Claims and Bad Faith Law Blog

COMMENTS ON OVERDRAFT RULE ARE DUE BY JULY 1.

I left the following Comments on the overdraft rule earlier today.  Comments are due by July 1.  The overdraft rule is being examined by the Consumer Financial Protection Bureau because the CFPB is required to review the rule by the Regulatory Flexibility Act.  Reviews and revisions of rules by the CFPB since 2017 have not been favorable to consumer financial protection.  If you want to leave Comments on the overdraft rule that advance consumer financial protection, your time grows short.  Go to www.regulations.gov, input “overdraft rule,” and click on “Comment Now!”  Comments do not have to be as long or as complicated as books or articles.  They can be short and to the point, which if I had it to do over again, I would make my own Comments even shorter and even more to the point.

Here are the Comments I left on the overdraft rule earlier today:

I would like to leave these comments on improving and strengthening the overdraft rule.

First, as I understand the present situation, banks may charge fees without getting a customer's prior approval whenever the customer overspends her or his account by using a paper check.  As it is currently written, the overdraft rule applies to most electronic transactions.  Paper checks may not be as prevalent as they once were, but prevalence of electronic transactions is no excuse for this inequity.  (This would be true in any case, but today it is especially true because electronic transactions are required by the very banks who benefit from the rule's failure to regulate transactions involving paper checks.)  This is unfair and unequal.  The overdraft rule should now be updated and strengthened by extending its application to the customer's use of a paper check.

Further, I understand that some banks still reorder debit transactions so that one tiny shortage in the customer's account becomes an automatic trigger of overdrafts and fees charged by the banks.  The banks that indulge themselves in this practice and that continue to inflict it upon their customers apparently rely on disclosure to their customers of what they do, usually in small inconspicuous type in a disclosure document.  Disclosure is no excuse for predatory practices.  Customers often have little or no choice of banking options in their communities.  This practice of reordering debit transactions, usually by processing them from the highest amount to the lowest amount, must be barred completely.  The overdraft rule should be updated and strengthened accordingly, with a complete prohibition on any practice of reordering debit transactions that has the result of charging the customer with overdraft and any other associated charges.

Thank you for your consideration.

Dennis Wall

Please Read the Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

Download CI and IBF 06.27.19.

A POX ON BOTH YOUR BAD FAITH HOUSES: EXPERT TESTIMONY UNHELPFUL.

In Hansen Constr. Inc. v. Everest Nat’l Ins. Co., No. 16-cv-02902-CMA-GPG, 2019 WL 2602510 (D. Colo. June 25, 2019), a Federal Judge granted the plaintiff’s and the defendant insurance company’s motion to exclude expert witness testimony in a bad faith case.

The reason that both sides filed their motions to exclude their respective experts’ testimony was the same.  Both sides argued that testimony from  experts on the issue of insurance industry standards of good faith and bad faith would be of no help to the jury in deciding the bad faith issues in that case:

    Both parties intend to call expert witnesses at trial to offer opinions regarding insurance industry standards of care and whether Defendant’s conduct in handling Plaintiffs’ claim was reasonable. Defendants object to Plaintiffs’ proffered experts, J. Kent Miller and Garth H. Allen, on the basis that their opinions are improper and inadmissible under Fed. R. Evid. 702. (Doc. # 102.) Plaintiffs object to Defendant’s proffered expert, Jon F. Sands, on similar grounds. (Doc. # 101.)

Hansen Constr. Inc. v. Everest Nat’l Ins. Co., No. 16-cv-02902-CMA-GPG, 2019 WL 2602510, at *1 (D. Colo. June 25, 2019).

The Federal Judge agreed in this case and granted both motions to exclude the expert testimony on bad faith vs. good faith industry standards applicable to this case:

    Neither party raises arguments related to the qualifications of the experts at issue. Rather, both parties assert that the expert opinions should be limited or excluded because the opinions are not helpful due to the fact that they relate to subject matter committed exclusively to the jury or to the Court. The Court agrees.

Hansen Constr. Inc. v. Everest Nat’l Ins. Co., No. 16-cv-02902-CMA-GPG, 2019 WL 2602510, at *3 (D. Colo. June 25, 2019).

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

Download IBF 06.27.19.

