William Reed and Jennifer Reed, a married couple v. State Farm Fire & Casualty Company, and State Farm Fire and Casualty Company a foreign insurance corporation

• Court: District Court, E.D. Washington
• Decided: December 1, 2025
• Docket: 2:25-cv-00068
• Status: Unknown

Opinion

1 Dec 01, 2025 2 SEAN F. MCAVOY, CLERK 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF WASHINGTON 8 WILLIAM REED and JENNIFER REED, 9 a married couple, 10 No. 2:25-CV-00068-RLP 11 Plaintiffs, ORDER GRANTING MOTION TO 12 v. COMPEL IN PART AND 13 DENYING IN PART AND STATE FARM FIRE & CASUALTY GRANTING MOTION FOR 14 COMPANY, and STATE FARM FIRE PROTECTIVE ORDER IN PART AND CASUALTY COMPANY a foreign 15 insurance corporation, 16 17 Defendants. 18 Before the Court are Plaintiffs William and Jennifer Reed’s First Motion to 19 20 Compel, ECF No. 14, and Defendant State Farm’s Motion for Protective Order, 21 ECF No. 20. The motions were heard by videoconference on November 25, 2025. 22 Attorney Marshall Casey appeared for the Plaintiffs; attorney Terri Sutton 23 24 appeared on behalf of Defendant State Farm. 25 This discovery dispute involves three categories of information: (1) State 26 Farm’s claims handling manuals, training materials, and documents describing 27 28 processes and procedures for adjusting homeowner claims from January 1, 2010 1 through March 1, 2025; (2) personnel records reflecting performance evaluations, 2 job changes, or bonuses for the adjusters and managers involved in handling the 3 4 Reeds’ claim; and (3) contracts and agreements between State Farm and a 5 contractor which supplied adjusters for the claim. For the reasons set forth below, 6 the Court finds that the foregoing are discoverable categories of information, but 7 8 that limitations are appropriate. Good cause exists to grant a protective order with 9 revisions. 10 FACTS/BACKGROUND 11 12 State Farm sold the Reeds an insurance policy on their home. ECF No. 1, ¶ 13 2.1. On March 24, 2024, the Reeds’ home burned in a fire, causing significant 14 damage, and the Reeds made a claim with State Farm the following day. Id. at ¶ 15 16 2.12, 2.13. On July 11, 2024, State Farm completed its initial loss investigation and 17 informed the Reeds that the estimated repairs were $520,111.32 with an actual 18 cash value of $500,024.86. Id. at ¶ 2.16. Employees of Renfroe, a company 19 20 contracted by State Farm to provide adjusters, worked on behalf of State Farm in 21 the adjustment of the Reeds claim. ECF No. 16 at 9. State Farm paid the Reeds the 22 actual cash value in late July 2024. Id. at ¶ 2.17. The Reeds believed the amount 23 24 was insufficient and by August 5, 2024, the Reeds notified State Farm that their 25 preferred contractor estimated repairs at $1,418,502.07. Id. at ¶ 2.21. State Farm 26 conducted further investigation and on September 19, 2024, State Farm updated its 27 28 repair estimate to $999,723.95. Id. at ¶ 2.22, 2.26. 1 Based on the updated estimate, State Farm paid the Reeds an additional 2 $409,511.88, the limits of the dwelling coverage. Id. at ¶ 2.26. Additionally, the 3 4 policy included an increased dwelling limit of $186,843 would be paid when the 5 repairs were complete. Id. at ¶ 2.27. State Farm indicated that the increased 6 dwelling limit amount was at risk if the Reeds did their repairs as estimated by 7 8 their contractor. Id. State Farm took the position that the lower estimate was 9 appropriate because trusses and other portions of the dwelling could be salvaged. 10 Id. at ¶ 2.28. 11 12 In November 2024, the Reeds hired their own engineer for an opinion on 13 salvaging the trusses and other portions of the home at a cost of $26,014.51. Id. at 14 ¶ 2.29, 2.30. The Reeds notified State Farm they intended to move forward with 15 16 demolition and construction, so any further inspection by State Farm would need to 17 occur immediately. Id. at ¶ 2.31. State Farm responded that moving forward with 18 demolition could prejudice State Farm’s ability to investigate. Id. at ¶ 2.32. The 19 20 Reeds allege State Farm’s actions and delays prevented them from commencing 21 construction until December 2024, resulting in added costs, stress, and mental 22 anguish. Id. at ¶ 2.34. 23 24 The Reeds sued State Farm for (1) breach of contract, (2) bad faith, (3) 25 negligent claims handling, (4) violation of the Consumer protection Act, and (5) 26 violation of the Insurance Fair Conduct Act. The Reeds seek relief in the form of 27 28 damages, interest, exemplary damages, and attorney fees and costs. 1 On April 30, 2025, the Reeds served nine requests for production. ECF No. 2 15 at 2. On June 2, State Farm produced responsive documents with objections, 3 4 answers, and responses. ECF No. 17 at 4. 5 State Farm initially proposed a protective order on May 7, 2025. The parties 6 corresponded regarding a possible protective order and other discovery issues from 7 8 May to September and participated in an informal discovery conference with the 9 Court on September 25, 2025. ECF No. 17. 