694 F. Supp. 3d 1173 (D.N.D. 2022)

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Pyle v. A.H. Bennett Co.

United States District Court, D. North Dakota

Dec 1, 2022

694 F. Supp. 3d 1173 (D.N.D. 2022)

Opinion

Case No. 3:21-cv-159 Case No. 3:22-cv-75

2022-12-01

Brian K. PYLE, Plaintiff, v. A.H. BENNETT COMPANY, a Minnesota corporation, et al., Defendants. Glenn W. Frericks, Plaintiff, v. A.H. Bennett Company, a Minnesota corporation, et al., Defendants.

David C. Thompson, Grand Forks, ND, for Plaintiff in Nos. 3:21-cv-159, 3:22-cv-75. Elizabeth Sorenson Brotten, Jason Mohr, Joanna M. Salmen, Kyle B. Mansfield, Paul William Magyar, Foley & Mansfield PLLP, Minneapolis, MN, for Defendants A.H. Bennett Company in Nos. 3:22-cv-75, 3:21-cv-159, A.W. Kuettel & Sons, Inc. in Nos. 3:22-cv-75, 3:21-cv-159, Goodyear Tire & Rubber Company in No. 3:21-cv-159, Rockbestos-Surprenant Cable Corporation in Nos. 3:22-cv-75, 3:21-cv-159, Marley-Wylain Company in No. 3:21-cv-159, Zurn Industries, Inc. in No. 3:21-cv-159, H.H. Robertson Company in No. 3:22-cv-75, Riley Power, Inc. in No. 3:22-cv-75. Abigale Raye Griffin, Todd E. Zimmerman, Matthew P. Kopp, Fredrikson & Byron, P.A., Fargo, ND, for Defendant American Crystal Sugar Company in Nos. 3:21-cv-159, 3:22-cv-75. Kathryn Nekola, Flom Law Office, P.A., Moorhead, MN, Joel A. Flom, Flom Law Office, P.A., Fargo, ND, for Defendant Asbestos Corporation, Ltd. in Nos. 3:21-cv-159, 3:22-cv-75. Thomas D. Jensen, Stuart David Campbell, Lind Jensen Sullivan & Peterson PA, Minneapolis, MN, for Defendants Bell & Gossett in Nos. 3:21-cv-159, 3:22-cv-75, Goulds Pumps in Nos. 3:21-cv-159, 3:22-cv-75, Western Steel & Plumbing, Inc. in No. 3:22-cv-75. Heather H. Neubauer, Meagher & Geer, P.L.L.P., Minneapolis, MN, for Defendants Burnham, LLC in Nos. 3:21-cv-159, 3:22-cv-75, Building Sprinkler Company, Inc. in No. 3:22-cv-75. Thomas D. Jensen, Lind Jensen Sullivan & Peterson PA, Minneapolis, MN, for Defendant Cleaver-Brooks, Division of Aqua-Chem, Inc. in Nos. 3:21-cv-159, 3:22-cv-75. Marc E. Betinsky, Robert Bennett, Robins Kaplan LLP, Minneapolis, MN, Stacey Elizabeth Tjon Bossart, Haugen Moeckel & Bossart, Fargo, ND, for Defendant Crown Cork & Seal Company, Inc. in Nos. 3:21-cv-159, 3:22-cv-75. Jon P. Parrington, Jon P. Parrington, P.A., Minneapolis, MN, for Defendant Fargo-Moorhead Insulation Company in No. 3:22-cv-75. David E. Scouton, Matthew R. Thibodeau, Thibodeau, Johnson & Feriancek, Duluth, MN, for Defendant Foster Wheeler Corporation in Nos. 3:21-cv-159, 3:22-cv-75. David D. Schweigert, Tyler Johnson Siewert, Schweigert, Klemin & McBride, P.C., Bismarck, ND, for Defendant General Electric Company in Nos. 3:22-cv-75, 3:21-cv-159. Scott D. Jensen, Camrud, Maddock, Olson & Larson, Ltd., Grand Forks, ND, for Defendant John Crane, Inc. in Nos. 3:21-cv-159, 3:22-cv-75. Peter K. Doely, Michael C. McCarthy, Maslon LLP, Minneapolis, MN, for Defendant Metropolitan Life Insurance Company in Nos. 3:21-cv-159, 3:22-cv-75. Elizabeth Sorenson Brotten, Jason Mohr, Kyle B. Mansfield, Paul William Magyar, Foley & Mansfield PLLP, Minneapolis, MN, for Defendant Riley Power, Inc. in No. 3:21-cv-159. Jon R. Russell, Meagher & Geer, P.L.L.P., Minneapolis, MN, for Defendants Redco Corporation in No. 3:21-cv-159, S.O.S. Products Company, Inc. in No. 3:22-cv-75, United Conveyor Corporation in No. 3:22-cv-75. Elizabeth Sorenson Brotten, Jason Mohr, Foley & Mansfield PLLP, Minneapolis, MN, for Defendants IKO Midwest, Inc., IKO Industries, Ltd. in No. 3:21-cv-159. H.H. Robertson Company, Pro Se. Elizabeth Sorenson Brotten, Jason Mohr, Joanna M. Salmen, Kyle B. Mansfield, Paul William Magyar, Ye Xu, Foley & Mansfield PLLP, Minneapolis, MN, for Defendants Goodyear Tire & Rubber Company, Zurn Industries, Inc. in No. 3:22-cv-75. Matthew R. Thibodeau, Thibodeau, Johnson & Feriancek, Duluth, MN, for Defendants Industrial Contractors, Inc., Paul W. Abbott Company, Inc. in No. 3:22-cv-75. Scott D. Jensen, Camrud, Maddock, Olson & Larson, Ltd., Grand Forks, ND, for Defendant John Crane, Inc. in No. 3:22-cv-75. David T. Schach, Jon R. Russell, Meagher & Geer, P.L.L.P., Minneapolis, MN, for Defendants S.O.S. Products Company, Inc., United Conveyor Corporation in Nos. 3:21-cv-159, 3:22-cv-75. David E. Scouton, Thibodeau, Johnson & Feriancek, Duluth, MN, for Defendants U.S. Filter Co., Whittier Filtration, Inc. in Nos. 3:21-cv-159, 3:22-cv-75. Jane L. Dynes, Kasey D. McNary, Serkland Law Firm, P.C., Fargo, ND, for Defendant Union Carbide Corporation in Nos. 3:21-cv-159, 3:22-cv-75. David T. Schach, Jon R. Russell, John C. Hughes, Meagher & Geer, P.L.L.P., Minneapolis, MN, for Defendant Redco Corporation in No. 3:22-cv-75.

