Case No.: 4:17-cv-00618-PJH

DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO STAY DISCOVERY PENDING RESOLUTION OF RULE 12 MOTIONS

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GERARD G. PECHT (Admitted Pro Hac Vice)

gerard.pecht@nortonrosefulbright.com

SUMERA KHAN (Admitted Pro Hac Vice)

sumera.khan@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

1301 McKinney, Suite 5100

Houston, Texas 77010-3095

Telephone: (713) 651-5151

Facsimile: (713) 651-5246

M. SCOTT INCERTO (Admitted Pro Hac Vice)

scott.incerto@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

98 San Jacinto Boulevard, Suite 1100

Austin, Texas 78701-4255

Telephone: (512) 474-5201

Facsimile: (512) 536-4598

JOSHUA D. LICHTMAN (SBN 176143)

joshua.lichtman@nortonrosefulbright.com

MICHELLE L. MELLO (SBN 288081)

michelle.mello@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

555 South Flower Street, Forty-First Floor

Los Angeles, California 90071

Telephone: (213) 892-9200

Facsimile: (213) 892-9494

Attorneys for Defendants

HCC LIFE INSURANCE COMPANY and HCC 

MEDICAL INSURANCE SERVICES, LLC 

(erroneously sued as TOKIO MARINE HCC –

MEDICAL INSURANCE SERVICES GROUP) 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA – OAKLAND DIVISION

MOHAMMED AZAD and DANIELLE 

BUCKLEY, on behalf of themselves and all 

others similarly situated, 

Plaintiffs,

v.

TOKIO MARINE HCC – MEDICAL 

INSURANCE SERVICES GROUP, HEALTH 

INSURANCE INNOVATIONS, INC., HCC 

LIFE INSURANCE COMPANY, and 

CONSUMER BENEFITS OF AMERICA,

Defendants.

Case No.: 4:17-cv-00618-PJH

DEFENDANTS’ REPLY IN SUPPORT 

OF MOTION TO STAY DISCOVERY

PENDING RESOLUTION OF RULE 12 

MOTIONS

Date: TBD

Time: TBD

Ctrm : 3

Complaint Filed: February 7, 2017

Case 4:17-cv-00618-PJH Document 68 Filed 05/03/17 Page 1 of 9
Case No.: 4:17-cv-00618-PJH

DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO STAY DISCOVERY PENDING RESOLUTION OF RULE 12 MOTIONS

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I. Introduction

Plaintiffs agree that courts in this District apply a two-part test to evaluate whether to stay 

discovery pending the resolution of a motion to dismiss, in that courts assess whether the motion 

(1) is potentially dispositive of the case; and (2) can be decided without additional discovery. 

(Opposition Brief (“Opp. Br.”) at 1, 4-5.) Plaintiffs also agree that Defendants need only show 

that there is “an immediate and clear possibility” that they will prevail on their dispositive 

Motions. (See id. at 1, 4 (emphasis added).) In turn, Plaintiffs must and do concede that 

discovery stays are warranted under appropriate circumstances.1 This is such a case. 

Regarding the first factor, Plaintiffs do not dispute that Defendants’ Motions are casedispositive. Instead, Plaintiffs make a frontal attack on the potential success of the Motions that 

wholly misses the mark. In the many pages of argument directed to the Motions, Plaintiffs refer 

to no specific factual allegations based on Plaintiffs’ own experiences that refute any of the points 

raised in the Motions. Instead, they rely on broad and conclusory allegations that are untethered 

to Plaintiffs’ own experiences. This tactic shows the weakness of Plaintiffs’ pleaded claims and, 

conversely, that granting of Defendants’ Motions is far more than a “possibility.” 

As for the second factor, Plaintiffs concede that no discovery is necessary to adjudicate 

the pending Motions. While they generally oppose a stay and request discovery, they do not 

identify any discovery they claim to need to respond to the Motions. They do not and cannot 

contest that the factual bases for the Motions are taken directly from the Complaint’s allegations 

and the documents incorporated by reference therein. 

Because both parts of the two-part test are satisfied, the Court should grant the limited 

stay of discovery. Further, the requested stay would best serve the proportionality interests 

 1 Plaintiffs’ citation to various procedurally and factually inapposite cases in which discovery 

stays were not granted illustrates that a case-by-case inquiry is required. For example, Baker 

denied a motion to stay discovery in part because plaintiffs amended their complaint after 

defendants filed motions to dismiss and stay, such that, unlike here, “no motions to dismiss 

[were] pending.” See Baker v. Ark. Blue Cross, No. C-08-03974 SBA (EDL), 2009 WL 904150, 

at *1 (N.D. Cal. Mar. 31, 2009). In another example, Skellerup, because only one of two 

defendants moved to dismiss, granting that motion “would not result in the termination of th[e] 

action.” Indus. Ltd. v. City of L.A., 163 F.R.D. 598, 601 (C.D. Cal. 1995). By contrast, all 

Defendants in this case have filed dispositive motions. 

