Est. of Daher ex rel. Daher v. Co
Est. of Daher ex rel. Daher v. Co
2023 WL 4670997 (E.D. Pa. 2023)
July 13, 2023
Quinones Alejandro, Nitza I., United States District Judge
Summary
The court granted Plaintiff's motion to compel the production of documents prepared by American Viatical Services, including life expectancy reports, that were directly relevant to Plaintiff's claims. The court found that Coventry had the ability to obtain the requested documents from its sister company and that engaging a consultant to decrypt the AVS data would not pose an undue burden or cost. This case highlights the importance of ESI and the need for parties to be able to access and decrypt such information in order to properly litigate their case.
ESTATE OF JOSEPH H. DAHER, by and through its personal representative, Christine Daher Plaintiff
v.
LSH CO, et al. Defendants
v.
LSH CO, et al. Defendants
MISCELLANEOUS ACTION NO. 23-0088
United States District Court, E.D. Pennsylvania
Filed July 13, 2023
Counsel
Daniel R. Miller, Walden Macht & Haran, LLP, Philadelphia, PA, for Plaintiff.William Stewart, Williams & Connolly LLP, Washington, DC, for Defendants Coventry Capital I LLC, Coventry First LLC, PFP Funding I LLC, PFP Funding II LLC.
Quinones Alejandro, Nitza I., United States District Judge
ORDER
*1 AND NOW, this 12th day of July 2023, upon consideration of Plaintiff Estate of Joseph H. Daher's (“Plaintiff') emergency motion to compel production of documents from Coventry, [ECF 1], the response in opposition filed by non-parties Coventry Capital I LLC, Coventry First LLC, PFP Funding I LLC, and PFP Funding II LLC (collectively, “Coventry”), [ECF 7], and Plaintiff's reply, [ECF 10], it is hereby ORDERED that the motion is GRANTED.[1] Accordingly, Coventry shall serve full and complete responses to Plaintiff's November 16, 2022 subpoenas by no later than August 14, 2023.
*2 BY THE COURT:
Footnotes
The Estate of Daher (“Plaintiff”) commenced the underlying lawsuit in the United States District Court for the Central District of California, styled Civil Action No. 21-3239, asserting claims, under Delaware state law, to recover the proceeds of a life insurance policy (the “Policy”) insuring Joseph H. Daher. In the complaint, Plaintiff essentially alleges that the Policy was procured or caused to be procured by strangers who do not have an insurable interest in Mr. Daher's life, thus, constituting an illegal wager on human life under Delaware law. Plaintiff further alleges that the Policy was generated under a non-recourse premium finance program administered by non-party Coventry—specifically, Coventry's Premium Finance Program II (“PFP II”).
Before this Court is Plaintiff's motion to compel Coventry to produce three categories of documents pursuant to various November 16, 2022 subpoenas; to wit: (1) the agreements and transaction documents for PFP II that Coventry has not already produced; (2) all screenshots of the file related to the Policy in the Coventry Administrative System (“CAS”), which is Coventry's internal system for tracking information on life insurance policies, premium finance loans, and insureds; and (3) documents related to Mr. Daher obtained by Coventry from American Viatical Services (“AVS”), a now-defunct company that prepared life expectancy reports on insureds. Coventry opposes the motion to compel in its entirety.
Federal Rule of Civil Procedure (“Rule”) 45 governs subpoenas in federal litigation. Subpoenas issued in accordance with Rule 45 must fall within the scope of discovery regulated by Rule 26(b)(1). Culver v. Specter, 2014 WL 4915857, at *2 (M.D. Pa. Sept. 30, 2014). As such, subpoenaed information is discoverable if it is nonprivileged, relevant, and proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1). The information subpoenaed need not be admissible in evidence in order to be discoverable. Id.
As noted, Plaintiff seeks the production of PFP II documents not produced, explaining that Coventry has represented to Plaintiff that there are about thirty documents comprising the PFP II program. Coventry has already produced one document, the “Program Administration Agreement,” from the set of approximately thirty PFP II documents and is willing to produce two additional documents with associated exhibits. With respect to the PFP II documents not produced, Coventry contends that Plaintiff has failed to meet its burden to show that these documents are relevant to the litigation and whatever relevance alleged is merely speculative. This Court disagrees. As argued by Plaintiff, the Policy at issue was originated under PFP II, and the unproduced documents include information concerning the structure and function of PFP II. Such information may be relevant to Plaintiff's claims to the proceeds of the allegedly unlawfully procured Policy.
