Claims and Bad Faith Law Blog

NO CHRISTMAS MIRACLE IN CALIFORNIA.

This article springs from "An Unopposed Christmas Miracle in Pennsylvania," which was  published here on December 20, 2017.

I noted in an article published on Insurance Claims and Bad Faith Law Blog on December 26, 2017, that I reviewed the electronic court file of a federal case in California on PACER.  I have since reviewed that electronic court file even more closely, and the results are startling.

The case is Feller v. Transamerica Life Ins. Co., No. 2:16-cv-01378-CAS-AJW, filed in the U.S. District Court for the Central District of California.  The issue is concealed evidence in this insurance case.  The plaintiffs sued their life insurance company based on claims that their carrier overcharged them for premiums.

That fact should be kept in mind, or nothing wonderful can come of this story, to borrow a line from Dickens' A Christmas Carol.  Made concrete and applied to this life-insurance-premium case, it clearly outlines the range of conceivable needs, if any, and of course desires for "redaction," "sealing," and secrecy, in short, for concealing the evidence.

The results of two searches on the electronic docket are revealing (no pun intended).  The first of my searches that I want to report here was for the word, "stipulation."  The word was found 48 times since the first document was filed 23 months ago on February 28, 2016.

That is an average of more than 2 stipulations per month. 

The second of my searches that I want to report here was for the word, "seal."  This search yielded 205 results.  That means that the docket referenced 205 times when evidence was requested to be sealed, including of course many repetitions of the word, but still resulting in a total of 205 results.

Some of the things that were sealed either raise questions or are outright unknown except to the parties and perhaps to the District Judge or to the Magistrate Judge.  Two examples, in turn, will be sufficient here to illustrate.

Document Number 136 is an Order Granting the Plaintiffs' Application (Motion) to File Documents and Deposition Under Seal That Defendant Has Designated as "Highly Confidential -- Attorneys' Eyes Only'," filed two days after the Plaintiffs apparently filed their Application.  Download Gordon Feller v. Transamerica Life Ins. Co. Doc. No. 136 Order Granting Ps Application to F Docs and Depo Under Seal etc. F'd 10.12.16 (C.D. Cal. Case No. 2.16.cv.01378.CAS.AJW; s by USDJ).  (Their Application did not actually have that revealing title according to the Clerk's electronic docket.)

The judge made one change, apparently.  The District Judge crossed out the word, "PROPOSED," before she signed the Order.

There are no findings in the Order that the District Judge signed.

There are no recitals of fact in it at all.

There are no citations of legal authorities. 

We know only from the Clerk's docket that the District Judge's Order sprang out of the Plaintiffs' Application.  We cannot see this Application, however, because the public is not allowed to see it.

The Application is designated as Doc. No. 132 on the Clerk's electronic docket, filed October 10, 2016.  It is not accessible.  It is known only from the docket entry written by the Clerk.

To put it simply, among the many things we are not going to know from this, is what documents were sealed by this slice of the proceedings and what testimony was concealed from public view by this one motion and one Order among many.

In a case alleging not state secrets, but instead alleging overcharged-insurance-premiums-claims.

The second example from reviewing the electronic court file that illustrates the existence of questions concerning rulings and sealings, concerns the pleadings.  This specific example relates to Doc. No. 149 on the Clerk's electronic docket, apparently filed on Halloween in 2016 after a pair of secrecy orders were entered.

This pleading is identified by the Clerk as the Plaintiffs' Memorandum in Support of their Renewed Application for Preliminary Injunction.  This seems like pretty significant stuff, and it probably is.  In their original motion for Preliminary Injunction, Doc. No. 131 filed 10.10.16, the Plaintiffs announced that they asked for a Preliminary Injunction in part on the basis of their Memorandum, naturally Download Gordon Feller v. Transamerica Life Ins. Co. Doc. No. 131 Ps Application for PI F'd 10.10.16 (C.D. Cal. Case No. 2.16.cv.01378.CAS.AJW).:

This renewed application is based on the accompanying memorandum of points and authorities, the declaration of Larry N. Stern and attached exhibits, the declaration of Andrew S. Friedman and attached exhibits, and such further and other evidence as may be presented at or before the hearing of this motion.