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defined in the recently amended Rule 26(b)(1) of the Federal Rules of Civil Procedure, especially 

when no urgent need for discovery to begin has been demonstrated. 

II. Argument

A. Defendants’ Motions Will Dispose of the Entire Case And Have An 

Immediate, Clear Possibility of Being Granted

Plaintiffs do not dispute that their claims are based on two purported theories of 

misconduct: (1) that Defendants falsely advertised/misrepresented the short-term medical 

(“STM”) product’s preexisting conditions exclusion; and (2) that Defendants employed (and 

misrepresented they engaged in) improper claims-handling practices. Plaintiffs’ Opposition 

highlights that the Complaint does not adequately state any claims for relief under either theory, 

given that it relies on sweeping conclusions untethered to the actual specific factual allegations.

First, while Plaintiffs do not dispute that their false advertising/misrepresentation theory

as stated in the Complaint relies entirely on the contents of a single “exemplar” brochure (when 

read in conjunction with the STM application), Plaintiffs’ Opposition neither mentions the 

brochure, nor addresses a fundamental flaw in the Complaint: that neither named Plaintiff alleged 

they saw or relied on that brochure. Instead, Plaintiffs merely conclude, citing no supporting 

allegations, that they have “clearly and adequately alleged” claims under this theory, and that 

Defendants’ contrary position creates a “quintessential factual issue.” (Opp. Br. at 5.) Not so. 

Plaintiffs do not and cannot contest the well-established Ninth Circuit authority cited in 

Defendants’ Motions (see Docket No. 48 at 10) holding that a court need not credit conclusory 

allegations, and instead may assume as true the contents of documents incorporated by reference 

in a complaint rather than contrary allegations. (Docket No. 48 at 10.) Here, Plaintiffs’ position 

is belied by numerous materials that were available on the HCC website incorporated by 

reference in the Complaint, which expressly and repeatedly disclosed the preexisting conditions 

exclusion; including: (1) the general STM product description webpage; (2) the California STM 

product description webpage; and (3) the STM policy Certificate. (Docket No. 48 at 4-6.) 

Moreover, allegations regarding the named Plaintiffs’ individual purchases reflect that each 

received multiple additional disclosures. (Id. at 6-8.) For Azad, the exclusion was also disclosed 

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on (1) the STM application he alleged completing; (2) the broker website he alleged visiting; (3) 

the verification telephone call he alleged joining; and (4) a video linked through the coverage 

confirmation email he alleged receiving. (Id. at 6-7.) As for Buckley, the fulfillment package she 

received in connection with her husband’s purchase expressly disclosed the exclusion twice. (Id.

at 8.) Notably, Plaintiffs do not dispute the existence of any of these disclosures. The Court need 

not accept Plaintiffs’ bare and conclusory allegations as true in the face of these extensive 

consumer-facing materials, which show as a matter of law that neither Plaintiffs, nor any 

reasonable consumer, could have been misled. At bottom, Plaintiffs have not (and cannot) state 

any claims under this theory, and Defendants have shown that there is far more than a possibility 

that the Complaint will be dismissed on this ground. 

Plaintiffs’ second theory of improper claims-handling fares no better. Plaintiffs’ assertion

that their causes of action based on this theory will survive because Defendants demanded “‘all 

medical records, provider notes, and labs’ from Plaintiffs despite the irrelevance of those records”

(see Opp. Br. at 6) is neither supported by the Complaint’s allegations nor documents 

incorporated by reference therein. With respect to Azad, HCC’s records requests were directed 

merely to two medical providers in connection with the claims at issue. (See Docket No. 48 at 9.) 

As for Buckley, the Complaint alleges that HCC requested records only from her primary care 

physician and the urgent care facility where she was treated for the claims at issue. (Id.) 

Plaintiffs do not identify any other medical providers to whom HCC sent records requests, or 

explain why HCC’s requests were anything but reasonable. Given that the Complaint establishes 

that neither of the named Plaintiff’s claims was improperly handled, delayed, or denied, 2

Plaintiffs attempt to salvage their theory by pointing generally to a purported “whistleblower 

contractor’s” opinion regarding Defendants’ “acts of obstruction and bad faith.” (Opp. Br. at 6.) 

But there are no facts or non-conclusory allegations tethering this individual’s purported opinion 

to how Azad and Buckley’s claims were handled and, indeed, none of the purported misconduct 

 2 Plaintiffs do not dispute that (1) HCC did not receive medical records necessary to adjudicate 

Plaintiffs’ claims; (2) HCC did not deny Plaintiffs’ claims, instead merely abating them pending 

receipt of the requisite records; and (3) HCC is not required to pay a claim when it has not 

received sufficient records or information for a proper evaluation. (See Docket No. 63 at 4.) 

