I. Introduction

*1 The instant discovery dispute involves a request by Plaintiffs[1] for production by Defendant The Lincoln National Life Insurance Company (“Lincoln”) of three categories of documents. Those categories are: (1) documents concerning the impact of older-age sales, premium funding levels, and lapse rates on the profitability of the Legend Policies subject to Lincoln's 2016 COI increases; (2) documents relating to quarterly earnings reports, call scripts, financial analyses, and related communications, as referenced during the deposition of Paul Spurr; and (3) experience studies and related documents and analyses concerning Lincoln's experience for the Legend Policies, as referenced during the deposition of John Overton.

For the reasons discussed below, Plaintiffs' motion is DENIED to the extent Plaintiffs seek documents that Lincoln has not previously agreed to produce in response to Plaintiffs' filing of this motion.

II. Applicable Legal Standards

Federal Rule of Civil Procedure 26 provides:

Fed. R. Civ. P. 26(b)(1). Furthermore, relevancy is defined as “any tendency to make a fact” at issue in the litigation “more or less probable than it would be without the evidence.” Fed. R. Evid. 401. In this district, courts have determined that “[r]elevancy is to be broadly construed for discovery purposes and is not limited to the precise issues set out in the pleadings or to the merits of the case.” Frank Brunckhorst Co. v. Ihm, Misc. No. 12-0217, 2012 WL 5250399, at *3 (E.D. Pa. Oct. 23, 2012) (quotation omitted). Nevertheless, “[a]lthough 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).

Initially, “[t]he moving party bears the initial burden of showing that the requested discovery is relevant.” Plexicoat Amer., LLC v. PPG Architectural Finishes, Inc., No. 13-3887, 2015 WL 171831, at *3 (E.D. Pa. Jan. 14, 2015) (citing Morrison v. Phila. Hous. Auth., 203 F.R.D. 195, 196 (E.D. Pa. 2001)). The burden then shifts to the opposing party to demonstrate “that the requested documents either do not come within the broad scope of relevance defined pursuant to Fed. R. Civ. P. 26(b)(1) or else are of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.” Id. at *2 (quotation omitted).

III. Analysis

*2 As discussed above, Plaintiffs seek an order compelling Lincoln to produce what Plaintiffs have identified as three categories of documents. Generally speaking, those categories are: (1) documents concerning the effects of older-age sales, premium funding levels, and lapse rates on the profitability of the Legend Policies at issue; (2) the so-called “packets” put together to prepare Lincoln's CEO, Philip Glass, for quarterly earnings calls; and (3) experience studies and related documents and analyses concerning Lincoln's experience for the Legend Policies. Whether Lincoln should be required to produce documents regarding each of these categories is discussed below in turn.

A. Documents Reflecting the Effect of Older-Age Sales, Premium-Funding Patterns, and Lapses on Profitability

1. Plaintiffs' Position

Plaintiffs seek documents concerning the impact on Lincoln's profitability from sales of policies (i) to older-age individuals, (ii) to those who tend to minimally fund their policies, and (iii) to those who are less likely to lapse their policies. Generally these characteristics are correlated to older-age individuals forgoing the “savings account” aspects of the universal life policy and surrendering (or “lapsing”) their policies at lower rates. These attributes of lower premium funding and lower lapse rates are also characteristic of policies that are stranger-originated, stranger-owned, or investor-owned, known as “STOLI” and “IOLI” policies. Plaintiffs seek documents reflecting Lincoln's analysis of whether these characteristics — older-age policyholders, premium funding levels, and lapse rates — negatively affected Lincoln's profitability. Plaintiffs contend that such documents will demonstrate that Lincoln increased the COI rates in 2016 in an effort to recoup the shortfall in profitability caused by these factors, which Plaintiffs contend was improper, as opposed to Lincoln basing any such increase on the specific factors enumerated in the policies as constituting the permissible bases for COI increases. Plaintiffs contend that if the sought records demonstrate that Lincoln was motivated by these impermissible factors, i.e., older-age sales, premium-funding rates, and lapses, Plaintiffs will be more likely to prove that Lincoln's challenged COI increases breached the contractual terms of the policies.

