Free Letter - District Court of Delaware - Delaware

Case 1:05-cv—00699-SLR—|\/IPT Document 108 Filed 02/02/2007 Page 1 of 3
otter j
Anderson
COITOOII LLP John E. James 2
Partner
Attorney at Law
1313 North Mmlcet Street [email protected]
P.O.Bo>c 951 302 984-6018 Direct Phone
Wilmington, DE 19899-0951 302 658-1l92 Facsimile
302 984-6000
\‘VW'W.p0E€EF9.I1dl%YS9l1.COIH
February 2, 2007
By CM/EOF and by Hand
Magistrate Judge Mary Pat Thynge
U. S. District Court for the District of Delaware
844 North King Street
Wilmington, DE 1980l `
RE: E. I. du Pont de Nemours and Company v.
Lumbermens Mutual Casualty Company
D. Del., C.A. No. 05—699-**1*
Dear Judge Thynge:
I write on behalf of Plaintiff E. `I. du Pont de Nemours and Company ("DuPont") to bring
` several discovery disputes to the Court’s attention pursuant to Paragraph 3(e) of the Scheduling
Order of December 13, 2005. Discovery is set to close in this matter on February 27, 2007, yet a
number of issues remain unresolved despite DuPont’s efforts to secure Defendant Lurnbermens
Mutual Casualty Company’s (°‘Ke1nper") voluntary compliance with its discovery obligations.
Consistent with the Scheduling Order, we have scheduled a telephone conference for Tuesday,
February 6, 2007, at 11:00 A.M. to discuss these issues with Your Honor; thus, this letter does
not present extensive argument or authorities, but instead states the issues to be addressed during
the telephone conference and summarizes DuPont’s position on those issues.
DuPont’s Second Rule 30( blt 6) Notice of Deposition of Kemper
On December 28, 2006, DuPont served its Second Notice of Deposition of Defendant
Pursuant to Federal Rule of Civil Procedure 30(b)(6) ("DuPont’s Second 30(b)(6) Deposition
Notice”) and noticed the deposition for January 10, 2007. (See Exhibit A.) The topics at issue in
that notice relate to the origins of the insurance program provisions upon which Kemper bases its
claim that DuPont owes Kemper approximately $4.5 million. Those provisions have been in
existence since the beginning of DuPont’s relationship with Kemper in 1971, and the parties
fundamentally disagree over their interpretation. As such, DuPont seeks to discover Kernper’s
intent at the time that Kemper drafted those provisions.
Kemper responded to DuPont’s Second 30(b)(6) Deposition Notice on January 8, 2007,
stating that it would not be producing a witness on January 10 “[d]ue to preexisting scheduling
conflicts and the objections set forth herein? For a period of time, Kemper refused to designate
a witness in response to DuPont’s notice or to provide alternative dates for that deposition.

