United States District Court, D. Montana, Missoula Division
OPINION AND ORDER
W. MOLLOY, DISTRICT JUDGE
case arises out of an automobile accident that occurred on
January 6, 2015, on Highway 93 near Florence, Montana. As a
result of that accident, Plaintiff Steven Nei
(“Nei”) brought this action against his insurance
company, Travelers Home and Marine Insurance Company
(“Travelers”), seeking medical payments and
underinsured motorist coverages under his automobile
policies. In preparing the case, Nei sought discovery of
Travelers' claims file, claims manuals, claims
procedures, its pattern and practice, and incentives for
bonuses. Travelers objected to most of Nei's discovery
requests, resulting in the present motion to compel.
(See Doc. 25.) Argument on the motion was heard on
July 18, 2018. (See Min. Entry, Doc. 34.) The motion
is granted in part and denied in part.
January 6, 2015, an elderly woman named Shirley MacDonald ran
a stop sign and pulled her SUV out in front of the Ford
Taurus occupied by Nei and his daughter. Nei was not able to
stop or avoid the accident. He was not at fault. As a result
of the accident, Nei has been diagnosed with injuries to his
brain, spine, arm, hand, and extremities. After the accident,
USAA, MacDonald's insurer, paid Nei its liability limit
of $300, 000. After Travelers was notified of Nei's
claims, it took the position that the claim was not worth
more than the USAA liability limits.
2009 through the date of the accident, Nei paid Travelers
premiums for automobile insurance on his family's
vehicles. He paid for medical payment coverage of $5, 000 and
underinsured motorist coverage of $500, 000 for each of his
three vehicles. Nei argues that these coverages should stack.
August 2, 2017, Nei filed a state court complaint against
Travelers in the Fourth Judicial District Court, Missoula
County, alleging bad faith and unfair claims practices and
seeking a declaration of coverage and punitive damages. (Doc.
1-3.) That action was removed to this Court on September 26,
2017, (Doc. 1), and on January 10, 2018, a preliminary
pretrial conference was held. The case is set for trial in
February 2019. (See Doc. 21.)
motion to compel may be filed when a party disagrees with the
objections interposed by the other party and wants to compel
more complete answers. See Moreno Rivera v. DHA Global
Forwarding, 272 F.R.D. 5 (D.P.R. 2011). The Court has
wide discretion in controlling discovery. Jeff D. v.
Otter, 643 F.3d 278, 289 (9th Cir. 2011) (citing
Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir.
1988)). If no claim of privilege applies, the production of
evidence can be compelled regarding any 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, and the importance
of discovery in resolving the issues, and whether the burden
or expense of the proposed discovery outweighs its likely
benefit.” Fed.R.Civ.P. 26(b)(1). While
“relevance” is defined broadly, Moe v. System
Trans., Inc., 270 F.R.D. 613, 618 (D. Mont. 2010),
“[t]he 2015 Amendment to Rule 26(b)(1) emphasized the
importance of proportionality in discovery requests, ”
Frost v. BNSF Rwy. Co., 218 F.Supp.3d 1122, 1134 (D.
Mont. 2016) (citing 2015 Committee Notes). “However,
the change was not intended to permit the opposing party to
refuse discovery simply by making a boilerplate objection
that it is not proportional.” Id. (internal
quotation marks omitted). While the party seeking discovery
has the burden to show the relevancy of the request,
“the parties and the court have a collective
responsibility to consider the proportionality of all
discovery and consider it in resolving discovery
disputes.” McCall v. St. Farm Mut. Auto. Ins.
Co., 2017 WL 3174914, at *6 (D. Nev. July 26, 2017)
(quoting In re Bard IVC Filters Prods., 217 F.R.D.
562, 563 (D. Ariz. 2016)).
objects to Travelers' responses to Interrogatories 10,
11, 12, and 13 and Requests for Production 6, 7, 13, 15, 16,
17, 18, 19, 20, 24, 28, 29, 30, 32, 33, and 34. Those
specific discovery requests and objections are attached.
(See Appendix.) Nei (1) objects to Travelers'
use of boilerplate objections, (2) seeks a complete,
unredacted claims file, and (3) requests that Travelers be
ordered to produce the requested historical and claim
both Nei's requests and Travelers' objections suffer
from infirmities: Nei's requests lack “reasonable
particularity, ” Fed.R.Civ.P. 34(b)(1)(A), while
Travelers' objections also lack particularity,
Fed.R.Civ.P. 34(b)(2)(B), and fail to state “whether
any responsive materials are being withheld, ”
must state objections to discovery requests with specificity.
