Pending before the Court is Plaintiff Wolverine World Wide, Inc.’s (“Wolverine”) Motion for Discovery Sanctions Against Travelers (“Motion for Sanctions”) (ECF No. 2067 and 2068). The Travelers Indemnity Company's (“Travelers”) Response to the Motion for Sanctions is at ECF No. 2089. Wolverine filed a Motion for Leave to Supplement the Record Regarding this Motion for Sanctions (“Motion to Supplement Record”) (ECF No. 2084) and Travelers Response to the Motion for Leave to Supplement the Record is at ECF No. 2114. Leave to Supplement the Record was granted (ECF No. 2123).

Pursuant to Local Rule 7.1(e), Wolverine requested expedited consideration of the Motion for Sanctions and its Motion to Supplement Record (ECF No. 2067 and 2084) since the discovery deadline is September 8, 2023 and Travelers’ conduct has now severely impacted Wolverine's ability to obtain discovery in this matter (ECF No. 2084, PageID.139328).

The Special Master has reviewed all of the parties’ written submissions and appended exhibits and heard oral argument on August 17, 2023 (the “Hearing”).

Defendant Travelers was ordered on February 2, 2022 to produce “... their entire claim files related to the policies, on [or, sic] Wolverine's claim for insurance coverage with respect to the Underlying Actions, including any Documents and Communications related thereto.” (ECF No. 1357, PageID.123209). Travelers was further ordered to produce “all claim file documents,” unredacted “reinsurance policies,” and “underwriting files” (Id., PageID.123204-123208). In a subsequent Order, this Court held that “routine claims handlers notes done in the ordinary course of an insurance company's business” are not privileged and must be produced to Wolverine (ECF No. 1914, PageID.136622). Objections to these Special Master Orders were denied by the Honorable Janet T. Neff.

As to reinsurance policies, this Court explained that “[c]ourts within this circuit are clear that reinsurance policies themselves are discoverable pursuant to Fed. R. Civ. P. 26(a)(1)(A)(iv).” (ECF No. 1914, PageID.123203.) With respect to underwriting files, this Court held that such documents are relevant and discoverable and must be produced in unredacted form (ECF No. 1357, PageID.123207). In opposition to the above Court Orders, Travelers produced redacted versions of its reinsurance policies and its underwriting files.

Wolverine alleges in its Motion for Sanctions that “in spite of the Special Master's direct Orders (ECF No. 1357, 1391, and 1914), Travelers has not provided a single claim note or document resembling its claim handlers’ analysis of coverage” (ECF No. 2067, SEALED, pg. 4). Wolverine argues that during the parties meet and confer for this Motion for Sanctions, counsel for Wolverine directly asked counsel for Travelers, countless times, whether they were withholding claims notes on the basis of privilege (Naccachian Decl., ¶ 8.) Travelers responded, “you are assuming claim notes exist” and “how do you know that claim notes exist.” Id.

*2 In Response to this Motion for Sanctions (ECF No. 2089, SEALED), Travelers contends that Wolverine's continued insistence that Travelers is withholding pages upon pages of coverage analysis is, quite simply, wrong and that the claim handler for this claim, Jane Kelly, has provided to counsel any document from her file that could be considered a “note” (Declaration of Patrick E. Winters at Ex. 1, Affidavit of Jane E. Kelly, ¶ 5) and those documents have been produced to Wolverine. Travelers argues that it produced Ms. Kelly's notes from a meeting with Wolverine that took place before Wolverine initiated the present action. Id.at ¶ 6. Further searches revealed a four-page Word document that Ms. Kelly created based on mediation updates provided by Wolverine's counsel. Id. at ¶ 1. Finally, Ms. Kelly created a spreadsheet that contained information regarding each of the underlying complaints filed against Wolverine which has been produced. Id. Travelers states that there are no other “notes.” Id. at¶ 7.

Interestingly, after this Motion for Sanctions was filed, Travelers located and began producing documents that it claims were recently located and had not been produced. Travelers also canceled the deposition of its Corporate Witness and Claims Handler, Jane Kelly, for the second time after the Motion for Sanctions was filed. Ms. Kelly's deposition is now scheduled for September 7, 2023, one day before the end of fact discovery in this case.

