Micron Tech. v. Factory Mut. Ins. Co.

1

MICRON TECHNOLOGY, INC., et al., Plaintiffs, v. FACTORY MUTUAL INSURANCE COMPANY, Defendant.

No. 3:18-cv-07689-LB

United States District Court, N.D. California, San Francisco Division

August 3, 2022

ORDER DENYING IN PART AND GRANTING IN PART FACTORY MUTUAL'S MOTION FOR RECONSIDERATION RE: ECF NO 234

LAUREL BEELER, United States Magistrate Judge.

INTRODUCTION

Factory Mutual moved for reconsideration of the court's order (ECF No. 229) compelling it to respond to Micron's discovery requests seeking information about claims made by other insureds involving losses under the same or similar policy language to that governing Micron's claimed loss here.^[1] Factory Mutual brought its motion under Civil Local Rule 7-9 and Federal Rule of Civil Procedure 54(b).^[2] It argues that reconsideration is warranted because the court did not properly weigh the relevancy of the information against the burden on Factory Mutual and non- party insureds.^[3] Factory Mutual also argues that new facts have emerged concerning the burden on Factory Mutual. Factory Mutual specifically cites objections it has received from its insureds and details concerning the time spent on reviewing the subject claim files.^[4] Alternatively, Factory Mutual asks the court to certify the discovery order for interlocutory appeal under 28 U.S.C. § 1292(b).^[5]

The court can decide the motion for reconsideration without oral argument. N.D. Cal. Civ. L.R. 7-1(b). The court denies Factory Mutual's request to generally relieve it of the obligation to produce responsive claim files of other insureds. But the court amends its earlier order by (1) further limiting the scope of the production to documents that involve the interpretation or application of policy language and (2) providing the non-party insureds fourteen days to review their documents before production. To the extent the non-party insureds still object to the production of responsive documents after reviewing the documents, the parties are ordered to meet and confer regarding (1) modifications to the existing protective order or, failing that, (2) an agreement to redact trade secrets that the non-party insureds contend cannot be adequately shielded by a protective order.

STATEMENT

In the underlying discovery dispute, Micron sought documents about “other claims” after January 1, 2014, involving comparable losses, specifically including the following: (1) claims arising from certain faults or malfunctions, for example, claims involving safety interlocks, control systems or level transmitters (see Micron's Requests for Production Nos. 62-67); (2) claims involving the invocation of certain exclusions, such as exclusions for losses while stock or material is being “worked on” or for losses based on “inherent vice or latent defect” (see Micron's Requests for Production Nos 68-74); and (3) losses at certain times and places, for instance, an Intel claim for damage to a “semiconductor fab” in Ireland in 2020 or 2021 and a claim by Fushun Ethylene in China in 1997 (see Micron's Requests for Production Nos. 75-78).^[6] The court ordered Factory Mutual to produce all documents responsive to Micron's Requests for Production Nos. 62-78 for claims in the semiconductor industry (meaning semiconductor fabrication plants).^[7]

Factory Mutual cites technical problems it has encountered while preparing the other claim files for production, the number of hours its attorneys have spent reviewing the claim files, and objections it received from its insureds concerning the production of claim files.^[8] Factory Mutual claims that the objections it received from its insureds are “new facts” because, even though it anticipated receiving these objections, the fact that they have actually occurred is a “new fact” warranting reconsideration.^[9]

Factory Mutual has asked the court to amend its prior order by (1) denying Micron's request for the claim files of other insureds, (2) relieving Factory mutual of its obligation to produce the claim files of any objecting insured, or (3) “set[ting] an appropriate schedule that allows for addressing insureds' objections before any production to Micron is required, including appropriate adjustments to the case schedule that protect the rights of the non-party other insureds.”^[10]

LEGAL STANDARDS

1. Motion for Reconsideration

This district's local rules provide that a motion for reconsideration must be based on one of the following: (1) “a material difference in fact or law” relative to that “which was presented to the Court before entry” of the subject order, (2) “[t]he emergence of new material facts or a change of law,” or (3) “[a] manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court.” N.D. Cal. Civil L.R. 7-9(b).