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attributed by the purported whistleblower is alleged to have occurred in connection with either of 

the named Plaintiffs’ claims. For example, based on the purported whistleblower’s opinion, the 

Complaint alleges that customer service representatives acted to “deceive, delay and obstruct 

policyholders,” and “discouraged” claimants from pursuing claims by “emphasizing the 

expansive scope of the policies’ preexisting conditions exclusion.” (See Docket No. 1 at ¶¶ 58-

67). 3 However, Azad and Buckley do not dispute that neither of them alleged any facts to 

indicate HCC’s representatives discouraged or obstructed them from pursuing their claims and, 

indeed, each has pursued their claims. Accordingly, causes of action asserted under Plaintiffs’ 

claims-handling theory are also subject to dismissal. 

B. Defendants’ Motions Can Be Decided Without Discovery

The second part of the test—whether the Motions can be decided without additional 

discovery—is plainly satisfied, as Plaintiffs do not identify any discovery necessary to adjudicate 

the pending motions. Instead, they only argue that Defendants’ assertions “will require 

discovery” at some point and Plaintiffs “need to move forward.” (Opp. Br. at 1, 7.) That is not 

the standard. See, e.g., Pettit v. Pulte Mortg., LLC, No. 2:11-cv-00149-GMN-PAL, 2011 WL 

5546422, at *6 (D. Nev. Nov. 14, 2011) (granting motion to stay discovery in part because, in 

opposing the motion, plaintiff did “not claim that discovery [wa]s needed to respond to the 

pending dispositive motion”).

While Plaintiffs argue that the Motions paint a “one-sided record” (see Opp. Br. at 7), they 

do not contest that the facts are derived entirely from their own allegations and the very 

documents that they reference. Nor do Plaintiffs contest that under the well-established 

incorporation by reference doctrine, courts properly consider these documents in deciding 

motions to dismiss. (See Docket No. 48 at 10-11.)4

 

Clearly, Plaintiffs intend to use the discovery process not to confirm details or narrow and

clarify the issues in dispute, but rather to determine what acts, if any, a defendant may have 

 3 Notably, there are no allegations even tying the whistleblower to any purported activities by 

HCC in California.

4 The declarations included with the Motions merely establish the authenticity of the documents, 

which is one of the elements of the incorporation by reference doctrine. Not surprisingly, 

Plaintiffs do not contest the authenticity of any of the referenced documents.

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undertaken in order to fall within Plaintiffs’ theories of the case. 5 But the time for crafted 

discovery is after a complaint asserts well-pleaded causes of action against a specific defendant, 

not before. “[I]f the allegations of the complaint fail to establish the requisite elements of the 

cause[s] of action . . . requiring costly and time consuming discovery . . . would represent an 

abdication of [] judicial responsibility,” and “[i]t is sounder practice to determine whether there is 

any reasonable likelihood that plaintiffs can construct a claim before forcing the parties to 

undergo the expense of discovery.” Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 

(9th Cir. 1987) (internal quotation marks omitted). In turn, the purpose of Rule 12(b)(6) motions 

“is to enable defendants to challenge the legal sufficiency of complaints without subjecting 

themselves to discovery.” (Id. (emphasis added).) 

C. Permitting Discovery to Proceed Would Be Disproportionate Under Rule 

26(b)(1), and Plaintiffs Will Not Suffer Any Prejudice From a Brief Stay

While discovery proportionality has deep roots within the Federal Rules of Civil 

Procedure, its import has shifted throughout time until the most recent amendments “restore[d] 

the proportionality factors to their original place in defining the scope of discovery.” Fed. R. Civ. 

P. 26 Advisory Committee’s Note (2015). This renewed emphasis reinforces the “collective 

responsibility” of all parties and the court “to consider the proportionality of all discovery,” and 

fits hand-in-glove with Rule 1’s directive to construe, administer, and employ all Rules “to secure 

the just, speedy, and inexpensive determination of every action and proceeding.” Id.; Fed. R. Civ. 

P. 1. In turn, courts properly consider proportionality when determining whether a stay of 

discovery is warranted pending a dispositive motion. See, e.g., Pettit, 2011 WL 5546422, at *5-6. 

Plaintiffs concede that the amendments place great emphasis on efficiency. (Opp. Br. at 

9.) But “efficiency” need not—and should not—be singularly construed as requiring early and 

immediate discovery. Indeed, “efficiency” must also include conservation of resources, time, and 

costs until this Court establishes what (if anything) is at stake. Plaintiffs seek no discovery that 

they claim is necessary for the pending dispositive Motions. Instead, they point to Defendants’ 

 5 It is impossible to discern from the allegations which acts or omissions Plaintiffs seek to assert 

against HII or CBA, and neither HII nor CBA should have to engage in potentially costly 

discovery without any plausible allegations of wrongdoing stated against them.

