Opinion
C.A. No. 00C-06-010
Submitted: November 5, 2001
Decided: February 28, 2002
On Plaintiff's Motion for Class Certification. Denied (Without Prejudice).
On Plaintiff's Motion for Special Discovery Master. Denied (Without Prejudice).
John S. Spadaro, Esquire, and Roger D. Landon, Esquire, of Murphy, Spadaro Landon, Wilmington, Delaware for the Plaintiff.
Keith E. Donovan, Esquire, of Swartz, Campbell Detweiler, Wilmington, Delaware, for the Defendant.
MEMORANDUM OPINION
Before the Court is the motion of James M. Crowhorn ("plaintiff") for class certification, as well as the response of Nationwide Mutual Ins. Co. ("defendant" or "Nationwide") in opposition to certification. For the reasons outlined in the Delaware Supreme Court's recent ruling in Benning v. Wit Capital Group, Inc., class certification must be denied at this time until further discovery is conducted.
2001 WL 1388544 (Del.Supr.).
Background
Plaintiff filed this class action complaint on behalf of himself and all those similarly situated, alleging that: Nationwide violated 21 Del. C. § 2118B and 6 Del. C. § 2513; committed common law fraud; and wrongfully refused to honor their contractual obligations arising under certain automobile insurance policies. The plaintiff's injuries stem from a motor vehicle collision which occurred on March 8, 1999. As a result of processing his claim, plaintiff maintains that he was submitted to the "systematic practices" of Nationwide in denying him his first-party insurance or Personal Injury Protection ("PIP") benefits. He alleges that Nationwide's practices, ongoing since at least 1994, are fraudulent and in violation of Delaware statutes.
See Crowhorn v. Nationwide Mut. Ins. Co., 2001 WL 695542 (Del.Super.Ct.) (explaining factual development of the instant case).
Class Certification Standards
"[C]ertification of a class action requires a two-step analysis." The first step requires that the action satisfy all four prerequisites mandated by subsection (a) of . . . [R]ule 23." These are: (1) numerosity; (2) commonality; (3) typicality and (4) adequacy of representation. "If and only if all of the prerequisites of subsection (a) are satisfied, then Rule 23(b) requires the presence of at least one of four additional factors." Under Rule 23(c) the Court is directed to determine whether or not a case qualifies for class certification "as soon as practicable after the commencement of an action brought as a class action."In the case sub judice, the Court indicated from the bench that it wished to consider the certification issue as soon as practicable; therefore, certain discovery (such as the issue of the appointment of a special discovery master) would be suspended until the parties could brief the certification issue and the Court could resolve the matter on the briefs. It is apparent from the Delaware Supreme Court's opinion in Benning, however, that the Court cannot make its final decision with respect to the elements of Rule 23, where a party has attempted to conduct "discovery that would have aided in identifying instances where [the defendant's] actions harmed other proposed class members."
Benning, 2001 WL 1388544 at *1.
Under Benning, this Court must "allow the parties to review all documents that it believes would bear on the viability of the class" and permit "the parties to conduct sufficient discovery before it determines whether or not a viable class exists." In addition, discovery should also encompass "the question of whether or not a class action remains the superior method for the fair and efficient adjudication of this litigation."
Id.
Id. (citations omitted).
Id. at *2.
Discovery
Accordingly, this Court will "order a discovery schedule that will allow it to determine properly if the proposed class meets the . . . requirements of Superior Court Rule 23." The parties should be prepared to discuss the scheduling of all discovery matters at the upcoming pre-trial conference to be held on March 5, 2002.The Court will also take this opportunity to voice its concerns regarding the discovery process in this case to date. Rule 26(g) sets out the duty of the parties in responding to discovery. This rule presupposes that Counsel will make "a reasonable effort to assure that [its] client has provided all the information and documents available to him that are responsive to the discovery demand." The test for "what is reasonable is a matter for the Court to decide on the totality of the circumstances." In reviewing conduct covered by Rule 26(g), federal courts have considered "the thoroughness, accuracy and honesty (as far as counsel can reasonably tell) of the responses and the process through which they have been assembled."
Del. Super.Ct.Civ.R. 26(g) is similar to Fed.R.Civ.P. 26(g)(2).
Advisory Committee Notes to 1983 Amendments to the Federal Rule of Civil Procedure 26(g).
Id.
See Gregory P. Joseph, Sanctions: The Federal Law of Litigation Abuse, § 42(c), P.541 (3d.ed. 2000).
The Court is concerned with the thoroughness and accuracy of the process here. It is noted, for example, that plaintiff propounded requests for admissions to defendant. Plaintiff asked the defendant to admit that the number of PIP claims which have been denied since 1994, or that have been paid after the expiration of thirty days, equaled numbers ranging from 25 cases to over 20,000 cases. These requests were objected to by defendant. As a result, plaintiff moved to compel a response. An Order was issued for the Court, by Commissioner Freud, that compelled the defendant's response.
