Fair
resists the motions.
DISCUSSION
A.
Good Faith Certification
Both the Federal Rules of Civil Procedure and this district’s local rules of
procedure require that parties meet and confer in an attempt to resolve
discovery disputes before filing discovery motions. See Fed. R. Civ. P. 26(c)(1);
DSD LR 37.1. A certification must be part of any discovery motion and the
certification must show that a good-faith effort was made to resolve disputes
before filing the motion. Id.
Defendants satisfied their duty to meet and confer prior to filing the
second motion, Docket No. 70. As to the first motion to quash and for a
protective order, Docket No. 48, no such attempt was even made by defendants
before filing the motion. Defendants state that “due to the holidays, the parties
have not had an opportunity to satisfy the obligations to meet and confer.” See
Defendants’ brief at Docket No. 49, page 2.
Plaintiff’s counsel represents that he was in his office working every
business day over the holidays and even on some non-business days. He was
5
never contacted by defendants’ counsel regarding the subject of this discovery
motion.
Had defendants attempted to contact plaintiff to resolve the discovery
issues and had defendants been unable to get in touch with plaintiff, the
failure to abide by Rule 26(c)(1) and Local Rule 37.1 might be excused. But the
meet-and-confer requirement is mandatory–both rules use the word “shall.”
And defendants made no effort to fulfill this requirement before filing the
instant motion. If defendants’ counsel were in the office long enough to draft
and file this motion, they were in the office long enough to place a telephone
call or send an e-mail to plaintiff’s counsel. The court finds that defendants
have not satisfied their obligation under Fed. R. Civ. P. 26(c)(1) or DSD LR 37.1
before filing this motion and that the failure to do so provides an independent
ground for the denial of the motion.
However, defense counsel did contact plaintiff’s counsel after filing the
motion and represent that they were unable to resolve their differences.
Because the merits of defendants’ objections to plaintiff’s discovery are likely to
arise again, and because the meet-and-confer was eventually held (albeit after
the motion was filed) the court addresses the merits of the motion.
B.
Scope of Discovery in a Civil Case
Under Fed. R. Civ. P. 30(b)(6), a party may designate a public or private
corporation as the deponent and list with reasonable particularity the matters
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the party wishes to examine the corporation on. The corporation must then
designate one or more persons to testify on behalf of the corporation.
Defendants Sedgwick CMS and Nash Finch do not take issue with the nature of
plaintiff’s Rule 30(b)(6) notice. They do not argue that Ms. Fair has failed to
state with reasonable particularity the matters on which she wishes to inquire.
Rather, defendants’ argument against the discovery is that the discovery is not
relevant and poses an undue burden.
The scope of discovery is governed by Fed. R. Civ. P. 26. The scope
described by that rule is broad:
Unless otherwise limited by court order, the scope of discovery is
as follows: Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or
defense–including the existence, description, nature, custody,
condition, and location of any documents or other tangible things
and the identity and location of persons who know of any
discoverable matter. For good cause, the court may order
discovery of any matter relevant to the subject matter involved in
the action. Relevant information need not be admissible at the
trial if the discovery appears reasonably calculated to lead to the
discovery of admissible evidence. All discovery is subject to the
limitations imposed by Rule 26(b)(2)(C).
See Fed. R. Civ. P. 26(b)(1).
This broad scope of discovery under subsection (b)(1) is limited by
subsection (b)(2)(C). That subsection provides that:
On motion or on its own, the court must limit the frequency or
extent of discovery otherwise allowed by these rules or by local rule
if it determines that:
(i) the discovery sought is unreasonably cumulative or
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duplicative, or can be obtained from some other source that
is more convenient, less burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to
obtain the information by discovery in the action; or
(iii) the burden or expense of the proposed discovery
outweighs its likely benefit, considering the needs of the
case, the amount in controversy, the parties’ resources, the
importance of the issues at stake in the action, and the
importance of the discovery in resolving the issues.
See Fed. R. Civ. P. 26(b)(2)(C).
A party may move for a protective order from discovery upon a
demonstration of good cause in order to protect themselves from annoyance,
embarrassment, oppression, or undue burden or expense. See Fed. R. Civ. P.
