The Court elected to decide these matters without a hearing pursuant to Rule 7.1(c) of the Local Rules of Practice for the United States District Court for the District of Hawaii. See ECF No. 16, 20. As discussed in detail below, the Court GRANTS IN PART AND DENIES IN PART Plaintiffs' Motion to Compel and DENIES Defendant's Motion to Bifurcate.

This litigation involves Plaintiffs' benefits under a homeowner's insurance policy issued Defendant for losses arising out of alleged wind damage. See ECF No. 1-2 at 27-38. Plaintiffs assert claims for breach of the insurance contract, bad faith, unfair business practices, deceptive business practices, fraud, and intentional infliction of emotional distress. See ECF No. 1-2 at 32-38.

In the Motion to Compel, Plaintiffs ask the Court to compel Defendant to produce documents responsive to Plaintiffs' First and Second Requests for Production of Documents. See ECF No. 15. Plaintiffs' First Request for Production of Documents were served on March 16, 2020. See ECF No. 15-1. Defendant provided written responses including objections on May 22, 2020. See ECF No. 15-2. Although Defendant's written responses state that certain documents will be produced, Defendant did not produce any documents responsive to Plaintiffs' First Request until October 19, 2020, three days after the Motion to Compel was filed. See ECF No. 22-1 at 1. Plaintiffs' Second Request for Production of Documents was served on July 17, 2020. See ECF No. 15-3. As of the date of Plaintiffs' Reply, Defendant has not served written responses or produced any documents responsive to Plaintiffs' Second Request for Production of Documents. See ECF No. 22.

On October 23, 2020, a week after the Motion to Compel was filed, Defendant sent Plaintiffs a document titled “Privilege Log” that states in general terms that various categories of documents are being withheld because they are protected by the attorney-client privilege and/or the work product doctrine, are proprietary, or are irrelevant and protected by the right to privacy. See ECF No. 22-1 at 2-3.

In the Motion to Bifurcate, Defendant asks the Court to bifurcate Plaintiffs' coverage claim from Plaintiffs' bad faith claims and to stay all discovery related to Plaintiffs' bad faith claims pending resolution of Plaintiffs' coverage claim. See ECF No. 18. The Court first discusses the Defendant's Motion to Bifurcate followed by Plaintiffs' Motion to Compel.

I. The Court DENIES Defendant's Motion to Bifurcate

*2 Under Federal Rule of Civil Procedure 42(b), “[f]or convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims.” Fed. R. Civ. P. 42(b). Bifurcation, however, is the exception rather than the rule of normal trial procedure. See Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1021 (9th Cir. 2004); see also Fed. R. Civ. P. 42 advisory committee's note (“separation of issues for trial is not to be routinely ordered”).

The moving party has the burden of showing that separate trials will result in judicial economy and will not unduly prejudice either party. See MySpace, Inc. v. Graphon Corp., 732 F. Supp. 2d 915, 917 (N.D. Cal. 2010). In making this determination, the Court may consider whether the evidence offered in the proposed separate trials will substantially overlap, whether the issues are so intertwined that they might create confusion, and whether potentially dispositive preliminary issues can be resolved to avoid unnecessary proceedings. See Hangarter, 373 F.3d at 1021; Miller v. Fairchild Indus., Inc., 885 F.2d 498, 511 (9th Cir. 1989); Jinro Am., Inc. v. Secure Invs., Inc., 266 F.3d 993, 998 (9th Cir. 2001). The decision to bifurcate is within the court's sound discretion. See M2 Software, Inc. v. Madacy Entm't, 421 F.3d 1073, 1088 (9th Cir. 2005).

Here, Defendant argues that Plaintiffs' bad faith claims should be bifurcated from their coverage claim for purposes of discovery and trial. See ECF No. 18. Defendant contends that bifurcation is appropriate here because the bad faith claims will only proceed if Plaintiffs prevail on their coverage claim and because, if the claims are tried together, Plaintiffs may be able to discover Defendant's work product to support their bad faith claims, which would prejudice Defendant's defense of the coverage claim. See ECF No. 17 at 3-5.

