Netscape Communications Corporation et al v. Federal Insurance Company et al

Filing 93

RESPONSES to Objections to Evidence in St. Paul's 74 Motion for Partial Summary Judgment filed by St. Paul Mercury Insurance Company. (Kerby, David) (Filed on 2/9/2007) Modified on 2/12/2007,LINK TO MOTION (cv, COURT STAFF).

Netscape Communications Corporation et al v. Federal Insurance Company et al

Doc. 93

Case 5:06-cv-00198-JW

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Gordon & Rees LLP 275 Battery Street, Suite 2000 San Francisco, CA 94111

SARA M. THORPE (SBN 146529) [e-mail] D. CHRISTOPHER KERBY (SBN 124546) [e-mail] GORDON & REES LLP Embarcadero Center West 275 Battery Street, Suite 2000 San Francisco, CA 94111 Telephone: [phone] Facsimile: [phone] Attorneys for Defendant ST. PAUL MERCURY INSURANCE COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT COURT OF CALIFORNIA SAN JOSE DIVISION NETSCAPE COMMUNICATIONS CORPORATION, a Delaware corporation; and AMERICAN ONLINE, INC., a Delaware corporation, vs. Plaintiffs, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 5:06-CV-00198 JW (PVT) ST. PAUL'S RESPONSES TO PLAINTIFFS' OBJECTIONS TO EVIDENCE IN ST. PAUL'S MOTION FOR PARTIAL SUMMARY JUDGMENT Complaint Filed: 12/12/05 Amended Complaint: 2/24/06 Date: March 26, 2007 Time: 9:00 a.m. Judge: Honorable James Ware Courtroom: 8, 4th Floor, San Jose

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FEDERAL INSURANCE COMPANY, an Indiana corporation, et al., Defendants.

Defendant St. Paul Mercury Insurance Company ("St. Paul") hereby responds to the objections by plaintiffs America Online Inc. and Netscape Communications ("plaintiffs") to evidence presented in St. Paul's motion for partial summary judgment (hereafter referred to as "St. Paul's Motion"). St. Paul requests that at the hearing on St. Paul's Motion the court deny plaintiffs' objections and consider evidence produced in support of St. Paul's Motion. /// /// ///
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TRAV/1036622/1141258v.1

Dockets.Justia.com

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Proffered Evidence and Objection/Response to AOL's Objection 1. Response To Objection That Factual Propositions Are Incorrect

It is a minor point and not critical for St. Paul's Motion, but AOL objects to St. Paul's statement that the "Personal Injury For Non-Online Activities Endorsement" (Ex. 1 at SPM 0337) was accepted by AOL. (See AOL Brf. at 29, n. 107.1) AOL argues there is no evidence of acceptance of the endorsement by AOL and there is evidence that it actually was rejected. AOL's characterization of the evidence and of Michele Midwinter's testimony in particular are not a fair characterization. In Ex. 69 (also Ex. 39), the email sent by Mike O'Connor (Marsh) confirming receipt of the Online Activity Exclusion that did not contain a definition (Ex. 1 at SPM 0337), Marsh does not indicate there is any dispute over the new exclusion being part of the policy. Rather, Marsh indicates that "the current PI/AI endorsement" needed additional corrections, and that Marsh was proposing a definition be added to that exclusion. 2. Response To Objection That Factual Propositions Are Improperly Supported

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AOL objects to St. Paul's statement that the premium St. Paul charged reflects that its policy was to cover only traditional general liability risks. (See AOL Brf. at 29, n. 108.) In making this objection, AOL singles out some references in support of this proposition, but ignores that St. Paul's Motion contains other support. AOL contends Exhibits 8 [should be 18] and 159 do not support St. Paul's statement. Although there was a typographical error in St. Paul's Motion in one place (Ex. 8 referred to at footnote 72 should have referenced Ex. 18), Ex. 18 is also referenced at footnotes 25, 27, and 28. There is also more than ample evidence before the Court for the proposition that the premium charged by St. Paul reflects the policy was only intended to cover "traditional" personal injury claims and not intended to cover personal injury for online risks. See, the comparison of policy premiums charged for the St. Paul policy ($106,000) to the premium for the broader coverage afforded by AIG the year before ($700,000). See Ex. 18 (at NET/SDL
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References to AOL's Opposition/Cross-Motion are "AOL Brf. at __." References to St. Paul's Opening Brief are "SP Brf. at __."
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0011480); Ex. 159 (at Marsh 0543); Ex. 160 (at AOL 048 0004). See, also Ex. 22 (at Marsh 1385-1386) [Marsh's letter to AOL noting that the St. Paul policy excludes coverage for personal injury "as respects AOL's online activities," and that "this coverage is insured under the AOL Multimedia policies wit h Execut ive Risk and Employers Reinsurance Corp."]. See, also SP Brf. at 7, n. 25 [referencing Exs. 18, 79, 159, 160 and deposition testimony]. 3. Response To Objection That Factual Propositions Are Not Supported

AOL objects to the following statements as not supported by the evidence (AOL Brf. at 29, n. 109):
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SmartDownload was obtained from "AOL." St. Paul in its Opening Brief used

"AOL" to refer to both AOL and Netscape. (See SP Brf. at 1:6.) The complaints in the class action suits alleged that: [] Netscape has no bona fide existence independent of AOL. In November of 1998, defendant AOL agreed to merge with defendant Netscape . . . [] Since the consummation of the merger, the operations of AOL and Netscape have been functionally merged and inextricably intermingled, . . . [] They are using Internet computers and other assets under their joint control to accomplish the wrongs complained of herein. [] Netscape introduced SmartDownload in November of 1998, virtually simultaneously with the execution of the merger agreement with AOL. . . (Ex. 129 [at SPM 0011]).
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Allegat ions of third party dissemination of private information never developed.