 It should be noted that much of the other evidence cited in this motion is sealed.

So is the Plaintiffs' Memorandum in Support of their Renewed Application for Preliminary Injunction.

It is a pleading on which a judge is asked to rule in a case affecting the premiums paid to a life insurance company.

Still and all, we cannot see it.  It too is sealed from public view.

Dennis Wall is continuing to work on a book based in part on investigations into public records of actual court files involving concealed evidence and how it affects our lives.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

HAVE A HAPPY NEW YEAR THROUGHOUT 2018!

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ASCERTAINING A CALIFORNIA CLASS, REDACTED: HIDDEN DIFFICULTIES BECOME PUBLICLY IMPOSSIBLE.

Picking up from the last article published on Insurance Claims and Bad Faith Law Blog, "A Christmas Story From Pennsylvania," another secrecy opinion has recently been released.

In a recent decision announced in early December, 2017, the District Judge eventually reviewed what seems to be all of the factors a judge should review when someone asks to certify a class for action.  However, in this case, the judge left the public to guess why.

Her opinion has unexplained and inexplicable redactions in the text.  Like holes in a blanket on a cold night, they leave a lot out.

Even the attorneys seem to be missing from this opening presentation of the case as published on Westlaw:

2017 WL 6496803

Only the Westlaw citation is currently available.

United States District Court,

C.D. California.

GORDON FELLER ET AL.

v.

TRANSAMERICA LIFE INSURANCE COMPANY

Case No. 2:16-cv-01378-CAS-AJW

|

Filed 12/11/2017

Attorneys and Law Firms

Attorneys Present for Plaintiffs: Not Present

Attorneys Present for Defendants: Not Present

I found a few of the REDACTIONS quoted in the opinion.  I cannot say that I necessarily found all of them.  It is interesting to note that the REDACTED materials were considered -- and rejected, for reasons unknown -- in the course of his ruling.

For example, and ironically in this instance, the judge considered the requirement that a class action be "superior" to other forms of litigation in essence.  This case was about Transamerica Life Insurance Company's "monthly deduction rate ('MDR') increase imposed on holders of life insurance policies issued by Transamerica."  The plaintiffs requested class action certification of these claims.

Transamerica opposed the motion on many grounds.  Among other things, Transamerica argued that the action would not be superior to other forms of litigation if it proceeded as a class action.  To say again, the judge rejected this contention and found in favor of class action superiority in this action, but we do not completely know why.  Here is the Court's summary of this aspect of Transamerica's contentions:

    Transamerica argues that plaintiffs fail to establish superiority in light of the complications of trying all putative class member claims together. Opp’n at 42. With respect to factor (A) identified in Rule 23(b)(3), class members purportedly have “substantially different interests” in controlling the prosecution of separate actions because some class members [REDACTED] and some [REDACTED] from plaintiffs’ proposed method of calculating MDR increases. Id. at 43.

Feller v. Transamerica Life Ins. Co., No. 2:16-cv-01378-CAS-AJW, 2017 WL 6496803, at *14 (C.D. Cal. December 11, 2017).  Why the judge thought that Transamerica's opposition to superiority was not well taken is unclear, at its best.

I have reviewed the electronic court file of this case on PACER.  The "opposition" filed on behalf of Transamerica which the Court referred to in its opinion, seems to itself have been "redacted;" large swaths of its text are simply blacked out.  Presumably the judge was allowed to see them.

The plaintiffs also argued Rule 23(b)(2) "predominance" as a reason for class certification, and the judge agreed.  However, Transamerica interposed certain objections at this point:

    Transamerica argues that plaintiffs fail to show that the MDR increases are unlawful across the entire putative class. Opp’n at 38. Transamerica contends that, under plaintiff’s interpretation of the policy terms, some [REDACTED]. Id. at 39. Thus, plaintiffs’ requested injunctive and declaratory relief [REDACTED], and [REDACTED]. Id.