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Magistrate Judge Mary Pat Thynge ’
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Finally, when threatened with a motion to compel unless Kemper produced a witness or moved
for a protective order, Kemper designated Jack McGregor by letter of January 26 to testify in `
response to the notice. Kemper failed, however, to propose a date for that deposition and still
has not done so. .
Further, in Kemper’s January 26 letter, Kemper states that its agreement to produce Mr. g
McGregor is “subj ect to the objections" in its January 8 letter. Kemper°s objections, however, if
sustained, would completely eviscerate the topics in DuPont’s Second 30(b)(6) Deposition
Notice. For example, Kemper objects that it “would entail undue burden and expense for
Kemper to research historically [sic] and to present appropriate witnesses to testify? If Mr.
McGregor testifies "subject to” that objection, as Kemper proposes, it is difficult to see what
testimony, if any, Mr. McGregor would be able to give regarding the history of the language
upon which Kemper bases its $4.5 million claim. Rather than wasting everyone’s time by
commencing what would appear to be a fruitless deposition, DuPont seeks the assistance of the
Court in overruling Kemper’s objections and compelling Kemper to produce an educated
witness, Alternatively, if Kemper is unable to produce a witness to speak knowledgeably on
behalf of Kemper, Kemper should state on the record that it is unable to do so and should be
precluded from later offering any testimony relating to the topics in l)uPont’s Second 30(b)(6)
Deposition Notice. ‘
Financial Documents
During the deposition of Kemper’s 30(b)(6) witness on September 29, 2006, Kemper
testified that it books the full subject premium, without any offset for a "dividend", at the
beginning of the program year. DuPont questions the accuracy of such a statement because,
during the parties’ thirty-·year relationship, Dufont was never billed for the full subject premium
and has never paid the full subject premium. Consequently, DuPont has requested that Kemper
produce its accounting records from 1997 to the present showing the manner in which Kemper
, booked any insurance premiums or other payments made by DuPont.
In response, Kemper has produced documents relating only to the 2002 program year,
and even those documents appear to have been generated after the dispute arose (i.e., long after
January l, 2002). While 2002 is the only year in dispute between the parties, prior yems are
relevant because they may show, for example, that in 2002 Kemper changed the manner in
which it books payments from DuPont as a result of the parties’ dispute. Kemper objects to
producing documents relating to prior years primarily upon the grounds of overbreadth and
undue burden. DuPont’s request, however, is already narrowly drawn —~ asking for documents
only from 1997 forward instead of all the way back to the program’s inception in 1971 —~ and
should be responded to in full.
Documents Regarding Kemper’s Financial Condition
In Document Request No. 31, DuPont asked Kemper to produce documents relating to its
financial condition since January l, 2001. Kemper produced a few press releases regarding

Case 1 :05-cv—OO699-SLR—l\/IPT Document 108 Filed O2/O2/2007 Page 3 of 3
Magistrate Judge Mary Pat Thynge
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downgrades in Kemper’s financial strength ratings, but little else. Notably absent from Kemper's I
production were any communications between Kemper and the rating agencies that led to these
downgrades. These documents are relevant to DuPont°s aliegation that Kemper concealed its
true financial condition from DuPont (Counts LEV and V of the Complaint). Despite DuPont’s
request, Kemper has refused to either produce the responsive documents or, if it believes it
already has produced such documents, then provide the Bates numbers ofthe documents.
Documents Regarding Berkshire Hathaway Transaction
In Document Request No. 32, DuPont asked Kemper to produce documents relating to its
decision to repurchase S l 25 million of Berkshire Hathaway’s investment in Kemper Commercial
Insurance Company. Kemper objected to this request as "overbroad, unduly burdensome, and
not reasonably calculated to lead to the discovery of admissible evidence" and has produced little
more than press releases that mention the transaction. The documents requested by DuPont are
relevant to Paragraphs 64—68 of Du}?ont’s Complaint, in which DuPont explained that A.l\/I. Best
cited the Berkshire Hathaway transaction as a contributing factor in its downgrade of Kemper.
Further, DuPont alleged that the Berkshire Hathaway transaction was intended to favor an equity
investor over Kemper’s policyholders. DuPont is entitled to take discovery regarding these
allegations.
Kemper’s Decision Not to Declare “Dividends"
In Document Request No. l9, DuPont asked Kemper to produce documents relating to
Kemper’s decision not to declare a "dividend” for DuPont’s 2002-03 program. The only
document that Kemper produced in response to this request was a two—·page, largely·redacted,
excerpt from the minutes of a meeting of Kemper’s board of directors. Kemper’s decision not to
declare a "dividend" for DuPont’s 2002—03 program was the first time in the parties’ thirty—year
history that a “dividend" was not declared. One would expect that Kemper’s decision was not
made lightly and that documents should exist relating to that decision, yet Kemper has produced
none.
We look forward to discussing these matters further with Your Honor during our
telephone conference on Tuesday, February 6, 2007.
Respe · ily sub ` ed,
*,2. give}
E. J .
JE]/cml
Enclosures
776063/20120645
cc: Clerk, U. S. District Court (w/ encs.) (via CMJECF and by hand)
M. Duncan Grant, Esquire (wf encs.) (via CM/ECF)