The Court finds that bifurcation is not warranted in this case. Defendant has not established that it will be prejudiced by a single trial and consolidated discovery or that two trials would be more convenient or economical. Contrary to Defendant's argument, Plaintiffs' bad faith claim is not necessarily dependent on proving improper denial of coverage under the policy. See Enoka v. AIG Hawaii Ins. Co., 128 P.3d 850, 865 (Haw. 2006) (holding that a bad faith claim may proceed “even where there is no coverage liability on the underlying policy”). Further, all of Plaintiffs' claims involve the same underlying facts and witnesses related to Defendant's handling of Plaintiffs' claim for benefits under the policy. In light of the overlapping factual issues between Plaintiffs' coverage claims and bad faith claims, it is unlikely that any material would be discoverable as to the bad faith claims but undiscoverable as to the coverage claims. Lastly, Defendant has failed to show that Plaintiffs' ability to discover information from the claims file would prejudice Defendant's defense of the coverage claims. Even assuming that some prejudice exists, the Court finds that it does not outweigh the interests of judicial economy. See Estate of Hoxsey v. Allstate Prop. & Cas. Ins. Co., at *3 (W.D. Wash. May 31, 2016) (holding that bifurcation of coverage and bad faith claims was not appropriate); Deguchi v. Allstate Ins. Co., 2007 WL 3022235, at *2 (D. Haw. Oct. 11, 2007) (same). Accordingly, the Court declines to exercise its discretion to bifurcate trial or discovery in this case and DENIES Defendant's Motion to Bifurcate.

II. Plaintiffs' Motion to Compel is GRANTED IN PART AND DENIED IN PART and Defendant's Request for a Protective Order is GRANTED IN PART AND DENIED IN PART

*3 Federal Rule of Civil Procedure 26(b) provides that “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). Under Rule 37(a)(3), a party may move for an order compelling discovery if a party fails to produce documents. See Fed. R. Civ. P. 37(a)(3)(iii), (iv). Under Federal Rule of Civil Procedure 26(c)(1), “[t]he court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(1). The Court may, for good cause, also issue a protective order “requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way.” Fed. R. Civ. P. 26(c)(1)(G). Rule 26(c) confers “broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984); see also Veterans for Common Sense v. Shinseki, 644 F.3d 845, 888 (9th Cir. 2011) (“ ‘[B]road discretion is vested in the trial court to permit or deny discovery.’ ”) (quoting Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002)). The burden is on the party seeking the order to “show good cause” by demonstrating harm or prejudice that will result from the discovery. See Phillips ex rel. Estates of Byrd v. General Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002). “If a court finds particularized harm will result from disclosure of information to the public, then it balances the public and private interests to decide whether a protective order is necessary.” Id. at 1211; see also In re Roman Catholic Archbishop of Portland in Oregon, 661 F.3d 417, 424 (9th Cir. 2011).

A. Plaintiffs' First Request for Production of Documents

Plaintiffs' First Request for Production of Documents seeks four broad categories of documents. See ECF No. 15-1. The Court addresses each category below.

1. Documents Related to Defendant's Claims Manual (Request Nos. 1, 2, 3, 4, and 5).

Plaintiffs requested all documents related to claims handling guidelines, policy, practice and/or procedure manuals, handbooks, and guides. See ECF No. 15-1 at 7. Defendant responded that it would produce responsive documents only after Plaintiffs' coverage claim was resolved and “under the appropriate protective order” and objected to producing some documents because they seek “confidential and private customer information.” ECF No. 15-2 at 3-5. Notably, it was not until Defendant filed its Opposition the Motion to Compel that Defendant objected to producing documents responsive to these requests on the basis that they contained proprietary information. See ECF No. 17 at 9-10.

