Deborah Lewis, Plaintiff, v. First American Title Insurance Company, Defendant Case No. 1:06-cv-000478-EJL-LMB Signed November 15, 2012 Boyle, Larry M., United States Magistrate Judge ORDER *1 This action is before the Court on the following motions: (1) Defendant's Motion for Leave to file Supplemental Statement (Dkt. 158), (2) Plaintiff's Motion to Compel (Dkt. 173), and (3) Defendant's Motion to Decertify Class (Dkt. 188). The Court heard oral argument on these matters on July 26, 2012. After consideration of the positions and arguments of the parties, the Court enters the following order. Summary The disputes currently before the Court are circular: Plaintiff contends that she cannot ascertain class-members because the independent agents are resisting discovery; Defendant argue that because Plaintiff cannot ascertain class-members, the class should be decertified. Thus, the two questions now before the Court are: (1) Should the Court compel discovery from the non-party agents; and (2) in light of new case law, and Plaintiffs difficulties in discovery, should the Court decertify the Idaho class. A. Background By way of background, Plaintiff alleges that, in violation of Idaho Code §§ 412705–2707, Defendant improperly overcharged her in the purchase of a lender's title insurance policy associated with a refinanced mortgage. Plaintiff represents a class of similarly situated Idaho plaintiffs. There is no dispute in Idaho that a fifty percent discount is provided when a purchase of a title policy is issued within two years of a similar policy on the same property by the same owner. The Idaho rate manual requires that the prior policy or reasonable proof of the prior policy be presented in order for the “discount rate” to apply. Plaintiff, on her own behalf, claims that Defendant overcharged her by at least $364 in a mortgage refinance transaction by charging the full basic insurance rate rather than the fifty percent discount rate required by the published manual. In her Complaint, Plaintiff charges that Defendants overcharged hundreds of other purchasers of title insurance policies in five states: Arizona, Idaho, New Mexico, Oregon, and Washington. Previously, certification of a five-state class of plaintiffs was denied by this Court. However, on February 24, 2010, the following Idaho class was certified: All persons in the state of Idaho who, in connection with a mortgage refinancing transaction: (a) paid a premium for the purchase of residential title insurance from First American Title Ins. Co.; (b) had either an unsatisfied mortgage from an institutional lender and prior title policy insurance, or a deed to a bona fide purchaser in the chain of title within two years of the payment of the premium provided in the Title Insurance Rate manual in Idaho; and (c) did not receive the discount specified in the Manual. (Order, Dkt. 95) (cert.denied, 5/20/2010). The class certification was predicated on the assumption that Plaintiff could and must identify class members through discovery. Initially, the close of discovery was set May 5, 2011. But that deadline was later extended to December 7, 2011. In August, 2011, Plaintiff served subpoenas duces tecum on more than forty independent Idaho title agents, who had made sales of title insurance policies for First American. Plaintiff now seeks information from thirty-one agents. Plaintiff estimates that 100,000 files, the majority of class claims, are at issue. *2 The subpoenas sent to these agents were largely identical. They sought: [A]ll documents, information, or electronically stored information, including but not limited to electronically stored information to which [the agent had] access including metadata relating to any First American Title Insurance Company residential, non-simultaneous lender title insurance policies that [the agent] issued in Idaho between November 1, 2003 and the present. (See Ex. A to the Schwartzman Dec. at each p. 8). According to Plaintiff's counsel, their “efforts quickly led to the collection of documents from some agents, as well as the elimination of response obligations for others who had no relevant data.” (Motion to Compel, 4). At the same time, a group of 31 entities (“independent agents”) jointly retained legal counsel.[1] Through their attorney, the independent agents have resisted discovery, citing relevance, expense, and a necessary search of documents “that places an incredible burden on the third parties.” (Independent Agents Brief Opposing Motion to Compel, Dkt. 179 at 2). The agents suggest that the file search will cost $300,000 ($150/hour; 2,000 hours). The agents also claim that Plaintiff has not been diligent in seeking discovery from them. Plaintiff explains that the delay was due to their good faith efforts to engage Defendant and the agents in meaningful “meet and confer” sessions, in which the agents gave Plaintiff the impression at the time, and throughout these proceedings, that there was a good possibility that the agents would agree to disclose the requested documents resolving the non-party discovery issues without court involvement. Plaintiff further contends that she has proposed several methods for discovering the information quickly, and at Plaintiff's expense through the use of an independent file examiner, Bridge City Legal. Plaintiff proposes that the agents copy all computerized transaction files stored in the agents' computer systems and