*1 This complex insurance liability case arises from Wolverine World Wide, Inc.’s defense of extensive legal action filed as a result of PFAS contamination in northern Kent County. More than 260 “PFAS” cases have been filed in state and federal court against Wolverine, the Plaintiff herein. The five federal cases in this district, including three consolidated class actions, remain pending before the undersigned. Wolverine in turn filed this action alleging a duty to defend and indemnify on the part of dozens of insurance companies under potentially dozens of policies issued to Wolverine over a thirty-year period, 1957 through 1986.

Following an initial status conference with counsel on April 5, 2019, and recognizing the unusual case complexity and demand on limited Court resources, the Court appointed a Special Master “to proceed with all reasonable diligence to oversee pretrial proceedings in this complex insurance coverage case, including discovery, document management, claims of privilege, case management and related matters, to efficiently prepare the case for disposition” (ECF No. 96).[1] Over the course of the past nine months, the Special Master has diligently performed the duties set out by the Court, as fully demonstrated by the ongoing docket proceedings, transcripts and orders.

Presently before the Court are the parties’ numerous objections alleging error in the Special Master's rulings related to the Court's phased case management based on the duty to defend and the duty to indemnify, established by this Court at the outset of this case. In accordance with FED. R. CIV. P. 53 and the Court's May 31, 2019 Order Appointing and Authorizing Special Master under that rule (ECF No. 96), “[a]ny recommendation, order or decision of the Master is subject to de novo review by the Court.”

The Court has conducted de novo review of those aspects of the Special Master's rulings challenged by each side's objections at continuing stages of this case. Having fully considered the parties’ arguments and the record, the Court denies the objections without qualification.[2] The Court finds that the Special Master's discovery and case management rulings were sound, and properly based on the applicable legal authority and the circumstances presented, contrary to the parties’ exhaustive argument. The Court denies the objections for the reasons that follow.

1. Defendants’ Rule 53(f)(2) Objections to the Special Master's Orders Denying Defendants’ Motions to Compel (ECF No. 189) and Defendants’ Supplemental Rule 53(f)(2) Objections to the Special Master's Orders Denying Defendants’ Motions to Compel (ECF No. 236) are DENIED.

*2 Defendants object to the Special Master's September 25, 2019 Order denying Defendants’ Motion to Compel Production of Documents (entered 9/26/19, ECF No. 182) and the September 27, 2019 Order Granting in Part and Denying in Part Defendants’ Motion to Compel Response to Interrogatories (ECF No. 183). Defendants argue that the “facts attendant to the underlying actions are, without question, relevant to whether the Defendants have a continued duty to defend – which is the subject of this first phase of the case,” and it is “also clear that the Discovery Requests are proportional to the needs of this case” (ECF No. 189 at PageID.8066).

In their Supplemental Objections, Defendants object to the Special Master's subsequent December 6, 2019 Order (ECF No. 231) on the ground that in revising her previous rulings from September 25 and 27, 2019, the Special Master ordered Plaintiff to produce some of the documents Defendants requested, but the order does not afford Defendants the complete relief to which they are entitled. That is, the Special Master's reconsideration “simply does not go far enough in recognizing the broad scope of discovery Defendants are permitted under Michigan law,” and “Defendants are entitled to the full relief sought in their motions to compel” (ECF No. 236 at PageID.9057). Defendants assert that “Michigan law clearly allows an insurer to continue to examine the facts as developed in the underlying lawsuit to determine if those newly-developed facts establish that a claim is precluded by the pollution exclusion or otherwise not covered for any other reason,” which is “all that the Discovery Requests seek to do” (id. at 9058).

The record establishes that the Special Master appropriately considered the parties’ positions and applicable, well-settled authority on determining an insurer's duty to defend. Ample authority supports the Special Master's conclusion that an insurer's duty to defend depends on the allegations made in the complaint by a third party against the insured (see ECF No. 182 at PageID.8051-8052, citing Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Pa., 916 F. Supp. 2d 813, 825-26 (W.D. Mich. 2013)). The Special Master aptly observed, contrary to Defendants’ arguments, “Alticor stands for the proposition that an insurer has the duty to look beyond the third party pleadings in determining if coverage is possible, not to disprove coverage” (ECF No. 182 at PageID.8052).

