Insurance Coverage Litigation Lawyer & Attorney : Rivkin Radler Law Firm : Long Island, New York

If you have any doubt about the impact and pitfalls of electronic discovery, read about the Qualcomm litigation.  Evidently, 21 emails were recently found that undercut Qualcomm's lawyers' arguments.  The emails may be part of 300,000 pages of other documents that had not been produced.  The sad tale is presented in this morning's Wall Street Journal, Recovered Emails Bedevil Qualcomm in Court, Don Clark, 10/9/07, at B1.  Insurers facing litigation cannot over-emphasize the importance of managing electronic discovery.  And insurers with ADR clauses have another reason to celebrate.

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Law.com recently published a very interesting article discussing how insurers are beginning to consider policyholders' obligations for electronic discovery.  Another side of electronic discovery presents a more direct challenge: insurers' obligation to respond to discovery requests propounded directly on the insurers in coverage litigation.  Much of policyholders' discovery is designed to disrupt and annoy insurers, rather than advance the cases. Policyholders bludgeon insurers with discovery in the hope that the aversion to discovery will increase settlement value.  Electronic discovery will certainly present special challenges to insurers.

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I was happy to see the California Supreme Court decline to order an insurer to produce reinsurance information. Catholic Mutual Relief Society v. Superior Court of Los Angeles (Aug. 27, 2007). I’ve been representing insurers for more than 20 years. While reinsurance information is always sensitive, it’s almost never probative. In the few instances that I’ve seen it produced in any form, it did not advance the insured’s case. It only caused the insurer pain. Pain is the ultimate goal, and that certainly doesn't justify the discovery request.

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Thank you to the Supreme Court of Texas for issuing a June 15, 2007 decision rejecting discovery concerning other claims, In re Allstate County Mutual Insurance Company.  Discovery concerning unrelated claims has become policyholders' "STP," standard torture procedure.  Here, a $13,500 dispute, the trial court had enforced discovery requests beyond the claim presented, including a request for the "transcripts of all testimony ever given by any Allstate agent on the topic of insurance."  The Texas Supreme Court didn't tolerate it:  "Overbroad requests for irrelevant information are improper whether they are burdensome or not....  'Reasonable' discovery necessarily requires some sense of proportion."  Although this decision concerned discovery under Texas procedure, the Texas Supreme Court's guiding principles may well be cited in other jurisdictions.

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An insurer recently asked me whether a litigation hold is required for all coverage denials. 

In Zubulake v. UBS Warburg, the United States District Court for the Southern District of New York held that: “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Can it be said that a claims department anticipates litigation whenever it issues a denial? I don’t think so. And even if litigation is always anticipated, insurers should be spared the obligation of litigation holds because the burden would be excessive if litigation holds were required for all denials. 

Surprisingly, I have not seen insurance-specific decisions this issue.   I’d be interested in hearing whether anyone has litigated this issue in the insurance context.

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