NY Court Says Sandy Bad Faith Claims Should Be Tossed

Law360, New York (June 05, 2014, 3:19 PM ET) -- Three New York federal judges overseeing Superstorm Sandy insurance litigation on Wednesday directed courts to throw out bad faith claims against insurers, as well as requests for punitive damages and attorneys' fees, after plaintiffs in more than 150 cases didn't file necessary paperwork.

Magistrate Judges Cheryl Pollak, Gary Brown and  Ramon Reyes Jr., who are taking the lead on more than 1,000 cases tied to losses from the devastating October 2012 storm, hadasked plaintiffs to voluntarily withdraw these claims or to explain to a judge the legal basis for pursuing these claims, which the judges say are not supported under New York law.

Insurers on May 16 told the court that many plaintiffs did not comply with those directions within the timeframes set out by the court. In its latest order, the three magistrate judges reiterated that their prior decision was based on “clear case authority” and that it would avoid “wasteful and unnecessary motion practice before each judge.”

“For [these] reasons … and based upon plaintiffs' failure to comply with the unambiguous directives contained in [the case management order], it is respectfully recommended that the district judges presiding in each of the above-captioned actions enter an order dismissing the state law claims and claims for damages that are not available under New York law,” the judges said in an order posted online Thursday.

Lawyers have two weeks to object to the recommendation, or else waive their right to waive the ruling, according to the order.

"The court required that plaintiffs address these claims back in February and since so many plaintiffs have failed to do that, it's not a surprise that the court has taken action on that at this point," said Jared Greisman, a White Fleischner & Fino LLP attorney who serves as the defendants' liaison attorney."

Tracey Bryan, a Gauthier Houghtaling & Williams LLP attorney and plaintiffs' liaison counsel, said the plaintiffs had voluntarily dismissed these claims but their attorneys did not file the paperwork to make the dismissal official.

The Eastern District of New York set up the Superstorm Sandy docket in an effort to efficiently resolve insurance battles stemming from the unprecedented storm, which left behind more than $50 billion in property damage.

A federal court in New Jersey came up with its own strategy to smoothly resolve the more than 1,400 Sandy coverage suits in that state.

Attorneys at Wilson Elser Moskowitz Edelman & Dicker LLP remarked in a firm memo that the EDNY had adopted an “express train” discovery schedule.

“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,” the memo said.

According to the post, courts have wide latitude to control discovery schedules. In this case, the EDNY is trying to push parties to exchange information openly, though whether that will work remains to be seen, the memo said.

The plaintiffs' liaison counsel are Tracey Rannals Bryan of Gauthier Houghtaling & Williams LLP and Javier Delgado of Merlin Law Group.

The defendants' liaison counsel are Jared Greisman of White Fleischner & Fino LLP and Gerald Nielsen of Nielsen Carter & Treas LLC.

The docket is Hurricane Sandy Cases, docket number 1:14-mc-00041, in the U.S. District Court for the Eastern District of New York.

--Editing by Chris Yates.