Alice R. Senechal, United States Magistrate Judge

ORDER

Alice R. Senechal, United States Magistrate Judge

Plaintiffs in the above-captioned cases allege state law claims arising from their occupational exposure to asbestos. This court's jurisdiction is based on diversity of citizenship.

Defendants, in both cases, move to enforce plaintiffs' compliance with disclosure provisions of North Dakota's Asbestos Bankruptcy Trust Transparency Act (Trust Transparency Act) set forth in North Dakota Century Code section 32-46.1-02. (Pyle, Doc. 105; Frericks, Doc. 63). Defendants further request that, if plaintiffs do not comply with the disclosure requirements by a date certain, the cases be dismissed pursuant to the state statute.

Defendants state their motions "seek the enforcement of a statute, up to and including dismissal of this case" and therefore contend they are not bringing discovery motions that require compliance with Civil Local Rule 37.1. (Pyle, Doc. 105, p. 1 n.1; Frericks, Doc. 63, p. 1 n.1). That rule provides parties may not file a discovery motion until after they have conferred in an attempt to resolve the dispute and after they have participated in an informal conference with the assigned magistrate judge. Only if a dispute remains unresolved after those steps are completed may a party file a discovery motion. Plaintiffs have not responded to defendants' position that the motions are not discovery related. Under that circumstance, the court declines to address whether defendants should have complied with Rule 37.1's requirements before filing the motions and will consider the motions on the merits.

Defendants requested plaintiffs' compliance with section 32-46.1-02 via letters to plaintiffs' counsel. (Pyle, Doc. 106-17 to -18; Frericks, Doc. 64-17 to -24). Plaintiffs acknowledge they have not complied with the statute's requirements. The record includes no suggestion defendants have requested any trust related information through federal rules governing discovery.

Plaintiffs oppose the motions, contending section 32-46.1-02 is procedural and therefore preempted by Federal Rules of Civil Procedure 26 and 37. Plaintiffs request the motions be denied on that basis. Alternatively, plaintiffs request that if the court determines section 32-46.1-02, or the Trust Transparency Act as a whole, is substantive rather than procedural, the court conclude the Trust Transparency Act is unconstitutional. (Pyle, Doc. 111; Frericks, Doc. 65).