Feller v. Transamerica Life Ins. Co., No. 2:16-cv-01378-CAS-AJW, 2017 WL 6496803, at *15 (C.D. Cal. December 11, 2017).  Reader, please re-read this quoted passage of the Court's opinion and please tell me and the rest of the public what the Court ruled here and on what basis.  You can leave your Comments in the Comments area at the bottom of this article.

Please tell us what did Transamerica contend that under plaintiff's interpretation of its own policy terms, some what?  Thus, plaintiff's requested injunctive and declaratory relief was what and what, did they say?

What were the arguments that Transamerica made in this case?

And why did the judge think that Transamerica's arguments were not well taken in this case?

Last, if we look hard enough we can kind of glean what counter-arguments the plaintiffs made in this instance:

    Last, plaintiffs argue, for the same reasons there are no material conflicts of law, each policy has the same non-recoupment provision, and Transamerica applied [REDACTED] to every policy—accordingly, Transamerica’s argument that the (b)(2) class is not “cohesive” fails.

Feller v. Transamerica Life Ins. Co., No. 2:16-cv-01378-CAS-AJW, 2017 WL 6496803, at *15 (C.D. Cal. December 11, 2017).  But gleaning should be for prospectors looking for small pieces of gold.  Not so much for people trying to understand why a judge ruled the way she did in any case. She might rule the same way in our case some day.  How would we know which arguments won the day, and which contentions did not actually work very well?

The following thoughts do not appear in the written opinion in this case, but we can still think about them.  What First Amendment considerations might be involved in a decision to rule based on information known only to the parties and to the judge, information which is kept secret from everyone else without any explanation -- or recognition even -- of the concealment?

What interests does the public have in open proceedings and in rulings openly arrived at?  How much greater does the public's interest become, if at all, when you consider that the public pays for the judicial system?

Finally, a decision based on REDACTED evidence and arguments implicates this question as well:  What is the reason for writing an opinion in the first place?  It seems that we read opinions in order to understand what judges ruled on when they made rulings, and why they ruled the way they did.

Whey write a decision that does not inform anyone of these things?  Why take the time to point out that the Court considered REDACTED stuff before the Court ruled one way or another?

In the end, we are left knowing the result in this case.  In future cases, perhaps results too will become REDACTED.  When there is no explanation, GRANTED or DENIED says just as much as REDACTED.

Dennis Wall is investigating the court files of both reported and unreported actual cases, to shine a light in a book about how concealed evidence and secret rulings affect our lives.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

A CHRISTMAS STORY FROM PENNSYLVANIA.

This is a story that ends with two motions, a motion for reconsideration and an "unopposed emergency motion" to reseal some documents in a Court file.  But nothing wonderful can come from this story unless we begin at the beginning.

The plaintiff, Golon, Inc., formerly known as Golon Masonry Restoration, Inc., sued its liability carrier for alleged bad faith and breach of contract under two liability policies.  Our story begins with these basic facts reported in Golon, Inc. v. Selective Ins. Co., No. 17cv0819, 2017 WL 6397447 (W.D. Pa. December 14, 2017).  Golon alleged ...

... that Selective engaged in “bad faith, high risk, [and] brinkmanship negotiation strategy,” (ECF 1-1 at ¶ 41), when Selective continually refused to settle the underlying state court case within the total two-policy limits of $11 million, rejected its initial, well-respected trial attorney's advice, and tried the case to a jury verdict of $32 million.

Golon served a request to produce certain documents.  Selective responded to the request by withholding thousands of pages under a claim of "mediation privilege."  A close reading of the opinion reveals that at least some of the documents "derived from the pre-trial conciliation before Judge Lutty, the presiding trial judge in the underlying state court matter."

Golon filed a motion to compel.

Selective filed a motion for protective order addressing its claim, again, of mediation privilege.

