Admissions of Fact, and More Propounding or Responding to Discovery - - PowerPoint PPT Presentation

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Discovery Requests in Insurance Litigation: Interrogatories, Production of Documents, Admissions of Fact, and More

Propounding or Responding to Discovery Requests After Amendments to Rules 26(b) and 34(b)

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, APRIL 5, 2017

Sarah R. Anchors, Partner, Quarles & Brady, Phoenix Tomas M. Thompson, Partner, Vocke Law Group, Chicago

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Discovery Requests in Insurance Litigation: Interrogatories, Production of Documents, Admissions of Fact, and More

Sarah Anchors practices general commercial litigation, with a focus on lender liability, consumer protection statutes, and insurance policyholder

• representation. She assists insurance

policyholders in obtaining coverage for claims and works on bad-faith claims. Recently, she has presented on the emerging field of insurance coverage for data breaches and cybersecurity

• risks. Additionally, she has experience

representing lenders and businesses in eminent domain actions. sarah.anchors@quarles.com

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Discovery Requests in Insurance Litigation: Interrogatories, Production of Documents, Admissions of Fact, and More

Tom Thompson is a partner at Vocke Law Group LLP, a Chicago boutique launched in October of 2016. With significant experience presenting cases to juries, judges, arbitrators and regulators, Mr. Thompson frequently represents insurers and reinsurers in complex coverage matters, class actions, regulatory investigations, and reinsurance arbitrations. He also regularly advises insurance and reinsurance clients on information governance, data privacy and electronic discovery issues. Mr. Thompson is a member

• f the Seventh Circuit Electronic Discovery

Pilot Program Committee and served as the co-chair of the Technology Subcommittee. tthompson@vockelawgroup.com

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Discovery Requests in Insurance Litigation: Interrogatories, Production of Documents, Admissions of Fact, and More

Propounding or Responding to Discovery Requests After Amendments to Rules 26(b) and 34(b)

Overview I. Brief overview of 2015 amendments II. Considerations for drafting discovery requests

• III. Strategies for responding/objecting to discovery requests

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• I. Brief overview of 2015 amendments

Proportionality Rule 1:

[These rules] should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.

Rule 26(b)(1):

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may

• btain 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.

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• I. Brief overview of 2015 amendments
• Rule 1: “[These rules] should be construed, and administered,

and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.”

• Amended to emphasize that “the parties share the responsibility to employ the

rules” for a just, speedy and inexpensive determination. “Effective advocacy is consistent with –and indeed depends upon – cooperative and proportional use of procedure.” Rule 1 Advisory Committee Notes, 2015 Am.

• Rule 1 “has been expanded by a mere eight words, but those are words that

judges and practitioners must take to heart. . . . The underscored words make express the obligation of judges and lawyers to work cooperatively in controlling the expense and time demands of litigation—an obligation given effect in the amendments that follow.” Chief Justice John G. Roberts’ 2015 Year-end Report on the Federal Judiciary, at pp. 5-6.

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Case discussion of amended Rule 1

• Steuben Foods, Inc. v. Oystar Gp., 10-CV-00780-EAW-JJM, 2015 WL 9275748, at *1 (W.D.N.Y.
• Dec. 21, 2015) (reminding parties of Rule 1 and the expectation that they will coordinate

efforts in scheduling depositions and avoiding repetitive and cumulative questioning of witnesses)

• Southport Bank v. Miles, 10-CV-8321, 2016 WL 7366885, at *3 (N.D. Ill. Dec. 19, 2016)

(“Southport's overbroad discovery requests to FNBO are not in keeping with the letter or spirit of Rule 1 let alone the other Federal Rules and cases cited herein.”)

• Harbord v. Home Depo U.S.A. Inc., 3:16-CV-2179-SI, 2017 WL 1102685, at *3 (D. Or. Mar. 24,

2017) (“Defendant's approach to discovery in this case is inconsistent with Rule 1. Plaintiff's motion for protective order (ECF 14) is granted. After Defendant has reviewed Plaintiff's initial disclosures, Defendant and Plaintiff shall, in good faith, meet in person and confer about discovery as required under Rule 26(f) of the Federal Rules of Civil Procedure, which the parties have not yet done. Only then may Defendant propound a more reasonable set of requests for production, if needed, consistent with both the letter and spirit of the federal rules.”)

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• I. Brief overview of 2015 amendments

Proportionality

Before 2015 Amendments Rule 26(b)(1): 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). Rule 26(b)(2)(C): On motion or on its own, the court must limit the frequency or extent of discovery … if it determines that: (i) 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; (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.

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• I. Brief overview of 2015 amendments

Proportionality

Today (after 2015 Amendments)

Rule 26(b)(1): 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.

