United States District Court, S.D. Indiana, Indianapolis Division
ELI LILLY AND COMPANY, et al. Plaintiffs,
ARCH INSURANCE COMPANY, et al. Defendants.
ORDER ON PLAINTIFFS' MOTION FOR
J. McKINNEY, JUDGE United States District Court
Eli Lilly and Company (“Lilly”) and Eli Lilly do
Brasil LTDA (“Lilly do Brasil”) (collectively,
“Plaintiffs”) have moved for sanctions against
Defendants Arch Insurance Company and Arch Specialty
Insurance Company (collectively, “Arch”) pursuant
to Rule 37 of the Federal Rules of Civil Procedure
(“Rule 37”). Dkt. No. 375. Plaintiffs asserts
that Arch's unilateral decision to cancel the Rule
30(b)(6) deposition of John Touchstone
(“Touchstone”), which was scheduled to commence
on February 10, 2016, violated this Court's Orders dated
January 29, 2016, and February 2, 2016. Further, Plaintiffs
contend that Arch's subsequent evasive tactics to
reschedule a Rule 30(b)(6) deposition and the personal fact
deposition of Touchstone amount to an abuse of the discovery
process. Both of these failures, Plaintiffs assert warrant
sanctions, including attorneys' fees and expenses
incurred by Plaintiffs for the cancelled deposition and the
filing of this motion as well as the establishment of two
contested facts that were at issue in the depositions: (1)
Lilly do Brasil is a named insured; and (2) Brazil is
included in the Arch policies' “coverage
territory.” Arch denies that its cancellation violated
any of the Court's orders or that its conduct amounts to
an abuse of the discovery process such that an award of
sanctions is proper.
reasons stated herein, the Court GRANTS in part and DENIES in
part Plaintiff's Motion for Sanctions.
in this case seek coverage under its general liability
insurance policies for claims arising in Brazil against Lilly
do Brasil and Lilly. Specifically, Plaintiffs seek coverage
for (1) defense and, if necessary, indemnification against
suits brought by the Brazilian government and individuals who
worked or lived at or near the facility that alleged injury
from contamination at Lilly do Brasil's former facility
in Brazil; and (2) the costs of investigating and remediating
the contamination. Arch denies any defense, indemnity, or
remediation cost obligation.
November 20, 2015, Arch filed a Motion for Judgment on the
Pleadings in which it alleges, in part, that Plaintiffs
cannot support their claim that the Arch policies should be
reformed because the parties intended for them to cover
Lilly's subsidiaries, including Lilly do Brasil. Dkt. No.
362. Arch also asserts a foreign law defense. Id.
December 9, 2015, Arch moved to stay discovery between it and
Plaintiffs based on its arguments in the Motion for Judgment
on the Pleadings. Dkt. No. 318. On January 28, 2016, the
Court granted in part and denied in part Arch's motion to
stay discovery (“Jan. 28 Order”). Dkt. No. 342.
Specifically, the Court stated, “[T]he discovery
between Lilly and Arch shall be limited to the foreign law
defense and arguments raised by Arch in its Motion for
Judgment on the Pleadings.” Dkt. No. 342 at 4.
February 2, 2016, Plaintiffs' counsel informed the Court
that a dispute had arising regarding the scope of the
discovery contemplated by the Jan. 28 Order, namely, whether
or not a deposition of Arch's Rule 30(b)(6) witness
should proceed; therefore, the Court scheduled a Telephonic
Status Conference to resolve the dispute. Dkt. No. 345.
During the teleconference, the Court heard arguments from the
parties on the issue and concluded “that the deposition
may take place as limited to the issues raised by Arch in its
Motion for Judgment on the Pleadings and its application of
foreign law argument and notice.” Dkt. No. 346
(“Feb. 2 Order”). The Court offered to make
itself available on the day of the deposition to help the
parties narrow the deposition requests or to resolve any
disputes that arose. Id.
time of the February 2, 2016, teleconference, Arch had
identified John Touchstone (“Touchstone”) as its
Rule 30(b)(6) witness. However, given Touchstone's key
role in writing/acquiring the Arch policies at issue,
Plaintiffs had also noticed Touchstone's personal
deposition for the same time in or to save resources; it
served both subpoena's on Arch's counsel. Dkt. No.
377 at 4. The depositions were set to occur on February 10,
2016. Id. at 4-5.
on February 8, 2016, at approximately 10:10 p.m., Arch's
counsel contacted Plaintiffs and cancelled the Rule 30(b)(6)
deposition offering no explanation but stating, “We
will reset the deposition as promptly as we can consistent
with your schedule. I know this is very unfortunate and will
work with you to get it reset as promptly as possible. I
apologize.” Dkt. No. 376-14.
Arch's counsel's request, counsel for both parties
conferred by telephone the next morning. Dkt. No. 376-16.
Plaintiffs' counsel summarizes the conversation as
[Mr. Shadley] stated that he was in California and had been
preparing Mr. Touchstone for his depositions, and that during
his preparation he had come to the conclusion that there
“was something wrong with Mr. Touchstone.” He
stated that Mr. Touchstone “might have a condition,
” that is “answers would not be reliable, ”
and the he didn't “want everyone to waste their
time flying out to California.” Mr. Shadley said that
Arch would be designating a different 30(b)(6) witness. He
also said that Arch would work around my schedule in
resetting the 30(b)(6) deposition so as to minimize the
inconvenience of the last minute cancellation. I informed Mr.
Shadley that Lilly would be seeking costs, which Mr. Shadley
acknowledged as being reasonable under the circumstances.
Dkt. No. 376-1, ¶ 16.
around February 23, ...