 

FILED RATE DOCTRINE IS NOT A BAR TO JURISDICTION. IT IS A DEFENSE ...

even if a "filed insurance rate doctrine" were to be recognized.

Aetna started it. Aetna sued Insys. Aetna alleged that Insys defrauded Aetna into reimbursing Insys and its officers for off-label prescriptions of a certain drug.

MSI tried to join the party. Specifically, MSI tried to intervene in Aetna's lawsuit against Insys. Its motion for leave to intervene was ultimately denied, but the Court's treatment of the filed rate doctrine raised by Aetna is worth noting.

MSI alleged that it is Aetna's insured, and that it, MSI, purchased healthcare coverage for its employees from Aetna. MSI alleged against Insys that Insys's alleged misconduct caused MSI to pay increased premiums, higher deductibles, and pay greater co-pays charged by Aetna than otherwise would have been the case without Insys's alleged misconduct.

Aetna did not want MSI at Aetna's party. Aetna opposed MSI's intervention in part by raising the filed rate doctrine. Aetna contended that its rates "are filed with and approved by the Pennsylvania Insurance Department," so that the Court did not have jurisdiction to adjudicate MSI's claims which challenged Aetna's filed insurance rates, Aetna contended.

This Court would have none of that. The Federal Judge ruled that "this doctrine is a defense to claims rather than a jurisdictional bar." Aetna Inc. v. Insys Therapeutics, Inc., 330 F.R.D. 427 (E.D. Pa. 2019) (pinpoint page numbers not available from Westlaw at the time of publication).

Simple as that. No ruling whether Pennsylvania would recognize a filed insurance rate doctrine or not, and no need to rule on that question. Instead, the filed rate doctrine as the Court recognized in this case is a defense on the merits, not a defense to jurisdiction.

Please Read The Disclaimer. ©2019 Dennis J. Wall. All Rights Reserved.

"BAD FAITH BREACH OF INSURANCE CONTRACT": $1 MILLION PUNITIVE DAMAGES ...

... IN CALIFORNIA, NOT IN FLORIDA.

"As reduced by the trial court, the $ 1 million in punitive damages (approximately three times the amount of compensatory damages) is within the constitutionally permitted range in view of the degree of reprehensibility of GEICO’s conduct."  This holding is published in the Court's opinion immediately before the Court began to discuss the Background of the case.  Mazik v. GEICO General Ins. Co., 35 Cal. App. 5th 455, (Cal. 2d DCA, Division 2, 2019) (page numbers not available from Westlaw at the time of this writing).  When Mazik first appeared in publication unofficially in Westlaw, it was the subject of an earlier article here on May 21, 2019.

A jury originally assessed punitive damages on GEICO in the amount of $4 Million, but the trial judge reduced the punitive damages assessment to the amount of $1 Million affirmed by the appellate court.

In many ways, this case mirrors the Manor House decision of Florida's Fifth DCA that was profiled here in an earlier article on Tuesday of this week.  Both Mazik and Manor House were decided in May, but Mazik involved a cause of action for "bad faith breach of insurance contract" of an underinsured motorist policy, presumably meaning a breach of the implied covenant of good faith in California, while Manor House involved a cause of action for breach of a property insurance contract in Florida.

The differences can be determinative of the outcomes.  While punitive damages does not seem to have been an issue in Manor House unlike Mazik, it is unlikely that Florida courts would countenance an award of $1 Million in punitive damages for a breach of contract without a showing of bad faith which, it will be recalled, could not be made even if the plaintiffs in Manor House had attempted to allege a cause of action beyond breach of contract because Citizens Property Insurance, the defendant in Manor House, is statutorily immune from "bad faith" lawsuits in Florida.

There was clearly no such immunity against a cause of action for breach of the implied covenant of good faith in the Mazik case in California.

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

Download IBF 06.20.19.

BREACHING CONTRACT BY IMPROPERLY DELAYING LOSS ADJUSTMENT: FLORIDA CONSEQUENTIAL DAMAGES.