The Court finds that the requested documents are relevant to Plaintiffs' claim in this litigation and proportional to the needs of the case. Further, for the same reasons discussed above regarding Defendant's Motion to Bifurcate, the Court rejects Defendant's objection to withholding these documents until after the coverage claims are resolved. Accordingly, the Court GRANTS Plaintiff's request to compel Defendant to produce documents responsive to Request Nos. 1, 2, 3, 4, and 5 in Plaintiffs' First Request for Production of Documents.

As to Defendant's request for a protective order related to these documents, the Court finds that Defendant has demonstrated good cause for a protective order designating its claims manuals, handbooks, and/or guides as “confidential” because they contain business information about Defendant's handling of specific insurance claims that is not publicly available and may result in competitive harm to Defendant if publicly disclosed. See In re Adobe Sys., Inc. Sec. Litig., 141 F.R.D. 155, 158 (N.D. Cal. 1992) (“Good cause may be that the protected information includes proprietary and technical information, financial information and business strategy or marketing information which, if revealed to a competitor, would put a company at a competitive disadvantage.”). Defendant may mark any such documents “confidential” and such documents shall be used by Plaintiffs solely for the purpose of this litigation. If Plaintiffs seek to file in the public record any portion of those documents or wishes to refer in a filing to information from those documents, Plaintiffs must move to file the matter publicly under Local Rule 5.2(d). Defendant may oppose the motion to file the matter publicly and seek to have all or part of the matter sealed under Local Rule 5.2(c).

2. Documents Related to Personnel Files (Request Nos. 6 and 7)

*4 Plaintiffs requested all documents related to the personnel files of the adjuster and the handler assigned to Plaintiffs' claim for benefits. See ECF No. 15-1 at 8. Defendant objected to producing these documents because they “are protected as private and confidential records.” ECF No. 15-2 at 5-6.

Given the claims asserted by Plaintiffs, the personnel files for the two individuals involved in the handling of Plaintiffs' insurance claim are relevant and proportional to the needs of the case. “Personnel files in bad faith actions have routinely been found to be relevant and discoverable ... because personnel files may reveal an inappropriate reason or reasons for defendant's action with respect to plaintiff's claim or an improper corporate culture.” Am. Auto. Ins. Co. v. Hawaii Nut & Bolt, Inc. Moore, 2017 WL 80248, at *5 (D. Haw. Jan. 9, 2017) (citations omitted). Accordingly, the Court GRANTS Plaintiff's request to compel Defendant to produce documents responsive to Request Nos. 6 and 7 in Plaintiffs' First Request for Production of Documents.

Regarding Defendant's objections based on privacy concerns, the Court finds that those concerns can be addressed through redactions and a limited protective order as follows. The Court directs Defendants to redact from these documents information that reflects the identify of any family members, Social Security numbers, places of residence, phone numbers, private email addresses, or anything relating to a medical condition. Further, Defendant may mark such documents “confidential” and such documents shall be used by Plaintiffs solely for the purpose of this litigation. If Plaintiffs seek to file in the public record any portion of those documents or wishes to refer in a filing to information from those documents, Plaintiffs must move to file the matter publicly under Local Rule 5.2(d). Defendant may oppose the motion to file the matter publicly and seek to have all or part of the matter sealed under Local Rule 5.2(c).

3. The Insurance Claim File (Request Nos. 8, 9, 10, 11, 12, 13, 14, 16, and 17)

Plaintiffs requested all documents related to the insurance claim file. See ECF No. 15-1 at 8-9. Defendant responded that it would produce some documents and that other documents would be produced only after Plaintiffs' coverage claim was resolved and “under the appropriate protective order.” ECF No. 15-2 at 6-9. Although Defendant's written response included a general boilerplate objection to all requests on the basis of attorney-client privilege and work product, see ECF No. 15-2 at 2, it was not until Defendant filed its Opposition the Motion to Compel that Defendant objected to producing documents responsive to these requests on the basis that they are protected from discovery under the attorney-client privilege or the work product doctrine. See ECF No. 17 at 10. Also, as noted above, Defendant produced a document titled “Privilege Log” on October 23, 2020, stating material in the claim file “received or generated after the filing of the litigation and service of process are withheld and protected by the attorney-client privilege and/or the work product doctrine.” ECF No. 22-1 at 2-3.

