United States District Court, D. Nebraska
MEMORANDUM AND ORDER
R. Zwart, United States Magistrate Judge
matter is before the court on the motion to compel filed by
Defendant Top's Personnel Inc. (“Top's
Personnel”). (Filing No. 46). For the
following reasons, the motion will be granted in part and
denied in part.
December of 2011, Applied Underwriters Captive Risk Assurance
Company, Inc. (“AUCRA”) entered into a
Reinsurance Participation Agreement (“Reinsurance
Agreement”) with Top's Personnel. (Filing No.
17 at CM/ECF p. 3). Plaintiff Applied Underwriters Inc.
(“Applied Underwriters”) was not a party to the
Reinsurance Agreement. On May 15, 2014, Top's Personnel
executed a promissory note (“the Note”) in favor
of Applied Underwriters. In the Note, Top's Personnel
“acknowledge[d] its indebtedness (including
workers' compensation premiums) to [Applied Underwriters]
and its affiliates and subsidiaries” and promised to
pay the principal sum of $119, 645.13 together with interest.
(Filing No. 1-1 at CM/ECF p. 7). AUCRA was not a
party on the Note.
February of 2015, Applied Underwriters and Applied Risk
Services (“ARS”) filed a Complaint against
Top's Personnel. (Filing No. 1-1). The initial
Complaint alleged two claims. The first alleged Top's
Personnel breached its obligations to Applied Underwriters
under the Note. The second alleged Top's Personnel
breached its obligations to ARS under the Reinsurance
court determined ARS was not a party to the Reinsurance
Agreement. (Filing No. 22). Thereafter, Plaintiff
Applied Underwriters filed an amended complaint omitting ARS
and the second cause of action from the original complaint.
The amended complaint alleges that Top's Personnel and
Applied Underwriters entered into the Note “for good
and valuable consideration” and Top's Personnel
failed to make the required payments under the Note.
(Filing No. 23). Applied Underwriters alleges that
Top's Personnel owes $126, 488.45 under the Note plus
accruing interest. (Id.).
April of 2016, Top's Personnel moved to dismiss or
otherwise stay Plaintiff's claim and compel arbitration,
citing an arbitration clause within the Reinsurance
Agreement. (Filing No. 27). The court determined
Applied Underwriters was not a party to the Reinsurance
Agreement nor did it appear to be legally bound to the
Reinsurance Agreement or the specific arbitration provision
within it. (Filing No. 34). Specifically, the court
found there was
no evidence that AUCRA had actual, implied, or apparent
authority to bind [Applied Underwriters] to the Reinsurance
Agreement and its provisions, or that the corporate
relationship between [Applied Underwriters] and AUCRA was
sufficiently close or the formalities were disregarded such
that the corporate veil can be pierced or that the two
entities acted as each other's alter ego.
(Filing No. 34 at CM/ECF p. 6). The court denied
Top's Personnel's motion.
August 8, 2016, this Court entered its order for the final
progression of this case in accordance with the parties'
Rule 26(f) report. (Filing Nos. 38 &
39). The Court ordered that the deadline for
completing written discovery was November 30, 2016.
(Filing No. 39 at CM/ECF p. 2). Top's Personnel
served its First Set of Interrogatories and Document Requests
upon Plaintiff on September 22, 2016. Among other requests,
the defendant's Interrogatories and Document Requests
sought specific information and documents concerning the
Reinsurance Agreement, the relationship between the Note and
the Reinsurance Agreement, and the corporate relationship
between AUCRA and Applied Underwriters. Defendant received
Plaintiff's responses on December 12, 2016.
Personnel believed Applied Underwriters' responses to its
discovery were incomplete, and in accordance with Fed. R.
Civ. P. 37(a)(2)(A) and NECivR 7.0.1(i), the parties
conferred in an effort to resolve their disputes. On December
29, 2016, the defendant sent a meet-and-confer letter to
Plaintiff's counsel. (Filing No. 48-1 at CM/ECF p.
