Insurance Law Alert

July/August 2024

In This Issue
California Court Rules That Insurers Have No Duty To Defend Opioid
Suits Based On Lack Of Alleged “Occurrence”
A California district court ruled that underlying opioid-related suits did not allege a covered“occurrence” and therefore that insurers had no duty to defend. AIU Ins. Co. v. McKesson
Corp., 2024 U.S. Dist. LEXIS 134565 (N.D. Cal. July 30, 2024). (Click here for full article)

New York Appellate Court Reverses Dismissal Of Suit Alleging PFA
Groundwater Contamination“Simpson Thacher’s
insurance practice group isamong the best in the country.
Their attorneys are supremely
intelligent, hardworking, andregularly handle the most complex
and high dollar insurance coverageclaims in the nation.”

A New York appellate court ruled that a trial court erred in dismissing a PFA-related
contamination suit based on standing, finding that the petitioner’s allegations of pollution
and injury were not conclusively refuted. Seneca Lake Guardian v. New York State Dept. of
Envtl. Conservation, 2024 N.Y. App. Div. LEXIS 3899 (3d Dep’t July 18, 2024). (Click here
for full article)– The Legal 500

Reversing Trial Court, New Jersey Appellate Court Rules That Exclusion
in D&O Policy Precludes Coverage For Underlying Settlement(quoting a client)

A New Jersey appellate court ruled that a trial court erred in failing to apply an “operation of
capacity” exclusion to claims arising out of an executive’s wrongful acts taken in connection
with both an insured and uninsured entity. Mist Pharmaceuticals, LLC v. Berkley Ins. Co.,
2024 N.J. Super LEXIS 57 (N.J. Super. Ct. App. Div. July 9, 2024). (Click here for full article)

Louisiana Appellate Court Rules That Insurer Had No Duty To Indemnify
Because Insured Was Not “Legally Obligated To Pay” Damages
Reversing a trial court decision, a Louisiana appellate court ruled that an insured was not“legally obligated to pay” damages and was therefore not entitled to coverage under a liability
policy. Hodge v. Louisiana Farm Bureau Mutual Ins. Co., No. 55,656 (La. App. Ct. June 26,2024). (Click here for full article)

Texas Court Rules That Umbrella Insurer Had No Duty To Defend
Underlying Claims Pursuant To “Drop Down” Provision
A Texas district court ruled that an umbrella insurer had no duty to defend claims pursuant
to a “drop down” provision that applied only when claims were “not covered” by underlying
insurance. ACE American Ins. Co. v. Murco Wall Products, Inc., 2024 U.S. Dist. LEXIS
111368 (N.D. Tex. June 24, 2024). (Click here for full article)
Simpson Thacher & Bartlett LLP

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Maryland Supreme Court Finds Subrogation Waiver Ambiguous As To
Whether It Precluded Insurer’s Subrogation Claim
The Maryland Supreme Court ruled that a subrogation waiver was ambiguous as to whether
it precluded a subrogation claim by a tenant’s insurer against subcontractors who were
allegedly negligent in the construction of a warehouse. Lithoko Contracting, LLC v. XL Ins.
Am., Inc., 2024 Md. LEXIS 256 (Md. July 15, 2024). (Click here for full article)

California Court Grants Policyholder’s Motion To Compel Production Of
Reinsurance Documents
A California district court granted a policyholder’s motion to compel the production ofreinsurance-related materials, finding that the documents were relevant to breach of contract
and bad faith claims. Jackson Family Wines, Inc. v. Zurich Am. Ins. Co., 2024 U.S. Dist.
LEXIS 119383 (N.D. Cal. July 8, 2024). (Click here for full article)2

California Court Rules That Insurers Have No
Duty To Defend Opioid Suits Based On Lack Of
Alleged “Occurrence”
HOLDINGA California district court ruled that underlying opioid-related suits did not allege a covered“occurrence” and therefore that insurers had no duty to defend. AIU Ins. Co. v. McKesson
Corp., 2024 U.S. Dist. LEXIS 134565 (N.D. Cal. July 30, 2024).