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Proportionality is not new

• Previously in Rule 26(b)(2)(C)(iii). Added in 1983.
• The 1983 Advisory Committee Notes to FRCP 26(b) state that
• ne of the purposes of the amendment adding proportionality

was to “deal with the problem of over-discovery” and to “guard against redundant or disproportionate discovery.” In applying the proportionality requirement, the Committee counseled that

• ne of its concerns was “the limitations on a financially weak

litigant to withstand extensive opposition to a discovery program.” Id. Furthermore, the Committee acknowledged that

• ften proportionality cannot be measured solely in terms of the

money damages at stake, and that often philosophic, social, or institutional public policy considerations might bear on the question of the value of the case. Id.

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• I. Brief overview of 2015 amendments

Additional Resources on Proportionality:

• The Sedona Conference Commentary on Proportionality in

Electronic Discovery, November 2016 Public Comment Version, available at https://thesedonaconference.org/publications

• www.discoverypilot.com – the Seventh Circuit Electronic

Discovery Committee Pilot Program’s website

• Hon. Elizabeth D. Laporte & Jonathan M. Redgrave, A Practical

Guide to Achieving Proportionality Under New Federal Rule of Civil Procedure 26, 9 FED. CTS. L. REV. 19 (2015)

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• I. Brief overview of 2015 amendments and their

requirements Kickstarting Document Discovery Rule 26(d)(2), Early Rule 34 Requests.

(A) Time to Deliver. More than 21 days after the summons and complaint are

served on a party, a request under Rule 34 may be delivered: (i) to that party by any other party, and (ii) by that party to any plaintiff or to any other party that has been served. (B) When Considered Served. The request is considered to have been served at the first Rule 26(f) conference.

Rule 34(b)(2), Responses and Objections.

(A) Time to Respond. The party to whom the request is directed must respond in writing within 30 days after being served or — if the request was delivered under Rule 26(d)(2) — within 30 days after the parties’ first Rule 26(f) conference. A shorter or longer time may be stipulated to under Rule 29 or be ordered by the court.

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• II. Considerations for drafting discovery requests

Two Common Insurance Litigation Scenarios

• A. Breach of Contract – Coverage under Insurance Policy

within Limits

• B. Bad Faith – Damages beyond the Insurance Policy Limits

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• II. Considerations for drafting discovery requests

in a Breach of Contract Case

• All documents relating to the investigation, processing and

analysis of insured’s claim.

• All documents relied upon, or which form any basis, for

insurer’s assertion that certain of insured’s claims are not compensable, including, but not limited to, schedules of industry standards, similar compensable claims, accounting, valuation charts and any valuation charts or memoranda or recommendations.

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• III. Strategies for responding/objecting to discovery

requests

• Recognize Rule 26(b) analysis is highly fact-intensive
• Proportionality is a proactive strategy that requires more

than conclusory objection

• Increasing embrace of “iterative” approach to ensure

proportionality, e.g. phasing and staging – Phasing of discovery – Staging of production on specific issues – Representative sampling

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• III. Strategies for responding/objecting to discovery

requests

• FRCP 34(b) makes crystal clear that such general objections

are disallowed. Responding party must specifically state how each request is privileged, overly burdensome, outside the scope of discovery, or otherwise not subject to discovery.

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• III. Strategies for responding/objecting to discovery

requests Asserting Objections Based on Proportionality or Burden

• Be Specific – Address each factor and provide detail
• Think Metrics over Rhetoric

‒ Consider discovery expenses from past cases ‒ Industry averages ‒ Estimates from service providers

• Consider Litigation Management Policy and/or Procedures

Based on Case Parameters

• If applicable, consider suggesting alternative less-burdensome

means to provide probative evidence

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• II. Considerations for drafting discovery requests
• Interrogatory: The name, court, docket number, substance of

allegations and outcome of all lawsuits alleging bad faith against the insurer in the past 10 years.

• Related RFP: Produce all complaints and docket sheets for the

lawsuits you identified in response to the Interrogatory.

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• III. Strategies for responding/objecting to discovery

requests Insurer Viewpoint and Potential Response Strategy

• Consider Battle Lines: Lawsuit Allegations v. Judgments

‒ Lawsuit allegations are not relevant and prove nothing ‒ What may have been alleged in an unrelated case is not probative of bad faith in this case

• Can the Response Be Staged or Phased?

‒ Produce judgement cases and reassess ‒ Depending on nature of bad faith allegations, propose staging by office/region or line of business

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• II. Considerations for drafting discovery requests
• Produce the personnel files of all personnel involved in the

claim, and of all supervisors in the chain of command above those personnel, up to the head of the claims department.