10 On October 6, 2025, the Reeds filed the present motion to compel responses 11 12 to the following three Requests for Production: (1) State Farm’s claims handling 13 manuals, training materials, and documents describing processes and procedures 14 for adjusting homeowner claims from January 1, 2010 through March 1, 2025 15 16 (RFP 4); (2) personnel records reflecting performance evaluations, job changes, or 17 bonuses for the adjusters and managers involved in handling this claim (RFP 6); 18 and (3) contracts and agreements between State Farm and Renfroe (RFP 9). ECF 19 20 No. 14. 21 State Farm objected to Requests for production 4, 6, and 9 and filed a 22 Motion for a Protective Order. ECF Nos. 16, 20. In support, State Farm filed 23 24 declarations from John Carter (ECF No. 22, 37), Michael Gardner (ECF No. 23), 25 Kevin Mosby (ECF No. 24), Philip Rolfs (ECF No. 25), and Sally Rauschendorfer 26 (ECF No. 26, 36). 27 28 1 Mr. Carter is employed by State Farm as a Process Manager and has 2 knowledge of the policies and procedures State Farm provides its claims personnel 3 4 to guide them in the adjustment of insurance claims. ECF No. 22 at 2. He indicates 5 that documents responsive to the Reeds’ Request for Production, State Farm’s 6 Standard Claim Processes (SCPs) and Jurisdictional References (JRs,) are 7 8 proprietary and confidential. The SCPs and JRs were developed through 9 substantial monetary and time investments and are not generally known or 10 ascertainable by others, especially competitors. State Farm has developed its own 11 12 industry policies which are unique to State Farm rather than relying on standard 13 Insurance Service Office (ISO) forms. State Farm maintains confidentiality of its 14 unique SCPs and JRs by requiring employees to annually sign a Code of Conduct 15 16 which requires confidentiality and by seeking to limit access to SCPs and JRs by 17 requiring a protective order or confidentiality agreement when they are required to 18 be produced in litigation. According to Mr. Carter, State Farm has invested 19 20 enormous amount of time and expense in developing the SCPs and JRs which 21 cannot be quantified or monetized. As an example, he worked as part of team to 22 review and update just one Jurisdictional Reference, a process which took 23 24 approximately one year to complete. ECF No. 37. 25 Ms. Rauschendorfer is a Claim Consultant in State Farm’s Property and 26 Casualty Claims Consulting Services Department. She has knowledge of the 27 28 Operation Guides (OGs) which contain the claims practices, procedures, and 1 standards which guide the handling of property insurance claims by State Farm. 2 ECF No. 26. She indicates that some OGs responsive to Request for Product No. 4 3 4 are designated as confidential or trade secret. Ms. Rauschendorfer identified 5 numerous OGs which, if disclosed, would likely put State Farm at a competitive or 6 business disadvantage. According to Ms. Rauschendorfer, State Farm has incurred 7 8 expense and devoted personnel resources to researching, developing, and updating 9 these OGs which are unique to State Farm. Like the SCPs and JRs, confidentiality 10 of the OGs is maintained through the employee Code of Conduct and seeking 11 12 protective orders or confidentiality agreements when the OGs are disclosed in 13 litigation. The OGs reflect considerable and ongoing efforts made by State Farm to 14 develop and implement claims-handling processes that helps State Farm attract and 15 16 retain customers. The confidential OGs are update at least every three years, if not 17 more frequently, and review of just one OG took a team several months to 18 complete. ECF No. 36. 19 20 Mr. Mosby is a Staff Consultant at State Farm, having previously served as a 21 Claim Specialist and Claim Team Manager as well as other positions. ECF No. 24. 22 Mr. Mosby’s Declaration contains information similar to Ms. Rauschendorfer’s 23 24 Declarations regarding a different group of OGs. The OGs describe processes and 25 programs unique to State Farm which took significant time and resources to 26 develop. ECF No. 24. 27 28 1 Ms. Gardner is a Human Resources Director at State Farm and has 2 knowledge of State Farm’s human resources procedures, compensation, employee 3 4 performance evaluations, and similar. ECF No. 23. According to Ms. Gardner, 5 State Farm’s performance assessment processes are treated as proprietary and 6 confidential. She notes employees have an expectation of privacy regarding their 7 8 personal information and State Farm honors this expectation by treating 9 performance assessment as proprietary and confidential. Accordingly, State Farm 10 limits access and control to such documents, and State Farm employees are 11 12 required to safeguard such information from unauthorized use, even if they depart 13 the company. ECF No. 23. 