Defendant responded to that Order, first, by objecting to the terminology used to define the class. Secondly, defendant maintained that, after reasonable inquiry, it was without sufficient information or knowledge to admit or deny the requests for admission because there was no reasonable method to obtain the information necessary to formulate a response (without conducting a manual file-by-file review of every PIP file in Delaware since January 1, 1994). Moreover, defendant stated that the claim files, if they existed, could not be assembled or reviewed in the time period required for a response. The Court is concerned that these responses may not be reasonable and that defendant acts at the peril of Rule 37(c) with regard to remedies after trial.
Under Delaware Superior Court Civil Rule 37(c), a party is not relieved from sanctions for insufficient responses to requests for admission unless:
(1) the request was held objectionable pursuant to Rule 36(a); or
(2) the admission sought was of no substantial importance; or
(3) the party failing to admit had reasonable grounds to believe that [it] might prevail on the matter; or
(4) there was other good reason for the failure to admit.
Rosenblatt v. Getty Oil Co., 1982 WL 17836 at *2 (Del.Ch.) (stating that:
while there may be authority to the contrary, . . . [it is not] the function of the Court, in advance of trial, to analyze the sufficiency of or justification for the various answers given by a party in response to a request for admissions. . . . [This is] because Rule 36, with its reference to Rule 37(c), would appear to carry its own sanction, namely, that if a party unfairly refuses to admit an uncontroverted fact or legal status, thereby needlessly putting the other party to the formal proof of that fact or status as a necessary part of its case, the Court, in its discretion, may assess the expense of proving such matters against the party to which the request for the admission was made. In refusing to make an admission, a party acts at this peril. . . . [Otherwise, the Court would be involved] in a determination of the evidentiary merits of factual matters in advance of the trial. In this case, given its complexity, there is no time to do so, nor . . . [is] it appropriate.").
Defendant could characterize its response as an attempt to object properly under Rule 37(c)(1) or (4). Defendant's response may be insufficient under rule 37(c)(4) because its objection to the class definition does not appear to have been made to the Commissioner, nor made in a motion for protective order. Defendant "has the burden of persuasion on this issue and the mere mention of a possible defense, without more, is insufficient to meet this burden."
Cline v. Prowler Ind. of Maryland, 418 A.2d 968, 984 (Del. 1980) (citing Wileman v. Signal Fin. Corp., 358 A.2d 689 (Del. 1978))
Under 37(c)(1) the response also fails because Rule 36(a) states that "an answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless . . . the information known or readily obtainable by him is insufficient to enable him to admit or deny." Here, the defendant implied that no files may be available (thus there is insufficient information to respond), or if they were available, there was insufficient time (not insufficient information) to obtain the truthful response.
The Court finds it hard to believe that there are no PIP files available and readily obtainable under Nationwide's control since 1994 (which defendant implies might be the case). The Court questions why the defendant could not review at least some files in an attempt to admit or deny some of the requests for admissions propounded (for example requests one through three perhaps). Importantly, the defendant did not request an extension of time to try to respond truthfully. Nor did it turn over files so that the plaintiff could attempt to count potential class members. Inconvenience is not an acceptable excuse for non-responsiveness if there is at least some information available to a party.
See e.g. Wileman v. Signal Fin. Corp., 385 A.2d at 690 (finding sanctions . . . appropriate where a party stated that it could not provide certain information, but also stated that such information was available at the home office in Pittsburgh).
This principle is applicable to discovery methods beyond requests for admissions, and the Court is cognizant of additional concerns both parties have raised with respect to discovery that are not addressed here. The Court intends to schedule a plan for resolution of all discovery matters at the pre-trial conference, and will expect the parties to comply fully with all discovery orders as discovery in this matter has languished long enough.
Special Discovery Master
The Court is also aware that the plaintiff has requested the appointment of a special discovery master in this case, and has decided to deny that motion for the present. The basis for plaintiff's motion appears to be that Nationwide's lassitude and indolent approach will make discovery tasks particularly onerous due to the numerous and complex issues involved. At the present time, the Court believes that the procedures afforded by the Superior Court Kent County Case Management Plan, whereby the parties may move to compel discovery (and may move for corresponding costs or other appropriate sanctions), should provide the parties an adequate remedy for non-responsive discovery. If, however, documents are not turned over on the basis of privilege, and numerous documents will therefore need individual review, the Court will reconsider plaintiff's motion at such time.
See e.g. Delaware Superior Court Civil Rules 26, 37.
Wherefore, plaintiff's motion for class certification is denied without prejudice until completion of discovery, whereupon the motion may be renewed. Plaintiff's motion for the appointment of a special discovery master is also denied without prejudice.
IT IS SO ORDERED.