Claims and Bad Faith Law Blog

DISCOVERING RESERVES IN A BAD FAITH CASE.

In Ockford v. Encompass Ins. Co., No. 24-1581, 2024 WL 4437820 (E.D. Pa. Oct. 7, 2024) (Hey, USMJ), a U.S. Magistrate Judge overstated the legal proposition behind discovering reserves in a UIM or underinsured motorist coverage case involving Pennsylvania substantive law and a bad faith claim.  Federal law governed work product issues and Pennsylvania law governed bad faith issues in this case.

Here is what the Magistrate Judge said initially: 

The determination of whether reserve information is discoverable in a bad faith case depends on whether the bad faith claim arises from a denial of coverage or the valuation of the claim. “[W]hen the bad faith claim is based on a denial of coverage and ‘does not involve the value of the claim or [the plaintiff's] estimation of liability ... the reserve information ... is neither relevant nor reasonably calculated to lead to the discovery of admissible evidence.’ ”  [Citations omitted.]

Ockford, 2024 WL 4437820, at *3.

Actually, the determination of whether reserve information is discoverable in a bad faith case depends on more than simply whether the bad faith claim is based on a denial of coverage or an incorrect estimate of value, i.e., of damages, as the Magistrate Judge recognized in the very next sentence of the opinion in this case:

    However, when the claim relates to the insurer’s failure to settle or involves a discrepancy in the valuation of the claim, the reserves are relevant and may be discoverable. 

Ockford, 2024 WL 4437820, at *3 (emphasis added).  The determinative feature, then, of discoverability of reserves in a bad faith case is whether “the claim relates to the insurer’s failure to settle,” which the Magistrate Judge naturally enough equated with “the valuation of the claim” in this UIM case.

She ruled in this case that the reserves information is discoverable:

Because Plaintiffs bring a bad faith claim based on the valuation of their claim, I find that the reserves are relevant and discoverable and not shielded by the work product doctrine.

Ockford, 2024 WL 4437820, at *4.

Decided case law concerning Discovery of Reserves on First-Party Claims like Ockford is discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 12:16 (Thomson Reuters West Publishing Company 3d Edition & 2024 Supplements).

Please read the disclaimer.  ©2024 Dennis J. Wall.  All rights reserved.

THE DISCOVERABILITY OF POST-LITIGATION CLAIM EVALUATION AND REVIEW MATERIALS.

In Lynn v. State Farm Mut. Auto. Ins. Co., ___ F. Supp. 3d ___, No. 23-cv-03222-MDB, 2024 WL 4180731 (D. Colo. Sept. 6, 2024), a U.S. Magistrate Judge dealt with the thorny issue of discovery of post-litigation claim evaluation and review materials.

          The dispute was presented to the Court by the plaintiff-policyholder’s, Ms. Sheree Lynn’s, motion to compel.  Injured in an automobile accident, the other party’s insurance carrier paid her that policy’s bodily injury liability limits.  Ms. Lynn then claimed the underinsured motorist (UIM) benefits under her own policy with State Farm. 

            Ms. Lynn and State Farm disagreed over “the nature and extent” of Ms. Lynn’s injuries.  Lynn, 2024 WL 4180731, at *1.  She eventually brought the instant suit for insurer bad faith.

          “Plaintiff seeks an order requiring the production of Defendant’s post-litigation claim review materials.”  Lynn, 2024 WL 4180731, at *1.   Put another way, Ms. Lynn requested among other things, materials which State Farm obtained in discovery in this bad faith case.  Among the materials State Farm obtained in discovery in this bad-faith case were “over 40+ medical and employment Authorizations” from Ms. Lynn’s “’employers and medical providers,’” she told the Court.    Lynn, 2024 WL 4180731, at *1.

            She was not interested so much in these discovery materials per se, as in materials reflecting State Farm’s evaluation and review of this and other information after the bad-faith litigation commenced.   

            State Farm’s response to the plaintiff’s requested discovery included what the Court described as an admission “that it ‘continues to review information obtained post-suit[.]’  (Doc. No. 30 at 2-3, 5.)”  (All brackets and parentheses by the Court.)  The Court’s response was succinct insofar as establishing a right in this case to relevant, unprivileged claim evaluation material obtained and reviewed by State Farm regarding Lynn’s UIM claim after the bad-faith litigation began:

Plaintiff is entitled to know whether that review has been conducted in good faith and whether Defendant is adhering to its duty of good faith and fair dealing.

Lynn, 2024 WL 4180731, at *4.   That may seem to an outside observer to have ended the matter, but it didn’t.

          The reason that this was not the end of the matter lies in how the Court got to this point.  The Court’s inquiry into discoverability of these materials was informed by guidance from two sources:  federal proportionality of discovery, and Colorado doctrine concerning the duty of good faith and fair dealing here.  To the Court, proportionality of discovery in federal court meant that the defendant carrier should not be required to produce information for which the defendant “claims work product or privilege protections over post-litigation claim review materials,” i.e., “those objections” which the defendant “reflected in a [future] privilege log.”  Lynn, 2024 WL 4180731, at *4.   Parenthetically, the Court had previously noted that up until this point, “so far as the Court can tell,” the defendant had not yet put these materials on a privilege log to support its “work product argument[.]”  Lynn, 2024 WL 4180731, at *1.

          The second source informing the Court’s resolution of the policyholder’s motion to compel production of the post-litigation claims evaluation and review materials in this case, was Colorado law.  After wending its way through the thicket of Colorado cases involving the duty of good faith and fair dealing in third-party and in first-party bad faith cases (including at least one UIM case), the Court held that Colorado law would recognize a continuing duty of good faith and fair dealing in this case even after the bad-faith lawsuit was filed:

An insurer who continues to evaluate a claim is necessarily creating new discoverable documentation while the case is pending. However, unless and until Colorado law changes to relieve an insurer of its post-litigation duty of good faith, that duty must be tested through discovery. The difficulties this presents for courts should not give insurers a free pass on that discovery. Additionally, courts have many tools at their disposal to manage discovery, curtail it where necessary, and stave off discovery abuses. [Citation omitted.]   Thus, the concern over process will not deter this Court from ordering relevant and proportional discovery that will facilitate adjudication on the merits. [Citations omitted.]  Insureds are entitled to know whether their insurers continue to operate in good faith,, and post-litigation claim review materials are relevant to that determination.

Lynn, 2024 WL 4180731, at *4.   

          In the end, the issue of discoverability of post-litigation claim materials reviewed and evaluated by the defendant carrier in this insurer bad faith case required the Court to resolve the tug of Federal proportionality with the pull of State law.  The Court resolved the dispute in this matter with this succinct holding:

  CONCLUSION

For these reasons it is

ORDERED that Plaintiff’s Motion (Doc. No. 24) is GRANTED to the extent Defendant does not log the communication/document on a privilege log. It is DENIED without prejudice to the extent Defendant logs it on a privilege log within 10 days of this order.

Lynn, 2024 WL 4180731, at *4 (boldface in original).

The Court’s holding is so concise that I hesitate to say anything else about it.  It could not be clearer.  But, perhaps because I am a lawyer, I will speak.  The ball is now in the insurance carrier’s court (no pun intended) and this case will go from there, depending on what the carrier does.

Please read the disclaimer.  ©2024 Dennis J. Wall.  All rights reserved.  Interested in many things including Claims and Bad Faith Law?  Check out my Substack newsletter.  

CONSIDER THESE REQUESTS FOR PRODUCTION IN A BAD FAITH CASE.