14 Mr. Rolf is a State Farm Procurement Category Manager in the Purchasing 15 16 Department and assists with negotiation of contracts, including claims adjusting 17 service providers such as Renfroe. ECF No. 25. Mr. Rolf indicates that State 18 Farm’s position in the marketplace would be damaged if the Renfroe contract 19 20 becomes public. Because State Farm is prominent in the marketplace, it has the 21 ability to negotiate favorable contract terms, which might be jeopardized if 22 Renfroe contract terms and pricing were publicly available. ECF No. 25. 23 24 ANALYSIS 25 1. Scope of Discovery 26 Under Fed. R. Civ. P. 26(b)(1) “[p]arties may obtain discovery regarding 27 28 any nonprivileged matter that is relevant to any party’s claim or defense. … 1 Relevant information need not be admissible at trial if the discovery appears 2 reasonably calculated to lead to the discovery of admissible evidence.” 3 4 While discovery is broad, it is not boundless. “Discovery of matter not ‘reasonably 5 calculated to lead to the discovery of admissible evidence’ is not within the scope 6 of Rule 26(b)(1).” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n.12 7 8 (1978). 9 The Court finds that Plaintiffs are entitled to the following:1 10 Claims handling materials and training materials (RFP No. 4): As 11 12 recognized by State Farm, Defendants must produce materials pertinent to the 13 State of Washington that were in place from the time of Plaintiffs’ claim to the 14 present. Defendants must also produce any additional claims handling materials 15 16 relied upon by individuals responsible for investigation, evaluation, and handling 17 of Plaintiffs’ claim. Plaintiffs have not presented any non-speculative theory that 18 materials outside this scope would lead to the discovery of admissible evidence. 19 20 Personnel Files (RFP No. 6): Defendant must Produce “(1) the criteria by 21 which the performance of any and all persons responsible for investigation, 22 evaluation and handling of Plaintiffs’ claim was evaluated; (2) the evaluations or 23 24 reviews, including any disciplinary action, of any and all persons responsible for 25

26 1 The issue of whether the disclosed materials shall be subject to a protective 27 order is a separate issue, addressed below. 28 1 investigation, evaluation and handling of the claim; (3) the compensation for any 2 and all persons responsible for investigation, evaluation and handling of the claim, 3 4 including but not limited to the criteria by which bonus or other special or 5 incentive compensation is determined; (4) the training of any and all persons 6 responsible for investigation, evaluation and handling of Plaintiffs’ claim.” Knaack 7 8 v. Allied World Specialty Ins. Co., 2024 WL 1049819, at *2 (W.D. Wash. Mar. 11, 9 2024). Plaintiffs have not presented any non-speculative theory that evidence 10 pertaining to a broader scope of personnel would lead to the discovery of 11 12 admissible evidence. 13 Contract with Renfroe (RFP No. 9): Defendant must produce the contract or 14 contracts pertinent to the State of Washington that were in place at the time of 15 16 Plaintiffs’ claim to the present. Plaintiffs have presented a non-speculative theory 17 that the terms of the contract a relevant to issues of bias and the qualifications of 18 persons responsible for the investigation, evaluation, and handling of Plaintiffs’ 19 20 claim. 21 2. Protective Order 22 Discoverable information is “presumptively public.” Fierro Cordero v. 23 24 Stemilt AG Services LLC, 142 F.4th 1201, 1207 (9th Cir. 2025), quoting San Jose 25 Mercury News, Inc. v. U.S. Dist. Ct.-N. Dist. (San Jose), 187 F.3d 1096, 1103 (9th 26 Cir. 1999). Nevertheless, in order to “protect a party or person from annoyance, 27 28 embarrassment, oppression, or undue burden or expense,” the Court can issue a 1 protective order, restricting the public dissemination of discovery materials. Fed. 2 R. Civ. P. 26(c)(1). A party seeking a protective order has the burden of 3 4 establishing good cause in the form of good cause that would arise from public 5 disclosure. Fierro Cordero, 142 F.4th at 1207. If the Court finds a party has 6 satisfied this initial burden, the Court must balance the public and private interests 7 8 and determine whether less restrictive alternatives, such as redaction, can 9 ameliorate concerns of harm. In re Roman Catholic Archbishop of Portland, 661 10 F.3d 417, 425 (9th Cir. 2011). 11 12 Claims handling materials and training materials (RFP No. 4): Defendants 13 have shown sufficient evidence that the identified materials either qualify as trade 14 secrets or confidential research, development, or commercial information. For 15 16 example, as indicated in the Declarations of John Carter and Sally Rauschendorfer, 17 State Farm has developed unique claims processes, policies, guidelines, forms, and 18 other materials based on substantial investments of time and personnel. State Farm 19 20 has taken steps to ensure certain matters related claims handling and training 21 remain confidential by requiring its employees to annually agree to keep its 22 processes and policies private and confidential. 