The opinion of the court was delivered by: Veronica L. Duffy United States Magistrate Judge
ORDER GRANTING MOTION TO COMPEL
Plaintiff Carolyn Brown Bear moves to compel defendants Cuna Mutual Group, Cuna Mutual Life Insurance Company, and Cuna Mutual Insurance Society (collectively "Cuna"), to produce discovery in response to Plaintiff's First, Second, and Third Requests for Production of Documents. [Docket No. 33]. Defendants oppose the motion. [Docket No. 39]. The motion was referred to this magistrate judge for resolution by the Honorable Jeffrey L. Viken, United States District Judge. [Docket No. 46]. The order is granted in part as to Plaintiff's First Request for Production of Documents, as detailed below. The order is granted as to Plaintiff's Second and Third Requests for Production of Documents.
FACTS AND PROCEDURAL BACKGROUND
The facts, insofar as they are pertinent to the motion pending before this court, are as follows. In 2002, Carolyn Brown Bear purchased "credit disability" insurance to insure two loans from Black Hills Federal Credit Union. Cuna issued the certificate of insurance for the coverage. On December 17, 2003, several months after suffering a stroke, related brain injury, and undergoing brain surgery, Brown Bear submitted a claim to defendants. On March 1, 2004, Cuna denied Brown Bear's claim, stating that Brown Bear had not been advised by any doctor to discontinue working due to a medically-determined sickness or accidental injury.
On February 25, 2005, the Social Security Administration issued a determination that Brown Bear was disabled due to various serious medical causes, and had been so disabled since October 24, 2003. On October 15, 2005, Brown Bear resubmitted her claim to Cuna and included a copy of the Social Security determination of disability. Cuna again denied Brown Bear's claim, this time relying on language contained in the certificate of insurance and stating that the information pertaining to Brown Bear's disability was received after the time frame specified within the certificate of insurance.
Specifically, Cuna relied on the certificate provision which states, "Unless you have been legally incapable of filing proof of Total Disability, we won't accept it if it is filed more than one (1) year from the time it should have been filed." (emphasis added). Brown Bear resisted Cuna's denial of her claim, relying instead on language on the certificate of insurance which states that proof of disability must be submitted within ninety days of the date the claimant's disability stops. Cuna contends that the "should have been filed" language permits it to deny claims where proof of disability was not filed within twelve months of when the claimant's disability first began, or within twelve months of the date Cuna requests such proof. Ms. Brown Bear filed the present action on October 8, 2008.
On June 1, 2009, Cuna went to trial in an unrelated case, involving Cuna's denial of benefits based on its interpretation of the above-mentioned certificate language. See McElgunn v. CUNA Mutual Ins. Soc., et. al (hereinafter Powell), 5:06-cv-05061-KES, Docket 414.*fn1 The district court, Chief Judge Karen E. Schreier presiding, overruled Cuna's use and interpretation of the "should have been filed" language, holding that the certificate language unambiguously requires a claimant to present proof of disability within ninety days after the disability stops, and that the language allows a claimant an additional twelve months after that time to provide proof of loss. Id. The court also held that in order to enforce a time limitation based on a proof of loss provision, an insurer must prove it has suffered prejudice based on the claimant's delay. Id. at p. 5.
During the Powell trial, Cuna's defense counsel represented to the jury that based the district court's decision regarding the unambiguous nature of the certificate language, Cuna had decided to "reprocess" all claims it previously denied using its erroneous interpretation of the "time filing" language. Subsequent to the Powell trial, Cuna withdrew its denial of Brown Bear's claim and issued her two checks as reimbursement for the payoff amount of the loans she had insured in 2002. See 5:08-cv-05080-JLV, Docket No. 34-15. The parties in the instant case stipulated that the documents produced in discovery in Powell could be used as if produced in this case. Docket No. 34, at 5.