22. Please produce documents, reports, memos, or other records of any reserve or reserves set up related to Claim Nos. [of certain claims identified by their claim numbers].
23. Please produce documents and written communication, including all letters, emails, correspondence, fax, or electronic transmission, related to any changes in reserve levels pertaining to Claims Nos. [of certain claims identified by their claim numbers].
24. Please produce actuarial calculations, and/or evaluations used in setting or changing reserve levels related to Claims Nos. [of certain claims identified by their claim numbers].

Similar requests were approved in the bad faith case of Sandpiper Isle Condominium Association v. Empire Indemnity Insurance Co., No.:  2:21-cv-105-KCD, 2023 WL 5720744, at *2 (M.D. Fla. Sept. 5, 2023), in which  a policyholder brought a bad-faith action after its carrier refused to pay the Condominium Association's claim for hurricane damage. 

          The Court held that reserve information was discoverable in this bad-faith action.  Moreover, the carrier objected that discovery "should be limited to Sandpiper's claim only[.]"  Sandpiper Isle Condominium Association, 2023 WL 5720744, at *3.   (Presumably, the carrier was concerned that one or more of the requested claim numbers would implicate other policyholders' claims.)  The Court overruled the carrier's objection in that regard "because in a bad-faith case, [the carrier's] general business practices are at issue."  Sandpiper Isle Condominium Association, 2023 WL 5720744, at *3.  As to pleading and proof of General Business Practices requirements in third-party bad faith cases, see § 3:28, in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2024 Supplements in process), and regarding pleading and proof of GBP requirements in first-party bad faith cases, see §§ 9:14 and 9:14.75, Volume 2, id.

    Sample requests for production, interrogatories, jury instructions and other materials helpful to trial lawyers are contained in Volume 2 of DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH.  The requests in this article will appear, with others, in the forthcoming 2024 Supplements.

FORGET TO RAISE A PRIVILEGE BEFORE PRODUCTION? STIPULATE!

In U.S.A. v. Cherokee Gen. Corp., No. 2:22-cv-00299-KKE, 2023 WL 7624807 (W.D. Wash. Nov. 14, 2023), the parties stipulated that the Court should enter a Protective Order saying that if the parties produced information during discovery that they later thought was privileged and so should not have been produced (perhaps reflecting a reasonable concern about notifying E&O or malpractice carriers), then the information should be treated as privileged and returned to the owner.  The federal judge in this case agreed and entered the parties' Stipulated Protective Order in this regard:  "Information produced in discovery that is protected as privileged or work product shall be immediately returned to the producing party."  Cherokee General, 2023 WL 7624807, at *6.

So, if you forget to raise a privilege before production, stipulate with your opposing counsel that you did not have to raise the privilege.  Perhaps a federal judge, a fellow lawyer, will look kindly upon you.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

INSURER BAD FAITH, FLORIDA CONFIDENTIAL, TRADE SECRETS, CERTIORARI, ALL!

In Progressive Select Ins. Co. v. Lloyd's of Shelton Auto Glass, LLC, 367 So. 3d 586 (Fla. 2d DCA 2023), an insured's assignee sued for insurer bad faith and to compel production of the insurance company's alleged secret pricing agreement with a windshield replacement company.  

    The trial court directed the release of the carrier's Provider Agreement, subject to a confidentiality agreement that the insured had entered into with the carrier.  Progressive, 367 So. 3d at 587.

    The carrier filed this appeal seeking certiorari review because, it contended, release of the Provider Agreement would reveal "trade secrets."

    The appellate court declined to review the order.  Progressive, 367 So. 3d at 587-88.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

Certiorari review of discovery orders concerning Claims Adjuster's Files in particular in first-party bad faith litigation is discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 12:5 (3d Edition West Publishing Company, 2023 Supplements in process).

 

 

 

MORE TO COME BY WAY OF GOOGLE, DISCOVERY, AND LITIGATION ....

(Bing Clip Art via Barry Law School)

The Google case discussed here on Wednesday, July 12, 2023 continued on.  On March 28, 2023 the Court once again declined the opportunity, as it had previously declined the same opportunity earlier in this case, "to issue terminating sanctions against Google."  Quite simply, the Court remained inclined to decide the antitrust case before it on grounds other than Google's "lost Chat communications."  In re Google Play Store Antitrust Litig., ___ F. Supp. 3d ___, No. 21-md-02981-JD, 2023 WL 2673109, at *10 (N.D. Cal. March 28, 2023).

          The Court was equally inclined, however, to sanction Google for its performance in discovery in that case.  What non-monetary sanctions would be appropriate will have to await further proceedings, the Court held:

The determination of an appropriate non-monetary sanction requires further proceedings. The Court fully appreciates plaintiffs’ dilemma of trying to prove the contents of what Google has deleted. Even so, the principle of proportionality demands that the remedy fit the wrong, and the Court would like to see the state of play of the evidence at the end of fact discovery. At that time, plaintiffs will be better positioned to tell the Court what might have been lost in the Chat communications.

In re Google Play Store Antitrust Litigation, 2023 WL 2673109, at *10 (emphasis supplied).

          Not so with respect to monetary sanctions.  In that regard, the remedy was clear and it fit the wrong with comparative ease, in the eyes of this Court:

    For monetary sanctions, it is entirely appropriate for Google to cover plaintiffs’ reasonable attorneys’ fees and costs in bringing the Rule 37 motion, including the joint statement that preceded the motion and the evidentiary hearing and related events. Plaintiffs are directed to file ... a statement of proposed attorneys’ fees and costs with adequate documentation.  The parties will meet and confer on the proposal ....

In re Google Play Store Antitrust Litigation, 2023 WL 2673109, at *10 (emphasis supplied).

          More is undoubtedly yet to come. 

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

IN BAD FAITH CASE, FORMER CLIENT SUBPOENAS FORMER DEFENSE ATTORNEYS.

Gettysburg 2022 (Matt McClain / Washington Post)

In Wiseman v. Progressive Paloverde Ins. Co., No. 8:21-cv-02743-TPB-AAS, 2023 WL 2162374, at *1 (M.D. Fla. Feb. 22, 2023) (Sansone, USMJ),  non-party witnesses contested subpoenas served upon them in a bad faith case by the plaintiff who sued their client in the underlying case.

The subpoenaed nonparties were defense attorneys in the underlying liability case.  They filed motions to quash or modify subpoenas for their depositions and for certain documents including text messages exchanged with the insured they were previously defending.  A U.S. Magistrate Judge held that attorney-client privilege did not apply under Florida law in this instance:

Florida courts have consistently held that the plaintiff in a third-party bad-faith action against an insurance company for failure to settle for policy limits is entitled to the entire litigation file of the insured's counsel from the inception of the lawsuit until the date the judgment was entered in the underlying action.  [Citations omitted.] The courts reasoned that the plaintiff stands in the same posture as the insured and is, therefore, entitled to full discovery. [Citation omitted.]  Therefore, attorney-client privilege does not preclude the requested communications.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

DO YOU KNOW THE DIFFERENCE BETWEEN "INDEMNITY RESERVES" & "CLAIM RESERVES"?

In Luxottica of Am. Inc. v. Allianz Global Risks US Ins. Co., No. 1:20-cv-698, 2022 WL 1204870 (S.D. Ohio April 22, 2022),  what the Court identified as "indemnity reserves," the Court held to be protected work product under federal civil procedure in a third-party bad faith case.  Confused yet?  The Court itself was unsure of the exact distinction between "indemnity reserves" and "claim reserves."   Nonetheless, the Court thought itself clear enough on the concepts at issue in this case to rule that indemnity reserves such as in the case at bar designate reserves that are directly related to the carrier's exposure to its insured given the claims involved.  It was such reserves that the Court addressed when it ruled that they are protected work product under federal civil procedural rules in this third-party bad faith case.   Luxottica, 2022 WL 1204870, at *1-*2.