26(c)(1). If a motion for protective order is denied, the court may order that the
party provide or permit discovery. Id. at (c)(2). The court may award attorneys
fees and expenses in connection with a motion for protective order. Id. at (c)(3);
Fed. R. Civ. P. 37(a)(5).
The scope of discovery under Rule 26(b) is extremely broad. See 8
Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 2007 (2d
ed. 1994) (hereinafter "Wright & Miller"). The reason for the broad scope of
discovery is that "[m]utual 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." 8 Wright &
Miller, § 2007, 96 (quoting Hickman v. Taylor, 329 U.S. 495, 507-08, 67 S. Ct.
8
385, 392, 91 L. Ed. 2d 451 (1947)). The Federal Rules distinguish between
discoverability and admissibility of evidence. Id. at 95; see also Fed. R. Civ. P.
26(b), 32, and 33. Therefore, the rules of evidence assume the task of keeping
out incompetent, unreliable, or prejudicial evidence at trial. These
considerations are not inherent barriers to discovery, however.
The advisory committee’s note to the 2000 amendments to Rule 26(b)(1)
provide guidance on how courts should define the scope of discovery in a
particular case:
Under the amended provisions, if there is an objection that
discovery goes beyond material relevant to the parties’ claims or
defenses, the court would become involved to determine whether
the discovery is relevant to the claims or defenses and, if not,
whether good cause exists for authorizing it so long as it is relevant
to the subject matter of the action. The good-cause standard
warranting broader discovery is meant to be flexible.
The Committee intends that the parties and the court focus on the
actual claims and defenses involved in the action. The dividing
line between information relevant to the claims and defenses and
that relevant only to the subject matter of the action cannot be
defined with precision. A variety of types of information not
directly pertinent to the incident in suit could be relevant to the
claims or defenses raised in a given action. For example, other
incidents of the same type, or involving the same product, could be
properly discoverable under the revised standard. ... In each case,
the determination whether such information is discoverable
because it is relevant to the claims or defenses depends on the
circumstances of the pending action.
The rule change signals to the court that it has the authority to
confine discovery to the claims and defenses asserted in the
pleadings, and signals to the parties that they have no entitlement
to discovery to develop new claims or defenses that are not already
identified in the pleadings. ... When judicial intervention is
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invoked, the actual scope of discovery should be determined
according to the reasonable needs of the action. The court may
permit broader discovery in a particular case depending on the
circumstances of the case, the nature of the claims and defenses,
and the scope of the discovery requested.
See Fed. R. Civ. P. 26(b)(1) advisory committee’s note.
The same advisory committee’s note further clarifies that information is
discoverable only if it is relevant to the claims or defenses of the case or, upon
a showing of good cause, to the subject matter of the case. Id. “Relevancy is to
be broadly construed for discovery issues and is not limited to the precise
issues set out in the pleadings. Relevancy ... encompass[es] ‘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.’ ” E.E.O.C. v. Woodmen of the World
Life Ins. Society, 2007 WL 1217919 at *1 (D.Neb. March 15, 2007) (quoting
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)). The party
seeking discovery must make a “threshold showing of relevance before
production of information, which does not reasonably bear on the issues in the
case, is required.” Id. (citing Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th
Cir. 1993)). “Mere speculation that information might be useful will not suffice;
litigants seeking to compel discovery must describe with a reasonable degree of
specificity, the information they hope to obtain and its importance to their
case.” Id. (citing Cervantes v. Time, Inc., 464 F.2d 986, 994 (8th Cir. 1972)).
10
Discoverable information itself need not be admissible at trial; rather,
“discovery of such material is permitted if reasonably calculated to lead to the
discovery of admissible evidence.” See Fed. R. Civ. P. 26(b)(1) advisory
committee’s note.
Ms. Fair’s only claim in this lawsuit is a claim of bad faith refusal to pay
worker’s compensation insurance benefits for which she requests both
compensatory and punitive damages. To prove a bad faith cause of action,
Ms. Fair must show that defendants had no reasonable basis for denying her
worker’s compensation benefits as to her September, 2009, medical care and
that they acted with knowledge or a reckless disregard as to the lack of a
reasonable basis for the denial of benefits. See Sawyer v. Farm Bureau Mut.
