Summary
denying application for protective order precluding deposition of company's president
Summary of this case from Six West Retail Acq., Inc. v. Sony Theat. Mgmt. Corp.Opinion
90 Civ. 7811 (KC)
February 4, 1993
MEMORANDUM AND ORDER
The defendant in this action, National Union Fire Insurance Company of Pittsburgh, PA ("National Union") has moved pursuant to Rule 26(c) of the Federal Rules of Civil Procedure for a protective order precluding the plaintiff, Arkwright Mutual Insurance Company ("Arkwright") from conducting certain discovery. Each of the issues will be addressed in turn.
Retrocession Information
At its core, this case concerns liability for the cost of cleaning up environmental contaminants at a General Electric plant. The contaminants were identified following a fire at the plant, and Arkwright, as the primary property insurer, assumed responsibility for the cleanup costs. National Union was a reinsurer to which Arkwright had ceded part of its risk, and Arkwright therefore sought reimbursement for a portion of the cleanup costs. National Union declined, however, arguing in part that the contaminants had been present before the fire and that the bulk of the cleanup expenses were therefore not a covered loss.
National Union itself had ceded some of its risk to other reinsurers through a series retrocession agreements. In a deposition notice propounded pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, Arkwright now seeks information regarding. those agreements as well as communications between National Union and its retrocessionaires concerning the loss. National Union has objected on grounds that the requested information is irrelevant and constitutes confidential trade secrets.
Arkwright argues that by failing to seek a protective order in a timely fashion, National Union waived any objections to the requested discovery. In light of my determination on the merits of National, Union's application, this contention need not be addressed.
National Union's argument regarding relevance might be stronger if this were simply a "Coverage" case. Where the only issue is whether a loss is covered by an insurance policy, succeeding levels of reinsurance may be of doubtful relevance. See Rhone-Poulenc Rorer Inc. v. Home Indemnity Co., 139 F.R.D. 609, 612 (S.D. Pa. 1991); Leksi, Inc, v. Federal Insurance Co., 129 F.R.D. 99, 106 (D.N.J. 1989). However, National Union has raised counterclaims, including one that seeks recision of the contract of reinsurance based on alleged misrepresentations that Arkwright made concerning the amount of risk that it would retain. National Union's own retrocessional arrangements could therefore shed light on whether the defendant actually relied on Arkwright's purported representations and whether they were material. See Nat'l Union Fire Ins. Co. of Pittsburgh, PA. v. Continental Illinois Corp., 116 F.R.D. 78, 82 (N.D. Ill. 1987). Likewise, National union's communications with the retrocessionaires concerning both the risks involved and the loss, are clearly relevant, and the reinsurance agreements themselves are pertinent to understanding those communications. See id. at 83.
National Union's claim of confidentiality also fails. Its contractual relations with retrocessionaries are undoubtedly business arrangements that National Union would rather keep confidential. However they hardly rise to the level of a secret formula or other proprietary information such that their disclosure would do substantial harm. Moreover, under Rule 26(b)(2) of the Federal Rules of Civil Procedure, insurance policies are specifically subject to disclosure, and in this case National Union's retrocession agreements function as its own insurance policies with respect to the loss. See id. at 83-84 Therefore, they can hardly be exempt from discovery on grounds of confidentiality.
Finally, National Union's vague claims of burden are unpersuasive. In order to collect funds to which it would be entitled under the retrocession agreements, National Union necessarily has ready access to the relevant files.
Accordingly, National Union's application for a protective order with respect to retrocession information is denied, and that information shall be produced subject to the same confidentiality order that the parties agree to regarding Arkwright's reinsurance information.
Deposition of Thomas Tizzio
Thomas Tizzio is president of the American International Group, Inc., Nation Union's parent corporation. National Union has objected to producing him in response to paragraph 33 of Arkwright's 30(b)(6) notice, which seeks information concerning
all communications between Thomas Tizzio and Hobbs Group, Arkwright, Borg-Warner, or General Electric regarding the subject matter of this action.
