Nagy v. Baltimore Life Ins. Co.

• Citation: 49 F.Supp.2d 822
• Decision Date: 24 May 1999
• Docket Number: No. Civ. AMD 96-3673.,Civ. AMD 96-3673.
• Parties: Ossama NAGY, et al., Plaintiffs, v. BALTIMORE LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Maryland

49 F.Supp.2d 822

Ossama NAGY, et al., Plaintiffs, v. BALTIMORE LIFE INSURANCE COMPANY, et al., Defendants.

No. Civ. AMD 96-3673.

United States District Court, D. Maryland.

May 24, 1999.

George Wadie Hermina, John Wadie Hermina, Laurel, MD, Houeida Saad, Alexandria, VA, for plaintiffs.

Barrett W. Freedlander, Saul, Ewing, Weinberg & Green, Baltimore, MD, Stanley Mazaroff, Venable Baetjer & Howard, Baltimore, MD, for defendants.

MEMORANDUM

DAVIS, District Judge.

The plaintiffs, Ossama Nagy, Sherif M. Saad, Nooshin Soozangar and Shagufla Azad, are four non-United States citizens having Arabic ancestry. In their second amended complaint, they allege that defendant Baltimore Life Insurance Company and one of its affiliated insurance companies (together, "Baltimore Life") discriminatorily, in violation of 42 U.S.C. § 1981, rejected their applications for life insurance on the basis of race and alienage. The court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1343. Pending before the court, inter alia, is the defendants' motion for summary judgment.¹ Counsel have fully briefed the issues presented and a hearing has been held. For the reasons set forth below, I shall grant defendants' motion for summary judgment.

PRELIMINARY ISSUES

Motion to Quash Deposition Subpoena to Maryland Insurance Commissioner

Pending before the court is a motion to quash a deposition subpoena duces tecum or, alternatively, motion for protective order, filed by the Maryland Insurance Commissioner ("Commissioner"), in respect to an effort by plaintiffs to conduct third party discovery from the Maryland Insurance Administration. The motion is granted for the reasons stated herein.

After this case had been pending for almost a year, one of plaintiffs' counsel wrote a letter to the Commissioner on behalf of the American Arab Anti-Discrimination Committee ("AAADC") asserting that AAADC had received "numerous complaints from [its] members [who] ... have been discriminated against by Baltimore Life," and requesting the Commissioner to "revoke the license" of Baltimore Life. The Commissioner promptly responded, indicating that he regarded the allegations as very serious, and informing the AAADC that his agency would perform a "market conduct" examination of Baltimore Life concerning the allegations. A "market conduct" examination is one of several types of regulatory investigations authorized under Maryland law. See Md.Code Ann. Ins. Art. § 2-205, et seq.

The Commissioner conducted the examination during the period October 27-November 13, 1997. It involved a site visit to the Baltimore Life offices, a detailed review of thousands of pages of documents and interviews of Baltimore Life personnel. Pursuant to statute, see id. at § 2-209(c), a "proposed" report of the examination was provided to Baltimore Life. Thereafter, apparently, significant modifications were made to the "proposed" report and a final report of examination — concluding that Baltimore Life had not violated Maryland law by discriminating on the basis of citizenship in its underwriting practices — was formally filed with the Commissioner. The Commissioner's report is discussed in detail infra.

In the course of discovery, seizing on Baltimore Life's admission that favorable modifications had been made to the "proposed" report after Baltimore Life had been given an opportunity to respond to the Commissioner's proposed findings and conclusions, plaintiffs caused deposition subpoenas duces tecum to be issued to two current employees and one former employee of the Maryland Insurance Administration regarding work they performed on the Commissioner's behalf during the market conduct examination. The intended deponents were requested to produce "correspondence, notes and memos relating to market conduct examinations of Baltimore Life between 1994 and 1998 including all documents utilized in generating the reports and all documents supplied to the unit by Baltimore Life."

After an exchange of correspondence between counsel for plaintiffs (whose letters were remarkably acerbic) and the Assistant Attorney General representing the Commissioner, the Commissioner filed his motion to quash or for protective order. In his motion, the Commissioner relies on four distinct grounds: (1) the Commissioner is prohibited by state law from disclosing information concerning any matters involving preparation of a market conduct report, see id. at § 2-209(g)²; (2) Maryland state court decisional authority supports the nondisclosure of the information sought by plaintiffs' subpoena; (3) executive privilege; and (4) the medical and other personal information provided by individual life insurance applicants (and contained in the documents covered by the subpoena) is confidential.

