37 Besen Parkway, LLC v. John Hancock Life Insurance Company (U.S.A.)

Filing 83

OPINION AND ORDER re: 71 LETTER MOTION for Local Rule 37.2 Conference addressed to Magistrate Judge Henry B. Pitman from Seth Ard dated 9/5/2017, filed by 37 Besen Parkway, LLC, 60 LETTER MOTION for Discovery Dispute addresse d to Judge Paul G. Gardephe from John F. LaSalle & Seth Ard dated July 17, 2017, filed by John Hancock Life Insurance Company (U.S.A.). Because defendant has failed to demonstrate relevance, its application to compel production of the retainer agree ment between plaintiff and its counsel is denied. The Clerk of the Court is respectfully requested to close Docket Items 60 and 71, and as further set forth herein. (Signed by Magistrate Judge Henry B. Pitman on 10/5/2017) Copies Transmitted By Chambers. (ras)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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37 BESEN PARKWAY, LLC, on
behalf of itself and all
others similarly situated,
Plaintiff,

15 Civ. 9924

(PGG) (HBP)

OPINION
AND ORDER

-againstJOHN HANCOCK LIFE INSURANCE
COMPANY (U.S.A.),
Defendant.

-----------------------------------x
PITMAN, United States Magistrate Judge:

I write to resolve two issues left open at the discovery conference held in this matter on September 12, 2017.
The first issue relates to the conditions under which
certain mortality experience data that defendant has produced to
plaintiff can be made available to plaintiff's expert, James
Rouse.

The data in issue is the experience data underlying

defendant's JH07, JHll and JH14 experience studies and data for
all universal and variable life insurance policies issued since
2000.

This data has been produced to plaintiff's counsel on an

"eyes-of-counsel-only" basis; plaintiff seeks to share the data
with Rouse.

Summaries based on the experience data in issue have

already been made available to Rouse.

Rouse is a co-founder of

Demeter Investments which provides advice and brokerage services
to individuals and entities who trade in blocks of life insurance
i.~.,

policies in the tertiary market,

the market in which life

insurance policies are traded among investors, but not between
investors and original owners or insureds.

Plaintiff proposes

that the data in issue be made available to Rouse under the
protective order currently in place which would prohibit the use
of the data for "any business, commercial or competitive purposes."

Defendant contends that this protection is insufficient

because once Rouse has access to the information he will be
unable to segregate it in his mind and that he will use it to
compete unfairly with defendant.

Thus, defendant proposes that

the data should be disclosed to Rouse only upon condition that he
agree not to participate or advise parties in connection with
life insurance policies issued by defendant for a period of five
years.
I conclude that the enhanced protections sought by
defendant are neither necessary nor appropriate.
First, defendant and Rouse's clients do not operate in
the same market.

An insured who decides to exchange his/her life

insurance policy for immediate cash has two choices; he or she
can surrender the policy to the issuing insurer or sell it to an
investor.

Thus, investors and insurance companies do compete in
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what the parties have referred to as the "secondary market,"
namely the market in which insureds or owners of policies sell or
surrender their policies.

As noted above, Rouse's firm provides

advisory and brokerage services in the tertiary market or the
market in which investors buy and sell blocks of policies from
and to other investors.

Defendant does not claim to participate

in this market and, therefore, Rouse's clients do not compete
with defendant.
Second, I have reviewed a sample of the data in issue
and find that it is so voluminous and detailed that it creates no
substantial potential for misuse.

Defendant has provided a

sample of the data underlying the JH14 mortality study.

Defen-

dant's sample is comprised of 10 rows of data; the entire study
contains 195,000 rows of data.

Each row has 57 columns each of

which contains various pieces of data.

Thus, in total, the study

contains more than 11 million pieces of data.

The data in a

particular row includes, among other things, the policies written
on a particular form, where the policy was issued in 2004,
whether the insured was a smoker and the age range of the insured
at the time the policy was issued.

The row goes on to provide

the expected deaths during a particular year and the actual
number of deaths.

Assuming that Rouse and plaintiff comply with

the protective order issued in this matter and return or destroy
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all copies of the data in issue and all compilations, summaries,
etc. that capture or contain the data (and there is no claim that
plaintiff or Rouse will violate the protective order), it is
inconceivable that Rouse could retain all this data in his memory
and recall it in any meaningful way; the experience data is
simply too voluminous for Rouse, or any individual, to retain.
Third, defendant's policies do not make up a substantial part of the market in which Rouse is active.

