TERMINALS INC v. UNITED NATIONAL INSURANCE COMPANY (2022)

ORDER DENYING PLAINTIFFS’ MOTION TO ENFORCE DEFENDANT UNITED NATIONAL'S DUTY TO SUPPLEMENT UNDER FEDERAL RULE OF CIVIL PROCEDURE 26(e) (Dkt. No. 120)

I.

INTRODUCTION

On January 18, 2022, the Court conducted an informal telephonic discovery conference to address the parties’ disputes regarding whether, under the ongoing duty to supplement imposed by Federal Rule of Civil Procedure 26(e), Defendant United National Insurance Company is required to produce certain materials that were identified by Mark DiGiovanni, United National's Vice President of Litigation Management, during his November 15, 2021 deposition as the company's 30(b)(6) witness. Although the parties participated in the lengthy discovery conference in good faith, they were unable to resolve their differences. Because this case is already in summary judgment proceedings, (see Dkt. Nos. 79, 101), the Court set an expedited schedule for limited briefing on the supplementation issue. (Dkt. No. 119).

Pending before the Court is a Motion to Enforce Defendant United National's Duty to Supplement under Federal Rule of Civil Procedure 26(e), filed jointly by Plaintiffs L.A. Terminals, Inc. (“LAT”) and Soco West, Inc. (“Soco”) (collectively, “Plaintiffs”) on January 20, 2022. (“Motion,” Dkt. No. 120). The Motion is supported by the declarations of Kristen C. Jackson (“Jackson Decl.,” Dkt. No. 120-1) and Steven B. Lesan (“Lesan Decl.,” Dkt. No. 120-2), and attached exhibits. United National filed an Opposition on January 27, 2022, (“Opp.,” Dkt. No. 121), supported by the declaration of Daniel N. Katibah, (“Katibah Decl.,” Dkt. No. 121-1), and attached exhibits. On January 31, 2022, Plaintiffs filed a Reply. (“Reply,” Dkt. No. 123).

The Court took the matter under submission without a hearing. C.D. Cal. L.R. 7-15. For the reasons stated below, Plaintiffs’ Motion is DENIED.

II.

BACKGROUND INFORMATION

A. Plaintiffs’ Requests For Production

Plaintiffs served their First Set of Requests for Production of Documents on United National on April 12, 2019. (Jackson Decl., ¶ 2 & Exh. A). On May 20, 2019, United National served its responses. (Id., ¶ 3 & Exh. B).

Request for Production (“RFP”) No. 16 required United National to produce:

All procedure manuals, training manuals, videotapes, written guidelines, interoffice memoranda, bulletins, sales brochures, sales pamphlets, or other DOCUMENTS setting forth YOUR practices, procedures or guidelines RELATING TO the investigation, handling, assessment, processing, evaluation, acceptance, settlement, payment or denial of claims.

(Id., Exh. A at 13). “YOUR” is defined elsewhere in the Requests to mean “United National Insurance Company, and any of its successors, predecessors, assigns, affiliates, parent corporations, subsidiaries (including any such entities involved in the issuance of the UNITED NATIONAL POLICIES), or any PERSONS acting on its behalf, including, but not limited to, its officers, directors, employees, attorneys and agents. (Id. at 5).

United National responded:

United National objects on the grounds that requesting all documents, as so defined, is vague, ambiguous, confusing, and functionally impossible to comply with as a practical matter.

United National further objects to this request on grounds that it is vague and uncertain, and thus decline to produce responsive documents. Without waiving this objection, United National infers that plaintiffs are requesting a copy of Global Indemnity's -- United National's parent corporation -- Best Practices manual for handling claims, which contains confidential and proprietary business material. United National therefore objects to this request on that ground, though will agree to produce the Best Practices manual, but only if plaintiffs will agree to execute a stipulated protective order consistent with Federal Rule of Civil Procedure 26(c)(1)(G). Otherwise, the manual will be withheld on the basis of the above objections.

(Id., Exh. B at 19-20).

B. Deposition of Mark DiGiovanni

On November 15, 2021, Plaintiffs took the deposition of Mark DiGiovanni in his capacity as the company's 30(b)(6) witness. (See Jackson Decl., Exh. C). DiGiovanni testified that United National provides “the Best Practices Manual to all of our claims examiners, and then we provide additional trainings.” (Id. at 24). The questioning continued:

Q What are the additional trainings?

