A New York state court has denied a bid by the National Football League and NFL Properties, LLC (NFL Entities) to stay discovery in their legal dispute with Alterra America Insurance Company and Discover Property & Casualty Company.
The legal dispute centers on the coverage obligations of the insurance companies in the ongoing concussion litigation pitting former NFL players and the league, In Re National Football League Players’ Concussion Injury Litigation, MDL 2323, being heard in the Eastern District of Pennsylvania by Federal Judge Anita B. Brody.
The litigation includes numerous lawsuits commenced by former National Football League players and their families, alleging certain neurological injuries and conditions as a result of concussive and subconcussive impacts the former players sustained during their NFL careers.
While a class settlement was reached, more than 150 players opted out of the settlement (The opt-out litigation). Discovery has not taken place in the opt-out litigation.
The instant dispute centers on the Alterra and Discover bid in 2012 to obtain a declaration that they do not have a duty to defend or indemnify the NFL against the numerous concussion lawsuits filed against the NFL. They subsequently filed an amended complaint against the NFL and 30 of its insurers on August 22, 2013 seeking, in addition to the declaratory relief requested in the original complaint, declarations that the NFL breached their contractual obligation to cooperate with them by failing to provide them information about other insurance coverage related to the concussion litigations, as well as seeking a declaration of the rights and obligations of the other 30 insurance company defendants.
The two sides have become embroiled in a discovery dispute in which the NFL has claimed that its legal position with regard to the aforementioned settlement (currently on appeal) and the ongoing opt-out litigation will be compromised if it complies with the plaintiff insurers’ requests.
The state court judge was unmoved.
“The NFL entities’ argument that I must stay discovery with respect to indemnity under Cordial Greens Country Club, Inc. v Aetna Cas. & Sur. Co., 41 NY2d 996, 363 N.E.2d 1178, 395 N.Y.S.2d 443 (1977) and its progeny is unavailing,” wrote the judge. “A close reading of Cordial Greens clearly demonstrates that any determination of the indemnity-related issues must await resolution of the underlying personal injury action for which insurance coverage is sought (Id. at 997).
“Although the NFL entities are correct in pointing out that indemnity-related coverage issues should await final resolution of the MDL Action, they fail to appreciate the procedural posture of the cases they rely on in making this argument. Procedurally, those cases indicate that the determinations were the result of dispositive motions or a trial. Here, plaintiff insurers are not seeking a determination concerning the indemnity coverage at this juncture. They merely, after waiting patiently for nearly four years, seek discovery.”
The court had other reasons for discounting the case law presented by the NFL. “Although the NFL entities are defendants in (both) actions, the plaintiffs are completely different. Also, the claims advanced in the MDL Action are essentially negligence and fraud based, whereas the claims in the consolidated actions concern coverage issues.
“The NFL entities’ concern — that absent a stay they will be prejudiced in defending the MDL Action given that discovery in the indemnity-related claims would assist the MDL Action plaintiffs with respect to establishing the NFL entities’ liability — is unfounded. Indeed, there is always unavoidable discovery tension between declaratory actions concerning coverage issues and the underlying actions for which coverage is sought. The fact that discovery in these consolidated actions could be sought to be used in the MDL Action is not, in and of itself, a basis for a stay. Indeed, such discovery may eventually be produced in the MDL Action. Whether it is produced here or in the MDL Action, or whether there is some overlap, are not bona fide reasons to stay discovery herein. In that regard, the NFL entities argue that discovery should proceed in the MDL Action in the first instance. That argument is unavailing. Other than a stay, there is no rule that provides for that priority. Also, the NFL entities have failed to show that discovery is underway in the MDL Action.”
In sum, the judge noted that plaintiff insurers “have waited long enough and have indulged me. The time is now. Under these circumstances, I find that the NFL entities have failed to demonstrate that a stay of discovery is warranted.”
Alterra America Insurance Company v. National Football League et al.; Sup. Ct. N. Y.; Index No. 652933/2012, 652813/2012, 2016 N.Y. Misc. LEXIS 4125; 2016 NY Slip Op 32221(U); 10/28/16