Ins. Co., 2000 S.D. 144, ¶ 18, 619 N.W.2d 644, 649.
To be entitled to an award of punitive damages, Ms. Fair must show that
defendants acted with malice, actual or implied. See Bertelsen v. Allstate Ins.
Co., 2011 S.D. 13, ¶ 39, 796 N.W.2d 685, 698-99 (citing SDCL § 21-3-2).
“Actual malice is a positive state of mind, evidenced by a positive desire and
intention to injure one another, actuated by hatred or ill-will towards that
person.” Id. at 699 (quoting Biegler v. American Family Ins. Co., 2001 S.D. 13,
¶ 45, 621 N.W.2d 592, 605). “By contrast, presumed malice is ‘malice which
the law infers from or imputes to certain acts.’ ” Id. (quoting Harter v. Plains
Ins. Co., 1998 S.D. 59, ¶ 36, 579 N.W.2d 625, 634). “Presumed malice may
11
not ‘be motivated by hatred or ill-will but is present when a person acts
willfully or wantonly to the injury of others.’ ” Id. (quoting Biegler, 2001 S.D.
13, ¶ 45, 621 N.W.2d at 605).
Among the factors considered in determining the appropriateness and
amount, if any, of punitive damages to award, the degree of reprehensibility of
the defendant’s conduct is paramount. State Farm Mut. Auto. Ins. Co. v.
Campbell, 538 U.S. 408, 419 (2003); Roth v. Farner-Bocken Co., 2003 S.D. 80,
¶48, 667 N.W.2d 651, 666. When considering this factor, one considers
whether “the harm caused was physical as opposed to economic; [whether] the
tortious conduct evinced an indifference to or a reckless disregard of the health
or safety of others; [whether] the target of the conduct had financial
vulnerability; [whether] the conduct involved repeated actions or was an
isolated incident; and [whether] the harm was the result of intentional malice,
trickery, or deceit, or mere accident.” Roth, 2003 S.D. 80, ¶ 49, 667 N.W.2d at
666 (quoting Campbell, 538 U.S. at 419). Knowing the issues that are relevant
to the claim asserted by Ms. Fair, the court turns to defendants’ arguments as
to relevance.
1.
Items “a” through “h”
In Ms. Fair’s deposition notice, she listed the following topics into which
she indicated she wishes to depose both Sedgwick and Nash Finch:
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a.
The names of all people to whom you sent the following
documents: Nash Finch 9-10, 14-15, 19-20, 22-23, 31-32,
36-37, and 56.
b.
The amount in dollars that a 10% reduced average cost per
claim in 2002 would have totaled (see David Oertli deposition
p. 23).
c.
The amount in dollars that “a 10% reduction in the average
cost closed of IN and MO claims for 2009 for each office
when compared to 2008 numbers” (Nash Finch document
10) would have totaled.
d.
The amount in dollars of the “16.5% reduction on the
average paid on Indemnity claims when compared to last
year at this same time.” (Nash Finch document 20).
e.
The amount in dollars of the 11.6% reduction in the Medical
Only average paid on closed files in 2009 (Nash Finch
document 32).
f.
The amount in dollars of the 26% reduction in the “overall
average paid on indemnity claims” and the 8.4% reduction in
“medical only claims” (Nash Finch document 37).
g.
The amount in dollars of the percentage reductions in “Avg
Paid on Closed Indemnity % of Variance” (Nash Finch
document 56).
h.
The amount in dollars of the percentage reductions in the
“Avg Paid on Closed MO % of Variance” (Nash Finch
document 56).
Defendants object to all of the above on the grounds of relevance. Defendants
argue that each of the above topics relates only to closed indemnity and
medical only claims. Defendants assert that Anna Fair’s claim is an open
claim and, therefore, not included in the statistics for average closed costs.
Defendants further assert that their failure to pay Ms. Fair’s September, 2009,
13
medical expenses was as a result of mere oversight, and not part of any larger
claims-handling pattern extent within their organizations.
Of course, this latter is at the crux of Anna Fair’s claim of bad faith.