A I set up ten trainings a year on a monthly basis, with the exception of July and August, in which panel counsel from a different state will come in and present -- or do a webinar in these days of COVID -- present on a topic of interest.

․

Q Do the claims handlers that report to you receive training on the standards to apply when a claim is tendered for a defense?

A Yes.

Q In -- in what form?

A It can be -- usually, it's part of the monthly training that's presented by panel counsel. And then there's in -- they're provided with the Claims Manual. And then they have supervisors who directly work with them and train them.

․

Q How about any training specific to California standards that apply when a claim is being tendered for a defense?

A We have annual California insurance regulations training every June.

(Id. at 25-26).

Q You -- you stated that -- that claims handlers are expected to understand the legal standards to apply when addressing a tender of a claim for defense under California law; correct?

A Yes.

Q What, if anything, does United National do to ensure that they understand those legal standards?

A Provide the training we've been discussing.

․

Q. Did Randi Hoffman participate in the training that you've referenced regarding the legal standards to apply when addressing a tender of a claim for defense under California law?

A Yes.

Q In every instance? Do you know? Did she attend all of the California trainings?

A As far as I can recall.

(Id. at 29-30).

Q But there is a -- there is a repository of -- of training materials that claim handlers can reference?

A Yes, on our database.

Q Is that information relevant to claim handlers doing their -- doing their daily duty in -- in handling claims on behalf of insureds? Is that why -- is that why United National keeps the library, because those reference materials may be relevant to a claim handler's job in handling claims?

․

THE WITNESS: Well, it's done to ensure that the examiners are up to speed in the jurisdictions in which they handle claims on all pertinent issues which they may face in their claim handling.

Q And claim handlers rely on those documents?

A They rely on those documents, their training, experience, education; sure.

(Id. at 34). Plaintiffs’ counsel then informed United National's counsel that Plaintiffs did not receive copies in discovery of the training materials to which DiGiovanni had been referring and asked for their production. (Id. at 34-35). United National's counsel responded that he did not believe the materials “were requested ever,” but stated that he would “get back to [Plaintiffs] on that.” (Id. at 35). Fact discovery closed four days after DiGiovanni's deposition, on November 19, 2021.

C. Deposition of Peter J. Senuty

On January 26, 2022, Plaintiffs deposed United National's expert, Peter J. Senuty, who provided the following testimony regarding the reference in his report to Ms. Hoffman's annual claims handling training:

Q In the second paragraph there, the -- there's a sentence “Ms. Hoffman performed annual claims handling training and stayed abreast of legal developments in the field of environmental insurance claims by participating in monthly seminars and periodic presentations by panel counsel.”1

Do you see that?

A Yes.

Q You would need to see the training materials to know if Ms. Hoffman was receiving good information to assist her in her claim handling, correct?

․

THE WITNESS: Yeah. I took her at her -- this comes from her deposition. And it's the sort of thing one expects for California. You're supposed to do annual training on the Fair Claims Practices Act.

I assume that was the kind of annual training she talked about. She also reflected receiving information from panel counsel attending seminars, all of which I make the assumption that it was appropriate and substantively on point for her to perform her job in compliance with the applicable standards and requirements.

․

WITNESS: To verify my assumption, sure, it would help to see [the training materials], but I have no reason to think it was other than as I've described.

(Katibah Decl., Exh. 3 at 43-44) (rough transcript).

III.

