Unreported / Non-Citable
Background
Mr. Cooper Group purchased a financial institution bond and computer crime coverage rider from National Union to insure against losses from criminal cyberattacks. Mr. Cooper also purchased excess coverage from Berkshire Hathaway. When Mr. Cooper suffered losses from a cyberattack, both insurers denied coverage. Mr. Cooper sued for breach of contract, alleging both insurers violated their obligations by failing to indemnify it for losses. The dispute centers on whether the policies’ definition of “loss” covers the costs incurred following the attack and whether an exclusion for “theft of confidential information” applies.
Mr. Cooper moved to compel discovery National Union resisted, including: (1) deposition testimony from National Union’s Rule 30(b)(6) designee regarding underwriting of the policies; (2) responses to interrogatories about when National Union anticipated litigation and when it retained counsel; (3) responses to contention interrogatories about coverage interpretation; and (4) production of documents withheld as attorney-client privileged or work product.
The Court’s Holding
The court granted the motion to compel in part, finding that underwriting information is relevant and discoverable in insurance coverage disputes because it “may shed light on which interpretation of the Policies is most reasonable” and whether National Union handled the claim in bad faith. The court rejected National Union’s argument that the discovery was barred because the policy provisions are unambiguous, holding that parties cannot avoid discovery obligations merely because they expect to prevail at summary judgment.
However, the court found Mr. Cooper’s specific Rule 30(b)(6) deposition notice was overbroad and vague on several topics. The court ordered the parties to meet and confer within 14 days to narrow the scope of examination by reducing sources of information, limiting subject matter, and confining relevant time periods. The court indicated it would then consider modifying any remaining disputed topics.
The court granted the motion to compel National Union’s responses to Interrogatories 5 and 6 (seeking facts about when National Union anticipated litigation and retained counsel), holding these seek underlying facts protected by privilege. The court also granted the motion as to contention Interrogatories 16 and 17 (seeking National Union’s position on coverage interpretation), finding no sufficient reason to defer answering these interrogatories. Finally, the court held that National Union failed to meet its burden of demonstrating that withheld documents qualified for attorney-client privilege or work product protection. The court noted that documents created by in-house and outside counsel functioning as underwriters or claim adjusters, without clear evidence the primary purpose was anticipating litigation, do not qualify for privilege. National Union may redact attorney mental impressions and litigation strategy from produced documents.
Key Takeaways
- Underwriting and coverage determination information is discoverable in insurance dispute litigation even when the policy language appears unambiguous.
- Boilerplate privilege objections are insufficient; parties asserting privilege must provide detailed factual support for each document or communication withheld.
- Mere involvement of counsel in business communications does not create attorney-client privilege when counsel is functioning in another capacity, such as as an underwriter or claim adjuster.
- Work product protection requires proof of a definite shift from ordinary business operations to anticipated litigation, not merely the retention of counsel or post-retention communications about coverage issues.
- Rule 30(b)(6) deposition notice topics must specify subject matter with reasonable particularity, define temporal limits, and identify sources of information; overbroad or vague topics may be challenged and require meet-and-confer refinement.
Why It Matters
This decision reinforces that discovery in insurance disputes cannot be blocked by privilege claims that lack sufficient factual specificity. Courts examining discovery disputes increasingly require parties to distinguish between underlying factual matters and protected legal advice. The ruling will pressure insurers to carefully structure communications between counsel and claim/underwriting personnel, as blurred roles can defeat privilege claims. The decision also rejects attempts to avoid discovery by asserting policy language is unambiguous—factual discovery about underwriting practices and coverage interpretation remains available even when the insurer believes it will ultimately prevail on the interpretation question.
For litigants, the case demonstrates the importance of Rule 30(b)(6) meet-and-confer protocols before deposition; overly broad initial notice topics are likely to be challenged and refined. The court’s rigorous approach to privilege assertions—requiring detailed affidavits rather than blanket invocations—signals that insureds suing on coverage disputes will have robust discovery access to underwriting files, counsel communications, and claim determination reasoning.