United States District Court, D. New Jersey
OPINION AND ORDER
B. CLARK, III, United States Magistrate Judge
MATTER comes before the Court on: (1) a motion by
non-party Resolute Management, Inc. (“Resolute”)
to quash the Federal Rule of Civil Procedure 30(b)(6)
Subpoena served upon Resolute by Defendant J.M. Huber
Corporation (“Defendant”) on March 22, 2017 and
for the entry of a protective order prohibiting Defendant
from inquiring into certain subjects during the future
depositions of Resolute employees Connie Gianakis and Maria
Menotti in this action [Dkt. No. 83]; and (2) a motion by
Plaintiffs Continental Casualty Company and Transportation
Insurance Company (collectively “CNA” or
“Plaintiffs”) for a protective order prohibiting
Defendant from inquiring into certain subjects during
Defendant's 30(b)(6) deposition of Plaintiffs'
corporate representative and the future individual
depositions of Ms. Gianakis and Ms. Menotti [Dkt. No. 101].
Defendant opposes both Resolute's motion [Dkt. No. 86]
and Plaintiffs' motion [Dkt. No. 116]. For the reasons
set forth below, Resolute's motion to quash and for a
protective order [Dkt. No. 83] is DENIED and
Plaintiffs' motion for a protective order [Dkt. No. 101]
approximately 1969 to 1994, Plaintiffs issued insurance
policies (the “Policies”) to their insured,
Defendant J.M. Huber Corporation, a specialty engineered
materials company. The Policies are subject to
“incurred loss retrospective premium plans”
pursuant to which Defendant's premium obligations are
based upon payments and reserves on claims submitted for
coverage under the Policies. Dkt. No. 37, Am. Compl. at
¶ 9. Under the Policies, the retrospective premiums are
calculated annually by determining the payments and reserves
on claims submitted for coverage under a policy valued as of
the first day of December, and continue from year to year
until either all claims submitted for coverage under the
relevant policy have closed or until the maximum premium is
reached. Id. at ¶ 10 These annual calculations
of retrospective premiums are referred to as “Rating
Plan Adjustments.” Id.
claims in this matter arise out of unpaid invoices issued to
Defendant for retrospective premiums. On or around March 12,
2012, Plaintiffs issued to Defendant invoice number EA 27327
for an additional payment of $33, 629 based upon the Rating
Plan Adjustment for the Policies calculated with incurred
losses valued as of February 1, 2012. On March 6, 2013,
Plaintiffs issued to Defendant invoice number EA 27893 for
$737, 116 for retrospective premiums valued as of February 1,
2013. Defendant did not remit payment for either invoice and
on July 12, 2013, Plaintiffs filed their Complaint in this
matter seeking payment for the outstanding retrospective
premiums. See Dkt. No. 1, Compl. Subsequently,
Plaintiffs conducted an additional annual calculation and
determined that as of February 1, 2014, Defendant owed an
additional $978, 222. Id. at ¶ 28. Based upon the
2014 Rating Plan Adjustment, Plaintiffs filed an Amended
Complaint stating claims for breach of contract, unjust
enrichment, and account stated arising from Defendant's
failure to pay the 2012, 2013, and 2014 invoices.
response to Plaintiffs' initial Complaint, Defendant
filed its Answer and counterclaims on August 8, 2013.
See Dkt. No. 5. In response to Plaintiffs'
Amended Complaint, Defendant filed its Amended Answer and
counterclaims on October 27, 2014. See Dkt. No. 38,
Am. Countercl. Defendant's Amended Counterclaim asserts
two causes of action for breach of contract and breach of the
duty of good faith and fair dealing based upon
Plaintiffs' allegedly “improper allocation and/or
calculation, through and/or by their agent [Resolute], of the
amount of retrospective premiums due under the
Policies.” Id. at ¶ 1.
to Defendant, throughout the course of the “mutually
professional insurer-insured relationship” between
Plaintiffs and Defendant, which spanned over several decades,
Defendant would submit claims to Plaintiffs for coverage, and
Plaintiffs would respond by either covering those claims or
providing “a reasoned basis for either contesting or
not covering them.” Dkt. No. 86 at p. 1. Under the
retrospectively rated policies, Defendant claims that
Plaintiffs would send Defendant retrospective premium
invoices and loss details in support of such invoices, which
Defendant would review and pay, and any questions or disputes
regarding the retrospective premium invoices “were
dealt with, and resolved, in a professional and cordial
manner befitting such a longstanding and mutually beneficial
business relationship.” Id. at p. 2.
claims that the longstanding “mutually
professional” relationship between itself and
Plaintiffs changed in 2010 when Berkshire Hathaway, Inc.
