Claims and Bad Faith Law Blog

CLASS ACTION DISCOVERY: NO IMMUNITY FROM "INSUFFICIENTLY DEMONSTRATING" TRADE SECRET.

 

          In Cabrera v. Government Emp's Ins. Co., 2014 WL 2999206 (S.D. Fla. July 3, 2014)(Seltzer, Chief U.S.M.J.) the Court once again applied an oft-applied rule of discovery.

          To set the stage, Plaintiff Carlos Cabrera sued in a class action complaint.  The defendants are Government Employees Insurance Company (GEICO) and Bell, LLC ("Bell").  Mr. Cabrera alleges that the defendants violated the Telephone Consumer Protection Act.  "More specifically,

Plaintiff contends that after GEICO pays claims to its customers pursuant to automobile insurance policies, it attempts to recoup the amounts paid from other drivers involved in the accident in subrogation. According to Plaintiff, when GEICO is unable to collect the funds, it contracts with collection agencies, including Defendant Bell, to contact the purported debtors in an attempt to recoup the funds. Bell, in turn, allegedly makes repeated unauthorized, unsolicited live and pre-recorded telephone calls to the third-parties, informing them that they owe subrogation payments to GEICO.

Cabrera v. Government Emp's Ins Co., 2014 WL 2999206 *1 (S.D. Fla. July 3, 2014)(Seltzer, Chief U.S.M.J.).

          The plaintiff propounded certain discovery and the defendant Bell responded with objections including an objection based on trade secrets.  The Court quoted Bell's trade secrets objection, which was a statement without any supporting evidence:

Defendant's processes are proprietary processes that have independent commercial value and are not generally known.  They are trade secrets.

Cabrera v. Government Emp's Ins Co., 2014 WL 2999206 *9 (S.D. Fla. July 3, 2014)(Seltzer, Chief U.S.M.J.).  Standing alone, "these summary statements" were insufficient to establish confidentiality or to demonstrate that disclosure would be harmful, which are the burdens of proof when stating a trade secrets objection.  In other words, mere generalized objections did not immunize a response to particular discovery requests.  See Cabrera v. Government Emp's Ins Co., 2014 WL 2999206 *9 (S.D. Fla. July 3, 2014)(Seltzer, Chief U.S.M.J.).

          This decision represents one more in a long line of decisions that generalized objections to specific discovery requests in a lawsuit are not legally sufficient.  The established case law is reviewed in Dennis J. Wall, "Conditional and Other 'Nonspecific' Objections to Discovery Are No Objections At All in an Insurance (or in Any Other Case)," 33 Ins. Lit. Rptr. 437 (September 23, 2011 ed.), Download Conditional Objections Are No Objection ILR.

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

 

THE GOOD FAITH OF A PERSON.

   The concept of a corporation as a person may have started as an economic theory.  The concept of the corporation as a person is now being translated into the different languages of law and political theory.  See Binyamin Appelbaum, "They're Not Like You and Me," p. 14, Sunday New York Times Magazine, Sunday, July 27, 2014.

   According to the cited article, the idea that a corporation should be treated as a person in particular ways, includes the idea that if you or I encounter the corporation and do not like the experience, we can go elsewhere.  There is a problem with that idea.  It is pretty accurate from one economic perspective, but it does not translate well into discussions of constitutional rights.

   When we are a purchaser, we certainly can take our money and go down the street to someplace else.  When we are a seller and the corporation is the purchaser, however, it is the corporation that decides that it does not need to purchase what we are selling, and the corporation that can take its money and go elsewhere.

    When we are employees, we are sellers of our labor and not purchasers.  The prospective employer like Hobby Lobby is the purchaser in that situation.  If we do not like the exemptions they claim from providing benefits, it is meaningless to say that we can take our labor elsewhere -- particularly if the only other prospective purchasers of our labor, if the only other prospective employers available to us, claim the same exemptions from providing benefits.

   So, whoever thought that anyone would say that corporations have faith?  That corporations got religion as it were?  Or that anyone would hear that good faith and fair dealing would require an exemption from providing insurance benefits to laborers?

QUESTION:  My wife wonders whether Hobby Lobby and other employers pay for group health plans that cover drugs for men which can cause side effects that, if they last longer than four hours, the man should see a doctor?   But they do not pay insurance premiums for contraceptive coverage?  I wonder, too.  I'll bet you do, too. 

Please Read The Disclaimer. Copyright 2014 by Dennis J. Wall.  No claim to original U.S. Government works.  