Plaintiffs advance a separate but related argument with respect to what Plaintiffs view as the relevance of such documents to Plaintiffs' bad faith claims, i.e., Plaintiffs' claims for breach of the implied covenant of good faith and fair dealing, tortious breach of the duty of good faith and fair dealing, and the consumer protection statutes of various states. Such bad faith claims are based on Plaintiffs' allegations that Lincoln used COI increases as a pretext to force policyholders to surrender or lapse their policies because in light of such COI increases the cost of maintaining those policies became prohibitively expensive. In Plaintiffs' view, Lincoln did not implement the COI increases in order to address changes in expected mortality, interest, or expenses, which were permissible factors on which to base COI increases under the policies. Instead Plaintiffs claim that Lincoln implemented the COI increases as a means of ridding itself of unprofitable policies. Plaintiffs seek punitive damages in connection with some or all of their bad faith claims.

2. Lincoln's Position

In response, Lincoln argues that these documents are not relevant to any of Plaintiffs' claims. Furthermore, to the extent that the documents may be relevant, they are, in Lincoln's view, duplicative of the documents that Lincoln has already provided to Plaintiffs in discovery. Lincoln notes that all the actuarial calculations and supporting documents on which Lincoln relied when implementing the COI increases have already been disclosed. As per Lincoln, these already-produced documents include: (i) all documents showing Lincoln's “profitability projections” for the policies at issues at the time of original pricing; (ii) “mortality tables and applicable scalars used at pricing” and in the COI increases; and (iii) studies for the policies at issue that show Lincoln's “actual experience over time with mortality, investment returns, earnings, terminations, lapses, and premium persistency.” (Lincoln Br. at 6.) Lincoln also notes that it has produced to Plaintiffs all the underlying raw data, which the parties term the “Seriatim Data,” for the subject policies. (Id. at 5-6.) Therefore, according to Lincoln, Plaintiffs already have all the relevant information for their breach of contract claims.

*3 Lincoln also denies that the documents requested by Plaintiffs are relevant to Plaintiffs' bad faith claims. Lincoln seizes on a perceived inconsistency between Plaintiffs' arguments in which Plaintiffs appear to argue that lapses both increase and decrease Lincoln's profits. Lincoln further argues that it has already produced “all communications concerning the COI Adjustment and all documents regarding [Lincoln's] management's decision to initiate the COI Adjustment or COI rate adjustments for legacy Jefferson-Pilot universal life insurance policies in general.” (Id. at 10.) In Lincoln's view, Plaintiffs already have all the communications and documents to which they are entitled.

3. Analysis

Plaintiffs' argument is unpersuasive. The Legend Policies allowed for COI increases based on “expectation of future mortality, interest, expenses, and lapses.” Plaintiffs have already received extensive discovery from Lincoln on Lincoln's experience as it relates to these factors. At this time, Plaintiffs are not arguing that those productions were deficient. Rather, Plaintiffs now seek additional documents that, in Plaintiffs' view, would demonstrate that Lincoln had improper “motivations” when raising the COI based on such factors. But such documents concerning Lincoln's motivations are not relevant — even under the relaxed standards for Rule 26 — to deciding the issue of whether Lincoln's actions in raising the COIs were allowed under the express terms of the policies at issue.

Even viewed in the context of Plaintiffs' bad faith claims, Plaintiffs fail to demonstrate the relevancy and necessity of the requested documents. As Lincoln notes, Plaintiffs already have all documents and communications concerning the COI increases, including documents reflecting Lincoln's decision-making process in implementing the COI increases for the policies at issue. Plaintiffs fail to explain why documents that Lincoln created to track the profitability of the Legend Series policies would contain any non-duplicative information relating to Lincoln's motivations.

Accordingly, Plaintiffs' request for an order compelling Lincoln to produce documents reflecting the effect of older-age sales, premium-funding levels, and lapses on the profitability of the Legend Series policies is DENIED insofar as Plaintiffs seek production of additional documents from Lincoln.