Both parties spend an inordinate amount of space in their briefs addressing
the merits whether bad faith occurred in this case. Defendants’ motion is not
about the merits of this action. That is for another day. What defendant’s
motion puts in issue is whether the discovery Ms. Fair has requested is
relevant to her claim.
Ms. Fair asserts that the topics are relevant to her claim. She asserts
that these inquiries relate to a program instituted by defendants in 2009–the
same year as Ms. Fair’s unpaid medical claims--to aggressively pressure their
claims handlers to close claims files and to reduce payments on claims.
Ms. Fair points out that items “a” through “h” have already been
produced by defendants in discovery or, with regard to topic “b,” Ms. Fair
made inquiry orally in a deposition of one of defendant’s employees. However,
failure to object on the basis of relevancy during a deposition does not waive
that objection. See Fed. R. Civ. P. 32(d)(3)(A). As to the written discovery,
defendants did interpose a relevancy objection, while at the same time
producing the documents requested.
Nevertheless, the posture of discovery right now is that defendants have
produced information to Ms. Fair and Ms. Fair’s Rule 30(b)(6) deposition is
14
fairly characterized as simply an attempt to obtain further explanation or
insight into these topics or documents which defendants have already allowed
to be discovered.
Item “a” in plaintiff’s Rule 30(b)(6) notice relates to documents sent by
defendants regarding the alleged claim reduction program. The names of all
but four of the persons to whom the document were sent were redacted by
defendants prior to producing the documents to Ms. Fair in discovery.
Ms. Fair argues that she needs to know who else the document was sent
to in order to judge the size and scope of defendants’ claim reduction program.
This is certainly relevant to the issue of the reprehensibility of defendants’
actions and whether defendants’ conduct “involved repeated actions or was an
isolated incident; and [whether] the harm was the result of intentional malice,
trickery, or deceit, or mere accident.” Roth, 2003 S.D. 80, ¶ 49, 667 N.W.2d at
666 (quoting Campbell, 538 U.S. at 419).
The remaining topics “b” through “h” are likewise relevant. Apparently
defendants have already testified or given documents to Ms. Fair regarding
percentage reductions in various claims. Items “b” through “h” merely seek for
someone at Sedgwick or Nash Finch to tell plaintiff what those percentages
translate into in terms of actual dollar amounts. This seems wholly
unobjectionable and is relevant to the same issue discussed above.
15
Furthermore, the work required by defendants to translate percentages into
dollar amounts seems minimal.
With regard to defendants’ assertion that the statistics relate to closed
files whereas Ms. Fair’s claim is open, Ms. Fair disputes this characterization.
Ms. Fair points out that the aforementioned alleged program was instituted to
reduce the amount of money defendants paid out on claims. By definition, no
monies are paid out on closed claims, so the program can only have its desired
effect on claims that are open–either by denying payments on those claims or
by closing the files (or both). Furthermore, Ms. Fair asserts that in 2010,
defendants in fact did close Ms. Fair’s file.
The court returns to the governing principle regarding discovery
relevancy. The discovery sought need not be admissible at trial. It need only
be relevant to an issue or claim or defense that is disputed in the lawsuit.
Here, Ms. Fair has adequately satisfied her burden of showing that the
discovery sought in topics “a” through “h” is relevant to her claim of bad faith
and request for punitive damages.
2.
Topics “i” through “k”
In topics “i” through “k,” Ms. Fair seeks to inquire into the following:
i.
How much Sedgwick paid out in 2009 on Nash Finch
workers compensation claims (see David Oertli deposition p.
5-6).
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j.
The number of Sedgwick offices nationwide that administer
Nash Finch worker’s compensation claims (see David Oertli
deposition p. 6-7).
k.
How much of Nash Finch’s worker’s compensation insurance
nationwide is administered by Sedgwick (see Beth Iacono
deposition p. 6-8).
Defendants object to these topics on the basis of relevance, arguing again
that Ms. Fair’s claim was not paid due to inadvertence. Ms. Fair argues that
this is relevant to the alleged program instituted by Sedgwick to reduce the
amount paid out on claims.