THE PARTIES’ CONTENTIONS

Plaintiffs contend that under the Rule 26(e) duty to supplement, United National must produce the documents identified by DiGiovanni, which include “instruction on the standards that apply when a claim is tendered for a defense, how to address conflicts of interest between United National and its insureds, and the qualified pollution exception -- all central issues in this case.” (Motion at 2) (citing Jackson Decl., Exh. C, at 55:18 - 56:2; 61:16 - 62:2). Plaintiffs note that while United National has consistently represented to Plaintiffs that all non-privileged documents responsive to Plaintiffs’ document requests have been produced, (Motion at 4), “counsel for both parties learned for the first time [at DiGiovanni's deposition] that ․ United National maintains a database of these training materials[.]” (Motion at 2-3). According to Plaintiffs, the “broad” request in RFP No. 16 is “plainly not limited to training materials authored by United National,” but encompasses materials prepared by persons acting on United National's behalf. (Id. at 5). Plaintiffs further argue that because United National's claims handlers rely on the training materials at issue in handling claims, and the repository of those materials is maintained by United National for that very purpose, the materials must be produced as responsive to “any reasonable interpretation” of RFP No. 16. (Id.). Finally, Plaintiffs maintain that because United National's expert, Peter J. Senuty, referred to the fact that Randi Hoffman, the claims handler in charge of Plaintiffs’ claim, stayed abreast of legal developments by participating in the trainings, the materials are necessarily responsive to the request for training manuals and related materials. (Id.).

United National argues that Plaintiffs’ Motion does not seek materials encompassed by any duty to supplement, but is in fact a disguised motion to compel improperly brought after the District Judge's discovery cutoff date, and is therefore untimely. (Opp. at 1). According to United National, Rule 26(e) is not at issue because United National has not “learned” that its prior production was incomplete or incorrect, as the disputed documents are non-responsive to Plaintiffs’ requests. United National notes that the training materials are PowerPoint slides and written outlines prepared by outside law firms about “claim-handling regulations, California law, and the law firms’ suggested approaches to that law.” (Id. at 3). As such, they do not set forth United National's “practices, procedures or guidelines,” (id.), and the Global Indemnity claims manual, which was produced, “is the only document responsive” to the request that does so. (Id. at 4). Furthermore, United National's outside counsel “are not insurance companies,” and do not maintain their own “discrete practices, procedures or guidelines” as sought by RFP No. 16. (Id.). United National argues that the outlines are merely “legal resources,” not unlike “treatises, legal databases like Westlaw or Lexis, or other sources” that it maintains for claims personnel to refer to. (Id.). Furthermore, United National's expert testified that he had never seen the outlines, but merely drew conclusions from Ms. Hoffman's deposition. (Id. at 5). In sum, United National contends that because Plaintiffs’ production requests did not include “all investigatory or legal resources made available to United claims personnel,” there is no duty to supplement. (Id. at 5).

In their Reply, Plaintiffs emphasize that a responding party has a duty to supplement under Rule 26(e) even after the discovery cut-off, and that motions to compel supplementation after the cut-off are not subject to the District Judge's Scheduling Order. (Reply at 1-4) (citing cases). Plaintiffs further insist that the materials requested are “absolutely responsive to Plaintiffs’ express request for training materials in RFP No. 16” because “United National actually uses the training materials to train its claims handlers,” and as such, the materials are distinguishable from legal resources such as Westlaw or Lexis. (Id. at 4). In the event their Motion is granted, Plaintiffs ask that United National be ordered to produce the materials before the February 9, 2022 deposition of David Elliott. (Id. at 5).

IV.

DISCUSSION

The Training Materials Sought By Plaintiffs Are Not Clearly Or Directly Responsive To Plaintiffs’ Request For Production No. 16

The threshold question the Court must address is whether the materials described by DiGiovanni are responsive to RFP No. 16. If they are not, the parties’ dispute over whether United National is obligated under Rule 26(e) to supplement its production is moot. The Court concludes that United National is under no duty to “supplement” because the materials to which DiGiovanni referred are best construed as legal reference works that fall outside the range of materials requested in RFP No. 16 for documents relating to United National's “practices, procedures or guidelines.”

Rule 34(b) requires the requesting party to describe the items to be produced with “reasonable particularity.” Fed. R. Civ. P. 34(b)(1). “The test for reasonable particularity is whether the request places a party upon reasonable notice of what is called for and what is not.” Bruggeman ex rel. Bruggeman v. Blagojevich, 219 F.R.D. 430, 436 (N.D. Ill. 2004) (internal quotation marks omitted); see also Regan-Touhy v. Walgreen Co., 526 F.3d 641, 649-50 (10th Cir. 2008) (“Though what qualifies as ‘reasonabl[y] particular’ surely depends at least in part on the circumstances of each case, a discovery request should be sufficiently definite and limited in scope that it can be said ‘to apprise a person of ordinary intelligence what documents are required and [to enable] the court ․ to ascertain whether the requested documents have been produced.’ ”) (quoting Wright & Miller, 8A Federal Practice and Procedure § 2211, at 415).

