While we all tend to think of winning a trial in terms of a brilliant cross-examination or an outstanding closing argument, most cases are determined long before the point that evidence or testimony is presented to the jury. With the increasing use of mediation, the value of a legitimate case is established during discovery. For the litigator, the successful compilation of documentary evidence through discovery is the difference between an ordinary case and a great case. This fact is not lost on current members of the Supreme Court of Alabama. In the case of Ex parte Horton , 711 So.2d 979, 984 (Ala. 1998), the court recognized that since BMW v. Gore was decided, it is more necessary than ever for the plaintiff's counsel to prove a "degree of reprehensibility" in order to support a punitive damage award. Of course, one of the primary factors in establishing reprehensibility in a fraud or misrepresentation case is proving "the existence and frequency of similar past conduct." Ex parte Horton at 984, citing, BMW of North America v. Gore, 701 So.2d 507, 512 (Ala. 1997). The only way to do this is through broad discovery which seeks documents and information related to transactions and people other than the particular plaintiff or transaction at issue. In determining whether this discovery is allowable, the trial court has an obligation to balance the plaintiff's right to the discovery necessary to prove his or her case with the defendant's right to be protected from "oppression or undue burden or expense." Ex parte First National Bank of Pulaski 1999 WL 148201 (Ala. 1999), citing Ex parte Compass Bank, 686 So.2d 1135, 1138 (Ala. 1996).
All practicing attorneys must acknowledge, as our appellate courts acknowledge, that a trial court has "very broad discretion in discovery matters." Ex parte Thomas, 628 So.2d 483 (Ala. 1993); Home Insurance Co. v. Rice , 585 So.2d 859 (Ala. 1991). Coupled with the trial court's broad discretion is a corresponding duty to prevent abuse of the discovery process. Ex parte Heilig v. Meyers Furniture Co. , 684 So.2d 1292, 1294 (Ala. 1996). Since the rules allow discovery of "any matter, not privileged, which is relevant," trial court judges deserve discretion to regulate discovery matters. Ex parte O'Neal , 713 So.2d 956 (Ala. 1998).
Frequently, the party that demonstrates a willingness to compromise and cooperate at the trial court level, as opposed to the party who takes the stance that no information will be turned over absent a court order, ultimately has a better chance of limiting overbroad discovery requests, thereby protecting the client. Trial courts, for the most part, appreciate the lawyer who makes a goof faith effort to provide discovery or limit discovery in an effort to reach a compromise with opposing counsel.
To overturn a trial judge's ruling on a discovery issue, an aggrieved party must demonstrate that the trial court clearly abused its discretion. Ex parte Clark , So.2d 1064, 1067 (Ala. 1991). Before appealing the trial's ruling on a discovery matter, a party must exhaust all efforts to demonstrate to the trial court why the discovery at issue is improper. It is essential that the defendant file a timely objection to the requested discovery. Additionally, a Motion for Protective Order or other motion must be field with the court creating a record in opposition to the requested discovery prior to seeking appellate review. Ex parte Sargent Industries, Inc. , 466 So.2d 961 (Ala. 1985); Ex parte Reynolds Metals Co. , 710 So.2d 897 (Ala. 1998); Ex parte Union Security Life Insurance Co. , 723 So.2d 34 (Ala. 1998).
Even where a party has made a clear record at the trial court level, the lower court's ruling will not be disturbed on appeal absent significant evidence that he judge abused his or her discretion. This can only be established by seeking a writ of mandamus to the appellate courts. Fighting for the issuance of a writ of mandamus on the appellate level is an uphill battle:
Mandamus is an extraordinary remedy requiring a showing that there is "(1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court."
Ex parte Johnson , 638 So.2d 772, 773 (Ala. 1994) (quoting Ex parte Edgar , 543 So.2d 682, 684 (Ala. 1989).
The success ratio in reversing trial court discovery orders is generally higher in cases where a trial court has restricted or prohibited discovery as opposed to where the trial court has allowed liberal discovery. Ex pate Pomerantz , 590 So.2d 903 (Ala. 1991); see also Alabama Rules of Civil Procedure Annotated , 3 rd Ed. Lyons Section 26.5. Recent decisions by the Supreme Court of Alabama seem to indicate that this trend may be changing.
