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AKH Company, Inc. v. Universal Underwriters Insurance Co.

United States District Court, D. Kansas

July 3, 2014

AKH COMPANY, INC., Plaintiff,
v.
UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Defendant,

ORDER ON DEFENDANT'S MOTION TO COMPEL

KENNETH G. GALE, Magistrate Judge.

Now before the Court is Defendant's "Motion to Compel Sufficient Written Responses and Production of Documents." (Doc. 123.) For the reasons set forth below, the Court GRANTS this motion.

I. GENERAL BACKGROUND

A. Factual Background and Claims.

The facts of the case were summarized by District Court in its Order (Doc. 66) denying Defendant's motion to transfer venue, which stated in relevant part:

This is an insurance coverage dispute filed by AKH Company, Inc. ("AKH") against Universal Underwriters Insurance Company ("UUIC"), arising out of a trademark infringement action against AKH which UUIC defended and settled under a reservation of rights. AKH is a California corporation with its principal place of business in California. It sells and installs tires through its retail garages and internet website under the name "Discount Tire Centers." In May of 2010, The Reinalt-Thomas Corporation dba Discount Tire filed a civil action against AKH in the District of Arizona, alleging that AKH infringed upon and diluted its trademark under state and federal law. AKH in turn filed its own civil action against Reinalt-Thomas in the Central District of California and successfully moved to transfer venue of the first action to the Central District of California. The two lawsuits were consolidated ("the R-T lawsuits") and ultimately settled in December of 2012. UUIC insured AKH under a series of annual liability insurance policies from 2007 to 2013. In December of 2011, AKH notified UUIC of the R-T lawsuits and tendered the claims against AKH for a defense. UUIC accepted AKH's tender of defense of the R-T lawsuit under a reservation of rights.
In this case, AKH seeks declaratory relief that UUIC breached its duties to defend, settle, and act fairly and in good faith. UUIC brings counterclaims for declaratory relief and breach of contract arising out of its defense and settlement of the R-T lawsuits.[1]

(Doc. 66, at 1-2.)

B. Nature of the Motion to Compel.

Defendant brings the present motion arguing that Plaintiff "has refused to provide critical facts that relate to the very heart of this lawsuit." (Doc. 124, sealed, at 6.) Defendant contends that it took Plaintiff "over four months to provide partial written responses and to produce some documents" in response to the underlying discovery requests. ( Id. ) Defendant further contends that Plaintiff "produced 185 pages of privilege logs, identifying approximately 3, 500 documents (more than those actually produced!) as allegedly attorney-client privileged or work product communications withheld from production." ( Id. ) Defendant contends that even if these documents are in fact privileged, they should be produced under the crime-fraud exception to the attorney-client privilege. This portion of Defendant's motion, including the relevant evidence and factual allegations, is discussed in Section III of this Order, infra.

Defendant also complains about various other "run of the mill" objections Plaintiff raised in response to Defendant's discovery requests. These objections, which Plaintiff virtually ignored in its responsive brief, are discussed in Section II, infra.

II. GENERAL DISCOVERY OBJECTIONS.

In response to Defendant's discovery requests, Plaintiff raised various standard objections which, for various reasons, Defendant argues are improper. The Court will address each of these objections in turn.

A. "Materiality" versus "Relevance."

Defendant contends that in response to its discovery requests, Plaintiff objects, in part, that the requests seek documents "which are not material." (Doc. 124, sealed, at 15.) Defendant argues that this objection "wholly ignores that the standard for permissible discovery is that it be relevant to a party's claim or defense, not that it be material.'" ( Id., at 16.)

Plaintiff has not addressed this issue in its responsive brief. As such, the objection is waived. Sonnino v. Univ. of Kansas Hosp. Auth., 221 F.R.D. 661, 670-71 (D.Kan.2004) (holding that a party fails to meet its burden to support its objections when it fails to address those objections in response to a motion to compel, leaving the Court "without any basis to determine whether the objections are valid and applicable in light of the particular circumstances of the case"); Cooper v. Old Dominion Freight Line, Inc., No. 09-2441-JAR, 2011 WL 251447, at *2 (D.Kan. Jan.25, 2011) (holding that a discovery objection not relied upon in response to a motion to compel is waived). The Court will, however, also address the substantive merits of the objection.

Fed.R.Civ.P. 26(b) states that "[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party... Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." As such, the requested information must be both nonprivileged and relevant to be discoverable.

"Discovery relevance is minimal relevance, ' which means it is possible and reasonably calculated that the request will lead to the discovery of admissible evidence." Teichgraeber v. Memorial Union Corp. of Emporia State University, 932 F.Supp. 1263, 1265 (D. Kan. 1996) (internal citation omitted). "Relevance is broadly construed at the discovery stage of the litigation and a request for discovery should be considered relevant if there is any possibility the information sought may be relevant to the subject matter of the action." Smith v. MCI Telecommunications Corp., 137 F.R.D. 25, 27 (D.Kan.1991). Stated another way, "discovery should ordinarily be allowed unless it is clear that the information sought can have no possible bearing on the subject matter of the action." Snowden By and Through Victor v. Connaught Lab., 137 F.R.D. 325, 341 (D.Kan.1991), appeal denied, 1991 WL 60514 (D.Kan. Mar. 29 , 1991).