"[A]n order to vacate a notice of taking [a deposition] is generally regarded as both unusual and unfavorable. . . ." Investment Properties International, Ltd. v. IOS, Ltd., 459 F.2d 705, 708 (2d Cir. 1972). "Generally, one is required to show both that there is a likelihood of harassment and that the information sought is fully irrelevant before a party is altogether denied the right to take an individual's deposition."United States v. Miracle Recreation Equipment Co., 118 F.R.D. 100, 104 (S.D. Iowa 1987); see also Salter v. Upjohn Co., 593 F.2d 649, 651 (5th Cir. 1979); West Peninsular Title Co. v. Palm Beach County, 132 F.R.D. 301, 302 (S.D. Fla. 1990).
Here, National Union has made no such showing. Arkwright has demonstrated that Mr. Tizzio has familiarity with the events underlying the litigation. He met with two officers of the Hobbs Group, Arkwright's broker, concerning the loss at issue. Aft. of W. Glenn Yancey, dated Jan. 8, 1993, ¶ 3. Although one of these officers states that Mr. Tizzio took notes, no such notes can be found. Yancey Aff. ¶ 3; Defendant's Response to Plaintiff's Third Request for Production of Documents, Item 11. Furthermore, Mr. Tizzio communicated with the managing general agent for National Union concerning the loss.
Mr. Tizzio has proffered no affidavit denying knowledge of intonation relevant to this case. Instead, National Union's attorney has submitted his own affidavit stating that Mr. Tizzio told him that the meeting with the Hobbs Group representatives was a short one, that he does not settle claims, and that he does not have "current" knowledge of the status of the litigation. Aff. of Edward J. Ozog, dated Jan. 20, 1993, ¶ 13. This is insufficient. Not only are these representations second-hand, but they fall well short of an unequivocal statement that this witness lacks relevant knowledge.
This is not an inconsequential case in which a chief executive's deposition is sought merely to harass or to force settlement. Rather, it involves a multimillion-dollar claim of which the president of National Union's parent has some knowledge. The application for a protective order precluding the deposition of Thomas Tizzio is therefore denied.
Scope of 30(b)(6) Deposition
National Union next objects to items 11 through 33 of Arkwright's 30 (b)(6) deposition notice on the ground that they seek information more appropriately provided in response to contention interrogatories. The dispute appears to be largely a matter of semantics.
To the extent that Arkwright is seeking factual information relating to each of the claims in the litigation, the use of a 30(b)(6) deposition is wholly appropriate. Arkwright need not serve contention interrogatories to discover the facts underlying National Union's legal contentions. Furthermore, the declination decision and similar policy determinations are subject to discovery by deposition even if they involved legal interpretations of the contracts between the parties. Thus, both the factual and contractual grounds for a decision-maker's determination to decline coverage are discoverable.
What is not appropriate at this stage is inquiry into the legal theories of the instant litigation. Whether National Union is now asserting a particular legal defense is an issue better addressed by counsel in response to contention interrogatories than by a lay witness at a deposition. Likewise, individual witnesses may not have comprehensive knowledge of the facts in this case, and their testimony cannot be deemed to limit the evidence that National Union can present at trial. In order to ensure that the trial evidence is confined to that which is disclosed during discovery, Arkwright can propound appropriate contention interrogatories.
Finally, National Union's suggestion that it not be required to submit to a 30(b)(6) deposition until Arkwright provides further discovery is without merit. Discovery is proceeding apace, and adopting a tit-for-tat schedule would only slow the process. If Arkwright is in fact not responding appropriately to National Union's discovery demands, those issues can be addressed on their own merits.
Privileged Information
National Union's last objection to the 30(b)(6) deposition notice is that it "potentially" seeks material protected from discovery by the attorney-client privilege or the work product doctrine. This objection is entirely amorphous. At this stage Arkwright has done no more than identify areas of inquiry. When specific questions are asked, National Union can establish a proper foundation for asserting any objection based on privilege.
Conclusion
For the reasons set forth above, National Union's motion for a protective order is denied.