Civ. A. No. 88–9752
United States District Court, E.D. Pennsylvania
June 17, 1991
Jill A. Douthett, Philadelphia, Pa., for plaintiff.
Louis E. Bricklin, Illene G. Greenberg, Bennett Bricklin & Saltzburg, Philadelphia, Pa., for John Barrington Hume & INSCO, Ltd.
Jeffrey B. Albert, Wendy Fleishman, Stephanie Resnick, Timothy D. Mara, James W. Christie, Clark, Ladner, Fortenbaugh & Young, Philadelphia, Pa., for The Home Indemnity Company.
*1 On May 7, 1991, this U.S.M. Judge filed a Memorandum and Order on the Motion by plaintiffs (collectively), the “policyholders” to compel the production of certain “drafting history” and “other insurance” information. On May 14th, I denied the insurers' motion to vacate but allowed them to submit additional responses to plaintiffs' motion to compel on or before June 5, 1991.
Having determined that the plaintiffs' discovery requests are relevant to the subject matter of this litigation, the Court now turns to defendant's other objections. One of the objections, pressed most fervently is contained in the affidavits of four insurers—North Star Reinsurance Corp. (North Star), Insurance Company of North America (INA), Aetna Casualty and Surety Company (Aetna), and an affidavit by Charlotte Brown employed with American International Adjustment Company on behalf of AIU Insurance, Illinois National, Landmark Insurance Company, Lexington, National Fire of Pittsburgh, New Hampshire Insurance Company, Granite State Insurance Company, and Birmingham Fire Insurance Company. These affidavits object to the plaintiffs' discovery requests on the grounds that compliance, even if feasible would be a herculean task that is unduly burdensome and expensive.
For instance the affidavit submitted by Aetna Casualty and Surety Claims Counsel Robert E. Hyland, Esquire, states that there are approximately 166,026 claims outstanding in the Commercial Insurance Division. In Hartford, Conn. Document Depository there are approximately 1.1 million closed files for commercial and casualty claims; among these files are auto and general liability claim files, workers compensation and personal automobile and homeowners liability claim files as well. These categories are physically interspersed with one another. It further states that the files closed prior to 1984 (with few exceptions) would have been earmarked for destruction under Aetna's Document Retention Policy.
An affidavit of John W. Dattner, Vice President of North Star Reinsurance Corp. states that he has only one 1978 policy limited high layer policy at issue; that the policy is 13 years old and was written before AIDS was known to exist. He further states that he has no files on “drafting history” and that the burden of the expense and time consuming use of resources that would be imposed by requiring North Star to look further for drafting history information would be enormous, taking months and at least 2500 hours of labor at a cost in excess of $100,000. Moreover, to avoid waiver of any privilege-attorney-client, attorney work product, and joint defense privileges, North Star and outside counsel would have to review any such documents individually before producing anything.
The affidavit of Charlotte Brown, the Home Office Supervisor employed with American International Adjustment Company tracks basically the affidavits set forth above expressing the enormity of the labor involved regarding hundreds of thousands of files, at four different file locations as well as the fact that these third-party defendant insurers do not maintain the files at issue indexed by policyholder, industry or industry group. She states that in order to locate claims and underwriting files, it is necessary first to ascertain the policies issued to each putative insured. Further, that the information sought by plaintiffs would, for the most part, require these third-party defendants to canvass their underwriting or policy files. She also states that the claims files for a putative insured which might be accessed by computerization systems, are generally not classified by type of claim, so that a manual search of each claims file identified would be required to determine if the claim is related to AIDS and blood products.
*2 The affidavits submitted do not demonstrate the “most extreme showing of burdensomeness” as required by the appropriate and applicable decisions. In cases involving similar discovery requests, courts have held that an unwieldy record-keeping system, which requires heavy expenditures in money and time to produce relevant records, is simply not an adequate excuse to frustrate discovery. In re
Richardson–Merrell, 97 F.R.D. 481, 483 (S.D. Ohio 1983). Dunn v. Midwestern Indemnity, 88 F.R.D. 191, 197–98 (S.D. Ohio 1980); Kozlowski v. Sears, Roebuck & Co., 73 F.R.D. 73, 76 (D.Mass.1976); 4 A. Moore's Federal Practice §§ 34–19 at 34–106 2d Ed.1981). Defendants' insurers contentions herein, this Court feels, are but a repeat of these arguments which have been rejected before.
In Kozlowski v. Sears, Roebuck & Co., supra,
the plaintiffs sought discovery concerning accidents similar to the one alleged. Sears resisted compliance on the ground that there was “no practical way for anyone to determine whether there have been any complaints similar to those alleged ... other than [by] going through all of the claims ... which is the equivalent of an impossible task.” Id.
at 76. The Court stated, “[m]erely because compliance with a ‘Request for Production’ would be costly or time-consuming is not ordinarily sufficient reason to grant a Protective Order where the requested material is relevant and necessary to the discovery of evidence.” Id.