The District Court granted and denied both of the competing discovery motions, in part.  The Court advised the parties and their counsel that the Court had reviewed the "withheld and/or redacted documents" in camera, that the Court holds the mediation privilege in the highest esteem in essence, and still out of the thousand-plus pages the Court held "that the mediation privilege asserted by Selective was not applicable to almost all of the documents it had either withheld or redacted[.]"

The Court accordingly ordered that all of the documents be unsealed but three of them, which were the only three documents among the bunch that were "properly withheld and/or redacted[.]"

Selective's attorneys filed an "unopposed emergency motion" to reseal the documents which the Court had just ordered unsealed.  In Selective's emergency motion, its attorneys argued "that Selective's attorney-client privilege and/or work product doctrine are being violated with this Court's ordered production."

The Court had ordered that Selective's production take place no later than Noon on December 11, 2017.

At five minutes after Noon on December 11, 2017, Selective's attorneys filed a motion for reconsideration of the Court's order. 

Selective's attorneys "openly stated" later, in a Brief they filed in support of Selective's motion for reconsideration, that Selective "would only produce" certain documents, because Selective "would file a Motion for Reconsideration as to the mediation privilege documents the Court had ordered produced."  {Emphasis in original and by the Court.)

That brings us closer to the climax of our Christmas story.  "The Court will now DENY Selective's Motion for Reconsideration finding that there is no basis to grant such a Motion."

The Court expanded on its ruling, finding a basis to deny such a motion.  Actually, the Court found three bases for denying Selective's motion:

1. Under the federal standard governing motions for reconsideration, this one was simply not well taken in the eyes of the Court.
2. Repeating that the Court "considers the mediation privilege a very important privilege in jurisprudence," the Court wrote that the Pennsylvania mediation privilege simply does not apply to the documents "such as the reports and emails prepared and exchanged by and among Selective's insurance employees about Golon's (the insured's) underlying mediation[.]" The Court put the same thing another way, observing that "the content of the documents at issue do not fall within the definition of 'mediation communications' which Pennsylvania's mediation privilege protects."
3. Someone apparently thought that it was a good idea to tell the Judge that they thought that he, the Judge, did not review the documents in question.

The Judge basically pointed out that this claim was unfounded, it would be fair to say:

The Court notes that it reviewed every document which was provided to the Court for its in camera inspection and found three documents which met the requirements established by Pennsylvania's mediation privilege statute, 42 P.A.C.S.A. § 5949.   This Court held that none of the other documents met the criteria set forth in Pennsylvania's mediation privilege statute. Accordingly, just because the Court addressed these documents along with the all the others, and did not single them out as pre-trial conciliation documents as Selective would have preferred, is not a basis for reconsideration; and thus, the Court will deny the Motion for Reconsideration for this reason as well.

          (Emphasis again in original and by the Court.)

The Court was not done.  There remained the matter of the unopposed emergency motion to reseal the documents previously ordered unsealed by the Court.

To begin with, the Court found that the emergency motion to reseal was "nothing more than a creatively styled Motion for Reconsideration."  A motion for reconsideration by any other name would smell as sweet, apparently, for the emergency motion to reseal was also denied.

In denying the emergency motion to reseal, the Court carefully pointed out that the attorney-client privilege and/or work product doctrine that were discussed in it "were never briefed or discussed in Selective's Motion to Compel / Selective's Motion for Protective Order."  (Emphasis yet again in original and by the Court.)

"Moreover," of all the documents ordered to be produced, "only seven documents" on Selective's privilege log were written with notations "that attorney-client privilege and/or work product doctrine apply."

So, in the end, for two reasons the emergency motion to reseal that Selective's attorneys filed on its behalf was denied:  First, "any argument" as to attorney-client privilege or work product "were, and are, deemed waived."

Second, "based on the information and current record which has been provided to the Court, the Court finds that Selective failed to meet its burden of proving that it is entitled to redact and/or withhold documents" on the basis either of attorney-client privilege or work product.

Still, the Court was not finished with its labors with respect to these discovery issues.  The Court's Order denying the motion for reconsideration and denying as moot the emergency motion, was entered during the work day on Thursday, December 14, 2017.