In this regard, it would be relevant to know what the apparent bargaining
power is between Nash Finch and Sedgwick. The old saw, “if you owe your
banker $1,000, it’s your problem, if you owe your banker $1 million, it’s your
banker’s problem,” comes to mind. Was Nash Finch one of only many clients
for whom Sedgwick handled claims, constituting a small percentage of
Sedgwick’s total business? Or was Nash Finch the “tail that wagged the dog,”
accounting for a disproportionate share of Sedgwick’s business? In
determining whether Nash Finch had any input or power to affect the claims
handling procedures utilized by Sedgwick, the information in topics i through k
is at least tangentially relevant. The court notes that both parties are named
defendants in this action, so their relative fault and power to control events
relevant to the handling of Ms. Fair’s claim may be relevant.
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3.
Topic “l”
Plaintiff alleges that Jane Adams, Sedgwick’s National Program Manager
for the Nash Finch account, was a key factor in implementing the program to
reduce claims payments discussed above. Plaintiff alleges that Ms. Adams sent
a number of e-mails relating to this program beginning in January, 2009. After
resounding success in reducing claims payments, according to plaintiff,
Ms. Adams is alleged to have stated “I really like all the green in these columns
of the report.”
Plaintiff previously deposed a Sedgwick employee, Cindy Weingart, who
testified that the “green” Ms. Adams referred to in her statement was not the
color of United States currency, but rather that the “green” referred literally to
the color on Ms. Adams’ spreadsheet. Topic “l” of plaintiff’s Rule 30(b)(6)
deposition requests that defendants designate someone to testify to whether
“green” in Ms. Adams’ statement refers literally to the color green or to the fact
that money is green.
Defendants object to this as an “improper” topic for a Rule 30(b)(6)
deposition, although they cite no authority in support of their objection. More
cogently, defendants point out that the subpoena duces tecum which
accompanied plaintiff’s Rule 30(b)(6) deposition notice asks defendants to
produce a color copy of the actual computer screen and report referred to in
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Nash Finch document 23. Defendants have represented that they do not object
to this subpoena and intend to produce the two requested documents.
Defendants’ objection, really, is thus that the Rule 30(b)(6) notice is
duplicative. The court agrees. A color copy of both the computer screen and
the report will show whether the columns were literally green or not. Anyone
else’s interpretation of Ms. Adams’ statement is really beside the point.
The court notes that no deposition notice for Ms. Adams appears in the
court’s docket. In a telephone conference regarding these motions, the parties
indicated that Ms. Adams is available as a witness. It seems Ms. Adams would
be in the best position to explain her own statement in this regard. If plaintiff
wishes to specifically depose Ms. Adams, a separate deposition notice can be
issued as to her. The plaintiff will have in her possession the color copy of
Ms. Adams’ computer screen and report. The court will not require defendants
to produce a parade of recipients of Ms. Adams’ statement to testify as to each
of their own individual understandings of what Ms. Adams meant.
4.
Topics “m” through “r”
Topics “m” through “r” request defendants to produce a representative to
testify regarding incomplete discovery responses previously made by
defendants. The topics upon which plaintiff wishes to inquire are:
m.
Why you did not produce the e-mails between March 5,
2009, and August 17, 2009, that are part of the series of emails that are marked as Nash Finch 9-10, 14-15, 19-20,
22-23, 31-32, and 36-37.
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n.
Why the personnel file that you produced for David Oertli
runs only through 2005 (see Oertli deposition p.23).3
o.
Whether the personnel files you produced for Christine
Jesperson, Cindy Weingart, and David Oertli are complete or
incomplete, and if incomplete, what documents you failed to
produce and why you failed to produce them.
p.
Why you produced incomplete billing records for Richard
Travis and Jeff Shultz.
q.
Why you have failed to produce complete billing records for
Richard Travis and Jeff Shultz despite plaintiff’s attorney’s
multiple requests for them.
r.
What efforts, if any, you took to produce complete billing
records for Richard Travis and Jeff Shultz.
