Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-02853/USCOURTS-cand-4_07-cv-02853-6/pdf.json

Parties Involved:
Executive Risk Specialty Insurance Company
Counter-claimant
Eyexam of California, Inc.
Counter-defendant
Lenscrafters, Inc.
Counter-defendant
Liberty Mutual Fire Insurance Company
Counter-defendant
Markel American Insurance Company
Counter-defendant
United States Fire Insurance Company
Counter-claimant
Westchester Fire Insurance Company
Counter-claimant

Document Text:

United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LENSCRAFTERS, INC., et al.,

Plaintiffs,

 v.

LIBERTY MUTUAL FIRE

INSURANCE COMPANY, et al.,

Defendants. /

No. C 07-2853 SBA

ORDER

[Docket Nos. 121 & 125]

Currently before the Court is Plaintiffs’ Motion to Continue April 23, 2008 Case Management

Conference [Docket No. 121]. Having read and considered the arguments presented by the parties in

the papers submitted to the Court, the Court finds this matter appropriate for resolution without a

hearing. For the reasons articulated below, the Court hereby DENIES the motion.

BACKGROUND

A. The Underlying Snow Action

In March 2002 Melvin Gene Snow filed a class action complaint in San Francisco Superior

Court against LensCrafters, Inc., EYEXAM of California, Inc. and several other entities (Melvin

Gene Snow, et al. v. LensCrafters, Inc., et al., San Francisco Superior Court, Case No. CGC-02-

40554 (“Snow”)) (LensCrafters, Inc. and EYEXAM are referred to together as “LensCrafters.”). 

Among other things, the complaint in the Snow case alleges that LensCrafters disclosed private

medical information of the putative plaintiff class, in violation of the California Confidentiality of

Medical Information Act (“COMIA”) (Cal. Civ. Code § 56, regulating disclosure of confidential

medical information).

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B. LensCrafters’ Excess Policies

Defendant United States Fire Insurance Company (“U.S. Fire”) issued three excess policies

to LensCrafters from 1998 to 2001, each of which provides a $25 million limit of liability per

occurrence and in the aggregate. Defendant Markel American Insurance Company (“Markel”)

issued a single excess policy to LensCrafters providing $15 million in coverage for the February

2001 to February 2002 policy period. Defendant Westchester Fire Insurance Company

(“Westchester”) issued five excess policies to LensCrafters from 2001 to 2007, one of which

provides $10 million in coverage in excess of Markel’s policy and the other four of which provide a

$25 million limit of liability per occurrence and in the aggregate.

C. The Snow Settlement

The Snow action has been pending for nearly six years. After intensive negotiations lasting

from early 2007 until early 2008, including multiple mediation sessions, the parties in Snow were

able to achieve a settlement. The settlement agreement covers a class of more than one million

California consumers and will provide a combination of cash and discount vouchers to class

members. On February 4, 2008, the parties submitted the Snow settlement to the Hon. Richard A.

Kramer, who is presiding over the Snow case, for preliminary approval. On the same date, the

Superior Court issued an order granting preliminary approval of the Snow settlement (the “Snow

Settlement Order”). 

The Snow Settlement Order sets a hearing for final approval of the Snow settlement for July

11, 2008. However, class members may submit claims until August 4, 2008.

D. LensCrafters’ Lawsuit

On May 31, 2007, LensCrafters filed this declaratory relief lawsuit. This suit initially

requested only a declaration regarding LensCrafters’ insurers’ obligations to provide coverage for

the Snow action under its insurance policies. On August 6, 2007, LensCrafters sought to amend its

complaint to add breach of contract and bad faith claims. On September 28, 2007, the Court granted

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LensCrafters’ Motion for Leave to file its First Amended Complaint (“FAC”), which it filed on

October 2, 2007.

The FAC added two new claims for relief. In the Second Claim for Relief, entitled “Breach

of Contract Re Defendants’ Duty To Indemnify and Duty To Settle,” LensCrafters alleged that it

asked defendants to accept and fund a settlement that had been reached in the Snow case; that

defendants refused to do so, thereby exposing LensCrafters to a judgment in excess of the settlement

amount; and that “[a]s a direct and proximate result of defendants’ acts, LensCrafters has been

damaged in an amount that is to be proved at trial and that is in excess of the jurisdictional

requirements of this Court.”

In the Third Claim for Relief, entitled “Tortious Breach of the Covenant of Good

Faith and Fair Dealing,” LensCrafters alleged that defendants had breached the covenant of good

faith and fair dealing by, among other things, “failing to accept a reasonable settlement in the Snow

Action.” LensCrafters further alleged that it “sustained damages in an amount yet to be determined

including, but not limited to, attorneys’ fees, related expenses and costs incurred in obtaining

coverage under defendants’ policies.”

