Suljanovic v. State Farm Mut. Auto. Ins. Co.

EDISA SULJANOVIC, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

No. 4:20-CV-534 RLW

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

February 18, 2021

MEMORANDUM AND ORDER

This matter is before the Court on Defendant State Farm Mutual Automobile Insurance Company's ("State Farm") Motion for Protective Order Concerning 30(b)(6) Deposition Topic No. 9 (ECF No. 32) filed pursuant to Rule 26(c), Federal Rules of Civil Procedure. Plaintiff Edisa Suljanovic ("Plaintiff") opposes the Motion and it is fully briefed. After careful consideration of the motion papers, the Court will deny State Farm's Motion for Protective Order except as to the time period of the discovery request at issue.

Background

Plaintiff filed this action in the Circuit Court of the City of St. Louis and State Farm removed it to this Court on the basis of diversity of citizenship jurisdiction under 28 U.S.C. § 1332(a). The case arises out of a motor vehicle accident on June 18, 2019. Plaintiff alleges she was injured as a result of the carelessness and negligence of a third party driver. Plaintiff brings this first-party breach of insurance contract claim for underinsured motorist benefits under her State Farm automobile policy. Plaintiff also asserts a claim for statutory vexatious refusal to pay her claim under § 375.420 of the Missouri Revised Statutes.

Plaintiff served a Rule 30(b)(6) notice of deposition on State Farm, specifying nine topics for examination. State Farm seeks a protective order to preclude 30(b)(6) deposition testimony regarding topic No. 9, which seeks the following documents and information: "Copies of financial incentives or bonuses that could be awarded to or earned by Defendant's claim personnel and adjusters based upon the amount of money paid or not paid in settlement of uninsured and underinsured motorist claims." State Farm asserts this information is not relevant to any claim or defense in this case and states it was previously subject to unchallenged objections during written discovery. Plaintiff responds that the topic is relevant to her statutory vexatious refusal to pay claim because if State Farm's adjusters and claims personnel are incentivized to deny claims, they may have denied her claim on that basis rather than on its merits.

Legal Standards

A. Scope of Discovery

The scope of discovery for actions filed in federal court is set forth in Federal Rule of Civil Procedure 26:

Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Rule 26(b)(1), Fed. R. Civ. P.

"The scope of discovery under Rule 26(b) is extremely broad." Gowan v. Mid Century Ins. Co., 309 F.R.D. 503, 508 (D.S.D. 2015) (citing 8 Charles A. Wright & Arthur R. Miller,Federal Practice & Procedure § 2007, 3637 (1970)). "Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession." Hickman v. Taylor, 329 U.S. 495, 507 (1947). Relevancy in this context "has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case." Jo Ann Howard & Assocs., P.C. v. Cassity, 303 F.R.D. 539, 542 (E.D. Mo. 2014) (citation and quotation omitted).

After the proponent of discovery makes a threshold showing of relevance, the party opposing it has the burden of showing its objections are valid by providing specific explanations or factual support as to how each discovery request is improper. Id. (citing Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1993), and St. Paul Reins. Co. v. Commercial Fin. Corp., 198 F.R.D. 508, 511-12 (N.D. Iowa 2000)). The opposing party must demonstrate "that the requested documents either do not come within the broad scope of relevance defined pursuant to Rule 26(b)(1) or else are of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure." Id. (quoted case omitted). "Rule 26 requires 'a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements.'" Vallejo v. Amgen, Inc., 903 F.3d 733, 743 (8th Cir. 2018) (quoting Gen. Dynamics Corp. v. Selb Mfg. Co., 481 F.2d 1204, 1212 (8th Cir. 1973)).

Rule 26(b)(1) was amended in 2015 to include a "proportionality" requirement for the parties and the court to consider in resolving discovery disputes. Fed. R. Civ. P. 26 advisory committee's notes to 2015 amendment. The amendment does not "alter the basic tenet that Rule 26 is to be liberally construed to permit broad discovery." Prime Aid Pharmacy Corp. v. ExpressScripts, Inc., 2017 WL 67526, at *4 (E.D. Mo. Jan. 6, 2017) (quoted case and internal citation omitted). Also, "[T]he existing allocation of burdens to show undue burden or lack of proportionality have not fundamentally changed." Vallejo, 903 F.3d at 742 (quoted case omitted). "A party claiming requests are unduly burdensome cannot make conclusory allegations, but must provide some evidence regarding the time or expense required." Id. (quoted case omitted).

