1 2 3 4 5 6 9 10 AMERICAN CLAIMS MANAGEMENT, Case No.: 18-CV-925 JLS (MDD) INC., 11 ORDER OVERRULING Plaintiff, 12 PLAINTIFF’S OBJECTION TO v. DISCOVERY ORDER 13 ALLIED WORLD SURPLUS LINES 14 INSURANCE COMPANY (f/k/a Darwin (ECF No. 41) 15 Select Insurance Company), 16 Defendant. 17 18 Presently before the Court is Plaintiff American Claims Management’s Objection to 19 Magistrate Judge Berg’s Discovery Order (“Obj.,” ECF No. 41). Also before the Court is 20 Defendant Allied World Surplus Lines Insurance Company’s Opposition to (“Opp’n,” ECF 21 No. 45) and Plaintiff’s Reply in Support of (“Reply,” ECF No. 48) the Objection. Plaintiff 22 requests that the Court set aside Magistrate Judge Berg’s December 31, 2018 Order (the 23 “Discovery Order, ECF No. 40) as it pertains to his finding “that compensation paid to 24 [Alan] Jampol is irrelevant, and clarify that ACM is entitled to further inquire of Jampol’s 25 compensation from Allied World and seek through discovery the nature and extent of these 26 engagements, including the value of them.” Obj. at 5. After reviewing the Discovery 27 Order, the Parties’ arguments, and the law, the Court OVERRULES Plaintiff’s objection. 28 /// 2 This case concerns an insurance dispute between Plaintiff American Claims 3 Management, a third-party insurance claim administrator, and Defendant Allied World 4 Surplus Lines Insurance Company, Plaintiff’s insurer. The facts that give rise to this 5 dispute have been detailed in other orders, including Judge Berg’s Discovery Order at issue 6 here. See Discovery Order at 1–3. The Court incorporates by reference that factual 7 background. 8 Relevant to this motion, Plaintiff has raised a breach of Defendant’s duty to defend. 9 Plaintiff contends that the attorney appointed by Defendant, Alan Jampol of Jampol Zimet 10 LLP, caused excess damages as a result of his failed assignment scheme. Plaintiff argues 11 that Defendant is liable for Jampol’s conduct because Defendant controlled his conduct. 12 The present dispute arises from Plaintiff’s First Set of Requests for Production of 13 Documents and Things (“RFP”). See Obj. at 7. In RFP 10, Plaintiff requested Defendant 14 to produce “Documents reflecting all compensation—whether for attorneys’ fees, defense 15 costs, or otherwise—paid by you [Allied World] to Jampol relating to you or any insured.” 16 Discovery Order at 8. Defendant objected that the request was “vague, overbroad, 17 burdensome, disproportionate to the needs of this case, and not reasonably calculated to 18 lead to admissible evidence.” Id. at 8–9. Plaintiff was unsatisfied with this response. See 19 Obj. at 7. Unable to come to a resolution through meet and confer attempts, the Parties 20 filed a Joint Motion for Determination of Discovery Dispute. Id. at 7–8. 21 Magistrate Judge Berg decided the discovery dispute on December 31, 2018. 22 Regarding RFP 10, Judge Berg denied Plaintiff’s request to compel discovery “[f]or the 23 same reasons set forth in the Court’s analysis with respect to RFP No. 9.” Id. Plaintiff’s 24 RFP 9 sought “[d]ocuments reflecting all compensation—whether for attorney’s fees, 25 defense costs, or otherwise—paid by you to Jampol relating to [Plaintiff].” Id. at 7. Judge 26 Berg determined that although “[i]nformation regarding attorneys’ fees and defense costs 27 paid with respect to this Complaint seeks relevant information proportional to the needs of 28 this case[,] . . . information regarding any sums paid to the attorney Jampol on any case 1 ever worked on ‘relating to [Plaintiff]’ is neither relevant nor proportional to the needs of 2 this case.” Id. at 8 (citing Fed. R. Civ. P. 26(b)(1)). Two weeks after the Discovery Order 3 issued, Plaintiff filed its Objection. 