This differs substantially from the definition of "material." Typically, a fact is considered "material" if "proof of that fact would have effect on establishing or refuting one of essential elements of a cause of action or defense asserted by the parties, and would necessarily affect [the] application of [an] appropriate principle of law to the rights and obligations of the parties." BLACK'S LAW DICTIONARY, 977 (6th ed. 199). Clearly, this is a much higher standard than whether the information has the requisite discovery relevance. Plaintiff's objection is substantively overruled. Plaintiff is directed to provide supplemental responses without this objection.

B. Vagueness.

Defendant next argues that Plaintiff has objected to "all but one" of Defendant's discovery requests

on the grounds that the requests contain terms such as EMBODY, ' COMMUNICATIONS, ' RELATING TO' and/or RELATED' that are vague and ambiguous' so as to render the requests so broad as to potentially include all documents in [Plaintiff's] possession and make it impossible for [Plaintiff] to determine exactly what documents are responsive.

(Doc. 124, sealed, at 17.) Defendant continues that the objections are "meritless" and the terms "should be construed in their ordinary meaning based on common sense." ( Id. )

Plaintiff again chooses not to address this issue in its responsive brief. As such, the objection is waived. Sonnino, 221 F.R.D. at 670-71; Cooper 2011 WL 251447, at *2. The Court will again, however, address the substantive merits of this objection.

Courts look "with disfavor on conclusory or boilerplate objections that discovery requests are irrelevant, immaterial, unduly burdensome, or overly broad." Id., 650. "Unless a request is overly broad, irrelevant, or unduly burdensome on its face, the party asserting the objection has the duty to support its objections." Sonnino, 221 F.R.D. 661, at n.36 (D.Kan.2004) (citing Hammond v. Lowe's Home Ctrs., Inc., 216 F.R.D. 666, 670 (D.Kan. 2003)); Cont'l Ill. Nat'l Bank & Trust Co. of Chicago v. Caton, 136 F.R.D. 682, 685 (D. Kan. 1991) (stating that a party resisting a discovery request based on relevancy grounds bears the burden of explaining how "each discovery request is irrelevant, not reasonably calculated to the discovery of admissible evidence, or burdensome"). Thus, "the objecting party must specifically show in its response to the motion to compel, despite the broad and liberal construction afforded by the federal discovery rules, how each request for production or interrogatory is objectionable." Sonnino, 221 F.R.D. at 670-71 (internal citation omitted).

The Court finds that the terms "embody, " "communications, " "relating to, " and "related" are not per se vague and ambiguous. Plaintiff can, and should, employ the ordinary, common sense definitions of these words in the context of the discovery requests at issue. Plaintiff's objections are substantively overruled. Plaintiff is directed to provide supplemental responses without these objections.

C. Temporal Limitation.

Plaintiff also objects that "all but one" of Defendant's requests are overbroad for failure to be limited to a particular time period. (Doc. 124, sealed, at 17.) The Court finds that Defendant has adequately limited the time frame for the various discovery requests and overrules Plaintiff's objection.

D. Identification of Produced Documents.

Defendant next argues that Plaintiff did not comply with the requirements of Fed.R.Civ.P. 34(b)(2)(E), which provides that "[a] party must produce documents as they are kept in the ordinary course of business or must organize and label them to correspond to the categories in the request." Defendant argues that Plaintiff has engaged in a document "dump, " "deliberately [mixing] critical documents with others in the hope of obscuring significance.'" (Doc. 124, sealed, at 18 (citing S.E.C. v. Collins & Aikman Corp, 256 F.R.D. 403, 409 (S.D.N.Y. 2009).) Defendant contends that the documents should be produced again with proper organization and indexing "so that they are organized to correspond to the [specific] document requests." ( Id. )

Because Plaintiff fails to address this issue in its responsive brief, the Court grants this portion of Defendant's motion as uncontested. Plaintiff is instructed to reproduce the documents at issue with sufficient indexing and organization so as to indicate which documents produced correspond to which particular discovery requests.

E. Sufficiency of Privilege Log.

Defendant argues that the information contained in Plaintiff's privilege log is insufficient to support an assertion of the attorney-client privilege or work product doctrine for 15-20% of the documents listed on Plaintiff's 146-page privilege log. (Doc. 124, sealed, at 19.) Pursuant to the Federal Rules of Civil Procedure,

[w]hen a party withholds information otherwise discoverable by claiming that the information is privileged or subject to protection as trial-preparation material, the party must:
(I) expressly make the claim; and
(ii) describe the nature of the documents, communications, or tangible things not produced or disclosed - and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.

Fed.R.Civ.P. 26(b)(5); see also Kear v. Kohl's Dept. Stores, Inc., No. 12-1235-JAR-KGG, 2013 WL 3088922 (D.Kan. June 18, 2013) (citation omitted) (stating that "[a] privilege log must provide sufficient information to allow the other party assess the claimed to privilege.").

Defendant has, however, provided only certain "examples" of entries in the voluminous privilege log that it finds questionable. ( See Doc. 124, sealed, at 20; Doc. 124-21, sealed, at 3.) It is not the Court's province to engage in a line-by-line review of the privilege log at issue and attempt to surmise which entries Defendant may or may not have wanted to Court to consider in the present motion as improper applications of the attorney-client privilege or work product doctrine.

As to the three examples listed on page 15 of Defendant's brief, the Court does not find the privilege log entries to be facially improper. The first two examples involve communications between Plaintiff's officers regarding settlement issues.

Organizational clients and business entities often are personified by a number of employees. In preparation for, or in the midst of, consultations with an attorney, employees of the client will often consult one another to ensure that the ...

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