II. WHAT YOU CAN GET IN DISCOVERY
A. Contact with Potential Witnesses
In Ex parte Clark, 582 So.2d 1064 (Ala. 1991) , Justice Adams joined with Justices Hornsby, Almon, Steagall and Ingram in ruling that a trial judge could not restrict the plaintiff's counsel's contact with Alabama policyholders of the defendant. The trial court ordered defendant Associated Life Insurance Co. to provide a list of "persons in the State of Alabama who obtained a conversion policy" through the defendant insurer, but limited the plaintiff's attorneys from making direct contact with the policyholders. In granting a writ of mandamus , the Supreme Court held that the trial judge's orders limiting direct contact (and the content of any contact) were "unduly restrictive."
In the case of Ex parte Hicks , 727 So.2d 23 (Ala. 1998) , the plaintiff claimed that the funeral home has defrauded him in the way it handled his father's burial policy. The plaintiff filed discovery seeking customer lists and related sales documents for funeral arrangements made by the defendant for a five year period. The defendant objected and moved for a protective order which the trial court granted. The Circuit Court Judge limited the plaintiff to discovery of customers' names who purchased the same policy as the decedent. The Court also limited the plaintiff's contact with the mortuary customers through a letter first reviewed by the defendant's attorneys and then approved by the Court.
On appeal, the Alabama Supreme Court ruled that the trial court erred by limiting discovery to customer names who had purchased the same policy as the plaintiff. Due to the pattern and practice implications of the misrepresentation and suppression claims made by the plaintiff, the Supreme Court concluded that the plaintiff was entitled to conduct discovery regarding the names and addresses of all mortuary customers who purchased burial policies with Family Reserve, as well as Liberty national and Brown Service. The Court also held that the trial court was wrong in limiting the plaintiff's contact with the defendant's customers through an approved letter. The Court determined that the individual customers had a right to refuse to respond to inquiries, but the trial court should not have limited the manner in which the plaintiff could contact potential witnesses.
In the case of Ex parte Howell , 704 So.2d 479 (Ala. 1997) , the Alabama Supreme Court ruled that the trial court had abused its discretion by granting a protective order which limited the plaintiff's effort to conduct discovery. The Court ruled that the trial court improperly limited the plaintiff's contact to 25 policyholders per New York Life agent. Additionally, the Supreme Court ruled the trial court was wrong in limiting the number of policyholders who the plaintiff could interview to 15 policyholders per New York Life agent. Further, the Supreme Court held that he trial court erred in requiring that a New York Life representative be allowed to attend any meeting between the plaintiff's attorney and policyholders. Finally, the Supreme Court also overruled the trial court's order which prevented the plaintiff's attorney from representing any people identified in the policyholder list.
In granting a writ of mandamus which required the trial judge to set aside his protective order, the Supreme Court reached the following conclusions:
The purpose of discovery is to allow abroad search for facts, the names of witnesses, or any other matters that can assist a party in presenting his or her case. Given that his case was a fraud action alleging that the defendants had engaged in a pattern and practice of fraud, that purpose was thwarted by the limitation the trial court place don the number of policyholders who could be interviewed. The limitation would prevent the discovery of any information after the fifteenth policyholder from each agent's list was interviewed, regardless of whether additional relevant information could be discovered. It is also apparent that the limitation the trial court placed on the method by which the Howells' attorneys could contact the policyholders, i.e., only by court-approved, and defense counsel reviewed, letters and postcards, created an awkward procedure that could prevent the acquisition of information...As this Court noted in Ex parte Stephens , "nothing prevents a lawyer from accepting employment from someone whom he may have interviewed as a witness in another case, so long as the lawyer does not violate Rule 7.3 Ala. R. Prof. Conduct." 676 So. 2d at 1314. That rule prohibits the solicitation of a prospective client for the attorney's pecuniary gain. It appears clear that he trial court's motive was to prevent the Howells' attorneys from soliciting employment by the policyholders. This amounts to an assumption that those attorneys would act in an unethical manner. As noted in Ex parte Stephens , it cannot and should not be presumed that an officer of the court will act in an unethical manner. Therefore, this provision is invalid as well.
Id. at 482, citing Ex parte Stephens , 676 So.2d 1307 (Ala. 1996).
B. Discovery of Insurance Policies
In Rule 26 (b)(2) of the Alabama Rules of Civil procedure, discovery on insurance agreements is specifically addressed:
Insurance Agreements: A party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered and due the action or to indemnify or reimburse for payments made to satisfy the judgment. Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial. For purposes of this paragraph, an application for insurance shall not be treated as part of an insurance agreement.