5 A party may object to a non-dispositive pretrial order of a magistrate judge within 6 fourteen days after service of the order. Fed. R. Civ. P. 72(a). The magistrate judge’s order 7 will be upheld unless it is “clearly erroneous or is contrary to law.” Id.; see 28 U.S.C. 8 § 636(b)(1)(A). The “clearly erroneous” standard of review applies to factual findings and 9 discretionary decisions made concerning nondispositive pretrial discovery. See F.D.I.C. v. 10 Fid. & Deposit Co. of Md., 196 F.R.D. 375, 378 (S.D. Cal. 2000). The “clearly erroneous” 11 standard is “significantly deferential, requiring a definite and firm conviction that a mistake 12 has been committed.” Concrete Pipe & Prods. of Cal., Inc., v. Constr. Laborers Pension 13 Tr. of S. Cal., 508 U.S. 602, 623 (1993) (internal quotation marks omitted). 15 Plaintiff contends Judge Berg’s decision about the relevancy of compensation paid 16 by Defendant to Jampol and his firm was clearly erroneous because “(1) [Defendant]’s 17 control and direction over Jampol is an important question for [Plaintiff]’s claims in this 18 litigation, and (2) Jampol’s financial relationship with Allied World is highly probative of 19 the control and direction [Defendant] had over Jampol.” Obj. at 12. 20 Defendant contends the request was neither relevant nor proportional. Opp’n at 15. 21 Defendant contends that for Plaintiff to prevail in its claim, it must show Jampol was a de 22 facto employee of Defendant and that the compensation paid to Jampol for other, unrelated 23 matters is not relevant to this determination. Id. 24 Federal Rule of Civil Procedure 26 generally allows for broad discovery regarding 25 “any nonprivileged matter that is relevant to any party’s claim or defense.” Fed. R. Civ. P. 26 26(b)(1). “District courts have broad discretion in determining relevancy for discovery 27 purposes.” Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005) 28 (citing Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002)). 1 The Court finds Judge Berg’s conclusion, that information relating to Jampol’s 2 compensation paid by Defendant for unrelated matters is irrelevant, is neither clearly 3 erroneous nor contrary to law. Under California law, an “attorney hired by the insurer to 4 represent the insured is an independent contractor” and, thus, “the insurer is not vicariously 5 liable for the negligence” of the appointed attorney. Travelers Ins. Co. v. Lesher, 187 Cal. 6 App. 3d 169, 191 (1986). Despite this general rule, Plaintiff argues Defendant is 7 vicariously liable for Jampol’s conduct because an insurer can be liable for an appointed 8 attorney’s conduct if the attorney is “controlled by the insurer.” Obj. at 12–13 (citing id.); 9 see also Merrit v. Reserve Ins. Co., 34 Cal. App. 3d 858, 880 (1973) (finding no vicarious 10 liability for insurer where appointed attorney was “not a servant of the defendants but an 11 independent contractor”). The only question the Court must answer to determine this 12 claim, according to Plaintiff, is whether Jampol was subject to the “subject to the control 13 and direction” of Defendant. See Merrit, 34 Cal. App. 3d at 880. 14 For the information requested to be relevant, Plaintiff must show it is related to the 15 claim at issue.
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1 2 3 4 5 6 9 10 AMERICAN CLAIMS MANAGEMENT, Case No.: 18-CV-925 JLS (MDD) INC., 11 ORDER OVERRULING Plaintiff, 12 PLAINTIFF’S OBJECTION TO v. DISCOVERY ORDER 13 ALLIED WORLD SURPLUS LINES 14 INSURANCE COMPANY (f/k/a Darwin (ECF No. 41) 15 Select Insurance Company), 16 Defendant. 