Zaremba et al v. Federal Insurance Company et al

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re:
Continental Capital Investment Services, Inc.
and Continental Capital Securities, Inc.,
Debtors.
Thomas S. Zaremba, Trustee,
Plaintiff,
v.
Federal Insurance Company,
Defendant.
) 	Bankruptcy Adv. Pro. No. 03-3370
) 	SIPA Liquidation
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) 	Adv. Pro. No. 09-3322
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) 	Hon. Mary Ann Whipple
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MEMORANDUM OF DECISION AND ORDER GRANTING MOTION TO COMPEL
This adversary proceeding came before the court for hearing on Plaintiff’s Motion to Compel
Defendant to Withdraw All Objections or to Overrule All Objections in its Discovery Responses and to
Compel Production of Documents and Electronically Stored Information (“Motion to Compel”) [Doc. # 58],
Defendant’s opposition [Doc. # 59], and Plaintiff’s reply [Doc. # 65]. Also before the court is Plaintiff’s
supplemental memorandum in support of the Motion to Compel [Doc. # 119] filed with leave of court after
Dated: September 30 2011
The court incorporates by reference in this paragraph and adopts as the findings and
orders of this court the document set forth below. This document has been entered
electronically in the record of the United States Bankruptcy Court for the Northern
District of Ohio.
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the hearing and Defendant’s supplemental response [Doc. # 111]. For the reasons that follow, the court will
grant the Motion to Compel.
BACKGROUND
On June 11, 2010, Plaintiff served on Defendant his First Set of Interrogatories (“Interrogatories”)
and First Requests for Production of Documents and Electronically Stored Information (“Production
Requests”). Under the rules, responses were due on July 12, 2010. See Fed. R. Bankr. P. 7033 and 7034;
Fed. R. Civ. P. 33(b)(2) and 34(b)(2)(A). On July 26, 2010, Plaintiff sent Defendant an email regarding
Defendant’s failure to respond and asking when a response could be expected. 	Defendant informed
Plaintiff that discovery responses “are in the works” but would not be completed until “sometime after
August 9” and stated that “[i]f this present[s] a problem, please advise immediately.” [Pl. Ex. B, p. 1]. On
August 27, 2010, Plaintiff sent Defendant another email asking to schedule a meeting to discuss when
Defendant would provide responses to the discovery requests. 	Defendant sent an email response on
September 1, 2010, with dates to discuss the issues but did not indicate when a response would be
forthcoming. [Id.]. 	On September 24, Plaintiff again asked to schedule a telephone conference with
Defendant to identify a firm date it could expect to receive its discovery answers and documents. [Id. at 3].
Receiving no response, Plaintiff sent yet another email on September 30, 2010, informing Defendant that
he would be filing a motion to compel discovery unless he received all responses by the following day and
stating that Defendant had long since waived any objections to the discovery requests. [Id.]. 	Defendant
responded that counsel “was working on the responses” but that they would not be sent by the next day.
[Id.]. 	Although Defendant never filed a motion seeking an extension of time or a protective order, its
responses were not served on Plaintiff until October 20, 2010. [See Doc. # 54].
Defendant’s responses include numerous “General Objections,” many of which Defendant’s counsel
admits have no relevance to any particular interrogatory or production request, as well as specific objections
to each and every discovery request. As to each request for production of documents and electronically
stored information, Defendant posed the same objections, which included objections based on the attorney-
client privilege and work product doctrine. However, a privilege log was not provided.
On October 22, 2010, Plaintiff sent Defendant a letter asking it to voluntarily withdraw all of its
objections due to its failure to timely respond to Plaintiff’s discovery requests and to provide the date certain
on which it could expect to receive the documents to be produced. [Pl. Ex. D]. 	On November 1, 2010,
Defendant responded by email stating that it was preparing a privilege log and that the documents and
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electronically stored information would be provided in hard copy on or before November 8, 2010. [Pl. Ex.
E]. The email further stated that counsel was “currently evaluating” the request to withdraw objections and
would be in contact to discuss the matter. [Id.]. Plaintiff responded on November 1 with dates that week
that counsel was available to discuss the waiver of objections. Receiving no response, Plaintiff sent another
email on November 4, 2010, again seeking a time to discuss Defendant’s waiver of objections.
On November 10, 2010, Plaintiff filed his Motion to Compel, having received no response to his
attempt to discuss a voluntary waiver of objections and Defendant, at that time, having produced no
documents or privilege log. Plaintiff did not receive the documents ultimately produced by Defendant and
Defendant’s privilege log until after his motion was filed. The privilege log that was produced lists 54
documents and includes only the conclusory claim of “Attorney-client privilege; attorney work product”
as to 35 documents, and states only “Reserve information” as to 10 documents. [Doc. # 59, and attachment
thereto].