A district court can also “reconsider” non-final judgments pursuant to Federal Rule of Civil Procedure 54(b) and the court's “inherent power rooted firmly in the common law” to “rescind an interlocutory order over which it has jurisdiction.” City of Los Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 887 (9th Cir. 2001). Reconsideration is appropriate when (1) the court is presented with newly discovered evidence, (2) the underlying decision was in clear error or manifestly unjust, or (3) there is an intervening change in controlling law. See Sch. Dist. No. 1J, Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). “There may also be other, highly unusual, circumstances warranting reconsideration.” Id.

2. Certification for Interlocutory Review

Section 1292(b) provides a means for litigants to bring an immediate appeal of a non-dispositive order with the consent of both the district court and the court of appeals. 28 U.S.C. § 1292(b); In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1981). A district court may certify an interlocutory appeal pursuant to § 1292(b) “only in exceptional situations in which allowing an interlocutory appeal would avoid protracted and expensive litigation.” Id. (citing U.S. Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966).

The district court may certify an order for interlocutory appellate review under § 1292(b) if the following three requirements are met: (1) there is a “controlling question of law;” (2) there are “substantial grounds for difference of opinion;” and (3) “an immediate appeal may materially advance the ultimate termination of the litigation.” Id.

The Ninth Circuit defines a controlling question as one in which the “resolution of the issue on appeal could materially affect the outcome of litigation in the district court.” Id. A question may be controlling even though its resolution does not determine who will prevail on the merits. Id. at 1026-27. But it is not controlling simply because its immediate resolution may promote judicial economy. Id. at 1027.

Regarding the second factor, “[c]ourts traditionally will find that a substantial ground for difference of opinion exists where the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point, if complicated questions arise under foreign law, or if novel and difficult questions of first impression are presented.” Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010) (cleaned up).

Finally, the Ninth Circuit has not expressly defined material advancement of the ultimate termination of the litigation. Still, an immediate appeal will not materially advance the ultimate termination of litigation where the appeal might postpone the scheduled trial date. See Shurance v. Plan. Control Int'l, Inc., 839 F.2d 1347, 1348 (9th Cir. 1988).

ANALYSIS

1. Reconsideration

As noted above, there are, in general, three possible grounds for reconsideration: (1) differences in fact or law relative to what the court previously considered; (2) new facts or law; and (3) the failure to consider dispositive legal arguments. N.D. Cal. Civ. L.R. 7-9(b); see also Sch. Dist. No. 1J, Multnomah Cnty., Or., 5 F.3d at 1263. There has been no change in controlling law. And the court has already considered the issues of relevancy and burden, which the parties presented in the underlying discovery dispute.^[11] Accordingly, the issue is whether (1) the time Factory Mutual has spent preparing the production or (2) the concerns of non-party insureds warrant reconsidering the court's prior order.

The court has already ruled that material in the claims files may be relevant to the interpretation and application of policy language.^[12] See also Pac. Hide & Fur Depot v. Great Am. Ins. Co., No. CV-12-36-BU-DLC, 2013 WL 11029340, at *3 (D. Mont. July 31, 2013) (“[T]his Court finds that claims between Defendant and other insureds with policies similar to Plaintiff's policy [are] relevant and discoverable.”); Ivy Hotel San Diego, LLC v. Hous. Cas. Co., No. 10cv2183-L (BGS), 2011 WL 13240367, at *6 (S.D. Cal. Oct. 20, 2011) (“Discovery of other insureds' claims files is relevant to show the insurer's interpretation of the policy language at issue.”). That said, where courts have ordered the production of other insureds' claims files, courts have closely limited the scope of the production. For example, in Ivy Hotel San Diego, LLC, the court limited the production “to non-privileged documents from claims files that involve an express contract or other similarly worded exclusion” and ordered the parties to “meet and confer and determine the specific types of documents that [the plaintiff insured] wants produced.” 2011 WL 13240367, at *7.

As Factory Mutual points out, the 2015 amendments to Rule 26 changed the rule to emphasize proportionality such that it was no longer “good enough to hope that the information sought might lead to the discovery of...