B. Protective Order Standard

A party may move for a protective order pertaining to discovery requests in order to "protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense[.]" Fed. R. Civ. P. 26(c)(1). "Because of liberal discovery and the potential for abuse, the federal rules 'confer[ ] broad discretion on the [district] court to decide when a protective order is appropriate and what degree of protection is required.'" Misc. Docket Matter No. 1 v. Misc. Docket Matter No. 2, 197 F.3d 922, 925 (8th Cir. 1999) (quoting Seattle Times Co. v. Rhinehart, 467 U.S. 30, 36 (1984)). "The party moving for the protective order has the burden to demonstrate good cause for issuance of the order." Buehrle v. City of O'Fallon, Mo., 2011 WL 529922, at *2 (E.D. Mo. Feb. 8, 2011) (citation omitted). To show good cause, "the parties seeking protection must show that specific prejudice or harm will result if no protective order is granted." Id. (citation omitted). The prejudice or harm Rule 26(c) will protect against includes "annoyance, embarrassment, oppression, or undue burden or expense." See Fed. R. Civ. P. 26(c); Crawford-El v. Britton, 523 U.S. 574, 599 (1998). Stereotypical and conclusory statements are insufficient to establish good cause under Rule 26(c). Misc. Docket Matter No. 1, 197 F.3d at 926. "Rule 26(c) confers broad discretion on the trial court to decide when aprotective order is appropriate and what degree of protection is required." Seattle Times, 467 U.S. at 36; Roberts v. Shawnee Mission Ford, Inc., 352 F.3d 358, 362 (8th Cir. 2003).

Discussion

As previously stated, Topic 9 seeks: "Copies of financial incentives or bonuses that could be awarded to or earned by Defendant's claim personnel and adjusters based upon the amount of money paid or not paid in settlement of uninsured and underinsured motorist claims."

State Farm first asserts that Plaintiff sought the production of documents on this topic but did not file a motion to compel after State Farm objected. This appears to be an argument that Plaintiff waived the right to engage in further discovery on the topic. State Farm next asserts the topic seeks information that is "clearly irrelevant" and "not proportional to the interests of the case" because Plaintiff's Petition has not pled any facts to support a claim that "claim personnel and adjusters" acted in contravention of his or her proper duties, or that the dispute between the parties would somehow be more easily or readily resolved if Plaintiff were allowed to delve into sensitive areas such as employee compensation. (ECF No. 33 at 3.) State Farm also asserts the request is too broad because it (1) is not limited to the individuals who adjusted her claim but rather seeks information concerning all State Farm employees in the stated classification, (2) seeks information regarding both uninsured and underinsured motorist claims, and the instant case concerns only an underinsured motorist claim, and (3) is not limited in time and any time period beyond the date on which Plaintiff's claim was adjusted has no relevance to this suit.

Plaintiff responds that State Farm's argument the financial incentives it offers to its employees who decide whether or not to pay claims are irrelevant ignores the purpose of § 375.420. Plaintiff contends any financial incentives State Farm offers its claims handling personnel that incentivize the denial of legitimate claims is relevant to vexatious refusal under§ 375.420, which provides for additional damages above policy limits where the insurer fails to pay a loss "without reasonable cause or excuse." Plaintiff states the purpose of § 375.420 is to make the insured whole in a practical sense and to provide an incentive for insurance companies to pay legitimate claims without litigation, citing Drury Co. v. Missouri United School Ins. Counsel, 455 S.W.3d 30 (Mo. Ct. App. 2014). Plaintiff argues that if State Farm incentivizes the denial of legitimate claims, a jury could reasonably believe the claims handlers who denied Plaintiff's claim were motivated by the financial incentive rather than the merits of her claim.

To prove a...