In reply, defendants argue section 32.46.1-02 does not conflict with any federal rule, the state statute is substantive, and the state statute applies because federal court jurisdiction is based on diversity of citizenship. Defendants also argue plaintiffs' constitutional arguments should be rejected based on an earlier decision of this court in another case. (Pyle, Doc. 126; Frericks, Doc. 67).

The briefs and supporting materials filed in Pyle and Frericks are nearly identical. Hereinafter, the court cites only to the briefs and supporting materials filed in Pyle.

Background

Individuals with asbestos-related injuries may seek compensation through two avenues—by filing claims with trusts established by bankrupt asbestos manufacturers and by initiating litigation in the courts against solvent companies that caused plaintiffs' exposure to asbestos.

In 1994, Congress enacted 11 U.S.C. § 524(g) of the Bankruptcy Code to "address a critical problem posed by asbestos-related bankruptcies, namely that, because of the delayed onset of many asbestos-related illnesses, 'potential claimants against an asbestos manufacturer's bankruptcy estate may not know of their claims until years after the estate has been depleted by other claimants whose symptoms became apparent earlier.' " Fireman's Fund Ins. Co. v. OneBeacon Ins. Co., 49 F.4th 105, 111 n.8 (2d Cir. 2022) (citation omitted). Under § 524(g), a bankruptcy court, through an injunction, may channel asbestos-related claims to a settlement trust created for the purpose of compensating present and future claimants. Id.

Because the trust system is separate from the court system, some courts have commented on abuses resulting from a lack of transparency between the two systems. In 2014, a bankruptcy judge issued an order estimating a debtor's liability for present and future mesothelioma claims arising from asbestos exposure. In re Garlock Sealing Techs., LLC, 504 B.R. 71 (Bankr. W.D.N.C. 2014). During an evidentiary hearing, after the debtor, Garlock, was permitted full discovery in fifteen settled asbestos tort cases, Garlock demonstrated each of the plaintiffs had withheld information about sources of their asbestos exposure. Further, "Garlock identified 205 additional cases where the plaintiff's discovery responses conflicted with one of the Trust claim processing facilities or balloting in bankruptcy cases." Id. at 86-87. The court described the plaintiffs' conduct as a "startling pattern of misrepresentation." Id. at 86.

In 2017, North Dakota enacted legislation requiring a plaintiff alleging asbestos-related injuries to disclose all asbestos trust claims. That statute, titled "Required disclosures by plaintiff," provides:

1. Within thirty days after an asbestos action is filed, the plaintiff shall:

a. Provide the court and parties with a sworn statement signed by the plaintiff and plaintiff's counsel indicating an investigation of all asbestos trust claims has been conducted and all asbestos trust claims that could be made by the plaintiff have been filed. The sworn statement must indicate whether a request has been made to defer, delay, suspend, or toll any asbestos trust claim and provide the disposition of each asbestos trust claim.

b. Provide parties with all trust claims materials, including materials related to the conditions other than those that are the basis for the asbestos action and any materials from all law firms connected to the plaintiff in relation to the plaintiff's exposure to asbestos.

c. Produce all available trust claims materials submitted to any asbestos trusts by other individuals if the plaintiff's asbestos trust claim is based on exposure to asbestos through those individuals.

2. The plaintiff shall supplement the information and materials required under this section within thirty days after supplementing an existing asbestos trust claim, receiving additional information or materials related to an asbestos trust claim, or filing an additional asbestos trust claim.

3. The court may dismiss an asbestos action if the plaintiff fails to comply with this section.

4. An asbestos action may not proceed to trial until at least one hundred eighty days after the requirements of this section have been met.

N.D. Cent. Code § 32-46.1-02. (footnotes added). A number of other states have enacted similar legislation.

Asbestos trusts are not limited to those created under § 524(g). The state statute defines "asbestos trust" as:

a government-approved or court-approved trust, qualified settlement fund, compensation fund, or claims facility created as a result of an administrative or legal action, a court-approved bankruptcy, or pursuant to 11 U.S.C. [§] 524(g), 11 U.S.C. [§] 1121(a), or other applicable provision of law intended to provide compensation to claimants arising out of, based on, or related to the health effects of exposure to asbestos.

N.D. Cent. Code § 32-46.1-01(3).

Defendants state they are not seeking to enforce any stay provision, but section 32-46.1-02(4), which defendants seek to enforce, is essentially a stay provision.

The Trust Transparency Act includes additional provisions not currently in dispute. See N.D. Cent. Code §§ 32-46.1-03 to -06.