See Fed.R.Civ.P. 33(b)(4); 34(b)(2)(B).
Additionally, objections to requests for production
“must state whether any responsive materials are being
withheld on the basis of that objection” and
“[a]n objection to part of a request must specify the
part and permit inspection of the rest.” Fed.R.Civ.P.
34(b)(2)(C). The recitation of “boilerplate objections
or blanket refusals” is therefore not consistent with
the requirements of the discovery rules. Burlington N.
& Santa Fe Ry. Co. v. U.S. Dist. Ct., 408 F.3d 1142,
1149 (9th Cir. 2005). The Local Rules also require specific
reasons for discovery objections. See Local Rule
26.3(a)(2)-(3) (requiring an objection “be followed by
a statement of reasons”). “The burden lies on the
objecting party to show that a discovery request is improper.
Where a party's objections are themselves vague and
impermissibly overbroad, and no specifics are given, the
objecting party fails to carry its burden.” Russell
v. Daiichi-Sankyo, Inc., 2012 WL 1161435, *2
(D. Mont. 2012). Nonetheless, the Court has an obligation to
review the discovery requests to ensure that they are not
frivolous. Moreno Rivera, 272 F.R.D. at 57.
alleged “boilerplate” objections state either:
Travelers objects to this Interrogatory as irrelevant, overly
broad, burdensome, oppressive, not proportional to the needs
of the case, seeking non-discoverable expert information
beyond that allowed by Rule 26(b)(4) of the Federal Rules of
Civil Procedure; or Travelers objects to this Request for
Production as irrelevant, overly broad, not limited in
duration, burdensome, oppressive, not proportional to the
needs of the case, and seeking information that is
confidential and/or proprietary business information.
of their individual application, none of Travelers'
objections state whether responsive material was withheld as
explicitly required by Rule 34(b)(2)(C). At the July 18
hearing, counsel for Travelers argued that this omission is
immaterial because the existence of an objection implies the
existence of responsive materials. However, Rule 34 was
specifically amended in 2015, Fed.R.Civ.P. 34 (Advisory Comm.
Notes), to make such a statement mandatory. The failure to
clarify the existence of responsive materials also hamstrings
the Court's ability to assess the relevancy and
proportionality of the discovery request. Travelers'
objections fail to comply with Rule 34 and can be overruled
on those grounds alone.
objections also lack specificity in their individual
application. Travelers' argument that while they may be
broad and overlap, “the objections apply, ” (Doc.
27 at 18), is a truism. Almost any discovery request could be
objected to by generally stating the limitations of civil
discovery. That does not mean, however, that those objections
are sufficiently specific.
other hand, as argued by Travelers, many of Nei's
requests are themselves overbroad, failing to reasonably
define the parameters of the information sought. See
Fed. R. Civ. P. 26(b)(1). As a result, neither Nei's
requests nor Travelers' objections are helpful in
determining the amount of discovery that is proportional
under these circumstances. See Fed. R. Civ. P.
26(b)(1). At a minimum, however, proportional discovery lies
somewhere in the middle.
Travelers' objections are overruled in part and it is
required to provide responsive materials as outlined below.
also seeks a complete, unredacted copy of his claims file.
Travelers insists that it has produced the claim file,
excepting only the privilege portions outlined in the
privilege logs, which have been properly supplemented
pursuant to Rule 26(e). Travelers further insists that the
privileged information was appropriately withheld. Nei argues
that Travelers is impermissibly attempting to use privilege
as both a sword and a shield. Nei further argues that
Travelers has sent him on “a never-ending wild good
chase, ” releasing different portions of the claims
file at different times and with over 1, 500 pages of
shuffled, duplicate pages of documents. (See Doc. 26
at 16.) At this point, it is not entirely clear what portions
of the claims file have been produced and which redacted. It
seems that the Third Supplemental Privilege Log (March 27,
2018) outlines all that has been withheld. Because this case
sits in the unique procedural posture where both bad faith
litigation and claim investigation are pending at the same
time, in camera review of most of the withheld
documents is necessary.
federal court sitting in diversity applies the privilege law
of the forum state, Theme Promotions, Inc. v. News Am.