As the Special Master noted, discovery at the time was confined to the duty to defend, exhaustion of policies and missing policies, and the disputed discovery was not relevant to those issues, but is relevant to the duty to indemnify (id. at PageID.8051). The Special Master granted in part and denied in part Defendants’ Motion to Compel Responses to Interrogatories based on the same reasoning (ECF No. 183). Moreover, the Special Master noted the “expansive” nature of Defendants’ requests (ECF No. 182 at PageID.8050), which were not tailored to contribute to the efficient, effective resolution of the matters at hand, i.e., the duty to defend. Defendants have produced no authority to persuade the Court that they were entitled to the full panoply of discovery at the time of the Special Master's ruling on this issue.[3] Nor have they raised any other arguments that warrant overturning the Special Master's orders, in whole or in part.

2. Plaintiff's Objections to the Special Master's December 6, 2019 Order (ECF No. 237) are DENIED.

*3 Following a Status/Pretrial hearing on December 4, 2019, the Special Master reconsidered her previous orders discussed above, and ordered Wolverine to produce all exhibits and documents, including deposition transcripts referenced in the underlying complaints in more than 260 pending cases against Wolverine. Wolverine objects to the order as procedurally and legally improper, and unduly burdensome. The parties’ arguments to a large extent reiterate their positions and cite authority concerning the duty to defend addressed in Defendants’ objections above. This Court has now upheld the Special Master's initial rulings based on the governing legal rules limiting the examination of the duty to defend, and the Court rejects Defendants’ arguments to the contrary, i.e., that looking beyond the underlying complaints is permitted to defeat the duty to defend. See City of Holland v. Federal Ins. Co., No. 1:13-cv-197, 2017 WL 5713950, at *9 (W.D. Mich. Mar. 7, 2017). Here, as in City of Holland, Defendants point to no authority allowing an insurer to overlook allegations in a complaint that trigger insurance coverage and instead rely on facts beyond the complaint to deny coverage. See id. The Court need not revisit these arguments as a basis for overturning the Special Master's decision.

The Court otherwise finds no grounds for overruling the Special Master. The Court is not persuaded by Plaintiff's argument that the Special Master's order must be reversed because of procedural improprieties, i.e., that the Special Master committed error in revisiting the prior rulings without a formal motion, briefing and notice. See, e.g., Livonia Pub. Schs. v. Selective Ins. Co. of the Se., No. 16-CV-10324, 2020 WL 728540, at *5 (E.D. Mich. Feb. 13, 2020) (citing Mallory v. Eyrich, 922 F.2d 1273, 1282 (6th Cir. 1991) (discussing the court's “ ‘inherent power to reconsider interlocutory orders and reopen any part of a case before entry of a final judgment’ ”)). “A District Court may exercise this power sua sponte ... or it may do so on motion of the parties.” Id. (citing Leelanau Wine Cellars, Ltd. v. Black & Red, Inc., 118 F. App'x 942, 945-46 (6th Cir. Dec. 29, 2004)). Defendants point out, and the Special Master recognized, that as the underlying cases have progressed, the context of this case has changed, bringing indemnification to the forefront (see ECF No. 251 at PageID.9863). The Special Master was well within her authority to modify her discovery orders based on the progress of the underlying litigation.

In light of the facts before the Court, the December 6, 2019 discovery order does not appear to be unduly burdensome to Plaintiff. And to the extent it proves to be unduly burdensome, Plaintiff can advance such concerns to the Special Master based on the specific facts of record at the time.

3. Plaintiff's Rule 53(f)(2) Objections to the Special Master's Order (ECF No. 292) are DENIED.

Wolverine objects to the Special Master's order issued during the February 4, 2020 status hearing, ordering Wolverine to produce all documents referenced in the underlying complaints, as in the December 6, 2019 Order addressed above. For the reasons above with respect to the December 6, 2019 Order, this Objection is denied, both as to the substantive and procedural grounds.

The Court concurs with the Special Master's rulings concerning the duty to defend, discussed above with respect to Defendants’ objections to the September 25 and 27, 2019 Orders. There is no need to address this issue further.