See also 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 8:6 Home Office Claims Files and Setting of Reserves (3d Edition West Publishing Co., 2022 Supplements forthcoming).

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

LISTENING AS THE WITNESS TESTIFIES.

One of the things that lawyers need to do better when they take depositions is listen to what the witness has to say.

I heard Mr. Bill Stepien testify today by deposition at the Jan 6 Committee Hearing.  He testified that he told the Grievance Boy about the so-called “Red Mirage” phenomenon.  That is a mirage caused when in-person votes are counted on Election Day, and Republican (“Red”) candidates often tend to be in the lead until early voting, absentee, and mail-in ballots are counted later.  The whole counting process can takes days.  For those reasons, in 2020 Mr. Stepien counselled against declaring victory on Election Night based only on the in-person vote totals, because it was just too early.

I heard Mr. Stepien also testify in his deposition testimony that was “read” (or more accurately, seen and heard via video), that he told the Grievance Boy this in 2016 as well.  He testified several times, actually, that he had done this in 2016.  And that was only in the small portions of his deposition testimony that we could see and hear today.

So, the Grievance Boy knew in 2016 that we cannot know who won a national election until all the votes are counted, not just the in-person votes that are counted on Election Day.

I did not hear any follow-up questions or testimony, but as I say, I did not hear (or “read”) the entire deposition.  Certainly, I did not hear any mention of that testimony about Mr. Stepien’s counsel in 2016 at today’s Hearing, and I did watch the entire Hearing.

I hope there was follow-up at the deposition, and that there will be follow-up now both during the Committee’s remaining investigation and during the Department of Justice’s investigation, if any, of the January 6 Attack on the U.S. Capitol.  As I said toward the beginning, one of the things that lawyers need to do better is listen to what the witness is actually saying.  Sometimes we get so tied up in what we want to ask witnesses that we may not pay enough attention to the witnesses’ testimony.  After all, the testimony is why the lawyers and witnesses are there in the first place, whether the testimony is developed in a deposition or at trial.

In the end, it may also be true that one of the things that everyone receiving witness testimony needs to do better – not just the lawyers asking the questions -- is to listen to what the witnesses are saying.

Were you listening today, Merrick?

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

ELECTRONICALLY STORED INFORMATION (ESI), AMAZON, AND MODEL ORDERS.

In Crosby v. Amazon.com, Inc., No. 21-1083-JCC, 2022 WL 522953 (W.D. Wash. Feb. 22, 2022), the plaintiffs successfully challenged the use of a U.S. District Court's Model Agreement And Proposed Order, and lived to tell the tale.

The plaintiffs challenging Amazon in the Crosby case are individuals.  They could not agree with Amazon on what a court order should say to regulate the production and handling of Electronically Stored Information (ESI) in that case:

The parties have been unable to come to an agreement whether to adopt, without modification, the District's model agreement governing Rule 34 production of electronically stored information (“ESI”). See [MODEL] AGREEMENT REGARDING DISCOVERY OF ELECTRONICALLY STORED INFORMATION AND [PROPOSED] ORDER, available at https:// www.wawd.uscourts.gov/court-forms.

Crosby v. Amazon.com, 2022 WL 522953, at *1.

The District Court granted the plaintiffs' motion to modify the Western District of Washington's Model Agreement and Proposed Order, in part.  At the plaintiffs' request, the Court added ten additional search terms and granted the plaintiffs' request for an "expanded timeframe."  Crosby v. Amazon.com, 2022 WL 522953, at *1.

The rest of the plaintiffs' requests were denied.  Thereafter, the Court entered a detailed order accordingly, see Crosby v. Amazon.com, 2022 WL 522953, at *2-*5, during the course of which the Court set forth a compelling justification for its actions:

1. General Principles

1. An attorney's zealous representation of a client is not compromised by conducting discovery in a cooperative manner. The failure of counsel or the parties to litigation to cooperate in facilitating and reasonably limiting discovery requests and responses raises litigation costs and contributes to the risk of sanctions.

Crosby v. Amazon.com, 2022 WL 522953, at ¶1, p. *2.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

GENERAL OBJECTIONS IGNORED, COURT'S STANDARD STIPULATED PROTECTIVE ORDER OBSERVED.

Once again, general objections repeated endlessly in reply to specific discovery requests are not responses at all.  Stated differently, general objections are not given any attention by the courts whenever specific objections to discovery requests are required by the applicable rules.  See Dyno Nobel, Inc. v. Johnson, NO. 5:21-cv-00322-KKC-MAS, 2022 WL 507431, at *3 (E.D. Ky. Feb. 18, 2022) (Stinnett, USMJ).

Dyno was requested to produce documents in this Kentucky case that were subject to a federal court's standard stipulated protective order in use by the federal court where litigation is pending in Utah.  In this case, the Utah protection was provided in Kentucky as well.  Dyno Nobel, 2022 WL 507431, at *5.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

WEBINAR ON DISCOVERY CONFIDENTIALITY, COMING UP!

 Readers, here is a link to the Discovery Confidential! page of my website.  Thanks.--Dennis Wall

 Click here for the Mobile/Web Version

Discovery Confidentiality February 22, 2:00 p.m. ET–3:00 p.m. ET Pricing Private Attorney Members: $40 Legal Aid and Public Interest Members: $30 Nonmembers: $90 (if you have not yet been approved to attend NACA webinars, you must email [email protected] to be vetted to attend) Are you interested in learning the methodologies of stipulated protective orders  proposed by defendants’ counsel in every case, large and small? The focus will be on federal court cases, but many of the same principles apply to state court cases, too. The webinar will include a discussion of standards for obtaining protective orders that the parties are bound to follow. This webinar will also provide tips and strategies to improve the pre-discovery stipulated protective orders that judges are most likely to enter in your clients’ cases. In addition, the speakers will examine typical provisions used in actual litigation.  This webinar is useful for practitioners at every level, from those who handle multi-district litigation to individual cases. What You Will Learn How to address negotiations over a stipulated protective order and how you can shape the best possible protections for your client What adversaries will likely propose in their pre-discovery umbrella and stipulated protective orders How to implement preemptive strategies, including judges’ model orders, local rules, and orders approved by the same judge or proposed by the same defendants in other cases Speakers Jody López-Jacobs is a consumer protection attorney based in Philadelphia.  Born in Lancaster, PA, Jody graduated magna cum laude from Temple University Beasley School of Law, where he served on the law review editorial board and won second place in an American Bar Association writing competition. After serving as a federal law clerk in the Eastern District of Pennsylvania, Jody joined the law firm Flitter Milz, PC, where he litigates individual and class actions involving repossessions, credit reporting, and financing fraud. Jody’s advocacy has resulted in millions of dollars in relief for consumers across the country. In 2021, Jody was named as one of Super Lawyers’ “Rising Stars.” Ariana Tadler is the founding partner of Tadler Law LLP, a WBENC-certified, women-owned boutique law firm that offers an array of litigation and legal counseling services. With more than twenty-seven years of experience advocating for consumers and investors against corporate fraud and abuse while litigating and managing securities, consumer and data breach class actions, and complex litigation, Ariana is considered one of the leading women litigators in the country. Ariana is regularly appointed by courts to leadership positions in large, complex federal, multi-district, and state coordinated proceedings because of her extensive experience managing complex litigation. Ariana is also recognized as one of the nation’s leading authorities on electronic discovery and pioneered the establishment of an e-Discovery Practice group within a plaintiffs’ firm structure more than fifteen years ago. Dennis Wall is an experienced litigator, mediator, and expert witness in Florida and federal trial and appellate courts. He is an AV- rated attorney and an elected member of the American Law Institute. He has personally litigated the issues addressed in this webinar. The author of four books, he is currently at work on a book about the presumption of public access to judicial and administrative records. He has dedicated a page on his website to resources on discovery confidentiality.   National Association of Consumer Advocates 1215 17th Street NW, 5th Floor, Washington, DC 20036 Phone: 202.452.1989 | Fax: 202.452.0099 Contact Us

WEBINAR NEXT WEEK: DISCOVERY CONFIDENTIALITY!