have a third-party review the files at Plaintiff's expense. Unable to resolve this dispute, Plaintiff filed the underlying motion to compel. *3 Shortly after Plaintiff filed the motion to compel, First American filed its motion to decertify the class, arguing that new case-law and Plaintiff's difficulties in discovery require that the class be decertified. Essentially, First American contends that since this class action was certified, the United States Supreme Court, in Wal–Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), and the Ninth Circuit Court of Appeals, in Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), ruled that prior to class certification, a Plaintiff “be prepared to prove,” “after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.” First American further contends that Dukes held that “claims must depend upon a common contention” that “must be of such a nature that it is capable of classwide resolution–which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Dukes, 131 S.Ct. at 2551. First American reasons that “discovery has proven that the reissue rate's and class definition's prior-policy requirement raises inherently individualized issues requiring transaction-specific analyses, thereby preventing ascertainment of the class, defeating commonality and predominance, rendering this case unmanageable, and requiring decertification.” It is unclear if there is any common proof to determine whether any specific property was previously insured. According to First American, this determination only can be made, if at all, after an unmanageable, file-by-file analysis. Finally, following the hearing on these matters, First American filed notice with the Court of what it characterizes as supplemental authority[2] in support of the decertification motion. (Dkt. 203). As a preliminary matter, First American's request to file a supplemental statement (Dkt.158) directly concerns the adequacy of Plaintiff's proposed partial class notice list. Much of its supplemental briefing concern the same issues raised in the motion to decertify. Further, Plaintiffs concede the inadequacy of the proposed list, but argue that further discovery would cure those deficiencies. The Court finds the information contained in the supplemental statement useful, and the Court will consider it in resolving Plaintiff's motion to compel, and Defendant's motion to decertify. To that end, Defendant's Motion for Leave to file a Supplemental Statement (Dkt. 158) is granted. B. Plaintiff's Motion to Compel On April 2, 2012, Plaintiff filed a motion to compel responses from the independent agents. (Dkt. 173). The motion was filed several months after the close of discovery. The independent agents resist discovery on three grounds: (1) that the request is untimely; (2) that Plaintiff seeks irrelevant information; and (3) production will put an undue burden and expense on the independent agents. (Response, Dkt. 179). 1. Timeliness of Plaintiff's Motion District Courts must issue scheduling orders and the establishment of a firm discovery cutoff date ... has impacts generally helpful to the orderly progress of litigation. Fed R. Civ. P. 16(b); Cornwell Credit Union, 439 F.3d 1018, 1027 (9th Cir. 2006). However, Rule 37, which governs motions to compel discovery, Rule 16, and the scheduling order in this case do not establish a deadline by which a party must file a motion to compel discovery. Rather, “[a]motion to compel may be filed after the close of discovery. Absent unusual circumstances, it should be filed before the scheduled date for dispositive motions.” Galt v. Nabisco Biscuit Co., 184 F.R.D. 620, 622 (D. Nev. 1999). Where a party can provide a reason for the delay in filing a motion to compel, raises the issue promptly with the opposing party, and attempts to meet and confer until it becomes clear that the opposing party would not produce, motions to compel filed after the close of discovery may be granted. Humphreys v. Regents of Univ. of California, C 04–03808 SI, 2006 WL 1140907 (N.D. Cal. Apr. 3, 2006). Generally, Courts in the Ninth Circuit treat such motions filed after the close of discovery as also seeking leave to conduct additional discovery despite discovery having closed. See, e.g., Veliz v. Cintas Corp., C 03–1180 RS, 2008 WL 5427605 (N.D. Cal. Dec. 30, 2008) (citing Google Inc. v. Am. Blind & Wallpaper Factory, Inc., 2006 WL 2578277 (N.D. Cal. Sept. 6, 2006) objections overruled, C 03–5340–JF (RS), 2006 WL 3050866 (N.D. Cal. Oct. 23, 2006)). *4 It is beyond dispute that Plaintiff has known about the need for this type of third-party discovery since May 2, 2011, as a result of Defendant's Supplemental Statement regarding Plaintiff's proposed Partial Class Notice. However, this potential need in and of itself does not mean that Plaintiff should have expected this kind of discovery dispute. Rather, it appears that Plaintiff has made diligent efforts not to bring in third-party agents before the court, instead seeking to appease the agents concerns regarding time, relevance and cost though meaningful meet and confer sessions[3] with the agent's counsel. Notably, there have been no dispositive motions filed, and no party is claiming prejudice in disclosure. Finally, upon receiving the agent's definitive answer that they were at an impasse, Plaintiff filed this motion to compel within two weeks. Accordingly, the Court finds, and thus concludes, that Plaintiff was diligent in pursuing this resolution and the motion to compel will be considered. See M2 Software, Inc. v. M2 Commc'ns, L.L.C., 217 F.R.D. 499, 500 (C.D. Cal. 2003). 