BACKGROUND

McKesson, a distributor of prescription drugs, was named as a defendant in underlying
suits brought by government entities for its alleged role in contributing to the opioid crisis.
The suits alleged that McKesson intentionally flooded the market with opioids,
contravening various industry safeguards and ignoring or concealing risks associated withthe use of opioid medications. McKesson’s insurers sought a declaration of no coverage,
arguing, among other things, that the underlying claims did not allege an “occurrence.”
Ruling on McKesson’s motion for summary judgment, the court held that the underlying
allegations did not give rise to an “occurrence” and therefore that the insurers had no duty
to defend the suits.

DECISIONAs the court noted (and as reported in our January 2024 Alert), the Ninth Circuit granted
insurers’ partial summary judgment motion, finding no duty to defend three Exemplar
Opioid Lawsuits under two policies issued to McKesson in effect from 2008-2009 and2015-2016. AIU Ins. Co. v. McKesson Corp., 2024 U.S. App. LEXIS 1806 (9th Cir. Jan. 26,2024). The Ninth Circuit reasoned that the conduct was not “accidental” and thus did notconstitute an occurrence as defined by the policy because the allegations in the lawsuit
involved exclusively intentional conduct and did not involve unexpected or
unforeseen injuries.
In the present case, McKesson argued that notwithstanding the Ninth Circuit’s ruling,
the suits alleged at least a potentially covered occurrence as that term is defined underpolicies issued between 1999-2004. McKesson reasoned that a slight difference in policy
language during this time period warranted a different conclusion as to the occurrence
issue. In particular, the 1999-2004 policies included the phrase “damage neither expected
nor intended from the standpoint of the insured,” whereas the policies in the Ninth
Circuit decision did not include the phrase “from the standpoint of the insured” in theoccurrence definition, but instead included that phrase in a policy exclusion that barred
coverage for damage “expected or intended from the standpoint of the insured.” Rejecting

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this argument, the court held that the differing placement of that verbiage was irrelevant,and that all policies required accidental conduct or damage that was neither expected
nor intended from the standpoint of the insured in order to trigger an insurer’s defense
obligations. Further, the court emphasized that under California law, deliberate conduct is
not deemed accidental simply because the insured did not intend the damage that resulted
from the deliberate conduct.
The court also rejected McKesson’s assertion that even if the definition of “occurrence”
in the 1999-2004 policies “is as the Ninth Circuit stated,” the suits allege a potentiallycovered occurrence based on “diversion” of the opioid products distributed by McKesson.
McKesson argued that the diversion of opioids by “‘underhanded’ physicians andpharmacists who were writing and filling illegitimate prescriptions was the particular
unforeseen, intervening cause of the alleged injuries from 1999-2004.” Deeming thisargument unpersuasive, the court noted that the Ninth Circuit had already rejected that
contention, noting that diversion of McKesson’s “oversupply of opioids” was the “inevitableand entirely foreseeable result” of its alleged actions and practices, including its alleged
failure to maintain effective controls and failure to report or halt suspicious orders.

New York Appellate Court Reverses Dismissal Of Suit
Alleging PFA Groundwater Contamination
HOLDINGA New York appellate court ruled that a trial court erred in dismissing a PFA-related
contamination suit based on standing, finding that the petitioner’s allegations of pollution
and injury were not conclusively refuted. Seneca Lake Guardian v. New York State Dept.
of Envtl. Conservation, 2024 N.Y. App. Div. LEXIS 3899 (3d Dep’t July 18, 2024).

