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For discovery purposes, “control” over documents does not necessarily require actual physical possession. In fact, certain agency contracts can designate that a company has “control” over documents held by its independent agents. In Haskins v. First American Title Insurance Company, the United States District Court for the District of New Jersey held that First American Title Insurance (defendant) had to assert a litigation hold on its present and former independent title agents.
Plaintiffs filed suit against defendant claiming that they had a scheme to overcharge customers for title insurance when refinancing residential mortgages. Those New Jersey insurance policies in question were generally issued by “independent title agents.” As part of the discovery process, plaintiffs were seeking copies of a representative sample of the closing files to demonstrate and figure out why certain customers were overcharged when refinancing mortgages
The two unresolved discovery disputes were:
The court found that defendant had control over the documents from its independent agents and therefore had a duty to issue a litigation hold to preserve the relevant documents in the physical possession of the independent agents.
The court determined that defendant had control over the documents based on the language of the agency contracts. The definition of “possession, custody, or control” under FRCP 34(a) is construed very broadly for discovery purposes and a party has control over documents if they have “the legal right or ability to obtain the documents from another source upon demand.” The contracts between defendant and its independent agents contained such provisions, including that agents had to maintain and preserve all documents and defendant could inspect the documents on request. This properly established control under FRCP 34(a).
Therefore, the court held that defendant had to request copies of approximately 300-400 closing files the parties agreed should be produced for the lawsuit. Additionally, defendant was ordered to serve a litigation hold letter to its present and former title agents in NJ that had similar agency contracts.
Being aware of discovery obligations for third party agents are extremely important. If a company fails to properly produce requested documents they have “control” of under FRCP 34(a) or fail to place a proper litigation hold then costly sanctions could follow.
Author Bio: Catherine Kiernan graduated magna cum laude from Rutgers University, New Brunswick in 2010 with a B.A. in political science. She will receive her J.D. from Rutgers School of Law – Camden in 2014. This year she is participating in the competitive Hunter Moot Court and is a judicial extern for a Philadelphia Superior Court Judge.