 Readers, here is a link to the Discovery Confidential! page of my website.  Thanks.--Dennis Wall

 Click here for the Mobile/Web Version

Discovery Confidentiality February 22, 2:00 p.m. ET–3:00 p.m. ET Pricing Private Attorney Members: $40 Legal Aid and Public Interest Members: $30 Nonmembers: $90 (if you have not yet been approved to attend NACA webinars, you must email [email protected] to be vetted to attend) Are you interested in learning the methodologies of stipulated protective orders  proposed by defendants’ counsel in every case, large and small? The focus will be on federal court cases, but many of the same principles apply to state court cases, too. The webinar will include a discussion of standards for obtaining protective orders that the parties are bound to follow. This webinar will also provide tips and strategies to improve the pre-discovery stipulated protective orders that judges are most likely to enter in your clients’ cases. In addition, the speakers will examine typical provisions used in actual litigation.  This webinar is useful for practitioners at every level, from those who handle multi-district litigation to individual cases. What You Will Learn How to address negotiations over a stipulated protective order and how you can shape the best possible protections for your client What adversaries will likely propose in their pre-discovery umbrella and stipulated protective orders How to implement preemptive strategies, including judges’ model orders, local rules, and orders approved by the same judge or proposed by the same defendants in other cases Speakers Jody López-Jacobs is a consumer protection attorney based in Philadelphia.  Born in Lancaster, PA, Jody graduated magna cum laude from Temple University Beasley School of Law, where he served on the law review editorial board and won second place in an American Bar Association writing competition. After serving as a federal law clerk in the Eastern District of Pennsylvania, Jody joined the law firm Flitter Milz, PC, where he litigates individual and class actions involving repossessions, credit reporting, and financing fraud. Jody’s advocacy has resulted in millions of dollars in relief for consumers across the country. In 2021, Jody was named as one of Super Lawyers’ “Rising Stars.” Ariana Tadler is the founding partner of Tadler Law LLP, a WBENC-certified, women-owned boutique law firm that offers an array of litigation and legal counseling services. With more than twenty-seven years of experience advocating for consumers and investors against corporate fraud and abuse while litigating and managing securities, consumer and data breach class actions, and complex litigation, Ariana is considered one of the leading women litigators in the country. Ariana is regularly appointed by courts to leadership positions in large, complex federal, multi-district, and state coordinated proceedings because of her extensive experience managing complex litigation. Ariana is also recognized as one of the nation’s leading authorities on electronic discovery and pioneered the establishment of an e-Discovery Practice group within a plaintiffs’ firm structure more than fifteen years ago. Dennis Wall is an experienced litigator, mediator, and expert witness in Florida and federal trial and appellate courts. He is an AV- rated attorney and an elected member of the American Law Institute. He has personally litigated the issues addressed in this webinar. The author of four books, he is currently at work on a book about the presumption of public access to judicial and administrative records. He has dedicated a page on his website to resources on discovery confidentiality.   National Association of Consumer Advocates 1215 17th Street NW, 5th Floor, Washington, DC 20036 Phone: 202.452.1989 | Fax: 202.452.0099 Contact Us

CALL THEM BY THEIR TRUE NAMES: THEY ARE "CONFIDENTIALITY ORDERS."

Following a rapidly accelerating trend, the Court in Loy v. BMW of N. Am., No. 4:19-CV-00184 JAR, 2021 WL 3930501 (E.D. Mo. September 2, 2021) called Stipulated Protective Orders by their true names:  "Confidentiality Orders."  They are orders written and submitted by the parties for the purpose of asking the courts to protect certain materials exchanged in discovery.  That is what they are.

          That is all they are.

          This practice is a trend accelerating in a crescendo of opinions, and it is a contemporary trend followed in the Third Circuit in particular.  Let it be followed everywhere; nothing will be lost, something will be gained and that something is how the issue is framed:  Confidentiality and the Rules of Civil Procedure.

          Parenthetically, the Court addressed two motions which implicated the "Confidentiality Orders" previously entered in that case.  One of the motions is of particular interest here.  It was a motion for contempt and sanctions, as to which the Court declined to strike affirmative defenses but reserved ruling on whether to award attorney's fees and costs in the future for discovery violations described in the opinion.

          Along with the motion for contempt and sanctions, the plaintiffs requested that the Court remove the "Confidentiality" designation from certain presentation slides which BMW designated as "Confidential" after BMW at first denied that the slides even existed.  The Court ordered BMW to submit the slides for the Court's in camera inspection.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

ONCE AGREED, COURT ORDERS DISCLOSURE ACCORDING TO STIPULATED PROTECTIVE ORDER.

Even if the law apparently stands otherwise.

In Barrio Bros., LLC v. Revolucion, LLC, No. 1:18-CV-02052, 2021 WL 2463844 (N.D. Ohio June 17, 2021), a District Judge in the Northern District of Ohio considered an appeal from a Magistrate Judge's Report and Recommendation.  The Magistrate recommended that the plaintiffs' objections to production of certain Licensing Agreements be overruled.

In this case, both the Magistrate Judge and the District Judge appeared to enforce the parties' Stipulated Protective Order at the expense of the law including at the expense of Local Rules which one side of the litigation apparently followed.

The Magistrate Judge's recommendation and the District Judge's ruling came in a lawsuit involving the alleged theft of intellectual property rights.  Barrio Brothers and the other plaintiffs sued various defendants, complaining that one of the defendants, Condado Tacos, misappropriated Barrio's intellectual property rights in the way it designed and built its restaurants.

The Magistrate Judge granted Condado Tacos' motion to compel production of Barrio Brothers' Licensing Agreements with its third-party partners in several cities in Michigan, Ohio, and New Hampshire.  The third parties were not parties to the litigation, and apparently the theory behind the request for production was that the Licensing Agreements could show what Barrio Brothers franchised exactly, and what it did not.  The plaintiffs appealed to the District Judge from this ruling.  Barrio Brothers, 2021 WL 2463844, at *1.

Previously in this case, the plaintiffs and the defendants had agreed to a Stipulated Protective Order.  The order they wrote covered the production of documents like the Licensing Agreements.  Most important to the outcome of Barrio Brothers' production appeal, the parties' agreed order "provides Barrio a framework by which Barrio may seek out additional protection."  Barrio Brothers, 2021 WL 2463844, at *2.

In the eyes of both the Magistrate and the District Judge, the parties' agreed order determined the outcome of Barrio Brothers' appeal of the Magistrate's ruling.  "In other words," said the District Judge, " [i]f Barrio believes the Licensing Agreements merit additional protection, Barrio may seek such protection according to the terms of the Stipulated Protective Order." Barrio Brothers, 2021 WL 2463844, at *2.

The framework laid out in the agreed protective order by which Barrio Brothers and any of the other parties could seek out additional protection is not provided by the Rules of Civil Procedure.  The Federal Rules leave much to the discretion of the District Courts in any case.  See Fed. R. Civ. P. 26(c).

By their agreement in the Barrio Brothers case, the lawyers could mark their client's production as intended, for example, so as to prohibit disclosure of "highly sensitive competitive or confidential information to another party," or they could mark the production as restricted "only to specifically designated in-house counsel or party representatives."  Barrio Brothers, 2021 WL 2463844, at *2.