At 10:00 the following morning, or on Friday, December 15, 2017, the Court ordered "Selective to produce the documents" it was ordered to produce to Golon.

Dennis Wall is at work on a forthcoming book about Concealed Evidence and Secret Settlements.  The Golon v. Selective decision discussed in this article also addressed arguments that the withheld documents should be resealed because the motion to reseal them was "unopposed."  This aspect of the case will be discussed in a separate article on Insurance Claims and Issues tomorrow.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

SEALED EVIDENCE? NO PROBLEM. JUDGES RULE ANYWAY.

In Chaichian v. Sentinel Ins. Co., No. 1:16-cv-1026, 2017 WL 4891534 (W.D. Ark. October 30, 2017) (Hickey, United States District Judge), the pro se plaintiff signed a "confidential release" in settlement, was tendered a check to fund the settlement, and also received a sealed notice of dismissal of her case, with prejudice, prepared by the defendants' lawyers.

To say again, the release which the pro se plaintiff signed is under wraps.  It is sealed from public view.  That release apparently contains the terms of the settlement agreement.  Still, it is sealed.

To say again also, the defendants' attorneys prepared a notice of dismissal with prejudice for the pro se plaintiff to sign.  It is also under wraps.  It too is sealed.

After all that, the plaintiff balked at these proceedings.  She had the apparent temerity (even gall!) to say that the defendants' lawyers promised to pay her more money than what was in the check.

So, she filed a motion to enforce the settlement.  Her motion was denied.

The defendants filed a motion to enforce what they said was the settlement, and they filed their motion under seal away from public view.  Their motion was granted.

And the defendants also filed a motion to strike the plaintiff's motion to enforce the settlement.  It too was secret.  It too was granted.

All this was reported yesterday on Insurance Claims and Issues Blog as it came before the U.S. Magistrate Judge.  His report and recommendations were adopted "in toto," as the U.S. District Judge put it. 

However, the District Judge made it clear that her ruling and the magistrate's report and recommendations were based on evidence only they and the parties (presumably including the pro se plaintiff) had ever seen:

Judge Bryant’s Report and Recommendation concludes that this case should be dismissed with prejudice. Judge Bryant bases this recommendation on a review of the settlement documents, filed with the Court under seal, which do not reference an additional settlement payment.

(Emphasis supplied.)  We have their words to take for what was in the settlement documents, I suppose, since they were filed with the Court under seal as the District Judge said.

But in truth we have more than that.  The U.S. Constitution requires that when evidence is used by a judge to make a ruling against someone, then that evidence must be open to the public.

There is another reason which does not necessarily come from the Constitution.  It comes from reality.  In reality, it is the public that pays for the court system with their federal tax dollars; private wealthy litigants do not fund it.

In the meantime, federal magistrates and federal judges make rulings using secret evidence, and not just in this case.

Dennis Wall is currently at work on his fifth book, which will address how concealed evidence and secret settlements take our money, foreclose on our homes, and change our lives.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

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DISCOVERY OF UNDERWRITERS' FILES: NOT IN FEDERAL CASE IN PENNSYLVANIA.

In Westfield Ins. Co. v. Icon Legacy Custom Modular Homes, 321 F.R.D. 107 (M.D. Pa. 2017), a policyholder could not get discovery of its Commercial General Liability carrier's underwriting files.

The carrier was the plaintiff in that case.  It filed a declaratory judgment action that it had no coverage for an underlying claim.

The policyholder, a homebuilder, filed a counterclaim for bad faith which was dismissed before the discovery issue was resolved.

The policyholder requested production of the plaintiff carrier's underwriting files in this declaratory judgment action to determine coverage.  The carrier refused.  The policyholder then filed a motion to compel production of the carrier's  underwriting files.

