Griffith v. Allstate Insurance
2014 U.S. Dist. LEXIS 182819
M.D. Penn.2014Background
- Plaintiff was injured in a car accident and sought underinsured motorist (UIM) benefits under a policy providing $25,000/$50,000 stacked limits.
- Plaintiff settled with the tortfeasor’s insurer, then claimed UIM benefits from defendant; insurer offered $5,000, plaintiff demanded $50,000.
- Plaintiff filed state-court suit alleging breach of contract and bad faith (42 Pa.C.S. § 8371); defendant removed to federal court and answered.
- Defendant moved under Fed. R. Civ. P. 42(b) to sever and stay the bad faith claim, arguing extensive privileged/work-product discovery and different issues would prejudice it and justify bifurcation.
- Plaintiff opposed, arguing substantial overlap in issues and that additional discovery would not be unduly prejudicial.
- Court denied the motion: found the claims intertwined (injuries and claim file central to both), overlapping evidence/witnesses, judicial economy favored keeping claims joined, and privilege/discovery concerns manageable through ordinary procedures.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to bifurcate/sever bad-faith claim from breach-of-contract claim under Rule 42(b) | Claims overlap; joinder appropriate; additional discovery not unduly prejudicial | Bad-faith inquiry requires intrusive privileged/work-product discovery into claims file and internal processes; prejudice and inefficiency justify severance | Denied — claims are substantially intertwined; overlapping evidence and witnesses; bifurcation would prolong litigation and is unnecessary; privilege disputes can be handled in discovery |
| Whether bad-faith proof and breach issues are significantly different | Overlapping factual nucleus (injuries, damages, claim file) | Bad-faith focuses on insurer’s internal decisionmaking distinct from breach claim | Held they are not profoundly different; central issues overlap |
| Whether disclosure of claims adjuster notes/work product warrants severance | Plaintiff: ordinary protections and limited additional evidence; no automatic waiver | Defendant: adjuster impressions/work product would be exposed, causing prejudice | Held disclosure concerns insufficient to justify severance; privileges remain available and waiver not automatic |
| Whether bifurcation promotes judicial economy | Plaintiff: keeping claims together avoids duplicative discovery and trials | Defendant: severance could expedite bad-faith disposition if contract resolved first | Held severance would likely double litigation burden and timeline; economy favors joinder |
Key Cases Cited
- Landis v. North American Co., 299 U.S. 248 (U.S. 1936) (stay standards and balancing interests)
- Barr Laboratories, Inc. v. Abbott Laboratories, 978 F.2d 98 (3d Cir. 1992) (standards for stays and district court discretion)
- Bechtel Corp. v. Laborers’ International Union, 544 F.2d 1207 (3d Cir. 1976) (broad discretion to manage case proceedings)
- Gold v. Johns-Manville Sales Corp., 723 F.2d 1068 (3d Cir. 1983) (party seeking stay must show clear hardship or inequity)
- Klinger v. State Farm Mutual Automobile Insurance Co., 115 F.3d 230 (3d Cir. 1997) (elements of bad-faith claim against insurer)
- Verdetto v. State Farm Fire & Casualty Co., 837 F. Supp. 2d 480 (M.D. Pa. 2011) (clarifying clear-and-convincing standard for bad-faith claims)
- Reading Tube Corp. v. Employers Insurance of Wausau, 944 F. Supp. 398 (E.D. Pa. 1996) (factors for considering severance under Rule 42(b))