Marketing FSI, 546991, 1007 (9th Cir. 2008), and applies
federal law in determining the application of the work
product doctrine, Moe, 270 F.R.D. at 622. Thus the
Court here applies Montana privilege law and federal work
Montana law, privilege is construed narrowly, Am. Zurich
Ins. Co. v. Mont. Thirteenth Jud. Dist. Ct., 280 P.3d
240, 245 (Mont. 2012), and “[t]o the extent an attorney
acts as a claims adjuster, claims process supervisor, or
claims investigation monitor, and not as a legal advisor, the
attorney-client privilege does not apply, ” Barnard
Pipeline, Inc. v. Travelers Property Cas. Co. of Am.,
2014 WL 1576543, at *3 (D. Mont. 2014) (internal quotation
marks omitted). “An insurer in a bad faith case waives
the attorney-client privilege by relying on advice of counsel
as a defense to a bad faith charge.” Id.
“To deserve protection [under this privilege], . . .
documents must contain confidential communications for the
purpose of seeking legal advice.” Id. at *6.
protected under the work product doctrine, the document must
be “prepared in anticipation of litigation.”
Fed.R.Civ.P. 26(b)(3)(A). This does not include documents
prepared in the ordinary course of business, Barnard
Pipeline, Inc., at *4, and the party withholding the
documents has the burden to show that each document
withheld “was prepared or obtained because of the
prospect of litigation, ” Moe, 270 F.R.D. at
625 (internal quotation marks omitted). “Often, in
insurance bad faith litigation, the work product doctrine
does not apply to materials that are generated before the
insurer has formally denied the insured's claim because
such materials are prepared as part of the ordinary course of
business.” Barnard Pipeline, Inc., at *4. But,
once an insured has filed a bad faith action, “all
documents generated by the insurer are generated ‘in
anticipation of litigation' and are not part of the
ordinary course of business.” Id.
Third Supplemental Privilege Log outlines approximately 43
pages withheld pursuant to either privilege or work product.
Only one entry pre-dates Travelers' knowledge of
Nei's lawsuit, and is described as emails between
attorney Adrienne Harris and Anthony Schwisow about “a
separate claim that was inadvertently added to claim
notes.” (See Doc. 26-10 at 5 (THMI00105-06,
1/2716 and 1/21/16).) All of the other documents post-date
Travelers' knowledge of this bad faith lawsuit,
(see Notice of Removal, Doc. 1 at ¶ 2
(indicating Travelers became aware on August 28, 2017)), and
relate to communication with Travelers' current counsel,
Jon Wilson. It appears all the other information withheld
under the previous privilege logs-including communications
with previous counsel Spoon Gordon Ballew-has been provided.
question of whether the documents identified in the Third
Supplemental Privilege Log have been properly withheld is
complicated by the fact that Travelers has never formally
denied Nei's claim, admitting at the July 18 hearing that
it continues to investigate the claim with the aid of present
counsel. Thus there is a question about invoking the
attorney-client privilege based on the extent to which
present counsel acted as a “claims adjuster, claims
process supervisor, or claims investigation monitor, and not
as a legal advisor, ” Barnard Pipeline, Inc.,
is also a work product question because “the work
product doctrine applies to documents generated by an insurer
after the insured files a bad faith claim against the
insurer, even when the insurer has not yet formally denied
the insured's claim.” Id. at *4. But, work
product protection is not absolute, and “a party may
discover work product materials if it can establish the
relevance of the materials, the requisite need for the
materials, and the requisite hardship in obtaining the
materials by other means.” Id. at *5 (citing
Fed.R.Civ.P. 26(b)(3)(A)(i)-(iii)). “To obtain ordinary
work product materials, the requesting party must show a
‘substantial need' for the materials.”
Id. And, “[t]o obtain opinion or mental
impression work product as defined in Fed.R.Civ.P.
26(b)(3)(A)(ii), the requesting party must show a
‘compelling or overwhelming need' for the
materials.” Id. (citing Moe, 270
F.R.D. at 626-27).
explained in Barnard Pipelines, Inc.:
Because an insurer's “claims file reflects a
unique, contemporaneous record of the handling of the
claim” that cannot be obtained elsewhere, because the
“strategy, mental impressions and opinion of the
insurer's agents concerning the handling of the claim are
directly at issue” in an insurance bad faith claim, the
need for such materials is compelling, and both ordinary and
opinion work product protection is generally overcome in bad
faith litigation when asserted by the insurer's agents.
Id. (internal citations omitted). But, an
“insured cannot establish a compelling need for the
opinion work product of an insurer's attorneys”
“unless the insurer relies on the advice of counsel
defense.” Id.: see Holmgren v. St. Farm
Mut. Auto. Ins. Co., 976 F.2d 573, 577 (9th Cir. 1992)
(“[O]pinion work product may be discovered and admitted
when mental impressions are at issue in a case and
the need for the ...