23 24 Federal courts in this circuit have recognized that, in this circumstance, there 25 is good cause for issuance of a protective order. See, e.g., Haldiman v Cont’l Cas. 26 Co., 2014 WL 584305 (D Ariz. 2014); Takata v Hartford, 283 FRD 617, 621 27 28 (EDWA 2012). The value of these materials is derived precisely from the fact that 1 the information contained therein is not public. Thus, the private interests in 2 preventing disclosure are strong. Redaction of discrete information from the 3 4 materials at issue does not appear feasible. Thus, the Court is satisfied that the 5 materials must be provided pursuant to a protective order that prohibits further 6 dissemination of the materials to persons outside the current litigation. 7 8 The Court’s determination of this issue is without prejudice. Should further 9 discovery reveal that State Farm has not held the documents at issue in confidence 10 or that the materials contain nothing more than general best practices that would be 11 12 obvious to competitors, then the Court will reconsider whether the documents 13 should be subject to a protective order. See, e.g., McCallum v. Allstate, 149 Wn. 14 App. 412 (2009). 15 16 The Court further determines that State Farm’s interest in protecting the 17 aforementioned discovery from disclosure to competitors by placing reasonable 18 restrictions on access to the materials by collateral litigants. See Foltz v. State 19 20 Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1132 (9th Cir. 2003). Counsel for a non- 21 party litigant may obtain a copy of the disclosed materials by submitting an 22 application to this Court, verifying that counsel is currently involved in litigation 23 24 against State Farm in state or federal court. The application shall specify the court 25 where litigation is pending and the cause number. Disclosure of discovery to a 26 collateral litigant shall be subject to a protective order, prohibiting dissemination of 27 28 the discovery materials to any party or entity not involved in the specified court 1 case. Should State Farm object to a disclosure request from a collateral litigant, the 2 objection and supporting argument shall be filed within 14 days of the date of 3 4 request.2 5 Personnel files (RFP 6): Personnel information is often sensitive and must 6 be handled with care. See Reagan-Touhy v. Walgreen Co. 526 F.3d 641 (10th Cir. 7 8 2008). Particularly because of the potential for dissemination over the internet, 9 public access to an employee’s personal, health, or family information can subject 10 the employee to identity theft, harassment, or malicious disinformation. Given the 11 12 nature of this case, there is no public interest in personal employee information that 13 may be disclosed during discovery. Thus, discovery in this case shall be redacted 14 to eliminate irrelevant or personally identifying information such as: social security 15 16 17 2 The Court declines to require a that collateral litigant make a preliminary 18 showing of relevance, as contemplated by Foltz. See Foltz, 331 F.3d at 1132-33. 19 Such a requirement would be inconsistent with the rule recognized in Fierro 20 21 Cordero that discovery may be accessed by the public, absent a showing of good 22 cause for protection. Fierro Cordero, 142 F.4th at 1207. Here, the only good cause 23 for limiting disclosure is the risk to State Farm should disclosure be made to a 24 25 competitor. That risk can be alleviated by ensuring that disclosure is limited to an 26 attorney representing a litigant in a pending case against State Farm who will be 27 subject to a protective order. 28 1 numbers, dates of birth, tax information, home addresses, family member 2 information, and health care or reasonable accommodation information. In 3 4 addition, to the extent private employee information is discoverable and does not 5 meet the aforementioned criteria for redaction, it shall be restricted to 6 dissemination to persons involved in the current litigation. Private employee 7 8 information is defined to include compensation details and employee performance 9 or evaluation materials. 10 Contract with Renfroe (RFP 9): Defendant has alleged that public disclosure 11 12 of the financial contract with Renfroe would place it at a competitive disadvantage 13 with other insurance companies. Defendant has not made any other specific 14 showing of harm. At most, Mr. Rolfs’ Declaration indicates that vendors “may be 15 16 less likely” to agree to favorable terms if contracts “such as the Renfroe Contract” 17 became public. ECF No. 25. This does not constitute sufficient harm. 18 It appears that the precise financial details of the contract have little bearing 19 20 on the public’s interest in assessing the merits of the parties’ dispute. And 21 Defendant’s interests can be adequately addressed by a court order requiring that 22 financial terms of the contract be redacted prior to any public dissemination of 23 24 discovery materials. 