BACKGROUNDCounty Line applied for a permit from the
Department of Environmental Conservation(“DEC”) to operate a waste and recyclables
processing facility. In its application, County Line
noted that operation of the proposed facility would
produce leachate and disclosed its need totransport the leachate to an offsite treatment
facility. It identified Ithaca Area Wastewater
Treatment Facility as the offsite facility that would
receive the leachate for treatment and disposal.
After the DEC issued a permit, Seneca Lake
Guardian (“SLG”), a nonprofit environmental
conservation organization, sought to annul thepermit. The DEC and County Line each moved todismiss, asserting that SLG lacked standing.
A New York trial court granted both motions,finding that SLG’s allegations of harm were “toospeculative to confer standing” and no different
than harm incurred by the public at large. The
appellate court reversed.

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DECISION

An organization can establish organizational standing “by asserting a claim on behalf of its
members, provided that at least one of its members would have standing to sue, that it isrepresentative of the organizational purposes it asserts and that the case would not require
the participation of individual members.” Additionally, the organization must demonstratethat at least one of its members may suffer an injury in fact—“actual harm” separate andapart from the public at large—and that such injury falls within the “zone of interests” of
the government regulations at issue.
Accepting SLG’s allegations as true for the purposes of the motion to dismiss, the appellate
court concluded that SLG met this standard. The parties did not dispute that the alleged
injury fell within the zone of interest of the New York state regulations pertaining towaste management. Further, the respondents did not challenge that SLG’s claims wererepresentative or that its organizational purpose was to preserve and protect the health ofthe local Finger Lakes environment. The only issue in dispute was whether SLG adequately
pleaded that at least one of its members would suffer an injury-in-fact different from that
suffered by the public at large.
Finding that SLG did plead such harm, the appellate court noted that SLG alleged thatits members would be harmed by the leachate produced by County Line, which would betreated by the Ithaca treatment facility and then dumped into Cayuga Lake. According
to SLG, the type of solid waste that County Line would handle would create leachatethat contains PFA substances, which have been linked to adverse health outcomes. SLG
additionally alleged that because the PFAs cannot be fully filtered out of leachate, PFAs
would enter the lake and cause its members harm. SLG specifically identified a member
whose potable drinking water is only filtered through the ground in “beach wells” on
Cayuga Lake and would be unsafe to drink if County Line were to transport its waste in
the method outlined in its DEC application. The appellate court emphasized that neither
County Line nor DEC provided evidence rebutting these allegations. As such, the court
concluded that SLG’s allegations were sufficient to establish non-speculative injury-infact to an individual member distinct from harm to the public at large and therefore hadstanding to challenge the permit.

COMMENTS

As litigation stemming from PFA-related contamination or exposure to PFA-containing
materials continues to proliferate, so too will policyholders’ claims for defense andindemnity of such claims. Coverage litigation in this context will turn primarily on
applicable policy language, including pollution exclusions, as well as particularjurisdictional law. At least two courts have dismissed policyholder suits, finding thatpollution exclusions barred coverage for such claims, while a few other courts have ruled
that, based on the particular allegations in the complaint as compared to policy language,
the insurers were obligated to defend the suits.

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Reversing Trial Court, New Jersey Appellate Court Rules
That Exclusion in D&O Policy Precludes Coverage For
Underlying Settlement
HOLDINGA New Jersey appellate court ruled that a trial court erred in failing to apply an “operationof capacity” exclusion to claims arising out of an executive’s wrongful acts taken inconnection with both an insured and uninsured entity. Mist Pharmaceuticals, LLC v.
Berkley Ins. Co., 2024 N.J. Super LEXIS 57 (N.J. Super. Ct. App. Div. July 9, 2024).