At legislative hearings on the bill that became the Trust Transparency Act, one proponent briefly discussed the Garlock case. (Doc. 106-15, p. 14). Several proponents described the primary purpose of the bill as ensuring that juries in asbestos injury actions have sufficient information to accurately apportion fault. See id. at 4, 8-9, 15-17, 23, 30, 34. Proponents described the bill as a mechanism that would achieve that purpose by requiring plaintiffs to file trust claims at the beginning of an asbestos lawsuit so that juries would know what portion of fault might be attributable to bankrupt wrongdoers. Id. at 4, 16-17, 24. Proponents also described the bill as "streamlining the discovery process," noting there would be fewer discovery motions, as avoiding "double-dipping," and as "govern[ing] proceedings in state courts." Id. at 8-9, 17-18, 25, 27, 31-32. One proponent stated:

"Double-dipping" refers to a plaintiff withholding identification of sources of asbestos exposure in litigation but identifying those withheld sources in asbestos trust claims. The effect is that a jury may apportion a higher percentage of fault to a less culpable defendant. There is no evidence of "double-dipping" in North Dakota asbestos injury litigation, but there is such evidence in other states. (See Doc. 106-4 to -12).

North Dakota is a state that allows the bankrupt -- anybody that may have contributed to the plaintiff's disease to be put on the verdict form, and we're not changing that in any way with this bill.

. . . [W]e're not intending in any way to change the mechanism in which North Dakota is apportioning liability. This is simply an information disclosure piece of legislation.

Id. at 28-29.

Law and Discussion

Plaintiffs contend section 32-46.1-02 conflicts with Federal Rules of Civil Procedure 26 and 37 and argue the state statute is therefore preempted under Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010). Defendants counter that there is no direct conflict between the state statute and the Federal Rules and contend Shady Grove does not apply because this court held section 32-46.1-02 was substantive rather than procedural in Kotalik v. A.W. Chesterton Co., 471 F. Supp. 3d 934 (D.N.D. 2020).

The Kotalik order addressed nearly identical motions in two cases—Kotalik [v. A.H. Bennett Company, 2019 WL 3758035 (D.N.D. 2019)] and Selfors v. Apollo Piping Supply, Inc. This court refers to the two cases collectively as Kotalik.

In Shady Grove, the Supreme Court addressed whether a New York statute prohibiting class actions to collect unpaid statutory interest conflicted with Federal Rule of Civil Procedure 23. The federal district court found the claim barred under the state statute, though it would have been allowed to proceed under the class action criteria of Rule 23. On appeal, the Second Circuit affirmed the district court's decision, finding no conflict between Rule 23 and the New York statute but opining that if there were a conflict between the two, Rule 23 would control unless it violated the Rules Enabling Act. Concluding the New York law was substantive rather than procedural, the Second Circuit applied it under the doctrine of Erie R. Co. v. Tompkins, which noted, consistent with the Rules of Decision Act, 28 U.S.C. § 1652, that "[e]xcept in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State." 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The Supreme Court disagreed with the Second Circuit's application of the state statute.

Justice Antonin Scalia, writing for a Shady Grove plurality, described the framework for analysis of the issue:

We must first determine whether Rule 23 answers the question in dispute. If it does, it governs—New York's law notwithstanding—unless it exceeds statutory authorization of Congress's rule making power. We do not wade into Erie's murky water unless the federal rule is inapplicable or invalid.

Shady Grove, 559 U.S. at 398, 130 S.Ct. 1431 (citations omitted). "[I]t is not the substantive or procedural nature or purpose of the affected state law that matters, but the substantive or procedural nature of the Federal Rule." Id. at 410, 130 S.Ct. 1431. In a concurrence, Justice John Stevens agreed with the plurality's statement of the framework for analysis, describing the question as whether the federal rule is "sufficiently broad to control the issue before the Court." Id. at 421, 130 S.Ct. 1431 (quoting Burlington N.R.R. Co. v. Woods, 480 U.S. 1, 5, 107 S.Ct. 967, 94 L.Ed.2d 1 (1987)). If the federal rule is "sufficiently broad," it controls unless it violates the Rules Enabling Act, 28 U.S.C. § 2072. The plurality and concurring opinions agreed—if a federal rule answers the question and does not violate the Rules Enabling Act, Erie does not apply, and the state statute does not govern. As the Sixth Circuit stated in discussing Shady Grove:

The first question we must ask is whether the Federal Rules of Civil Procedure answer the question in dispute . . . . In other words, do the Federal Rules answer "the same question" as the state rule? If the Federal Rules answer that question, we then must ask whether the Federal Rules are valid under the Constitution and the Rules Enabling Act. If the answers to both those questions are yes, then our work is done. We apply the Federal Rules . . . .

