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Defendant's Attorney: Bradley D. Brickell

Description: Seminole, Oklahoma civil litigation lawyer represented Plaintiff, who sued Defendant on a workers' compensation coverage issue.

Petitioners, certain members of a workers' compensation self-insured group ( employers' group or group ), seek to prohibit the enforcement of a discovery order by the District Court, Seminole County, Gordon R. Melson, respondent-judge, which directs that financial records requested by respondents, Dale Clayton Thompson, Sr., and Shirley Thompson, husband and wife ( Thompson ), be produced for in-trial proof that would support an actual and punitive-damages award against the group for its alleged bad-faith failure to pay a workers' compensation award. Upon the group's application to take original cognizance of these causes and to issue prohibition,

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¶ 1 The issues we are asked to decide in this original proceeding are whether in the pretrial discovery stage ( 1 ) a tort defendant may be compelled to produce financial [944 P.2d 306] records in advance of the judge's in-trial decision that would submit to the jury the plaintiff's plea for punitive damages and ( 2 ) if the materials sought by the plaintiff be discoverable at that stage, should the court hold a hearing to consider a requested protective order by whose terms the discovered material would remain under seal until the punitive-damages phase of the trial? We answer both questions in the affirmative.

¶ 2 Dale Clayton Thompson, Sr. and his wife Shirley ( Thompson ) sued certain members of a self-insurance association organized by a group of employers ( employers' group or group ) to provide workers' compensation benefits to their employees. Dale had been injured in the course of his employment. He secured in the Workers' Compensation Court an award of benefits, but was unsuccessful in obtaining payments that were due. When the employers' group declared itself unable to pay, Dale commenced a district court action. He then received a payment upon his award. At that point he amended the claim by including a punitive- damages plea for the group's alleged "bad faith" in failing to satisfy the award .1 In the pretrial stage of the action the respondent judge ordered that the group's financial statements and tax returns stand subject to discovery, rejecting the group's request for a protective order. The hearing transcript ( but not the order's text ) reveals the judge's view that, under the provisions of Oklahoma's Discovery Code, financial records are indeed discoverable in advance of trial. In his opinion, the Code supplanted all earlier jurisprudence. The latter proscribes pretrial discovery of a tort defendant's financial condition. 2

¶ 3 We hold that although the documents in contest here may indeed be the subject of pretrial discovery, their fitness, qua sensitive financial records, for protection from premature public disclosure as well as from pretrial delivery should be reconsidered upon their in camera inspection.

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¶ 10 The statute that governed discovery of documents at the time of our decision in Cox was enacted in 1965 as 12 O.S. §548. 7 That statute provided that any party in the case could request by motion the production of documents for inspection and copying ( and for other purposes pertinent to that kind of evidence ). 8 "Good cause" was required to be shown. 9 The trial judge was vested with "equitable power" to protect parties and witnesses from disclosures which could cause "annoyance, embarrassment, or oppression." 10

¶ 11 In Cox v. Theus this court was called upon to examine the provisions of 12 O.S. 1971 §548 with a view to determining if "good cause" could be shown to support the plaintiff's quest--made at the pretrial [944 P.2d 308] stage--for production of financial records to be used in support of the petition's plea for punitive damages. 11 Punitive ( exemplary ) damages were then governed by the provisions of 23 O.S. 1971 §9, originally enacted in 1910. 12 That one-sentence section authorized "damages for the sake of example" when a tort defendant "was found guilty" of "oppression, fraud, or malice." 13 The 1910 antecedent of 23 O.S. 1971 §9 neither set a stage for special proceedings nor required the defendant's "financial condition" to play a role in the punitive award's assessment. 14

¶ 12 Because in Cox the discovery was sought at the pretrial stage on mere allegations in plaintiff's pleading, it was declared unsupported by "good cause" and subject to denial as premature. 15 Only after evidence adduced at trial would provide the basis for punitive damages' submission could plaintiff compel defendant's disclosure of relevant financial documents.16