This provision of Rule 26(b) was addressed by the Alabama Supreme Court in Ex parte Badham , 1999 WL 77543 (Ala. 1999) . In Badham , the plaintiffs filed a petition for a writ of mandamus directing the circuit court to enter an order compelling discovery of the policy limits of the liability insurance held by the defendants. The Badhams argued that the Alabama Rules of Civil Procedure provided for the discovery of such information. The Supreme Court agreed and held that "the present version of Rule 26(b)(2), as amended in 1995, provides for the discovery of the "existence and contents" of the insurance policy and does not exclude the policy limits from discovery." Id. at 3.
The rule that allows for the discovery of insurance policies and limits of coverage in civil cases does not apply to healthcare professionals. The Medical Liability Act of 1987 was amended in May of 1996 to specifically exclude discovery of the limits of liability insurance coverage available to healthcare providers who are sued for allegedly breaching the standard of care applicable to their field. As to the rest of the world, the Alabama Rules of Civil Procedure provide that insurance coverage, and the amount of coverage, must be provided if requested during the course of discovery.
C. Discovery Concerning Knowledge by the Defendant
Discovery of documents and information concerning pattern and practice evidence in fraud and misrepresentation cases seems to dominate much of the case law concerning the scope of Rule 26. There are several other legal theories that will support broad discovery requests for prior bad acts or similar incidents. These causes of action include cases with allegations of negligent hiring, negligent supervision and negligent entrustment. In these cases, the employer's knowledge, or constructive knowledge, is an essential element of proof. In order to recover under these theories of liability, the plaintiff must show that the employer knew, or should have know, that the company hired, entrusted or failed to properly supervise an incompetent employee.
Under Alabama law, the elements of a claim for negligent entrustment are:
1. Proof that the entrustee was incompetent, inexperienced or reckless;
2. Proof that the entrustor knew or had reason to know of the entrustee's alleged incompetence;
3. Proof that there was an entrustment of the vehicle;
4. Proof that the entrustment created an appreciable risk of harm to plaintiff; and
5. Proof that he harm to the plaintiff was proximately or legally caused by the negligence of the defendant.
Reeves v. King , 534 So.2d 1107 (Ala. 1988); Jackson v. Searcy , 628 So.2d 887 (Ala. Civ. App. 1993); Alabama Pattern Jury Instructions (Civil) 26.16.
The plaintiff must be able to prove that the employer or entrustor had some degree of knowledge of the entrustee's incompetency in order to recover under any of these theories. Dunaway v. King , 510 So.2d 543 (Ala. 1987); Bruck v. Jim Walter Corp. , 470 So.2d 1141 (Ala. 1985) . The requisite knowledge can be shown by establishing that the incompetency was actually known by the entrustor. Alternatively, knowledge can be proven by evidence indicating that, had the entrustor exercised proper diligence, the entrustor would have learned of the particular incompetency at issue. Proof may be made by a showing of specific acts of incompetency brought to the awareness of the entrustor, or by a showing that the acts are of such a nature, character and frequency that the entrustor, in the exercise of due care, should have known of the entrustee's incompetence. Thompson v. Havard , 235 So.2d 853 (Ala. 1970).
While specific acts of incompetency cannot be used to prove that an entrustee was negligent in doing the act complained of, when repeated acts of carelessness and incompetency are shown, the jury is allowed to consider them in determining whether the employer had actual or constructive notice of the alleged incompetency. The admissibility of this type of evidence for one purpose and not another illustrates the problems inherent in any trial involving negligence claims against an entrustee and negligent hiring, training, supervision or entrustment claims against an employer or other entrustor.
This problem was addressed in Bruck v. Jim Walter Corp., supra , a case in which an action was filed for wrongful death against a truck driver and his employer. Negligent or wanton entrustment of the truck by the corporate employer was also alleged.
The trial court granted a Motion in Limine prohibiting the introduction of the truck driver's driving record, which included four speeding violations, driving an overweight truck, and running a red light within the four years prior to the fatal accident. A directed verdict was then entered as to the entrustment claims, and a verdict for the defendants was returned at trial.
The plaintiff appealed and the Alabama Supreme Court discussed the trial court's ruling excluding the driving record. Specifically, it determined that:
The plaintiff, in order to prove his claim for negligent or wanton entrustment, had to show, as one of the elements of his claim, that the defendants either knew or should have know that Reynolds was incompetent to drive. Consequently, evidence of Reynolds' driving record was highly relevant. Obviously, we recognize, as do the defendants, that such evidence carries with it the potential for prejudice. The jury might infer, because Reynolds had been charged with negligent conduct in the past, that he was negligent at the time of the accident. This would be in contravention of the general rule that evidence of similar prior acts of negligence is inadmissible on the issue of negligence at the time of the injury complained of in an action. 29 Am. Jur. 2d Evidence, §315 (1967). Therefore, one of questions we must address is whether the resulting inconsistency can be resolved. We think it can.