Defendants argue that topics “m” through “r” are not proper topics for a
Rule 30(b)(6) deposition and assert that the topics should be resolved “through
informal resolution activities by the parties and motions practice.” Defendants
do not specify what type of activities or motions are appropriate to resolve these
matters. Defendants do not cite any authority for their position. As the party
seeking to avoid discovery, defendants have the burden of demonstrating that
they have a basis for doing so if plaintiff shows that the discovery is relevant to
her claim. Fed. R. Civ. P. 26(c)(1).
Ms. Fair asserts that the information is relevant. First of all, she points
out that defendants have produced some documents relative to each of these
3
David Oertli is asserted to have continued his employment with
Sedgwick to the present day.
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topics. She wants to inquire as to each category of documents whether the
production was complete or incomplete.
Second, citing McElgunn v. CUNA, 700 F. Supp. 2d 1141, 1149 (D.S.D.
2010), plaintiff asserts that evidence that an insurance company has submitted
false discovery responses in a bad faith litigation is relevant to the insurance
company’s credibility, which is turn is relevant to the bad faith action because
the jury must determine whether the company’s explanation for how it handled
the plaintiff’s claim is credible.
Defendants point out that the discovery response in McElgunn was
completely false in that the company responded that there were no documents
at all, when in fact documents existed while defendants’ own responses in this
case are merely incomplete. This is a distinction without a difference.
Ms. Fair has a right, at minimum, to discover if there are other
documents responsive to her discovery requests that defendants have not yet
produced. This is certainly a proper topic for a Rule 30(b)(6) deposition.
Defendants cannot shield themselves from producing the custodian of various
categories of documents to answer questions about what documents exist.
Furthermore, depending on the reason certain documents were withheld, if
they were withheld, and whether it was disclosed to Ms. Fair that documents
were being withheld, Ms. Fair may discover further evidence of bad faith. At a
minimum, the reason why documents were not produced may bear on the
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defendants’ credibility. This is not only relevant, but may lead to the discovery
of other relevant and admissible information.
5.
Subpoena duces tecum for “scorecards”
On December 21, 2011, Ms. Fair served defendants with a subpoena
duces tecum requesting that they produce, on January 13, 2012, certain
“scorecards” for the years 2008 and 2009 as David Oertli referenced during his
deposition. Christine Jesperson was the Sedgwick employee who was the
claims handler for Anna Fair’s claim. Her immediate supervisor was Cindy
Weingart. Ms. Weingart’s supervisor was David Oertli, who was the supervisor
for the claims group in Minneapolis, Minnesota.
Defendants’ objection to producing the “scorecards” is that they were an
entirely personal metric which they assert Mr. Oertli created and kept for
himself to reflect the performance of his “team.” Ms. Weingart and
Ms. Jesperson were part of Oertli’s “team.” Defendants also argue that the
“scorecards” contain information about claims other than plaintiff’s type of
claim.
Ms. Fair disputes defendants’ characterization of the “scorecard” as being
wholly a personal creation of Oertli. Ms. Fair has produced corporate
documents from Sedgwick discussing its expectations of its operation
managers, including an expectation that the manager will, at minimum, meet
the target on his or her office’s “scorecard.” See Docket No. 74-1. Thus, it
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appears every office manager would be expected to have a scorecard for his
office and to meet the target on that scorecard.
Both Oertli and Weingart discussed the use of “scorecards” in how
Sedgwick manages its employees. See Docket No. 74-2, 74-3. Ms. Weingart
testified that if her diaries chronicling past-due claims–claims that have not
been closed by a certain target date–or if her supervisor diaries are late, she
gets “scorecarded”–something that she explained as a chart whereby her
supervisor tells her “this is where you are improving, this is where you are not
improving.” See Docket No. 74-3.
Plaintiff’s theory of her case appears to be that defendants brought
institutional pressure to bear on its employees to deny claims and close claims
files. The use of “scorecards” appears to be an instrument whereby Sedgwick
manages its employees’ performance in the handling of claims. It is relevant.
It is not wholly personal to Oertli. And Oertli’s scorecards are relevant because
his “team” included the employee handling Ms. Fair’s claim.
C.
