When Does a Subrogating Carrier's File Become Privileged?

A defective truck, manufactured by Daimler, and containing an power distribution module manufactured by Tyco, alleged failed and caused a fire.  Travelers paid under its policy and brought a subrogation action against Daimler and Tyco.

A discovery dispute arose during the course of this litigation.  The Court issued an Order determining three questions:  (a) how much of a subrogating carrier’s file must be produced and when does the “work product” privilege attach to the carrier’s file?; (b) must the carrier produce a witness to testify on behalf of the carrier or does it suffice if the insureds testify?; and (c) must the carrier produce its underwriting file? [1] 

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Broken Beer Bottle Expert Precluded from Testifying

Bartender Bill Toomey was stacking an ice bin with 12-ounce bottles of Coors Light on May 23, 2009.  He grabbed two bottles with his left hand, placing one bottle between his index finger and thumb and another bottle between his index and middle fingers.  As he was placing the bottles in the ice bin, the bottle between his index and middle fingers exploded, severely injuring his index finger.  He was unable to work as a bartender for 26 weeks following this accident.

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Carrier Cannot Subrogate Against One Who is Insured by the Same Carrier

The Reeds’ teenage daughter woke up in the middle of the night to find her bedroom was on fire. The Reeds’ carrier, Liberty Mutual (“Liberty”), sent investigators to the scene, who determined the fire began at an electric-powered water filter in an aquarium. Liberty put the manufacturer of the filter on notice and gave them an opportunity to inspect the scene and evidence. Coincidentally, the water filter manufacturer was also insured by Liberty, subject to a $250,000 deductible. A subrogation action was brought in the name of the Reeds against the manufacturer, Aqueon. Following discovery, Aqueon moved to dismiss the action, arguing that the “anti-subrogation rule” barred the action. The court granted the motion, with one proviso.

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