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Samuel Rowe and Estella Rowe , On Behalf of Themselves and All Others Similarly Situated v. Bankers Life and Casualty Company and Bankers Life Insurance Company of Illinois

May 18, 2011


The opinion of the court was delivered by: Martin C. Ashman United States Magistrate Judge

Judge Robert M. Dow, Jr. Magistrate Judge Martin C. Ashman


Plaintiffs Samuel and Estella Rowe ("Plaintiffs") bring this motion to compel Defendants Bankers Life and Casualty Company and Bankers Life Insurance Company of Illinois ("Bankers Life") to produce certain insurance examination documents. The Court rules on this motion under District Judge Robert M. Dow Jr.'s referral for a decision pursuant to N.D. Ill. Rule 72.1. Based on the parties' briefs and a hearing held on April 18, 2011, the Court finds that Plaintiffs' motion is denied.

I. Background

Plaintiffs have brought this action on behalf of themselves and all similarly-situated persons against Bankers Life for the allegedly improper sales of deferred annuities to senior citizens. Claiming various common law actions, as well as violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 28 U.S.C. § 1961, et seq., Plaintiffs allege in their Second Amended Complaint that Bankers Life formulated a deceptive scheme involving an untrained sales force, high-pressure tactics, and opaque sales literature designed to induce senior citizens to purchase annuities from Bankers Life. On May 28, 2009, Plaintiffs issued their First Request for Production of Documents. Request No. 38 asks for the production of "all market conduct examinations sent between any State's Department of Insurance and Bankers Life that relate to the marketing, advertising, servicing, underwriting, or sale of Your Annuities to Senior Citizens." Bankers Life responded, in part, with the familiar objection that Plaintiffs' request was overly broad, unduly burdensome, and irrelevant.

Notwithstanding, Bankers Life agreed to produce documents responsive to governmental inquiries to the extent that the requested documents were not confidential or were not otherwise barred from disclosure under any state law or regulation. Bankers Life informs the Court in its response that it has already produced six "market conduct examinations" to the Plaintiffs. A market conduct examination is a form of report made by state insurance agencies in order to assess whether insurance companies are in compliance with a state's laws and regulations. See Solarchick v. Metropolitan Life Ins. Co., No. 01-444, 2006 WL 1308073, at *1 (W.D. Pa. May 10, 2006) (providing descriptions of market conduct examinations). Bankers Life, however, refused to produce a report by the California commissioner of insurance. In its initial response to Request No. 38, Bankers Life stated that no California market examination existed for the time period included in Plaintiffs' request. Bankers Life submitted a revised response that claimed the company could not produce the report because such disclosure is prohibited by the California Insurance Code.

II. Discussion

A party may file a motion to compel under Fed. R. Civ. P. 37 whenever another party fails to respond to a discovery request or when its response is insufficient. Fed. R. Civ. P. 37(a). Courts have broad discretion in resolving such disputes and do so by adopting a liberal interpretation of the discovery rules. Wilstein v. San Tropai Condo. Master Assoc., 189 F.R.D. 371, 375 (N.D. Ill. 1999). Federal Rule of Civil Procedure 26 provides that the "[p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense." Fed. R. Civ. P. 26(b)(1). Discoverable information is not limited to evidence admissible at trial. Instead, such information is relevant "if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. However, while the scope of permissible discovery is broad, it is not unlimited. A court can limit discovery if the court believes it is unreasonably cumulative, if the party seeking discovery has already had ample opportunity to do so, or if the burden of the proposed discovery outweighs its likely benefit.

Fed. R. Civ. P. 26(b)(2).

A. Timeliness

Bankers Life first argues that the Court should deny the instant motion because discovery closed in this case on July 21, 2010, and Plaintiffs' motion is late. Plaintiffs answer this objection by noting that discovery has been taken on a "rolling basis," with various documents produced by Bankers Life after the cutoff date, and by claiming that Bankers Life fails to show how it would be prejudiced by responding to Request No. 38 at this time. Standing alone, neither of these arguments is dispositive, as no clear standard controls when a motion to compel should be considered after fact discovery has closed. The Federal Rules of Civil Procedure do not address this issue. Instead, courts are given "extremely broad discretion in controlling discovery" and can deny motions to compel as untimely when such action is appropriate under the circumstances. In re Sulfuric Acid Antitrust Litig., 231 F.R.D. 331, 336 (N.D. Ill. 2005); Wilstein, 189 F.R.D. at 375.

Bankers Life's argument gives the Court some pause, as Plaintiffs do not seriously argue why this motion could not have been brought at an earlier time. Nevertheless, two factors persuade the Court that the parties', as well as the Court's, interests are best served by finding the motion not to be barred as untimely. First, the allegations involved in this class action are complex; Plaintiffs' Second Amended Complaint is seventy-five pages long and contains fifty-three attachments. Courts have shown a willingness to consider motions to compel that could have been filed at an earlier date when extensive fact and expert discovery may be involved in a case. See U.S. S.E.C. v. Sentinel Mgt. Group, Inc., No. 07 C 4684, 2010 WL 4977220, at *6 (N.D. Ill. Dec. 2, 2010). Second, the discovery Plaintiffs seek is very limited. Bankers Life does not dispute that it possesses the document that Plaintiffs request, nor does it argue in its response that producing the California market examination would be burdensome. Were that the case, the Court would be more reluctant to consider a motion that Plaintiffs could have filed at a more reasonable time after Bankers Life submitted its revised response to Request No. 38 on December 18, 2009. As this case has not been set for trial, and as the class certification issue has not been decided, the Court finds that Plaintiffs' motion should not be dismissed as untimely.

B. The California Insurance Code

Bankers Life argues that the California Insurance Code prevents it from disclosing a market conduct report that the California insurance commissioner undertook in relation to Bankers Life. Section 735.5 of the California Insurance Code governs the publication and disclosure of preliminary and final examinations made by the California commissioner of insurance. Subsection (a) of § 735.5 authorizes the commissioner to exercise discretion in releasing examination reports and information in the furtherance of legal or regulatory actions; subsection (b) authorizes the commissioner to provide the same information to a variety of state and federal agencies, either with the relevant insurance company's consent or with a written agreement by the receiving agency not to disclose the information. Cal. Ins. Code § 735.5(a) & (b). Neither subsection applies to this case. Section 735.5(c), however, provides: All working papers, recorded information, documents, and copies thereof produced by, obtained by, or disclosed to the commissioner or any ...

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