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Richard Howard Kelly v. Provident Life and Accident Insurance Co

June 20, 2011

RICHARD HOWARD KELLY, PLAINTIFF,
v.
PROVIDENT LIFE AND ACCIDENT INSURANCE CO., DEFENDANT.



The opinion of the court was delivered by: Hon. Bernard G. Skomal U.S. Magistrate Judge United States District Court

ORDER ON JOINT MOTION TO DETERMINE DISCOVERY DISPUTE [Doc. No. 174]

This matter is before the Court on the parties' Joint Motion to Determine Discovery Dispute. (Doc. No. 174.) The pending dispute concerns "Plaintiff's Seventh Notice of Corporate Deposition of Defendant Provident Life and Accident Insurance Company" (Provident). (Doc. No. 192.) Plaintiff seeks to compel Provident to produce a witness pursuant to Federal Rule of Civil Procedure 30(b)(6), and Provident seeks a protective order to preclude Plaintiff from taking the deposition. After reviewing the motion, the entire case file, applicable case law, and for the reasons set forth below, the Court finds that Plaintiff is entitled to a Rule 30(b)(6) deposition on all of the topics set forth in his Seventh Notice of Corporate Deposition.

RELEVANT BACKGROUND

Plaintiff initiated this action relating to his own-occupation disability insurance policy with Provident. Plaintiff's complaint alleges three claims: (1) rescission of an August 2001 settlement agreement ending prior litigation between the parties; (2) breach of disability insurance contracts; (3) breach of the implied covenant of good faith and fair dealing. (Doc. No. 1 at ¶¶ 53-75.) Magistrate Judge Adler bifurcated discovery into two phases. (Doc. Nos. 93, 94.) The first phase was limited to discovery on the rescission claim. (Id.) Pursuant to Judge Adler's orders, if Plaintiff survived summary judgment on the rescission claim, the parties would continue with discovery on Plaintiff's breach of contract and bad faith claims. (Id.) On August 12, 2010, Judge Hayes issued an order denying Provident's motion for summary judgment on Plaintiff's rescission claim. (Doc. No. 158.) Because Plaintiff survived summary judgment, the undersigned held a further Case Management Conference and set the schedule for completing discovery on the breach of contract and bad faith claims. The Court's scheduling order stated: "At this stage in the litigation, all remaining discovery is limited to the claims and defenses relating to the causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing." (Doc. No. 164.)

Between October 2010 and February 2011, Provident produced thousands of internal company documents. (Doc. No 174-4, Ex. E.) The production encompassed at least 9,000 pages. (Id.) On February 18, 2011, the Court held a hearing on a number of discovery disputes, including the dispute currently before the Court-a Rule 30(b)(6) deposition concerning Provident's record retention policies and documents relating to Provident's claims adjusting policies. (Doc. No. 171 at 8-9.) The Court ultimately determined that the parties had not adequately briefed the Rule 30(b)(6) issue and ordered the parties to further meet and confer in hopes of resolving the dispute. (Id. at 20.) Unfortunately, the parties could not resolve the dispute, thus resulting in the present motion.

Plaintiff's Rule 30(b)(6) Notice of Deposition contains 14 potential deposition topics. (Doc. No. 192.) The topics are described with reasonable particularity and are narrowly tailored to the relevant issues and time periods. The topics include requests for a witness or witnesses that can testify about: (1) "records retention policies, practices, and procedures that were in place from 1991-1999; " (2) documents concerning Provident's changes to it claims handling policies, practices, and procedures that occurred between 1991 and 1999; (3) documents concerning claim improvement initiatives between 1995 and 1999; (4) documents concerning "institutionalizing the scrub," which were drafted between 1993 and 1999*fn1 ; (5) documents concerning the "lists of claimants targeted for 'intensive efforts' for 'successful resolution of the claim'"; (6) documents concerning lists of "problem claims"; (7) documents concerning "targeting of 'subjective claims'"; (8) documents concerning 'targets or goals for claims termination'; (9) documents concerning 'targets or goals for claims resolution'; (10) documents concerning financial targets for claims handling; (11) documents concerning reserve targets for claims handling; (12) documents concerning 'net termination ratios'; (13) documents concerning policies, practices, and procedures that were in effect from 1986 through 1999 that relate to Provident informing insureds that it is reserving the right to deny coverage; and (14) documents concerning Provident's policies, practices, and procedures in effect from 1986 through 1999 that relate to informing insureds that it is reserving the right to seek reimbursement of benefits previously paid. (Doc. No. 192.)

Provident argues that the burden and expense of the Rule 30(b)(6) deposition outweighs its likely benefit. (Doc. No. 174 at 4.) Provident further argues that: (1) Plaintiff did sufficient discovery into the breach of contract and bad faith claims during the rescission phase of discovery; (2) Plaintiff could have done this discovery during the previous phase; and (3) Plaintiff has access to deposition and trial testimony transcripts from other litigation and those transcripts are a more convenient source for the discovery presently being sought.*fn2 (Id. at 4-8.)

LEGAL STANDARD

The Federal Rules allow for broad discovery in civil actions: "Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party. . . .

Relevant information need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Fed. R. Civ. P. 26(b)(1). This provision is liberally construed to provide wide-ranging discovery of information necessary for parties to evaluate and resolve their dispute. Oakes v. Halvorsen Marine Ltd., 179 F.R.D. 281, 283 (C.D. Cal. 1995). A court must, however, limit discovery when "the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues." Fed. R. Civ. P. 26(b)(2)(C)(iii); see also Playboy Enterprises, Inc. v. Welles, 60 F. Supp.2d 1050, 1054 (S.D. Cal. 1999).

The party seeking to compel discovery has the burden of establishing that its request satisfies the relevancy requirements of Rule 26(b)(1). Soto v. City of Concord, 162 F.R.D. 603, 610 (N.D. Cal. 1995). In turn, the party opposing discovery has the burden of showing that discovery should not be allowed, and also has the burden of clarifying, explaining and supporting its objections with competent evidence. DirectTV, Inc. V. Trone, 209 F.R.D. 455, 458 (C.D. Cal. 2002).

Federal Rule of Civil Procedure 30(b)(6) provides:

In its notice or subpoena, a party may name as the deponent a public or private corporation, a partnership, an association, a governmental agency, or other entity and must describe with reasonable particularity the matters for examination. The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify. A subpoena must advise a nonparty organization of its duty to make this designation. The persons designated must testify about information known or reasonably available to the organization. This paragraph (6) does not preclude a deposition by any other procedure allowed by these rules.

The designee's role is to provide the entity's interpretation of events and documents. United States v., 166 F.R.D. 356, 361 (M.D. N.C. 1996). It is not expected that the designee have personal knowledge as to all relevant facts; however, the designee must become educated and gain the requested knowledge to the extent reasonably available. Int'l Ass'n of Machinists & Aerospace Workers v. Werner-Masuda, 390 F. Supp.2d 479, 487 (D. Md. 2005) (recognizing that a Rule 30(b)(6) deposition represents the entity's knowledge and not that of the individual deponent). The designee may become educated by reasonably obtaining information from documents, past employees, or other sources. Great Am. Ins. Co. of N.Y. v. Vegas Constr. Co., Inc., 251 F.R.D. 534, 541 (D. Nev. 2008). See also United States v. Mass. Indus. Fin. Agency, 162 F.R.D. 410, 412 (D. Mass. 1995) (rejecting corporation's arguments that it was not required under Rule 30(b)(6) to educate its witness about actions ...


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