¶ 13 In short, Cox singled out the discovery of one's personal financial records as a protected class and pronounced it exempt from the ordinary pretrial disclosure process. There, the court concluded that no "good cause" was shown--in the §548 sense--to compel the pretrial disclosure sought. 17 The version of 23 O.S. 1971 §9 then in force tended to accord with the Cox view. Financial worth was not yet statutorily identified as an element of proof in exemplary-damages proceedings. 18





¶ 14 The Oklahoma Discovery Code, 12 O.S. 1991 §§3226 et seq., was enacted in 1982. Its provisions replaced the earlier §548. The text of §3226 (B) (1) introduced a broader discovery scope. 19 Its language did not cast the "good cause" requirement upon the party seeking discovery, but allowed disclosure demands to be "otherwise limited by order of the court in accordance with the Oklahoma Discovery Code." 20





¶ 15 Discovery limitations are found in subsection (C) of 12 O.S. 1991 §3226. 21 That [944 P.2d 309] provision shifts the burden of showing "good cause" to the party who opposes discovery. 22 Just as it was the case under 12 O.S. 1971 §548, so under the Code the trial judge may consider whether the discovery sought would cause "annoyance, embarrassment, or oppression." In order to prevent unauthorized disclosure from taking place, a protective order may be granted, which could limit or disallow the discovery, or place some documents under seal, "to be opened as directed by the court." 23





¶ 16 The 1910 version of 23 O.S. 1971 §9 ( which originally governed exemplary damages ) underwent yet another revision in 1986 when it was replaced by 23 O.S. Supp. 1986 §9 (A). 24 The 1986 scheme required a midtrial judicial determination, to be effected at the conclusion of the plaintiff's case in chief, that there was sufficient evidence for the jury to consider an exemplary damages award in excess of actual damages. 25 The 1986 text was repealed and replaced in 1995 by the provisions of 23 O.S. Supp. 1995 §9.1. The latter language is presently in force. 26 Under the new procedure the jury is now specifically authorized to consider in its deliberations the financial condition of the defendant. 27 The 1995 version requires a two-phase trial process ( the second of which is statutorily referred to as a "separate proceeding" ), which calls for a particularized verdict finding that the evidence meets the standards for an exemplary-damages award. 28

¶ 17 The after-enacted provisions of the Discovery Code, coupled with the new punitive-damages submission regime, clearly call for our re-examination of Cox. The Discovery Code gives no support for setting apart the process of discovery for exemplary-damages proof as a separate disclosure rubric. All discovery must be filtered through the procedure established by [944 P.2d 310] 12 O.S. 1991 §3226 (C), which would allow, upon "good cause," a protective order if sensitive material is sought to be produced. 29 The new submission procedure for exemplary damages clearly authorizes ( 1 ) a "separate" trial stage for the jury consideration of that award and ( 2 ) submission of financial-worth proof for assessing the amount of that award. It neither declares nor authorizes any form of interim moratorium on compelled pretrial production of financial records. 30





¶ 18 Neither in the Discovery Code nor in the present text of 23 O.S. Supp. 1995 §9.1 did the legislature craft a separate procedural regime for compelled disclosure of information needed in the punitive-damages stage. Pretrial discovery of a defendant's financial condition serves to protect the uninterrupted continuity of the trial process and a smooth transition into the punitive-damages stage. Objections to production of private financial documents may be made under the terms of 12 O.S. 1991 §3226 (C) to protect the defendant's legitimate claims to privacy. Once an objection is interposed, equitable powers should be exercised to decide whether ( a ) discovery is warranted and ( b ) if so, whether a protective order is one's due.

¶ 19 III.

PRESENT STATUTORY REGIME THAT GOVERNS DISCOVERY AND RECENT ENACTMENTS DEALING WITH PRETRIAL DISCLOSURE OF A DEFENDANT'S FINANCIAL CONDITION SOUGHT IN SUPPORT OF PLAINTIFF'S PLEA FOR EXEMPLARY DAMAGES CAN BE HARMONIZED TO PROTECT A DEFENDANT'S RIGHT OF PRIVACY WITHOUT RIGIDLY INTERPOSING UNDUE DELAY IN THE TRIAL PROCESS.