• Produce all documents related to compensation, including

bonuses, stock compensation and any other remuneration, to all personnel involved in the claim and to all supervisors in the chain of command above those personnel, up to the head of the claims department.

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• III. Strategies for responding/objecting to discovery

requests

Insurer Viewpoint and Potential Response Strategy

• Objection: Requests for entire personnel files are overly broad and

present undue burden to produce given inclusion of confidential and irrelevant PII and PHI of employees

• Challenge Relevance of All Compensation Documents: Contrast

dubious relevance with burden and confidentiality implications

• Propose Reasonable Alternative: Will subset of requested

documents satisfy opposing side, e.g. disciplinary excerpts from personnel file related to claim handling, incentive compensation policy and spreadsheet reflecting salary and bonus information for involved employees?

• Insist on a protective order before producing any information from

personnel files or compensation information

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• II. Considerations for drafting discovery requests
• Produce a copy of all claim files, including claim forms,

correspondence, internal notes and valuations, in the past 10 years where the insured sought coverage for [same/similar loss] under a [same type of] policy.

• Reasoning: Evidence of pattern and practice; corporate

culture

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• III. Strategies for responding/objecting to discovery

requests

Insurer Viewpoint and Potential Response Strategy

• Objection: Requests for all claim files are quintessentially
• verbroad, present enormous burden, and implicate host of issues

concerning confidential information of claimants, including PII, HIPAA- protected PHI. Settlement agreements may be confidential.

• Detail a Proportionality Objection: Contrast fishing expedition into

area of marginal relevance with burden and confidentiality

• implications. Many factors are fact-specific, of course.
• Consider Staging or Sampling: If standing on objection futile,

consider staging any production by line of business or office/region, and/or sampling approach.

• Insist on a protective order with claw back: goes without saying.

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• III. Strategies for responding/objecting to discovery

requests Support for Proportionality Objections Nelson v Am. Family Mut. Ins. Co., No. 13-cv-607, 2016 WL 6917205 (D. Minn. May 13, 2016) (denying plaintiff’s motion to compel additional discovery before class certification hearing based on proportionality and untimeliness). FTC v. Directv, Inc., No. 15-cv-01129, 2016 WL 3351945 (N.D. Cal. June 9, 2016) (approving proposal to produce only a random sampling; the proposal “more closely comport[ed] with Rule 26’s demand for proportionality,” and the relevance of the at-issue materials was “largely speculative”).

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• III. Strategies for responding/objecting to discovery

requests Support for Proportionality Objections Hespe v. City of Chicago, No. 13 C 7998, 2016 WL 7240754 (N.D.

• Ill. Dec. 15, 2015) (upholding magistrate’s conclusion that

requested inspection of plaintiff’s devices was not proportional to the needs fo the case “especially” in light of privacy and confidentiality interests implicated). In re Bard IVC Filters Prod. Liab. Litig., ---F.R.D.---, 2016 WL 4943393 (D. Ariz. Sept. 16, 2016) (analyzing 2015 amendments

to Rule 26(b)(1) and finding that requested communications

• f foreign subsidiaries were “only marginally relevant”

whereas that “the burden of [the] foreign discovery would be substantial”).

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• III. Strategies for responding/objecting to discovery

requests

• Schultz v. Sentinel Ins. Co., Ltd, 4:15-CV-04160-LLP, 2016 WL 3149686, at *5–6 (D.S.D. June 3,

2016) :

Although Sentinel seizes on the “proportional to the needs of the case” language in the amended version

• f Rule 26(b)(1) as a requirement new to discovery in federal court, as can be seen by comparing the

highlighted portions of both rules above, the proportional requirement was already a part of Rule 26, it was just codified previously in subsection (c). Most of what appeared in subsection (b)(2)(C) of old Rule 26 has been in effect for the last 33 years, since 1983, so it is hardly new. See Fed. R. Civ. P. 26(b) Advisory Committee's note to 2015 amendment. Thus, as to this particular change, the only change rendered by the amendment was to move the proportional requirement from subsection (b)(2)(C) up to subsection (b)(1). The amended rule also specifies one additional factor to be considered in determining proportionality: the parties' access to relevant information. This factor definitely favors Sentinel, who “holds all the cards” on the discovery sought by Ms. Schultz.

• Henry v. Morgan's Hotel Group, Inc., 2016 WL 303114, at *3 (S.D.N.Y. Jan. 25, 2016)

(acknowledged that proportionality was previously part of the rule and stated, “[u]nder the amended Rule, '[r]elevance is still to be “construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on” any party's claim

• r defense.' ” (quoting State Farm Mut. Auto. Ins. Co. v. Fayda, 2015 WL 7871037, at *2

(S.D.N.Y. Dec. 3, 2015)).

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