Brown Bear issued her first set of requests for production of documents in this matter on February 2, 2009. Docket No. 21. Cuna did not initially respond or provide discovery, and responded formally only after Brown Bear brought the present motion to compel. Docket Nos. 33, 39. According to Brown Bear, on March 9, 2009, several months before filing her motion to compel, Brown Bear wrote to Cuna and asked when Cuna would provide responses. Docket No. 34, Exhibit 2.*fn2 Brown Bear's counsel sent an e-mail on May 5, 2009 notifying defense counsel that they had not received the discovery which counsel "were going to send by overnight mail on or about 4/22."*fn3 Id. at Exhibit 4. Brown Bear's memorandum in support of the present motion represents that Cuna agreed to produce documents on April 22, 2009. Docket No. 34, p. 4, n.3. At some point prior to May 14, 2009, Cuna responded to Brown Bear's first requests; however, the documents provided were apparently quite incomplete, and Brown Bear subsequently provided an inventory of the missing documents. Id. On June 30, 2009, Brown Bear's counsel again consulted with Cuna regarding the missing documents and information. Docket No. 34-7. Brown Bear's counsel provided another exhaustive inventory of missing discovery and requested that Cuna supplement its responses appropriately in light of Cuna's then-recently announced decision to reprocess claims following the district court's ruling in Powell. Cuna's counsel responded via e-mail on July 2, stating: "We will address each of your concerns regarding discovery next week." Id.
In early July 2009, Cuna twice replaced its defense counsel. See Docket Nos. 28, 31. Cuna's substituted and current counsel apparently requested an extension of time to the end of July to respond to the discovery responses issued six months earlier. See Docket No. 34, p. 5. Brown Bear's counsel declined to expressly consent to an extension, but nevertheless waited until after the date of defense counsel's request passed to file the present motion to compel. Docket No. 34.
I. Plaintiff's First Request for Production of Documents
In request 1 of her First Requests for Production of Documents, which were served on February 2, 2009, Brown Bear asked Cuna to provide "[a]ny and all documents relating in any way to the claim(s) of Carolyn Brown Bear, which would include but not be limited to:
A: electronic data not included in the hard copy filed, including e-mails, or other computerized data;
B: copies of the file jackets containing documents that relate to the Plaintiff, as well as any telephone slips, post-it-notes, hand-written notes, or other removable materials that have ever been in or associated with any of the files relating to the Plaintiff;
C: any and all claims files, claim committee notes, appeal committee notes, memos, or documents of any kind relating to the claim(s) of the Plaintiff.
Docket No. 34-1. Plaintiff asserts that while Cuna produced portions of Carolyn Brown Bear's claims file during the Powell litigation, Cuna has not provided all documents in response; specifically, that Cuna has not produced any documentation as to its "reprocessing" of Plaintiff's claim which resulted in Cuna's decision to pay her claim. Plaintiff represents that defendants have agreed to comply with this discovery request on at least two occasions, but that defendants have not so complied. See Docket No. 34, Exhibits , 6. Cuna responded to request number one by objecting on grounds of privilege and relevancy. Cuna further responded that without waiving its objections, it would "produce responsive materials at a mutually agreeable time and place." Cuna stated that it would produce "available unprivileged" documents with regard to this request.
Cuna cites both the attorney-client privilege and the work product privilege in its response to Brown Bear's first request. The attorney-client privilege protects the confidentiality of communications between attorney and client made for the purpose of obtaining legal advice. In a diversity action, state law determines both the existence and scope of the attorney-client privilege. Fed. R. Evid. 501; Gray v. Bicknell, 86 F.3d 1472, 1482 (8th Cir. 1996); Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)("Except in matters governed by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of the state.").
Four elements must be present to invoke the attorney-client privilege: (1) a client; (2) a confidential communication; (3) the communication was made for the purpose of facilitating the rendition of professional legal services to the client; and (4) the communication was made in one of the five relationships enumerated in S.D.C.L. §19-13-3. State v. Rickabaugh, 361 N.W.2d 623, 624-25 (S.D. 1985)(quoting State v. Catch The Bear, 352 N.W.2d 640, 645 (S.D.1984)); S.D.C.L. § 19-13-3. The party claiming the privilege carries the burden of establishing all of the essential elements. Id.
