in Re National Lloyds Insurance Company, 507 S.W.3d 219

Background

Plaintiffs (insureds) sued National Lloyds for underpaying claims arising from Hidalgo County hail storms (Mar. 29 & Apr. 20, 2012) in MDL pretrial court; claims included Insurance Code violations, fraud, breach of contract, and bad faith.
The MDL pretrial court adopted a master discovery plan and Plaintiffs served institutional requests (Requests 12 & 13) seeking documents about National Lloyds’ handling of the Hidalgo County storms.
National Lloyds initially objected as overbroad and privileged but later withdrew objections to Requests 12 and 13; disputes arose over management reports referenced in emails.
Plaintiffs moved to compel system-generated management reports and related emails; National Lloyds said the reports were not historical, were not retained, and contained global data spanning many counties and events.
The pretrial court ordered production of “all emails, reports attached to emails, and any follow-up correspondence and information” and assessed $15,726.25 in sanctions for National Lloyds’ nonproduction.
The Supreme Court of Texas held the production order overbroad as not limited by time/place/subject and conditionally granted mandamus vacating the order as to management reports and directing reevaluation of sanctions.

Issues

Issue	Plaintiffs' Argument	National Lloyds' Argument	Held
Whether pretrial court’s order compelling "all emails, reports attached to emails, and any follow-up correspondence" is overbroad	Reports/emails related to company handling show pattern/practice and are relevant to punitive damages, bad faith, and Insurance Code claims	Order is not tailored; reports are global, cover other counties/events, not specific to Hidalgo storms and thus irrelevant/overbroad	Overbroad. Court vacated the part of the order compelling management reports and emails; discovery must be reasonably tailored
Whether NL waived objections by withdrawing responses to Requests 12 & 13	Plaintiffs: NL withdrew objections and thus waived later objections to breadth/relevance	NL: consistently objected to the compelled form and scope of the reports and timely asserted objections in briefing and motions	No waiver. NL preserved its objection to breadth/relevance by timely written objections and motion practice
Whether MDL status permits broader discovery across many claims	Plaintiffs: MDL context and need to show pattern justifies broad institutional discovery	NL: MDL status does not change relevance limits; same standards apply; cannot seek indiscriminate corporate reports	MDL status does not broaden discovery rules; same relevance/overbreadth limits apply
Whether sanctions should be vacated following partial reversal of discovery order	Plaintiffs: sanctions appropriate for NL’s nonproduction	NL: sanctions tied to overbroad order should be vacated or reduced	Court directed pretrial court to reevaluate sanctions; did not automatically vacate them because multiple categories were implicated and allocation of fees was not specified

Key Cases Cited

In re National Lloyds Ins. Co., 449 S.W.3d 486 (Tex. 2014) (discovery of unrelated third-party claims was overbroad)
In re CSX Corp., 124 S.W.3d 149 (Tex. 2003) (scope-of-discovery limits; time/place overbreadth)
Texaco, Inc. v. Sanderson, 898 S.W.2d 813 (Tex. 1995) (requests must be reasonably tailored by time/place/subject)
In re Dana Corp., 138 S.W.3d 298 (Tex. 2004) (MDL status does not justify relaxed discovery standards)