25 3. Scope of Protective Order 26 Plaintiffs raise the concern that the terms of Defendant’s proposed protective 27 28 order are too restrictive. Specifically, Plaintiffs object to Defendant’s request that 1 the parties meet and confer before filing any materials that are subject to the 2 protective order in conjunction with a dispositive motion. As Plaintiffs point out, 3 4 this could unnecessarily delay litigation. 5 The Court determines Plaintiffs’ concerns can be addressed by modifying 6 the terms of the protective order. 7 8 The standard governing protection of discovery materials differs from that 9 governing protection of materials filed with the Court. “When discovery material is 10 filed with the court … its status changes” and the material becomes a judicial 11 12 record. Foltz, 331 F.3d at 1135. The Ninth Circuit recognizes “a strong 13 presumption in favor of access to court records.” Id. When it comes to non- 14 dispositive motions, the existence of a protective order will justify sealing 15 16 discovery materials that are subject to the order. Id. But when it comes to 17 dispositive motions or other motions touching on the merits of the case, a party 18 seeking protection must establish reasons for sealing the materials. See id. at 1135- 19 20 38. 21 Given the different standards governing the fruits of discovery and judicial 22 records filed in relation to dispositive or quasi-dispositive motions, the Court will 23 24 not automatically order that discovery materials be filed under seal simply because 25 they are subject to a protective order. To streamline litigation, the Court directs the 26 following process: Documents that are subject to the protective order which are 27 28 filed pursuant to a dispositive motion must initially be filed under seal. The seal 1 will be removed after 14 days unless a motion is filed requesting to seal the 2 documents from public disclosure based on compelling circumstances. If a motion 3 4 to seal is filed, the question of whether the document will remain subject to sealing 5 will be determined by Court order. 6 Accordingly, IT IS HEREBY ORDERED: 7 8 1. Plaintiffs’ Motion to Compel, ECF No. 14, is GRANTED in part 9 and DENIED in part as set forth herein. 10 2. In response to Request for Production No. 4, Defendants must 11 12 produce materials pertinent to the State of Washington that were in place from the 13 time of Plaintiffs’ claim to the present. Defendants must also produce any 14 additional claims handling materials relied upon by individuals responsible for 15 16 investigation, evaluation, and handling of Plaintiffs’ claim. 17 3. In response to Request for Production No. 6, Defendant must produce: 18 (1) the criteria by which the performance of any and all persons responsible for 19 20 investigation, evaluation and handling of Plaintiffs’ claim was evaluated; (2) the 21 evaluations or reviews, including any disciplinary action, of any and all persons 22 responsible for investigation, evaluation and handling ffof the claim; (3) the 23 24 compensation for any and all persons responsible for investigation, evaluation and 25 handling of the claim, including but not limited to the criteria by which bonus or 26 other special or incentive compensation is determined; (4) the training of any and 27 28 all persons responsible for investigation, evaluation and handling of Plaintiffs’ !| claim. Redactions of irrelevant or personally identifying information may be made

as set forth above. 3 4. In response to Request for Production No. 9, Defendant must produce 5|| the contract or contracts pertinent to the State of Washington that were in place at the time of Plaintiffs’ claim to the present. Q 5. State Farm’s Motion for Protective Order, ECF No. 20, is 9) GRANTED in part and DENIED in part as set forth herein. 10 6. Within 14 days of the date of this Order, the parties shall file a

12|| proposed protective order that meets the terms of this Order. 13 7. Defendants shall provide the above-directed responses no later than 14 5 three days after the Court’s entry of a protective order. Defendants may provide responses at an earlier date should the parties reach a confidentiality agreement. V7 IT IS SO ORDERED. The District Court Clerk is hereby directed to enter 18 19 this Order and to provide copies to counsel.

20 DATED December 1, 2025. 21 22 REBECCA L. PENNELL 23 United States District Judge 24 25 26 27 28 ORDER RE MOTION TO COMPEL AND MOTION FOR PROTECTIVE INT) TAT TNT) 1f£f