At the same time, a responding party has “an obligation to construe ․ discovery requests in a reasonable manner.” Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614, 618-19 (D. Colo. 2007). Accordingly, “[r]espondents should exercise reason and common sense to attribute ordinary definitions to terms and phrases utilized in [the requests].” Pulsecard, Inc. v. Discover Card Servs., Inc., 168 F.R.D. 295, 310 (D. Kan. 1996); accord McCoo v. Denny's Inc., 192 F.R.D. 675, 694 (D. Kan. 2000); see also King-Hardy v. Bloomfield Board of Education, 2002 WL 32506294, at *5 (D. Conn. Dec. 8, 2002) (responding party must give discovery requests a reasonable construction, rather than strain to find ambiguity).

Federal Rule of Civil Procedure Rule 26(e) provides in relevant part:

A party who has made a disclosure under Rule 26(a) -- or who has responded to an interrogatory, request for production, or request for admission -- must supplement or correct its disclosure or response:

(A) in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing; or

(B) as ordered by the court.

Fed. R. Civ. P. 26(e)(1). “[I]nformation is ‘incomplete or incorrect’ in ‘some material respect’ if there is an objectively reasonable likelihood that the additional or corrective information could substantially affect or alter the opposing party's discovery plan or trial preparation.” Sender v. Mann, 225 F.R.D. 645, 654 (D. Colo. 2004).

The duty to supplement “continues even after the discovery period has closed.” Star Direct Telecom, Inc. v. Global Crossing Bandwidth, Inc., 272 F.R.D. 350, 358 (W.D. N.Y. 2011); see also Woods v. Google, Inc., 2014 WL 1321007, at *4 (N.D. Cal. Mar. 28, 2014) (the Rule 26(e) duty to supplement “extends beyond the discovery cutoff date”); Cory v. Whisman, Grygiel & Giordano, P.A., 2012 WL 1632729, at *6 (D. Md. May 8, 2012) (parties’ obligation to supplement discovery responses “as necessary to ensure that their responses are complete and accurate ․ does not end at the close of discovery․”). “[S]upplementation of disclosures and responses after the close of discovery ․ is consistent with the spirit behind the discovery rules, which is to promote a liberal discovery process in an effort to narrow the issues for trial and to prevent unfair surprise.” Episcopo v. General Motors Corp., 2004 WL 628243, at *7 (N.D. Ill. Mar. 29, 2004) (internal quotation marks omitted). Consistent with this obligation, a motion to enforce Rule 26(e)’s supplementation requirement may also be brought after the close of discovery. See Gamevice, Inc. v. Nintendo Co., 2019 WL 5565942, at *3 (N.D. Cal. Oct. 29, 2019).

However, it is axiomatic that the duty to supplement is triggered only if the materials requested would have been responsive to a discovery request in the first instance. See Apple Inc. v. Wi-LAN Inc., 2019 WL 4253833, at *5 (S.D. Cal. July 22, 2019) (“Whether Apple is obligated to supplement prior RFPs with the Qualcomm Agreement depends on whether the Agreement is responsive to the RFPs at issue.”). The materials described by DiGiovanni, based on his testimony and United National's representations, do not appear to be tailored to “YOUR [United National's] practices, procedures or guidelines” in any meaningful way. Instead, they appear to be more akin to legal resources, similar to other kinds of legal resources made available to United National's claims processors, that simply describe the state of the law. RFP No. 16 did not request copies of United National's legal library. If it had, United National would have had the opportunity to respond to the request, either through objections or through negotiations to clarify the exact scope of the request. Rule 26(e) does not impose a duty to supplement discovery responses where the discovery sought is not responsive to timely propounded discovery requests. The discovery cut-off lapsed more than two months ago, and it is too late for Plaintiffs to seek materials now that it did not describe with “reasonable particularity” while discovery was open. Accordingly, United National is not required to “supplement” its response to RFP No. 16.