Brock , 420 So.2d at 1144.
Discovery concerning preceding acts of negligence that provide actual or constructive knowledge to an employer of an employee's incompetence is not limited to cases involving entrustment of a motor vehicle. Negligent entrustment, training and supervision claims, and the potential admissibility or prior acts by an employee, have been recognized in the context of corporate supervision of a store manager ( Big B, Inc. v. Cottingham , 634 So.2d 999 (Ala. 1993); an insurance company's supervision and training of its agents ( Life Ins. Co. of Georgia v. Johnson , 725 So.2d 934 (Ala. 1996); Northwestern Mutual life Ins. Co. v. Sheridan , 630 So.2d 384 (Ala. 1993)); and a nursing home's supervision of its nursing care personnel ( Ex parte McCullar WL 6946 (Ala. 1999) ).
In Ex parte McCullar , the Supreme Court ruled that despite the language of the Alabama Medical Liability Act (Section 6-5-551), the plaintiff was entitled to compel the production of information tending to show negligence and/or incompetence by members of the nursing home staff for a period of five years. The attorneys for the nursing home objected to the production of this discovery claiming that "pattern and practice evidence" is not discoverable in a case controlled by the Alabama Medical Liability Act, which restricts discovery to only those acts or omissions that are set forth in the Complaint. Alabama Code §6-5-551 (1975). In ruling for the plaintiff's right to conduct discovery of prior incidents leading up to the death of the plaintiff's decedent, the Supreme Court stated:
The discovery sought by Ms. McCullar is not sought as pattern and practice evidence, but is sought for the sake of showing negligence, wantonness, willfulness or breach of a contractual duty to provide adequate care by Dalraida Health Center in its hiring, training, staffing, etc., which negligence, wantonness, willfulness or breach the plaintiff alleges, proximately caused the death of her grandmother...
To the extent Ms. McCullar alleges that the Dalradia's employees were incompetent and that Dalraida knew of their incompetence, her allegations may be analogized to a claim alleging negligent entrustment. In such a claim, the plaintiff must prove that there was a negligent entrustment of a chattel (such as, perhaps, the G-Tube?) to an incompetent, which negligent entrustment proximately caused injury to the plaintiff of the plaintiff's decedent. Id. at 3 (citations omitted).
D. Discovery Concerning Notice to the Defendant
Discovery of prior accidents is fair game under Alabama law to show notice to a defendant. In proving an allegation of wantonness, it is an essential element of proof to show that the defendant had prior knowledge of an unsafe condition. In this regard, the Supreme Court of Alabama has held that prior accidents, even at different locations from the location in question, are fair game for discovery. Ex parte Heilig-Meyers Furniture Co., Inc., 684 So.2d 1292 (Ala. 1996); Ex parte Wal-Mart Stores, Inc. , 682 So.2d 65 (Ala. 1996).
In the Wal-Mart case, the Supreme Court upheld the trial court's order requiring Wal-Mart to provide incident reports from 86 stores in Alabama for a five year period. In the case of Ex parte Heilig-Meyers , the Supreme Court ordered a furniture store chain to provide copies of incident reports covering a three year period and 700 Heilig-Meyers stores. The issue in Heilig-Meyers was whether or not the company knew of accidents that occurred throughout the furniture chain as a result of the alleged negligent placement of furniture on showroom floors. In the Wal-Mart the issue was whether of not Wal-Mart knew that merchandise (such as a foot locker) was negligently stored along the shopping aisles. In each of these cases, the Supreme Court held that discovery of other incidents was allowable to show notice on the part of the defendant.
The discovery of prior accidents or incidents in order to prove notice has also been addressed in the blasting context. Dockins v. Drummond Co., Inc. , 706 So.2d 1235 (Ala. Civ. App. 1997) . Though Dockins did not deal directly with a discovery issue, the Court of Civil Appeals' ruling definitely has affected what is discoverable in blasting cases. In Dockins , landowners sued a company that had conducted blasting near their property asserting claims for wantonness and mental anguish. The trial court granted summary judgment as to the wantonness claims. The plaintiffs appealed, and the Supreme Court ultimately reversed the summary judgment on the wantonness count noting that "the Dockins also presented evidence that Drummond had received from the Surface Mining Commission two notifications of violations for exceeding air blasts limits during the blasting in issue." Id. at 1236. What is not clear from the opinion, but what is clear from a review of the court file, is that the notice of violations at issue were written more than four years before the complaint, well outside of the two year statute of limitations applicable to blasting cases. In other words, the notices of violation did not even occur during the time period when the plaintiffs could recover for damages. Despite this fact, the Court of Civil Appeals held that the violations were relevant, admissible evidence which went to show notice on the part of the defendant that the blasting it was doing was potentially damaging to the surrounding properties. Id.