B. Documents Relating to Quarterly Earnings Reports, Call Scripts, Financial Analyses, and Related Communications

1. Plaintiffs' Position

Plaintiffs also request documents that were prepared for Lincoln's senior management in advance of quarterly earnings calls with Lincoln's investors. According to Plaintiffs, these documents include scripts, Q&As, financial analyses, and other associated documents, including emails, and are collectively referred to as “preparation packets.” Plaintiffs have limited their request to the preparation packets for the quarterly earnings calls between October 1, 2015 and November 1, 2018.[2]

Plaintiffs contend that these documents informed and/or were the basis of the public statements that were made by Lincoln's management during the quarterly earnings calls. Specifically, Plaintiffs contend that topics such as reinsurance and recouping lost earnings were discussed during the quarterly earnings calls. Indeed, Plaintiffs included in their complaints in both the 2016 COI litigation and the 2017 COI litigation allegations that Lincoln's CEO, Dennis Glass, made public statements, during these quarterly earnings calls and otherwise, regarding the COI increases. Plaintiffs contend that the public statements quoted in the operative complaints support Plaintiffs' theory that the COI increases attempted, improperly in Plaintiffs' view, to ameliorate past losses based on below-expected investment earnings and other impermissible factors. From that, Plaintiffs argue that they are entitled to discovery of the materials that Lincoln used to prepare their senior management officials in advance of these quarterly earnings calls during which such topics were discussed.

*4 During the oral argument that was conducted by the Special Master on January 15, 2020, Plaintiffs proffered an additional reason for requesting these preparation packets. Plaintiffs noted that, in accordance with the Special Master's December 5, 2019 Opinion and Order Regarding Defendants' Request for a Protective Order in Respect of a Notice of Deposition for Dennis R. Glass, it had been ruled that Plaintiffs were entitled to take the deposition of Glass. (Civ. A. No. 16-6605, ECF No. 147.)[3] Accordingly, Plaintiffs claimed that they now require these preparation packets in advance of Glass's deposition so that they can ask questions related to Glass's public statements about the COI increases.

2. Lincoln's Position

In response, Lincoln argues that the preparation packets are not relevant to any of the claims or defenses in the case. Lincoln notes that it produced the July 2016 preparation packet only because those materials expressly referenced the COI increases. According to Lincoln, the remaining preparation packets do not. Moreover, in Lincoln's view, Plaintiffs' invocation of statements that Glass made regarding his goal of meeting corporate profit targets does not indicate bad faith on Lincoln's part in connection with COI increases or that any impermissible factors were used by Lincoln to inflate the COI rates.

Lincoln has also advanced a number of other arguments in support of its position that the documents need not be produced. For example, Lincoln invoked the July 26, 2018 Order from Judge Pappert that resolved a prior discovery dispute in this litigation. As part of that discovery dispute, Plaintiffs had requested: (A) “documents showing the assumptions underlying Defendants' GAAP financial reports and value of business acquired determinations,” and (B) “documentation of business plans, line of business targets, budgets and reports that reference (1) the profitability of Lincoln's universal life blocks of business; or (2) any potential COI rate increases.” (ECF No. 82, at 1.) As per Judge Pappert's July 26, 2019 Order, Lincoln was not required to produce these documents. (ECF No. 83, at ¶¶ 1, 3-4.) From that, Lincoln now argues that the preparation packets that Plaintiffs now seek are encompassed within the documents for which discovery by Plaintiffs has already been denied.

Third, Lincoln argues that, even if Judge Pappert's July 26, 2018 Order were not viewed as specifically encompassing Plaintiffs' current request for documents, the spirit of that Order yet counsels against ordering further discovery because the preparation packets discuss Lincoln's life insurance business in the aggregate rather than the specific Legend Series policies at issue in this litigation. Lincoln notes that Judge Pappert, in response to Plaintiffs' prior document requests, only required production of documents specific to the policies subject to the 2016 COI increases. (Id.) Lincoln also points to the Special Master's July 31, 2019 Opinion and Order Regarding the Discovery Dispute Concerning the Relevancy and Burden of Producing Three Categories of Documents, in which it was noted that “in light of Lincoln's representation that it does not have any interim profitability assumptions specific to the Legend Series policies, the probative value of any aggregate reports involving or comprehending other policies that Lincoln may have, and as per the letter and spirit of Judge Pappert's prior discovery order, is far from clear.” (ECF No. 134, at 7.) According to Lincoln, the same rationale applies here and would foreclose Plaintiffs' request.

*5 Fourth, Lincoln argues that the request is unduly burdensome because Lincoln would be required to run additional searches and review approximately 117,000 documents and redact the documents significantly to remove information about financial and accounting standards and regulations, as well as other non-relevant material relating to Lincoln's business. Lincoln contends this review will cost upwards of $1 million.

