Old Republic Insurance Company et al v. Liberty Mutual Fire Insurance Company

Filing 42

ORDER signed by Judge Rudolph T. Randa on 12/16/2014. 27 Plaintiff's MOTION for Protective Order Limiting Depositions DENIED. Plaintiff's must produce Meier, Hill, and McDermott for deposition in Colorado no later than 1/16/2015. Libery M utual awarded reasonable expenses incurred in opposing protective order motion: by 12/30/2014 parties to engage in good faith effort to agree to amount of expenses and file stipulated proposed order; if parties cannot reach stipulation Liberty Mutual must file itemized claim by 1/7/2015 and Plaintiff's must file objections by 1/15/2015. (cc: all counsel)(cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
OLD REPUBLIC INSURANCE COMPANY,
and
RYDER TRUCK RENTAL, INC.,
Plaintiffs,
-vs-

Case No. 14-C-165

LIBERTY MUTUAL FIRE INSURANCE COMPANY,
Defendant.

DECISION AND ORDER
The Plaintiffs, Old Republic Insurance Company (“Old Republic”) and
Ryder Truck Rental, Inc. (“Ryder”), seek declaratory judgment that Defendant
Liberty Mutual Fire Insurance Company (“Liberty Mutual”) is obligated to
pay half of the settlement and defense costs incurred in relation to two
lawsuits arising out of a multi-vehicle accident that occurred in Indiana in
2008. They also seek judgment in the amount of $410,557.76 plus interest.
(Am. Compl. ¶ D.) (ECF No. 37.)
Liberty Mutual contends that it is not liable for any of the costs sought
by the Plaintiffs because the Indiana lawsuits were not tendered to it in a
timely fashion, prejudicing its ability to investigate, evaluate and defend those
matters, and to determine coverage under its policy. Liberty Mutual also
asserts that Old Republic’s policy provided primary coverage for the accident,

and that the Plaintiffs are estopped from seeking a declaration that Liberty
Mutual’s policy is co-primary because of their prior representations, relied
upon by Liberty Mutual, that the Old Republic policy provided primary
coverage and the Liberty Mutual policy was an excess policy.
This Decision and Order addresses the Plaintiffs’ motion for a
protective order, pursuant to Fed. R. Civ. P. 26(b)(2)(C) and 26(c)(1), limiting
the depositions of Ken Meier (“Meier”), Shanta Hill (“Hill”), Pat McDermott
(“McDermott”), or any other current or former Ryder employee(s) in this
action. (ECF No. 27.) The Plaintiffs assert that such depositions are not
reasonably calculated to lead to the discovery of admissible evidence; the
information sought is duplicative of that already produced in written
discovery; the information sought can be obtained from another source that is
more convenient and less burdensome; and the burden or expense of the
proposed discovery outweighs its likely benefit.
Analysis
Rule 26 of the Federal Rules of Civil Procedure governs the scope of
discovery in federal civil cases. Federal discovery rules are construed liberally
in order to assist in preparation for trial and settlement of litigated disputes.
See Bond v. Utreras, 585 F.3d 1061, 1075 (7th Cir. 2009). While a party may
object to discovery requests on the ground of relevance, that term is broadly
defined under Rule 26. Rule 26(b)(1) allows parties to discover information

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“regarding any nonprivileged matter that is relevant to any party’s claim or
defense. . . . Relevant information need not be admissible at the trial if the
discovery appears reasonably calculated to lead to the discovery of admissible
evidence.” Fed. R. Civ. P. 26(b)(1). See Nw. Mem’l Hosp. v. Ashcroft, 362 F.3d
923, 930 (7th Cir. 2004).
“Although there is a strong public policy in favor of disclosure of
relevant materials, Rule 26(b)(2) of the Federal Rules of Civil Procedure
empowers district courts to limit the scope of discovery if ‘the discovery sought
is unreasonably cumulative or duplicative, or is obtainable from some other
source that is more convenient, less burdensome, or less expensive.’”
Patterson v. Avery Dennison Corp., 281 F.3d 676, 681 (7th Cir. 2002). Federal
Rule of Civil Procedure 26 provides that a court “may, for good cause, issue an
order to protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(1). Potential
limits include specifying the terms of discovery, forbidding inquiry into certain
matters, limiting the scope of discovery, and designating the persons who may
be present while discovery is conducted.
Liberty

Mutual’s

submissions

establish

that

Meier,

Hill

and

McDermott, current or former Ryder employees who have first-hand
knowledge of the investigation/settlement of the Indiana lawsuits, are likely
to have information that is relevant to its defense that it was prejudiced due

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to the late notice of the Indiana lawsuits. Under substantive Wisconsin law,
which the parties apparently agree controls the issue, the Plaintiffs have the
burden of proving that Liberty Mutual was not prejudiced by the late notice.1
However, that does not preclude Liberty Mutual from conducting depositions
to develop the defense.
The Plaintiffs’ claim that the depositions will be burdensome is
diminished by Liberty Mutual’s agreement that it will conduct the depositions
in Colorado where the deponents work and reside, rather than requiring the
deponents to travel. Furthermore, the Plaintiffs have not established that the
information sought is duplicative of information that Liberty Mutual has or
that it is obtainable from another more convenient and less burdensome
source.

