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Zurich American Insurance Co. v. Fluor Corp.

United States District Court, E.D. Missouri, Eastern Division

December 13, 2019

ZURICH AMERICAN INSURANCE COMPANY, Plaintiff,
v.
FLUOR CORPORATION, et al., Defendants.

          MEMORANDUM AND ORDER

          E. RICHARD WEBBER, SENIOR UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Plaintiff/Counter-Defendant Zurich American Insurance Company's Motion to Compel Compliance with Subpoena Duces Tecum to Third Parties Witnesses [ECF No. 327].

         I. BACKGROUND

         The Court will briefly review and summarize the history of this litigation relevant to the Motion to Compel currently pending before it. Plaintiff Zurich American Insurance Company (“Zurich”) issued general liability policies to St. Joseph Lead, which later became St. Joe Minerals (“St. Joe”). In 1981, Fluor purchased St. Joe and in 1994, Fluor sold its interest to Doe Run Resources (“Doe Run”). In the 1990s, Fluor and Doe Run were sued for a number of bodily injury and property damage claims arising from St. Joe's lead smelter facility in Herculaneum, Missouri (the “Herculaneum Lawsuits”). Eventually, in the Herculaneum Lawsuits, after mediation on November 18, 2010, Doe Run reached a settlement with many of the plaintiffs (“Doe Run Settlement”). Fluor was not included in the settlement. The claims against Fluor proceeded to trial and resulted in a judgment against Fluor for $38, 527, 186 in compensatory damages, and $320 million in punitive damages.

         Doe Run sued Zurich regarding Zurich's duty to indemnify Doe Run for settlement of the Herculaneum Lawsuits. In 2016, Doe Run and Zurich reached a settlement agreement in which Zurich agreed to pay $15.88 million toward Doe Run's settlement of the Herculaneum Lawsuits. In 2012, Fluor sued Doe Run in Jefferson County, Missouri (Fluor Corporation et al. v. The Doe Run Resources Corp, et. al.). Fluor asserted Doe Run was required to indemnify and defend Fluor in the Herculaneum Lawsuits and it was a breach of contract to exclude Fluor from the Doe Run Settlement. After Fluor sued Doe Run in Jefferson County, Zurich filed the suit before this Court seeking a declaratory judgment stating Zurich's insurance policies do not provide coverage for the defense or indemnity of Fluor's litigation in the Herculaneum Lawsuits and the policies are exhausted. Fluor filed a counterclaim alleging Zurich wrongfully failed to settle and wrongfully withdrew its defense of Fluor in the Herculaneum Lawsuits.

         In the Fluor v. Doe Run action in Jefferson County, Fluor issued a third-party subpoena to non-party Zurich requesting communications between Zurich and Doe Run about the mediation, the Doe Run Settlement, and Doe Run's subsequent settlement with Zurich. Zurich and Doe Run objected to disclosure of the communications pursuant to the insurer-insured privilege and a settlement/mediation privilege. The Jefferson County court appointed a special master to review the dispute. The Jefferson County court adopted the special master's recommendation and allowed certain limited production pursuant to an Amended Stipulated Protective Order which prohibited use of the documents in any other action.

         In April 2016, Fluor filed a motion in the Jefferson County action to modify the Amended Stipulated Protective Order so documents designated as Confidential and Highly Confidential in that action could be used in the instant case. See ECF No. 335-2. Zurich and Doe Run opposed the modification. Counsel for Zurich argued that under Paragraph 9, the documents it produced and marked Confidential and/or Highly Confidential could only be used in the Jefferson County action. ECF No. 335-1 at 5. In denying Fluor's Motion, the Jefferson County Court noted Zurich had “relied on the protections of the order in producing the Highly Confidential documents and the corporate representative, with the expectation that the Zurich discovery would be used for purposes of that action only.” ECF No. 335-2 at ¶ 6.

         In this case, the protections of the Amended Stipulated Protective Order were again at issue when, on July 11, 2019, Zurich propounded subpoenas for the depositions of Doe Run's corporate representative (Marc Halpern); Doe Run's defense counsel Andrew Rothschild; Edward J. Dowd, who represented additional defendants who settled with Doe Run; and underlying plaintiffs' counsel Gerson Smoger. Zurich also served subpoenas duces tecum, directing the Third Parties to produce their own respective deposition transcripts from the Jefferson County lawsuit.[1]

         On July 17, 2019, counsel for Doe Run, Andrew Rothschild, and Edward Dowd objected to the production of the transcripts. On October 29, 2019 Zurich contacted the Third Parties to discuss the objections. On November 26, 2019, Zurich filed a Motion to Compel Compliance with Subpoena Duces Tecum to Third-Party Witnesses. In its Motion to Compel, Zurich states Doe Run, Andrew Rothschild, and Edward Dowd have objected to the production of their deposition transcripts on the basis that the materials: contain privileged information, [2] are subject to the Amended Stipulated Protective Order entered in the related Jefferson County Lawsuit, and contain irrelevant and confidential and proprietary information.

         On December 3, 2019, Zurich, Doe Run, Andrew Rothschild, and Edward Dowd submitted a Joint Summary to the Court requesting a telephone conference regarding Zurich's Motion to Compel. This letter set forth their dispute over the effects of the Amended Stipulated Protective Order in place in the Jefferson County Lawsuit. At a telephone conference held on December 6, 2019, the Court heard argument concerning the pending Motion to Compel, addressed certain discovery disputes, and ordered that the Third Parties' Opposition to Zurich's Motion to Compel should be filed in accordance with the local rule. On December 10, 2019, the Third Parties filed their Response in Opposition to Zurich's Motion to Compel.

         II. DISCUSSION

         The issue before this Court is whether the Court should compel production of the subpoenaed Third-Party deposition transcripts from Fluor Corporation et al. v. The Doe Run Resources Corp, et. al. given the protective order that remains in place. In its Motion to Compel, Zurich argues the Third Parties are not bound by the protective order in the Jefferson County Lawsuit. Specifically, Zurich contends that because the Third Parties have been subpoenaed as producing parties, the protective order in the Fluor v. Doe Run case cannot shield them from producing discovery. Zurich alternatively argues that even if the Jefferson County protective order applies to the subpoenaed documents, this Court should modify or supersede it.

         In response, the Third Parties argue the language of the protective order in the Jefferson County Lawsuit precludes the production of the transcripts in this action. The Third Parties also contend any determination of whether the protective order can or should be modified to allow the production of these documents is a matter for the court in Jefferson County, not this Court.

         The Court finds that the language of the Amended Stipulated Protective Order is clear that information designated as Confidential was only to be used for purposes of the Jefferson County action and not to be used in any other action or litigation. Under the Amended Stipulated Protective Order, a party or non-party producing Discovery Material (a “Producing Party”) may designate as "Confidential Discovery Material" or “Highly Confidential Discovery Material” all or a portion of any documents, information, materials, testimony or other things disclosed or produced. ECF No. 327, Ex. 3 at ¶ ¶ 4, 5. Moreover, under the protective order, any Producing Party may designate portions or all of a deposition transcript as Discovery Material by making such designation on the record during the deposition. Id. at ¶ 5(d) (emphasis added). The order further states that “portions designated during the deposition as Discovery Material shall be separated and ...


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