III. WHAT YOU CAN'T GET FROM DISCOVERY
Given the broad scope of Rule 26 and the case law discussed in the previous section, is there any limit to what the plaintiff can get through discovery? The answer is yes. If a defendant is able to make a "clear showing" that proposed discovery is unduly burdensome, overly broad or unreasonably expensive, then our Supreme Court has held that the scope of the proposed discovery must be limited.
The following specific examples illustrate where discovery requests have gone too far in seeking information.
A. The Geographical Area is Too Broad
In Ex parte Union Security Life Insurance Co., 723 So.2d 34 (Ala. 1998) , the plaintiff requested discovery of all lawsuits involving credit life insurance policies filed against Union Security in the "Southern United States." The defendant, Union Security, was sued for breach of contract, fraud, negligence, wantonness and bad faith because it denied payment on a credit life insurance policy on the basis that the policyholder failed to disclose that he was suffering from cancer at the time he obtained the insurance. The policyholder passed away and his wife made a claim against Union Security under the provisions of the credit life insurance policy.
The trial judge entered an Order compelling Union Security to provide information on all lawsuits filed against it over a five year period for a seven state (Southeast) region. Union Security objected to this discovery on the basis that it was overly broad. On appeal, the Supreme Court of Alabama agreed with Union Security and held that ordering discovery for lawsuits outside the state was too broad. In granting a writ of mandamus , the Alabama Supreme Court recited language from a previous decision which disallowed discovery beyond the borders of this state:
The geographical scope of the interrogatory demonstrates an abuse of discretion by the trial court. We agree that at this juncture, such is this case. No class action claim has been asserted by the plaintiff, and it would appear that if State Farm has engaged in the fraudulent scheme which the plaintiff sets out in his Complaint, the records relating to Alabama policyholders over the years since 1971 should establish that fact.
Ex parte Union Security , 723 So.2d at 39, citing Ex parte State Farm Mutual Automobile Ins. Co. , 452 So.2d 861, 862 (Ala. 1984).
Given the Supreme Court's ruling in Ex parte Union Security , it is doubtful that a plaintiff can obtain discovery related to lawsuits or claims which occurred outside the State of Alabama in a fraud, misrepresentation or bad faith case without a showing of special circumstances, such as in cases involving nationwide class action claims.
B. The Language of the Request is Too Broad or Unduly Burdensome
Generally speaking, the Supreme Court of Alabama is unwilling to require a party to go to the burden of manually reviewing hundreds of documents in order to respond to discovery. The Court is equally hesitant to require a party to provide documents covering a time period that is overly broad.
On the other hand, clearly defined and identifiable documents, for a limited period of time, are discoverable so long as they are "reasonably calculated to lead to the discovery of admissible evidence." Rule 26(b)(1).
The line between "fair game" discovery and overly broad/ unduly burdensome discovery is not subject to a static interpretation. By design, case law interpreting Rule 26 provides us with elastic boundaries in which the trial court is vested with a considerable amount of discretion.
In Ex parte Steiner , 1998 WL (Ala. 1998) , the plaintiff had his checking account debited by the bank for an unpaid bank loan that had been discharged in bankruptcy several years earlier. Mr. Steiner sued the bank for negligence, wantonness, conversion, defamation, and breach of fiduciary duty. The plaintiff requested that the bank produce the names of all other bank customers, with a checking and/or savings account who "filed Chapter 13 proceedings in the last 10 years."
The trial court refused to compel the bank to provide the requested discovery based in part on an affidavit filed by AmSouth indicating that the requested discovery would require the manual review of thousands of files.
On appeal the Supreme Court upheld the trial court's decision across the board:
In 1997, AmSouth received approximately 2,500 notices of bankruptcy filings that were related to loans. (The requested discovery) would require AmSouth to cross-reference ten years of bankruptcy filings with all of its checking and savings accounts for the same period. Putting aside the number of checking and savings account records, one could reasonably estimate that Steiner's discovery requests would involve well over 20,000 bankruptcy records alone.
The Supreme Court denied the plaintiff's petition of writ of mandamus and upheld the trial judge's ruling that the requested discovery was overly broad and unduly burdensome.
