Macmillan, Inc. v. Federal Insurance

141 F.R.D. 241, 1992 U.S. Dist. LEXIS 2925, 1992 WL 47693
CourtDistrict Court, S.D. New York
DecidedMarch 10, 1992
DocketNo. 90 Civ. 0438 (RPP)
StatusPublished
Cited by4 cases

This text of 141 F.R.D. 241 (Macmillan, Inc. v. Federal Insurance) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Macmillan, Inc. v. Federal Insurance, 141 F.R.D. 241, 1992 U.S. Dist. LEXIS 2925, 1992 WL 47693 (S.D.N.Y. 1992).

Opinion

OPINION AND ORDER

ROBERT P. PATTERSON, Jr., District Judge.

This is an action brought by Macmillan, Inc. (“Macmillan”) against an insurer, Federal Insurance Company (“Federal”), seeking reimbursement of. litigation fees incurred in defending lawsuits brought against Macmillan’s former independent directors. Before the Court are (1) Macmillan’s motion pursuant to Rules 26 and 37 of the Federal Rules of Civil Procedure for an order compelling certain discovery, and (2) Federal’s motion pursuant to Rules 26, 34, and 37 of the Federal Rules of Civil Procedure for an order compelling certain discovery from Macmillan and from two non-parties, Skadden Arps Slate Meagher & Flom (“Skadden”), and Wachtell Lipton Rosen & Katz (“Wachtell”). For the reasons set forth below, Plaintiff’s motion is denied, and Defendant’s motion is denied in part, and decision is reserved in part.

BACKGROUND

The facts relating to this action are set forth more fully in this Court's two prior opinions, Macmillan, Inc. v. Federal Ins. Co., 741 F.Supp. 1079 (S.D.N.Y.1990), and Macmillan, Inc. v. Federal Ins. Co., 764 F.Supp. 38 (S.D.N.Y.1991).

In October 1987, Federal issued Executive Liability And Indemnification Policy No. 81035455-A (the “Policy”) to Macmillan. The Policy requires Federal (1) to pay on behalf of Macmillan all amounts Macmillan is “permitted or required by law” to pay its officers and directors and/or to reimburse them for costs and expenses they incur in defense of claims asserted against them in their capacity as officers and directors, and (2) to pay on behalf of the officers and directors all amounts they become obligated to pay in defense of such claims. In this action, Macmillan seeks to recover from Federal $8 million in litigation fees it expended to defend eleven former independent directors in certain lawsuits brought in 1988 (the “Litigation Fees”). Among other defenses to payment, Federal asserts that the Policy covers only reasonable litigation fees, and the Litigation Fees sought to be covered here are unreasonably excessive.

Macmillan now moves for an order compelling Federal to respond to its Second Interrogatory, wherein it requested Federal to:

Identify all claims made since January 1, 1981 by or on behalf of any insured person or insured organization under a Director and Officer Insurance Policy, provided, underwritten, or issued by Federal, which arose out of or concerned a tender offer, proxy contest, restructuring, leveraged buy out, or other change in control of all or part of a corporation, and in which Federal paid less than 100% of attorney’s fees claimed under the Director and Officer Insurance Policy, or in which Federal took the position that it was obligated to pay less than 100% of the attorney’s fees claimed under the Director and Officer Insurance Policy. For each such claim provide the following information:
(a) The caption of the action or proceeding out of which the claim arose, the name of the court or other tribunal in which the action or proceeding was (or is) pending, the date the action was commenced, the identities of all parties to the action or proceeding and the identities of all insured persons and insured organizations;
(b) The total amount of attorney’s fees claimed by the insured person or insured organization pursuant to the Director and Officer Insurance Policy, the date or dates attorney’s fees were claimed, the total amount of. attorney’s fees actually paid by Federal and the date or dates attorney’s fees were paid; and
(c) The reason or reasons that Federal paid less, or took the position that Federal paid less, than 100% of the [243]*243amount of the claimed. attorney’s fees

Prior to serving this interrogatory, Macmillan had asked for the production of substantially the same information through paragraph 5 of its First Document Request.

Also before the Court is Federal’s motion to compel Macmillan’s response to its First and Second Requests for the Production of Documents and its First Set of Interrogatories, and to compel Skadden and Wachtell to respond to certain subpoenas duces tecum.

DISCUSSION

I. MACMILLAN’S MOTION TO COMPEL

Federal opposes Macmillan’s motion on the grounds that (A) the requested material is covered by the attorney/client or- work product privilege, (B) compliance with the request would be unduly burdensome, and (C) the requested material is not relevant.

A. Privilege

A party asserting privilege bears the burden of demonstrating its applicability. von Bulow v. von Bulow, 811 F.2d 136, 146 (2d Cir.), cert. denied 481 U.S. 1015, 107 S.Ct. 1891, 95 L.Ed.2d 498 (1987). By making an unsubstantiated and bare allegation that the requested information is privileged, Federal has failed to meet this burden. Even if Federal had made a proper showing, however, it is doubtful that it could assert a privilege as to this information. Absent special circumstances, client fee information is not privileged. In re Shargel, 742 F.2d 61, 62 (2d Cir.1984).

B. Burden

As with assertions of privilege, a party asserting burden must come forward with evidence of that burden. See Johnson v. McTigue, 122 F.R.D. 9, 11 (S.D.N.Y. 1986). Here, Federal asserts that it:

would have to gather and review thousands of claim files (and tens of thousands of pages of documents) in order to first screen the files to determine which are responsive to the interrogatory and which are not and then to glean from the files the extensive information that is requested.

Affidavit of James M. Kaplan, sworn to on December 5, 1991, ¶ 8. This statement is sufficient evidence that Macmillan’s request would be burdensome to Federal. Considered in light of the irrelevance of Macmillan’s request,1 this burden supports denial of the motion to compel.

C. Relevance

Macmillan asserts that the requested information is relevant to the issue of the reasonableness of the Litigation Fees, arguing that Federal’s response: (1) will provide evidence of fee charges by lawyers in other contested takeover situations, and (2) show how Federal has interpreted similar policies containing the same “reasonableness” limitation covering losses suffered by directors and officers of other corporations that have been the subject of contested takeovers. Pl.Rep.Mem. 4-5.

Macmillan asserts that Federal’s position is that “normal takeover related litigation fees are not reasonable under its Policy” and that Federal’s posture toward claims made by other policy holders for litigation fees incurred in similar litigation is relevant. Pl.Mem. at 7. Federal’s position, however, is not that all takeover litigation fees are per se unreasonable under the Policy.

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141 F.R.D. 241, 1992 U.S. Dist. LEXIS 2925, 1992 WL 47693, Counsel Stack Legal Research, https://law.counselstack.com/opinion/macmillan-inc-v-federal-insurance-nysd-1992.