After the Motion to Compel was filed, Defendant produced documents responsive to Request Nos. 8, 9, 11, and 13. See ECF No. 22 at 29-30. Accordingly, the Court GRANTS Plaintiff's request to compel as these Requests. However, Defendant did not produce documents responsive to the remaining requests, which include all documents related to Defendant's investigation of insurance claim, all correspondence between employees, investigators, contractors, experts, and adjusters concerning the insurance claim, documents related to Defendant's assertion that it reviewed and responded in a timely manner to the claim, documents related to documents related to Defendant's assertion that it does not have a duty to provide coverage, and the entire claim file. See ECF No. 22 at 30.

*5 The Court finds that the requested documents are relevant to Plaintiffs' claim in this litigation and proportional to the needs of the case. Further, for the same reasons discussed above regarding Defendant's Motion to Bifurcate, the Court rejects Defendant's objection to withholding these documents until after the coverage claims are resolved. Accordingly, the Court GRANTS Plaintiffs' request to compel Defendant to produce documents responsive to Request Nos. 10, 12, 14, 16, and 17 in Plaintiffs' First Request for Production of Documents.

As to Defendant's assertion that “post-litigation” responsive documents are protected from discovery under the work product doctrine, the Court finds that Defendant has waived any assertion of the work product doctrine as these documents. The work-product doctrine, codified at Federal Rule of Civil Procedure 26(b)(3), protects “from discovery documents and tangible things prepared by a party or his representative in anticipation of litigation.” Admiral Ins. Co. v. U.S. Dist. Ct., 881 F.2d 1486, 1494 (9th Cir. 1989) (citing Fed. R. Civ. P. 26(b)(3)). To qualify for work-product protection, documents must: (1) be “prepared in anticipation of litigation or for trial” and (2) be prepared “by or for another party or by or for that other party's representative.” In re Grand Jury Subpoena, Mark Torf/Torf Envtl. Mgmt., 357 F.3d 900, 907 (9th Cir. 2004). First, Defendant's boilerplate objection included in its written response is insufficient to properly assert a protection under the work product doctrine. See Burlington Northern & Santa Fe Ry. Co. v. U.S. Dist. Court for the N. Dist. Of Montana, 408 F.3d 1142, 1149 (9th Cir. 2005) (“We hold that boilerplate objections or blanket refusals inserted into a response to a Rule 34 request for production of documents are insufficient to assert a privilege.”).

Second, Defendant's belated “Privilege Log” provided five months after Defendant's written responses also fails to properly assert a claim for protection from discovery under the work product doctrine. See id. (holding that the district court's finding of waiver was not clearly erroneous where a privilege log was provided five months after responses were due “on this fact alone”). Defendant's “Privilege Log” also fails to comply with the requirements of Federal Rule of Civil Procedure Rule 26(b)(5)(A), which states that all claims of privilege must be expressly made and must include a description of the documents withheld so that the other party may assess the claim. Defendant's “Privilege Log” does not list the documents at issue, does not describe the nature of the documents withheld, and does not provide any information regarding the date, author, or recipient, which would allow Plaintiffs and the Court to assess the claim of work product. See ECF No. 22-1 at 2-3. Because Defendant has failed to properly assert that responsive documents are protected from discovery under the work product doctrine, the Court finds that Defendant has waived any such claim and must produce all responsive documents previously withheld on this basis.