In the case of Ex parte Finkbohner , 682 So.2d 409 (Ala. 1996) , the plaintiffs' counsel requested production of all bad faith actions filed against the company for the previous five years as well as information on al policyholders who alleged that their claim had been denied in "bad faith" over the last five years, even if they had never filed a suit.
The plaintiffs in the Finkbohner case alleged that their insurer, Principal Mutual Life Insurance Company wrongfully denied their claim for surgery to repair a hernia. The insurance company contended that Ms. Finkbohner also had a "tummy tuck" as part of the operation. Since the carrier thought the process was "cosmetic" it denied the claim under the policy.
The Finkbohners' legal counsel wanted the defendant to produce all claims where Principal Mutual denied benefits to policyholders in Alabama over a five year period on the basis that the health care service rendered was "cosmetic" and therefore not covered under the policy.
The trial court denied the Finkbohners' Motion to Compel the production of all "claims" that were denied on the basis of the cosmetic surgery exclusion of the Principal Mutual Policy. The trial court recognized that this type of discovery would be unduly burdensome on the defendant because the defendant would have to sift through possibly thousands of policyholder files.
On appeal, The Supreme Court of Alabama noted that "evidence of prior similar acts is admissible to show fraud, scheme, motive or intent ." Ex parte Clarke , 582 So.2d 1064, 1067 (Ala. 1991). Therefore, the Supreme Court held that the plaintiffs were entitled to obtain discovery on three years worth of bad faith lawsuits occurring in the State of Alabama. On the other hand, the Court ruled that Principal Mutual did not have to respond to the plaintiffs' request for "bad faith claims." The Supreme Court reasoned that it would be unduly burdensome for the insurer to produce the requested information:
The term "bad faith" is a legal term corresponding to certain wrongful conduct on the part of an insurer in denying a claim for benefits. For this reason, we conclude that it would be unduly burdensome on Principal Mutual for it to have to sift through possibly hundreds, if not thousands, of letters or other items of correspondence complaining of or challenging its denial of particular claims and to have to decide whether any one of the complainants was charging it with a ""bad faith" denial of the claim. We also question how many complaints or "claims" not resulting in legal action would be "reasonably calculated to lead to discovery of admissible evidence." Rule 26 (b)(1), Ala. R. Civ. P. For these reasons, we conclude that the trial court did not abuse its discretion in denying the Finkbohners' Motion to Compel the discovery of previous "bad faith claims."
Id. at 682, So.2d 413.
Another example of overly broad discovery may be found in the case of Ex parte Heilig-Meyers Furniture Co, Inc. , 684 So.2d 1292 (Ala. 1996). This was a personal injury case in which the plaintiff asked for a list of all slip and fall accidents that occurred in any Heilig-Meyers furniture stores. The defendant claimed that compiling such a list would be unduly burdensome. The trial court granted the plaintiff's Motion to Compel and ordered the defendant, within five days, to provide copies of all accident reports for a three year period involving some 700 Heilig-Meyers stores along with an explanation for each such report indicating the disposition of each defendant.
On appeal, the Supreme Court of Alabama held that he plaintiff's request was far too broad to constitute permissible discovery. As a starting point, the Supreme Court cited Rule 26(b)(1) to establish:
The frequency or extent of use of the discovery methods set forth in Subdivision (a) shall be limited by the court if it determines:... (iii) that the discovery is unduly burdensome or expensive, taking into account the needs of the case, the amount in controversy, limitations on the parties' resources, and the importance of the issues at stake in the litigation.
Id. at 1294.
The Supreme Court reasoned that the plaintiff's discovery request was unduly burdensome:
Rule 26 provides a means for relief from discovery requests that are unduly burdensome. The facts before us show that Heilig-Meyers had over 700 stores in the United States and Puerto Rico and that there is no particular person, file, database, or document that could provide the information sought by Simpson. According to Heilig-Meyers, it would have to contact and inquire of over 700 store managers as to where similar incidents had occurred at their stores between July 1, 1992 and July 1, 1995, and, if so, it would have to locate any complaints or reports that might have been prepared in connection with those incidents and explain how the incidents were handled. We agree with Heilig-Meyers that such an undertaking would be unduly burdensome.
. . .
We believe, instead, that Heilig-Meyers should be able to satisfactorily respond to Interrogatory No. 10 by attaching copies of any complaints or reports made or forwarded to Heilig-Meyers at its home office between July 1, 1992 and July 1, 1995, concerning any incidents similar to the one made basis of Simpson's complaint, that occurred at any of Heilig-Meyers stores. Heilig-Meyers should also explain how any such complaint or report was handled. This should eliminate the burdensome nature of the request and help to ensure that any information provided is relevant ( i. e., that it tends to establish knowledge on the part of Heilig-Meyers that its merchandise was being displayed in an unsafe manner). Id.
