Location, Location, Location: Strategic Considerations for Selection of Forum March 13, 2009
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Microsoft Office Word 2003.lnk Insurance Coverage Training Series: Location, Location, Location: Strategic Considerations for Selection of Forum March 13, 2009 Speaker(s) Mike Lynch Partner, Pittsburgh John Hagan Associate, Pittsburgh Emily Thomas Associate, Pittsburgh Microsoft Office Word 2003.lnk Insurance Coverage Training Series: Location, Location, Location: Strategic Considerations for Selection of Forum March 13, 2009 PROGRAM LONDON Registration Program 4:00pm–4:15pm 4:15pm–5:15pm EAST COAST Registration/Lunch 12:00noon–12:15pm 12:15pm–1:15pm Program TEXAS Registration Program WEST COAST Registration Program 11:00am–11:15am 11:15am–12:15pm 9:00am–9:15am 9:15am–10:15am SPEAKER(S) Mike Lynch Partner, Pittsburgh John Hagan Associate, Pittsburgh Emily Thomas Associate, Pittsburgh PROGRAM DESCRIPTION The speakers will discuss selection of forum and challenges to forum selection. This session will provide practical tips and strategic considerations for the process of determining the most favorable forum and litigating issues arising from forum selection. CLE INFORMATION 1.0 hour (General) California Newly admitted: 1.0 hour APP (Transitional) New York Experienced: 1.0 hour (General) Pennsylvania 1.0 hour (Substantive) 1.0 hour (General) Texas Other States Applications submitted upon request Microsoft Office Word 2003.lnk Insurance Coverage Training Series: Location, Location, Location: Strategic Considerations for Selection of Forum March 13, 2009 TABLE OF CONTENTS TAB PowerPoint Presentation.........................................................................................................................................1 Speaker Biographies ...............................................................................................................................................2 TAB 1 Location, Location, Location: Strategic Considerations for Selection of Forum Mike Lynch John Hagan Emily Thomas March 13, 2009 Introduction Forum selection is often critical to success Forum selection influences: Choice of substantive law (Sensient Colors (NJ)) Key evidentiary rules (e.g., burden re missing policies) Discovery rulings Expert discovery rules (e.g., PA – no expert depositions) Choice of judge Time to trial Ability to obtain appeal Willingness of opponent to settle 1 Introduction (cont.) Fundamental takeaway points: In selecting forum, you must consider multiple factors Policyholders often fail to do this They consider only some of the obvious critical factors They do not consider less obvious, but also crucial factors Selection often involves weighing competing factors Must know all factors to weigh them properly Failure to consider all factors can lead to disaster 2 Introduction (cont.) Presentation will consider forum issues using an environmental coverage case hypothetical Presentation will address steps for: Identifying the best forum; Securing the best forum; and Escaping a bad forum. 3 Environmental Hypothetical PH seeks coverage for 3 NJ sites, 3 NY sites PH’s current principal place of business (ppb) is NJ PH’s ppb at time policies issued was NY Policies were brokered in NY Insurers’ principal place of business is CT PH has settled with lower layer insurers PH is negotiating with high level excess PH is missing copies of some policies Negotiations are ongoing, but not making progress 4 Step 1: Identify potential jurisdictions Potentially relevant factors include: Location of environmental sites/underlying claims Location of source of contaminants Current and past ppb of PH Current and past ppb of insurers Location where policies negotiated Location where policy obligations performed Location of brokers (but see Foster-Wheeler (NY)) Combination of factors will determine choices 5 Step 2: Identify preferred forum To identify preferred forum: Identify key legal issues in case, e.g.: Trigger Allocation Number of occurrences Late notice Qualified pollution exclusion Expected or intended Owned property exclusion Missing policies Exhaustion of underlying Misrepresentation/concealment Application of limits Non-cumulation/settlement credit Suit limitation language 6 Step 2: Identify preferred forum (cont.) Identify key factual issues, e.g.: What are contaminants at issue? How did contamination occur? When did contamination start? Over what period did contamination occur? What did PH do to prevent contamination? When did PH learn of contamination? Did PH expect contamination? What was state of knowledge re constituents? What was state of knowledge re handling of constituents? 7 Step 2: Identify preferred forum (cont.) From legal, fact review, identify key issues in case Learn substantive law on key issues in each forum Learn choice of law rules Learn evidentiary rules (e.g., missing policies) Learn discovery rules (e.g., a/c priv.) Consider statute of limitation, suit limitation rules Consider state or federal court Consider possible judges and jury pool Identify trends from recent decisions Consider appellate rules 8 Application of Step 2 to hypothetical Identify better substantive law Potential key legal and factual issues for hypo: Enforceability of qualified pollution exclusion PH has multiple policies with qpe NY – no coverage for gradual pollution (Northville Indus.) NJ – coverage for gradual pollution (Morton) Allocation PH seeking coverage from high level excess NY – straight pro rata (Consol. Edison) NJ – weighted pro rata (Owens-Illinois, Carter-Wallace) NJ coverage law appears to be better for PH 9 Application of Step 2 to hypothetical (cont.) Consider choice of law rules (COL) in NY, NJ Is it helpful/critical to be in NJ to obtain NJ law? Depends on COL Possible that NY forum might be more likely to apply NJ law Sensient (NJ) – forum more likely to select own law Must review COL for each forum NY and NJ adopt Restatement sections However, potentially different interpretations Pfizer (NJ) as compared to Foster-Wheeler, GE (NY) – PH’s ppb key 10 Application of Step 2 to hypothetical (cont.) Learn key evidentiary rules In some situations, differences can be critical, e.g.: Missing policies Is standard of proof by preponderance of evidence or clear and convincing evidence? Is secondary evidence admissible? Are there differences in hearsay exceptions? Expected/Intended Does expectation refer to act or consequence? Is burden of proof re expected/intended on PH or insurer? Is standard objective or subjective? Important to know rules prior to filing complaint 11 Application of Step 2 to hypothetical (cont.) Decide whether NY or NJ discovery rules are preferred Depending on circumstances, review rules, cases re: Attorney/client privilege Work product Underlying defense documents Other policyholder discovery Reinsurance discovery Reserve discovery Scope of E&I discovery Unreasonable burden Reference to documents as interrogatory response Expert discovery 12 Application of Step 2 to hypothetical (cont.) Decide whether federal court is possible Is there diversity? Is foreign instrument involved (Icarom (3d Cir.))? How are Lloyd syndicates treated for diversity purposes? Is abstention a factor (Brillhart or Colorado River (U.S. Sup. Ct.))? 13 If so, do you prefer state or federal court? If so, decide whether state or federal court is better Does the federal court apply state law differently? Are the federal court discovery rules different? What is quality, experience of respective judges? Do both courts assign one judge to case? What are respective procedures re ADR? Are chances for summary judgment different? What are relative times to trial? What are differences in jury pool? Are declaratory judgment rules different? How do appellate rules differ? 14 Application of Step 2 to hypothetical (cont.) Other considerations: Quality, experience of respective judges Quality of jury pool Jury verdicts/trends in case law Time to trial in respective forums Settlement tools Assume NJ law is better for PH here 15 Step 3: Securing and retaining the preferable forum Best way to secure, retain the preferable forum: File complaint first in preferred forum Make complaint as comprehensive as possible Helps to resist competing, later filed action If want state court, avoid actions permitting removal If want federal court, fulfill jurisdictional requisites Avoid procedural errors resulting in dismissal (e.g., Vale (PA)) Perfect service quickly Commence discovery quickly Obtain early rulings Avoid being jumped in unfavorable jurisdiction 16 Step 3: Securing and retaining the preferable forum (cont.) Options to avoid being jumped: File complaint prior to commencing negotiations Safest approach Can increase cost, make settlement more difficult Commence suit through alternative type of filing E.g., in PA, praecipe for writ of summons May not be as strong against second-filed action Before negotiating, enter into agreement not to sue Include provision tolling statute of limitations Risk that asking for agreement will cause other side to jump If forum is critical and in doubt, file first If doubt about opponent’s intentions If doubt about proper forum 17 Step 3: Securing and retaining the preferable forum (cont.) In hypo, PH would want to: File suit in NJ first; or Enter into agreement not to sue; or At minimum, be prepared to file suit immediately 18 Escaping an unfavorable forum If opponent files first in unfavorable forum: Evaluate immediately if this presents serious problem Should already know answer to this issue If this does present serious problem: Immediately file suit in favorable jurisdiction Move to dismiss first suit on grounds of defective pleadings Move to dismiss first suit for forum non conveniens Utilize Abstention Doctrine if possible 19 Escaping an unfavorable forum (cont.) In filing parallel suit, critical to: File as quickly as possible If possible, make suit more comprehensive than first Include additional parties, e.g.: Other insurers State guaranty fund Include additional claims Commence activity in suit as quickly as possible Try to move suit along faster than first-filed suit 20 Escaping an unfavorable forum (cont.) Parallel action may give rise to comity challenge Comity – respect courts accord each other Court may dismiss, stay second-filed suit on comity grounds NJ courts – comity does not trump all considerations Will permit second action to proceed if “special equities” Decision left to discretion of trial court 21 Escaping an unfavorable forum (cont.) Special equities identified by NJ courts include: Discouraging “first-strike maneuver” Was first suit filed to deprive PH “natural forum” Protecting strong NJ public policies E.g., making sure PH obtains coverage for NJ remediations E.g., making sure NJ coverage rules apply Sensient – difference b/t NJ and NY enforcement of qpe Protection of NJ regulatory process Sensient – NJ action included PLIGA (Guaranty Association) Protection of safety and welfare of NJ residents 22 Escaping an