As Defendant's assertion that “post-litigation” responsive documents are protected from discovery by the attorney-client privilege, the Court is more reluctant to find waiver given the nature of the privilege at issue. See United States v. Graf, 610 F.3d 1148, 1156 (9th Cir. 2010) (stating that the privilege protects communications between an attorney and client related to the purpose of obtaining legal advice). However, for the same reasons detailed above, the Court finds that Defendant has failed to properly assert the claim of attorney-client privilege. To the extent Defendant has withheld any documents responsive to Request Nos. 8, 9, 10, 11, 12, 13, 14, 16, and 17 in Plaintiffs' First Request for Production of Documents on the basis of attorney-client privilege, Defendant must produce a detailed privilege log that separately lists each document withheld, describes the nature of the document, and provides the date, author, and recipient for each document. See In re Grand Jury Investigation, 974 F.2d 1068, 1071 (9th Cir. 1992) (stating that a privilege log should identify the attorney and client involved, the nature of the document, all persons or entities that received the document, and the date the document was generated, prepared, or dated). Defendant does not need to list in its privilege log any communications with counsel for Defendant in this action. Defendant's failure to comply with this Court's order and produce a sufficient privilege log may result in a finding of waiver.

4. The Claim Files of Other Insureds (Request No. 15)

*6 Plaintiffs requested all documents related to the assertion that Defendant had treated the denial of Plaintiffs' claim in a fair and consistent manner in comparison with other similar claims that Defendant processed for other insureds. See ECF No. 15-1 at 9. Defendant objected to this request as overly burdensome and seeking confidential and private customer information. See ECF No. 15-2 at 8.

Although the Court agrees with Plaintiffs that documents regarding Defendant's treatment of similar claims may be relevant, the Court finds that the request as written is overly broad and unduly burdensome. Plaintiffs do not limit their request as to any time period or scope. Although the request states “similar claims,” that phrase is not defined by Plaintiffs. The Court DENIES Plaintiffs' request to compel Defendant to produce documents responsive to Request No. 15. The Court encourages the parties to meet and confer regarding an appropriately limited request for documents and a procedure for protecting the customer information that may be contained in any such documents.

B. Plaintiffs' Second Request for Production of Documents

Plaintiffs requested all documents related to Defendant's “Claims Core Process Redesign.” ECF No. 15-3 at 8. It does not appear that Defendant provided written responses to Plaintiffs' Second Request for Production of Documents. Defendant does not address Plaintiffs' Second Request in its Opposition to the Motion to Compel. See ECF No. 18. The Court GRANTS Plaintiffs' request to compel Defendant to provide a written response to Plaintiffs' Second Request for Production of Documents. However, the Court DENIES without prejudice Plaintiffs' request to compel Defendant to produce documents responsive to these requests. Based on the limited information provided by both Plaintiffs and Defendant regarding the subject matter of these requests, the Court is unable to determine at this time whether these requests seek documents that are relevant to Plaintiffs' claim in this litigation and proportional to the needs of the case.

Based on the case cited by Plaintiffs in the Second Request, it appears that these documents are internal implementation training manuals related to Defendant's business practices in the mid-1990s. See Young v. Allstate Ins. Co., 198 P.3d 666, 669 (Haw. 2008). Although such materials may have been relevant in the Young v. Allstate case that involved an insurance claim made in 1998, it is not clear from the briefing before the Court whether such materials would be relevant in this litigation that involves a claim made in 2018. See ECF No. 1-2 at 29. If the parties are unable to agree regarding the discoverability of the documents requested in Plaintiffs' Second Request after Defendant produces a written response, the parties may file the appropriate motion or letter briefs under Local Rule 37.1(c). The parties are reminded that all motions and letter briefs seeking to compel discovery must detail (1) the specific discovery requests at issue, (2) which responses are disputed, (3) why the responses are deficient, (4) the reasons any objections are without merit, and (5) the relevance of the requested information to the litigation. See McAllister v. Adecco Grp. N.A., 2017 WL 11151276, at *4 (D. Haw. Nov. 28, 2017) (citations omitted).