BACKGROUND

A suit was brought against Mist Pharmaceuticals, Joseph Krivulka, Akrimax
Pharmaceuticals and other entities. The complaint alleged that Krivulka, who served on theboard of both Akrimax and Mist, engaged in a scheme of self-dealing and fraud. In
particular, the complaint alleged that Krivulka improperly assigned various entities that hecontrolled or was invested in, including Mist, to serve as middlemen between Akrimax andother drug companies for personal gain.
Mist was insured under a D&O policy issued by Berkley. The policy contained an exclusionthat barred coverage for claims “based upon, arising out of, directly or indirectly resulting
from or in consequence of . . . any Wrongful Act of an Insured Person serving in theircapacity as director, officer, trustee, employee, member or governor of any other entity
other than an Insured Entity.” When Mist sought coverage for the suit, Berkley issued areservation of rights, citing the exclusion and also asserting that the underlying claim arose
prior to the policy period. In response, Mist filed a declaratory judgment action seeking aruling as to coverage.
The trial court granted Mist’s motion for partial summary judgment, finding that the claim
was within the policy period and that Berkley had a duty to defend. Thereafter, Mist sought
consent to settle and indemnification from Berkley. Berkley refused, citing insufficient
information from Mist as to the reasonableness of the proposed settlement. A Delaware
court ultimately approved a $12 million global settlement and assigned 25% liability
to Mist.
Following that ruling, a New Jersey trial court issued several findings as to coverage,
including that the settlement was reasonable and that Berkley’s refusal to contribute to
the settlement was a breach of its duty to indemnify. The trial court did not consider theoperation of capacity exclusion.

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DECISION

The appellate court reversed, ruling that the trial court improperly applied Fireman’s Fund
Ins. Co. v. Security Ins. Co. of Hartford, 367 A.2d 864 (N.J. 1976) in finding that Berkley
was obligated to indemnify the settlement. In Fireman’s Fund, the New Jersey Supreme
Court held that an insurer had unreasonably withheld its consent to settle and wastherefore liable for indemnification of the settlement. The appellate court explained that
unlike Fireman’s Fund, Berkley’s basis for withholding consent was reasonable because theglobal settlement represented the interests of multiple entities not insured under the policy
and because Berkley timely cited the exclusion as a defense to coverage.
Turning to the exclusion, the appellate court concluded that it squarely applied given that
Krivulka was acting in his capacity as both a director of Akrimax and majority shareholderof Mist in the alleged wrongdoing. The court stated: “[t]he loss claimed by Mist against
Berkley’s D&O policy arose from and could not have occurred but for Krivulka’s conduct
in his capacity as a director of Akrimax.” The court applied a “but for” analysis, notingthat it was not required to “unpack the percentage of Krivulka’s conduct” attributable
to his role in each entity. Rather, the phrase “arising out of” in the exclusion is applied
broadly, to include conduct that is “in any way connected” and does not require a causal
relationship. Having determined that the exclusion barred coverage for the underlying
claims, the appellate court ruled that Berkley’s refusal to consent to the settlement was
not unreasonable.

COMMENTSThis case presented a matter of first impression under New Jersey law. Therefore, in rulingon the operation of capacity exclusion, the court relied on the reasoning set forth indecisions in other jurisdictions. As the court noted, the Eleventh Circuit (applying Georgialaw) as well as courts in New York and Pennsylvania applied similar exclusions toanalogous factual scenarios.

Louisiana Appellate Court Rules That Insurer Had No
Duty To Indemnify Because Insured Was Not “Legally
Obligated To Pay” Damages
HOLDING

Reversing a trial court decision, a Louisiana appellate court ruled that an insured was not“legally obligated to pay” damages and was therefore not entitled to coverage under aliability policy. Hodge v. Louisiana Farm Bureau Mutual Ins. Co., No. 55,656 (La. App. Ct.
June 26, 2024).

BACKGROUND

The coverage dispute arose out of an accident in which an employee of Billy Ray Hodge
negligently drove one of Hodge’s tractors into an irrigation system located on property
owned by Sherman Shaw. At the time of the accident, Hodge was leasing that property
from Shaw pursuant to a verbal agreement and was using the irrigation system located onthat property, but there was no agreement with respect to a lease of the irrigation systemitself.
After the accident, Shaw did not file a claim with his property insurer, nor did he assert aclaim against Hodge. However, Hodge contacted Farm Bureau, his own liability insurer,
who sent an adjuster to assess the damage. Hodge claims that in response to assurances by
the Farm Bureau adjuster, Hodge replaced the irrigation system. When Farm Bureau later7

