By Jeff Sistrunk

Law360 (June 2, 2020, 4:55 PM EDT ) Zelle LLP partner Steve Badger, who represents insurers in high-stakes coverage disputes, recently spoke with Law360 about his role in a new initiative by the Institute for the Advancement of the American Legal System to develop standard discovery procedures for the burgeoning number of COVID-19 insurance lawsuits.

Last week, the IAALS formed a working group — comprising Badger, seven other attorneys and three federal judges — to craft initial discovery protocols that can be applied to the scores of disputes between businesses and their insurers over coverage for financial losses attributed to government-mandated limitations on operations amid the pandemic. The organization is aiming to publish the protocols by the end of the year.

Badger was also previously part of an IAALS group that designed discovery guidelines for lawsuits regarding coverage for property damage claims arising from natural disasters, such as hurricanes and wildfires.

This interview has been edited for length and clarity.

What is the mission of the IAALS project?

One of the great frustrations of being a litigator is fighting about the scope of proper discovery: what is discoverable, and what the proper issues are. All those things take tremendous time and energy in litigation.

What the IAALS tries to do with these protocols is get experienced practitioners in a room to discuss what is truly needed from both sides in a certain type of case in order to make the discovery process more efficient — and, more importantly, to avoid months of disputes in individual matters over the scope of discovery.

Each COVID lawsuit will have different policy forms to be interpreted, different factual scenarios to be interpreted and individual damages facts to be evaluated. However, there is basic discovery information that will be needed in each case, despite these different factual scenarios. With this project, we will be focused on what discovery is likely to be needed from both sides in the typical case, and to use that to simplify the discovery process.

Describe your experience working on the disaster discovery protocols.

For the disaster process, we got a number of plaintiffs lawyers, defense lawyers and judges all together in a room, and the lawyers discussed the type of discovery that is needed in a typical disaster case. We argued then about the scope of what is needed. Then, with the input and advice of the judges in the room, we ultimately reached agreement upon a set of interrogatories and document requests that made sense and could be applied to the typical case.

There are really two phases of discovery. There is the initial phase, which gives you enough information to evaluate the case, determine the exposure and see if the matter can be resolved. That was the aim of the disaster protocols, knowing most of those cases get settled. The focus was on getting sufficient information into the hands of both sides so they can reasonably evaluate the case and potentially move it to a settlement posture.

The aim was to avoid the typical disputes practitioners often get into in the second phase of discovery in terms of what is and is not discoverable — for instance, an insurance company's underwriting files or things of that nature that are a bit more of a deeper dive. Another example is the building history of the plaintiff and how much of that is needed.

We hope to do the very same thing here except, in light of the pandemic, we won't be meeting in a room in Denver like last time. We will instead be holding video meetings online.

How do COVID-19 cases compare to disaster cases?

Discovery for COVID cases will be similar to the disaster discovery in some respects, and very different in others. Obviously, the plaintiff is going to want the claim file, a copy of the policy and items relating to the adjustment. The insurance company is going to want information to allow it to evaluate whether there was physical loss or damage, and issues regarding civil authority orders.

This basic information will be needed to evaluate the merits of the case and see if there is a possibility for resolution, or to frame the issues for dispositive motions. I think that is where the difference between the disaster discovery and COVID discovery will be significant.

Some of the insurers feel very strongly about their dispositive defenses here. They will want to make sure they have adequate discovery to present those dispositive defenses, and plaintiffs will want to make sure they have adequate discovery to try to defeat those defenses. Perhaps, here, the focus will be more on getting discovery materials to address dispositive issues early on, as opposed to getting info to settle early on.

What is your favorite part of these initiatives?

It is refreshing to be part of a collaborative process that brings true first-party insurance litigators together who know the issues and handle these matters daily, in an effort to move litigation forward more efficiently for the benefit of who is important here — the clients, both insurance companies and policyholders.

--Editing by Philip Shea.

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