¶ 20 This court's original jurisdiction affords litigants an available remedy for resisting impermissibly compelled pretrial discovery. 31 An appeal may not always be adequate to protect a party's quest for withholding privileged or confidential information. Once released at nisi prius, the materials sought to be shielded would no longer receive the law's palladium. 32 If this were to occur, waiting to press one's grievance by the ordinary remedy of appeal would invariably reduce a lively controversy to but an abstract issue and call for relief that would be patently both worthless and ineffective. 33





¶ 21 Pre-Code jurisprudence viewed proof of a defendant's financial condition to be the subject of legitimate discovery inquest only after the plaintiff's evidence was judicially found sufficient for submission of the punitive-damages plea to the trier. 34 A mere allegation in the pleading did not make a defendant's financial records vulnerable to disclosure. 35 As for the production of income tax records, jurisprudence allowed their mid-trial discovery, but cautioned the nisi prius bench to limit a party's examination of tax returns, even when personal income was in contest, to the issues relevant to the case.36 Once the trial had begun, and the court had cleared punitive damages for submission to the trier, disclosure of financial information became compellable at midtrial. 37





¶ 22 Since the repeal of 12 O.S. 1971 §548 and the enactment of the Discovery Code, 38 the litigant who seeks the production [944 P.2d 311] of documents is no longer required to show "good cause" for their demand. Because the new statutory regime shifts the "good cause" burden to the party who opposes discovery, it is the latter litigant who bears the responsibility to establish an impermissible invasion of privacy or "annoyance, embarrassment, oppression, or undue burden or expense." 39 In camera inspection with a protective order should be sought if discovery material is to be withheld in whole or in part or be merely shielded from public view. 40





¶ 23 The provisions of 12 O.S. 1991 §3226 (C)--which allow for protective orders--can easily be harmonized with those of the current 23 O.S. Supp. 1995 §9.1. The latter expressly authorizes the financial condition of a defendant to be inquired into for assessment of the award that is sought at the punitive-damages stage.

¶ 24 A plaintiff's pretrial quest for financial information from the defendant ( to be used in a §9.1 punitive-damages phase of the trial ) should be decided in a §3226 ( C ) adversary hearing that is to consider the opposing litigant's quest for protection. The plaintiff's right to prepare for trial and to avoid delay in the evidentiary process should be balanced against the defendant's legitimate claim to privacy. 41 An in camera inspection of the documents sought to be withheld from discovery or from public disclosure is the preferred way to protect the interests of both parties. 42

Outcome: ¶ 25 Statutory changes effected by the provisions of 23 O.S. 1995 Supp.1995 [944 P.2d 312] §9.1 43 and those introduced by the Oklahoma Discovery Code, 12 O.S. 1991 §3226 (B) (1) as well as by §3226 (C), 44 call for today's re-examination of Cox. Section 3226 (B) (1) of the Code allows pretrial discovery of unprivileged material relevant to the issues in the case. Section 9.1 explicitly authorizes the financial condition of the defendant to be inquired into for introduction in a punitive-damages-assessment phase of trial. A plaintiff's right to discovery, which is not statutorily unlimited, stands subject to judicial supervision.45 Upon the adversary's motion for a protective order under the terms of 12 O.S. §3226 (C), the trial judge should consider whether the plaintiff's discovery request is needlessly or excessively intrusive, burdensome, or oppressive. 46 If so, discovery should be limited, and if need be, it may be disallowed. 47 In the cases here in contest, the safeguards of §3226 (C) have been invoked ( by the employers ) to protect the group's claim to privacy. The respondent judge is hence directed to re-examine his extant order for its conformity to the views expressed in today's opinion in an adversary hearing to be conducted after this pronouncement becomes effective, and upon an in camera inspection, if one is sought. Because the court is confident that the respondent will proceed in accordance with the views we express today, it is unnecessary to grant the prerogative writ sought against him. 48





¶ 26 ORIGINAL JURISDICTION IS ASSUMED; THE TWO CAUSES ARE CONSIDERED AND DISPOSED OF BY A SINGLE OPINION; RESPONDENT JUDGE IS DIRECTED TO CONFORM HIS DISCOVERY ORDER TO THE STANDARDS ARTICULATED IN THIS OPINION AND TO PROCEED FURTHER IN A MANNER CONSISTENT WITH TODAY'S PRONOUNCEMENT.

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