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Griggs v. The Vanguard Group, Inc.

United States District Court, W.D. Oklahoma

June 18, 2019

JANE B. GRIGGS, as Personal Representative of the Estate of Richard O. Bertschinger, Sr., deceased, Plaintiff,
v.
THE VANGUARD GROUP, INC., and VANGUARD MARKETING CORP., Defendants.

          ORDER

          SCOTT L. PALK UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff's Motion to Compel Discovery Responses [Doc. No. 47]. It is at issue. See Resp., Doc. No. 65; Reply, Doc. No. 69.[1] After Defendants removed this case to this Court, they requested that Plaintiff's claims against Vanguard Marketing Corp. be compelled to Financial Industry Regulatory Authority (“FINRA”) arbitration and that Plaintiff's claims against Vanguard Group, Inc. be dismissed. Plaintiff then put the “making” of the alleged arbitration agreements at issue, so the Court authorized limited-scope discovery in advance of the determination required by 9 U.S.C. § 4. See Order of Oct. 31, 2018, Doc. No. 27. The only question on which discovery has been authorized in this case is whether Mr. Bertschinger lacked mental capacity to enter into the arbitration clauses at issue-which were executed by Mr. Bertschinger on August 11, 1999 and on September 4, 2001.[2] See Doc. Nos. 10-2, 10-4.

         I. Relevant discovery standard

         Federal Rule of Civil Procedure 26(b)(1) applies to Plaintiffs' motion, and it provides in relevant part:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

         “When requested discovery appears relevant, the party objecting to production has the burden of establishing the lack of relevance by demonstrating that the request falls outside the scope set forth in Rule 26(b)(1), or that the requested discovery is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.” Shotts v. Geico Gen. Ins. Co., No. CIV-16-1266-R, 2017 WL 4681797, at *1 (W.D. Okla. Oct. 17, 2017) (citation omitted).

         II. Discussion and analysis

          Mental capacity to contract is evaluated as of the date of the contract's execution. See Evans v. First Nat'l Bank of Stillwater, 146 P.2d 111, 113 (Okla. 1944) (“[T]he test of the capacity to make a contract is whether the party had the ability to comprehend in a reasonable manner the nature and effect of the act in which he engaged and the business he transacted.” (quotation marks and citation omitted) (citing Charley v. Norvell, 221 P. 255 (Okla. 1924))); cf. Charley, 221 P. at 257 (“It must be borne in mind that at the time the release was executed in the case at bar the plaintiff was of full age, and the presumption of contractual capacity cannot be overthrown merely . . . by the fact that a short time after the release was executed a guardian was appointed by the county court on the ground of improvidence.”). This time-of-transaction evaluation is applicable regardless of whether New York, Oklahoma, or Pennsylvania law applies to the issue of mental capacity.[3] See Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46, 50 (Pa. Super. Ct. 2017) (“Where mental capacity to execute an instrument is at issue, the real question is the condition of the person at the very time he executed the instrument in question.” (quotation marks omitted) (quoting Estate of McGovern v. Pa. State Emps. Ret. Bd., 517 A.2d 523 (Pa. 1986), overruling on other grounds recognized by Vine v. Pa. State Emps. Ret. Bd., 9 A.3d 1150 (Pa. 2010))); Sears v. First Pioneer Farm Credit, 850 N.Y.S.2d 219, 222 (N.Y.App.Div. 2007) (“[T]o prevail, plaintiffs had to demonstrate that [the alleged-to-be- incapacitated person's] mind was so affected as to render him wholly and absolutely incompetent to comprehend and understand the nature of the transaction and, further, that such incompetency/incapacity existed when he executed the loan documents . . . .” (quotation marks and citations omitted)).

         Plaintiff asserts that the time period relevant to the issue of mental capacity is broader, at least if New York law applies. Pointing to Ortelere v. Teachers' Retirement Board, Plaintiff stresses that case's reliance on the Restatement (Second) of Contracts and part of its test for a voidable contract: “(1) A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect . . . (b) he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition.” 25 N.Y.2d 196, 204 (1969) (quotation marks omitted).[4] Under this standard, Plaintiff asserts that Defendants' knowledge of Mr. Bertschinger's capacity is relevant, opening up the period before (and, according to Plaintiff, the period after) Mr. Bertschinger executed the August 1999 and September 2001 documents to discovery.

         Without reaching the issue of what State's laws apply, the Court agrees with Plaintiff that Defendants' knowledge of Mr. Bertschinger's mental capacity to enter into the arbitration clauses at issue in August 1999 and September 2001 is relevant and is likely to be revealed by communications between Defendants and Mr. Bertschinger, at least for the periods before the agreements were executed-as well as, as previously determined, for the period of time extending to three months after the latter of agreements at issue in this case: December 4, 2001. See Order of May 7, 2019, at 6, Doc. No. 45. That is, Defendants' knowledge in August 1999 and September 2001-based on their prior interactions with Mr. Bertschinger-is relevant regardless of whether Oklahoma or New York law applies.

         However, the Court does not see the relevance-as to the limited issues on which discovery has been authorized-of communications between Defendants and Mr. Bertschinger that took place after December 4, 2001.[5] Such communications do not shed light on Mr. Bertschinger's mental capacity in August 1999 or September 2001; nor do they show what knowledge of Mr. Bertschinger's mental capacity Defendants had during those same prior periods. In light of these general determinations, the Court turns to Plaintiff's individual discovery requests:

         A. Plaintiff's Interrogatory No. 1 and Request for Production No. 1

          Plaintiff seeks recordings of communications between Mr. Bertschinger and Defendants' employees or representatives from January 1, 1998, through October 4, 2016 (Mr. Bertschinger's date of death), along with “identification of the software requirements for accessing such data, and the manner of storage and backup of all such data.” Pl.'s Interrog. No. 1, Doc. No. 47-1. The Court is inclined to grant Plaintiff's request for production of communications-but only as to communications had from January 1, 1998, through December 4, 2001 (three months after Mr. Bertschinger executed the second agreement at issue in this case). As Defendants have indicated that they do not have any recordings from before November 2010-due to their document destruction policy that was in place prior to them being served with this lawsuit-no recordings exist for the Court to compel production of. Plaintiff's request is therefore denied.

         As to Plaintiff's request for Defendants' audio recording policies and data storage policies, the Court does not see any relevance between them and the issues on which discovery has been authorized. Even if Defendants (i) had policies in place that they violated (as Plaintiff seems to hypothesize) or (ii) did not have policies in place that they should have had under FINRA regulations, such violations do not reveal any relevant information regarding Mr. Bertschinger's mental capacity at the relevant times, or even Defendants' knowledge about his mental capacity at such times.[6] Plaintiff's request is therefore denied.

         B. Plaintiff's Interrogatory Nos. 2-3 and Request ...


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