It is well-settled that "[t]he scope of material obtainable by a Rule 45 subpoena is as broad as permitted under the discovery rules." Jackson v. Brinker, 147 F.R.D. 189, 193-94 (S.D.Ind.1993). Pursuant to Fed.R.Civ.P. 45(c)(3)(iii), a person may move to quash a subpoena seeking the disclosure of "privileged or other protected matter." The Commissioner has done so here. (Plaintiffs' objection to the timeliness of the Commissioner's motion is not well taken, has not demonstrated that plaintiffs were prejudiced by any delay, and the Commissioner's efforts to resolve the dispute prior to filing the motion to quash is to be encouraged rather than sanctioned.).

I have fully considered the arguments advanced by the Commissioner and the plaintiffs for and against compelling disclosure of the material sought by plaintiffs. I am persuaded that the Commissioner has satisfied his burden to demonstrate that weighty public and private interests support recognition of a privilege under the facts and circumstances presented in the case at bar to withhold from plaintiffs the documents and testimony they seek. See Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 40 F.R.D. 318 (D.D.C.1966) (discussing and applying, inter alia, deliberative process privilege in the context of a motion under Fed.R.Civ.P. 45), aff'd per curiam on the reasoning of the district court, 384 F.2d 979 (D.C.Cir.), cert. denied sub nom. V.E.B. Carl Zeiss, Jena v. Clark, 389 U.S. 952, 88 S.Ct. 334, 19 L.Ed.2d 361 (1967); Franklin Sav. Ass'n v. Ryan, 922 F.2d 209, 211 (4th Cir.1991) (citing Carl Zeiss Stiftung with approval); see also United States v. Cartledge, 928 F.2d 93, 95-97 (4th Cir.1991) (identifying elements of balancing test which informs federal court's exercise of discretion whether to recognize state-created privileges under F.R.E. 501; interpreting United States v. Gillock, 445 U.S. 360, 100 S.Ct. 1185, 63 L.Ed.2d 454 (1980)); Hartsell v. Duplex Products, Inc., 895 F.Supp. 100 (W.D.N.C.1995) (applying balancing test; state-created privilege applied in federal employment discrimination action), aff'd on other grounds, 123 F.3d 766 (4th Cir. 1997).

Plaintiffs have persisted in calling the "proposed" report of the market conduct examination the "first" report. In fact, the Maryland regulatory scheme specifically contemplates that an insurer will have an opportunity to respond to the Commissioner's "proposed" report prior to its publication as a "final" report and that, necessarily, the Commissioner should consider any response before filing his final report. See Md.Code Ann. Ins. Art. § 2-209(c)(1).³ It is not unexpected that modifications may result in the Commissioner's findings and conclusion as a consequence. Thus, as a matter of law, there was no "first" report as plaintiffs insist; the Commissioner properly delivered to Baltimore Life his "proposed" report.

Moreover, although the plaintiffs have attempted to narrow their requests to exclude disclosure of information revealing the Commissioner's deliberative processes, the plaintiffs long had broad access to all of the "facts" surrounding the Commissioner's investigation directly from Baltimore Life during discovery. Thus, the only "material," whether or not such "material" is loosely described as "facts," in the possession of the commissioner to which plaintiffs did not otherwise have ready access during discovery are the Commissioner's own analyses of the underlying data and his evaluative and deliberative synthesis of the information he obtained from the books and records of Baltimore Life. The final published report, which plaintiffs have received and which is discussed infra, contain all of the relevant facts on which the report is based.

For the reasons stated, therefore, in light of the important interests implicated in fostering unimpeded state control over (and public and industry confidence in) the state's regulatory role in respect to the business of insurance, balanced against the minimal showing by plaintiffs of their need for and of the likely probative value of the disputed material, the Commissioner's motion to quash is granted.

Defendants' Motion to Exclude the Testimony of Adel Alalfey

Defendants have moved in limine to exclude the testimony of Adel Alalfey for failing repeatedly to appear for deposition. Defendants present a compelling case as to why Alalfey's testimony should be barred and I shall grant the motion in limine.

To a very great extent, more than any other item of evidence, this case turns on the testimonial credibility of Adel Alalfey. Alalfey is a former agent for Baltimore Life. Alalfey understood from Baltimore Life that the company supported his plan to sell life insurance policies to his contacts in the Middle Eastern community in the Baltimore/Washington metropolitan area. Alalfey was himself a plaintiff in this case (represented by present plaintiffs' counsel) before I dismissed his claims on defendants' motion under Fed.R.Civ.P. 12(b)(6).

Alalfey is currently represented by plaintiffs' counsel in suits pending in the Maryland state courts arising out of his former employment with Baltimore Life. From the records submitted in the course of the instant...