Gallivan v. United States, 943 F.3d 291, 293 (6th Cir. 2019) (citations omitted). Stated differently, if a state statute directly collides with a federal procedural rule, the federal rule governs in a diversity case unless the federal rule violates the Constitution or the Rules Enabling Act. Woods, 480 U.S. at 4-5, 107 S.Ct. 967.

Kotalik did not address whether section 32-46.1-02 conflicted with any federal rule, specifically noting that argument had not been raised. 471 F. Supp. 3d at 945. In determining section 32-46.1-02 was substantive rather than procedural, this court noted the plaintiffs did "not directly address defendants' position that the disclosure requirements of the Trust Transparency Act [were] substantive, and not procedural, law" and further noted the plaintiffs' brief referred to the defendants' motions as involving a "North Dakota state substantive law." Id. at 948. Given those circumstances, Kotalik did not analyze whether section 32-46.1-02 is substantive or procedural and Kotalik is therefore not instructive in considering the current motions. Because plaintiffs now raise the issue and because of recent decisions in this district raising similar issues concerning a different North Dakota statute, the court now reexamines its Kotalik decision.

The question in dispute here—what disclosures are required of a plaintiff in asbestos injury itigation—is complicated by the fact that section 32-46.1-02—"Required disclosures by plaintiff"—includes requirements in addition to disclosure. Section 32-46.1-02 dictates the timing of asbestos trust related disclosures, the production of asbestos trust related materials, and the timing of supplementation of asbestos trust related information and materials. The statute also requires a plaintiff to file all asbestos trust claims within thirty days of filing an asbestos injury action and includes potential penalties for not complying with the statute's requirements.

The court first considers whether there is any direct conflict between the various requirements of section 32-46.1-02 and Rule 26. While several other states have statutes requiring similar disclosures in asbestos injury litigation, no federal court of appeals has addressed whether any state's asbestos trust transparency statutes conflict with the Federal Rules of Civil Procedure.

1. Conflict Between Rule 26 and the Statutory Disclosure Requirements

A federal rule conflicts with a state law when the federal rule's scope is sufficiently broad to control the issue before the court, leaving no room for operation of the state law. Woods, 480 U.S. at 4-5, 107 S.Ct. 967 (citation omitted). The Federal Rules are to be given their plain meaning and are not to be narrowly construed to avoid a conflict. Walker v. Armco Steel Corp., 446 U.S. 740, 750 n.9, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980).

Plaintiffs rely on a single decision from another district, which determined that part of Utah's Asbestos Bankruptcy Trust Claims Transparency Act was preempted by Rules 26 and 37 but another part of Utah's Act was not preempted. See Hipwell v. Air & Liquid Sys. Corp., 1:20-cv-00063-JNO-JCB, 2020 WL 6899492 (D. Utah Nov. 24, 2020). The court notes, however, that Hipwell arose in a procedural posture different from that of the present cases. In Hipwell, the parties conferred regarding a discovery schedule and submitted a report stipulating to all matters except applicability of provisions of Utah's Act. The Hipwell plaintiff did not dispute defendants were entitled to the information required to be disclosed under the Utah Act. Rather, the plaintiff argued the information should be disclosed pursuant to the Federal Rules of Civil Procedure. Id. at *2. Here, plaintiffs appear to challenge whether all of the information required to be disclosed under the North Dakota statute would be subject to disclosure under the Federal Rules of Civil Procedure. The Hipwell court determined Federal Rules 26 and 37 preempted section 2004 of Utah's Act, which required a plaintiff to provide:

The parties do not cite, and this court's research has not identified, any other district court cases that have addressed whether a state's asbestos trust transparency statutes conflict with the Federal Rules of Civil Procedure.

It is difficult to discern plaintiffs' position on the effect of a determination that the North Dakota statute is procedural rather than substantive. Plaintiffs' briefs include arguments based on North Dakota's Rules of Civil Procedure rather than the federal rules. Portions of the briefs appear to refer to scheduling orders in asbestos cases brought in state court. Plaintiffs' briefs include arguments regarding admissibility rather than discoverability of trust related information. While advocating that the Trust Transparency Act should be interpreted as procedural rather than substantive, plaintiffs also argue the statute is an unconstitutional violation of the separation of powers. The briefs include reference to remand to state court, though plaintiffs filed the cases in this court. In short, plaintiffs' briefs are of little assistance to the court.

