PACIFIC COAST SURGICAL CENTER v. SCOTTSDALE INSURANCE CO Case No. CV 18-3904 PSG (KSx) United States District Court, C.D. California Filed April 24, 2019 Counsel Cheryl Dunn Soto, Joshua D. Franklin, Franklin Soto LLP, Del Mar, CA, for Pacific Coast Surgical Center. Michael Vincent Ruocco, Valerie D. Rojas, Cozen O'Connor, Los Angeles, CA, for Scottsdale Insurance Co. Gutierrez, Philip S., United States District Judge Proceedings (In Chambers): Order DENYING Defendant's motion for review of Magistrate Judge Stevenson's order *1 Before the Court is Defendant Scottsdale Insurance Company's (“Defendant”) motion for review of a discovery order issued by Magistrate Judge Karen L. Stevenson.[1] See Dkt. # 42 (“Mot.”). Plaintiff Pacific Coast Surgical Center, L.P. (“Plaintiff”) has opposed this motion. See Dkt. # 47 (“Opp.”). Defendant has not filed a reply. The Court finds the matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. Having considered the moving papers, the Court DENIES the motion. I. Background In this case, Plaintiff alleges that Defendant, its insurer, acted in bad faith in denying coverage. See generally Complaint, Dkt. # 1. In discovery, Plaintiff asked Defendant to produce “documents reflecting the details of [Defendant's] evaluation of the employees responsible for the investigation, evaluation and handling” of its insurance claim. See Pac. Coast Surgical Ctr., L.P. v. Scottsdale Ins. Co., No. CV 18-3904 PSG (KSx), 2019 WL 1199024, at *1 (C.D. Cal. Mar. 11, 2019) (the underlying order from Magistrate Judge Stevenson). Defendant sent back a boilerplate response, objecting to the request because, among other things, it was unduly burdensome, sought documents that were not relevant to any claims or defenses, and was not proportional to the needs of the case. See id. Plaintiff filed a motion to compel that was heard by Magistrate Judge Stevenson. See id. In briefing the motion, Plaintiff argued that the performance evaluations of the claims personnel who handled its claim were relevant to “(1) what motivated Defendant's decision [to deny coverage]; (2) whether the basis for these decisions was reasonable; and (3) whether Scottsdale knew its decisions were unreasonable.” Id., at *2. It further explained that the documents were “relevant to determining whether evaluations and/or compensation criteria were in any way based on internal incentives to deny claims”—in other words, whether Defendant incentivized its employees to deny claims, which could support a finding of bad faith. See id. Defendant countered that the information in its employees’ personnel files was not relevant or proportional and would violate the employees’ constitutional right to privacy. See id. After considering the arguments on both sides, Magistrate Judge Stevenson concluded that the request for the personnel files, limited to the personnel who handled Plaintiff's claim, was both relevant to the claims at issue and proportional to the needs of the case. See id. In reaching this conclusion, she emphasized that other courts have “routinely” found this type of information “relevant and discoverable” in bad faith actions. See id. (citing Gowan v. Mid Century Ins. Co., 309 F.R.D. 503, 512 (D.S.D. 2015); Am. Auto. Ins. Co. v. Haw. Nut & Bolt, Inc., Civ. No. 15-245 ACK-KSC, 2017 WL 80248, at *5 (D. Haw. Jan. 9, 2017) ). While recognizing that Defendant had raised “legitimate privacy concerns” regarding its employees’ information, she concluded that these could be adequately addressed by the Protective Order in this case, see Dkt. # 25, as well as the fact that Plaintiff had conceded that information unrelated to an employee's duties as a claims adjuster, such as healthcare benefits, dependent information, disability status, marital status, childcare, benefits, and education transcripts, did not need to be disclosed. See Pac. Coast, 2019 WL 1199024, at *3. *2 Magistrate Judge Stevenson ordered the documents produced within fourteen business days of her order. See id. Rather than producing them, however, Defendant filed the current motion for review of the order. See generally Mot. II. Legal Standard Under Rule 72, a district court judge may set aside a magistrate judge's order if it is “clearly erroneous” or “contrary to law.” Fed. R. Civ. P. 72; 28 U.S.C. § 636(b)(1)(A); see also Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1414 (9th Cir. 1991) (a “magistrate's decision on a nondispositive issue will be reviewed by the district court under the clearly erroneous standard” while “[d]ecisions on dispositive issues will be reviewed de novo”). “[T]he clearly erroneous standard applies to factual findings and discretionary decisions made in connection with non-dispositive pretrial discovery matters.” Crispin v. Christian Audigier, Inc., 717 F. Supp. 2d 965, 971 (C.D. Cal. 2010). The clearly erroneous standard is “significantly deferential, requiring ‘a definite and firm conviction that a mistake has been committed.’ ” Concrete Pipe & Prods. v. Constr. Laborers Pension Tr., 508 U.S. 602, 623 (1993); Sec. Farms v. Int'l Bhd. of Teamsters, 124 F.3d 999, 1014 (9th Cir. 1997). “In contrast, the ‘contrary to law’ standard permits independent review of purely legal determinations by the magistrate judge.” Green v. Baca, 219 F.R.D. 485, 489 (C.D. Cal. 2003) (quoting F.D.I.C. v. Fid. & Deposit Co. of Md., 196 F.R.D. 375, 378 (S.D. Cal. 2000) ). III. Discussion Defendant has attempted to avoid the deferential clear error standard of review by arguing that Magistrate Judge Stevenson erred as a matter of law in concluding that the documents Plaintiff requested were relevant, proportional, and not protected by the employees’ constitutional right to privacy. See Mot. 3:13–18. However, in the context of discovery disputes, magistrate judges are “afforded broad discretion which will be overruled only if abused.” Vident v. Dentsply Int'l, No. SACV 06-1141 PSG (ANx), 2008 WL 4384124, at *2 (C.D. Cal. Aug. 29, 2008). Applying that standard here, the Court concludes that it was well within Magistrate Judge Stevenson's discretion to order production of the documents at issue. Magistrate Judge Stevenson's conclusion that the employee personnel files could reveal information that is relevant to whether Defendant acted in bad faith was amply supported by similar decisions from other courts. See Pac. Coast, 2019 WL 1199024, at *2. Nor did she err in concluding that Plaintiff's request was proportional to the needs of the case given that Defendant's only argument to the contrary is a conclusory statement that production of the documents would be “burdensome,” with no further explanation given. See Mot. 7:23. Finally, Magistrate Judge Stevenson did not ignore the employees’ right to privacy under the California Constitution. Instead, she properly balanced the need for discovery against the right to privacy and concluded that the employees’ privacy rights would be adequately protected by the Protective Order as well as Plaintiff's concession that personal information unrelated to the employees’ duties need not be disclosed. This was a reasonable determination. *3 Defendant additionally argues that disclosure of the personnel files is unnecessary because its Rule 30(b)(6) witness testified in a deposition that the adjuster who handled Plaintiff's claims was not disciplined for his work on this case and that his compensation was based on his general performance rather than work on any particular case. See Mot. 7:23–27. It is not clear whether this argument was presented to Magistrate Judge Stevenson such that it was preserved for this Court's review. But even if the Court were to consider it, it would find it unavailing. First, as Plaintiff points out, the fact that the employee was not disciplined for denying Plaintiff's claim could be evidence in support of its theory that the denial was made in bad faith at Defendant's behest. See Opp. 7:9–18. Second, Defendant's Rule 30(b)(6) witness lacked knowledge of several categories of information that could potentially be gleaned from the personnel files of the employees who handled Plaintiff's claim, demonstrating that his testimony is not an adequate substitute for production of the documents. See Deposition of Michael B. Zartman, Dkt. # 47-3, 208:24–209:19, 210:23–211:7. In sum, it was well within Magistrate Judge Stevenson's discretion to order production of the personnel files of the employees who handled Plaintiff's claim, subject to the limitations Plaintiff has agreed to. See Pac. Coast, 2019 WL 1199024, at *3. Accordingly, Defendant's motion for review of the order is DENIED. IV. Conclusion For the foregoing reasons, Defendant's motion for review of Magistrate Judge Stevenson's March 11, 2019 order is DENIED. The hearing set for May 6, 2019, at 1:30 p.m. is hereby VACATED and taken OFF-CALENDAR. IT IS SO ORDERED. Footnotes [1] Defendant's request for a stay of the discovery order pending this Court's review should have been brought in a separate ex parte application because it sought relief in advance of the May 6, 2019 hearing date. Because the request was procedurally improper, the Court did not consider it. In any event, a stay would not have been appropriate because Defendant could not have demonstrated a likelihood of success on the merits.