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Dickman v. Banner Life Insurance Co.

United States District Court, D. Maryland

September 29, 2017

RICHARD DICKMAN, et al. Plaintiffs,


          David Copperthnte United States Magistrate Judge.


         This case was referred to me for all discovery (ECF 75) on May 16, 2017. On August 28, 2017, Plaintiff filed a motion to compel discovery (ECF 92). On August 29, 2017, Defendant filed a motion to compel discovery (ECF 108). On September 5. 2017, Plaintiff requested a hearing on the combined motions (ECF 111). Those motions are now ripe for review. The matter has been fully briefed and no hearing is necessary. Local Rule 105.6. Therefore, the Plaintiffs' motion for a hearing is DENIED.

         The parties have each spent a considerable amount of time and expense in this discovery dispute. There is. however, a consistent underlying theme to each objection set forth in the opposing Motions to Compel. Plaintiffs allege Defendant has not provided information beyond the subject policies which Plaintiffs believe is discoverable. Defendant responds that not only is that information not relevant and overly burdensome to produce, but specific requests are also protected by a Maryland statutory privilege. Flipping to the other side. Defendant alleges Plaintiffs have failed to respond to both interrogatories and document production, alleging Plaintiffs have given pro forma responses and relied improperly on other sources to provide inadequate responses to Defendant's requests. Fortunately for both parties. Judge Bennett has suspended the discovery deadlines upon resolution of these disputes.

         Facts of the Case

         Plaintiffs are represented in their individual capacity and as potential class representatives in the remaining contracts and fraud claim against Defendant (ECF 1. 55, 56, 57, 59, 73). Plaintiffs purchased universal life insurance policies from Defendant in 2002 (Complaint at p. 4). The policies purchased provided a $300, 000.00 death benefit and no lapse guarantee, provided the policyholder continued to pay the monthly premium. Banner is a Maryland life insurance company located in Frederick, Maryland (Id. at 5). A detailed allegation of facts is contained at pp. 5- 9 of the Complaint. In a nutshell. Plaintiffs allege that Banner was engaged in an elaborate scheme in order to pay their stockholders and corporate officers huge dividends over a period of years. The scheme consisted of shifting debt to a number of alleged reinsurers located either offshore or in states with weak state oversight, thus showing the Maryland Insurance Agency ("MIA") a surplus of Banner funds with which to pay the huge dividends. Plaintiffs further allege that Banner consistently raised the cost of insurance ("COI") to its policy holders to force them to surrender their policies. Plaintiffs allege that this "hide the ball" game was designed and carried out to pay its shareholders huge dividends and to hide Banner's questionable solvency.

         Discovery in General

         As a general rule. Federal Rule 26(b) provides general provisions regarding the scope of discovery:

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).

         Discovery rules are to be accorded broad and liberal construction. See Herbert v. Lando, 441 U.S. 153, 177 (1979); Hickman v. Taylor, 329 U.S. 495, 507 (1947). Nevertheless, a court may "issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense ...."Fed. R. Civ. P. 26(c)(1). Protective orders pursuant to Rule 26(c) "should be sparingly used and cautiously granted." Medlin v. Andrew, 113 F.R.D. 650, 652 (M.D. N.C. 1987). "Normally, in determining good cause, a court will balance the interest of a party in obtaining the information versus the interest of his opponent in keeping the information confidential or in not requiring its production." UAI Tech., Inc. v. Valulech, Inc., 122 F.R.D. 188, 191 (M.D. N.C. 1988) (citation omitted).


         In balancing discovery disputes, the Court is guided by Fed.R.Civ.P. 26(b)(1) and pursuant to Appendix A, Guideline 1 of the Local Rules, the requirement "to facilitate the just, speedy and inexpensive conduct of discovery, in light of what is relevant to any party's claim or defense; proportional to what is at issue in a case and not excessively burdensome or expensive compared to the likely benefit of obtaining the discovery being sought." Local Rules, Appendix A, Guideline 1. The Court agrees with Defendant in its response that Plaintiffs cite to the prior Fed.R.Civ.P. 26 incorrectly in their argument. It is no longer valid to argue a party is entitled to discovery that may lead to discoverable information. Importantly here, the 2015 Amendment restores proportionality as an express component of discovery and deletes the former provision authorizing the Court to order discovery of any matter relevant to the subject matter involved in the action. Fed.R.Civ.P. 26.

         Central to resolving any discovery dispute is determining whether the information sought is within the permissible scope of discovery, as stated in Fed.R.Civ.P. 26(b)(1). Lynn v. Monarch Recovery Management. Inc.,285 F.R.D. 350, 355 (D.Md. 2012). Federal Rule of Civil Procedure 26(b)(2)(C) "cautions that all permissible discovery must be measured against the yardstick of proportionality." Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 523 (D.Md.2010). Under that rule, the court, acting sua sponte or at a party's request, "must limit the frequency or extent of discovery" if: (i) "the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive"; (ii) "the party seeking discovery has had ample opportunity to obtain the information by discovery in the action"; or (iii) "the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of ...

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