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BAD FAITH COVERED; BUT WHO "DONE IT" MAKES A DIFFERENCE.

   It matters who caused the destruction of Flight 17.  But bad faith will not defeat potential insurance coverage for damage like this.

   There are a couple of scenarios circulating in the press at this time.  Each involves bad faith.  Bad faith will not defeat possible insurance coverage for a catastrophic event like this, no matter who did it.

   The Terrorism Risk Insurance Act, if it applied here, authorizes the Secretary of the Treasury, acting with the "concurrence" of the Secretary of State and of the Attorney General, to certify any act as an "Act of Terrorism" under TRIA.  In that case, and so long as four conditions more or less are met, primary and excess property and casualty insurers are required to cover damages resulting from the declared act of terrorism.

   The four conditions are:

 

1.       The act is an act of terrorism.

 

Bad faith clearly does not matter here.  In fact, every act of terrorism is an act done in bad faith.

 

But it is also clear that it matters who "done it".  If a government caused the act and resulting damages to happen, is it an "act of terrorism"?  Is there coverage under such as TRIA?

 

2.      The act is dangerous to human life, property or infrastructure.

 

The death of Flight 17 and the deaths of all the passengers and crew on it clearly qualify.

 

3.      The act resulted in damage within the United States.

 

This is not as quick to answer as it seems.  Yes, Flight 17 was flying over the Ukraine when it was destroyed.  That does not necessarily mean that there was no damage within the United States.  What of damage claimed by any family members within the United States, is that not damage?

 

Whether this condition is met here, or not, it clearly does not depend on good faith or bad faith.  Given the nature of the act, bad faith is irrelevant to the coverage determination -- even though bad faith is relevant to the world in this unspeakable tragedy.

 

4.      The act has been committed by an individual or individuals to influence the policy or affect the conduct of the United States Government by coercion.

 

Once again, whether this condition can be met here, or not, it clearly does not bar bad faith conduct.  If anything, this condition depends on bad faith conduct or this condition cannot be met.

 

   So, it is worth repeating the focus of this article.  It is not whether TRIA coverage applies or not.  The focus, rather, is whether bad faith conduct will defeat potential insurance coverage for the damages resulting from the death of Flight 17 and its passengers and crew.  It seems that bad faith will not defeat potential coverage for terrorism risk insurance.

   It does seem, in contrast, that the identity of who "done it" may defeat this form of potential insurance coverage.  This is a concept that will be carried forward on Insurance Claims and Issues Blog, http://www.insuranceclaimsissues.typepad.com/.

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

MURKY BAD FAITH LIABILITY RULES and GOOD FAITH CORPORATE CONTRIBUTIONS.

          There is something to be said for the law of (perhaps) unintended consequences.  Delaware Courts have in the eyes of some observers been busy spinning tales of liability for ill-defined “bad faith” conduct particularly on the part of CEO’s, and then backtracking to avoid finding any of the CEO’s guilty of bad faith. See James Kwak, “Corporate Political Contributions and Bad Faith, Whatever That Is,” posted on The Baseline Scenario Blog on June 24, 2014.

          A recent article puts forward the argument that political contributions which are in the CEO’s interest but not in the corporation’s interest are made in bad faith.  The article is discussed in U. Conn. Law Prof. James Kwak’s blog article, above.

          Sometimes, to say again, there is something to be said for the law of unintended consequences.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 Please Read The Disclaimer.

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NO COVERAGE, NO BAD FAITH UNDER PENNSYLVANIA LAW.

          In a recent decision, a Federal Court in Pennsylvania held that there where there is no coverage, there is no bad faith claim.  Hackbarth v. Nationwide Mutual Insurance Co., 2014 WL 3378695 (W.D. Pa. July 9, 2014).  The Court in that case went out of its way to grant the defendant's motion to dismiss with prejudice accordingly.  Here is how.

          The plaintiff conceded that if his claim for declaratory relief (really, for breach of the insurance contract) was dismissed, then his claim for insurance bad faith for unreasonable failure to pay that claim should also be dismissed.  The Federal Court noted this concession and declined to rule on that basis.  Instead, the Court went forward to examine the law governing the plaintiff's ability to amend the claim for insurance bad faith under Section 8371 in the face of a determination that there was no insurance coverage.  Hackbarth v. Nationwide Mutual Insurance Co., 2014 WL 3378695 *10-*11 (W.D. Pa. July 9, 2014).