The work product privilege is "distinct from and broader than the attorney-client privilege." In re Green Grand Jury Proceedings, 492 F.3d 976, 980 (8th Cir. 2007) (quoting In re Murphy, 560 F.2d 326, 337 (8th Cir. 1977)). While the purpose of the attorney-client privilege "is to encourage clients to make a full disclosure of all favorable and unfavorable facts to their legal counsel," Murphy, 560 F.2d at 337, the work product privilege "functions not merely and (perhaps) not mainly to assist the client in obtaining complete legal advice but in addition to establish a protected area in which the lawyer can prepare his case free from adversarial scrutiny." In re Special September 1978 Grand Jury (II), 640 F.2d 49, 62 (7th Cir. 1980). Because the work product privilege protects the attorney's thought processes and legal recommendations, both the attorney and the client hold the privilege. United States v. Under Seal (In re Grand Jury Proceedings # 5), 401 F.3d 247, 250 (4th Cir. 2005)(citation omitted); Genentech, Inc. v. U. S. Intern. Trade Com'n, 122 F.3d 1409, 1415 (Fed. Cir. 1997)(internal quotation marks and citation omitted).
In a diversity case, such as this one, courts must "apply federal law to resolve work product claims." McElgunn v. Cuna Mut. Group, No. 06-Civ-5061-KES, 2008 WL 5105453, at *1 (D.S.D. Dec. 2, 2008) (quoting Baker v. Gen. Motors Corp., 209 F.3d 1051, 1053 (8th Cir. 2000)). Rule 26(b) of the Federal Rules of Civil Procedure permits discovery of any matter "not privileged." Rule 26(b)(3) provides that documents "prepared in anticipation of litigation or for trial by or for another party or by its representative" are discoverable only if the requesting party demonstrates a "substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means." The rule further states that the court will "protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation." Fed. R. Civ. P. 26(b)(3). To assess the presence of either the attorney-client privilege or the work product privilege, the court may order documents to be submitted for in camera review. Fed. R. Civ. P. 26(b)(5).
With the applicable Federal Rules in mind, the court now turns to the test adopted by the Eighth Circuit for determining whether documents were prepared in anticipation of litigation, and thus are subject to the work product privilege. The test is "a factual determination" which asks whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation. But the converse of this is that even though litigation is already in prospect, there is no work product immunity for documents prepared in the regular course of business rather than for purposes of litigation.
Simon v. G. D. Searle & Co., 816 F.2d 397, 401 (8th Cir.1987). The Advisory Committee notes following Rule 26 indicate that "[m]aterials assembled in the ordinary course of business . . . or for other nonlitigation purposes" are not subject to qualified immunity under the Rule. Fed. R. Civ. P. 26(b)(3) advisory committee's note.
With respect to Brown Bear's first request, Cuna has not alleged any facts which would lead the court to accept the argument that documents related to her insurance claim are protected by the attorney-client privilege. Cuna has not carried its burden of proving each of the elements of the state statutory attorney-client privilege. See Rickabaugh, 361 N.W.2d at 624-25.
Furthermore, the court is unable to determine whether documents related to Brown Bear's claim are covered by the work product privilege based on Cuna's mere assertion that they are so privileged. "In cases involving large numbers of documents or where the nature of the document will not likely be readily apparent on its face to the uninitiated observer, the proponent of work product protection must present in camera matter to the Court in a reviewable form such as in a 'Vaughn Index' which itemizes each document, provides a factual summary of its content and justification for withholding it." Delaney, Migdail & Young, Chartered v. I.R.S., 826 F.2d 124, 128 (D.C.Cir.1987); Vaughn v. Rosen, 484 F.2d 820 (D.C.Cir. 1973), cert denied, 415 U.S. 977, 94 S.Ct. 1564 (1974). In the instant case, this was not done and, therefore, the court has no factual basis for concluding that any of the documents requested by Brown Bear would be subject to the work product privilege.
