United States District Court, D. Hawaii
AMERICAN AUTOMOBILE INSURANCE COMPANY; NATIONAL SURETY CORPORATION, Plaintiffs/ Counterclaim Defendants,
HAWAII NUT & BOLT, INC.; SAFEWAY, INC., Defendants/Counterclaim Plaintiffs, and DOUGLAS MOORE; MONARCH INSURANCE SERVICES, INC.; INSURANCE ASSOCIATES, INC., Additional Counterclaim Defendants.
GRANTING IN PART AND DENYING IN PART DEFENDANTS/ COUNTERCLAIM
PLAINTIFF SAFEWAY INC.'S MOTION TO COMPEL DOCUMENTS FROM
PLAINTIFFS/COUNTERCLAIM DEFENDANTS AMERICAN AUTOMOBILE
INSURANCE COMPANY AND NATIONAL SURETY CORPORATION
S.C. Chang United States Magistrate Judge.
the Court is Defendants/Counterclaim Plaintiff Safeway
Inc.'s (“Safeway”) Motion to Compel
Production of Documents From Plaintiffs/Counterclaim
Defendants American Automobile Insurance Company and National
Surety Corporation, filed October 20, 2016. On December 12,
2016, Counterclaim Defendants Douglas Moore, Monarch
Insurance Services, Inc., and Insurance Associates, Inc.
filed statements of no position. Plaintiffs/Counterclaim
Defendants American Automobile Insurance Company and National
Surety Corporation (collectively “Fireman's
Fund” or “FF”) filed their Opposition on
December 13, 2016. On December 20, 2016, Safeway filed its
matter came on for hearing on January 3, 2017. Steven
Allison, Esq., and Stuart Fujioka, Esq., appeared on behalf
of Fireman's Fund. Judith Pavey, Esq., and Maile Miller,
Esq., appeared, and Terence O'Toole, Esq., appeared by
phone, on behalf of Safeway. Corlis Chang, Esq., appeared on
behalf of Insurance Associates, Inc., and Donna Marron, Esq.,
and Sasha Hamada, Esq., appeared on behalf of Douglas Moore
and Monarch Insurance Services, Inc. After careful
consideration of the parties' submissions, the applicable
law, and the arguments presented at the hearing, the Court
HEREBY GRANTS IN PART AND DENIES IN PART the Motion for the
reasons set forth below.
Court and the parties are well-acquainted with the facts and
procedural history of this case, the Court includes only
those facts pertinent to the disposition of the instant
27, 2016, Safeway served FF with its First Request for
Production of Documents (“RPOD”). Due to an
anticipated substitution of counsel, Safeway granted FF an
extension of time to respond to the RPOD.
14, 2016, FF's former counsel Tom Petrus & Miller LLC
withdrew and Crowell & Moring LLP, along with local
counsel Stuart Fujioka, appeared.
September 15, 2016, FF began producing documents on a rolling
basis. Production continued through the end of October 2016.
During this time period, counsel for the parties exchanged
communications regarding the sufficiency of FF's
responses and production.
October 20, 2016, Safeway filed the instant Motion.
December 16, 2016, Senior U.S. District Judge Alan C. Kay
issued an Order Granting Plaintiffs American Automobile
Insurance Company's and National Surety Corporation's
Motion to Dismiss Breach of Contract and Reformation
Counterclaims in Second Amended Counterclaim
(“Dismissal Order”), which dismissed
Safeway's breach of contract and reformation claims with
leave to amend by January 15, 2017.
Rule of Civil Procedure (“FRCP”) 26 provides:
Parties may obtain discovery regarding any nonprivileged
matter that is relevant to any party's claim or defense
and proportional to the needs of the case, considering the
importance of the issues at stake in the action, the amount
in controversy, the parties' relative access to relevant
information, the parties' resources, the importance of
the discovery in resolving the issues, and whether the burden
or expense of the proposed discovery outweighs its likely
benefit. Information within this scope of discovery need not
be admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1). Relevance “has been construed
broadly to encompass any matter that bears on, or that
reasonably could lead to other matter that could bear on, any
issue that is or may be in the case.” Oppenheimer
Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). At the
same time, it has its “ultimate and necessary
boundaries.” Id. “District courts have
broad discretion in determining relevancy for discovery
purposes.” Surfvivor Media, Inc. v. Survivor
Prods., 406 F.3d 625, 635 (9th Cir. 2005) (citing
Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir.
2015 amendment to FRCP 26 added proportionality as a
requirement for obtaining discovery. Thus, “relevancy
alone is no longer sufficient to obtain discovery, the
discovery requested must also be proportional to the needs of
the case.” Centeno v. City of Fresno, Case No.
1:16-cv-00653-DAD-SAB, 2016 WL 7491634, at *4 (E.D. Cal. Dec.
29, 2016) (citing In re Bard IVC Filters Prod. Liab.
