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Truex v. Allstate Insurance Co.

January 10, 2006

DONALD L. TRUEX, D.D.S., PLAINTIFF,
v.
ALLSTATE INSURANCE CO., DEFENDANT.



The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge

MEMORANDUM OPINION

This case was referred to me for resolution of Plaintiff Donald L. Truex' Motion to Compel Deposition of FEMA Personnel. I previously stayed proceedings in this case pending Truex's compliance with Local Rule 83.2(c)(1), which requires attorneys who are not members of the Bar of this Court to join an attorney who is a member of the Bar of this Court. Truex has since retained local counsel and filed Donald L. Truex' Renewed Notice of Motion and Motion to Compel Deposition of FEMA Personnel ("Mot. to Compel"). In response to Truex's original motion to compel, the Federal Emergency Management Administration ("FEMA") filed Respondent FEMA's Memorandum in Opposition to Petitioner's Motion to Compel and Cross-Motion to Quash Subpoena ("Opp'n and Mot. to Quash").*fn1 As will be discussed in this memorandum opinion, Truex's motion to compel will be denied and FEMA's motion to quash will be granted for two reasons: (1) Truex failed to exhaust his administrative remedies under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. ("APA"); and (2) the federal government is not a "person" within the meaning of Rule 45.

I. BACKGROUND

Truex filed a lawsuit against Allstate Insurance Company ("Allstate") in the United States District Court for the Central District of California, alleging breach of insurance contract and tortious breach of the covenant of good faith and fair dealing in the handling of his claims for flood and mold damage. Truex's Memorandum in of Points and Authorities ("Truex Mem.") at 1. Allstate is a participating Write Your Own Company ("WYO") that sells the Standard Flood Insurance Policy pursuant to the National Flood Insurance Program which is run by FEMA. Id. at 2-3. Truex had purchased a Standard Flood Insurance Policy through Allstate. Id. at 2. In defending against Truex's allegations, Allstate asserts that, as a WYO, it is an agent of FEMA and that its status as an agent of FEMA is a complete bar to Truex's lawsuit. Id. In an attempt to gather evidence to dispute Allstate's agency defense, Truex served a subpoena on FEMA. Id. at 2-3.

Truex's initial subpoena to FEMA was issued from the United States District Court for the Central District of California and sought both documents and testimony relating to Truex's lawsuit. Opp'n and Mot. to Quash at 2. FEMA objected to the subpoena and informed Truex of its regulations limiting the production of documents and prohibiting agency witnesses from testifying in litigation to which FEMA is not a party. Id. at 2. On September 20, 2005, Truex provided FEMA with a request for a waiver of its regulations, asking that it allow for the deposition of a knowledgeable FEMA employee. Id. at 3. FEMA denied Truex's request for a waiver and sent him a letter explaining the basis for its determination. Id. at 4. Specifically, FEMA determined that Allstate was solely responsible for defending against Truex's lawsuit, that the subpoena sought largely speculative testimony about interests not part of the litigation, and that the Federal Insurance Administration staff were busy performing critical obligations related to the aftermath of Hurricanes Katrina and Rita. Id. at 10-11, Exh. 2.

Because a subpoena for attendance at a deposition must issue from the district where the deposition is to be taken, on September 29, 2005, Truex served a second subpoena on FEMA, this time issued from the United States District Court for the District of Columbia. Truex Mem. at 4. This second subpoena requested only deposition testimony. Opp'n and Mot. to Quash at 4. Truex subsequently filed the present motion to compel the deposition of FEMA personnel.

II. DISCUSSION

Truex moves this court for an order compelling FEMA to appear for deposition and give testimony in compliance with the subpoena ad testificandum served on September 29, 2005. Mot. to Compel at 1. In support of his motion, Truex asserts that the Federal Rules of Civil Procedure are controlling and that FEMA's regulations cannot preclude the deposition of FEMA's employees pursuant to a Rule 45 subpoena. Id.

In response, FEMA raises four arguments. First, FEMA argues that the subpoena is invalid because the federal government is not a "person" within the meaning of Rule 45 and, therefore, the government cannot be subject to a subpoena issued under that rule. Opp'n and Mot. to Quash at 7. Second, FEMA argues that its regulations restricting employee testimony are valid and that there has been no waiver of sovereign immunity in this case. Id. Third, FEMA argues that Truex failed to exhaust his administrative remedies, which requires him to file a separate lawsuit under the APA challenging FEMA's denial of his request for a waiver. Id. Fourth, FEMA argues that compliance with the subpoena would be burdensome and have serious programmatic implications. Id.

A. FEMA's Touhy Regulations and Truex's Failure to Exhaust His Administrative Remedies

Truex argues that the Federal Rules of Civil Procedure govern his request for a deposition, where as FEMA asserts that its Touhy regulations govern. Pursuant to 5 U.S.C. § 301, a federal agency may establish procedures for responding to non-party subpoenas. See 5 U.S.C. § 301 ("the head of an executive department . . . may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use and preservation of its records, papers and property"); Bobreski v. U.S. Envtl. Prot. Agency, 284 F.Supp.2d 67, 78 (D.D.C. 2003) (regulations under 5 U.S.C. § 301 "apply to all federal proceedings except those to which the United States is a party"). Regulations promulgated under 5 U.S.C. § 301 are commonly known as Touhy regulations, after Touhy v. Ragen, 340 U.S. 462 (1951).*fn2

FEMA has promulgated Touhy regulations that prohibit the testimony of its employees in cases to which FEMA is not a party. Specifically, 44 C.F.R. § 5.87(a) provides:

No FEMA employee shall testify in response to a subpoena or other demand in private litigation as to any information relating to material contained in the files of the Agency, or any information acquired as part of the performance of that person's official duties or because of that person's official status, including the meaning of Agency documents.

44 C.F.R. ยง 5.87(a). This prohibition on employee testimony can be waived only by FEMA's ...


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