Demeter

provides advice and brokerage services with respect to blocks of
life insurance policies, not individual policies.

According to

plaintiff,
In the last four years, the blocks for which Demeter
provided advice on the tertiary market ranged from a
block of 650 policies with $1.6 billion in face value,
of which 48 policies were issued by John Hancock, to a
block of 6 policies with $46.5 million in death benefit, of which one policy was issued by John Hancock.
Of 1,864 policies on which Demeter has provided advice
to clients, 163 policies (8.7% by count) were issued by
John Hancock entities, including John Hancock Life
Insurance Company, John Hancock Life Insurance Company
USA and John Hancock Variable Life Insurance Company.
(Letter from Seth Ard, Esq. to the Undersigned, dated September
19, 2017 (Docket Item ("D.I. ") 79)

("Ard Letter") at 2-3).

Given

the relatively small number of defendant's policies involved in
the transactions in which Demeter has participated and the fact
that mortality experience data cannot predict when a particular
insured will die, the data in issue would not provide any mate4

rial advantage with respect to the tertiary market for insurance
policies.
Fourth, plaintiff's counsel has advised that Demeter's
customer's do not seek Demeter's guidance or advice with respect
to the type of information disclosed by the data in issue (Ard
Letter at 4-5) .
Accordingly, for all the foregoing reasons, I find that
enhanced protection for the experience data underlying def endant 's JH07, JHll and JH14 experience studies and data for all
universal and variable life insurance policies issued since 2000
is not necessary, and that plaintiff may make them available to
Rouse under the terms of the protective order currently in place.
The second issue left open at the September 12 conference is defendant's application to compel production of the
retainer agreement between plaintiff and its counsel.

Defendant

seeks this document to "shed light on who is running this lawsuit, and more broadly, who the real person behind Besen actually
is"

(Letter from Joseph F. Kroetsch, Esq. to the Undersigned,

dated September 11, 2017 (D.I. 74) at 5).

Plaintiff claims that

its retainer agreement with counsel is irrelevant.
Defendant's argument is unconvincing.

To the extent

defendant claims that production of the retainer agreement is
necessary to determine who is controlling the lawsuit and the
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adequacy of Besen as a representative, defendant assumes that the
individual who signed the retainer agreement is the person
controlling the lawsuit.

In theory, the retainer agreement could

be signed by any individual with authority to bind Besen; the
signatory may or may not be the person directing the lawsuit.
Moreover, even if I assume that it is probable that the person
who signed the retainer agreement is the person controlling the
lawsuit, the only part of the retainer agreement that would be
relevant is the identity of the person who signed the retainer
agreement on behalf of Besen; defendant had the opportunity to
explore this issue when it conducted the 30(b) (6) deposition of
Besen. 1
Because defendant has failed to demonstrate relevance,
its application to compel production of the retainer agreement
between plaintiff and its counsel is denied.

1

I also note that the overwhelming weight of authority holds
that the terms of the retainer agreement are not relevant to
certification issues. g.g., In re: Takata Airbag Prod. Liab.
Litig., No. 15-2599, 2016 WL 5844309 at *4-*5 (S.D. Fla. May 23,
2016) (Report & Recommendation), adopted at, No. 14-24009-CV,
2016 WL 5844308 (S.D. Fla. July 7, 2016); Fort Worth Employees
Retirement Fund v. J.P. Morgan Chase & Co., 09 Civ. 3701
(JPO) (JCF), 2013 WL 1896934 at *2 (S.D.N.Y. May 7, 2013)
(Francis, M.J.); In re Front Loading Washing Mach. Class Action
Litig., No. Civ. Action No. 08-51 (FSH), 2010 WL 3025141 at *4
(D.N.J. July 29,

2010); Stanich v. Travelers Indemnity Co.,

259

F.R.D. 294, 322 (N.D. Ohio 2009); Piazza v. First American Title
Ins. Co., No. 3:06CV765AWT, 2007 WL 4287469 at *1 (D. Conn. Dec.
5, 2 007) (collecting authorities) .
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The Clerk of the Court is respectfully requested to
close Docket Items 60 and 71.
Dated:

New York, New York
October 5, 2017
SO ORDERED

HEN~MAN
United States Magistrate Judge

Copies transmitted to:
All Counsel

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