unfavorable forum (cont.) Nexus of dispute to NJ Protection of NJ PHs The law that is more likely to apply Relative progress of two cases Forum non conveniens factors Location of documents Location of witnesses Sensient, American Home Products, Cent. Indemn. Bottom line: special equities may trump comity 23 Escaping an unfavorable forum (cont.) File forum non conveniens motion NY – UniDynamics Public interest factors include: Availability of another suitable forum Local interest in having controversy decided there Burden on NY courts Determination of which forum’s law will likely apply Private interest factors include: Where the cause of action arose Where witnesses and documents are located The relative hardships to parties in litigating in other’s forum 24 Escaping an unfavorable forum (cont.) NJ – Chubb Custom Presumption favoring plaintiff's choice of home forum Public factors Burden on court, community Local interest in subject matter Interest in having local issues decided in forum Private Factors Access to proof and witnesses Whether view of premises would be useful Practical issues, like enforceability of judgment Relatively high standard to meet for motion Seek dismissal on other ground E.g., Failure to join all interested parties (Vale (PA)) 25 Forum Selection Checklist Identify the preferred forum Key factual issues Key substantive legal issues Which forum’s choice of law rules are most likely to apply desired substantive law? Key procedural legal issues Secure preferred forum File complaint first Consider alternative filing options Enter into tolling/standstill agreement Escape unfavorable forum Immediately file suit in preferred forum Move to dismiss first-filed action 26 TAB 2 Michael J. Lynch AREAS OF PRACTICE PITTSBURGH OFFICE 412.355.8644 TEL 412.355.6501 FAX michael.lynch@klgates.com Mr. Lynch is a partner in the firm’s Commercial Litigation group and concentrates his practice in complex civil litigation. He has been responsible for litigation matters in a number of different substantive areas in various jurisdictions across the country. In the insurance coverage area, his experience includes being lead trial counsel in a Washington State environmental coverage case in which the court granted the client all of its remediation costs, attorneys’ fees, and pre- and post-judgment interest totaling in the tens of millions of dollars. He was also lead counsel in a remand trial concerning insurance coverage for asbestos-related cancers. He has also been responsible for or had a significant role in environmental, toxic tort and Y2K insurance coverage litigation and/or coverage disputes in New York, New Jersey, Delaware, Pennsylvania, Maryland, Arizona, Illinois, Vermont, Connecticut, California and Hawaii. In the toxic tort area, Mr. Lynch was lead counsel for a manufacturing client that was sued in over 1,300 asbestos-related cases in Johnstown, PA. Mr. Lynch also has trial experience in breach of contract, tax and construction cases. In addition, he has litigation experience in a number of other substantive areas, including securities, antitrust and constitutional law. PROFESSIONAL BACKGROUND Mr. Lynch has practiced in K&L Gates’ Commercial Litigation group since his graduation from law school in 1981. He is the Pittsburgh office’s representative to the firm’s Diversity committee. He also served as the Chairman of the Hiring Committee for the firm’s Pittsburgh office from 1997 through 1999. PRESENTATIONS Mr. Lynch has lectured on a number of insurance coverage and other topics before professional audiences across the United States and in England. PROFESSIONAL/CIVIC ACTIVITIES American Bar Association Pennsylvania Bar Association Kids Voice (Board of Directors) COURT ADMISSIONS U.S. Court of Appeals for the Third and Federal Circuits U.S. Supreme Court BAR MEMBERSHIP Pennsylvania EDUCATION J.D., University of Virginia Law School, 1981 A.B., Colgate University, 1976 (Phi Beta Kappa) John M. Hagan AREAS OF PRACTICE Mr. Hagan concentrates his practice in the litigation and insurance coverage areas. COURT ADMISSIONS U.S. District Court for the Western District of Pennsylvania BAR ADMISSIONS PITTSBURGH OFFICE 412.355.6770 TEL 412.355.6501 FAX john.hagan@klgates.com Pennsylvania EDUCATION J.D., Washington and Lee University School of Law, 2005 (Lead Articles Editor, Washington and Lee Law Review) B.A., University of Notre Dame, 2002 (magna cum laude) Emily B. Thomas AREAS OF PRACTICE Ms. Thomas concentrates her practice in commercial litigation, including insurance coverage, intellectual property, media and entertainment, sports and trademarks & copyrights. PROFESSIONAL BACKGROUND PITTSBURGH OFFICE 412.355.8985 TEL 412.355.6501 FAX emily.thomas@klgates.com Ms. Thomas serves as a contributing editor for the ABA Tort and Insurance Practice Section, Excess, Surplus Lines and Reinsurance Committee. Additionally, she was an assistant buyer for Kaufmann's Department Stores, a division of May Company. PUBLICATIONS Co-Author, “Surfing Insolvency Waves on an Ocean of Economic Change,” American Bankruptcy Institute 2008 International Insolvency Symposium, Frankfurt, Germany, October 2008. PROFESSIONAL/CIVIC ACTIVITIES Pittsburgh Intellectual Property Law Association COURT ADMISSIONS United States District Court of the Western District of Pennsylvania BAR ADMISSIONS Pennsylvania EDUCATION J.D., University of Pittsburgh School of Law, 2006 (magna cum laude; Order of the Coif; Editor in Chief, University of Pittsburgh Law Review) B.A., Duke University, 2001
