A federal judge has ordered Zurich American Insurance Company and other insurers to produce documents and provide further information in a contentious discovery battle with Chevron USA Inc. over war-risk insurance claims.
In an order issued March 13, Judge Jacqueline Scott Corley of the Northern District of California addressed a series of disputes between Chevron and its primary and excess insurers, following a case management conference earlier in the week.
The primary insurers - Zurich, Liberty Mutual Insurance Company, and Great American Insurance Company - along with several Lloyd’s underwriters and Royal and Sun Alliance Insurance Ltd., are defending against Chevron’s claims stemming from policy exclusions tied to hostile or warlike actions.
At the heart of one dispute, Chevron sought access to documents from two high-profile insurance cases involving similar exclusions: Merck & Co., Inc. v. Ace American Insurance Co. and Mondelez Int'l, Inc. v. Zurich Am. Ins. Co.. Both cases revolved around coverage denials based on “hostile or warlike action” policy language.
Judge Corley ordered Zurich, Liberty Mutual, and Canopius to turn over all substantive briefs, including summary judgment filings, from those cases. Any redactions, she noted, must meet the Northern District’s standards.
Chevron also demanded records showing how the insurers handled claims by similarly situated policyholders - a request the insurers argued would require manually sifting through tens of thousands of files.
However, during the hearing, Zurich disclosed that approximately 15 to 20 employees handled war-risk claims. Judge Corley directed the primary insurers to query those individuals about any prior claims involving vessel seizures, captures, or detainments, and to share their findings with Chevron.
Another flashpoint involved Chevron’s request for documents related to reserves and reinsurance connected to its claims. While Zurich produced some documents - subject to redactions - Liberty Mutual and Great American objected to disclosing reserve information, citing confidentiality and privilege.
The court instructed the parties to meet and confer over redactions and, should disputes persist, to submit joint letters detailing their positions. Judge Corley emphasized that the insurers bear the burden of proving any privilege claims.
Chevron further sought reinsurance agreements and related communications. The insurers asserted they had no substantive communications evaluating coverage. The judge ordered them to detail their search efforts and left the door open for Chevron to challenge the completeness of their production.
Chevron requested marketing materials and claims handling manuals. The court found Chevron’s request for “other similar documents” overly vague but noted that the insurers’ efforts to locate claims manuals were satisfactory. On marketing materials, Judge Corley declined to compel further production, citing a lack of specificity.
Chevron criticized the insurers' proposed search terms and custodian lists as inadequate. However, Judge Corley declined to intervene, urging the parties to meet and confer further.
Chevron’s request to extend the discovery timeframe to cover documents from 2017 - when Zurich began negotiations with Chevron - was supported by the court. The insurers’ reciprocal concerns over Chevron’s limited search periods remain unresolved.
Lastly, the primary insurers contended Chevron improperly withheld approximately 100 attachments, labeling them non-responsive. The court reiterated the governing ESI protocol but encouraged direct engagement if disputes persist.
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