In a case that “involves the snail-paced resolution of insurance claims for property damage caused by a hurricane in 2004,” a Florida appellate panel unanimously held that the policyholder could sue Citizens Property Insurance Corporation for consequential damages but not for bad faith. Manor House, LLC v. Citizens Prop. Ins. Corp., No. 5D17-2841, 2019 WL 2306107, at *1 (Fla. 5th DCA May 31, 2019) (Edwards, J., for a unanimous Court; opinion stated not final until released for publication in the permanent law reports).

In reaching this decision, the Florida appellate court acted with significance beyond its borders and even beyond Florida itself. Citizens is immune from “bad faith” in Florida. However, Citizens is not immune, this Court held, from consequential damages for breach of contract that require neither allegations nor proof of bad faith.

The policyholder owned apartment buildings that were damaged during Hurricane Frances in 2004. Citizens allegedly improperly adjusted the claim including unnecessary delay in processing it. The policyholder alleged that as a consequence of the property insurance carrier’s delay (i.e., by Citizens), the policyholder lost rental income that it would have received had its property insurance claim been adjusted properly and without unnecessary delays.

The trial judge held that Citizens is not liable for such consequential damages and entered partial summary judgment in favor of Citizens on that claim.

On appeal, the Fifth District panel reversed this holding. The appellate panel established the law of Florida beyond bad faith extracontractual damages. The panel unanimously held that when an insurance carrier breaches the insurance contract it must face exposure to extracontractual damages in this sense: The contract breach allegedly caused the consequential damages. No inquiry into bad faith or good faith is necessary in such a case.

As the appellate panel held in a well-reasoned opinion by Judge Edwards in this case:

    In granting summary judgment, the trial court denied Manor House the opportunity to prove whether the parties contemplated that Manor House, an apartment complex, would suffer consequential damages in the form of lost rental income if Citizens breached its contractual duties to timely adjust and pay covered damages, which in this case allegedly resulted in a significant delay in completing repairs so that units could once again be rented. We hold that the trial court erred in so ruling, and we reverse that partial summary judgment so that the parties may litigate all issues related to Manor House's claim of lost rent. It is undisputed that Citizens, a creature of statute, is immune from bad faith claims. See § 627.351(6)(s) 1, Fla. Stat. (2017). However, the consequential damages Manor House seeks are based squarely on breach of contract claims requiring no allegation or proof that Citizens acted in bad faith.

Manor House, LLC v. Citizens Prop. Ins. Corp., No. 5D17-2841, 2019 WL 2306107, at *2 (Fla. 5th DCA May 31, 2019).

Please Read The Disclaimer. ©2019 Dennis J. Wall. All Rights Reserved.

Download IBF 06.18.19.

SPEAK, MR. BARR, SPEAK.

A guest article by John K. DiMugno, Esquire, a California attorney, legal educator, and the author or coauthor of multiple legal treatises and legal periodicals published by Thomson Reuters.

William P. Barr, Attorney General of the United States, recently spoke at the American Law Institute’s Annual Meeting in Washington, D.C. The ALI likely extended the invitation shortly after Mr. Barr’s confirmation when there was hope that he would play a role similar to that of the departed General Mattis and General McMaster and place guardrails on the President’s more authoritarian instincts. By the time of the Annual Meeting, those hopes had evaporated. Mr. Barr’s dissembling about the contents of the Mueller Report raised serious concerns about the Attorney General’s complicity in administration efforts to undermine the rule of law.

This Blog highlighted the incongruity between Mr. Barr’s conduct in office and the core mission of the ALI. Notably, Mr. Wall’s post made no attempt to silence Mr. Barr, a solution that would have satisfied the wishes of many in the ALI who were rightfully appalled by Mr. Barr’s transparent attempt to mislead the American public. But barring Mr. Barr from speaking would have entangled the ALI in partisan politics, something the organization scrupulously avoids for good reason. Staying above the political fray insulates the ALI’s Restatements of the Law against charges of political bias and broadens their influence on courts and legislatures around the country.

Mr. Wall’s proposed solution—letting Mr. Barr speak while contributing the ALI’s earnings from the speech to legal aid societies around the country—perfectly balanced those competing concerns. It had the salutary effect of simultaneously benefitting public interest groups that desperately need the money while drawing attention to questions about Mr. Barr’s integrity.