Under Virginia law, the duty to defend is determined by the four corners of the complaint. Resource Bankshares Corp. v. St. Paul Mercury Ins. Co. 407 F.3d 631, 636 (4th Cir. 2005) (applying Va. law); America Online, Inc. v. St. Paul Mercury Ins. Co., 347 F.3d 89, 93 (4th Cir. 2003) (applying Va. law). Here, there is no question but that the complaints did not allege injury fro m the disclosure of private information to third parties. Under California law, the duty to defend is determined at the time of tender. Waller v. Truck Ins. Exch. Inc., 44 Cal.Rptr.2d 370, 378 (Cal. 1995); Safeco Ins. Co. v. Parks, 19 Cal.Rptr.3d 17, 27 (Cal.App. 2004); Haggerty v. Fed. Ins. Co., 32 Fed.Appx. 845, 848 n. 4 (9th Cir. 2002). Information that AOL provides for the first time during the coverage suit is not relevant or admissible. Safeco, 19 Cal.Rptr.3d at 27. See Objections to Evidence and Motion to Strike. There was nothing presented to St. Paul at the time of tender that indicated the class suits
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sought damages for injuries from the disclosure of private information to third parties; anything presented during the coverage case is inadmissible and should not be considered. Furthermore, there is no evidence that plaintiffs in the class action suits ever alleged injury fro m the disclosure of private information to a third party. See, e.g., Ex. 129, 226 (at NET/SDL 0004140).
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that AOL's insurance program was designed to avoid duplication of coverage or

premium. AOL contends the program was a "mess" with gaps and duplications and that online coverage was found in various types of policies. AOL's citations do not indicate the program was a "mess." That there was coverage for online risks in many policies does not mean there was duplication. It is clear AOL and St. Paul intended that there would not be duplication between the St. Paul policy and Executive Risk policy; the two policies were purchased to compliment each other. See, Ex. 22 (Marsh's letter to AOL describing how St. Paul and Executive Risk policies worked); Ex. 4 (Marsh's email to St. Paul indicating how St. Paul and Executive Risk covered different risks). See also Ex. 21, 23, 24 (Marsh and St. Paul communications confirming St. Paul policy did not cover personal injury for online activities, whereas Execut ive Risk policy did). 4. Response To Objection That Factual Propositions Are Disputed

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AOL objects to St. Paul's statements that AOL and St. Paul agreed St. Paul would not cover personal injury arising out of online activities and that AOL intended to insure (and did insure) online risks through carriers other than St. Paul. (See AOL Brf. at 30, n. 110.) AOL claims this point is "disputed." AOL's evidence on this point does not raise a genuine issue of fact. AOL's objection is not well-taken. Glenn Spencer, the person upon whose testimony AOL now relies, prepared an email in June 2000 (prior to the class action suits being served) stating in no uncertain terms that it was his understanding (as the risk manager of AOL, and a broker on Marsh's AOL team) that there was no intention to obtain personal injury coverage fro m the St. Paul policy for AOL's online activities. Ex. 36, 37. In addition, Marsh (which for purposes of this motion, AOL has conceded is the same as AOL [see Stip-MSJ at ¶ 12]) sent numerous letters to St. Paul following issuance
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of the policy indicat ing that the St. Paul policy was not intended to cover personal injury for online activities. See Exs. 21, 23. 5. Response To Objection That Factual Propositions Are Irrelevant And/Or Inadmissible

AOL objects, as irrelevant and inadmissible, to St. Paul's reference to and reliance upon the confidential settlement agreement between Executive Risk and AOL (Ex. 168). (AOL Brf. at 30, n. 111, citing FRE 408.) AOL fails to explain its relevancy objection. It is undisputed that AOL received payment from Executive Risk in resolution of AOL's tender. See Stip-MSJ at ¶ 6. St. Paul offers the settlement agreement to establish AOL intended to insure and did insure online risks through other carriers, like Executive Risk. FRE 408 provides that evidence of an offer to settle a disputed claim or acceptance of such offer "is not admissible to prove liability for or invalidity of the claim or its amount." However, Rule 408 "does not require exclusion when the evidence is offered for another purpose." FRE 408 (emphasis added). Here, the settlement agreement between AOL and Executive Risk is offered to establish that AOL and St. Paul mutually intended St. Paul would not cover personal injury for online activities and that AOL intended its other policies, including specifically Executive Risk, to cover that type of risk. AOL's settlement agreement with Executive Risk is admissible for this purpose. The settlement is consistent with other evidence in the case, including Marsh's statements when providing St. Paul a copy of the Executive Risk policy (Ex. 4), and Marsh's statements in providing AOL with the 1999 insurance program which included both the St. Paul and Executive Risk policies (Exs. 21, 22, 23). Dated: February 9, 2007 GORDON & REES LLP By: /s/ Sara M. Thorpe SARA M. THORPE Attorneys for Defendant ST. PAUL MERCURY INSURANCE COMPANY

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