Misleading Discovery Response Results in New Trial
By Natasha Saggar Sheth, Litigation News Associate Editor – July 17, 2014

"Discovery is not supposed to be a game.” This was a lesson hard-learned by Ford Motor Company, which now faces retrial in a product liability lawsuit in which it had previously prevailed. The Georgia Supreme Court ruled unanimously to order the new trial, finding that Ford intentionally misled plaintiffs in their discovery responses regarding insurance. Ford Motor Co. v. Conley, et al.

Background of Conley
The Conleys filed a product liability lawsuit against Ford as a result of a single-vehicle rollover accident in Georgia. The parties engaged in pretrial discovery and motion practice for nearly two years. In that period, the Conleys issued discovery requests seeking standard information about Ford’s insurers.

Specifically, the plaintiffs’ interrogatory asked that Ford “state whether or not [it] carried casualty or liability insurance,” and asked for the name of the insuring company for each policy. In response, Ford lodged objections, but also answered in the following manner: “Subject to and without waiving its objections, Ford states it has sufficient resources to cover any judgment which could be reasonably rendered in this case, if any.”

In meet-and-confer correspondence that followed, the Conleys asked Ford to remove its objections to a number of interrogatories, including those pertaining to insurance, and fully answer the questions posed. Ford stood on its responses. The plaintiffs moved to compel Ford to respond to certain discovery requests but not those pertaining to insurance. There was no further communication among the parties related to Ford’s insurance.

Jury Qualification as to Insurers
The case proceeded to trial. Under Georgia law, jurors must be screened for relationships with all parties to a lawsuit, including insurance companies that may pay a judgment resulting from the trial. Neither the Conleys nor Ford requested that jurors be qualified in this manner as to Ford’s insurers. The jury found in favor of Ford, and the Conleys did not appeal this judgment.

Separate Lawsuit Reveals New Information
Over one year after the verdict in the Conleys’ case, Ford was involved in a separate lawsuit in which it served the same responses regarding its insurance. In that action, discovery revealed that Ford did, in fact, have numerous insurance policies that might cover a potential judgment. Evidence presented in that action further showed that Ford, as a general practice, did not disclose information about its insurance when responding to discovery.

Motion for New Trial
The Conleys filed an untimely “extraordinary” motion for a new trial in their case—almost two years after judgment—based on the information revealed about Ford and its insurers in the subsequent lawsuit. On an extraordinary motion for new trial, the court explained that a party must demonstrate two fundamental requirements: that the error alleged as the basis for the motion (1) could not have been discovered and raised within 30 days of judgment if the party had acted with due diligence, and (2) was materially harmful.

The trial court granted the motion, finding that Ford’s concealment of its insurance coverage was “willful” and “intentional.” The court determined that the Conleys had no reason to suspect that Ford had insurance coverage at the time of their trial and could not have requested jury qualification on that issue. Finally, the court determined that under established Georgia law, there is presumptive harm when a jury is not properly qualified as to a defendant’s insurers.

Ford appealed the court’s decision, but the Georgia Court of Appeals was divided on the outcome. The case was then transferred to the Georgia Supreme Court for decision.

Objections Alone Would Have Saved Ford
The issue of the Conleys’ due diligence in learning of Ford’s insurance was a close question for the court. Had Ford simply denied the existence of insurance without objection, the court opined that the Conleys would have had a clear case showing their own due diligence. Had Ford responded to plaintiffs’ discovery requests with only objections, the Conleys’ motion would have failed. A discovery response containing only objections puts the requesting party on notice that no substantive answer has been provided.

In this case, Ford lodged objections, but also provided a substantive response to the Conleys’ inquiries regarding its insurance. The Georgia Supreme Court, granting the trial court substantial deference, held that the court reasonably concluded that Ford’s answers were misleading. The court also stated that it likely would have deferred to the trial court if it had reached the opposite conclusion.

Material Harm Presumed
Under longstanding Georgia law, prejudice is presumed where a civil jury is not properly qualified by the court as to an insurer with a financial interest in the case. Many courts have since questioned the wisdom of this rule, as evidence of insurance coverage is prohibited at trial so jurors are not exposed to insurer information.

In a concurring opinion, one justice posited that the presumptive harm stemming from the failure to properly qualify the jury might properly be rebutted if, for example, a trial is conducted without any mention of any insurance carrier. “The concurring opinion perhaps strikes the correct balance, advocating for a rebuttable presumption of harm,” says Scott A. Wandstrat, Atlanta, GA, former cochair of the Professional Liability Subcommittee of the ABA Section of Litigation’s Insurance Coverage Litigation Committee.

The Georgia Supreme Court declined to reconsider its 80-year-old decision in Atlanta Coach v. Cobb, which established the presumption of harm for failure to qualify the jury as to an insurer with a financial interest.

Court Attempts to Limit Case to Its Facts
Ford urged that, if a new trial was granted, the “floodgates” would open for countless more motions, with losing parties combing back through discovery in search of vague responses. But the court rejected this contention, stating that the requirements for granting such extraordinary motions are strict, and it is the unusual case in which discovery responses are “affirmatively misleading.”

Lessons Learned
“If this case is to teach any lesson,” the court wrote, “it is that the civil discovery process is supposed to work to allow the parties to obtain the information they need to prove and defend their cases at trial before impartial juries.”

Indeed, “this decision reflects a trend where courts are holding that boilerplate discovery requests, answers and objections are no longer going to cut it,” says Jeffrey G. Close, Chicago, IL, cochair of the Discovery and Motion Practice Subcommittee of the Section of Litigation’s Pretrial Practice and Discovery Committee. “The old way of practicing where lawyers talk past each other instead of to each other is no longer acceptable—if it ever was—to the courts.”

Keywords: discovery, insurance, jury qualification

 
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