(1) a sworn statement identifying all asbestos trust claims that a plaintiff has filed or could file within 120 days prior to trial; (2) all trust claim materials for each asbestos trust claim that has been filed by a plaintiff; and (3) supplement the information and materials within 90 days after a plaintiff files an additional asbestos trust claim, supplements an existing trust claim, or receives additional information or materials related to a claim or potential claim. Utah Code Ann. § 78B-6-2004(1)-(3). Section 2004 further provides that failure to comply "shall constitute grounds for the court to extend

the trial date in an asbestos action." Utah Code Ann. § 78B-6-2004(4).

Id.

Section 2004, like section 32-46.1-02, requires a plaintiff to disclose whether there has been a request to defer, delay, suspend, or toll an asbestos trust claim while litigation is pending. See Utah Code Ann. § 78B-6-2004(1)(b).

Plaintiffs characterize section 2004 of Utah's Act as "essentially identical" to section 32-46.1-02. (Doc. 111, p. 7). While the statutes are largely similar—both require disclosure of certain asbestos trust related information, control the timing of those disclosures, and provide for potential sanctions—they are not identical. Section 32-46.1-02 requires a plaintiff to file all asbestos trust claims, rather than merely identifying those that could be but have not been filed, and requires a plaintiff to provide "any materials from all law firms connected to the plaintiff in relation to the plaintiff's exposure to asbestos." See N.D. Cent. Code § 32-46.1-02(1)(b). Section 2004 of Utah's Act does not include similar requirements.

Differences in the two statutes aside, this court considers the Hipwell court analysis:

Generally, discovery is procedural and controlled by the Federal Rules of Civil Procedure. Rule 26 governs a party's duties to disclose information, the timing of disclosure, the scope and content of discovery, and duties to supplement disclosures. Fed. R. Civ. P. 26(a)-(b). Rule 37 sets the applicable sanctions for a party's failure to comply. Fed. R. Civ. P. 37(c). Here, application of section 2004 would interfere with the federal discovery scheme and deprive the court of its discretion to manage the procedure and content of discovery, control the timing, and determine the sanctions for noncompliance. Application of section 2004's automatic stay provision would also abrogate the court's ability to control its own docket and manage the movement of the case to ensure prompt and efficient determination of the cases pending before it. Because there are no challenges to the validity of the Federal Rules at issue here, the court accepts that Rule 26 and Rule 37 are valid without further inquiry. Therefore, because section 2004 attempts to govern territory already occupied by the Federal Rules, Utah Code Ann. § 78B-6-2004 is preempted, and the Federal Rules control.

Hipwell, 2020 WL 6899492, at *2.

Here, like Utah's section 2004, section 32-46.1-02 clearly includes discovery-related provisions that implicate Rule 26. It is well recognized that the Federal Rules of Civil Procedure govern discovery when federal jurisdiction is based on diversity of citizenship. Bradshaw v. FFE Transp. Servs., Inc., 715 F.3d 1104, 1107 (8th Cir. 2013); see also 8 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2005 (3d ed. 2010) (explaining that "[s]tate law is of very little relevance to discovery in a federal action" and, except for matters of privilege and Rule 69, it is "wholly settled that discovery in a federal court is governed only by these rules and that state discovery practices are irrelevant."). Rule 26 governs required initial disclosures, other pretrial disclosures, supplemental disclosures, the timing of disclosures, the scope of discovery, the discovery plan, and assertions of privileges.

Section 32-46.1-02 also implicates other Federal Rules, under which defendants could request disclosure of trust related information. For example, defendants could seek discoverable trust related information through Rules 33, 34, and 36, which govern interrogatories, requests for production of documents, and requests for admissions and govern time to respond to requests under those rules. Defendants could also seek trust related information through depositions under Rule 30. Also notable, Federal Rule of Evidence 501 governs assertions of privilege, including attorney-client privilege, which section 32-46.1-02 appears to abrogate as to trust related materials in the possession of plaintiffs' law firms. Of course, Rule 501 provides for application of state law to claims of attorney-client privilege in diversity cases. Simon v. G.D. Searle & Co., 816 F.2d 397, 402 (8th Cir. 1987).