Although Plaintiffs focus on RFP No. 16 as “directly relevant” in their Motion, they contend in a footnote in their opening brief that “the materials as described are additionally responsive to Request No. 5 for documents broadly relating to United National's review and analysis of Plaintiffs’ claim, and Request No. 6 for documents broadly relating to United National's handling, investigation, assessment, evaluation and denial of Plaintiffs’ claim.” (Motion at 3 n.1; see also Reply at 4 n.2). The Court is not persuaded. RFP No. 5 seeks “DOCUMENTS and COMMUNICATIONS RELATING TO YOUR review and/or analysis of the UNDERLYING ACTIONS.” (Jackson Decl., Exh. A at 12). RFP No. 6 seeks “DOCUMENTS and COMMUNICATIONS RELATING TO YOUR handling, investigation, assessment, processing, evaluation, establishment of reserves, or denial of claims made by PLAINTIFFS RELATING TO any of the UNDERLYING ACTIONS.” (Id.). Neither of these requests describes with “reasonable particularity” the documents identified by DiGiovanni. A person of “ordinary intelligence,” applying a reasonable construction, would not understand that United National's repository of reference materials would be responsive to the requests. Accordingly, United National is similarly not required to “supplement” its responses to RFP Nos. 5 or 6.²

V.

ORDER

For the reasons stated above, Plaintiffs’ Motion to Enforce Defendant United National's Duty To Supplement Under Federal Rule Of Civil Procedure 26(e) is DENIED.

FOOTNOTES

1.   Both Plaintiffs and United National submitted copies of Senuty's report in connection with the motion. The passage from the report quoted above is found at Jackson Decl., Exh. E at 46 and Katibah Decl., Exh. 2 at 27.

2.   Because the Court finds that the documents sought are not responsive to any of Plaintiff's discovery requests, it is unnecessary to address whether they properly fall within the ambit of Rule 26(e)’s requirement that the requested discovery be “material.” However, the Court notes that Plaintiffs have not clearly explained why these documents are “material” to the prosecution of their case such that the information they contain would “substantially affect or alter” Plaintiffs’ “discovery plan or trial preparation.” Sender, 225 F.R.D. at 654.The Court's finding that the documents are not responsive to Plaintiffs’ request also renders moot the parties’ dispute about whether United National is improperly withholding responsive documents pursuant to asserted boilerplate objections. (See generally Lesan Decl., ¶¶ 3-6; Katibah Decl., ¶¶ 4-13). The parties are admonished that Rule 34 was amended in 2015 to provide that when an objection to a production request is asserted, the “objection must state whether any responsive materials are being withheld on the basis of that objection.” Fed. R. Civ. P. 34(c). The Advisory Committee notes to the 2015 Amendments explain that “the producing party does not need to provide a detailed description or log of all documents withheld, but does need to alert other parties to the fact that documents have been withheld and thereby facilitate an informed discussion of the objection.” The instant side dispute could have been avoided had United National simply affirmed in its discovery responses that notwithstanding the objections, no responsive documents were being withheld apart from the Best Practices manual, which would be produced upon entry of a protective order.Additionally, the parties are reminded that boilerplate objections are improper in federal court. Rule 34(b) expressly requires that objections be stated “with specificity ․ including the reasons.” Accordingly, a party may not simply object, without further explanation, that a request is “vague and ambiguous” or “unduly burdensome” -- the objection must explain why the request is vague and ambiguous or why it is unduly burdensome, preferably with a supporting declaration from a custodian of records or other qualified person describing the burden that would be involved if production were required as requested. See, e.g., A. Farber & Partners, Inc. v. Garber, 234 F.R.D. 186, 188 (C.D. Cal. 2006) (“[G]eneral or boilerplate objections such as ‘overly burdensome and harassing’ are improper -- especially when a party fails to submit any evidentiary declarations supporting such objections․ Similarly, boilerplate relevancy objections, without setting forth any explanation or argument why the requested documents are not relevant, are improper.”); Duran v. Cisco Sys., Inc., 258 F.R.D. 375, 379 (C.D. Cal. 2009) (“[U]nexplained and unsupported boilerplate objections are improper.”).

PEDRO V. CASTILLO, UNITED STATES MAGISTRATE JUDGE