(“Berkshire Hathaway”) through its affiliates,
including Resolute and National Indemnity Company
(“NICO”) entered into an agreement with
Plaintiffs pursuant to which Plaintiffs' legacy asbestos
and environmental pollution liabilities were transferred to
NICO. Am. Countercl. at ¶ 6-7. Upon NICO's
assumption of Plaintiffs' liabilities, Resolute became
the third-party administrator of Defendant's asbestos and
environmental claims on behalf of Plaintiffs acting as
Plaintiffs' “agent and/or representative.”
Id. at ¶ 8.
third-party administrator of Defendant's claims,
Resolute, acting as Plaintiffs' agent, issued the
invoices at issue in this matter. Upon receipt of the March
12, 2012 invoice for $33, 629 in “unsubstantiated
retrospective premiums, ” Defendant contacted
Plaintiffs by email requesting certain information aimed at
determining the basis for those premiums, including the basis
for creating a file in each policy year and an identification
of the specific claims used to calculate the retrospective
premiums in the invoice. Id. at ¶ 15-17.
Defendant contends that Plaintiffs' response to its
initial email regarding the March 12, 2012 invoice did not
address Defendant's specific concerns and that
Defendant's subsequent inquiries regarding the basis of
retrospective premiums in the invoice were likewise not
satisfactorily addressed by Plaintiffs or Resolute.
Id. at ¶ 19. Because Plaintiffs had purportedly
failed to provide Defendant with an explanation of the basis
for the retrospective premiums, Defendant advised Resolute
that it appeared to Defendant that Plaintiffs and/or Resolute
had “arbitrarily and capriciously transferred and/or
reallocated payments for losses under the Policies from
‘closed' to ‘open' polices” which
resulted in the improper calculation and assessment of
additional retrospective premiums. Id. at ¶ 20.
Plaintiffs and Resolute again failed to provide a response
which satisfied Defendant, and Defendant submitted further
inquiries which were also not sufficiently answered.
Plaintiffs' and Resolute's purported failure to
provide support for the March 12, 2012 invoice, Defendant
received the second invoice at issue in Plaintiffs'
Amended Complaint in March 6, 2013 in the amount of $737,
116. Id. at ¶ 25. Upon receipt of the March 6,
2013 invoice, Defendant again contacted Resolute requesting
an explanation of the reallocation and calculation of
retrospective premiums charged. According to Defendant, it
did not receive any response to its inquiries regarding the
March 6, 2013 invoice. Id. at ¶ 26-27. The
third and final invoice at issue in Plaintiffs' Amended
Complaint in the amount of $978, 222, and dated March 17,
2014, was received by Defendant on March 25, 2014.
Id. at ¶ 28.
counterclaim for breach of contract alleges that Plaintiffs,
in violation of the terms of the Policies, through Resolute,
wrongfully reallocated “decades-old payments”
made under the Polices and improperly issued the
retrospective premium invoices to Defendant for
“incorrect and/or unsubstantiated amounts.”
Id. at ¶ 48. In its counterclaim for breach of
the duty of good faith and fair dealing, Defendant claims
that Plaintiffs, through Resolute, “arbitrarily and
capriciously” reallocated payments made under the
Policies, issued incorrect retrospective premium invoices,
and failed to cooperate with Defendant in its efforts to
determine the basis for the disputed invoices. Id.
at ¶ 53.
in this matter has been fraught with issues, and after
several failed attempts to resolve the parties' disputes
without formal motions, the present motions were filed. The
present motions seek to prevent Defendant from exploring
certain topics during depositions in this matter and arise
from Defendant's efforts to obtain discovery related to
Resolute's and Plaintiffs' corporate practices and
claims handling procedures and the corporate relationships
between Plaintiffs, Resolute, NICO and Berkshire Hathaway.
The depositions at issue can be divided into two categories:
(1) Federal Rule of Civil Procedure 30(b)(6) depositions of
Plaintiffs' and Resolute's corporate representatives;
and (2) depositions of Resolute employees Connie Gianakis and
primary relief sought in the current motions relates to the
30(b)(6) depositions of Plaintiffs' and Resolute's
corporate representatives. Defendant served Plaintiffs with a
30(b)(6) deposition notice on March 16, 2017, which seeks
testimony on twenty (20) topics and the production of all
documents related to those topics. See Dkt. No. 100,
Thomas Cert. at Ex. A (the “CNA Notice”).