In light of the changed circumstances and progress of the underlying litigation, the Special Master was well within her authority to alter the discovery schedule to ensure the timely and efficient resolution of this case, and the Court finds no basis for overruling those determinations. See Livonia Pub. Schs., 2020 WL 728540, at *5.

The extensive record, including briefing, hearings and status conferences, leaves no doubt that the Special Master has given thorough and due consideration to the parties’ positions, the matters at issue, and changes in the underlying circumstances, which would or could not have been considered at earlier stages of this case. That is not to say the parties as a matter of course should bypass federal and local rules or routinely implore the court to revisit prior rulings. However, when unusual circumstances are presented that warrant a revised ruling, the court is not precluded from revisiting and, if appropriate, modifying such nonfinal rulings.

4. Plaintiff's Rule 53 Objections to the Special Master's Order Establishing Phase II Case Management Deadlines (ECF No. 303) are DENIED.[4]

*4 Finally pending is Wolverine's objection to the order addressing case management deadlines for Phase II of this case concerning Defendants’ duty to indemnify. Wolverine argues that proceeding with discovery on indemnification before the Phase I issues, particularly the duty to defend, are resolved will severely prejudice Wolverine and is an improper attempt by Defendants to use the indemnification discovery in connection with Phase I.[5] Wolverine asserts it would face litigating both Phase I and Phase II while simultaneously defending itself against the more than 260 unresolved underlying actions. Further, proceeding with Phase II will needlessly burden the Special Master and this Court with motion practice, will waste resources, and will further delay resolution of the questions presented in Phase I and Phase II. Moreover, because the Court's assessment of Defendants’ duty to indemnify involves resolution of Wolverine's potential liability (if any) in the underlying actions, and that liability is subject to ongoing litigation, Phase II discovery should not proceed until after the underlying actions have been fully resolved by way of settlements and/or judgments.

To the extent Wolverine raises a concern that Defendants may rely on Phase II discovery in seeking summary judgment on the Phase I duty to defend, the legal principles for deciding the duty to defend are clear, as this Court has recognized. The Court finds no basis for disturbing the Special Master's decision on this ground.

As to Wolverine's remaining concerns of overlap and prejudice, this case involves voluminous documents and complex issues of liability coverage under insurance policies spanning nearly three decades, implicating dozens of insurer entities and policies. The efficient management of this case is crucial to a timely and fair resolution of the claims. The Special Master's Case Management Order reflects consideration of this multitude of factors in light of continually changing circumstances in the underlying litigation. Any purported prejudice is somewhat speculative at this time given these changing circumstances. In any event, any specific concern of prejudice or actual prejudice may be raised in the course of discovery, and appropriately addressed by the Special Master at that time.

In conclusion, the Court admonishes all parties to proceed with this case in good faith by advocating their positions before the Special Master, and cautions the parties against using the Rule 54 review process as a means of further complicating and delaying this already substantively and procedurally complex litigation. This case and the array of underlying cases on which this case rests require an unusual balance of interests, including those of the instant parties, the parties to underlying litigation, and most importantly, the individuals and communities directly affected by the PFAS contamination. The Special Master's decisions reflect the appropriate consideration of these interests while ensuring the fair and efficient adjudication of this case. Accordingly, the parties’ objections to the orders of the Special Master are DENIED.

Therefore:

IT IS HEREBY ORDERED that Defendants’ Rule 53(F)(2) Objections to the Special Master's Orders Denying Defendants’ Motions to Compel (ECF No. 189) are DENIED.

IT IS FURTHER ORDERED that Defendants’ Supplemental Rule 53(F)(2) Objections to the Special Master's Orders Denying Defendants’ Motions to Compel (ECF No. 236) are DENIED.

IT IS FURTHER ORDERED that Plaintiff's Objections to the Special Master's December 6, 2019 Order (ECF No. 237) are DENIED.

IT IS FURTHER ORDERED that Plaintiff's Rule 53(f)(2) Objections to the Special Master's Order (ECF No. 292) are DENIED.

IT IS FURTHER ORDERED that Plaintiff's Rule 53 Objections to the Special Master's Order Establishing Phase II Case Management Deadlines (ECF No. 303) are DENIED.