The Plaintiffs have not shown good cause for a protective order.

Therefore, the motion is denied.
Liberty Mutual requests attorney fees under Rules 26(c)(3) and
37(a)(5). The Plaintiffs contend fees should not be awarded because their

See Gerrard Realty Corp. v. Am. States Ins. Co., 89 Wis.2d 130, 146-47, 277
N.W.2d 863, 872 (Wis. 1979) (“[S]ec. 631.81 does not address situations, as in the
instant case, where notice is given more than one year after the time in which notice is
required by the policy provisions. Thus, we hold that where notice is given more than
one year after the time required by the policy, there is a rebuttable presumption of
prejudice and the burden of proof shifts to the claimant to prove that the insurer was
not prejudiced by the untimely notice.”); Neff v. Pierzina, 245 Wis.2d 285, 301, 629
N.W.2d 177, 185 (Wis. 2001) (quoting Gerrard approvingly). Compare Guaranty Bank v.
Chubb Corp., 538 F.3d 587, 590 (7th Cir. 2008) (acknowledging that “[t]here is nothing
in section 631.81(1), upon which the court relied [in Gerrard], about burden of proof,”
but concluding that it was bound by Wisconsin Supreme Court's holding); Nelson v.
Transguard Ins. Co. of Am., No. 13-CV-854-BBC, 2014 WL 6886631, at *2 (W.D. Wis.
Dec. 4, 2014).
1

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position was substantially justified.
Rule 26(c)(3) states “Rule 37(a)(5) applies to the award of expenses.”
Rule 37(a)(5)(b) states that a “if the motion is denied, . . . the court . . . must, .
. . require the movant, the attorney filing the motion, or both to pay the party
or deponent who opposed the motion its reasonable expenses incurred in
opposing the motion, including attorney’s fees. But the court must not order
this payment if the motion was substantially justified or other circumstances
make an award of expenses unjust.
The parallel language in the Equal Access to Justice Act, 28 U.S.C. §
2412(d)(1)(A), and in Rule 37 indicates that the term “substantially justified”
should be interpreted consistently in both provisions. See United States v.
Kemper Money Market Fund, Inc., 781 F.2d 1268, 1279 (7th Cir. 1986). A
position taken by a party is substantially justified if it has a reasonable basis
in fact and law, and if there is a reasonable connection between the facts and
the legal theory. See Stewart v. Astrue, 561 F.3d 679, 683 (7th Cir. 2009)
(citing Pierce v. Underwood, 487 U.S. 552, 565 (1988)).
The Plaintiffs’ position in seeking a protective order lacks justification
in the law or fact. The Plaintiffs took a myopic view of the legal and factual
issues of the case and unreasonably attempted to restrict discovery. They
have not contended that other circumstances make an award unjust.
Accordingly, the Court awards to Liberty Mutual its reasonable

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expenses in opposing the motion including attorney’s fees incurred defending
the motion for a protective order.

By December 30, 2014, the parties are

directed to engage in a good faith effort to agree to the amount of allowable
expenses and to file a stipulation and proposed order.
If the parties are unable to reach a stipulation, Liberty Mutual must
file an itemized claim for such expenses by January 7, 2015, together with
supporting documentation. The request for attorney’s fees must be presented
in a format that includes the hourly rates of the attorneys who worked on the
opposition and provides a sufficient factual basis for the Court to determine
the reasonableness of the hourly rates of those attorneys, and the
reasonableness of the time that they devoted to the response. Additionally,
Liberty Mutual must provide legal authority for the award of any claimed cost
or disbursements. No later than January 15, 2015, the Plaintiffs must file its
objections to the claimed expenses.
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS
HEREBY ORDERED THAT:
The Plaintiffs’ motion for a protective order (ECF No. 27) is DENIED;
The Plaintiffs must produce Meier, Hill, and McDermott for
deposition in Colorado no later than January 16, 2015;
Liberty Mutual is awarded the reasonable expenses it incurred in
opposing the protective order motion;

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By December 30, 2014, the parties must engage in a good faith effort
to agree to the amount of reasonable expenses incurred by Liberty Mutual in
opposing the motion and to file a stipulation and proposed order;
If the parties are unable to reach a stipulation, Liberty Mutual MUST
file an itemized claim for such expenses no later than January 7, 2015; and,
No later than January 15, 2015, the Plaintiffs MUST file their
objections to the claimed expenses.
Dated at Milwaukee, Wisconsin, this 16th day of December, 2014.

BY THE COURT:

__________________________
HON. RUDOLPH T. RANDA
U.S. District Judge

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