Title: YWCA OF OKLAHOMA CITY v. MELSON

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

YWCA OF OKLAHOMA CITY v. MELSON  YWCA OF OKLAHOMA CITY v. MELSON 1997 OK 81 944 P.2d 304 68 OBJ 2224 Case Number: 88316, 88339 Decided: 06/24/1997 Supreme Court of Oklahoma THE YWCA OF OKLAHOMA CITY; C&H POWERLINE CONSTRUCTION CO., INC.; RONNIE'S SIGNS, INC.; TROY WESNIDGE; FLIP'S WINE BAR & TRATTORIA, INC.; JOHN VANCE MOTORS ; DALMARC ENTERPRISES, INC.; E&H TRANSFER, INC.; CHRIS HUNT WATER HAULING; CITY GLASS I AND II;GRISHAM CONSTRUCTION CO.; CENTURY MARTIAL ARTS SUPPLY, and OKLAHOMA STEEL & WIRE CO., INC., INC.; Petitioners, v. THE HONORABLE GORDON MELSON, Judge of the District Court of Seminole County, Oklahoma; and DALE CLAYTON THOMPSON, SR.; and SHIRLEY THOMPSON, husband and wife, Respondents, and PROGRESSIVE BRASS MANUFACTURING CO., Petitioner, v. THE HONORABLE GORDON R. MELSON, Judge of the District Court of Seminole County, Wewoka Division, 22 ON APPLICATION TO ASSUME ORIGINAL JURISDICTION FOR A PREROGATIVE WRIT ¶ 0 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, 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. Bradley D. Brickell, MAHAFFEY & GORE, P.C., Oklahoma City, Oklahoma, for Petitioners in Case No. 88,316; John W. Hunt and Lucy S. Kroblin, HOWARD & WIDDOWS, P.C., Tulsa, Oklahoma, for Petitioner in Case No. 88,339; B.J. Cooper and William C. McAlister, COOPER & McALISTER, P.C., Oklahoma City, Oklahoma, for Respondents. Opala, J. [944 P.2d 305] ¶ 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 . ¶ 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. I. THE ANATOMY OF LITIGATION ¶ 4 Claimant Dale Clayton Thompson, Sr., sustained in 1987 an on-the-job injury while working for Bullard's Oilfield Service. Found temporarily totally disabled, he was granted benefits by the Workers' Compensation Court. The award was not appealed. After Thompson failed to receive the payments when due, he brought a district court action against his employer and numerous members of the employers' unincorporated self-insurance group. ¶ 5 Although, after the suit's commencement, the group made a payment upon the compensation award, the record is unclear whether the entire obligation has been satisfied. Thompson's district court petition was later amended by the addition of an exemplary-damages plea for "bad faith refusal to pay the benefits." ¶ 6 To support his exemplary-damages plea Thompson demanded the group's pretrial production of certain documents with financial information. His quest included tax returns, financial statements, confidential business deeds, transfers of property, stock certificates, certificates of deposit, and bank statements. The group requested a protective order. The respondent judge limited the scope of compelled discovery to "complete financial statements and complete federal and state income tax returns for the years 1991 to the present," but his ruling declined otherwise to protect the compelled material. Respondent's order would allow for the "expansion" of discovery if the tax returns and financial statements did not prove "sufficient [944 P.2d 307] to disclose . . . financial information about the Defendants' financial worth." ¶ 7 The group, which assails in this proceeding the discovery order's enforceability, seeks prohibition. Reliance is placed on extant jurisprudence that proscribes pretrial discovery of a defendant's financial worth based on no more than allegations of bad faith. ¶ 8 We take original cognizance of these causes to re-examine pertinent jurisprudence of yore in light of massive statutory revisions that were enacted since this court's last opportunity in Cox v. Theus ( Cox ) ¶ 9 II. OKLAHOMA'S STATUTORY SCHEME OF YORE, AS WELL AS HER INTERPRETATIVE JURISPRUDENCE, DISALLOW PRETRIAL DISCLOSURE OF A DEFENDANT'S FINANCIAL RECORDS. ¶ 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. ¶ 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. ¶ 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. ¶ 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. ¶ 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. ¶ 15 Discovery limitations are found in subsection (C) of 12 O.S. 1991 §3226. ¶ 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). ¶ 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. ¶ 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. ¶ 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. ¶ 22 Since the repeal of 12 O.S. 1971 §548 and the enactment of the Discovery Code, ¶ 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. IV. SUMMARY ¶ 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. ¶ 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. ¶ 27 KAUGER, C.J. LAVENDER HARGRAVE, J. FOOT