denied coverage, Hodge sued, alleging detrimental reliance and breach of the duty of goodfaith. Farm Bureau asserted several affirmative defenses, including a policy exclusion forproperty that is “rented, occupied, and/or loaned” to Hodge or within his “care, custody, or
control.”A trial court denied Farm Bureau’s summary judgment motion, finding that issues of fact
existed as to whether Hodge leased the irrigation system in connection with his lease of theland, or had custody or control over it. Following a bench trial, the court ruled the exclusion
did not apply and that Hodge was entitled to coverage for the cost of replacing the system.
DECISION

Applying a manifest error standard of review, the appellate court reversed, ruling thatcoverage was unavailable because Hodge was never “legally obligated to pay” the cost of
replacing the system, as required by the liability policy. Rather, the court explained, Hodge“decided on his own that he was 100 percent at fault.” As such, Farm Bureau had no
obligation to fund Hodge for his expenditure.
The court further held that the policy exclusion provided an independent basis for Farm
Bureau’s coverage denial. The court explained that Hodge was the only person that
operated the irrigation system, and was solely responsible for maintaining and upgrading
it. The court concluded that those facts squarely implicated an exclusion that applied tophysical possession and control over property.
Finally, the court ruled that the theory of detrimental reliance did not apply. While Hodge
allegedly relied on a statement by the adjuster prior to placing the order for the new
system, the record indicated that he was on notice within several days that Farm Bureau
was asserting coverage defenses, and did not cancel the order.

COMMENTS

The decision highlights an important distinction between first-party property insurance,
which covers losses sustained by the insured, and third-party liability insurance, which
typically requires underlying liability (i.e., “legally obligated to pay as damages”) owed by
the insured to a third-party claimant. For third-party liability coverage to be implicated, theinsured must generally establish liability by virtue of an underlying judgment or settlementagreement, neither of which were present here.

8Texas Court Rules That Umbrella Insurer Had No
Duty To Defend Underlying Claims Pursuant To “DropDown” Provision
HOLDINGA Texas district court ruled that an umbrella insurer had no duty to defend claims pursuant
to a “drop down” provision that applied only when claims were “not covered” by underlying
insurance. ACE American Ins. Co. v. Murco Wall Products, Inc., 2024 U.S. Dist. LEXIS
111368 (N.D. Tex. June 24, 2024).

BACKGROUND

Murco Wall Products was named as a defendant in asbestos-related bodily injury suits.
When the limits of Murco’s primary policies were exhausted, Murco sought coverage underexcess policies, including an umbrella policy issued by Travelers. The policy provided two
types of coverage: excess coverage (Section I) and drop-down coverage (Section II). The
excess coverage provided indemnity once the underlying policy limits had been exhausted,
whereas the drop down coverage required Travelers to defend Murco in suits arising fromrisks “not covered” by the underlying policy. The parties agreed that Travelers owed excess
coverage under Section I, but Travelers denied drop-down coverage under Section II,
arguing that the asbestos claims were covered by the underlying primary policy. The court
agreed and granted Travelers’ summary judgment motion.

DECISION

The court ruled that the phrase “not covered” under the drop-down provision of Section II
was unambiguous and applied only to risks outside the scope of coverage under the
primary policy; it did not encompass scenarios in which the claims against the insured werecovered by the underlying policy and which exhausted the limits of those primary policies.
The court rejected Murco’s assertion that once the primary policy limits were exhausted, it“no longer covered” the asbestos claims, so as to trigger Section II of the Travelers policy.
As the court noted, such an interpretation not only contradicts the plain language of theprovision (“not covered by the underlying insurance”), but also would “erode the difference
between excess coverage (Section I) and drop-down coverage (Section II), which insure
different risks.”