Subsequent to the oral argument that was conducted regarding this dispute, Lincoln advised that it would agree to produce portions of two additional preparation packets. (Rappaport Email dated January 24, 2020 at ¶ 2.) As per Lincoln, those items, from the second quarter of 2016 and the second quarter of 2017, involve statements specifically referenced in the operative complaints in these consolidated cases. According to Lincoln, as a result of this, all quarterly earnings preparation packets or portions thereof relating to the 2016 or 2017 COI increases have been or will shortly be produced. (Id.) Lincoln argues that Plaintiffs are not entitled to any further productions of such preparation packets because those materials only discuss subject matters unrelated to this litigation. Lincoln contends that such materials would include, for example, documents prepared in connection with Lincoln's GAAP financials and documents discussing management actions to improve profitability through mechanisms other than COI increases.[4] (Lincoln Br. at 17.)

3. Analysis

On balance, Lincoln has the better argument here. Throughout the discovery process in this litigation, Lincoln has been required to produce documents concerning the Legend Series policies at issue and the COI increases themselves. However, Lincoln has not been required to produce documents concerning its entire universal life portfolio or its global life insurance business. For example, in connection with the discovery dispute submitted jointly by the parties in July 2018, Plaintiffs requested, inter alia, documents underlying Lincoln's GAAP financials and VOBA determinations, as well as documents reflecting Lincoln's business plans, budgets, and similar internal reports referencing the profitability of Lincoln's universal life policies or other management actions to improve the profitability of such policies. (ECF No. 83, at ¶¶ 1, 4.) However, Judge Pappert did not require Lincoln to produce those documents because “Lincoln's GAAP financial reporting is not specific to the Policies at issue in the case and Lincoln is already producing any GAAP and VOBA materials considered in connection with the COI adjustment.” (Id. at ¶ 1.) Similarly, Plaintiffs' request for business plans, budgets, and other internal reports was found by Judge Pappert to be “overly broad and not proportional to the needs of the case.” (Id. at ¶ 4.) Judge Pappert further noted that, in contrast, “Lincoln is producing documents that explicitly reference the Policies at issue in the case as well as documents related to the Legacy JP UL business.” (Id.)

Moreover, Lincoln has now agreed to produce the portions of the preparation packets relating to topics such as reinsurance, the COI increases, and Glass's public statements as quoted in the operative complaints. (Rappaport Email dated January 24, 2020 at ¶ 2.) Thus, Plaintiffs have received or will soon receive all portions of the preparation packets relating to the policies specifically at issue in this litigation. Plaintiffs have proffered no reason to abandon the path that has been well established by Judge Pappert's earlier rulings to the effect that documents containing information specific to the Legend Policies or the universal life business acquired from Jefferson Pilot are discoverable but documents concerning other aspects of Lincoln's portfolio are not subject to discovery. In keeping with the prior orders in this case, Plaintiffs' request for the remaining quarterly earnings preparation packets that Lincoln has not already agreed to produce for the time period between October 2015 and November 2018 is DENIED.

C. Experience Studies and Related Documents and Analyses Concerning Lincoln's Experience for the Legend Policies

1. Plaintiffs' Position

*6 Plaintiffs seek two subsets of documents that they contend were the subject of the deposition of John Overton, the Director of Lincoln's Life Experience Studies Team. These two subsets of documents are: (1) experience studies and “mortality stories” concerning the Legend Policies and all related documents, including emails, communications, data, memoranda, analyses and reports; and (2) Lincoln's submission of mortality experience information to Willis Towers Watson (“WTW”) to be used in connection with WTW's Tillinghast Older Age Mortality Studies (“TOAMS”), as well as all related documents.

Plaintiffs contend that these documents are relevant to show that Lincoln based its COI increases on unreasonable assumptions about future mortality of older-age policyholders and that these assumptions were inconsistent with Lincoln's own historical mortality experience. In addition, the “mortality stories,” which seem to be defined by Plaintiffs as draft analyses of the mortality experiences for a specific quarter and which served as “first draft[s] for the talking points compiled by upper management for the quarterly earnings calls” discussed above (Pls.' Br. at 19), are in Plaintiffs' view relevant to show Lincoln's contemporaneous understanding of mortality experience for the Legend Series policies as well as future mortality predictions. Plaintiffs argue that these documents are relevant because they may show that the mortality studies generated to support the COI increases are divorced from Lincoln's actual experience and expectation. In Plaintiffs' view, were that true, Lincoln would have breached the insurance contracts.