Coventry also argues that, in a similar lawsuit in Maryland, the court “rejected the same argument Plaintiff advances here.” Coventry's argument is misguided and, at best, takes the court's conclusions out of context. In the Maryland case, the court denied the plaintiff's request for documents related to Coventry's Premium Finance Program I (“PFP I”), the precursor to PFP II, on the basis that the plaintiff had “failed to explain why the production of all such documents would be proportionate to the needs of this case.” Pac. Life Ins. Co. v. Wells Fargo Bank, NA, 2023 WL 3058312, at *5 (D. Md. Apr. 24, 2023). As to another set of PFP I documents, the court could not conclude the documents were “necessarily relevant” to the case absent further information; accordingly, the court ordered the parties to meet and confer regarding the documents. Id. Here, in contrast, Plaintiff has explained that the already-produced Program Administration Agreement expressly refers to a “Master Participation Agreement,” to “Credit Agreements,” and to other terms as defined in a “Glossary,” all of which Coventry refuses to produce. Based on information Plaintiff has already gleaned, Plaintiff has reason to believe that these unproduced documents and agreements—part of a set of approximately thirty documents—are interlocking and cross-reference each other using the terms defined in the Glossary. Under these circumstances, and unlike in the Maryland case, Plaintiff has demonstrated that the unproduced PFP II documents are relevant and proportional to the needs of this litigation. Thus, the motion to compel with respect to the PFP II documents is granted.
Plaintiff also seeks the production of screenshots from the CAS file for the Policy, including all additional tabs or dropdown menus capable of being screenshotted in the file. Coventry represents that it has already produced screenshots of all tabs and dropdown menus related to the loan used to finance the Policy premiums. Coventry, however, contends that any remaining unproduced screenshots from Mr. Daher's CAS file are irrelevant because Coventry was not involved with the Policy beyond the loan used to finance the premiums. Plaintiff disagrees and argues that the CAS file includes additional information about the Policy prior to the approval of the loan and after the loan came due upon sale, and that the entire lifespan of the Policy is relevant to its claims. This Court agrees that the requested screenshots are relevant and not speculative, as the information Coventry holds on Mr. Daher is directly related to the process by which the Policy was procured.
Coventry also argues that producing the additional CAS screenshots would cause significant harm to Coventry's business practices because the CAS contains confidential and proprietary information related to “cash flows; internal notes and communications; procedures for acquiring and servicing life insurance policies; and pricing processes and outputs for those policies.” (Coventry's Resp. in Opp., ECF 7, at p. 12). This argument is unpersuasive, as the United States Court of Appeals for the Third Circuit has held that trade secrets do not enjoy “automatic and complete immunity against disclosure.” Smith v. BIC Corp., 869 F.2d 194, 199 (3d Cir. 1989); see Richard v. Ravin Crossbows, LLC, 2021 WL 9629026, at *3 (W.D. Pa. Sept. 8, 2021). Instead, courts are to weigh the privacy concerns against the need for disclosure. Smith, 869 F.2d at 199 (citing Fed. R. Civ. P. 26(c) advisory committee's note).
In weighing Coventry's privacy concerns against Plaintiff's need for the CAS screenshots, this Court finds that the circumstances weigh in favor of disclosure. Importantly, Plaintiff seeks screenshots related only to the Policy and Mr. Daher. This information is directly relevant to Plaintiff's claims that the Policy was procured through Coventry as an allegedly illegal wager on Mr. Daher's life. Indeed, Coventry's own description of the information in Mr. Daher's file—including information about “procedures for acquiring and servicing life insurance policies, and pricing processes and outputs for those policies”—supports Plaintiff's argument that that the unproduced portions of the CAS file pertaining to Mr. Daher is relevant to Plaintiff's claims. See Glenmede Tr. Co. v. Thompson, 56 F.3d 476, 485 (3d Cir. 1995) (“Federal courts should not provide a shield to potential claims by entering broad protective orders that prevent public disclosure of relevant information. The sharing of information among current and potential litigants is furthered by open proceedings.”). As noted by Plaintiff, the protective order issued by the California court protects Coventry's privacy concerns in this litigation. As such, any “confidential” or “trade secret” documents may be produced consistent with that protective order. Under the circumstances, this Court finds that the need for the production of the remaining CAS screenshots outweighs Coventry's privacy concerns. Therefore, Plaintiff's motion to compel with respect to the CAS screenshots is granted.
Finally, Plaintiff seeks the production of documents and life expectancy reports pertaining to Mr. Daher prepared by AVS. As noted, AVS data, computer server, and software systems were purchased by Coventry after AVS's closure. At the outset, Coventry argues that because Plaintiff failed to review the AVS reports Coventry already produced before filing the instant motion, Plaintiff's motion is premature in violation of Rule 45(d)(1). Coventry's argument is, however, unpersuasive. Specifically, Rule 45(d)(1) provides that the court may issue sanctions against a party who fails to “take reasonable steps to avoid imposing undue burden or expense on a person subject to a subpoena.” In its reply, Plaintiff represents that it was aware, prior to filing the motion, that Coventry had produced some but not all AVS reports, and that Plaintiff now seeks the AVS reports that were not produced. Plaintiff further explains that Coventry was aware of Plaintiff's request for the additional unproduced AVS reports prior to the parties' May 12, 2023 meet-and-confer discussion yet did not produce these reports. Under these circumstances, this Court finds no reason to conclude that Plaintiff failed to comply with Rule 45(d)(1), or that the request is premature, as alleged.
