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Valley Forge Insurance Company v. Hartford Iron & Metal Inc.

United States District Court, S.D. Indiana, Indianapolis Division

April 25, 2018

VALLEY FORGE INSURANCE COMPANY, Plaintiff,
v.
HARTFORD IRON & METAL INC. et al., Defendants.
v.
HARTFORD IRON & METAL, INC., et al., Third Party Plaintiffs,
v.
CONTINENTAL INSURANCE CO., et al., Third Party Defendants KERAMIDA, INC., and HYDROTECH CORPORATION, Interested Parties.

          ENTRY ON PLAINTIFF'S OBJECTION TO MAGISTRATE JUDGE'S ORDER AND ORDER DEFENDANT'S MOTION TO STRIKE

          TANYA WALTON PRATT, JUDGE UNITED STATES DISTRICT COURT.

         This matter is before the Court on Plaintiff Valley Forge Insurance Company's (“Valley Forge”) Objection to Magistrate Judge's Order on Motion to Show Cause (Filing No. 68). Also before the Court is a Joint Motion to Strike Improper Filings at ECF 73 and ECF 75 (Filing No. 76) filed by Defendant Hartford Iron & M Inc.'s (“Hartford Iron”) and Interested Party Keramida Inc.'s (“Keramida”). For reasons stated below, the Court overrules Valley Forge's Objection and grants Hartford Iron's and Keramida's Joint Motion to Strike.

         I. LEGAL STANDARD

         A district court may refer for decision a non-dispositive pretrial motion to a magistrate judge under Federal Rule of Civil Procedure 72(a). Rule 72(a) provides:

When a pretrial matter not dispositive of a party's claim or defense is referred to a magistrate judge to hear and decide, the magistrate judge must promptly conduct the required proceedings and, when appropriate, issue a written order stating the decision. A party may serve and file objections to the order within 14 days after being served with a copy. A party may not assign as error a defect in the order not timely objected to. The district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law.

Fed. R. Civ. P. 72(a). After reviewing objections to a magistrate judge's order, the district court will modify or set aside the order only if it is clearly erroneous or contrary to law. The clear error standard is highly deferential, permitting reversal only when the district court “is left with the definite and firm conviction that a mistake has been made.” Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d 926, 943 (7th Cir. 1997).

         II. BACKGROUND

         Valley Forge initiated this miscellaneous matter, which began from an Order by this Court compelling Keramida, an environmental remediation firm, to respond to a non-party subpoena that requested the production of certain internal documents. Valley Forge requested documents from Keramida, which was working as an environmental remediation contractor for Hartford Iron[1]. Valley Forge and Hartford Iron are also involved in underlying litigation in the United States District Court for the Northern District of Indiana (“Northern District”). That underlying litigation involves an environmental cleanup at Hartford Iron's scrap m plant. Keramida was hired as a contractor after the underlying litigation was well underway. (Filing No. 27 at 2.) As one of the insurers involved, Valley Forge is required to help fund the environmental remediation of the Hartford Iron site.

         After serving the non-party subpoena on Keramida and receiving no response, Valley Forge filed a Motion to Compel in this Court. (Filing No. 1.) The Court referred Valley Forge's Motion to Compel to Magistrate Judge Debra McVicker Lynch, for a decision. On January 11, 2016, the Magistrate Judge issued an Order denying the Motion to Compel and also denying the related requests to strike a responsive filing and for sanctions (Filing No. 15). Valley Forge timely filed its Objections to the Order fourteen days later on January 25, 2016 (Filing No. 17). On April 19, 2016, this Court, granted in part Valley Forge's Motion to Compel, ordering Keramida to respond to all but two of Valley Forge's document requests (expressly identified as “Keramida's files, Keramida's records, Keramida's correspondence files, and Keramida's accounting information”) within thirty days as modified, in the Court's Order (Filing No. 24) (the “April Order”). Keramida gathered the responsive documents which were then reviewed by counsel for Hartford Iron because Hartford Iron believed that some documents were privileged (either protected by the attorney-client privilege or the work product doctrine). (Filing No. 68 at 7; Filing No. 69 at 12.) Hartford Iron's counsel then pulled the privileged documents from Keramida's production and prepared a privilege log describing them. (Filing No. 66 at 3.) On May 19, 2016, Keramida produced the responsive, unprivileged documents to Valley Forge along with the accompanying privilege log.[2] (Filing No. 69 at 12.) The document production consisted of 1, 097 pages of paper documents, a flash drive containing 1.2 gigabytes in 601 electronic files, and a document-by-document privilege log. (Filing No. 69 at 7.) It also withheld more than 60 relevant and responsive documents on the basis of “trial preparation.” (Filing No. 25 at 3.)

         Meanwhile, discovery in the underlying litigation in the Northern District continued. In that litigation, instead of Keramida being the subject of discovery requests, Hartford Iron was the subject of Valley Forge's discovery requests. (Filing No. 69 at 7.) Hartford Iron provided an initial privilege log listing its Keramida communications on January 8, 2016. Id. at 8. Valley Forge objected to Hartford Iron's responses and privilege log, and thereafter filed a Motion to Compel in the Northern District on May 27, 2016. Id. Ultimately, Magistrate Judge Susan Collins conducted an in camera review (at Valley Forge's request petitioned on December 28, 2016), as the parties could not work out their discovery dispute over the privileged documents. (Filing No. 61-1.) This in camera review included communications between Hartford Iron and Keramida asserted as privileged by Hartford Iron. Id. at 4.

         On December 22, 2016, more than seven months after Keramida's May 19, 2016 production, Valley Forge filed a Motion for Show Cause in this Court, arguing the very issue before the Court now: Keramida had failed to comply with this Court's April Order (Filing No. 25). As that motion was pending, Hartford Iron filed a Motion to Transfer the Case to the Northern District pursuant to Fed.R.Civ.P. 45(f), arguing that the Northern District was considering the same discovery issues being argued here. (Filing No. 30.) Magistrate Judge Lynch denied Hartford Iron's Motion to Transfer, concluding that Rule 45 does not contemplate this type of subpoena-related motion. (Filing No. 45 at 2-3.) However, Magistrate Judge Lynch's order included two sentences that Valley Forge took issue with, despite Valley Forge receiving a favorable ruling. Valley Forge filed its second appeal, in this Court, to the following two sentences:

This does not mean that the Northern District's decision on the privilege issues before it will have no bearing on the court's resolution of Valley Forge's motion [to show cause]. In fact, the court expects it to have some bearing; at least it will assist this court in evaluating all of the relevant circumstances surrounding the issues before this court.

Id. at 4. In its objection, Valley Forge contended that this language would create a de facto motion for reconsideration of this Court's April Order. (Filing No. 48.) On June 27, 2017, this Court overruled Valley Forge's objection. (Filing No. 65.) Specifically, this Court stated,

The Court does not conclude that these two sentences of dicta somehow “rewrite” the Court's April 19 order, and the Court notes that Valley Forge remains free to argue to the Magistrate Judge that she should not consider (for whatever reasons) the Northern ...

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