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Travelers Casualty and Surety Co. v. Becton Dickinson and Co.

United States District Court, D. New Jersey

June 20, 2017

TRAVELERS CASUALTY AND SURETY COMPANY, et al., Plaintiffs,
v.
BECTON DICKINSON AND COMPANY, Defendant.

          OPINION AND ORDER

          JAMES B. CLARK, III United States Magistrate Judge.

         THIS MATTER comes before the Court on a motion by plaintiffs Travelers Casualty and Surety Company and Travelers Property Casualty Company of America (collectively “Plaintiff” or “Travelers”) to compel Defendant Becton Dickinson and Company's (“Defendant” or “BD”) production of documents related to the underlying lawsuits and settlements at issues in this action. [Docket Entry No. 93]. Defendant opposes Plaintiff's motion. [Docket Entry No. 94]. For the reasons set forth below, Plaintiff's Motion to Compel is DENIED.

         I. BACKGROUND

         By way of background, Travelers instituted this action on July 11, 2014, seeking a declaratory judgment that it owed no defense or indemnity coverage for groups of antitrust lawsuits (the “Underlying Actions”) that BD settled before tendering to Travelers. [Docket Entry No. 1]. The first action (the “Retractable Action”) was brought in state court in 1998, then as a federal action in 2001, and was settled by BD in July 2004. The second group of suits (the “Class Actions”) were commenced between 2005 and 2007 by direct and indirect purchasers of BD's hypodermic products. BD settled the direct-purchaser suits in April 2009, and the indirect-purchaser suits in July 2013.

         In December 2013, BD tendered the Class Actions to Travelers seeking coverage. Travelers initially declined coverage, but later withdrew its declination under the relevant policies and reserved its rights. In response to requests for additional information regarding the Class Actions, BD stated that the “[u]nderlying defense counsel prepared no evaluations or status reports during the class actions litigations” and the “underlying actions settled before the parties engaged in any discovery concerning any issue other than standing.” [Docket Entry No. 4-4]. In June 2014, BD tendered the Retractable Action to Travelers, which declined coverage under the relevant policies.

         After filing the instant action in July 2014, Travelers moved for judgment on the pleadings arguing that it owed no coverage for the Underlying Actions because BD breached various policy conditions when it handled and settled those matters before tendering them to Travelers. BD opposed, claiming that Travelers must show “appreciable prejudice” stemming from a condition breach and, to do so, must prove that it: (1) irretrievably lost substantial rights; and (2) would have defended successfully against the Underlying Actions. [Docket Entry No. 18 at 16-19]. Denying Travelers' motion for judgment on the pleadings, Judge Vazquez found that New Jersey's “appreciable prejudice” rule applies to occurrence-based policies and there is an “open issue” on whether the rule has a “good-faith” prerequisite. [Docket Entry No. 43.] Judge Vazquez further held that there were material issues of fact in dispute, including whether: (1) Travelers was appreciably prejudiced by BD's late notice and failure to cooperate and (2) “assuming that there is a good faith prequalification, whether Defendant failed to act in good faith”. [Id.]

         Thereafter, the parties exchanged written discovery and served responses in July 2016. With respect to BD's “appreciable prejudice” defense, Travelers sought information regarding BD's litigation and settlement of the Underlying Actions which included communications with counsel, and evaluations of strategy and the merits of the claims. [Docket Entry No. 93-2, 93-3]. Travelers further sought information regarding BD's good faith; specifically, information concerning BD's evaluation of potential coverage for those actions. BD objected to these requests, invoking the attorney-client privilege and work-product doctrines. That issue is now before us the Court on the instant motion.

         II.THE PARTIES'S POSITIONS

         A. Travelers' Position

         Travelers contends that BD has waived any attorney-client privilege or work-product protection over the requested documents by affirmatively placing those documents “at issue”. Specifically, BD asserted as an affirmative defense that “Plaintiffs cannot meet their burden of proving appreciable prejudice arising from any alleged untimely notice of the underlying action.” BD further stated in its opposition to Travelers' motion for judgment on the pleadings, that appreciable prejudice can only be shown by proving: (1) that it irretrievably lost substantial rights; and (2) it would have defended successfully against the Underlying Actions. BD further stresses the inability to prove the latter point, by arguing that Travelers “cannot[] allege it would have hired better counsel or achieved a better outcome than that secured by [BD's counsel]”. Taken all together, these statements place the advice of BD's counsel “at issue”. And such information cannot be obtained from a less intrusive source because a determination of whether Travelers could have been more successful in the underlying actions is dependent on the actions taken by BD's counsel-documents only BD maintains.

         With regard to documents related to BD's counsel's evaluation of potential insurance coverage for the Underlying Actions, Travelers argues that these documents are not protected by the work product doctrine because they were not prepared in anticipation of litigation. Even if they were, there is a substantial need for these documents because: (1) Travelers has no alternative to show good faith; and (2) deposition testimony is insufficient without contemporaneous documentation.

         B. BD's Position

         On the other hand, BD argues that the documents sought by Travelers are protected by the attorney-client privilege and work-product doctrines. These privileges have not been waived nor should be pierced for several reasons. First, BD has not placed its counsels' statements at issue with regards to Traveler's claim of appreciable prejudice. Second, BD argues that those privileges should remain intact because Travelers can obtain the requested information from other less intrusive sources without undue hardship. Specifically, documents related to BD's “defense and settlement of the Underlying Actions” and “how [its] counsel evaluated various strategy options” can be gleaned from the millions of pages of documents BD was preparing to produce in this matter, through court filings, and deposition testimony of corporate designee and fact witnesses.

         II. ...


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