United States District Court, D. Connecticut
ITT CORPORATION ET AL.
TRAVELERS CASUALTY & SURETY CO.
RULING ON PENDING DISCOVERY ISSUES
Glazer Margolis United States Magistrate Judge
January 6, 2012, plaintiffs ITT Corporation [“plaintiff
ITT”] and Goulds Pumps Inc. [“plaintiff
Goulds”] commenced this lawsuit against defendant
Travelers Casualty and Surety Company, formerly known as
Aetna Casualty and Surety Company, with respect to nineteen
Excess Overlayer Indemnity policies [“XN
policies”] issued to plaintiff ITT with more than $245
million in coverage and two XN excess insurance policies
issued to plaintiff Goulds with more than $50 million in
coverage; plaintiffs allege that defendant has changed its
interpretation of the XN policies to constructively eliminate
the coverage afforded to plaintiffs under their XN policies.
(Dkt. #1). The complaint contains three counts: Count One
requests declaratory and injunctive relief regarding
coverage; Count Two alleges a violation of the Connecticut
Unfair Trade Practices Act [“CUTPA”], Conn. Gen.
Stat. §42-110a et seq.; and Count Three alleges
procedural bad faith in the handling of plaintiffs'
asbestos claims in violation of the common law of
Connecticut. On June 12, 2014, defendant filed its answer and
affirmative defenses. (Dkt. #103).
March 24, 2014, the case was transferred from U.S. District
Judge Robert C. Chatigny to U.S. District Judge Jeffrey A.
Meyer (Dkt. #93); Judge Chatigny had referred the case to
U.S. Magistrate Judge Donna F. Martinez for discovery. (Dkt.
#26). Suffice it to say, there have been multiple discovery
disputes throughout the duration of this lawsuit. (See,
e.g., Dkts. ##17, 19, 25, 29-30, 33, 50-51, 61, 62,
67-68, 82-83, 85-87, 89-90, 94-95, 97-99, 100-02, 105-07,
111-12, 114-19, 121-29, 134, 145, 147-49, 151-52, 154-57,
160-74, 176-78). On February 21, 2013, Judge Chatigny stayed
this lawsuit under the Colorado River abstention
doctrine (Dkt. #78), pending a decision by the California
Superior Court regarding the proper interpretation of
defendant's excess insurance policies in Cannon
Electric, Inc. et al. v. Affiliated FM Insurance Co. et
al., Case No. BC 290354 [“Cannon”].
On March 17, 2014, Judge Chatigny lifted the stay to the
extent that plaintiffs could engage in “time
sensitive” discovery, after the California Superior
Court filed a thirty-eight page Statement of Decision in
favor of the plaintiffs there. (Dkt. #92; see also
Dkt. #83). On June 22, 2016, the California Courts of Appeal
affirmed this decision. (Dkts. ##138-39, 142). One month
later, on July 20, 2016, Judge Meyer further lifted the stay
to permit third party discovery. (Dkt. #145).
the latest Scheduling Order, filed July 26, 2016 (Dkt. #149),
all discovery is to be completed by May 31, 2017. On October
4, 2016, the parties filed status reports regarding their
pending discovery disputes. (Dkts. ##177-78). Twenty-three
days later, on October 27, 2016, Judge Meyer referred this
file to this Magistrate Judge for discovery. (Dkt. #181).
Four days thereafter, this Magistrate Judge filed an order
(Dkt. #182), requiring the parties to forward copies of the
Requests for Admission, Interrogatories and Document
Requests, and objections thereto, in dispute, as well as
letters detailing any other outstanding discovery disputes.
Consistent with this order, defendant filed its supplemental
letter on November 14, 2016, along with eighteen exhibits.