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possession of “centralized scripts and marketing materials” and “uniformly-applied claims 

processing policies.” (Opp. Br. at 9.) These are materials that relate to class certification and not 

whether the named Plaintiffs have alleged causes of action that can withstand a motion to dismiss. 

Thus, the discovery Plaintiffs seek puts the cart before the horse. They want discovery regarding 

claims that will not survive dismissal, for a class that has not been certified. Adjudicating the 

Motions before embarking on this type of discovery is the most proportionate and efficient 

outcome. 

Finally, Plaintiffs will suffer no prejudice from the requested discovery stay, which would 

be limited and brief, consisting only of the period from May 25, 2017—the last day by which the 

parties may hold a Rule 26(f) conference—until the Court decides the Motions set for hearing on 

June 14, 2017. Plaintiffs’ attempt to manufacture urgency by suggesting that there is “ongoing” 

harm is not well-taken, given that both Azad and Buckley’s STM policies have long expired, 6

and neither Plaintiff contends that they have other claims that have not been paid.

7

 (See Opp. Br. 

at 1.) Plaintiffs concede that this case is not one in which documents or evidence may become 

unavailable. Nor do Plaintiffs dispute that all parties would benefit from further clarification as to 

what claims (if any) are properly at issue before the parties and Court attempt to assess the proper 

scope of discovery. The burden and expense of discovery at this juncture is indisputably 

outweighed by any likely benefit. 

III. Conclusion

For the foregoing reasons, Defendants respectfully request that this Court grant their 

motion to stay all discovery pending resolution of Defendants’ Motions.

//

//

//

//

 6 See Docket No. 1 at ¶¶ 28, 37.

7 Buckley, whose claim for $3,500 was well below her $7,500 deductible, had no right to any

payment and, thus, suffered no damage from HCC’s alleged nonpayment. (See Docket No. 48 at 

23.) 

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Dated: May 3, 2017 GERARD G. PECHT 

SUMERA KHAN

M. SCOTT INCERTO 

JOSHUA D. LICHTMAN

MICHELLE L. MELLO

NORTON ROSE FULBRIGHT US LLP

By /s/ Joshua D. Lichtman _

JOSHUA D. LICHTMAN

Attorneys for Defendants

HCC LIFE INSURANCE COMPANY and HCC 

MEDICAL INSURANCE SERVICES, LLC 

(erroneously sued as TOKIO MARINE HCC –

MEDICAL INSURANCE SERVICES GROUP) 

Dated: May 3, 2017 GARRY W. O’DONNELL

GREENSPOON MARDER, P.A.

By _/s/ Garry W. O’Donnell _______________

GARRY W. O’DONNELL

Attorneys for Defendant

HEALTH INSURANCE INNOVATIONS, INC.

Dated: May 3, 2017 DANIEL J. HERLING

MINTZ LEVIN COHN FERRIS GLOVSKY AND 

POPEO, P.C.

By _/s/ Daniel J. Herling __________________

DANIEL J. HERLING

Attorneys for Defendant

HEALTH INSURANCE INNOVATIONS, INC.

Dated: May 3, 2017 HOWARD M. GARFIELD

HAIGHT BROWN & BONESTEEL LLP

By _/s/ Howard M. Garfield _______________

HOWARD M. GARFIELD

Attorneys for Defendant 

CONSUMER BENEFITS OF AMERICA

ATTESTATION REGARDING SIGNATURES

I, Joshua D. Lichtman, attest that all signatories listed, and on whose behalf this filing is 

submitted, concur in the filing’s content and have authorized the filing.

DATED: May 3, 2017 By: /s/ Joshua D. Lichtman

 JOSHUA D. LICHTMAN

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PROOF OF SERVICE

I, Rhonda M. Cole, declare:

I am a citizen of the United States and employed in Los Angeles County, California. I am 

over the age of eighteen years and not a party to the within-entitled action. My business address 

is 555 South Flower Street, Forty-First Floor, Los Angeles, California 90071.

On May 3, 2017, I electronically filed the attached document(s): DEFENDANTS’ 

REPLY IN SUPPORT OF MOTION TO STAY DISCOVERY PENDING RESOLUTION OF 

RULE 12 MOTIONS with the Clerk of the court using the CM/ECF system which will then send 

a notification of such filing and a hyperlink to the documents electronically to each of the parties 

listed on the Court’s service list.

I declare that I am employed in the office of a member of the bar of this court at whose 

direction the service was made.

Executed on May 3, 2017, at Los Angeles, California.

/s/ Rhonda M. Cole

 Rhonda M. Cole

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