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North American Company for Life and Health Insurance v. Philpot

November 24, 2010


The opinion of the court was delivered by: Hon. Nita L. Stormes U.S. Magistrate Judge


Plaintiff North American Company for Life and Health Insurance ("North American") brought suit against defendant Michael L. Philpot ("Philpot") and other agents of the Michael Philpot Agency (collectively, "Defendants"). The Michel Philpot Agency is a former general insurance agent for North American and sold North American's Custom Accumulator Universal Life Policies ("UL" policies). North American claims that Defendants impermissibly rebated portions of their commissions to UL policyholders who bought their policies through the Michael Philpot Agency.

Of the 16 named Defendants, all except for Alex Almeida, Stan Perlman, Steve Rasky, Steve Costello and Robert Epstein have either settled out or been dismissed from the lawsuit. One former Defendant, Evan Nelson, in an interview and subsequent deposition, named his mother-in-law, Olivia Tagle, as having participated in the alleged illegal commission scheme that North American details in its third amended complaint. Upon learning this information, North American served a third-party subpoena on Tagle for her deposition and for certain documents. Tagle moves to quash the subpoena. For the following reasons, the court GRANTS in part and DENIES in part Tagle's motion to quash.


1. The Nelson Interview

North American interviewed Nelson on September 2, 2010, while he was still an active Defendant, regarding his selling of North American life insurance policies. Cooley Decl. ¶ 2. In the interview Nelson said Tagle introduced him to the practice of rebating premiums. Id. ¶ 3. North American and Nelson filed a joint motion to request the dismissal of Nelson on September 9, 2010. Dkt. No. 246. Nelson was dismissed without prejudice on September 13, 2010. Dkt. No. 247.

On September 16, 2010, based on the information learned in the Nelson interview, North American attempted to serve a subpoena on Tagle, requesting to take her deposition on October 1, 2010 and requesting a production of documents. Cooley Decl. ¶ 6. After Tagle avoided service for a week, North American hired a private investigator to survey her home so as to accomplish service. Id. ¶¶ 7-8. North American served her on September 28 with a noticed deposition date of October 6, 2010. Id. ¶ 9. Tagle told North American she could not attend an October 6 deposition. Id. ¶¶ 10-12. She said she could be available October 28, 29 or November 1, 2010. Id. ¶ 14. North American confirmed it would depose her on October 28, 2010. Id. On October 8, Tagle, through counsel, asked to move the deposition to November 1, 2010. On October 20, Tagle told North American she would move to quash the subpoena. Id. ¶ 16. After a few meet and confer efforts, Tagle filed the motion to quash on October 29, 2010, the last business day before the deposition. Id. ¶¶ 17-21.

On November 3, 2010, North American deposed Nelson, where he restated his interview testimony regarding Tagle. Id. ¶ 5; Ex. A. He testified that because Tagle could no longer sell life insurance due to North American "blacklisting" her, Tagle had Nelson sign life insurance applications, and used him and at least four others to submit life insurance applications that Tagle had procured. Cooley Decl. Ex. A ("Nelson Depo."), 7:23-8:13; 11:22-12:23; 14:15-15:1; 23:7-24:16. Nelson also testified that Tagle assured her that rebating is legal in California. Id. 7:11-22; 13:6-12. As part of their arrangement, Nelson would take 2% of the commissions from North American and turn over the remainder to Tagle. Id. 16:13-22; 26:17-27:4.

2. The Subpoena to Tagle

The subpoena asserts that Tagle "recruited, supervised and . . . acted at Michael J. Philpot's direction in selling North American UL insurance policies and policies of other insurance companies between 2004 and 2007." Cooley Decl. Ex. B. It also seeks documents including, but not limited to, all documents relating the compensation Tagle received from North American since 2004 (RFP No. 9), the compensation she received from the sale of North American life insurance policies since 2004 (RFP No. 10), North American's termination of Tagle (RFP No. 11), and to insurance coverage Tagle has had in place since 2004 (RFP No. 12).

Tagle moves to quash the deposition subpoena and request for production of documents on the grounds that they are overly broad and impose an undue burden on Tagle. She also says that despite meet and confer efforts, North American refused to limit the subpoena in any way, such as by limiting it to activities Tagle engaged in after her termination or to her dealings with the remaining Defendants. North American, however, says it did not receive a response to its offer to hold the document request in abeyance if Tagle went forward with the deposition. Cooley Decl. ¶ 20.


1. Legal Standard

Rule 45 sets forth the duties and obligations of parties issuing subpoenas and non-parties responding to subpoenas. "A party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena." Fed. R. Civ. Proc. ...

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