2. Relevance The agents contend that Plaintiff's subpoenas request irrelevant information because the requests are overbroad. It is well-settled that the district Court may order the “discovery of any matter relevant to the subject matter involved in the action.” Fed.R.Civ.P. 26(b)(1). Relevant evidence is any evidence tending to make the existence of any consequential fact “more probable or less probable than it would be without the evidence.” Fed.R.Evid. 401. “[T]he question of relevancy is to be more loosely construed at the discovery stage than at the trial....” See 8 Wright, Miller, and Marcus, Federal Practice & Procedure, § 2008 at 125 (2010). That the evidence might be inadmissible does not preclude discovery so long as the request “appears reasonably calculated to lead to the discovery of admissible evidence.” Fed.R.Civ.P. 26(b)(1). The definition of relevancy “has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978). Plaintiff has proposed that a third-party contractor, Bridge City Legal, perform screening of the information to conform to the definition of the class and the narrowly-tailored information requested in the subpoenas. The proposal provides that any information retrieved will be reviewed by the third-party contractor, the agents, and First American before being provided to Plaintiff, and will then be destroyed or returned to the agents. The relevance of the information sought is obvious. At this stage, it is necessary to determine class membership. Later, Plaintiffs will be required to prove both liability and damages. 3. Burden and Expense The thrust of the independent agents' resistance to discovery is that compliance with the request places an undue burden on the agents because there is a risk of data corruption, inadvertent destruction of data, and a concern that the proposed third-party contractor could create a title plant from the agents' proprietary information. Pursuant to Fed.R.Civ.P. 45(c), an attorney issuing a subpoena must avoid causing undue burden or expense on the recipient. Plaintiff argues that the economic burden and expense can be avoided completely under Plaintiff's latest proposal. In short, Plaintiff has offered to pay for an independent third-party contractor to sort and search the files. The minimal imposition on the agents' time, to copy the electronic files, and resources appears not to be undue considering the offer of Plaintiff to cover all costs. As to the claims that the contractor could form a title plant, because the agents and Defendant will be given the opportunity to approve the third-party contractor, and because there are sufficient judicial remedies available in the form of protective orders and confidentiality agreements, the concern regarding formulation of a title plant is unfounded, easily avoidable, and easily controlled. *5 Therefore, the Court finds, and thus concludes, that Plaintiff's motion does not impose undue burdens on the non-party agents. Accordingly, limited third-party discovery should be implemented and Plaintiff's motion is granted. C. First American's Motion to Decertify First American claims that recent developments in class action case law now require a higher standard for class certification than when this class action was certified two years ago. Specifically, First American points out that the Supreme Court in Dukes held that prior to class certification, a Plaintiff “be prepared to prove, ... after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.” (Memo in Support, Dkt. 188–1 at 8–9) (quoting Wal–Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011)). First American contends that Plaintiff is not prepared to adequately establish that the prerequisites of Rule 23 have been satisfied. In short, First American contends that inherently individualized issues prevent certification. First American argues that a tedious, file-by-file review is necessary to determine “whether any particular refinance transaction had a prior policy and may have been entitled to the reissue rate (and thus be in the class).” First American estimates that it would take up to 38,000 hours to conduct a review of the agent files, arguing specifically that “there is no proxy for the requisite prior policy.” (Memo in Support, Dkt. 188–1 at 9). In other words, First American contends that direct evidence of a prior policy is necessary. First American, thus, argues that this individualized analysis of each file defeats commonality and renders the class unmanageable. Plaintiff responds arguing that the call for decertification is unfounded because the Idaho rate manual allows for “reasonable proof” of a prior policy, which can be ascertained through simple electronic discovery. Plaintiff further argues that, even if it is determined that there is no proxy for proof of a prior policy, decertification should still be denied because the issue of what constitutes reasonable proof is an issue of liability and not certification. Finally, Plaintiff argues that the thrust of Defendant's motion depends on the premise that direct proof is necessary to ascertain class eligibility. 