Mr. Barr’s penchant for making transparently misleading and often contradictory statements has left some wondering what he hopes to achieve other than aggrandize power and influence in the Trump administration. Sharon LaFraniere, Charlie Savage and Katie Benner, People Are Trying to Figure Out William Barr. He’s Busy Stockpiling Power, New York Times on line, June 9, 2019. 

He misled the American public about the contents of the Mueller Report knowing full well that when the report was released several weeks later his lies would be evident to everyone.

When Mr. Barr sought confirmation as Attorney General, he told the U.S. Senate that he had known Robert Mueller for years and did not believe that Mr. Mueller would engage in a “witch hunt.”  Yet, shortly before his confirmation hearings, he sent a memo to the Justice Department characterizing the obstruction of justice charges against the President as “asinine” and sent an e-mail stating he saw far less reason to scrutinize the Trump campaign’s ties to Russia than to investigate whether donations to Hillary Clinton’s family foundation had influenced her actions as secretary of state. Once he was confirmed, he enabled the President’s attempts to distract from the contents of the Mueller Report by opening an investigation of those who investigated him.

When Mr. Barr was seeking confirmation, he told the U.S. Senate Judiciary Committee that he was willing to reconsider the Justice Department’s decision not to defend the Affordable Care Act (ACA).  But, when he became Attorney General, he put the resources of the Justice Department behind litigation in Texas federal district court seeking to invalidate the entire Affordable Care Act.

As the song goes, “There’s something happening here. What it is ain’t exactly clear.” Buffalo Springfield, For What It’s Worth.  I say let Mr. Barr speak. Listen closely to what he says and watch what he does. Only then will whatever is happening start to become clear.

Download John DiMugno 06 13 19 Blog Article for IBF (2)

Please Read The Disclaimer.

UBER RUN OVER BY ITS OWN STIPULATED PROTECTIVE ORDER.

The City Attorney of San Francisco started an investigation which concerned Uber.  The City Attorney issued administrative subpoenas as the City Attorney was authorized by California law to do.

The administrative subpoenas required Uber to provide reports and data that Uber had previously submitted to the California Public Utility Commission.

Uber's response to the subpoenas was less than "substantial compliance," which triggered a lawsuit by the City Attorney.  The City Attorney requested a court to enforce the administrative subpoenas.

Early in the lawsuit, Uber and the City Attorney entered into a Stipulated Protective Order.  In it, Uber stipulated that its confidentiality interests were fully protected by the Order.

Nonetheless they resisted.

The appellate court affirmed.  "It is Uber's burden to demonstrate that the protective order is inadequate to protect its privacy interests, a burden that Uber fails to meet."  City and County of San Francisco v. Uber Technologies, Inc., No. A153205, 2019 WL 2436750, *10 (Cal. 1st DCA May 17, 2019).

They were for it until they were against it.  The Stipulated Protective Order was great until it wasn't.  That doesn't work in court very often.  It did not work here, that's certain.

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

PARTIES STIPULATE "ATTORNEYS' EYES ONLY," MAGISTRATE JUDGE FINALLY SAYS "NO."

In Hyundai Mtr. Am., Inc. v. Midwest Indus. Supply Co., No. 2:17-cv-03010-JCM-GWF, 2019 WL 2411420 (D. Nev. June 6, 2019) (Foley , USMJ), both the defendants and the plaintiffs filed motions to seal testimony and evidence.

Both sides said that they had stipulated to this secrecy.  Both sides said that they had "good cause" to seal this evidence.

In their requests to seal testimony and other evidence, the defendants said:

Defendants represent that such filings contain confidential and proprietary information designated as confidential or for “attorney's eyes only” pursuant to the parties' stipulated protective order. Further, Defendants represent that [one of the witnesses' testimony] contains confidential settlement discussions.

Hyundai Motor America, 2019 WL 2411420 at *1.

Likewise, along with their own requests to seal testimony and other evidence, the plaintiffs said:

Plaintiffs represent that the above documents contain confidential, sensitive and non-public information and is designated as confidential under the parties' stipulated protective order.

Hyundai Motor America, 2019 WL 2411420 at *1.

The Magistrate Judge ruled that the parties had shown good cause to seal neither the testimony nor the documentary evidence that they wanted to keep from public view.  The testimony and the documents had been filed in support of dispositive motions, motions more than "tangentially related" to the issues in the case.  The presumption of public access to court files trumped the parties' stipulation in this case.

