Ploen v. AIG Specialty Insurance Company

Background

This opinion addresses objections in two related cases: Ploen v. AIG Specialty Insurance Company, No. 21-CV-2248, and Enrico v. AIG Specialty Insurance Company, No. 21-CV-2264. Mark Ploen and Richard Enrico had sued non-party AOM Holdings, LLC, concerning $3 million investments or loans that each made in AOM. They settled those state-court lawsuits through agreements under which AOM paid each plaintiff $250,000 and agreed to the entry of a $3 million judgment for each plaintiff.

Ploen and Enrico then sued AOM’s insurer, AIG Specialty Insurance Company, seeking payment of those judgments. AIG argued that the settlements were unreasonable or the product of collusion and therefore could not be enforced against AIG. AIG also argued that the insurance policy excluded coverage because Tony Jacobson, a former AOM executive, allegedly assisted Ploen and Enrico with their lawsuits.

Discovery dispute

AIG sought three categories of documents from Ploen, Enrico, Jacobson, their lawyers, and AOM’s lawyer, Fredrikson & Byron: communications between Ploen’s and Enrico’s lawyers; billing invoices describing communications among the relevant lawyers; and a mediation statement and mediation-related communications. Magistrate Judge John F. Docherty denied in part AIG’s motion to compel production of those materials but granted AIG’s alternative request for privilege logs.

AIG objected under the rule governing review of a magistrate judge’s nondispositive pretrial ruling. Under that rule, the district court could reverse the ruling only if it was clearly erroneous or contrary to law.

Court’s analysis

The court concluded that AIG could not show that Judge Docherty’s denial of the motion to compel met that standard. Regarding Fredrikson, the court did not need to decide whether AIG was required to seek discovery only from AOM in the state-court coverage action. The written order gave additional independent reasons for denying discovery from Fredrikson, including that the invoices would be burdensome, duplicative, and unnecessary, that portions were privileged, and that AOM had already agreed to produce mediation-related communications between Fredrikson and counsel for Ploen and Enrico.

The court disagreed with Judge Docherty’s statement that communications between Ploen’s and Enrico’s lawyers about the settlement process and the strengths and weaknesses of the state-court cases were irrelevant to the settlements’ reasonableness. The court held that the lawyers’ views could be relevant to the objective question of what a reasonable person would think about the settlements. But the court also noted that Judge Docherty had independently denied production because the communications were protected by the work-product privilege, and AIG had not objected to that conclusion. The court therefore overruled AIG’s objection.

The court also denied AIG’s objection concerning claims of protection under Minnesota Statute section 595.02, subdivision 1(m), and the common-interest doctrine because AIG did not identify a specific action it wanted the district court to take. AIG’s objection to Judge Docherty’s consideration of possible fee awards for Fredrikson, Jacobson, and Jacobson’s counsel was likewise not decided in this order because Judge Docherty had already ruled on those fee motions and AIG could file a timely objection to those rulings.

Attorney-fee request

Fredrikson asked for fees incurred in responding to AIG’s objection, arguing that Federal Rule of Civil Procedure 45(d)(1) required sanctions for imposing an undue burden or expense through a subpoena. The court declined to award fees. It did not decide whether AIG’s subpoena violated that rule, but held that AIG was not unreasonable in seeking review because the federal case involved issues beyond those in the state-court coverage action, and some materials might be discoverable in the federal case even if they were not discoverable in the state case.

Disposition

Judge Schiltz overruled AIG’s objection to Judge Docherty’s June 21, 2022 order and affirmed that order. The court also denied Fredrikson’s request for attorney fees.