Wolverine argues that with fact discovery set to close on September 8, 2023, and with many depositions already scheduled between now and then, Travelers’ gamesmanship has substantially prejudiced Wolverine, whereby sanctions are required in order to provide Wolverine due process to complete discovery in this matter.

Wolverine supplemented the record with the Supplemental Declaration of Alice Kyureghian and Exhibits A though I attached to her Declaration. Ms. Kyureghian states that Travelers cancelled the depositions of Travelers’ Corporate Witness and claim handler, Jane Kelly, and Travelers’ supplemented production of documents since this Motion for Sanctions was filed (Kyureghian Declaration, ¶ 7, Exhibit B). In addition, Travelers has failed to provide dates in response to Wolverine's notice of depositions of numerous deponents, listed by name in the declaration (Id. ¶¶7 and 8, Exhibit B and C).

In its Response to Wolverine's Motion for Leave to Supplement the Record for Its Motion for Discovery Sanctions (ECF No. 2114, SEALED) Travelers admits that it recently discovered that certain internal email exchanges and email communications with Wolverine were not moved into an electronic document management system and, as a result, were not found during earlier searches for responsive documents. Immediately upon learning of these documents, Travelers began reviewing them for production and producing them to Wolverine. Travelers contend there was no malice or intent to deceive and no intentional withholding. Further, as soon as the issue was discovered, Travelers immediately began collecting the documents and sending them to counsel, counsel is reviewing the documents for privilege, and they are being produced to Wolverine prior to the close of discovery. Travelers contends this is not a situation where documents were produced on the eve of trial or during trial, but rather this was a simple mistake, and it is promptly being corrected (ECF No. 2114, SEALED, pg. 4).

The Special Master has reviewed the Exhibits attached to the Naccachian Declaration and the Kyureghian Declaration. It is apparent that Wolverine has brought the issue of missing claim file documents to Travelers attention without any relief on more than one occasion.

At oral argument, the Special Master concluded that the fact that there were only 3-4 documents produced from its Claim Handler, Jane Kelly, who has been the claims handler for Wolverine's claims since this litigation started, was unbelievable. Further, it was suspicious that only after the Motion for Sanctions was filed, that Travelers found documents that it had not identified and produced or logged when originally requested and after being compelled to produce these same documents. Wolverine's original Motion to Compel Production was filed in December 2021 and the first order compelling production was entered February 22, 2022. Several extensions of the Phase II Scheduling Order have since been entered. The Special Master is unable to conclude that this was a mistake on Travelers’ part particularly in light of the numerous requests from Wolverine for these documents. Wolverine points out that the other insurers produced these documents, but not Travelers.

*3 Travelers now is producing documents requested almost two years ago with redactions and claimed privileges. It seems that at this point the appropriate sanction is to order the documents produced in unredacted form and find that any claimed privileges have been waived by Travelers. The unredacted documents must be provided to Wolverine due to the delay caused by Travelers. It is obvious that Travelers did not conduct a reasonable search for documents as required by the Federal Rules of Civil Procedure.

If a party fails to obey an order to provide discovery, or fails to supplement its discovery responses, that party can be prohibited from using such non-disclosed information to support or oppose designated claims or defenses, or from introducing designated matters in evidence, Fed. R. Civ. P. 37(b)(2)(A)(ii), or to supply such evidence on a motion, at a hearing, or at trial, Fed. R. Civ. P. 37(c)(1). A court may also, in addition to or as an alternative to the above, direct “the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure to comply with the court order.” Fed. R. Civ. P. 37(b)(2)(C).