Litig., 317 F.R.D. 562, 564 (D. Ariz. 2016)). Addressing
all proportionality considerations does not rest solely with
the party seeking discovery. Fed.R.Civ.P. 26(b)(1) advisory
committee's note to 2015 amendment. Instead, “[t]he
parties and the court have a collective responsibility to
consider the proportionality of all discovery and consider it
in resolving discovery disputes.” Id.
courts have broad discretion to limit discovery where the
discovery sought is “unreasonably cumulative or
duplicative, or can be obtained from some other source that
is more convenient, less burdensome, or less
expensive.” Fed.R.Civ.P. 26(b)(2)(C). Limits also
should be imposed where the requesting party has had ample
opportunity to obtain the information through discovery in
the action or the discovery is outside the scope of
permissible discovery under FRCP 26(b)(1). Id.
event a party fails to respond to a discovery request, the
party who served the discovery request may file a motion to
compel. Fed.R.Civ.P. 37(a)(3)(B)(iii)-(iv). An incomplete or
evasive answer or response is deemed a failure to answer or
respond. Fed.R.Civ.P. 37(a)(4). The motion to compel must
include a certification that the “movant has in good
faith conferred or attempted to confer with the person or
party failing to make disclosure or discovery in an effort to
obtain it without court action.” Fed.R.Civ.P. 37(a)(1);
see also Local Rule 37.1(a), (b).
of this Motion, Safeway requests an order: 1) compelling FF
to provide appropriate responses and/or objections to all of
the requests; 2) compelling FF to produce the documents and
ESI in the form requested by Safeway; 3) compelling FF to
respond to and produce the documents and ESI responsive to
those requests they refuse to respond to (RPOD nos. 7, 17,
20, 24, 25, 25, 27, 29, 30, 31, 32, 33, 35, 36, 38, 39, 47,
49, 50, 51, 53, 54, 55, 56, 57, and 58); 4) compelling FF to
produce responsive documents and ESI to the requests for
which they have unreasonably limited or withheld production
(RPOD nos. 8, 9, 13, 26, 34, 42, 45, and 48); and 5) awarding
Safeway its reasonable attorneys' fees and costs incurred
in connection with this Motion.
initial matter, the Court addresses FF's contention that
Safeway did not engage in a meaningful meet and confer. Rule
37.1 of the Local Rules of Practice for the U.S. District
Court for the District of Hawaii (“Local Rules”)
The court will not entertain any motion pursuant to
Fed.R.Civ.P. 26 through 37, including any request for
expedited discovery assistance pursuant to LR37.1(c), unless
counsel have previously conferred, either in person or by
telephone, concerning all disputed issues (including the
requirement that discovery be proportional to the needs of
the case), in a good faith effort to limit the disputed
issues and, if possible, eliminate the necessity for a motion
or expedited discovery assistance.
Local Rule 37.1(a). Although it would have been preferable
for the parties to have resolved or more effectively limited
the subject disputes without involving the Court, the Court
finds that the meet and confer requirement was satisfied.
Therefore, the Court now turns to the merits of the disputes.
Claims and Underwriting Files in the Underlying
seeks all of HNB's claims and underwriting files in the
underlying lawsuit and does not accept FF's claims of
attorney client privilege and work product doctrine with
respect to the portions of the files that have been withheld.
FF represents that all claims and underwriting files for HNB
have been produced, with the exception of privileged
communications and documents with separate coverage counsel
and information on reserves. FF claims that it is unaware of
any additional non-privileged responsive documents and that
it has produced all non-privileged documents responsive to
RPOD nos. 8, 9, 13, 17, 29, 30, 31, 32, 33, 34, and 36.
Safeway believes the Court should conduct an in camera review
to determine whether the withheld documents have been
appropriately designated as
Court accepts counsel's representations concerning the
content of the withheld documents, as well as the
representation that all non-privileged documents have been
produced. The Court declines to order further production or
conduct an in camera review of all withheld documents in this
category based solely on Safeway's speculation that FF
has improperly designated the documents as privileged or
protected. Accordingly, the Court DENIES the Motion to the
extent it seeks further production and/or an in camera review
of all documents from the claims and underwriting files from
the underlying lawsuit for which FF asserts
the foregoing, the Court shall make a limited exception with
respect to Safeway's Exhibit L, which is a document
entitled Corporate Position Statement, Coverage Issues and
Declaratory Relief Actions. Safeway identifies this document
as a policy manual that should be produced, but FF's
counsel explained at the hearing that this is a unique
document. Per FF's counsel, FF asked coverage counsel to
make determinations about positions. Exhibit L was prepared
by coverage counsel and advises FF about how claims are to be
handled. The Court will review this document in
camera to determine whether the redactions are warranted. FF
is directed to provide the Court with an unredacted copy of
this document by January 16, 2017.
requests an order compelling the production of documents
relating to the setting of reserves. It asserts that
information concerning the setting of reserves is probative
of FF's assessment of HNB's exposure, as well as
FF's exposure. FF has objected to the production of
reserves information, characterizing the same as nothing more
than educated guesses about what an insurer may be required
to pay if coverage exists and the costs of defending a case.
an insurance context, the term ‘reserve' refers to
‘a fund of money set aside by a bank or an insurance
company to cover future liabilities.'”
Metropolitan Life Ins. Co. v. Ogandzhanova, No.
CV-12-372-PHX-GMS, 2013 WL 1442581, at *1 (D. Ariz. Apr. 9,
2013) (quoting Black's Law Dictionary (9th ed. 2009)).
The method of calculating reserves is central to the
relevance of the reserve information. If calculations rely on
automatic factors rather than an analysis of the factual or
legal merits of the insured's specific claim, the
relevance diminishes significantly. Id. at *2. By
contrast, “when calculation of the reserve amount
‘entail[s] an evaluation . . . based upon a thorough
factual consideration', the information will be
relevant.” Id. (citation and internal
FF's counsel conceded at the hearing that although the
setting of reserves is in part an accounting exercise to
comply with statutory/regulatory schemes, some analysis is
conducted. The Court therefore finds that the reserves
information with respect to HNB's claim is relevant and
proportional to the needs of the case. FF is ordered to
produce all non-privileged documents responsive to the
requests related to reserves information. Bernstein v.
Travelers Ins. Co., 447 F.Supp.2d 1100, 1107-08, 1116
(N.D. Cal. 2006) (finding ...