Eastern District of New York Adopts “Express Train” Discovery Schedule to Ensure Expeditious Resolution of Sandy-related Coverage Suits

April 24, 2014

Author: Stuart A. Miller

Like many New Yorkers, the U.S. District Court for the Eastern District of New York (EDNY) has had a difficult time dealing with the aftermath of Superstorm Sandy. In response to the hundreds of lawsuits that have flooded its docket – the overwhelming majority of which involve claims under homeowners’ and National Flood Insurance Program policies – the court has taken an aggressive approach toward expeditiously resolving these coverage disputes.

In late February 2014, the court issued its first case management order (CMO), scheduling all parties on what can only be described as an “express train to resolution,” avoiding all local stops along the “formal” discovery route. In keeping with this approach, the court has skipped all discovery conferences mandated by the Federal Rules of Civil Procedure and remained focused on the final destination – resolving these disputes.

The CMO included a comprehensive list of documents and information that the parties must exchange automatically within 60 days of the date any defendant files an answer. For example, plaintiffs are required to submit (1) an itemized statement of claimed damages and supporting documentation, including contractor estimates, invoices and work tickets, and (2) a statement of the reasons that the insured was denied payment. Defendants are required to provide (1) a statement of their “understanding of the nature of the dispute” and articulate a “legal basis for denial of coverage” if no payment was made, and (2) all non-privileged documents in the claim file.

Despite directing the plaintiff’s counsel to sever numerous improperly joined plaintiffs and re-file separate actions, the court is still requiring the parties to exchange documentary discovery by April 22, 2014. As a practical matter, this means that in many of the cases plaintiffs recently re-filed, discovery will need to be completed even before the defendants are required to answer.

Predictably, some attorneys and parties have criticized the court’s aggressive approach, arguing that it denies their right to engage in formal discovery and raises serious constitutional and/or due process concerns. In adopting its directives, the court has relied on its broad authority to control discovery, citing its belief that formal discovery may lead to “malingering” in many cases, resulting in unnecessary cost and delay. In keeping with this view, the court has endeavored to fashion a discovery schedule that will promote the kind of open exchange of information that the court believes will result in early dispositions, benefiting all parties.

Anticipating the inevitability of discovery disputes, the court ordered the parties to file a notice of mediation or arbitration days after the April 22 discovery exchange deadline. A team of mediators and arbitrators, trained by the court to address the unique legal and factual issues presented by Sandy cases, will be waiting at the end of this train ride to assist parties in resolving these disputes. This express train is ready to leave the station. It remains to be seen whether the court will achieve its goal of expeditious resolution of these matters.

Stand clear of the closing doors, please!

Steven Frangoulis provided assistance for this alert.

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