The Federal Rules of Evidence require a party to state whether the party is withholding a document on the basis of privilege and to provide enough information regarding both the document and the assertion of privilege to allow the opposing party to challenge that assertion. Fed. R. Civ. P. 26(b)(5); see also Id. at advisory committee's note, 1993 amendments (“A party must notify other parties if it is withholding materials otherwise subject to disclosure under the rule or pursuant to a discovery request because it is asserting a claim of privilege or work product protection. To withhold materials without such notice is contrary to the rule, subjects the party to sanctions under Rule 37(b)(2), and may be viewed as a waiver of the privilege or protection. Star Lodge LLC v. Endurance American Specialty Insurance Co., 2020 WL 8187478, No. 2:19-cv- 10905 at *4 (E.D. Mich., Nov. 10, 2020) (quoting United States v. Roxworthy, 457 F.3d 590, 593 (6th Cir. 2006)). Although the Star Lodge court found the party had waived its right to claim privilege as a result of deficient logs, here, Travelers had never produced and logged the documents newly discovered until after the Motion for Sanctions was filed. The time for producing documents with a privilege and redaction log has passed. Travelers shall now be required to produce all documents unredacted and have waived any claim to privilege.

Another facet to this Motion for Sanctions involves the scheduling of fact depositions. Wolverine claims that it noticed sixteen depositions of Travelers witnesses and has repeatedly proposed and requested dates from Travelers. (Kyureghian Declaration, ¶ 7, 8, 9, 15 and 16, Exhibit B, C, and G). This shows Travelers lack of cooperation in discovery especially considering its knowledge that that fact discovery closes in less than a month.

A court may also, in addition to or as an alternative to the above mentioned relief, direct “the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure to comply with the court order.” Fed. R. Civ. P. 37(b)(2)(C).

When analyzing a request for sanctions under Rule 37, courts apply a multifactor analysis as follows: First, whether the party's failure to cooperate in discovery is due to willfulness, bad faith, or fault. Second, whether the party in favor of the sanction was prejudiced by the other party's failure to cooperate in discovery. Third, whether the party was warned that failure to cooperate could lead to sanctions. Finally, the fourth factor considers whether less drastic sanctions were first imposed or considered. Vaughan v. Fed. Express Corp., No. 21-CV-11593, 2023 WL 4055362, at *3 (E.D. Mich. June 16, 2023), quoting Freeland v. Amigo, 103 F.3d 1271, 1277 (6th Cir. 1997).

*4 As to the first factor, whether Travelers failed to cooperate in discovery is due to willfulness, bad faith, or fault, the Special Master concludes that it is obvious that Travelers did not conduct a reasonable search for these records which supports a finding of willfulness and bad faith. It is certainly Travelers’ fault that it did not discover these documents earlier. Further, Travelers was clearly compelled to produce these documents over sixteen months ago and since such documents were not produced, Wolverine continued to question Travelers regarding its production of documents for several months.

As to the second factor of whether Wolverine was prejudiced by Travelers failure to cooperate in discovery, Wolverine has been seeking these documents since December 2021 and requires claim file documents prior to the depositions of Travelers claim handlers. That is prejudice when the fact discovery deadline is less than a month away.

As to the third factor of whether the party was warned that failure to cooperate could lead to sanctions, although not specifically warned of the possibility of attorney fees being assessed, Travelers certainly knew that sanctions were an option under the Federal Court Rules. Wolverine certainly brought Travelers’ discovery deficiencies to its attention (Naccachian Decl., Exhibit B) starting in March, 2023. Emails were exchanged between counsel for Wolverine and counsel for Travelers dated between May 8, 2023 and July 24, 2023 relating to Travelers’ cancellation of the depositions of Travelers’ Corporate Witness(es) and claim handler, Jane Kelly (Kyureghian Decl., Exhibit A) and canceled for the second time (Id., Exhibit B).

As to the last factor of whether less a drastic sanction was first considered, Travelers was compelled to produce these documents in February 2022. No sanctions were imposed at that time other than the court order compelling production. Policies of reinsurance and the underwriting files were clearly ordered to be produced in unredacted format. Travelers’ conduct is a clear violation of this Court's orders. It is the Special Master's belief that attorney fees in addition to costs and other the other relief granted herein is warranted.

In accordance with the rulings made on the record during the Hearing, a review of that transcript, and all filings and appended exhibits submitted and being otherwise fully informed, Plaintiff's Motion for Discovery Sanctions Against Travelers is GRANTED.

IT IS HEREBY ORDERED as follows:

IT IS SO ORDERED.