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Wetch v. Crum & Forster Commercial Ins.

United States District Court, D. South Dakota, Western Division

January 22, 2019

DAVID WETCH, Plaintiff,



         This matter is pending before the court on plaintiff David Wetch's amended complaint alleging bad faith failure to pay workers compensation insurance benefits, among other claims. See Docket No. 44. Jurisdiction is premised upon the diverse citizenship of the parties and an amount in controversy exceeding $75, 000. See 28 U.S.C. § 1332.

         Previously, the district court, the Honorable Jeffrey L. Viken, referred defendants' three motions to dismiss for lack of personal jurisdiction.[1] See Docket No. 75.[2] This court issued a report and recommendation regarding the motion by defendant Crum & Forster Holdings Corp. (C & F Holdings) that recommended granting the motion, but in view of the very limited opportunity Mr. Wetch had had to conduct discovery regarding personal jurisdiction up to that point, the court allowed Mr. Wetch 60 days to conduct a deposition of Marc Adee and to conduct other discovery relevant to C & F Holdings. See Docket No. 82. If additional relevant facts were discovered, the court directed Mr. Wetch could bring those before the court. Id.

         Mr. Wetch very promptly contacted defense counsel and inquired as to dates upon which Mr. Adee would be available for a deposition. Mr. Wetch waited, with the understanding defense counsel would get back to him with some suggested dates. Defense counsel denies that it made any representation about obtaining deposition dates for Mr. Adee. Instead, C & F Holdings filed objections to this court's report and recommendation, indicating therein it intended to resist the deposition of Mr. Adee. See Docket No. 83.

         By this point, two weeks of the 60-day period allotted by this court for the taking of Mr. Adee's deposition had elapsed. Rather than wait further, Mr. Wetch issued a notice of deposition for Mr. Adee, unilaterally selecting January 31, 2019, as the date for the deposition.

         C & F Holdings now moves for a protective order asking that Mr. Adee's deposition not be taken at all or, if it is taken, to move it to another date. C & F Holdings offers up a different gentleman, Eric Tibak, to be deposed in place of Mr. Adee. In addition, Mr. Wetch served C & F Holdings with written discovery requests intended to obtain facts pertinent to the personal jurisdiction issue. C & F Holdings has stymied that discovery, providing few if any documents requested.[3]

         Mr. Wetch asks the deposition of Mr. Adee be allowed and that an extension of the 60-day time frame be granted. Mr. Wetch does not wish to inconvenience Mr. Adee and is willing to take his deposition on a different, mutally-agreeable date. Mr. Wetch argues that defendant did not engage in a good faith effort to resolve this discovery dispute prior to filing its motion for protective order. Accordingly, Mr. Wetch asks that any costs associated with rescheduling Mr. Adee's deposition be paid by C & F Holdings.

         Previously, regarding the personal jurisdiction issue, the court found Mr. Wetch had supplied inadequate facts to support this court's exercise of jurisdiction over C & F Holdings. The case law Mr. Wetch cited involved facts different from the facts discovered up until then in this case. Namely, in the cases cited by Mr. Wetch, the officers of the parent and subsidiary were often the same people and the salaries of the officers of the subsidiary were paid by the parent company. See Docket No. 82 at pp. 23-31 (this court's opinion discussing facts and law as to C & F Holdings). Mr. Wetch had not yet produced facts of a similar import regarding C & F Holdings. Id. In addition, the parent companies in the cases cited by Mr. Wetch touted the geographic locations of their subsidiaries such that the courts in those cases held the parent should not be surprised to be haled into court in those locations. Id.

         The discovery Mr. Wetch now seeks from Mr. Adee concerns his attempts to discover or verify these very types of facts. Mr. Wetch has adduced proof that Mr. Adee was simultaneously an officer in both C & F Holdings and defendant United States Fire Insurance Company (US Fire). Specifically, Mr. Adee was Chairman of the Board, President and CEO as well as a Director or Trustee of U.S. Fire in 2016 while at the same time holding the position of Chief Executive Officer of C & F Holdings, a position which he held from January 1, 2015, to the present.

         Mr. Tibak, the substitute offered up by defendants in place of Mr. Adee for a deposition, did not hold such simultaneous positions. Mr. Wetch seeks evidence regarding which corporate entity paid Mr. Adee's salary and benefits during his dual officership as well as facts regarding whether C & F Holdings touted its connection to South Dakota in any way.

         C & F Holdings relies on the apex deposition doctrine to prevent the deposition of Mr. Adee. The court finds that doctrine inapplicable in this case. The apex deposition doctrine requires a party seeking to depose a high-level corporate executive to demonstrate (1) that the executive has unique or special knowledge of the facts at issue and (2) other less burdensome avenues for obtaining the information have been exhausted. Gladue v. Saint Francis Medical Center, 2014 WL 7205153 *1 (E.D. Mo. Dec. 17, 2014).

         A party seeking to prevent a deposition bears a heavy burden to show why discovery should be denied. Wells v. Lamplight Farms, Inc., 2015 WL 225815 *1 (N.D. Iowa Jan. 16, 2015); Bombardier Recreational Products, Inc. v. Arctic Cat, Inc., 2014 WL 5685463 *3 (D. Minn. Sept. 24, 2014). It is unusual for a court to prohibit the taking of a deposition altogether, even when it is a CEO, and a claimed lack of knowledge by itself is insufficient to preclude the deposition. Bombardier, 2014 WL 5685463 *3 (citing Apple Inc. v. Samsung Electronics Co, Ltd., 282 F.R.D. 259, 263 (N.D. Cal. 2012)); Raml v. Creighton Univ., 2009 WL 3335929 *2 (D. Neb. Oct. 15, 2009). The apex doctrine is intended to protect “busy, high-level executives” and “is bottomed on the apex executive lacking any knowledge of relevant facts.” Raml, 2009 WL 3335929 at *2 (quoting Minter v. Wells Fargo Bank, N.A., 258 F.R.D. 118, 126 (D. Md. 2009)). As the party seeking the protective order, C & F Holdings bears the heavy burden of demonstrating good cause for the order. Wells, 2015 WL 225815 *1; Bombardier, 2014 WL 5685463 *3; Raml, 2009 WL 3335929 *2; see also Fed.R.Civ.P. 26(c).

         Here, Mr. Wetch has shown Mr. Adee has special knowledge of facts pertaining to the defense of personal jurisdiction-namely his simultaneous holding of officer-level positions in both the parent and a subsidiary company. See Mills v. Wal-Mart Stores, Inc. 2007 WL 2298249 * 2 (W.D. Ark. Aug. 7, 2007) (holding it is sufficient if the witness has knowledge about any fact relevant to a claim or defense, not necessarily the plaintiff's core claim). Because C & F Holdings has placed personal jurisdiction into issue, facts related to that topic are relevant. Furthermore, Mr. Adee, by holding simultaneous officer-level positions in both the parent and subsidiary defendants herein, is the holder of unique facts regarding that issue.

         In addition, by serving written discovery and asking for this very information-and not receiving it-Mr. Wetch has exhausted other less burdensome avenues for obtaining ...

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