Markel and U.S. Fire moved to dismiss these new claims on grounds that they were unripe

for adjudication because no judgment or settlement had been entered in the Snow case. On February

12, 2008, this Court granted the motions to dismiss LensCrafters’ second and third claims on

ripeness grounds. [Docket No. 115]. Under the criteria set forth in the Court’s February 12, 2008

Order (the “Order”), LensCrafters’ claims for breach of the duty to settle and for bad faith become

ripe only once there is an actual settlement in the Snow action in excess of the limits of

LensCrafters’ primary policies.

As part of the settlement negotiations with the Snow plaintiffs, LensCrafters reached

settlement agreements with three of its insurers: Liberty Mutual Fire Insurance Company

(“Liberty”), Executive Risk Specialty Insurance Company (“ERSIC”), and Westchester. And, on

March 20, 2008, this Court dismissed LensCrafters’ claims against Liberty, ERSIC, and

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Westchester. [Docket No. 124]. However, Liberty, ERSIC, and Westchester remain a part of this

declaratory judgment action as cross-claim parties.

E. Motion to Continue the CMC

A Case Management Conference is scheduled for April 23, 2008 at 3:00 p.m. pursuant to the

Order. LensCrafters, in the present motion [Docket No. 121], requests that the Court continue the

CMC to after the settlement in the Snow action comes into effect so that LensCrafters can,

presumably, seek to amend its complaint to add the claims that this Court dismissed as unripe. 

However, LensCrafters is not seeking a complete stay of its declaratory judgment action but, rather,

would like to proceed with discovery concerning its first (and now only) claim. U.S. Fire opposes

the motion [Docket No. 125], arguing that the Snow settlement is an uncertainty.

APPLICABLE STANDARD

The decision to continue a CMC rests within the sound discretion of the Court. See Fed. R.

Civ. P. 16; Sherman v. United States, 801 F.2d 1133, 1135 (9th Cir. 1986) (“Federal courts have

broad inherent powers to manage their own affairs so as to achieve the orderly and expeditious

disposition of cases.”).

DISCUSSION

LensCrafters and U.S. Fire do not disagree over whether they should continue to meet and

confer and engage in discovery concerning the ripe issues at stake in this declaratory judgment

action (i.e., the rights and obligations of the parties, policy interpretation, and so forth). Rather, the

upshot of the parties’ disagreement is whether trial and pre-trial activity dates, including trial,

briefing, and motion dates, should be determined at the upcoming CMC currently scheduled for

April 23, 2008. LensCrafters argues that the parties should wait to set trial and pre-trial activity

dates for this case in light of the alleged impending Snow settlement and therefore moves to continue

the CMC until late July or early August. Defendant U.S. Fire, on the other hand, argues that the

Snow settlement is an uncertainty, and that LensCrafters’ dismissed claims (claims Two and Three

of the FAC) will not necessarily ripen by late July, as LensCrafters contends—because, inter alia,

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class members have until August 4 to submit claims, which will affect any determination of the

amount necessary to fully fund the Snow Settlement—thereby potentially necessitating yet another

request for a continuance. For these reasons, U.S. Fire argues that the parties should proceed fully in

this declaratory judgment action.

LensCrafters has failed to persuade the Court that there is a sound basis for continuing the

currently-scheduled CMC. As a substantive matter, it does not seem to make a significant difference

whether the parties set trial and pre-trial activity dates pursuant to the Order and the ensuing CMC

and then continue with discovery on the issues presently in this action, as U.S. Fire argues they

should, or whether the parties should proceed with discovery on the issues presently in this action,

but without setting trial and pre-trial activity dates, as LensCrafters argues they should. This is

because, as the parties both acknowledge, resolution of the claim already present in this action — a

declaration of the rights, duties and responsibilities of the parties — and completion of the

corresponding discovery, will be necessary for any adjudication of the claims plaintiff expects to

ripen when the Snow settlement becomes effective. And, both parties explicitly favor proceeding

with the meet and confer process and discovery concerning the first claim in this action. Thus,

proceeding with resolution of the only ripe claim in this case will not be wasteful, and therefore

LensCrafters’ sole argument, that the CMC should be continued “in the interest of judicial

economy,” falls flat.

If and when the Snow settlement becomes final, LensCrafters may notice a motion to amend

its pleading, if it desires to do so. And, at such time, the Court will consider the parties’ positions. 

However, there is no compelling reason to place this declaratory relief case on hold. Indeed,

resolution of the ripe issues in this declaratory judgment action may obviate any need for

LensCrafters to notice a motion to amend to add the unripe claims.

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CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED THAT Plaintiffs’ Motion to continue

the Case Management Order is DENIED. Pursuant to the Court’s February 12, 2008 Order, a CMC

remains scheduled for April 23, 2008 at 3:00 p.m. and a case management conference statement

must be filed with the court no later than 10 days prior to the CMC.

IT IS SO ORDERED.

 Dated: 4/10/08 SAUNDRA BROWN ARMSTRONG

United States District Judge

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