(Dkts. ##183-84). Plaintiffs also forwarded a letter, dated
November 14, 2016, along with twenty-nine
December 22, 2016, plaintiffs and defendant forwarded
additional letters summarizing the parties' discovery
disputes (Dkts. ##185, 187-88); after the discovery
conference was held on January 4, 2016, defendant forwarded a
supplemental letter one week later,  as to which plaintiffs
responded two days later. (Dkts. ##186, 189-90).
letter, dated December 22, 2016 (Dkt. #188), lists the
specific discovery items at issue and outlined the four
topics upon which they seek discovery: (1) evidence that in
2009 Travelers advanced a coverage position that contradicted
Aetna's intent on what the XN policies cover; (2)
evidence that Travelers knew that it had no reasonable
factual basis to assert that Aetna's underwriters did not
intend to cover plaintiffs' product liability loss for
losses that exceeded the aggregate limits of the policies
beneath the XN policies; (3) evidence that Travelers advanced
this position as a general business practice, i.e.,
not just with plaintiffs, but with other policyholders; and
(4) evidence of Travelers' financial motivation to engage
in bad faith conduct. (Id. at 2-3). Plaintiffs
dispute defendant's arguments that these discovery
requests are irrelevant, disproportional, vague, speculative
and unduly burdensome, and that the discovery is prohibited
by Conn. Gen. Stat. § 38a-988 and principles of
confidentiality. (Id. at 4). Plaintiffs have
suggested as a compromise that disclosure be limited as
follows: (1) to discovery related to claims made under XN
policies to insured A.H. Robins Company for Dalkon Shield
product liability loss; and (2) discovery related to
asbestos-related products liability claims made under XN
policies such that, of the twenty-seven XN policyholders with
asbestos-product liability claims for which it has made
payments under XN policies, defendant need only respond to
twelve of them, namely, the first six and the last six
policyholders for which Travelers paid asbestos products
claims, as an initial disclosure, without prejudice to
seeking the remaining fifteen claims. (Id. at
addition, plaintiffs seek discovery related to certain
documents for which they moved to compel production prior to
the case having been stayed due to the pendency of the
California lawsuit in 2014. (Id. at 5,
citing Dkt. #126, at 71-72, 74). Plaintiffs seek
production of the “Wigmore Memo, ” upon which
Judge Meyer has not ruled. (Id., citing
Dkts. ##127-28). Lastly, plaintiffs contended that they were
in the process of amending their Rule 26(a) disclosures
regarding damages, and would provide non-privileged
supporting documentation. (Id.).
letter, dated December 22, 2016 (Dkt. #187), defendant argues
that plaintiffs have misused the discovery process in having
served 520 Requests for Admission, Judge Meyer already has
denied many of plaintiffs' Requests for Production at
issue here and already found that the discovery sought is
overly broad, intrusive, and burdensome, and defendant is
willing to abide by the decision in the California litigation
so this lawsuit is “needless.” (Id. at
1-2, citing Dkts. ##125, 184 (Exh. C, at 21-26; Exh.
D, at 15-19; Exh. E, at 71-75)). Defendant further objects to
plaintiffs' proposed compromise as even the limited
request is “extraordinar[ily] burdensome and
intrusive[, ]” and would still leave the discovery
dispute unresolved in that it preserves the opportunity for
plaintiffs to seek additional files. (Id. at 2).
Defendant also contends that Judge Meyer already denied
production of the Wigmore Memo. (Id.,
citing Dkts. ##125, 127-28, 184 (Exh. E, at 74)).
Lastly, defendant argues that plaintiffs' promise to
provide copies of invoices for costs incurred in the
Cannon litigation in California still does not
satisfy their burden to provide computations of their damages
under Fed.R.Civ.P. 26(a)(1)(A)(iii). (Id. at 1).
letter, dated January 11, 2017 (Dkt. #189),  defendant
referred to other lawsuits in which plaintiffs' counsel
has been criticized for “playing the dual role of
coverage counsel and defense counsel for a different
policyholder[, ]” and argued that defendant's other
policyholders have legitimate expectations of privacy and
confidentiality (id. at 2-4 & Exhs. C-F), and
that plaintiffs have failed to demonstrate any “legally
cognizable ‘ascertainable loss'” required to
maintain a CUTPA claim. (Id. at 1-2 & Exhs.