After a dispute arose over disclosure, the attorneys further agreed:

[T]hen the parties may stipulate or move for the establishment of an additional category of protection that prohibits disclosure of such documents or information to  category (2) ["Parties and employees of a party to this Order"] or that limits disclosure only to specifically designated in-house counsel or party representative(s) whose assistance is reasonably necessary to the conduct of the litigation and who agree to be bound by the terms of the order.

Barrio Bros., LLC v. Revolucion, LLC, Doc. No. 42, Stipulated Protective Order entered July 26, 2019, n.1 at p. 4 (N.D. Ohio Case No. 1:18-CV-02052) (emphasis supplied).

The Stipulated Protective Order further provided that any challenge to its terms had to be by motion in accordance with Northern District of Ohio Local Rule 7.1.  The agreed order provided that nothing in it would limit "the Court's power" to enter any orders "with respect to the use and disclosure of any documents produced or [their] use in discovery," in part here pertinent.  Barrio Bros., LLC v. Revolucion, LLC, Doc. No. 42, Stipulated Protective Order entered July 26, 2019, ¶ 8, at p. 7.

This is the framework provided almost word-for-word in Local Civil Rules Appendix L, a Form Stipulated Protective Order.  This is also the framework that Barrio Brothers followed here.

The Barrio Brothers lawyers took the matter up with the presiding judge.  They invoked the District Court's power to enter an order with respect to the use and disclosure of the Licensing Agreements in discovery.  They appealed the Magistrate Judge's recommendation that Barrio Brothers disclose the Licensing Agreements in question to Condado Tacos.  Barrio Brothers, 2021 WL 2463844, at *2.

It didn't work out well for nondisclosure of the Licensing Agreements in this case, however.  In the end, the District Judge clearly announced her expectation that the parties would follow the procedures they agreed upon when they wrote their Stipulated Protective Order for the Magistrate to sign in the first place.

In many jurisdictions including the Sixth Circuit, "secrecy in the context of discovery," as in this case, is subject to a "good cause" showing and a Stipulated Protective Order does not by itself provide the required good cause showing for nondisclosure.  In re:  Nat'l Prescrip. Opiate Litig. (HD Media Co. v. U.S. Dep't of Justice), 927 F.3d 919, 929-30 (6th Cir. 2019) (appeal in Multi-District Litigation centered in the Northern District of Ohio).  The Northern District's Form Stipulated Protective Order, Local Civil Rules Appendix L that was followed almost to the letter in this case, accordingly provides for a good cause showing for nondisclosure of discovery materials.

In the opinion in the Barrio Brothers case, however, there would be no discussion of good cause.  In fact, a computer search shows that good cause was never mentioned in the opinion.  Implicitly, perhaps, the good cause shown for secrecy had to be shown by a rather undeserved devotion to the terms of an agreement made by the parties themselves:  "The Court expects the parties--and their attorneys--to abide by the Stipulated Protective Order to which they all agreed."  Barrio Brothers, 2021 WL 2463844, at *2 (emphasis in original). 

One other aspect of the parties' Stipulated Protective Order deserves attention, although it went unremarked in the District Judge's opinion.  In her description of the agreed order, the District Judge recounted that the lawyers would decide in the first instance what is "confidential" and so deserving of protection from the federal court.

If one category of confidentiality was insufficient in the lawyers' eyes to protect against disclosure, then they agreed to two options.  One was to prohibit disclosure to parties and employees of a party after filing a motion or a further stipulation.  This option was mentioned by both the Magistrate Judge and the District Judge, but it does not appear to have been considered by either of them in this case.

The parties' other agreed option in the event that they disputed the future disclosure of documents they had marked "confidential," was to limit disclosure "only" to identified "in-house counsel or party representatives."  In fact, the District Judge's opinion points out in passing that the Magistrate Judge "concluded that it was proper to 'leave it to the lawyers to decide whether the licensing agreements warrant this additional protection.'"  Barrio Brothers, 2021 WL 2463844, at *1.

This is problematical.  Courts including in the Sixth Circuit have rejected the idea that lawyers can confer discretion upon themselves to determine "confidentiality" in litigation.  See, e.g., In re National Prescription Opiate Litigation, 927 F.3d at 929-30;  Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165, 1180 (6th Cir. 1983) (holding that a “confidentiality agreement between the parties does not bind the court in any way”), cert. denied, 465 U.S. 1100, 104 S. Ct. 1585 (1984).

In the end, using a Form Appendix attached to the Local Rules may not achieve the result the lawyers intend in any given case.  There was nothing wrong with the Local Civil Rules Appendix L, the form Stipulated Protective Order in this case, for example.  It is worth noting that the District Judge in this case received a federal judicial commission in June 2019, so she is relatively new to the federal bench.

Whatever the reason for the rulings in this case, it is pretty clear that if the Form Stipulated Protective Order written in the Local Rules had been observed by the bench as closely as it was observed by the bar in this case, the result may have been no different but it is certain that "good cause" and not contract obedience would have been the focus of the judicial inquiry.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

IMPLIED GOOD-FAITH DUTY, BUT STATUTORY ALLEGED, DISCOVERY NOT ALLOWED.

A U.S. Magistrate Judge in Colorado was not impressed enough with an alleged breach of good-faith duties to allow discovery into the supervision and incentives for the adjusters involved in investigating the claim.

          In American Ins. Co. v. Pine Terrace Homeowners Ass'n, No. 20-cv-00654-DDD-KMT, 2021 WL  2188707 (D. Colo.  2021) (Tafoya, USMJ) the Court first held that every insurance contract in Colorado has an implied duty of good faith.  Pine Terrace, 2021 WL 2188707, at *2 .  This may be dicta, however.

          The defendant homeowner's association alleged two counterclaims:  Breach of Contract and Statutory Bad Faith.  The homeowner's association in this case did not allege common law bad faith.

          The standard for statutory bad faith in Colorado precluded the discovery requested.  The Court ruled that where the standard for measuring extracontractual liability for statutory bad faith, as in Colorado, is whether the carrier's conduct is "reasonable" and not "why" did they  breach their good-faith duty, discovery was not allowed into the supervision and incentives given to the adjusters who handled the claim at bar.  See Pine Terrace, 2021 WL 2188707, at *3-*4 .

          The implied duty of good faith and fair dealing is recognized in virtually every court that has considered the question, including but not limited in most cases to insurance contracts.  See 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 1.01 (West Publishing Co. 3d ed. & 2021 Supplements).

          The question of discovery into alleged bad-faith claims handling is the subject of two Chapters in 1 id., Ch. 8, titled "Discovery From Insurers Concerning Their Handling of Third-Party Claims" addressing discovery from, by, and between insurance carriers in third-party bad faith cases, & 2 id., Ch. 12, titled "Discovery From and By Insurers," discussing the same issues addressed by the courts in first-party insurance bad faith cases.

Please see the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

WORK PRODUCT IMMUNITY IN FIRST-PARTY BAD FAITH (ARSON) CASES.

    "There are two divergent bodies of case law governing the application of the work product doctrine to documents prepared by insurers in investigating claims of fire loss thought to be caused by arson. One line of cases holds that litigation becomes reasonably anticipated—and, thus, documents are covered by the work product doctrine—when the insurer has an indication that the loss was caused by the insured committing arson.  [Citations omitted.]  The other line of case law creates a presumption that documents prepared prior to an insurer issuing a formal notice of intent to deny coverage are not covered by the work product doctrine, while documents prepared after such notice are covered by the work product doctrine.  [Citations omitted.]  Though the facts of each case vary, both lines of case law tend to establish that the work product doctrine kicks in when 'the probability of litigating the claim is substantial and imminent.'”  So said a Federal Judge in the Southern District of West Virginia in the case of Javins v. Westfield Ins. Co.,  No. 2:20-cv-00698, 2021 WL 2188751, at *3 (S.D. W. Va. May 28, 2021).