So far.  The Magistrate Judge gave the parties in this case until Monday, June 17 to file more motions to seal.

Stay tuned.  Until then, the presumption of public access to evidence that judges rely on in their rulings -- at the request of the same parties that want to keep the evidence secret even though they ask the judge to rule on it -- is prevailing.

Please Read The Disclaimer.   ©2019 Dennis J. Wall.  All Rights Reserved.

 

WILL THE SECRECY EVER STOP? WILL PUBLIC ACCESS COURT FILES?

This article continues from the end of the article published here on Wednesday, June 5, 2019.

 

2. Under Secrecy agreements and Secrecy orders like the ones in the People of California v. Wells Fargo case, what was marked "confidential" purportedly stays "confidential" even if it is put in front of the judge.  California Rules of Court 2.550 and 2.551 were written to cover the case of what evidence can be sealed and how someone can go about asking a judge to seal that evidence.  However, neither of these Rules applies to the evidence exchanged between the parties as a lawsuit goes forward, which again is called discovery.

Under the Rules of discovery that are meant to apply to all cases, everybody drops the argument that they have a "right" to conceal evidence once they argue that previously concealed evidence is a part of their case.  This includes when they give the judge the evidence they previously marked "confidential" in an effort to get a favorable ruling from the judge on one of their motions. 

Secrecy agreements and their secrecy orders like the ones in the People of California v. Wells Fargo case make the exchange of evidence during litigation more of a joint exercise in concealment than a concerted effort at discovering the truth, or at least discovering evidence.   Using these agreements and orders, people can show concealed evidence to a judge, but not to the public, just by putting  the evidence into an envelope marked "CONFIDENTIAL--FILED UNDER SEAL PURSUANT TO PROTECTIVE ORDER AND WITHOUT ANY FURTHER SEALING ORDER REQUIRED."^[1]  This simply could not be done without the secrecy agreements and their orders rewriting the Rules.

3. Keeping control over the evidence marked "confidential." The secrecy stipulations in this case, and the January 2016 agreement in particular, were also written to keep control of the "confidential" evidence after the case was over.  The January stipulation provides that it shall always be "binding" unless the party that designated the evidence as confidential, or a judge, says otherwise.^[2]

It apparently was not enough to make the January stipulation in this case endless, however, even after it became a judge's order in February 2016.  The agreement and its order also add a provision typically found in secrecy stipulations-turned-into-secrecy-orders in many other cases, to the effect that once the case ends, "confidential" evidence must either be returned to the party that designated it "confidential," or it must be destroyed.^[3]  In short, the people that possess the evidence marked confidential are required to give it up at the end of that case.  They cannot make the evidence public.  The evidence can only be used for that one case.  When that one case ends, then the way that the thinking goes behind the secrecy here, there is no longer any reason to hold onto the evidence.  The public has no interest in it, according to the lawyers who write these agreements, it seems, and the public seemingly has no dog in this fight either, according to the judges who enable this behavior by validating these secrecy agreements.

This is the end of a three-part series of articles on representative secrecy stipulations that the parties agreed to in one case, the case of People of California v. Wells Fargo.  This is not the end of secrecy stipulations, of course.

Not by a long shot.

Not yet.

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

 

[1] Id., ¶ 18, at p. 8.

 

[2] Id., ¶ 21, at p. 8.

 

[3] Id., ¶ 22, at p. 9.

 

MORE SECRECY, MORE THROWING SHADE ON YOUR FINANCES?

This article continues from the end of the article published here on Tuesday, June 4, 2019.

The stipulation adopted by a judge's order in February 2016 in People v. Wells Fargo lines up behind many other secrecy stipulations and orders used in many other jurisdictions.  It restricts the use of any evidence marked "confidential," to the lawsuit in which the stipulation is filed.  It provides that such evidence may not be used for any other purpose "whatsoever."^[1]   This was pretty obviously intended to be taken literally.  It would mean that the only people who can use evidence marked "confidential" in the People of California v. Wells Fargo case in California are the people involved in that case.  No-one else can ever use it, or even see it. Even the people involved in the case named People of California v. Wells Fargo cannot use such "confidential" evidence anywhere else.