Undue Burden
Rule 26(b)(2) requires the court to limit discovery if it determines, for
example, that the discovery sought is unreasonably cumulative or duplicative
or that “the burden or expense of the proposed discovery outweighs its likely
benefit...” See Fed. R. Civ. P. 26(b)(2)(C); see also Roberts v. Shawnee Mission
Ford, Inc., 352 F.3d 358, 361 (8th Cir. 2003) (“The rule vests the district court
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with discretion to limit discovery if it determines, inter alia, the burden or
expense of the proposed discovery outweighs its likely benefit.”); Continental
Illinois Nat’l Bank & Trust Co. of Chicago v. Caton, 136 F.R.D. 682, 684-85
(D.Kan. 1991) (“All discovery requests are a burden on the party who must
respond thereto. Unless the task of producing or answering is unusual, undue
or extraordinary, the general rule requires the entity answering or producing
the documents to bear that burden.”).
Several courts have determined that where the discovery requests are
relevant, the fact that answering them will be burdensome and expensive is
not in itself a reason for a court’s refusing to order discovery which is
otherwise appropriate. See In re Folding Carton Antitrust Litigation, 83 F.R.D.
260, 265 (N.D. Ill. 1979) (stating that “[b]ecause the interrogatories themselves
are relevant, the fact that answers to them will be burdensome and expensive
‘is not in itself a reason for refusing to order discovery which is otherwise
appropriate’ ”); Alexander v. Parsons, 75 F.R.D. 536, 539 (W.D. Mich. 1977)
(stating that “the mere fact discovery is burdensome . . . is not a sufficient
objection to such discovery, providing the information sought is relevant or
may lead to the discovery of admissible evidence”); and Burns v. Imagine Films
Entm’t, Inc., 164 F.R.D. 589, 593 (W.D.N.Y. 1996) (determining that the fact
that answering interrogatories will require the objecting party to expend
considerable time, effort, and expense consulting, reviewing, and analyzing
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huge volumes of documents and information is an insufficient basis for an
objection). Moreover, if discovery requests are relevant, the fact that they
involve work, which may be time consuming, is not sufficient to render them
objectionable. See United States v. Nysco Labs., Inc., 26 F.R.D. 159, 161-62
(E.D.N.Y. 1960)and Rogers v. Tri-State Materials Corp., 51 F.R.D. 234, 245
(N.D. W. Va. 1970) (stating that “[i]nterrogatories, otherwise relevant, are not
objectionable and oppressive simply on grounds [that] they may cause the
answering party work, research and expense”).
Other than to make the bald assertion that Ms. Fair’s discovery requests
are an “undue burden,” defendants do not carry their own burden of
demonstrating that responding to the discovery requests will be onerous,
expensive, or require labor out of all proportion to the value of the discovery.
Defendants do not explain what steps will be required to respond to the
discovery. They do not estimate the hours of labor that will be involved. They
do not estimate the expense.
The court has found that all of plaintiff’s discovery requests are relevant
to her claim. As such, the burden is on defendants to show some basis for
issuing a protective order, some facts from which the court might be able to
judge whether responding to the requests will be simply “too much.”
Defendants have not carried their burden.
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CONCLUSION
Based on the foregoing, it is hereby
ORDERED that defendants’ motion to quash the Rule 30(b)(6) notice and
for a protective order [Docket No. 48] is denied, with the exception of topic “l,”
which the court grants. The Rule 30(b)(6) deposition notice issued by plaintiff
remains in full force and effect. The parties should exercise their best efforts to
hold the deposition on the date, time and location indicated in the plaintiff’s
notice. It is further
ORDERED that defendants’ motion to quash the subpoena duces tecum
requesting copies of David Oertli’s “scorecards” for the years 2008 and 2009
and for a protective order is denied. Defendants shall produce the documents
in the manner, at the location, and at the time and date specified in the
subpoena. It is further
ORDERED that the two motions to expedite and to stay [Dockets No. 52
and 70] are granted in part and denied in part. The court grants the request to
expedite ruling in that the court has ruled on the motions in advance of the
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deadlines contained in plaintiff’s discovery requests. The requests to stay are
denied as moot.
Dated January 11, 2012.
BY THE COURT:
/s/
Veronica L. Duffy
VERONICA L. DUFFY
UNITED STATES MAGISTRATE JUDGE
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