TCJL has filed an amicus brief in two mandamus actions currently pending before the Texas Supreme Court. In Re State Farm Lloyds (Nos. 15-0903 and 15-0905) involve hailstorm MDL Judge Rose Reyna’s decision to issue a protocol for the production of electronically stored information (ESI) that imposes excessively burdensome and unnecessary format requirements on defendant State Farm. The pretrial court’s order in the case violates Texas Rules of Civil Procedure 192.4 and 196.4, as well as Rule 13 of Texas Rules of Judicial Administration. These rules require courts to require the production of ESI only in reasonably usable formats that are less intrusive and less burdensome means of meeting the defendant’s discovery obligations. The implications of the case go far beyond the mass litigation in hailstorm claims, affecting all businesses that store data in electronic form and may be called on to respond to discovery in a civil lawsuit.
The State Farm situation, however, involves thousands of lawsuits. If the pretrial court’s protocol is allowed to stand, State Farm will be faced with reprogramming its systems, which are already designed to respond to litigation requests in state and federal courts around the country, to produce specific formats in each case. The only justification for the protocol, as far as we can tell, is to use the discovery process to ratchet up the settlement values of each lawsuit. As TCJL’s brief argues:
This case represents a microcosm of the larger phenomenon. It represents some of the astonishing 13,000 lawsuits arising from two 2012 hailstorms in Hidalgo County. These cases follow a repetitive pattern, alleging bad faith on the part of the insurer and seeking statutory penalties and mandatory attorney’s fees for the plaintiff and plaintiff’s attorneys. In one case that went to verdict, for example, a jury rejected the plaintiff’s claim for $14,000 in actual damages (only $900 to the roof) and up to $200,000 in attorney’s fees.[1]
Given the potential size of the financial payoff of filing mass numbers of lawsuits and making blanket discovery requests in an attempt to leverage settlements, trial courts must be especially vigilant about issuing pretrial orders that give an undue advantage to one side. We need only remember the spectacular abuses in the mass litigation of asbestos and silica-related claims in the late 1980s and 1990s (to which the present hailstorm litigation bears an uncanny resemblance) and the subsequent legislative intervention necessary to rebalance the system. In this case, however, the pretrial court’s protocol for discovery of ESI gives the plaintiff carte blanche to demand discovery in an inefficient, unnecessary, and burdensome form. By any standard, the prospect of paying up to $200,000 in each of thousands of lawsuits is terrifying enough to a responsible corporate defendant without also being dragged through the extraordinary amount of time and expense of unnecessary litigation over essentially equivalent forms of producing ESI. The protocol has the further effect of proleptically denying a defendant’s objections to any form of production not imposed by the plaintiff. The only conceivable rationale for such an order is to run up the costs of discovery to such an extent that settling the lawsuit would be cheaper than litigating it to a successful conclusion.
[1] “Jury Verdict Favors Texas Insurer in Hidalgo County Hail Claim Case,” Insurance Journal, March 9, 2015; http://www.insurancejournal.com/news/southcentral/2015/03/09/359900.htm.
The MDL plaintiffs in the case are represented by the Mostyn Law Firm. The Supreme Court’s decision whether to grant mandamus could come at any time, even without a response from the MDL plaintiffs.