So, perhaps it would be wrong to assume without evidence that the L.A. City Attorney's Office shared Wells Fargo's forbidden special interrogatory answers with the federal agencies that subsequently filed actions over the same charges against Wells Fargo.  There is absolutely no evidence for that matter that the Los Angeles City Attorney's Office ever shared any information with anyone else that was stipulated to secrecy in that case.  This is a much more certain way of keeping a secret than asking a judge to apply the law.

The City Attorney's Office and Wells Fargo also agreed and the judge ordered in that case that if a party considered "competitively sensitive" information to require a "confidential" marking did not mean that anyone else agreed that it was competitively sensitive just because it was marked confidential.^[2]   In other words, the parties agreed in that case that "competitively sensitive" information could be withheld from public view.

The only party that could possibly care if something was "competitively sensitive" is of course a business which faces competition.  In this case, the only party fitting that description is the bank which was accused of abuses in "cross-selling" financial products to the bank's existing customers.  By grafting the concept of keeping any "competitively sensitive" secret to the overall idea of court protection, the parties rewrote the Rules to benefit themselves.

Perhaps more accurately, one of them did and the other agreed to it.  The Rules say nothing about keeping evidence from the public because the evidence might be "competitively sensitive," of course.  The rewritten rule of secrecy agreements like the January 2016 Stipulation would make it possible for a bank, for example, to withhold evidence that might tend to support charges that it is opening accounts in customers' names without the customers' permission or even knowledge.  If that kind of evidence got out into the public, it could be misconstrued.  Whether misconstrued or true, such evidence would understandably be "competitively sensitive." 

What evidence Wells Fargo may have had in the People of California v. Wells Fargo lawsuit is something we may never know.  Wells was granted the "right" in this case by this stipulated secrecy order to conceal whatever it knew.

When the judge signed this stipulation into an order, Wells Fargo's "right" became a ruling and not just an agreement.

To be continued ....  Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

 

[1] Id., ¶ 9, at p. 6.

 

[2] Id., ¶ 11.a, at p. 6.

 

SECRECY STIPULATIONS CLOSED ACCESS FOR CLAIMS OF CROSS-SELLING PRACTICES.

Proposed secrecy orders in 2015-2016 California lawsuit filed by the L.A. City Attorney. Many of the changes made by the secrecy agreements in this California lawsuit were made earlier in previous lawsuits, as noted.  Other Rules changes in the agreements signed in this case have not often appeared in other cases, however.

There are three main ways in which their January 2016 secrecy agreement validated by the judge in February in this case changes the Rules that were written to apply to all cases. 

1. The secrecy agreements and proposed orders defined "confidential" to mean what the lawyers say it means.  One of the familiar features of secrecy agreements in private litigation is that the definition of exactly what is "confidential" is always what the lawyers say it is.  Like the stipulated agreements in most cases, the agreements in the case of People of California v. Wells Fargo do not give much of a definition.

What guidance the agreements do give on what is going to be "confidential" in the present case is certainly not based on judges' decisions in past cases.  The agreements and proposed orders generally say that "confidential" means simply whatever the lawyers choose to mark with the word, "confidential."  This includes documents and testimony in all such cases.

In the case of People of California v. Wells Fargo, a judge signed a proposed order which made this proposed agreement into the judge's ruling.  The February 2016 order validating the January secrecy agreement in this case was likely written by the bank.  The judge did not rewrite it.  To the contrary, she took the proposed order, crossed out the word, "proposed," and signed it.  At that point, the stipulation that lawyers wrote became the judge's ruling. 

 The February 2016 order continues down the foggy road of secrecy by adding that "confidential" means any documents or testimony that a party (including its lawyers) "believes in good faith ... is entitled to confidential treatment under applicable law."^[1] 

This includes giving the bank and the L.A. City Attorney in that case "the right to designate as 'Confidential'" any "non-public information," including documents and testimony.^[2]

There is no such thing in the Rules as "non-public information."  The Rules do not even use that term.  Making "non-public information" mean the same thing as protected "confidential" evidence makes it clear that the parties in this case were rewriting the Rules for their own use and, intentionally or not, preventing the public from seeing the evidence if they could.

