SUPREME COURT OF TEXAS GRANTS DISCOVERY MANDAMUS FOR CARRIER IN WIND-HAIL MDL

Last Friday, the Supreme Court of Texas granted mandamus relief protecting an insurer from a trial court's order requiring it to produce certain institutional discovery including management reports which contained global claims, financial and other business information.  In In re National Lloyds Ins. Co., No. 15-0452, 2016 WL 6311286 (Tex. Oct. 28, 2016), the trial court had ordered National Lloyds to produce voluminous institutional management reports and corporate emails, and denied a subsequent request for reconsideration and an in camera review of the documents in question.  The Corpus Christ Court of Appeals denied mandamus relief holding National Lloyds had waived its objections by withdrawing them.  This mandamus to the high court of Texas followed. 

The Supreme Court disagreed noting National Lloyds had timely lodged its objections in compliance with the Rules and had made clear at every stage of the proceedings its contention that the reports in question were beyond the scope of permissible discovery.  Quoting a previous opinion on a similar discovery dispute also involving National Lloyds, the high court observed that it was unclear how National Lloyds' payment or handling of other claims was probative of its conduct with respect to the wind-hail claims at issue, especially given the many variables associated with any particular claim.  The Supreme Court concluded that scouring other claims in hopes of finding similar claims with different results was a classic “fishing expedition” and impermissible under its prior holdings in Dillard v. Hall and Texaco v. Sanderson.

The high court rejected the plaintiffs' argument that their “pattern and practice” allegations entitled them to broad discovery of corporate strategy, and concluded the reports in question were not sufficiently related to the claims at issue.  The court also concluded the fact that the case was part of a multi-district litigation plan did not automatically entitle the plaintiffs to such broad discovery, and held the same relevance standard applies whether the suit involves a single claim or an MDL involving hundreds of claims – discovery must still be reasonably tailored to the time, place, and subject matter.

[Editor’s note:  Plaintiffs’ counsel in this MDL proceeding in Hidalgo County, and in this mandamus, was the Mostyn Law Firm from Houston which is notorious for harassing carriers across the state with overly broad and oppressive institutional discovery about an endless litany of business practices.  The wind-hail docket in The Valley remains quite large and bad faith cases arising out of wind and hail storms have spread to more than 40 other counties statewide over the past three years.  Congrats to National Lloyds and its counsel on having the courage to take this fight to the Texas Supreme Court and for this win which will be of tremendous help in trial courts across the state in the future when faced with broad institutional discovery about the carrier’s business practices.]