The Heilig-Meyers case is another example of our Supreme Court's unwillingness to require a defendant to accumulate or create information or documents that are not readily "available."
Finally, in Ex parte O'Neal , 713 So.2d 956 (Ala. 1998) , the Supreme Court of Alabama held that a discovery request seeking information relating to all claims investigated, handled, or adjusted by the adjustor who had denied the plaintiffs' claims placed an undue burden on the defendant. Ex parte O'Neal , 713 So.2d at 961. In O'Neal , an insured brought an action against his automobile insurer for breach of contract and bad faith. The plaintiff filed discovery requesting information relating to all claims handled, investigated, or adjusted by the Safeway adjustor who had denied the O'Neal's claims.
In discussing the discovery request, the Supreme Court stated that "unlike data relating to lawsuits filed against Safeway, the information sought by the interrogatory is so broad that to require Safeway to respond in the manner requested by O'Neal, would place an undue burden on Safeway." Id. at 961. The court held this in spite of the fact that the plaintiff had limited his request to claims handled within the previous five years. Additionally, the court noted that to force answers to the interrogatories dealing with the claims handled would "result in a waste of time, money and effort, thus defeating one of the purposes of discovery." Id. at 961.
Justice Lyons concurred specially in the case and noted that he would favor limitations on the scope of discovery relating to pattern and practice evidence in bad faith cases. Specifically, Justice Lyons stated that:
I write specifically to add that while the standard for determining discoverability under Rule 26 Ala. R. Civ. P., is relevance and not admissibility, in regard to a fraud and bad faith claim against an insurer, where the insurance company's failure to pay claims and provide a defense is grounded upon its construction of a specific policy provision, I would favor some limitation on the scope of discovery of pattern evidence. Where information is sought concerning instances involving claims or personnel other than those involved in handling the plaintiff's claim, I would limit such discovery to other cases involved in the same defense. Id. at 961.
These cases all illustrate the Supreme Court's willingness to restrict discovery requests which would create an undue burden on the party from whom the discovery is sought.
C. The Discovery is Too Expensive
This is an area where discovery battles are frequently won or lost. In the typical scenario, the plaintiff will propound discovery on a particular issue and in response the defendant will file an objection on the grounds that the discovery is overly broad and/or unduly burdensome. The plaintiff will file a Motion to Compel and in response the defendant will file a Motion for a Protective Order under Rule 26(c). Along with the Motion for a Protective Order, the defendant, or "the person from whom discovery is sought" will make a showing through the use of an affidavit that it should be protected from the requested discovery on the basis of "undue burden or expense." This practice has become commonplace in Alabama courts.
On the federal level, the U.S. Judicial Conference is considering an amendment to Rule 26 that would require the party seeking discovery to pay "all reasonable costs" incurred by the opponent in responding to burdensome discovery where ordered by the court. Apparently, this change has been recommended by the Advisory Committee and it will be approved by the Judicial Conference of the U.S. Courts this month. The proposal could go into law, along with several other modifications to Federal Rule 26, by December, 2000.
Recently the Alabama Supreme Court has addressed the issue of discovery costs. Through several decisions the court has given us examples of when discovery becomes overly burdensome from a cost standpoint.
In the case of Ex parte American Carpet Sales, Inc. , 703 So.2d 950 (Ala. 1997) , the plaintiff requested discovery on "all buyers' orders and/or purchase agreements" for a five year period where American Carpet "adjusted" upwardly the agreed purchase price. The trial court entered an Order compelling American Carpet Sales to produce discovery. American Carpet moved for a Protective Order and filed a motion for the trial court to reconsider its ruling. The trial court denied both of these motions despite the fact that American Carpet Sales produced affidavits establishing that the company would have to manually review "at least 30,000 customer files at a minimum cost of $12,000." Id. at 951.
On appeal, the Supreme Court of Alabama determined that the plaintiff should be given the right to conduct discovery to establish a "pattern and practice" of alleged similar fraudulent acts. However, the Court placed great weight on the burdensome nature of the request because of the associated expense factor and therefore reduced the period of time from a five year period to a two year period. In essence, the Supreme Court said that an expense of $4,800 would be acceptable for the review of approximately 12,000 customer files, but an expense of $12,000 for manual review of 30,000 customer files would be overly burdensome and too expensive.
While the Supreme Court has decided that an expense of $12,000 was too burdensome to impose on a defendant, there are a number of cases where defendant discovery costs exceeding $1,000 were deemed acceptable.