    It has not been said better very often, so I quote this passage here in its entirety.  When it's good, leave it alone to be good, whatever "it" may be.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

WHO, EXACTLY, DOES JUSTICE REPRESENT?

Rights and Responsibilities.  (Florida Dep't of Agriculture & Consumer Services /  Gridview_imagefull)

On February 8, 2021 -- 19 days after the Inauguration of President Joe Biden -- Brian M. Boynton filed a motion to quash a subpoena for the deposition of Betsy DeVos.

           Mr. Boynton filed his motion in the Southern District of Florida, where DeVos was then "a part-time resident."  That was one of the places where, arguably, venue was proper for Boynton's motion to quash.  The case in which Betsy DeVos was subpoenaed for deposition is pending in the Northern District of California.

           Parenthetically, I cannot find an order granting or denying the motion, and I cannot find any evidence that Ms. DeVos has  been deposed.  I have today emailed the lead attorney who requested this deposition, Margaret E. O'Grady, Esquire and if and when I receive her Reply, I will write about it here.

          Back to Mr. Boynton.  More recently, on June 7, 2021 Brian Boynton filed a reply brief for the United States to intervene for the former guy in his appeal from an order allowing E. Jean Carroll's defamation lawsuit to go forward in New York State Court.  Her defamation lawsuit had been pending in state court before the former guy's Barr removed the case to federal court.

          Mr. Boynton was reportedly hired away from a large law firm with experience in representing corporate clients, in order to assist Merrick Garland in running the Justice Department.

          The actions discussed here, and other actions known and unknown, raise urgent questions.  First:  Who, exactly, does Justice represent?

          Next, why is it in the interest of the United States not to have the testimony of Betsy DeVos under oath?

          How is it that any lawyer can argue, without consequence, that denying a rape and demeaning the victim is a part of the official duties of a President of the United States?

          I did not expect to be asking any of these questions with Merrick Garland replacing Bill Barr and Joe Biden replacing the former guy. 

          Did you?

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

CLAIM FILE DISCOVERY AND THE WORK PRODUCT DOCTRINE

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The Iowa Supreme Court summarized the law in this area in the context of a first-party bad faith case, Villareal v. United Fire & Cas. Co., 873 N.W.2d 714, 727 (Iowa 2016):

This means that claim files are not covered by the work product doctrine except insofar as they contain documents that would not have been prepared but for anticipated litigation. See Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 12:5 (3rd ed. 2011) (“Where the insured's complaint states a cause of action for first-party bad faith, the claims adjuster's files can generally be discovered. Work product objections will lie in particular cases.”).

          Unlike third-party bad faith cases, a first-party bad faith case does not provide any assistance by the nature of the bad faith claim either that the discovering party cannot obtain the substantial equivalent by other means, or that the discovering party cannot do without the requested materials in the preparation of its case without undue hardship.

As the Iowa Supreme Court noted, Discovery of Claim Files in first-party cases is discussed in 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 12:5 (West 3d ed. 2011; 2021 Supplements in process).  Discovery of Claim Files in third-party bad faith cases is discussed in 1 id., § 8:5.  Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

DEPOSING THE CORPORATE REP IN 2021.

(Free Photos)

A new article explores the ways and means of deposing corporate representatives in 2021, by Tiffany Ward and Jessica Kennedy, titled A REVIEW OF THE 2020 AMENDMENT TO RULE 30(B)(6): A GUIDE FOR PRACTITIONERS ON HOW TO APPROACH THE NEW CORPORATE DEPOSITION PROCESS, 95 Fla. Bar. J. 42 (Jan/Feb 2021).

This is a useful and informative review of the new Federal Rule.  States can be expected to follow the Federal lead soon so this article is also timely on the subject of deposing representatives of a corporate party in litigation filed potentially anywhere in the U.S.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

 

"GOOD FAITH BELIEF" IN A STIPULATED PROTECTIVE ORDER: WHOSE BELIEF?

Stipulated protective orders pretty universally require a "good faith belief" that the materials being marked "Confidential" are, in fact, worthy of being marked Confidential.  But whose good faith belief are we talking about?

(Photo by Peter Dejong/AP)

In some cases, this apparently means a good faith belief by the lawyers who marked the thing "confidential" in the first place.  See, e.g., Davey's Locker Sportfishing, Inc. v. Amco Ins. Co., No. 8:20-cv-01424 JVS (JDEx), 2020 WL 6681858, at *1, GOOD CAUSE STATEMENT (C.D. Cal. Nov. 12, 2020) (Stipulated Protective Order signed by USMJ; boldface in original).

In other cases, this expressly constitutes "a representation by the party or nonparty and its counsel that they believe in good faith" that the material designated "confidential" is, in fact, confidential.  See, e.g., Mullins v. Humana Health Plan, Inc., No. 4:20-cv-00192-CDL, 2020 WL 6706364, at *1, ¶ 3 (M.D. Ga. Nov. 13, 2020) (Definition of Confidential Material in Stipulated Protective Order signed by U.S. District Judge; italics in original).

In still other cases, the last remaining alternative is written in the Stipulated Protective Order and the requisite "good faith" belief comes from "the producing party[.]"  Multicare Health Sys. v. National Fire & Marine Ins. Co., No. C20-5559 TSZ, 2020 WL 6700924, at *1, ¶ 2 (W.D. Wash. Nov. 13, 2020) ("'CONFIDENTIAL' MATERIAL" paragraph in Stipulated Protective Order signed by U.S. District Judge; all caps in original).

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

DISCOVERING CLAIMS FILE MATERIALS: FIRST OBTAIN DETERMINATION OF COVERAGE.

It is unclear whether Luis and Elisa Gonzalez alleged insurance bad faith when they filed their lawsuit against Safepoint Insurance Company, their homeowner's insurance company.  All we know about their complaint against Safepoint is that they alleged "that Safepoint breached their homeowner's insurance policy by failing to provide coverage for damage to their home."  Safepoint Ins. Co. v. Gonzalez, ___ So. 3d ___, No. 3D20-1050, 2020 WL 5932521, at *1 (Fla. 3d DCA October 7, 2020).

          However, we know all we need to know under Florida law about their discovery request for production of Safepoint's claim file materials.  They filed a motion to compel "[p]rior to any determination of coverage for the alleged loss[.]"  Safepoint, 2020 WL 5932521, at *1.

          That fact alone simultaneously gave the Florida appellate court certiorari jurisdiction and doomed the production requested by the Gonzalezes.  In Florida, an insurance carrier's claim files are work product and are protected from discovery before coverage has been determined "in a breach of contract case."  Safepoint, 2020 WL 5932521, at *1.  Parenthetically, if the Gonzalezes had alleged a claim for insurer bad faith in this particular case, it would rise and fall on whether there was coverage in the first place, so the rule would seem to be the same under Florida law:  Before a determination of coverage, an insurer's claim files are work product protected from discovery.

          The appellate court in this case accordingly granted Safepoint's petition for writ of certiorari and quashed the order in which the trial court granted the policyholders' motion to compel production from Safepoint's claim file.

Discovery in first-party insurance cases like Safepoint v. Gonzalez, is addressed with an eye to Claims Adjuster's Files in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 12:5 (Thomson Reuters West 3d ed. & 2020 Supps), and in 2 id., § 12:6, concerning Home Office Claims Files, while discovery in third-party insurance cases of Claims Adjuster's Files is addressed in 1 id., § 8:5, and discovery of Home Office Claims Files and Setting of Reserves is the focus of 1 id., § 8:6.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

A LESSON IN LONGEVITY.