Plaintiffs also seek the data that Lincoln gave to WTW so that it could create the TOAMS 3 mortality experience study, which WTW then used in its actuarial models to support the COI increases. According to Plaintiffs, the TOAMS mortality experience studies contained unique assumptions relating to older age mortality. In Plaintiffs' view, using the TOAMS data caused the WTW report to indicate much higher mortality rates than Lincoln had been reporting in its models. Plaintiffs argue that, if they can prove TOAMS altered the mortality rates to levels different from Lincoln's actual experience, the COI increases were impermissible under the terms of the policies at issue and, therefore, Lincoln breached the terms of the policies by implementing the COI increases.

2. Lincoln's Position

In response, Lincoln has agreed to produce certain discrete categories of documents. Specifically, Lincoln agreed to produce: (1) “documents showing what pricing mortality tables and assumptions were used in experience studies”; (2) “morality and premium persistency experience studies that enable the viewer to sort by the ‘L300’ selection in the ‘QX_Tab’ variable field”; (3) “pricing mortality tables associated with such ‘L300’ selection”; (4) “pricing mortality assumptions relating to the Subject Policies used for experience study dashboards”; and (5) “documents setting forth the process for developing, producing, or disseminating experience studies.” (Lincoln Br. at 21 & n.23.)

According to Lincoln, the documents that remain at issue are “all emails, data, memoranda, and draft reports related to mortality and persistency experience studies; and all ‘mortality stories’ related to experience studies, along with emails, data, memoranda, and meeting notes related to the ‘mortality stories.’ ” (Id. at 21.) Lincoln argues that it should not be required to produce the documents still in dispute because these documents relate only to aggregate analyses to which, in Lincoln's view, Plaintiffs are not entitled under prior discovery orders from Judge Pappert and from the Special Master. Specifically, here Lincoln invokes the same prior discovery orders as involved in connection with Plaintiffs' requests for the preparation packets. Lincoln also argues that it should not be required to produce the requested documents because the analyses contained in such documents relate to “stale” interim data. Finally, Lincoln argues that the mortality stories are elements of management profitability analyses that Judge Pappert ruled are not subject to discovery from Lincoln in his July 26, 2018 Order.

3. Analysis

*7 Based on Lincoln's submission, it appears that this request is at least in part moot. Lincoln has stated that it is willing to produce the pricing mortality tables and assumptions that were used in the experience studies, together with certain other pricing mortality assumptions, and documents setting forth the process for developing, producing, or disseminating experience studies. However, the parties' dispute is not moot as it relates to: (1) all emails, data, memoranda, and draft reports relating to mortality and persistency experience studies; (2) all “mortality stories” related to experience studies, along with emails, data, memoranda, and meeting notes related to the “mortality stories”; and (3) the data and related documents provided to WTW as part of the TOAMS studies.

As to such documents, Lincoln should not be required to produce the additional documents in question. Lincoln has already agreed to produce the mortality tables and assumptions, as well as the process for developing those tables and assumptions, for the Legend Series policies and the COI increases. Plaintiffs have failed to demonstrate why the “related documents” they seek are relevant to the claims or defenses in this case. Rather, it appears that the “related documents” would relate only to Lincoln's life insurance business on a global basis, rather than relate specifically to the Legend Series policies, and would not contain any information that is not already in Plaintiffs' position. In all events, the discovery sought by Plaintiffs is not proportional to the needs of the case.

Similarly, Lincoln is not required to produce the requested TOAMS data or the requested related documents. Lincoln has already produced WTW's TOAMS 3 study itself: as well as all the underlying data for the Legend Series policies at issue. By requesting all the data that Lincoln submitted to WTW to develop these studies, Plaintiffs are essentially seeking all of Lincoln's experience data for the totality of its life insurance business, as opposed to limiting their request to the underlying data for the specific Legend Series policies at issue in this litigation. Furthermore, Lincoln has already produced all the underlying data for the Legend Series policies as part of what the parties have termed the “Seriatim Data.” In keeping with the Court's practice of allowing discovery of Lincoln only as to information. connected to the Legend Series policies, rather than as to Lincoln's entire life insurance business, Plaintiffs' request is DENIED except as to those documents that Lincoln has agreed to produce as specified in response to Plaintiffs' motion.