The people writing the secrecy stipulations in these cases removed any requirement that concealment depends on "good cause shown."  Participants in civil lawsuits in most courts in the United States, including in California, ^[3] can ask a judge to protect them from such things as annoyance, embarrassment, oppression, or undue burden or expense.  However, they cannot ask a judge to protect them under any of the Rules from "non-public information" that may find its way into documents and testimony just because the "information" is "not public," as the participants in the People v. Wells Fargo lawsuit wrote here.

Rather, as we have already seen, the Rules generally governing civil litigation require a party withholding documents during discovery to show "good cause" not to disclose them.  Judges ordinarily rule that the party withholding evidence during litigation has to show that the evidence is privileged or protected from disclosure in some legally recognized way.  Trade secrets "or other confidential research, development, or commercial information"^[4] are examples.  "Non-public information" is not.

Under a Secrecy Stipulation like the one in this case, a person withholding evidence can apparently succeed just by showing that its "designations" were done in the right way in the first place.  If it made the designation the right way, then according to the February 2016 order, the designating person gets to continue to conceal the designated "confidential" evidence.  The only burden is "to uphold any or all designations on Documents, Testimony, or Information."^[5]  People can conceal evidence using a secrecy order like this one by writing the word, "confidential," on anything so long as they say that they "believe[] in good faith that such information is entitled to confidential treatment under applicable law."^[6]

It is certainly easier to prove that a piece of evidence was marked "confidential" in good faith than to prove a privilege against disclosure of that evidence as the Rules require.

It is also a lot easier to prove a good faith belief when you are the only party that possesses evidence of that "good faith belief."

To be continued .....  Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

 

[1] Stipulation and Protective Order ¶ 1.c., at page 1, entered and filed on February 2, 2016 in People v. Wells Fargo & Co., Case No. BC 580778 (Los Angeles County Superior Court).

 

[2] Stipulation and Protective Order ¶ 2, at page 2, entered and filed on February 2, 2016 in People v. Wells Fargo & Co., Case No. BC 580778 (Los Angeles County Superior Court).

 

[3] The California Code of Civil Procedure regulates civil litigation in California courts.  California Code of Civil Procedure § 2031.060(b) provides as follows in this regard:

(b) The court, for good cause shown, may make any order that justice requires to protect any party or other person from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.

[Boldface added.]

 

 

[4] Federal Rule of Civil Procedure 26(c)(1)(G). 

 

[5] January 2016 Secrecy Stipulation, ¶ 6, at p. 4. 

 

[6] Id., ¶ 1.c, at p. 1.

 

 

NO BAD FAITH DAMAGES FOR INADEQUATE DEFENSE CLAIM.

That is because Count III failed to state a claim for inadequate defense upon which relief could be granted.  It does not mean that the substantive law of the forum State does not award damages for an inadequate defense; it does.

However, in the federal case of Mosley ex rel. Cellini v. Progressive Am. Ins. Co., No. 14-cv-62850-BB, 2018 WL 4208201 (S.D. Ill. April 8, 2018), U.S. District Judge Beth Bloom granted the liability carrier's motion to dismiss the inadequate defense claim which was alleged in Count III of Plaintiff's Amended Complaint against the carrier.  Count III failed to state a claim of inadequate defense for two reasons.  The Court's reasons for dismissing the inadequate defense claim in that case are instructive.

First, the claim contained a failure to settle allegation so that a claim for contract breach because of an inadequate defense, could not be determined objectively from the contract itself.  It would require a determination of "bad faith" or "good faith," which is a fact determination reserved exclusively to failure-to-settle claims.  The question of good or bad faith, in the eyes of the Court, has nothing to do with a claim of an inadequate defense.  Mosley, 2018 WL at *3.

Second, the Plaintiff did not present any "evidence" that defense counsel was "not competent or qualified[.]"  Mosley, 2018 WL at *4.  In the absence of such allegations, and since liability carriers are not vicariously liable for provided counsel's negligence in the forum State, there could be no claim for inadequate defense in this case as a matter of law.  (The Court must have meant that the Plaintiff did not present any allegations, since the Court was ruling on a motion to dismiss for which evidence should not be an issue.)

Allegations of inadequate defense are clearly almost inextricable from allegations of a failure to settle.  The rulings in this case make that all the more clear.

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.