The Court in that case denied the defendant policyholder's motion and refused to order the underwriting files to be disclosed.  In the eyes of the Court, the policy was not ambiguous.  Since the policy was not ambiguous, Pennsylvania law would not allow the admission of extrinsic evidence to contradict or alter the plain meaning of the contract.  Since extrinsic evidence could not be admitted under Pennsylvania law, the Court ruled as a result both that the request for production of underwriting files was neither relevant nor reasonably calculated to lead to the discovery of admissible evidence, and that the requested production of underwriting files was not "proportional" in a case in which that extrinsic evidence could never be admitted.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

ILLINOIS: "NOW YOU SEE IT, NOW YOU CAN'T COPY IT" ....

....APPROACH TO PRODUCTION REJECTED IN ILLINOIS.

Ninety thousand index cards were the subject of a defendant's concern in Illinois recently.  It produced the index cards for the plaintiffs' attorneys to inspect despite the defendant's concern about trade secrets.  Some or all of the 90,000 index cards contained customer information, apparently.

The plaintiffs' attorneys marked 5,077 of the index cards for production, in effect for copying, after they had seen them.

The defendant refused to copy 5,064 of the cards.  Instead, the defendant refused on the basis of claimed relevance at that point as to all but 13 of the cards which the defendant had already produced for inspection by the plaintiffs' attorneys.

The plaintiffs moved to compel, in a case that would become filled with competing motions to compel and motions for protective orders, and many charges of "bad faith" and pleas of "good faith" throughout the litigation and appeal.  Here is the Illinois appellate court's description of this particular motion to compel:

¶ 24 I. Plaintiffs' Motion To Compel

    ¶ 25 On January 26, 2017, plaintiffs filed a motion to compel [defendant] Cleaver-Brooks “to produce” copies of the 5077 index cards they had previously tabbed. Plaintiffs noted they did not understand Cleaver-Brooks's reference in its motion to continue to its need to review the index cards for relevance as “[t]he test for production of material in discovery is not that it be deemed ‘relevant’ by defense counsel after being produced for inspection.” Rather, plaintiffs asserted “[i]f the cards were not discoverable, then they would not have been produced in the first place.”

Salvator v. Air & Liquid Sys's Corp., --- N.E.3d ----, 2017 IL App (4th) 170173, 2017 WL 6015439, at p. *4, ¶¶ 24-25 (Ill. 4th DCA, December 5, 2017).

In pertinent part, later in its opinion the Illinois appellate court addressed this situation by pointing out that the defendant had no standing to raise relevance inasmuch as it had not sought an agreement with the plaintiffs or their attorneys, nor obtained a "confidentiality order" which would have permitted this manner of raising objections:

    ¶ 64 While it appears Cleaver-Brooks intended to preserve its right to review the tabbed index cards for relevance, the record shows Cleaver-Brooks failed to do so. Prior to production, Cleaver-Brooks did not obtain a ruling from the trial court or enter into an agreement with plaintiffs whereby it could review the index cards tabbed by plaintiffs for relevance. Instead, Cleaver-Brooks voluntarily produced the index cards without any reservation. By doing so, Cleaver-Brooks forfeited its relevance objection. See Gallagher v. Lenart,  226 Ill. 2d 208, 229, 874 N.E.2d 43, 56 (2007) (forfeiture is the failure to make a timely assertion of a known right whereas waiver is the intentional relinquishment of a known right). On this basis alone, the trial court's judgment may be sustained. See Elston v. Oglesby, 2014 IL App (4th) 130732, ¶ 12, 21 N.E.3d 57 (“[T]his court may affirm the trial court's judgment on any basis that is supported by the record.” (Internal quotation marks omitted.)).

For these reasons, the Illinois appellate court in pertinent part affirmed the Illinois trial court's order compelling this discovery in this case.  Salvator v. Air & Liquid Sys's Corp., --- N.E.3d ----, 2017 IL App (4th) 170173, 2017 WL 6015439, at p. *10, ¶ 64 (Ill. 4th DCA, December 5, 2017).

The author is currently at work on a book about how concealed evidence and secret settlements change our lives.  The Salvator decision is an example of how a so-called "confidentiality order" was not entered or requested, and the information was ordered open to the public.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.