To that end, with regard to Brown Bear's first request, Cuna shall produce to opposing counsel all documents relating in any way to Brown Bear's claim which have not already been produced and are not subject to claim of privilege. The file maintenance documentation required by S.D.C.L. § 58-3-7.4*fn4 shall also be made available. Cuna shall produce to the court the documents which it claims are subject to the attorney-client privilege, along with a Vaughn index setting forth its factual basis for Cuna's assertion that the documents are so privileged. See Rickabaugh, 361 N.W.2d at 624-25.
Cuna shall produce to the court the documents which it claims are subject to the work product privilege for in camera review. Cuna shall summarize, in factual and not conclusory terms, the nature of the material withheld and shall link each specific claim of privilege to specific material. See Vaughn, 484 F.2d at 826-28. The court can then assess whether statutory attorney-client or work product privileges apply to the documents and whether they are subject to discovery. Cuna shall produce all documents described above, whether directly to Ms. Brown Bear, or to the court for in camera review, within 30 days from the date of this order.
Cuna also objected to Brown Bear's first request on grounds of relevance. Relevancy is to be broadly construed for discovery issues and is not limited to the precise issues set out in the pleadings. For purposes of discovery, relevancy has been defined as "any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). Discovery requests should be considered relevant if there is any possibility that the information sought is relevant to any issue in the case, and should ordinarily be allowed, unless it is clear that the information sought can have no possible bearing on the subject matter of the action. See Marker v. Union Fidelity Life Ins. Co., 125 F.R.D. 121, 124 (M.D.N.C. 1989)(stating "discovery requests may be deemed relevant if there is any possibility that the information may be relevant to the general subject matter of the action") and Morse/Diesel, Inc. v. Fidelity & Deposit Co. of Maryland, 122 F.R.D. 447, 449 (S.D.N.Y 1988) (stating that if there is any possibility that the information requested may be relevant to the subject matter of the lawsuit, it is proper discovery).
In this case, Brown Bear asserts that Cuna breached the insurance contract by denying her disability claim and acted in bad faith when denying that claim. Clearly, the requested documents, all of which are narrowed in scope to include all documents relating only to Ms. Brown Bear's claim, dating from the time her certificate of insurance was issued to the present day, are relevant because they form the basis for the issues raised by Brown Bear in her complaint. The documents in Cuna's possession relating to Brown Bear's claim undoubtedly "bear on" litigation over that claim. Oppenheimer, 437 U.S. at 351. Cuna's argument as to lack of relevancy fails, and the court orders Cuna's compliance with Brown Bear's first request as set forth above in subsection (a).
In requests three and four of her First Requests for Production of Documents, Brown Bear asked Cuna to provide updated electronic versions of two Excel spreadsheets, previously produced in the Powell litigation and identified as (1) "CS003069 Members w Denial-PTL 042008.xls" (CMIS 7836-7884), and (2) "FilingDenials.xls" (CMIS 47455-47529). Brown Bear requested that the updated versions of both spreadsheets include information as to identification of claims and corresponding data that have occurred since creation and production of the spreadsheets in the Powell litigation.
Cuna responded to requests 3 and 4 by objecting on grounds that the requests were unduly burdensome, over broad, and called for information not likely to lead to relevant evidence at trial. Cuna further stated that no such updated information exists, because it stopped tracking time filing denials in 2006 and only made spreadsheets showing denials after that time based on the court's order after Powell. Docket 39, p. 8-9. Cuna asserts that the information sought is irrelevant to Ms. Brown Bear's bad faith claim, in that the relevant question in such an action is "whether the insurer acted recklessly or with ill will toward the plaintiff in a particular case, not whether the defendant's business practices were generally reasonable." Docket No. 39-1, at 7 (quoting DeKnikker v. General Cas., 2008 WL 1848144, at *2 (D.S.D. ...