Lead Underwriter’s Document Production Limits Scope of Following Market’s Production

Applying New York law, a federal district court in New York has held that market underwriters in a syndicate insurance program need not produce potentially responsive claim materials where such production is burdensome and duplicative of documents already produced by the lead underwriter on the program.  Certain Underwriters of Lloyd’s v. National Railroad Passenger Corp., 2016 WL 7017356 (E.D.N.Y. Nov. 30, 2016).

In coverage litigation, a policyholder sought discovery from its insurers, lead and following London market underwriters, which wrote policies through syndicates.  Under the program, the lead underwriter – i.e., the insurer who had accepted the largest percentage of the risk of the insurance program – typically handled claims and worked with the insured and defense counsel when a claim was submitted.  The following market underwriters – i.e., the insurers who issued coverage for the remainder of the program – generally did not actively engage in the claims handling process.  In the coverage litigation, the lead underwriter produced its files, but the policyholder sought further production of the following market underwriters’ files.

The court analyzed the production request under Federal Rule of Civil Procedure 26, which allows a court to limit potentially responsive discovery if such production would be overly burdensome to the producing party and duplicative of other available discovery.  Although the court noted that no blanket prohibition exists on discovery of the files of the following market underwriters, in this case the policyholder had obtained the relevant documents from the lead underwriter.  Accordingly, the court held that the policyholder was entitled only to limited additional discovery from the following market underwriters where such production was not duplicative or overly burdensome.