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Pepsi-Cola Metropolitan Bottling Co., Inc. v. Insurance Co. of North America

January 25, 2011

PEPSI-COLA METROPOLITAN BOTTLING CO., INC. PLAINTIFF,
v.
INSURANCE CO. OF NORTH AMERICA, INC; AND ONEBEACON AMERICA INSURANCE CO. DEFENDANTS.



The opinion of the court was delivered by: Rufe, J.

MEMORANDUM OPINION AND ORDER

Pending before the Court is Non-Party Resolute Management Inc., Mid-Atlantic Division's Motion to Quash and/or for a Protective Order. Pursuant to Federal Rule of Civil Procedure 78, no oral argument was held. For the reasons that follow, the Motion will be denied.

I. Background

Resolute Management Inc., Mid-Atlantic Division ("Resolute"), a non-party to this case, currently pending in the United States District Court for the Central District of California, now moves this Court to quash a Rule 30(b)(6)*fn1 Subpoena to testify issued by plaintiff Pepsi-Cola Metropolitan Bottling Company, Inc ("Pepsi"), or, alternatively, to enter a protective order excusing Resolute from presenting itself for deposition.

A brief review of the pending California litigation is necessary to the disposition of Resolute's Motion. On April 14, 2010, Pepsi sued one of its insurers, Insurance Company of North America ("INA") for its alleged failure to pay Pepsi's defense costs in a series of environmental lawsuits,*fn2 claiming, inter alia, breach of contract and bad faith.*fn3 Century Indemnity Company ("Century"), answered the Complaint and appeared as the defendant on behalf of INA.*fn4 On December 28, 2010, the California District Court granted partial summary judgment on Pepsi's motion, ruling that INA/Century had breached its contractual defense obligations through: (1) a "pattern of delaying its reimbursements to Pepsi";*fn5 and (2) its failure to fully reimburse Pepsi for its litigation costs.*fn6 The court bifurcated the determination of damages, ordering that attorneys' fees be decided in arbitration,*fn7 and other remaining damages be decided by a jury.*fn8

On November 17, 2010, Pepsi deposed INA/Century pursuant to the Federal Rule of Civil Procedure 30(b)(6).*fn9 Kevin Winey, an employee of Resolute, appeared as INA/Century's 30(b)(6) designee. Through Winey's deposition, and documents provided by INA/Century to Pepsi in October or November 2010, Pepsi learned that Resolute-a company located in Philadelphia, Pennsylvania-has managed all of INA/Century's claim-handling activities in connection with the underlying suits since 2004.*fn10 Accordingly, Pepsi issued a 30(b)(6) subpoena for Resolute, and two subpoenas for Winey's supervisors, Gregory Kelder and Daniel Brehm. Resolute produced Kelder and Brehm for half-day depositions on December 17, 2010, but refused to designate a witness for the 30(b)(6) subpoena.

Instead, Resolute filed this Motion to Quash the Subpoena, or Alternatively, for a Protective Order. In its Motion, Resolute first argues that the subpoena seeks "unreasonably cumulative and/or duplicative" information that Pepsi already had the opportunity to gather from Winey, Kelder, and Brehm.*fn11 Second, Resolute claims that the subpoena seeks the disclosure of irrelevant, privileged and confidential information. Finally, Resolute claims that the burden imposed by the subpoena outweighs its likely benefit. In response, Pepsi argues that the Resolute 30(b)(6) deposition is necessary to the development of its bad faith claim, and that it seeks information not yet obtained through any other discovery. The Court has considered the Motion, Response in Opposition, Reply and Sur-reply, and this matter is now ready for disposition.

I. DISCUSSION

The Federal Rules of Civil Procedure allow the examination of a deponent concerning "any matter, not privileged, which is relevant to the subject matter involved in the pending action."*fn12 Relevance under Rule 26(b)(1) is therefore construed more broadly for discovery than for trial; the information sought does not need to be admissible at trial, so long as the discovery appears reasonably calculated to lead to the discovery of admissible evidence. Therefore, relevancy is not limited to the precise issues set out in the pleadings.*fn13 Notably, "[a] district court whose only connection with a case is supervision of discovery ancillary to an action in another district should be 'especially hesitant to pass judgment on what constitutes relevant evidence thereunder."*fn14 Therefore, if relevance is unclear, Rule 26(b)(1) indicates that the court should be permissive.*fn15
"While broad, the scope of discovery is not boundless."*fn16 Courts have the discretion to limit relevant discovery under certain circumstances:

The frequency or extent of use of the discovery methods otherwise permitted under these rules and by any local rule shall be limited by the court if it determines that (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery had ample opportunity by discovery in the action to obtain the information sought; [or] (iii) the burden or expense of the proposed discovery outweighs its likely benefit. . . .*fn17

Further, under Rule 45(d)(1), a person who has been served with a discovery subpoena may move either for a protective order under Rule 26(c) or for an order quashing or modifying the subpoena under Rule 45(c)(3). Here, Resolute has moved this court to quash the 30(b)(6) subpoena, or, alternatively, to enter a protective order excusing it from appearing at the deposition. We address Resolute's arguments in turn.

A. Resolute's Motion for a Protective Order

Under Federal Rule of Civil Procedure 26(c), it is "well-established that a party wishing to obtain an order of protection over discovery material must demonstrate that "good cause" exists for the order of protection."*fn18 "Good cause" to issue a protective order exists when disclosure will result in a "clearly defined and serious injury to the party seeking the protective order."*fn19 The alleged injury must be articulated with ...

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