LAW AND ANALYSIS
Plaintiff argues that Defendant waived all objections to the Interrogatories and Production Requests
due to its failure to timely respond to the requested discovery and the insufficiency of the privilege log. In
his supplemental memorandum, Plaintiff asserts as an additional basis for granting the Motion to Compel
that Defendant waived its attorney-client privilege by voluntarily disclosing otherwise privileged documents
to a third party. Because the court will grant the Motion to Compel based upon the grounds originally
asserted by Plaintiff, it does not address arguments raised in the parties’ supplemental memoranda.
Under Rules 33 and 34 of the Federal Rules of Civil Procedure, made applicable in this case by
Federal Rules of Bankruptcy Procedure 7033 and 7034, a party has thirty days in which to serve its written
responses, including objections, to a request for interrogatories or production of documents. Fed. R. Civ.
P. 33 (b)(2) and 34(b)(2)(A). 	Courts in the Sixth Circuit have recognized the general rule that, in the
absence of an agreement between the parties or a motion for an extension of time or protective order, failure
to object to discovery requests within the thirty days provided by Rules 33 and 34 constitutes a waiver of
any objection. See Drutis v. Rand McNally & Co., 236 F.R.D. 325, 337 (E.D. Ky. 2006); United States v.
Elsass, No. 2:10-CV-336, 2011 WL 335957, *3, 2011 U.S. Dist. LEXIS 9005, *8 (S.D. Ohio Jan. 31, 2011);
Whitney v. City of Milan, No. 09-1127, 2010 WL 2011663, *3, 2010 U.S. Dist. LEXIS 54393, *8-9 (W.D.
Tenn. May 20, 2010); Horacek v. Wilson, 2008 WL 2397638, *2, 2008 U.S. Dist. LEXIS 45469, *6 (E.D.
Mich. June 11, 2008); Carfagno v. Jackson Nat’l Life Ins. Co., No. 5:99CV118, 2001 WL 34059032, *1,
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2001 U.S. Dist. LEXIS 1768, *3 (W.D. Mich. Feb. 13, 2001); Cleveland Indians Baseball Co. v. United
States, No. 96-CV-2240, 1998 WL 180623, *4, 1998 U.S. Dist. LEXIS 1459,*13 (N.D. Ohio Jan. 28, 1998);
see also Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1473 (9th Cir.1992) (“[F]ailure to
object to discovery requests within the time required constitutes a waiver of any objection”); In re United
States, 864 F.2d 1153, 1156 (5th Cir.1989) ( “as a general rule, when a party fails to object timely to
interrogatories, production requests, or other discovery efforts, objections thereto are waived”); Caudle v.
District of Columbia, 263 F.R.D. 29, 32 (D.D.C. 2009). “‘Any other result would ... completely frustrate
the time limits contained in the Federal Rules and give a license to litigants to ignore the time limits for
discovery without any adverse consequences.’” Cleveland Indians Baseball Co., 1998 WL 180623 at *4
(quoting Krewson v. City of Quincy, 120 F.R.D. 6, 7 (D. Mass. 1988)). Notwithstanding the general rule,
a party's waiver of objections to discovery requests may be excused upon a showing of good cause. Caudle,
263 F.R.D. at 33; North Am. Rescue Products, Inc. v. Bound Tree Medical, LLC , No. 2:08-cv-101, 2009
WL 4110889, *7, 2009 U.S. Dist. LEXIS 118316, *20 (S.D. Ohio Nov. 19, 2009); Fed. R. Civ. P. 33(b)(4)
(“Any ground not stated in a timely objection is waived unless the court, for good cause, excuses the
failure.”); see Fed. R. Bankr. P. 9006(b) (providing that the court “for cause shown” may extend time or “on
motion made after the expiration of the specified period permit the act to be done where the failure to act
was the result of excusable neglect”)
Defendant does not dispute that it did not respond until approximately 100 days after service of the
discovery requests. And it is clear that Defendant did not file a motion to extend time or a motion for
protective order. It cites, however, an email sent to Plaintiff’s counsel on July 27, 2010, stating that its
discovery responses would not be completed until “sometime after August 9” and that “[i]f this present[s]
a problem, please advise immediately.” Defendant characterizes this email as “essentially . . . a request for
an extension of the discovery deadline.” [Doc. # 59]. The court disagrees. Time to respond under Rules
33 and 34 had already expired. And subsequent emails from Plaintiff’s counsel show only that Plaintiff was
attempting to get the discovery responses that were required. They do not indicate agreement to accept
Defendant’s already untimely responses at some unspecified time in the future.