1. Standard for Decertification “Federal Rule of Civil Procedure 23 provides district courts with broad discretion to determine whether a class should be certified, and to revisit that certification throughout the legal proceedings before the court.” Armstrong v. Davis, 275 F.3d 849, 871 n.28 (9th Cir. 2001). Pursuant to Rule 23(c)(1)(C), the Court may decertify a class at any time before final judgment. See, e.g., Rodriguez v. West Publ'g Corp., 563 F.3d 948, 966 (9th Cir. 2009); City of Roseville Emples. Ret. Sys. v. Micron Tech., 2011 U.S. Dist. LEXIS 47506, at *13 (D. Idaho Apr. 28, 2011). “[A] district court retains the flexibility to address problems with a certified class as they arise, including the ability to decertify. 'Even after a certification order is entered, the judge remains free to modify it in the light of subsequent developments in the litigation.' ” United Steel, Paper & Forestry, Rubber, Mfg. Energy v. ConocoPhillips Co., 593 F.3d 802, 809 (9th Cir. 2010) (quoting Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982)). *6 However, “[i]n the absence of materially changed or clarified circumstances, or the occurrence of a condition on which the initial class ruling was expressly contingent, courts should not condone a series of re-arguments on the class issues by either the proponent or the opponent of class, in the guise of motions to reconsider the class ruling.” 3 William B. Rubenstein, Herbert Newberg & Alba Conte, Newberg on class Actions § 7.47 (4th ed. 2012) (citations omitted). The issue now before the Court is whether further discovery can result in identifying class membership without an undue burden on the agents, or a through file-by-file analysis, defeating commonality. The answer to this question turns on what constitutes proof of a prior title insurance policy. After a thorough analysis of these issues, the Court concludes that the rate manual's “reasonable proof” language prevents decertification because it is a factual matter that cannot be determined at this stage of the litigation. 2. Evidence of a prior policy First American argues that there is no proxy for evidence of a prior policy. Following that line of reasoning, it appears that First American is arguing that only direct evidence will suffice in proving a prior policy, and, thus, eligibility for the discount rate. First American goes further to argue that because of this standard of proof, Plaintiff cannot identify class members without engaging in a through file-by-file analysis, which it reasons destroys the requirement of Rule 23. Plaintiff responds that the current class definition reflects the status of Idaho law and First American's Idaho rate manual. Essentially, Plaintiff argues that Idaho's reasonable proof requirement language will simplify discovery because sufficient proof can be easily ascertained through electronic searches. Under the express terms of the Idaho rate manual, the reissue or discount rate is to be applied if a prior title insurance policy “is presented to the issuing company and [is] retained in the issuing company's file, or in the absence thereof, reasonable proof of insurance is provided to the issuing company.” (Exhibit 1 to Brayton Affidavit, Dkt. No. 53–2). The language of the rate manual provides that direct evidence may not necessarily be required for eligibility for the discount rate. Likewise, direct evidence may not necessarily be required to identify class membership. Indeed, First American has acknowledged that “[t]he only requirement is that there is sufficient proof. In other words, if you can see that another title company recorded a deed or loan we will not require written proof.” (Id.). Accordingly, First American's Motion to Decertify (Dkt. 188) is denied. Order It is hereby ORDERED: 1. Plaintiff's Motion to Compel (Dkt.173) is GRANTED; and 2. Defendant's Motion to Decertify (Dkt.188) is DENIED. Footnotes [1] The Objecting agents are: Alliance Title & Escrow, Ada County; Alliance Title & Escrow, Mountain Home; AmeriTitle, Payette; AmeriTitle, Ketchum; Custer County Title; First American Title Company, Ada County; First American Title Company, Driggs; First American Title Company, Idaho Falls; First American Title Company, Coeur d'Alene; First American Title Company, Madison & Fremont; First American Title Company, Kellogg; First American Title Company, Lewiston; First American Title Company, Rigby; First American Title Company, St. Maries; First American Title Company, Twin Falls; Pioneer Title Company, Emmett; Pioneer Title Company, Ada, Canyon, Bannock & Kootenai Counties; Pioneer Title Company, Owyhee County; Land Title & Escrow, Rupert; Land Title & Escrow, Twin Falls; Land Title & Escrow, Burley; Land Title & Escrow, Gooding; Land Title & Escrow, Jerome; First Idaho Title; Inland Title Co.; Latah County Title Co.; Washington County Title Co.; Timberline Title & Escrow; Lewis County Title; Lemhi Title Co.; Clearwater County Land Title. All are represented by Matthew Walters at Elam and Burke. 2Ahmad v. Old Republic Title Insurance Co., ___ F.3d ____, 2012 WL 3264560 (5th Cir. Aug. 13, 2012). First American argues that Ahmad represents authority that cases like this, where proof of a prior title insurance policy is necessary to qualify for the discount refinance rate, require a file-by-file review, thus, defeating the ascertainability, commonality, and predominance requirements of class maintenance. 3 The parties met and conferred on at least five occasions: October 7, 2011, December 7, 2011, December 14, 2011, January 23, 2012, and March 16, 2012.