In the case of Ex parte First National Bank of Pulaski, supra , the plaintiff requested the names and addresses of all Alabama residents who had borrowed money from the bank over a two year period. The plaintiff's counsel was attempting to prove that an officer of the bank required borrowers to purchase credit life and disability insurance as a part of the bank's loan arrangements. The plaintiff had originally requested discovery of this information over a five year period, but in response to the bank's objection, limited the discovery to a two year period. The bank refused to provide the discovery on the grounds that compiling a list of its customers in Alabama was an undue burden and release of customer names and addresses required the release of confidential information. The trial court denied the bank's Motion for a Protective Order and compelled the production of the requested discovery.
On appeal, the Supreme Court of Alabama recognized that the expense of producing the requested discovery would be between $800 and $1,260. The discovery request would cause the bank to have an employee manually review "a minimum of 15,500" documents. Given the "balance of interest" which required the Court to look at the needs of the case, the amount in controversy, limitations on the parties' resources, and the importance of the issues at stake in the litigation as set forth in Rule 26(b)(1), the Supreme Court found that the cost of the requested discovery was not too great a burden on the bank.
In a much older case, Ex parte Allstate Ins. Co. , 401 So.2d 749 (Ala. 1981) , the Supreme Court ruled that there was no abuse of discretion by the trial court in ordering Allstate to spend in excess of $1,000 in order to develop a computer program that would allow the insurance company to respond to an interrogatory propounded on behalf of the plaintiff.
One word to the wise. If a defendant is going to raise the issue of expense to oppose discovery on the grounds that it is overly burdensome or oppressive, then the record must be clear. Generalized statements of inconvenience that a defendant would have to expend "considerable man-hours, time, effort and expense" are insufficient to provide a meaningful basis on appeal for the proposition that discovery is oppressive or burdensome. See Union Security Life Ins. Co. , 723 So.2d at 38.
D. Is Relevance a Determining Factor?
Despite the liberal nature of Alabama's discovery rule, the issue of relevance is still a threshold matter than cannot be ignored. A writ of mandamus will issue on appeal to prevent an abuse of discretion based upon a trial court's order to produce irrelevant information in the discovery process. Ex parte American National Property & Casualty Co. , (WL 667293 (Ala. 1999).
According to the Supreme Court of Alabama, the fist step in determining whether a trial court has abused its discretion is to "determine the particularized need for discovery, in light of the nature of the claim." Ex parte Rowland , 669 So.2d 125, 127 (Ala. 1995). In order to determine whether there is a "particularized need" for discovery, the court should begin by examining the underlying complaint. Ex parte First National Bank of Pulaski . If the requested discovery is reasonably calculated to lead to the discovery of admissible evidence, then the "relevance" requirement is satisfied. Id. Remember, the rules state that "parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action... "Rule 26(b)(1).
In the American National case, a declaratory judgment action was filed against an insurer. The insurer failed to provide coverage for an automobile accident caused by its insured. Two parties sued the insured, obtained a judgment, and then sought to collect under the American National Insurance policy. After obtaining a judgment against the policyholder, two plaintiffs sought a declaration of coverage against the insurer through Alabama's direct action statute. Section 27-233-2 Ala. Code , 1975.
In conjunction with their action against the insurer, the plaintiffs asked for discovery of the names and addresses of all American National insureds, whose coverage was denied on the grounds that American National denied coverage in the underlying case.
American National refused to provide requested discovery and sought a protective order on the basis of relevance. The trial court granted a Motion to Compel and American National appealed.
On appeal, the Alabama Supreme Court said that the insurance company was right; "after carefully reviewing the record and the briefs, we can find no basis for concluding that the information sought by (the plaintiffs) is relevant to the issue of contractual interpretation before the trial court. Id. at 3. The court concluded that in a breach of contract or declaratory judgment case, information regarding other coverage denials is irrelevant. In other words, you cannot discover "pattern and practice" evidence in a breach of contract or declaratory judgment case.
Documentary and factual evidence gathered through paper discovery will help to bolster your position in settlement negotiations, mediation and trial. Though the general rule allows for broad and sweeping discovery on any issue that may be relevant to the facts of the case, there are still several areas where the Supreme Court will put limits on overbroad discovery. Knowing these limits will help the person seeking discovery to tailor his requests to meet the current requirements. Additionally, a working knowledge of the limits put on discovery will help any lawyer better defend their client.
While not an exhaustive overview of all the cases related to what you can and cannot get in discovery, this paper outlines several of the broader topics and should provide you with a good starting point in propounding or defending against broad discovery requests.
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