While the Federal Rules are sufficiently broad to control required initial disclosures, defendants argue "nothing in Rule 26 prevents additional disclosures from being required." (Doc. 126, p. 3). Defendants further argue:

The only way to find a direct conflict between the [Trust Transparency] Act and the Rule is by inserting the word "only" into the Rule, changing it to read that "a party must, without awaiting a discovery response, only provide to the other parties" [those initial disclosures required by Rule 26]. If Rule 26 included the word only, or some other language prohibiting a party from being required to provide information beyond what is listed in Rule 26, absent a discovery request, Plaintiff's argument might be well taken. But it does not. And while Rule 26 does not require the Plaintiff to disclose trust claim materials, neither does it prohibit the Plaintiff from being required to disclose such materials—it simply does not address the issue.

Id. at 4 (emphasis added).

The court disagrees with defendants' contention that Rule 26 and section 32-46.1-02 do not directly conflict. As defendants acknowledge, Rule 26(a) details initial disclosures required without any discovery request, including the timing of those disclosures. But defendants do not address Rule 26(f)(3), which governs any requested additional disclosures and other discovery-related issues. Under Rule 26(f)(3):

A discovery plan must state the parties' views and proposals on:

(A) what changes should be made in the timing, form, or requirement for disclosures under Rule 26(a) , including a statement of when initial disclosures were made or will be made;

(B) the subjects on which discovery may be needed, when discovery should be completed, and whether discovery should be conducted in phases or be limited to or focused on particular issues;

. . .

(D) any issues about claims of privilege . . .

. . . ; and

(F) any other orders that the court should issue under Rule 26(c) or under Rule 16(b) and (c).

Fed. R. Civ. P. 26(f)(3) (emphasis added). Read in conjunction, Rules 26(a) and (f)(3) provide that any additional disclosures sought by a party—including changes in timing, form, or requirement for initial disclosures—must be included in a discovery plan. Notably, Rule 26(f)(3) also provides the parties an opportunity to make proposals regarding subjects of discovery, privilege issues, and other discovery orders. Further, Rule 26(b) governs the scope of discovery. Contrary to defendants' assertion, section 32-46.1-02 directly conflicts with Rule 26, since the Rule requires additional disclosure only upon a party's proposal, the court's adoption of that proposal, and the issuance of a scheduling order that includes that proposal. Section 32-46.1-02 requires certain disclosures without any action by a defendant.

Defendants did not, in either case, propose any additional disclosures in the discovery plans submitted to the court.

Though the parties do not discuss Rule 16, it is significant that after a federal court receives the parties' discovery plan, which may include proposals for additional disclosure requirements, a federal judge must issue a scheduling order, pursuant to Rule 16(b), which sets forth the deadline for completion of discovery. The court's Rule 16(b) order may modify the timing of required disclosures and modify the extent of discovery, in addition to addressing other discovery-related issues. See Fed. R. Civ. P. 16(b)(3) & (c). The Federal Rules, not state law, govern discovery practice in the federal courts.

Because the court concludes Rule 26 and the disclosure requirements of section 32-46.1-02 directly collide, the court need not, at this time, consider the parties' arguments about Rule 37. Rule 26 controls discovery, including disclosure requirements, and it therefore preempts the state law's disclosure requirements absent Rule 26 exceeding Congress's rulemaking authority. Rule 37 would apply only if a party had not complied with a court order regarding discovery. Since defendants have not yet requested the trust related information via discovery, no order regarding disclosure has yet been issued, so noncompliance with a discovery order is not an issue at this time.

Section 32-46.1-02(c) states an "asbestos action may not proceed to trial until at least one hundred eighty days after the requirements of this section have been met." Federal courts are permitted to set trial dates in scheduling orders, and, as Hipwell aptly noted, state requirements on when federal cases are stayed or when trial may be held in federal court would "abrogate the [federal] court's ability to control its own docket and manage the movement of the case to ensure prompt and efficient determination" of the case. See 2020 WL 6899492, at *2. Though the parties have not specifically addressed section 32-46.1-02(c), this court agrees with the Hipwell court's statement regarding the court's control of its own docket.

2. Rules Enabling Act

As required by Shady Grove, the court next discusses whether Rule 26 exceeds Congress's rulemaking authority. The Rules Enabling Act, 28 U.S.C. § 2072, confers on the Supreme Court "the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrate judges thereof) and courts of appeals," but that power is not unlimited. The Act provides that rules of practice and procedure "shall not abridge, enlarge or modify any substantive right" and that "[a]ll laws in conflict with such rules shall be of no further force or effect after such rules have taken effect." 28 U.S.C. § 2072(b).