(Image courtesy of LexisNexis)

Judging from the electronic docket of the case, the parties and their lawyers in the case of Travelers Indemnity Co. of Connecticut v. Old Dominion Insurance Co. (M.D. Fla. Case No. 8:19-cv-T-30AAS) obviously want to settle.

    The docket activity since this case was filed in 2019 has involved offers of judgment/settlement, mediation, case management scheduling deadlines, and an expert witness matter.  There has not been any dispositive motion filed.  In particular, there has been no motion to dismiss.

    On September 24, 2020, the U.S. Magistrate Judge assigned to the case entered a discovery order granting in part and denying in part TIC's motion to compel production from Old Dominion.  The Westlaw publication of this order does not show that it was entered by the Magistrate Judge, but I learned who entered it when I reviewed the electronic docket of the case on PACER.  See Travelers Indem. Co. of Conn. v. Old Dominion Ins. Co., Case No. 8:19-cv-T-30AAS, 2020 WL 5701816 (M.D. Fla. Sept. 24, 2020).

    TIC a/k/a Travelers sued Old Dominion "for equitable subjugation or, in the alternative, equitable contribution" for failure to indemnify a common insured.  Travelers, 2020 WL 5701816, at *1.  Later in the case, the Magistrate Judge who entered the September 24 order said that "Travelers sues Old Dominion for equitable subjugation and equitable indemnity[.]"  Travelers, 2020 WL 5701816, at *4.

    I am an Insurance Coverage lawyer and I have never heard of "equitable subjugation."  Have you?  This alleged claim would later determine the outcome, as we will see below.  (The opinion cited one case, which involved equitable subrogation, so despite the words used in the Travelers case, maybe that is what was meant in this case, namely, equitable subrogation.  Again, the alleged claim determined the outcome here, see below.)

    I am also not familiar with "equitable contribution" between liability insurance carriers under Florida law, at least by that name or in the context of this case.  Unless Florida law has changed substantially, there is no cause of action between insurers for "equitable indemnity," either.  I have heard of equitable subrogation, and I have heard of contribution, and I have even heard of indemnity, but not "equitable contribution" or "equitable indemnity," either, particularly as an alternative to something called "equitable subjugation."

    If only a motion to dismiss had been filed in the case.  Perhaps this could have been cleared up by now.  On the road to settlement, perhaps this has been overlooked but since the parties and their lawyers are continuing on the road to settlement, it seems, perhaps the USMJ's two rulings on September 24 will hasten that conclusion to this matter. 

    The first ruling was to declare that the defense lawyer ("Attorney Metzger"), Old Dominion, and the insured enjoyed a "tripartite relationship."  The insured executed an assignment to Travelers and so, the court ruled, Travelers became the insured's "successor in interest" to this tripartite relationship.  "Thus, Old Dominion's attorney-client privilege objections to the production of correspondence between Old Dominion and Attorney Metzger are overruled.  Old Dominion must produce those withheld documents."  Travelers, 2020 WL 5701816, at *2.

    Second, Travelers sought to compel production also of Old Dominion's claim files in the underlying case against the common insured.  The Magistrate Judge responded to Travelers' claim that it really was like a plaintiff in a bad faith case because it had alleged "equitable subjugation claims."  Travelers, 2020 WL 5701816, at *2. 

    Old Dominion raised the qualified immunity of work product and also argued that "this is not a bad faith claim."  The Magistrate Judge held in favor of Old Dominion on this issue.  The USMJ based this outcome on the claim or cause of action alleged in this case:  "But Travelers does not assert a bad faith claim against Old Dominion; rather, Travelers asserts a claim of equitable subjugation.  Thus, the work-product doctrine applies to Old Dominion's claim file."  Travelers, 2020 WL 5701816, at *3.

    So, in the end, the lesson of this case may be that bad faith by another name does not smell like bad faith.  Or, perhaps, at least it need not be an insurmountable obstacle to settlement.

P.S. from another Insurance Coverage lawyer:  "Equitable subjugation strikes me as the quintessential oxymoron.  It sounds like a theory slaveholders might have invoked to support the trope that Blacks are better off under slavery than free."

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.   

 

DISCOVERING COVERAGE COUNSEL'S RESEARCH & ANALYSIS: COMMUNICATED, POST-SUIT, OR NOT.

(LexisNexis)

In a case in which insurance coverage was at issue, a federal court ordered production of certain documents generated by the insurance company's coverage counsel.   The documents included the lawyer's research and analysis of coverage, whether or not any of it was communicated to the carrier, and whether or not any of it was generated after the coverage lawsuit was filed.

    The case involved alleged damage to the interior of a house.  Dorn Homes, Inc. was the builder/developer but it subcontracted the actual work to others.  The carrier, United Specialty, declined coverage and the policyholder, Dorn, filed suit.  To be sure, there were stipulations and protestations concerning work product and even attorney-client privilege between the parties, but the policyholder never yielded in its assertion that it was entitled to the discovery under the Federal Rules of Civil Procedure.

    That teed up the issue for the federal judge's ruling granting Dorn's motion to compel from the carrier in United Spec. Ins. Co. v. Dorn Homes, Inc., 334 F.R.D. 542, 548 (D. Ariz. 2020) (boldface in the Court's order):

IT IS ORDERED that Defendant Dorn Homes, Inc.'s Motion to Compel Documents Withheld as Attorney Work Product (Doc. 123) is granted. Plaintiff United Specialty Insurance Company must produce, no later than January 31, 2019, all documents containing research and analysis on Desert Mountain [an Arizona State Court case relevant to the coverages claims at issue here concerning] preventative damages prepared by USIC's coverage counsel and that form the basis of USIC's advice of counsel defense, whether or not communicated by counsel to Plaintiff, and whether or not created post-lawsuit.

Discovery of "Insurance Counsel's Files" is the subject of § 12:8 in 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d ed. and 2020 Supps. Thomson Reuters West). 

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

DISCOVERING THE FINANCIAL INFORMATION OF AN EXPERT WITNESS.

"The financial information of an expert witness is squarely within the scope of discovery if its purpose is to uncover potential bias."  In re Jackson (Estate of Jackson v. Billingslea), No. 18-10400, 2019 WL 2743750, at *2 (E.D. Mich. July 1, 2019).

Discovery concerning experts in third-party insurance bad faith cases including the In re Jackson case, among other topics, is the subject of § 8:14, Considerations Applicable to Discovery by Insurers, and Expert Witnesses in Third-Party Bad Faith cases in general is the subject of § 8:17, in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d Edition Thomson Reuters West and 2020 Supplements).  Discovery by insurance carriers including concerning experts in first-party insurance cases is addressed in § 12:22, while § 12:18 features Expert Witnesses in First-Party Bad Faith cases in general, in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

WHEN DISCOVERY WAS PREMATURE IN THE MIDDLE DISTRICT OF FLORIDA.

"The Court finds that the entry of summary judgment on damages is premature when the parties have not yet completed discovery that could have a bearing on the issue."   Grey Oaks Country Club, Inc. v. Zurich Am. Ins. Co., No.:  2:18-cv-639-FtM-99NPM, 2019 WL 5802513, at *4 (M.D. Fla. November 7, 2019).

The Grey Oaks Country Club case is discussed along with many other cases addressing Discovery From Insurers Concerning Their Handling of Third-Party Claims, which is Chapter 8 in 1 Dennis J. Wall, LITIGATION AND PREVENTION OF INSURER BAD FAITH (3d Edition Thomson Reuters and 2020 forthcoming Supplements).  In particular, the case will be discussed in § 8:2, Suits for Bad Faith, Excess Liability.

Please read the disclaimer.  This blog article ©2020 Dennis J. Wall.  All rights reserved.