Subsequently, on March 22, 2017, Defendant served Resolute
with a 30(b)(6) Subpoena seeking testimony on twenty-three
(23) topics and the production of all documents related to
those topics. See Dkt. No. 83, Chakraborty Decl. at
Ex. A. (the “Resolute Subpoena”). Both Plaintiffs
and Resolute responded to Defendant with several objections.
The parties were unable reach any sort of consensus regarding
the scope of the depositions, which led to Resolute's
present motion seeking to quash the Resolute Subpoena in its
entirety [Dkt. No. 83] and Plaintiffs' present motion
seeking the entry of a protective order barring Defendant
from inquiring into certain topics during its deposition of
Plaintiffs' corporate representative [Dkt. No. 101].
Plaintiffs and Resolute are separate entities and Resolute is
not a party to this matter, the arguments set forth in
support of their respective motions are largely
interchangeable. In support of their motions, Plaintiffs and
Resolute argue that Defendant's 30(b)(6) deposition
topics are vastly overbroad, would cause Plaintiffs and
Resolute to suffer an undue burden, and seek information
beyond what is relevant to the issues in this case.
Plaintiffs and Resolute assert that discovery in this matter
should be limited solely to the calculation of the
retrospective premiums which form the basis of
Plaintiffs' claims and that Defendant's attempted
inquiries into Plaintiffs' and Resolute's general
corporate practices and claims handling procedures and their
corporate relationships far exceed the scope of permissible
discovery. Additionally, Resolute and Plaintiffs argue that
because Defendant seeks similar if not identical information
from both Resolute and Plaintiffs, Defendant's discovery
efforts are unreasonably duplicative.
response, Defendant argues that the discovery it seeks from
Resolute is targeted at investigating Resolute's
coordination with Plaintiffs in administering Defendant's
account and Resolute's role in “reallocating
historical losses to generate revenue in the form of
retrospective premiums” and is directly relevant to its
allegations that Resolute's and its affiliates'
internal policies encourage improper conduct aimed at
increasing profits in connection with claim handling attempts
to derive improper benefits from Plaintiffs' insureds.
Dkt. No. 86 at p. 9. As to the discovery sought from
Plaintiffs, Defendant claims that it is entitled to
information regarding Plaintiffs' business relationship
with Resolute to the extent that such a relationship affected
Plaintiffs' conduct, and that its request for information
regarding Plaintiffs' claims handling practices both
before and after Plaintiffs entered their agreement with NICO
will allow Defendant to investigate whether Plaintiffs'
handling of Defendant's claims changed when Resolute took
over as third-party administrator.
Resolute Employee Depositions
addition to the relief sought by Plaintiffs and Resolute
regarding the 30(b)(6) depositions, Plaintiffs and Resolute
seek the entry of a protective order barring Defendant from
inquiring into certain topics during its depositions of
Resolute employees Connie Gianakis and Maria
Menotti. The protective order application by
Plaintiffs and Resolute requests that any limitations
governing the 30(b)(6) depositions also apply to the
depositions of Ms. Gianakis and Ms. Menotti. In support of
their requests for a protective order, Plaintiffs and
Resolute claim that Defendant should not be permitted to use
the depositions of Resolute employees to obtain information
which it is barred from seeking during the 30(b)(6)
depositions, and that in light of Defendant's depositions
of other employees of Plaintiffs and Resolute and its intent
to conduct the 30(b)(6) depositions at issue, the depositions
of Ms. Gianakis and Ms. Menotti would be unreasonably
opposition to Plaintiffs' and Resolute's requests for
a protective order, Defendant claims that Ms. Gianakis and
Ms. Menotti are “key witnesses.” Dkt. No. 116 at
p. 33. According to Defendant, Ms. Menotti “made the
initial recommendation to open additional trailer files so
that [Defendant's] old asbestos losses could be used to
generate retrospective premiums” and Ms. Gianakis was
involved in the “meetings between [Plaintiffs] and
Resolute when Resolute decided to create money by setting up
the trailer files” and was “ultimately
responsible for reallocating [Defendant's] old asbestos
losses in order to create money through the generation of
retrospective premiums.” Id. In response to
Plaintiffs' and Resolute's duplicity argument,
Defendant claims that Ms. Gianakis and Ms. Menotti are key
fact witnesses with unique knowledge which does not unduly
overlap with that of other witnesses deposed by Defendant.