COMMENTS

An umbrella insurer’s obligations to “drop down” and assume the duty to defend (orindemnify) turn primarily on applicable policy language. In addition to policy language,
courts have also emphasized the inherent distinction between primary and excess coverage,
as reflected by different premiums and contractual duties, when ruling on the obligations ofan excess insurer.

9Maryland Supreme Court Finds Subrogation Waiver
Ambiguous As To Whether It Precluded Insurer’s
Subrogation ClaimHOLDING

The Maryland Supreme Court ruled that a subrogation waiver was ambiguous as towhether it precluded a subrogation claim by a tenant’s insurer against subcontractors who
were allegedly negligent in the construction of a warehouse. Lithoko Contracting, LLC v.
XL Ins. Am., Inc., 2024 Md. LEXIS 256 (Md. July 15, 2024).

BACKGROUND

Amazon contracted with non-party Duke Baltimore to serve as general contractor for theconstruction of a warehouse (the “Development Agreement”). The Development Agreement
required Duke to hire subcontractors to assist with the project and further required that all
subcontractor agreements include certain provisions, including a subrogation waiver. Dukeentered into agreements with four subcontractors, and in accordance with theaforementioned requirement, each subcontractor contract included an “Attachment 1,”
which contained the requirements set forth in the Development Agreement, including asubrogation waiver. Each subcontractor agreement also included numerous othersubrogation waivers, none of which mentioned Amazon specifically.
When the warehouse incurred damage, Amazon turned to its insurer, XL, for coverage. XLmade payments exceeding $50 million and then brought a subrogation action against thesubcontractors. The action alleged that the subcontractors’ negligence was the cause of theloss. In turn, the subcontractors argued that the waivers of subrogation in the Development
Agreement and the subcontractor agreements barred the claims.
A trial court agreed with the subcontractors and granted their motion for summary
judgment. An intermediate appellate court reversed, ruling that the subrogation waiver inthe Development Agreement was binding only on Amazon and Duke, and did not confer
any rights on the subcontractors. The appellate court also held that the subrogation waivers
in the subcontracts were not binding on Amazon (and therefore not binding on XL as
Amazon’s subrogee) because Amazon was not a party to those agreements. The Maryland
Supreme Court reversed and remanded the matter for further development.

DECISION

Under the doctrine of subrogation, an insurer that has compensated its insured for a loss
stands in the shoes of that insured and may seek recovery from a third-party. However, theinsurer’s rights are no greater than those of the insured, and if an insured has waived
subrogation via contract or other means, its insurer generally may not assert asubrogation claim.
The Maryland Supreme Court addressed the three possible mechanisms which could
preclude XL from asserting subrogation claims against the subcontractors: (1) the
subrogation waiver in the Development Agreement; (2) the contractual requirement in
the Development Agreement that all subcontracts include subrogation waivers; or (3)the subrogation waiver that was included in each of the agreements between Duke andthe subcontractors.
The court ruled that the first element did not preclude Amazon from bringing thesubrogation action, reasoning that the subcontractors were neither parties to nor thirdparty beneficiaries of the subrogation waiver in the Development Agreement. As to thesecond element, the court ruled that a contractual requirement that mandates inclusion10

of subrogation waivers in all subcontracts does not operate as a “project-wide waiver ofsubrogation” without regard to the particular terms of those required waivers.
Turning to the language of the subrogation waivers in the subcontracts, the court deemedthem ambiguous. The court noted, among other things, that the waivers did not identify
Amazon or indeed any particular party and that the overall contract contained unclear andpotentially conflicting language as to whether the parties intended to include Amazon as aparty bound by the subrogation waiver.
The court therefore remanded the matter for consideration of extrinsic evidence
relating to whether the parties intended that Amazon waive subrogation rights against
the subcontractors.
COMMENTS

The court declined to rule, as a matter of public policy, that a project-wide waiver ofsubrogation exists whenever a construction contract, such as the Development Agreementin this case, requires all subcontracts to include a subrogation waiver. In rejecting thisargument, the court acknowledged the benefits of subrogation waivers in constructionrelated litigation, but emphasized that contracting parties are free to “contract as theywish.” The court stated: “While the Court may decline to enforce contract provisions on the
grounds that they are against public policy . . . the Court will not rewrite the contracts ofthese parties to impose a project-wide waiver of subrogation.”