"[T]he bar for finding an Enabling Act problem is a high one," and there must be "little doubt" that application of a federal rule would abridge a substantive right to find application of a rule would violate the Rules Enabling Act. Shady Grove, 559 U.S. at 432, 130 S.Ct. 1431. The Supreme Court has never found a Federal Rule of Civil Procedure invalid as abridging, enlarging, or modifying any substantive right. Id. at 407, 130 S.Ct. 1431; Selective Ins. Co. of S.C. v. Sela, 353 F. Supp. 3d 847, 859-60 (D. Minn. 2018). "The test is not whether the rule affects a litigant's substantive rights; most procedural rules do." Id.; see also Hanna v. Plumer, 380 U.S. 460, 464-65, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) (stating "most alterations of the rules of practice and procedure may and often do affect the rights of litigants" and "every procedural variation is 'outcome determinative' " to some extent). A Federal Rule is valid under the Rules Enabling Act if it "really regulates procedure." Sibbach v. Wilson & Co., 312 U.S. 1, 14, 312 U.S. 655, 14, 61 S.Ct. 422, 85 L.Ed. 479 (1941). "If it governs only 'the manner and the means' by which the litigants' rights are 'enforced,' it is valid; if it alters 'the rules of decision by which [the] court will adjudicate [those] rights,' it is not." Shady Grove, 559 U.S. at 407, 130 S.Ct. 1431 (quoting Miss. Publ'g Corp. v. Murphree, 326 U.S. 438, 445, 66 S.Ct. 242, 90 L.Ed. 185 (1946)).

The parties do not argue invalidity of Rule 26. "Rule[ ] 26 . . . regulate[s] discovery, a matter that is certainly capable of classification as procedural." Passmore v. Baylor Health Care Sys., 823 F.3d 292, 299 (5th Cir. 2016). Rule 26 is therefore valid under the Rules Enabling Act. See id. (holding the same); Willever v. United States, 775 F. Supp. 2d 771, 783 (D. Md. 2011) ("There is no doubt that Rule[ ] 26(a)(2) . . . compl[ies] with the mandates of both the Rules Enabling Act and the Constitution."); Ward v. Estaleiro Itajai S/A, 541 F. Supp. 2d 1344, 1360 (S.D. Fla. 2008) (concluding Rule 26 violates neither the Constitution nor the Rules Enabling Act).

3. Discovery Under the Federal Rules of Civil Procedure

As previously noted, plaintiffs appear to challenge whether all of the information required to be disclosed under the North Dakota statute would be subject to disclosure under the Federal Rules of Civil Procedure and there is no suggestion defendants have requested any trust related information through discovery. Until defendants serve discovery requests aimed at obtaining that information and plaintiffs have an opportunity to respond, the court need not address any potential discovery disputes. If any dispute should arise, the parties must comply with Civil Local Rule 37.1.

The court recognizes the fact discovery deadline and the deadline to file discovery motions has passed in Frericks and those same deadlines are quickly approaching in Pyle. In light of this order, the court finds good cause to permit defendants to serve discovery aimed at obtaining trust related information and to extend the deadlines of each of the scheduling orders. The defendants in each case will be permitted to serve discovery, and the parties in each case will be directed to meet and confer and to submit joint proposals as to extending deadlines.

Conclusion

As discussed above, defendants' motions are DENIED without prejudice to raising similar issues through the discovery process. Also as discussed above, some aspects of defendants' motions are not ripe for decision until discovery has taken place. Defendants may serve discovery aimed at obtaining trust related information and materials within fourteen days of the date of this order. After meeting and conferring and within thirty days of the date of this order, the parties in each case are to submit joint proposals as to extending deadlines. Those proposals should be emailed to ndd_J-Senechal@ndd.uscourts. gov. After the court receives the proposals, a status conference may be set.

IT IS SO ORDERED.

Pyle v. A.H. Bennett Co.

Opinion

ORDER

Background

Law and Discussion

1. Conflict Between Rule 26 and the Statutory Disclosure Requirements

2. Rules Enabling Act

3. Discovery Under the Federal Rules of Civil Procedure

Conclusion

Pyle v. A.H. Bennett Co.

Pyle v. A.H. Bennett Co.

Case Details

Citations

Pyle v. A.H. Bennett Co.

Opinion

ORDER

Background

Law and Discussion

1. Conflict Between Rule 26 and the Statutory Disclosure Requirements

2. Rules Enabling Act

3. Discovery Under the Federal Rules of Civil Procedure

Conclusion

Pyle v. A.H. Bennett Co.

Pyle v. A.H. Bennett Co.

Case Details

CitationsCopy Citation

Citations