III. The Court GRANTS Plaintiffs' Request for Expenses Incurred in Bringing the Motion to Compel

*7 In their Motion to Compel, Plaintiffs request that the Court award attorney's fees and costs incurred in connection with the Motion. See ECF Nos. 15, 22. Under Rule 37(a)(5), if discovery is provided after a motion to compel is filed “the court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees.” Fed. R. Civ. P. 37(a)(5)(A). Further, if a motion to compel is granted in part and denied in part, the Court may “apportion the reasonable expenses for the motion.” Fed. R. Civ. P. 37(a)(5)(C). However, the Court must not award reasonable expenses if the nondisclosure or response was “substantially justified,” or “other circumstances made an award of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(A).

The Court finds that Defendant's actions in this discovery dispute were not substantially justified. Defendant bears the burden of establishing that its position was substantially justified. See Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106–07 (9th Cir. 2001). Substantial justification requires a showing that the discovery conduct has “a reasonable basis in both law and fact.” Pierce v. Underwood, 487 U.S. 552, 565 (1988). The discovery conduct must meet “the traditional reasonableness standard—that is justified in substance or in the main, or to a degree that could satisfy a reasonable person.” Id. (internal quotations omitted). Reasonable people could not differ on whether Defendant's conduct in this discovery dispute was appropriate. As detailed in above, Defendant failed to produce any responsive documents until after the Motion to Compel was filed and has failed to provide written discovery responses to Plaintiffs' Second Request for Production of Documents for months without explanation. Further, counsel for Defendant failed to respond to efforts to contact him regarding the status of discovery. As noted above, the discovery at issue was served in March and July 2020. Plaintiffs attempted to resolve these discovery issues informally for months before filing the Motion to Compel. See ECF Nos. 15-4, 15-5, 15-6, 15-7. Despite being given repeated opportunities to fulfil its discovery obligations, it was not until after the present Motion was filed that Defendant provided certain discovery responses and, even then, several responses remain deficient. In these circumstances, the Court finds that Defendant's actions were not substantially justified. Further, Defendant has not shown that any other circumstances made an award of expenses unjust. See Fed. R. Civ. P. 37(a)(5)(A). However, because the Court has granted in part and denied in part the Motion to Compel, the Court does find that apportionment is appropriate and will reduce the total expenses awarded to reflect Plaintiffs' partial success.

No later than January 11, 2021, Plaintiffs may file a supplemental declaration detailing the reasonable expenses incurred related to the Motion to Compel. The supplemental declaration should contain sufficient information for the Court to determine the reasonableness of the work completed and the hourly rate requested. No later than January 25, 2021, Defendant may file a response to Plaintiffs' supplemental submission. Thereafter, the Court will issue an order regarding the award of reasonable expenses.

The Court DENIES Defendant's Motion to Bifurcate.

The Court GRANTS IN PART AND DENIES IN PART Plaintiffs' Motion to Compel as follows:

Plaintiffs' request to compel Defendant to produce all documents responsive to Request Nos. 1-14, 16-17 in Plaintiffs' First Request for Production of Documents is GRANTED. All such documents shall be produced no later than January 11, 2021, including any documents previously withheld on the basis of work product doctrine.

*8 Defendant's privilege log detailing the documents responsive to Request Nos. 8-14 and 16-17 in Plaintiffs' First Request for Production of Documents that were withheld on the basis of attorney-client privilege shall be produced no later than January 11, 2021.

Plaintiffs' request to compel Defendant to produce documents response to Request No. 15 in Plaintiffs' First Request for Production of Documents is DENIED.

Plaintiffs' request to compel Defendant to provide a written response to Plaintiffs' Second Request for Production of Documents is GRANTED. Plaintiffs' request to compel Defendant to produce all documents responsive to Plaintiffs' Second Request for Production of Documents is DENIED without prejudice.

IT IS SO ORDERED.

DATED, HONOLULU, HAWAII, DECEMBER 11, 2020.

KAI, ET AL. vs. ALLSTATE INSURANCE CO., ET AL.; CIVIL NO. 20-00302 WRP; ORDER (1) GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION TO COMPEL AND (2) DENYING DEFENDANT'S MOTION TO BIFURCATE