66). Plaintiff responded by letter on January 6, 2017,
supplementing some of the discovery in dispute. (Id. at
p. 72). Top's Personnel argues that Applied
Underwriters' answers remain inadequate and filed the
instant motion on January 17, 2017.
motion, Top's Personnel seeks to compel Applied
Underwriters to fully answer Interrogatories 2, 3, 4, 5, 6,
7, 11, & 15 and to supplement its document production.
Regarding document production, Top's Personnel claims
Applied Underwriters has failed to produce any correspondence
regarding the Promissory Note, Reinsurance Agreement, and any
negotiations between the parties. (Filing No. 47 at
CM/ECF pp. 11-12). Finally, the defendant seeks to take
the deposition of Plaintiff's Counsel, Jeffrey Silver
based upon his position as Vice President of Applied
Underwriters and the answers he personally supplied for the
26(b)(1) of the Federal Rules of Civil Procedure was amended
on December 1, 2015. The scope of permissible
discovery under Rule 26 is broad and parties 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, considering the importance of the issues
at stake in the action, the amount in controversy, the
parties' relative access to relevant information, the
parties' resources, the importance of the discovery in
resolving the issues, and whether the burden or expense of
the proposed discovery outweighs its likely benefit.
Information within this scope of discovery need not be
admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1). Courts should examine each
case individually to determine the weight and importance of
the proportionality factors.
burden of demonstrating the proportionality of the requested
information is a collective responsibility between the
parties and the court. Elizabeth D. Laporte &
Jonathan M. Redgrave, A Practical Guide to Achieving
Proportionality Under New Federal Rule of Civil Procedure 26,
9 Fed. Ct. Rev. 20, 40 (2015). A party requesting
discovery must show how the requested information is
important to the issues and resolution of the case: The
responding parting must show the expense and burden of
responding. Id. The court can then balance the
parties' interests and order discovery consistent with
the proportionality mandated under the federal rules.
the discovery sought by Defendant through the instant motion
concerns the Reinsurance Agreement, the relationship between
the Note and the Reinsurance Agreement, and the relationship
between AUCRA and Applied Underwriters. Top's Personnel
claims this information is relevant because the parties still
have a dispute regarding the applicability of the arbitration
clause contained in the Reinsurance Agreement. It is
Top's Personnel's position that the two
agreements-the Reinsurance Agreement and the Note-are related
and that either 1) Applied Underwriters intended to be bound
by the Reinsurance Agreement, or 2) the parent company of
Applied Underwriters and AUCRA directed that a different
entity sign the Note in order to avoid obligations of the
Reinsurance Agreement. Accordingly, Top's Personnel
argues that the disputed discovery affects this court's
jurisdiction over the claim.
Underwriters argues that this lawsuit solely concerns the
Note and that Top's Personnel's efforts to interpose
the Reinsurance Agreement into this litigation was closed by
the court's order denying the Motion to
outlined in the court's ruling on the motion to dismiss,
as a non-signatory, Applied Underwriters may be bound to the
Reinsurance Agreement and its provisions, including the
arbitration provision, if it can be shown that
Applied Underwriters and AUCRA were sufficiently close or
formalities were disregarded such that the corporate veil was
pierced or the entities acted as each other's alter ego.
(See Filing No. 34). Accordingly, the court agrees
that the relationship between AUCRA and Applied Underwriters,
as well as the details surrounding the creation of the Note
and its connection to the Reinsurance Agreement are relevant
in this case.
court will review each of the disputed items in turn.
Interrogatories to Plaintiff.
in detail the negotiations that led to the execution of the
Reinsurance Agreement. In doing so:
a. Identify the individuals and entities that participated in
the negotiation of the Reinsurance Agreement;
b. Describe in detail the substance of those negotiations;
c. Set forth the time period of negotiation; and d. Attach
all documents that relate, refer, or otherwise pertain to the
incorporates herein its General Objections identified above.
Without waiving that objection, the RPA is offered to the
client in its final form as part of the EquityComp®
claims that Plaintiff's answer to this question was
evasive and nonresponsive. According to the defendant,
Plaintiff should be required to identify individuals involved
in the negotiation, state the substance of negotiations, and
provide documents that ...