17 18 Presently before the Court is Plaintiff American Claims Management’s Objection to 19 Magistrate Judge Berg’s Discovery Order (“Obj.,” ECF No. 41). Also before the Court is 20 Defendant Allied World Surplus Lines Insurance Company’s Opposition to (“Opp’n,” ECF 21 No. 45) and Plaintiff’s Reply in Support of (“Reply,” ECF No. 48) the Objection. Plaintiff 22 requests that the Court set aside Magistrate Judge Berg’s December 31, 2018 Order (the 23 “Discovery Order, ECF No. 40) as it pertains to his finding “that compensation paid to 24 [Alan] Jampol is irrelevant, and clarify that ACM is entitled to further inquire of Jampol’s 25 compensation from Allied World and seek through discovery the nature and extent of these 26 engagements, including the value of them.” Obj. at 5. After reviewing the Discovery 27 Order, the Parties’ arguments, and the law, the Court OVERRULES Plaintiff’s objection. 28 /// 2 This case concerns an insurance dispute between Plaintiff American Claims 3 Management, a third-party insurance claim administrator, and Defendant Allied World 4 Surplus Lines Insurance Company, Plaintiff’s insurer. The facts that give rise to this 5 dispute have been detailed in other orders, including Judge Berg’s Discovery Order at issue 6 here. See Discovery Order at 1–3. The Court incorporates by reference that factual 7 background. 8 Relevant to this motion, Plaintiff has raised a breach of Defendant’s duty to defend. 9 Plaintiff contends that the attorney appointed by Defendant, Alan Jampol of Jampol Zimet 10 LLP, caused excess damages as a result of his failed assignment scheme. Plaintiff argues 11 that Defendant is liable for Jampol’s conduct because Defendant controlled his conduct. 12 The present dispute arises from Plaintiff’s First Set of Requests for Production of 13 Documents and Things (“RFP”). See Obj. at 7. In RFP 10, Plaintiff requested Defendant 14 to produce “Documents reflecting all compensation—whether for attorneys’ fees, defense 15 costs, or otherwise—paid by you [Allied World] to Jampol relating to you or any insured.” 16 Discovery Order at 8. Defendant objected that the request was “vague, overbroad, 17 burdensome, disproportionate to the needs of this case, and not reasonably calculated to 18 lead to admissible evidence.” Id. at 8–9. Plaintiff was unsatisfied with this response. See 19 Obj. at 7. Unable to come to a resolution through meet and confer attempts, the Parties 20 filed a Joint Motion for Determination of Discovery Dispute. Id. at 7–8. 21 Magistrate Judge Berg decided the discovery dispute on December 31, 2018. 22 Regarding RFP 10, Judge Berg denied Plaintiff’s request to compel discovery “[f]or the 23 same reasons set forth in the Court’s analysis with respect to RFP No. 9.” Id. Plaintiff’s 24 RFP 9 sought “[d]ocuments reflecting all compensation—whether for attorney’s fees, 25 defense costs, or otherwise—paid by you to Jampol relating to [Plaintiff].” Id. at 7. Judge 26 Berg determined that although “[i]nformation regarding attorneys’ fees and defense costs 27 paid with respect to this Complaint seeks relevant information proportional to the needs of 28 this case[,] . . . information regarding any sums paid to the attorney Jampol on any case 1 ever worked on ‘relating to [Plaintiff]’ is neither relevant nor proportional to the needs of 2 this case.” Id. at 8 (citing Fed. R. Civ. P. 26(b)(1)). Two weeks after the Discovery Order 3 issued, Plaintiff filed its Objection. 5 A party may object to a non-dispositive pretrial order of a magistrate judge within 6 fourteen days after service of the order. Fed. R. Civ. P. 72(a). The magistrate judge’s order 7 will be upheld unless it is “clearly erroneous or is contrary to law.” Id.; see 28 U.S.C. 8 § 636(b)(1)(A). The “clearly erroneous” standard of review applies to factual findings and 9 discretionary decisions made concerning nondispositive pretrial discovery. See F.D.I.C. v. 10 Fid. & Deposit Co. of Md., 196 F.R.D. 375, 378 (S.D. Cal. 2000). The “clearly erroneous” 11 standard is “significantly deferential, requiring a definite and firm conviction that a mistake 12 has been committed.” Concrete Pipe & Prods. of Cal., Inc., v. Constr. Laborers Pension 13 Tr. of S. Cal., 508 U.S. 602, 623 (1993) (internal quotation marks omitted). 