Rule of Civil Procedure 26 governs the scope of discovery in
federal litigation and provides that:
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.
Fed. R. Civ. P. 26(b)(1). Rule 26 is to be construed
liberally in favor of disclosure, as relevance is a broader
inquiry at the discovery stage than at the trial stage.
Tele-Radio Sys. Ltd. v. De Forest Elecs.,
Inc., 92 F.R.D. 371, 375 (D.N.J. 1981). While relevant
information need not be admissible at trial in order to grant
disclosure, the burden remains on the party seeking discovery
to “show that the information sought is relevant to the
subject matter of the action and may lead to admissible
evidence.” Caver v. City of Trenton, 192
F.R.D. 154, 159 (D.N.J. 2000). Upon a finding of good cause,
a court may order discovery of any matter relevant to a
party's claims, defenses or the subject matter involved
in the action. “Although the scope of discovery under
the Federal Rules is unquestionably broad, this right is not
unlimited and may be circumscribed.” Bayer AG v.
Betachem, Inc., 173 F.3d 188, 191 (3d Cir. 1999).
to Rule (26)(b)(2)(C), courts are required to limit discovery
(i) the discovery sought is unreasonably cumulative or
duplicative, or can be obtained from some other source that
is more convenient, less burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to
obtain the information by discovery in the action; or
(iii) the proposed discovery is outside the scope permitted
by Rule 26(b)(1).
pursuant to Rule 26(c), “[t]he court may, for
good cause, issue an order to protect a party or person from
annoyance, embarrassment, oppression, or undue burden or
expense[.]” In moving for a protective order, the
“burden of persuasion [is] on the party seeking the
protective order.” Cipollone v. Liggett Group,
Inc., 785 F.2d 1108, 1121 (3d Cir. 1986). The party
seeking a protective order “must show good cause by
demonstrating a particular need for protection.”
Id. Establishing “good cause” requires
the movant to “specifically demonstrate [ ] that
disclosure will cause a clearly defined and serious injury.
Broad allegations of harm, unsubstantiated by specific
examples, however, will not suffice.” Glenmede
Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995)
(citing Pansy v. Borough of Stroudsburg, 23 F.3d
772, 786 (3d Cir. 1994)).
sought via a subpoena issued pursuant to Rule 45 must fall
within the scope of discovery permissible under Rule 26(b).
OMS Investments, Inc. v. Lebanon Seaboard Corp.,
2008 WL 4952445 (D.N.J. Nov. 18, 2008). In addition, pursuant
to Rule 45(d)(1), “[a] party or attorney responsible
for issuing and serving a subpoena must take reasonable steps
to avoid imposing undue burden or expense on a person subject
to the subpoena” and the Court has a responsibility to
enforce this duty. However, it is the party claiming undue
burden that must establish same. Nye v. Ingersoll Rand
Company, Civ. No. 08-3481(DRD), 2011 U.S. Dist. LEXIS
7383, *6, 2011 WL 253957 (D.N.J. Jan. 25, 2011); OMS
Investments, 2008 U.S. Dist. LEXIS 94165 at *2, 2008 WL
4952445. If a subpoena falls outside the scope of permissible
discovery, the Court has authority to Quash or modify it upon
a timely motion by the party served. Fed.R.Civ.P. 45(d)(3).
four circumstances exist which require the Court to quash or
modify a subpoena. Rule 45(d)(3)(A) provides that:
(A) On timely motion, the court for the district where
compliance is required must quash or modify a subpoena that:
(i) fails to allow reasonable time to comply;
(ii) requires a person to comply beyond the geographical
limits specified in Rule 45(c);
(iii) requires disclosure of privileged or other protected
matter, if no exception or waiver applies; or
(iv) subjects a person to undue burden.
Id. In contrast, a court may quash or
modify a subpoena where it requires “disclosing a trade
secret or other confidential research, development, or
commercial information.” Rule 45(d)(3) (B)(i).
burden of the party opposing the subpoena “is
particularly heavy to support a motion to quash as contrasted
to some more limited protection such as a protective order
In re Domestic Drywall Antitrust Litig., 300 F.R.D.
234, 239 (E.D. Pa. May 15, 2014). (internal quotation marks
omitted); see also Malibu Media, LLC v. John Does
1-15, No. 12-2077, 2012 WL 3089383, at *5 (E.D. Pa. July
30, 2012) (moving ...