California Court Grants Policyholder’s Motion To Compel
Production Of Reinsurance Documents
HOLDINGA California district court granted a policyholder’s motion to compel the production ofreinsurance-related materials, finding that the documents were relevant to breach ofcontract and bad faith claims. Jackson Family Wines, Inc. v. Zurich Am. Ins. Co., 2024
U.S. Dist. LEXIS 119383 (N.D. Cal. July 8, 2024).

BACKGROUND

Jackson Family Wines (“JFW”), a vineyard and winery operator, sought coverage underinsurance policies issued by Zurich for property damage it allegedly suffered as a result ofwildfires. According to the complaint, Zurich deliberately delayed the claim in order toavoid payment under the policies. During discovery, JFW requested production of“communications between Zurich and any reinsurer relating to JFW’s four fire claims.”
When Zurich refused to produce the material, JFW filed a motion to compel, which thecourt granted.

DECISION

In granting JFW’s motion to compel, the court rejected Zurich’s argument that thematerials need not be produced because they were not relevant to the suit. The court agreed
with JFW that communications between Zurich and its reinsurer(s) could be probative of
Zurich’s state of mind with respect to the wildfire claims, including “Zurich’s assessment of
its obligations on the claims and valuation of the losses, the adequacy of its investigation,and ‘whether Zurich acted contrary to its own assessment to minimize its payments.’” Inparticular, the court explained that Zurich’s state of mind was relevant to the bad faithclaim and its request for punitive damages, which requires a showing of fraud or malice.
Additionally, the court held that the communications were relevant to the parties’ coverage

11dispute, noting that the materials might reveal whether Zurich agreed with JFW’s
interpretation of the policies.
The court also rejected Zurich’s contention that the motion to compel should be denied
because the requested communications contained “confidential financial and otherinformation.” The court noted that a protective order was already in place and was
sufficient to address any confidentiality concerns.
COMMENTS

The discoverability of reinsurance materials is within the sound discretion of a trial court.
Such materials may be more likely to be deemed relevant in the context of bad faith claims,
where the insurer’s state of mind is at issue. However, as the court noted, a ruling on
discoverability is distinct from a ruling on admissibility at trial; under Federal Rule ofProcedure 26(b)(1), material need not be admissible as evidence in order to bediscoverable.

12Simpson Thacher has been an international leader in the practice of insurance and reinsurance law for
more than a quarter of a century. Our insurance litigation team practices worldwide.

Andrew T. Frankel+1-212-455-3073
afrankel@stblaw.com

Lynn K. Neuner+1-212-455-2696
lneuner@stblaw.com

Summer Craig+1-212-455-3881
scraig@stblaw.com

Bryce L. Friedman+1-212-455-2235
bfriedman@stblaw.com

Joshua Polster+1-212-455-2266
joshua.polster@stblaw.com

Matthew C. Penny+1-212-455-2152
matthew.penny@stblaw.com

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mgarvey@stblaw.com

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Alan C. Turner+1-212-455-2472
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Abigail W. Williams+1-202-636-5569
abigail.williams@stblaw.com

Laura Lin
+1-650-251-5160
laura.lin@stblaw.com

George S. Wang
+1-212-455-2228
gwang@stblaw.com

This edition of the
Insurance Law Alert
was prepared byBryce L. Friedman / +1-212-455-2235
bfriedman@stblaw.com,
Joshua Polster / +1-212-455-2266
joshua.polster@stblaw.com
and Karen Cestari /kcestari@stblaw.com.

The contents of this publication are for informational purposes only. Neither this publication nor the
lawyers who authored it are rendering legal or other professional advice or opinions on specific facts
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Please click here to subscribe to the Insurance Law Alert.
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