The court further stated:
The defendant may not excuse itself from compliance with Rule 34, Fed.R.Civ.P., by utilizing a system of record-keeping which conceals rather than discloses relevant records, or makes it unduly difficult to identify or locate them, thus rendering the production of documents an excessively burdensome and costly expedition. To allow a defendant whose business generates massive records to frustrate discovery, by creating an inadequate filing system, and then claiming undue burden, would defeat the purposes of the discovery rules. [citations omitted]
..... It is well established that a private corporation cannot avoid producing documents by an allegation of ‘impossibility’ if it can obtain the requested information from sources under its control. [citations omitted] Id.
at 76; Accord,
Alliance to End Repression v. Rochford, 75 F.R.D. 441 (N.D.Ill.1977).
This Court recognizes that the problems presented in complying with plaintiffs' requests in this case may be more complex or of a different nature than those presented in the above cases. However, the Court agrees with the reasoning in Kozlowski, supra.
Therefore, it wishes to make clear that it will not be receptive to the insurance carriers impossibility contentions insofar as they are grounded in the perculiar manner in which defendants maintain their records and their computer systems. Every lawsuit is burdensome and expensive to the party litigants, but where it is found necessary to bring about a fair, impartial and thorough administration of justice, all sources of information must be made available regardless of expense or inconvenience resulting therefrom. Michel v. Meier, 8 F.R.D. 464, 477 (D.W.Pa.1948). See also
Delozier v. First National Bank of Gatlinburg, 109 F.R.D. 161, 164 (E.D.Tenn.1986); United States v. American Optical Co., 39 F.R.D. 580 (N.D.Cal.1966). The mere fact that compliance with a discovery request will cause significant expense does not of itself justify denial of the request.
*3 Finally, it should be noted that the policyholders have reduced the scope of their discovery requests with respect to other insureds' claims to encompass only four blood fractionators—Travenol Laboratories, American Red Cross, Alpha Therapeutics, and Cutter Biological, and to encompass only AIDS related and blood-derivative claims. Therefore, it would seem that the insurers would not need to review the files of “each of [their] many thousands of insureds” to comply with this Court's order, but need only to review the claims files of those four specified insureds for AIDS related and blood-derivative claims. Moreover, the policyholders are not requesting that each insurer search every
file in its possession, but rather, only those files in which each insured knows or believes that drafting history information is contained, and those files which contain the form policy themselves, as well as drafting history information concerning them.
I shall therefore, follow the well established law that allows for liberal discovery and that does not penalize the party seeking discovery for the other parties unwieldy record keeping system by forcing them to pay the costs of discovery. However, to help mitigate the costs to the carriers the plaintiffs shall pay the costs of copying the documents it selects.
An appropriate Order is hereby entered.
AND NOW, this 17th day of June, 1991, upon consideration of the Motion of Plaintiffs, Rhone–Poulenc Rorer, Inc. and Armour Pharmaceutical Co. and third-party defendant and fourth-party plaintiff Revlon, Inc. for clarification or modification of the Court's May 7, 1991 Opinion and Order and the joint response of all insurance carriers (except Promethean Insurance Co., Ltd.), it is hereby ORDERED that plaintiffs' Motion for Modification and Clarification is GRANTED.
IT IS FURTHER ORDERED that:
1. Plaintiffs shall only be required to pay for copies of any documents on microfilm/microfiche which plaintiff requests, and that defendants bear the burden of searching and producing the documents.
2. The Court's Order filed May 7, 1991 is STAYED.
My May 7th Memorandum on this subject stated at P. 8–9:
The insurers argue that disclosure of the claims files of insured other than the policyholders herein would be unduly burdensome and would intrude on the confidentiality interests of nonparties to this action. I do recognize the insurers burdensome argument to be genuine and I will therefore limit any order to be entered in this matter to only the four insured named by the policyholders. Under the Federal Rules, a court may limit discovery upon a finding that “the discovery is unduly burdensome or expensive, taking into account the needs of the case, the amount in controversy, limitations on the parties' resources and the importance of the issues at stake in the litigation.” Federal Rule of Civil Procedure 26(b)(1) ...
The insurers are not satisfied with the policyholders' limitation of the four named above and argue that the information sought is irrelevant and will waste the time of the Court and the parties. However, the insurers have failed to demonstrate by detailed affidavit the burdensome nature of producing these four claims files. See Parker–Hannifan,
Slip Opinion at 2.
End of Document.