King v. Allstate Insurance

2004 NMCA 031, 86 P.3d 631, 135 N.M. 206
CourtNew Mexico Court of Appeals
DecidedJanuary 30, 2004
DocketNo. 23,130
StatusPublished
Cited by17 cases

This text of 2004 NMCA 031 (King v. Allstate Insurance) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
King v. Allstate Insurance, 2004 NMCA 031, 86 P.3d 631, 135 N.M. 206 (N.M. Ct. App. 2004).

Opinion

OPINION

KENNEDY, Judge.

{1} Allstate Insurance Company (Allstate) petitioned this Court to issue a writ of error to review the trial court’s order denying its motion for a protective order. We granted the petition in part to determine whether an order granting or denying a motion for a protective order is a collateral order and subject to review by writ of error. We hold that it is not. However, since we have exercised our discretionary jurisdiction to accept this appeal, we will reach the merits of the issues. We affirm the trial court’s decision to deny the protective order requested by Allstate.

FACTUAL AND PROCEDURAL BACKGROUND

{2} In 1996, Frederick King (Plaintiff) was a passenger in a car that was involved in a collision in Santa Fe County. The complaint alleges that the collision was caused by Eloy Rael, who was insured by Allstate.1 In addition, the driver of the car in which Plaintiff was a passenger was also insured by Allstate. In 1997, Plaintiff filed suit against Mr. Rael and Allstate. The complaint alleged that Allstate failed and refused to negotiate a good faith settlement of his claim.

{3} In his amended complaint, Plaintiff alleges that Alstate’s claims process was deliberately redesigned in the early 1990’s to fraudulently enhance corporate profits through the use of unfair, fraudulent, of deceptive claims handling practices. Plaintiff alleges that among those practices is the use of a process that is designed to put an unfairly low value on claims. Plaintiff specifically alleges that this internal value, which is the maximum amount for which an agent can settle the case, is less than the value Alstate puts on claims in its communications with regulatory agencies. The amended complaint alleges in considerable detail the process used to develop an internal value for each claim and the various tactics used to force claimants to settle for the unfairly low amount. It specifically alleges that as part of this plan, Alstate developed personnel evaluation standards that “reward and advance Alstate employees who aggressively assist and promote Alstate’s unlawful scheme.” This ease concerns the discovery of the Progress Development Summary (PDS) reports used annually by Alstate to evaluate its employees.

{4} In October 2000, Alstate filed a motion for a protective order under Rule 1-026(C) NMRA 2003. The motion asked that Plaintiff be denied discovery of the PDS reports. The motion argued, among other things, that ordering production of personnel files would be an invasion of privacy of Al-state employees. In addition, it asserted that the files were irrelevant, not likely to lead to the discovery of admissible evidence, and were “private, privileged and confidential.”

{5} In response, Plaintiff pointed out that what he was seeking in discovery was not the personnel files but the PDS reports of Rita Finley (Ms. Finely) and Hal Palmer (Mr. Palmer), two Alstate employees who handled Plaintiffs claim. Plaintiff explained that the PDS would show, among other things, how the amount paid on claims related to the amount targeted for each claim referred to by the parties as a severity goal. The PDS would also show how much the employee saved Alstate by underpaying or not paying certain claims. Plaintiff argued that Allstate failed to establish good cause for a protective order as required by pointing to a “ ‘clearly defined and serious injury’ ” that would be suffered in the absence of the protective order.

{6} Attached to Plaintiffs response was the affidavit of Linda Brown (Ms. Brown). Ms. Brown worked for Alstate from September 1987 until mid-March 1999. Ms. Brown stated that each Market Claim Office (MCO) had severity goals set by Alstate’s home office. For part of the time Ms. Brown worked for Alstate, the severity goals were put in writing in the PDS reports. Later, the severity goals were not stated in the PDS reports, but were communicated orally. However, agents were still evaluated on their ability to meet the severity goals set by Alstate’s home office. In addition, according to Ms. Brown, the market claim manager (MCM) and the various unit claims managers received reports comparing the monthly and yearly severity figures for each claims representative.

{7} Aso attached was the deposition of Carla Kline (Ms. Kline). At the time her deposition was taken, Ms. Kline was working for Alstate as a Frontline Process Expert. Ms. Kline testified that severity goals were communicated to her and to the MCM, and that the MCM received bonuses.

{8} Ultimately, the trial court ruled that Alstate had not shown good cause either for withholding the PDS reports or for the issuance of a protective order restricting the dissemination of the PDS reports. Thus, the trial court ordered Alstate to produce the PDS reports in their entirety without redaction. Alstate did not attempt to appeal this order.

{9} Subsequently, Plaintiff requested and Alstate voluntarily produced the PDS reports of a number of other adjusters and supervisors. In addition, Alstate identified Jose Cornejo (Mr. Cornejo) as the Abuquerque MCM and Ron Bonner (Mr. Bonner) as the Special Investigations Unit (SIU) manager who supervised Mr. Palmer. However, Alstate objected to producing the PDS reports for Mr. Cornejo and Mr. Bonner on the ground that they were not relevant or likely to lead to the discovery of relevant evidence because Mr. Cornejo and Mr. Bonner do not handle individual claims and their compensation is not based on the handling of individual claims.

{10} Plaintiff filed a motion to compel production of the PDS reports for Mr. Bonner and Mr. Cornejo. Plaintiffs motion alleged that, based on materials already received during discovery, the corporate severity goals for each year would be set out in detail in the PDS reports for these managers. In particular, Plaintiff alleged that the discovery material showed that the SIU was treated as a profit center and that the PDS reports would indicate the goals set for referring claims to the SIU. Plaintiff also argued that the relevance objection raised by Allstate must give way to the liberal discovery allowed under the discovery rules.

{11} In response, Allstate again asserted the privacy rights of Mr. Bonner and Mr. Cornejo, as well as its own alleged right of self-critical analysis. In addition, Allstate continued to argue its relevance objection. Ultimately, Allstate moved for a protective order because, in its view, the information was not relevant and was private and confidential. Allstate did not attach a proposed protective order, but requested an order that would limit the use of the PDS reports of Mr. Bonner and Mr. Cornejo to this case and prohibit the dissemination of the PDS reports. Allstate argued that it had shown good cause for a protective order because the PDS reports for Mr. Cornejo and Mr. Bonner were not relevant and because of the strong privacy interest an employee has in his or her personnel file. The trial court ordered Allstate to produce the PDS reports in question and denied Allstate’s request for a protective order.

{12} Allstate then petitioned this Court for a writ of error to review the trial court’s order. The petition did not mention the proceedings in connection with the PDS reports of Mr. Palmer and Ms. Finley.

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Cite This Page — Counsel Stack

Bluebook (online)
2004 NMCA 031, 86 P.3d 631, 135 N.M. 206, Counsel Stack Legal Research, https://law.counselstack.com/opinion/king-v-allstate-insurance-nmctapp-2004.