15 Plaintiff contends Judge Berg’s decision about the relevancy of compensation paid 16 by Defendant to Jampol and his firm was clearly erroneous because “(1) [Defendant]’s 17 control and direction over Jampol is an important question for [Plaintiff]’s claims in this 18 litigation, and (2) Jampol’s financial relationship with Allied World is highly probative of 19 the control and direction [Defendant] had over Jampol.” Obj. at 12. 20 Defendant contends the request was neither relevant nor proportional. Opp’n at 15. 21 Defendant contends that for Plaintiff to prevail in its claim, it must show Jampol was a de 22 facto employee of Defendant and that the compensation paid to Jampol for other, unrelated 23 matters is not relevant to this determination. Id. 24 Federal Rule of Civil Procedure 26 generally allows for broad discovery regarding 25 “any nonprivileged matter that is relevant to any party’s claim or defense.” Fed. R. Civ. P. 26 26(b)(1). “District courts have broad discretion in determining relevancy for discovery 27 purposes.” Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005) 28 (citing Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002)). 1 The Court finds Judge Berg’s conclusion, that information relating to Jampol’s 2 compensation paid by Defendant for unrelated matters is irrelevant, is neither clearly 3 erroneous nor contrary to law. Under California law, an “attorney hired by the insurer to 4 represent the insured is an independent contractor” and, thus, “the insurer is not vicariously 5 liable for the negligence” of the appointed attorney. Travelers Ins. Co. v. Lesher, 187 Cal. 6 App. 3d 169, 191 (1986). Despite this general rule, Plaintiff argues Defendant is 7 vicariously liable for Jampol’s conduct because an insurer can be liable for an appointed 8 attorney’s conduct if the attorney is “controlled by the insurer.” Obj. at 12–13 (citing id.); 9 see also Merrit v. Reserve Ins. Co., 34 Cal. App. 3d 858, 880 (1973) (finding no vicarious 10 liability for insurer where appointed attorney was “not a servant of the defendants but an 11 independent contractor”). The only question the Court must answer to determine this 12 claim, according to Plaintiff, is whether Jampol was subject to the “subject to the control 13 and direction” of Defendant. See Merrit, 34 Cal. App. 3d at 880. 14 For the information requested to be relevant, Plaintiff must show it is related to the 15 claim at issue. The Court notes that Plaintiff has not offered any standard to determine the 16 question of direction and control in this context. See Reply at 8–10 (rejecting common law 17 standard to determine employee’s status). Without a standard, the Court cannot assess 18 whether the information sought is relevant to any factor the court may consider. But even 19 if the Court took a broad view of the standard and “consider[ed] the ‘totality of 20 circumstances’ that reflect upon the nature of the work relationship of the parties,” see 21 Vernon v. State of California, 116 Cal. App. 4th 114, 124 (2004) (determining whether an 22 organization was a joint employer)—a test Plaintiff argues is not applicable—the Court 23 concludes that past compensation for other unrelated insurance matters would be irrelevant 24 to its determination of whether Defendant controlled Jampol during the underlying 25 litigation. Indeed, Plaintiff has not shown—and the Court has not found—any case law 26 showing that past compensation for unrelated matters is relevant to the question of control 27 in any context, let alone to determine an insurer’s control over an appointed attorney. Thus, 28 Plaintiff has not shown the information is relevant to its claim. 2 For these reasons, the Court OVERRULES Plaintiff's Objection to Magistrate 3 || Judge Berg’s December 31, 2018 Discovery Order. 5 ||Dated: June 24, 2020 . tt 6 ja Janis L. Sammartino 7 United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28