          The Federal Court held that since there was no insurance coverage, there was no claim for insurance bad faith as a matter of Pennsylvania law.  The Court accordingly reached out and granted the defendant's motion to dismiss with prejudice.  In other words, there was no possibility that the plaintiff could amend the bad faith claim as a matter of Pennsylvania law in the eyes of the Court.  Hackbarth v. Nationwide Mutual Insurance Co., 2014 WL 3378695 *11 (W.D. Pa. July 9, 2014).

          In reaching this decision, the Pennsylvania Federal Judge followed the rule followed by the vast majority of Courts in the United   States:  Where there is no insurance coverage under a first-party policy, as the Court determined in this case, then there is no first-party insurance bad faith claim either.  See also 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 9:18, Burdens of Proof--Who Has The Burden (Thomson Reuters West 3d ed. and 2014 Supplement).

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

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INSURING ILLEGAL CHILDREN.

This is a postscript to an article posted here on Sunday, July 6, 2014, "No Insurance Exists to Stop People From Threatening Children".

    The County Judge of Dallas County, Texas has made a tough decision.  He announced the availability of three temporary detention centers for illegal immigrant children to go to while awaiting deportation back to their home countries.  The County Judge in Texas, by whatever title, exercises administrative authority as well as judicial authority.

    Asked whether he had to consult anyone or just make the tough decision on his own, the Judge replied that he and a group of volunteers had gone door-to-door in the neighborhood where one of the housing facilities, an empty elementary school, is located.  The responses he got from the people who live next door or across the street from the planned facility were overwhelmingly positive.

    When asked about the politics of the situation, the Judge replied that the politics of this situtation are that there are no politics.  This is about children.  He used other words, too, like faith and compassion and love.

    If we are going to hear hatred and see angry images, we are reminded that the best of us surprise us with their goodness. But the politics for a change is that there is no politics in this situation.  There are children in this situation.

    And faith, compassion and love.

Copyright 2014 by Dennis J. Wall.  Please Read The Disclaimer.

NO INSURANCE EXISTS TO STOP PEOPLE FROM THREATENING CHILDREN.

          Adults threatened children on a road outside a small town in California last week.  The children were in buses.  The adults stopped the buses.  Then they shouted at the children inside, telling the children they are not wanted there.

          The images of this assault have pushed me off the reservation.  There is no insurance that can stop people who threaten children and there is no hook I can think of for an insurance-related blog like this one.

          You don't frighten children to make a point.  Be in favor of immigration.  Be against immigration.  But never, ever intimidate children.

          Make a point if you think you must.  But don't ever send children to bed at night afraid because of what you said or did.  Never. 

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 Please Read The Disclaimer.

PROXIMATE CAUSE IN INSURER BAD FAITH LAWSUITS.

          Even if in a given case the Court can assume that an insurance company has acted in bad faith, there must still be proof at least sufficient to take the case to the jury that the insurance company's alleged bad-faith conduct caused the damages, in the case of a liability insurance company defendant, caused the excess judgment.  See Messinese v. USAA Casualty Ins. Co., 2014 WL 2916451 *5 (M.D. Fla. May 22, 2014), in which the District Court granted the defendant insurance company's motion for summary judgment, holding in part:

     Even assuming that Plaintiffs have produced evidence from which a jury could find that USAA breached its duty of good faith by (a) failing to timely advise Mr. Adams of the possibility of an excess judgment and (b) withholding the homeowner's policy from Plaintiffs, the undisputed facts show that these actions by USAA did not cause or contribute to the excess judgment.

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

 

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CONCEPTUAL STANDING IN HOBBY LOBBY: WHERE PROOF IS NOT REQUIRED.

          There will be many things written about the Hobby Lobby decision released yesterday.  I only want to write this morning about one non-religious, non-regulatory issue which that decision unknowingly raises.  I have doubts whether this aspect of the ruling can be limited.

          The concept of standing in the Hobby Lobby may not be susceptible to limitations, or at least the limitations written into the opinion.  Conceptual standing in the Hobby Lobby means for one thing that standing does not require proof, and it means something more.

          Standing to assert an actual controversy now means only that the plaintiffs say that they are adversely affected or, in the Hobby Lobby, only that the plaintiffs say that they hold a sincere religious belief.  No proof is required.

          As any practicing lawyer knows, allegations are not proof, and no judgment has ever been validated by the nonexistence of any evidence to support it.

          I have doubts that this "I say it, therefore it is true" concept of standing will stay in the Hobby Lobby.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 Please Read The Disclaimer.

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