Coventry proffers four additional reasons to oppose Plaintiff's motion to compel, each of which will addressed separately. First, Coventry argues that it should not be compelled to produce the requested AVS documents because the AVS database contains confidential information pertaining to tens of thousands of people. This argument is unavailing, since Plaintiff seeks AVS documents and information concerning only Mr. Daher, not any other person. As such, no confidential information concerning people not involved in this litigation would necessarily be disclosed through Coventry's compliance with the subpoena. If necessary and appropriate, Coventry may redact confidential information about individuals other than Mr. Daher when producing the requested documents.
Coventry also argues that the requested documents are not subject to Plaintiff's subpoena because the AVS data is not within Coventry's possession, custody, or control. Under Rule 45(a)(1)(A)(iii), only documents, information, and things that are in a party's “possession, custody, or control” are subject to a subpoena. Fed. R. Civ. P. 45(a)(1)(A)(iii). When a corporate entity is requested to produce documents owned by another entity, “separate and distinct corporate identities are not readily disregarded.” In re Novartis & Par Antitrust Litig., 2019 WL 5722055, at *6 (E.D. Pa. Nov. 5, 2019) (citing Novartis Pharm. Corp. v. Eon Labs Mfg., Inc., 206 F.R.D. 392, 395 (D. Del. 2002)). Further, courts have defined “control” as “the legal right, authority, or ability to obtain upon demand documents in the possession of another.” See, e.g., Dixon v. Williams, 2016 WL 631356, at *3 (M.D. Pa. Feb. 17, 2016) (citing Florentia Cont. Corp. v. RTC, 1993 WL 127187 at *3 (S.D.N.Y. Apr. 22, 1993)); Frank Brunckhorst Co. v. Ihm, 2012 WL 5250399, at *7 n.8 (E.D. Pa. Oct. 23, 2012) (collecting cases).
Coventry argues that the AVS data is not owned by Coventry but instead by a sister company of Coventry First LLC that is neither a parent nor a subsidiary of any of the Coventry entities involved in this litigation. While the sister company is a distinct corporate entity, nowhere does Coventry argue that it does not have the “ability to obtain upon demand” the requested documents from its sister company. In fact, Coventry admits that some personnel of Coventry First LLC may have limited access to the AVS server containing the requested documents, including access to “search for life expectancy reports.” (Coventry's Resp. in Opp., ECF 7, at p. 8). Coventry has the ability to obtain “full access” to the database by decrypting the data with the aid of a third-party consultant. (Id. at p. 9). As such, Coventry has not demonstrated that the requested documents are not within its control.
Coventry further argues that much of the requested AVS data is encrypted and, thus, inaccessible. Coventry represents that it would need to engage a third-party information-technology consultant to decrypt the data, and that doing so would pose an undue burden on Coventry. Rule 26(b)(2)(B) sets forth specific limitations on discovery of electronically stored information. Specifically, the Rule provides that a party need not produce electronically stored information upon a showing that the information is “not reasonably accessible because of undue burden or cost.” Fed. R. Civ. P. 26(b)(2)(B). The court may nonetheless order such discovery if the requesting party shows good cause. Id. Here, beyond its bald assertion, Coventry has not shown that engaging a consultant to decrypt the AVS data would pose an undue burden or cost. See Stokes v. Cenveo Corp., 2017 WL 3648327, at *2 (W.D. Pa. Aug. 24, 2017) (“Mere assertions that compliance would be burdensome without any showing of specificity will not suffice.”). As such, Coventry's undue burden argument is insufficient to overcome its disclosure obligation under the Rules.
Finally, Coventry contends that Rule 45 does not permit Plaintiff to subpoena Coventry to provide the name and contact information of a data consultant who could decrypt the AVS data. As noted, Rule 45 provides that subpoenas extend only to documents and information in a party's “possession, custody, or control.” Fed. R. Civ. P. 45(a)(1)(A)(iii). As noted by Coventry, courts generally do not enforce subpoenas that “require the creation of documents that do not already exist.” Webster v. Haskins, 2020 WL 5908999, at *2 (E.D. Cal. Oct. 6, 2020). However, Coventry has informed Plaintiff that it already possesses the requested contact information for the consultant who could decrypt the AVS data. As such, Coventry's compliance with Plaintiff's subpoena would not require Coventry to create new documents that do not already exist. Further, Coventry's reliance on Flynn v. Manufacturers & Trades Trust Co., 2021 WL 8362649, at *8 (E.D. Pa. Sept. 15, 2021), is also unavailing. In Flynn, the court denied the plaintiffs' spoliation claims seeking “discovery-on-discovery” where the plaintiffs merely speculated that the defendant had not produced all of the relevant documents it possessed. Id. at *8 (“Federal courts will not compel a party to disclose its discovery process as a result of the opponent's mere suspicion that the party's process has not produced adequate documents.”) (internal quotations and citation omitted). Here, in contrast, the relevance of the AVS documents Plaintiff seeks is not based on speculation or mere suspicion. On the contrary, Plaintiff seeks documents pertaining to Mr. Daher, including life expectancy reports, that are directly relevant to Plaintiff's claims that the Policy was unlawfully procured by strangers without an insurance interest in Mr. Daher's life. Thus, Plaintiff's motion to compel the production of documents prepared by AVS is granted.
For the reasons set forth, Plaintiff's motion is granted in its entirety.