THE REAL ATTORNEY-CLIENT PRIVILEGE IN THE CLAIMS FILE.

In a bad-faith case arising out of denial of a life insurance claim, the Chief U.S. Magistrate Judge of a U.S. District Court took apart a claim of attorney-client privilege to bar discovery of a key memorandum from a claim file:

    The Court has considered the arguments by the parties and has reviewed the memorandum at issue. The memorandum is not written by an attorney and does not state that it conveys a confidential communication from Defendant’s counsel. Instead, the memorandum is written by Defendant’s Head of Claims and refers to business practices for contestable claims in states with a statute requiring that the condition that was misrepresented contributed to the loss.

Salopek v. Zurich Am. Life Ins. Co., CV No. 18-339 JAP/CG, 2019 WL 1746303, at *2 (D.N.M. April 18, 2019).

    The Court continued with regard to the attorney-client privilege claim:

Moreover, the substance of the memorandum merely advises claims handlers to refer contestable claims to a claim manager and for possible legal advice. For these reasons, the Court finds Defendant has not met its burden in proving the memorandum is privileged.

Salopek, 2019 WL 1746303, at *2.

But the Court was not finished. The Chief Magistrate Judge concluded that the memorandum in question is not only not privileged, but it is relevant:

    In addition, the Court finds the memorandum is relevant. Plaintiff’s claims involve a contestable claim and alleged misrepresentations on an insurance application. While the memorandum refers to statutes in states other than New Mexico, it also discusses Defendant’s business practices when presented with contestable claims and the effect of a misrepresentation. Therefore, is relevant to the claims and defenses in this case.

    IT IS THEREFORE ORDERED that Plaintiff’s Motion to Compel Zurich America Life Insurance Company to Produce an Unredacted Copy of a Memorandum, (Doc. 101), is GRANTED, and Defendant shall provide Plaintiff with an unredacted copy of Bates No. ZALICO_SAL0002235[.]

Salopek, 2019 WL 1746303, at *2-*3.

    So simply mentioning lawyers in a memorandum is not enough to keep the memorandum secret even in a bad-faith case. This is the universal or nearly universal rule and this decision exemplifies the rule.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

 

"Oh, Bedvidere! Come here boy!" Foghorn Leghorn goes silent with SPO.

A Stipulated Protective Order was signed in the insurance case of Bedivere Ins. Co. v. Blue Cross & Blue Shield of Kansas, Inc. & Allied World Specialty Ins. Co., Nos. 18-cv-02371 & 18-cv-02515, 2020 WL 1140394 (D. Kan. March 9, 2020) (O'Hara, USMJ). It was written by the parties, all of them insurance companies, and their lawyers of course. The lawyers of record came from Miami and Chicago and California, as well as local counsel from Kansas. They came bearing a proposed stipulated protective order.

    The Clerk wrote this on the Docket Entry for the proposed order, which Westlaw did not pick up in its report: "AGREED PROTECTIVE ORDER. The court finds good cause to enter the order submitted by the parties. Signed by Magistrate Judge James P. O'Hara on 3/9/2020." Bedvidere Ins. Co. v. Blue Cross & Blue Shield of Kansas, Inc., Case Nos. 18-cv-02371-DDC & 18-cv-02515-DDC, DE #88, proposed "Agreed Protective Order," filed March 9, 2020.

    The ones who wrote the proposed order said that their "Agreed Protective Order is based on the District of Kansas Model Protective Order." Bedvidere, 2020 WL 1140394, at *1. Except that it isn't.

    The lawyers included three categories of protection for "confidentiality" that the lawyers select in the first place. Interestingly, the lawyers wrote categories of confidentiality based on lawyers and not on their clients seeing the materials: "In particular, the parties have included three levels of confidentiality -- Confidential, Confidential -- Attorneys' Eyes Only, and Confidential -- Outside Counsel Only[.]" Bedvidere, 2020 WL 1140394, at *1. The District of Kansas Model Protective Order does not include such categories of secrecy, and neither do the District of Kansas Guidelines for the Model Protective Order.

    And what was so important that it has to be kept secret and available only in these two consolidated lawsuits and no others? This is an insurance coverage case. It involves competing coverages under Directors' and Officers' and Errors and Omissions insurance policies. See Download Bedvidere Ins. Co. v. Blue Cross & Blue Shield of Kansas Inc. No. 18-cv-02371-DDC DE #55 Amended Complaint filed 10.14.19 (D. Kan.).

    Very hush-hush indeed.

    Seriously, though: If you can get a stipulated protective order signed to keep your insurance coverage secrets, then what if anything must be disclosed?

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

 

SECRECY IN DISCOVERY AND SECRECY AT TRIAL ARE TREATED DIFFERENTLY.

In In re: Bard IVC Filters Prod's Liab. Litig., No. MDL 15-02641-PHX-DGC, 2020 WL 1070328 (D. Ariz. March 5, 2020), the District Court faced questions of secrecy claims over discovery materials and also secrecy claimed for trial exhibits. Like most Courts, this one treated the questions differently: Most Courts are willing to indulge secrecy in pretrial discovery but not for exhibits introduced in evidence at trial.

    First, the parties submitted a Stipulated Protective Order "governing the designation, handling, use, and disclosure of confidential discovery materials[.]" As is usual with such stipulated orders, the determination of "confidentiality" was made in the first place by the parties and their lawyers.

    Then a Case Management Order (CMO) "governed redactions of material from additional adverse event reports, complaint files, and related documents in accordance with" HIPAA.

    Third, the parties and their lawyers crafted another SPO specifically for Electronically Stored Information (ESI). "[T]o expedite production of ESI, the parties agreed to a primarily 'no-eyes-on' document production as to relevancy while still performing a privilege review for this expedited ESI document production." A CMO was amended apparently to accommodate this SPO.

    Thereafter the Court conducted three bellwether trials or demonstration trials. In Multi-District Litigation like this MDL, these trials offer a sampling of the likely outcomes. The Court in this case denied the defendants' motion to seal trial exhibits and otherwise to keep them confidential as to each of the three cases that were tried. "A list of exhibits admitted at the bellwether trials (excluding case-specific medical records) and documents deemed no longer subject to the protective order are attached as Exhibit 2." In re: Bard, 2020 WL 1070328, at *7.

    Familiarity with the principles of law is presumed here. The Court did not engage in a long discussion of them. Instead the Court ruled and the context of its rulings are known to people familiar with the principles of law they reflect. This opinion is very much worth reading for the outcomes in this regard.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

 

STIPULATIONS, PROTECTIVE ORDERS, GOOD CAUSE AND ... OUTHOUSE OR IN-HOUSE COUNSEL?

The case of Allscripts Healthcare, LLC v. DR/Decision Resources, LLC, d/b/a Decision Resources Group ["DRG"], No. 19-11038-NMG, 2020 WL 837444 (D. Mass. February 20, 2020), is a contract dispute. The defendant, DRG, wanted to tighten the confidentiality of one document beyond even the stipulated protective order that the parties had already obtained in that case. DRG wanted to "enhance" the existing protective order to bar review of one document by the plaintiff's in-house counsel and limit review strictly to the plaintiff's "outside counsel."

The District Judge's resolution of this matter was clear and succinct:

    A party to a stipulated protective order seeking to modify the order must demonstrate good cause for modification. [Citation omitted.]  DRG fails to proffer a persuasive reason for its speculation that Allscripts’ attorneys, who are officers of the Court and bound by the Protective Order, would flout their duty and disclose to Allscripts’ employees information labeled as “Confidential-Attorneys’ Eyes Only” in violation of the Protective Order.

    Accordingly, DRG’s motion to enhance the Protective Order will be denied.

Allscripts, 2020 WL 837444, at *4-*5.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.