days later, plaintiffs' letter (Dkt. #190) responded by
arguing that the Illinois lawsuit, in which four of the named
defendants have XN policies issued by Travelers, demonstrates
that “Travelers appears to have treated some of those
similarly situated XN policyholders differently[, ]” so
that discovery on “bad faith . . . is directly
relevant.” (Id. at 1). In addition, plaintiffs
replied that defendant's challenges to plaintiffs'
damages are “best resolved through a substantive
motion, rather than this discovery proceeding.”
outset, the Magistrate Judge rejects defendant's argument
that Judge Meyer already denied plaintiffs' requests for
this discovery during his prior discovery conferences in May
2014, June 2014, October 2014, November 2014, and August
2016. (Dkts. ## 102, 117, 126, 154, 169; see also
Dkt. #169). While defendant is correct that Judge Meyer
stated on November 25, 2014 that he was denying
plaintiffs' motion “in substantial part[, ]”
he immediately added that he “was going to make this
denial, however, subject to exceptions or conditions[,
]” which included that if “the California Court
of Appeals rules . . . adverse to Travelers[, ]” then
he may decide that “it's time to have a fuller
range of discovery in this action, and . . . plaintiffs would
not be prejudiced in that instance.” (Dkt. #126, at
PROPORTIONALITY, RELEVANCE AND BURDENSOMENESS
the enormous sums potentially at issue in this litigation,
defendant's proportionality argument rings hollow.
Travelers argues that plaintiffs' requests for admissions
relating to the XN policies issued to A.H. Robins in
connection with the Dalkon Shield product liability cases are
irrelevant. While the A.H. Robins XN policies concern a
different product, plaintiffs' claims turn not on the
product related to the XN policy, but on the intent of the XN
policies' underwriters' and on Travelers'
interpretations of the scope of coverage for the XN policies.
Plaintiffs' requests for admissions about the A.H. Robins
policies, under which plaintiffs allege that Travelers first
paid an XN claim, are relevant because they reflect
Travelers' understanding of how these policies worked at
a much earlier time. Accordingly, to the extent that
plaintiffs only make requests for admissions and not document
demands on this subject, these requests are relevant to
plaintiffs' claims that Travelers has changed its
interpretation of the coverage position of the XN policies
over time. (Dkts. ##186 and 183-2, Requests for Admission,
dated August 2, 2016, at 2-3).
the compromise proposed by plaintiffs related to the XN
policies issued to twenty-seven other policyholders who are
facing asbestos-related product liability claims, the
Magistrate Judge agrees with defendant that it would be
unduly burdened if, after reviewing the first six and last
six files, plaintiffs additionally requested production of
the remaining fifteen policies. Defendant appropriately
argues that it should not be forced to review these files
twice. Instead, unless counsel agree otherwise, the
Magistrate Judge orders defendant to produce eighteen of
these files (which constitute two-thirds of the twenty-seven
files) --in chronological order, numbers 1-2, 4-5, 7-8,
10-11, 13-14, 16-17, 19-20, 22-23, 26-27. Any request by
plaintiffs for additional production of the remaining nine
insurance files will require demonstration of
“compelling and substantial need” addressing why
production of the eighteen insurance files is insufficient.
Magistrate Judge agrees with plaintiffs that Conn. Gen. Stat.
§ 38a-988 does not bar production of these documents.
See Pike v. Anderson, No. X01 CV 10165364S, 2002 WL
31304235 (Conn. Super. Ct. Sept. 18, 2002). However, to the
extent that there are protective orders or confidentiality
agreements regarding these eighteen insurance files, or
sensitive personal matters that deserve protection,
production, is of course, subject to the Protective Order in
place in this case. (Dkt. #119). In addition, defendant may
redact the names of the claimants and its insureds, as
appropriate, substituting the parties' actual names or