Defendant has not shown cause for its failure to timely respond to Plaintiff’s discovery requests and
has not even tried to explain the circumstances resulting in its tardiness. Instead, Defendant cites case law
holding that the court may reject a waiver of privilege for late discovery responses where the opposing party
will not suffer prejudice and the delinquent party has not demonstrated a pattern of misconduct. See Caudle,
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263 F.R.D. at 33; Burlington Ins. Co. v. Okie Dokie, Inc., 368 F. Supp. 2d 83, 91 (D.D.C. 2005). 	In
addition, it argues that, notwithstanding its objections, it has produced all documents except those set forth
in its privilege log. Citing E.E.O.C. v. Safeway Store, Inc., No. C-00-3155, 2002 WL 31947153, *2, 2002
U.S. Dist. LEXIS 25200, *6 (N.D. Cal. Sept. 16, 2002), Defendant argues that waiver of privilege is a harsh
sanction that should not be imposed. The court is not so persuaded and finds the cases cited by Defendant
distinguishable.
First, the court finds that where a party has failed to show good cause for its untimely objections to
discovery, it cannot rely on a lack of prejudice to the opposing party to excuse waiver of the objections.
North American Rescue Products, Inc., 2009 WL 4110889 at *7 (finding that a party’s failure to show good
cause is alone enough to prevent it from relying on the objection); Carfagno, 2001 WL 34059032 at *2
(finding insufficient an assertion that plaintiff was not prejudiced where defendant did not attempt to show
good cause); cf. Gavenda v. Orleans County, No. 95-CV-025IE, 1996 WL 377091, *2, 1996 U.S. Dist.
LEXIS 9469, *7 (W.D.N.Y. June 19, 1996) (in the context of a motion to modify a scheduling order, stating
that “[o]nly if good cause were shown would the inquiry shift to determine (and balance) any prejudicial
effect on the opposing party”).
The court also finds that Defendant’s conduct in this case does not satisfy the standards for excusing
waiver that are set forth in the cases relied upon by Defendant. In Safeway Store, Inc., the court stated that
“Minor procedural violations, good faith attempts at compliance, and other such mitigating circumstances
militate against finding waiver. In contrast, evidence of foot-dragging or a cavalier attitude towards
following court orders and the discovery rules supports finding waiver.” 	Safeway Store, Inc., 2002 WL
31947153 at *2. 	And to satisfy the standard set forth in Caudle and Burlington Ins. Co., Defendant must
show not only that Plaintiff will suffer no prejudice but that it has not demonstrated a pattern of misconduct.
Defendant, however, has engaged in a pattern of conduct in this case that shows repeated disregard
for both the spirit and the requirements of the federal rules governing discovery practice. In addition to the
unjustifiable and lengthy delay in responding to Plaintiff’s discovery requests, it raised a multitude of
“General Objections” that admittedly have no relevance to any particular interrogatory or production
request. 	Also, Defendant withheld documents claiming that they are privileged without providing any
information to enable Plaintiff to assess the claim. 	Under Rule 26(b)(5) of the Federal Rules of Civil
Procedure, made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7026, in addition
to claiming privilege, a party must “describe the nature of the documents, communications, or tangible
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things not produced or disclosed – and do so in a manner that, without revealing information itself
privileged or protected, will enable other parties to assess the claim.” Defendant did not provide a privilege
log until after Plaintiff filed his Motion to Compel, and the privilege log provided was totally insufficient
as it provided no information required under Rule 26(b)(5). Although Defendant filed a privilege log with
more detailed information after the hearing on the Motion to Compel, that filing does not excuse its failure
to do so in a timely manner. See Peat, Marwick, Mitchell & Co. v. West, 748 F.2d 540, 542 (10 th Cir. 1984)
(finding that a party’s failure to make the required showing that privilege applies “is not excused because
the document is later shown to be one which would have been privileged if a timely showing had been
made”).
Plaintiff having demonstrated that he made good faith attempts to obtain the discovery responses
sought, see Fed. R. Civ. P. 7037; Fed. R. Civ. P. 37(d)(1)(b), for the foregoing reasons, the court finds that
Defendant has waived its objections to the Interrogatories and Production Requests, including objections
based on attorney-client privilege and attorney work product. Cleveland Indians Baseball Co., 1998 WL
180623 at *4 (waiver of untimely objections “applies with equal force to all objections, including those
based on attorney-client privilege or attorney work product”); Carfagno, 2001 WL 34059032 at *2 (same).
The court will, therefore, grant Plaintiff’s Motion to Compel production of all documents and electronically
stored information responsive to Plaintiff’s Production Requests.
THEREFORE, based on the foregoing reasons and authorities, good cause appearing,
IT IS ORDERED that Plaintiff’s Motion to Compel [Doc. # 58] be, and hereby is, GRANTED;
and
IT IS FURTHER ORDERED that Defendant shall produce all documents and electronically stored
information responsive to Plaintiff’s Production Requests on or before October 25, 2011.
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