Ada Shenon v. New York Life Insurance Company

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

'O'

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CoO., ET AL.

Present: The Honorable CHRISTINA A. SNYDER

Catherine Jeang Not Present N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

Not Present Not Present

Proceedings: [REDACTED] - ORDER ON DEFENDANTS’ MOTIONS IN

LIMINE (ECF NOS. 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80,

81, 86)

I. INTRODUCTION & BACKGROUND

The history of this action is known to the parties and is summarized in the Court’s

January 13, 2020 order (“MSJ Order”) denying defendants New York Life Insurance

Company (“NYL”) motion for partial summary judgment. ECF No. 64. For that reason,

the Court recites only the factual and procedural background that gives rise to NYL’s

motions in limine (“MILs”).

Defendant NYL filed fourteen MILs (“NYL’s MILs”) on February 14, 2020. ECF

Nos. 69-81, 86. Plaintiff Ada Shenon (“Shenon”) filed oppositions to NYL’s MILs Nos.

1, 2, 4,5, 8, 11, 12, 13, and 14, ECF Nos. 87, 89-93, 95, 99, 104, and gave notice of non-

opposition to NYL’s MIL No. 6 on February 24, 2020, ECF No. 96. Shenon filed motions

in opposition to NYL’s remaining MIL Nos. 3, 7, 9, and 10 on February 26, 2020. ECF

Nos. 116-119.

Having carefully considered the parties’ arguments, the Court concludes as follows.

Il. LEGAL STANDARD

“A motion in limine is a procedural mechanism to limit in advance testimony or

evidence in a particular area.” United States v. Heller, 551 F.3d 1108, 1111 (9th Cir. 2009).

“{M lotions in /imine must identify the evidence at issue and state with specificity why such

evidence is inadmissible.” Colton Crane Co.. LLC v. Terex Cranes Wilmington, Inc., No.

08-CV-08525-PSG (PJWx), 2010 WL 2035800, at *1 (C.D. Cal. May 19, 2010). The

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

“failure to specify the evidence” that a motion in limine “seek[s] to exclude constitutes a

sufficient basis upon which to deny th[e] motion.” Bullard v. Wastequip Mfg. Co. LLC,

No. 14-CV-01309-MMM (SSx), 2015 WL 13757143, at *7 (C.D. Cal. May 4, 2015).

“Trial courts have broad discretion when ruling on motions in limine.” Matrix Int’]

Textile, Inc. v. Monopoly Textile, Inc., No. 2:16-CV-0084-FMO-AJW, 2017 WL

2929377, at *1 (C.D. Cal. May 14, 2017). Such rulings are “not binding on the trial judge,

and the judge may always change his mind during the course of a trial.” Ohler v. United

States, 529 U.S. 753, 758 (2000). “Denial of a motion in limine does not necessarily mean

that all evidence contemplated by the motion will be admitted at trial. Denial merely means

that without the context of trial, the court is unable to determine whether the evidence in

question should be excluded.” Matrix Int'l] Textile, 2017 WL 2929377, at *1 (internal

citation omitted).

Il. NYL’S MOTIONS IN LIMINE

A. NYL’s MIL No.1

NYL moves to exclude the testimony and report of plaintiff's expert witness Sharon

Rosenfield. ECF No. 70 at 1. NYL anticipates that Rosenfield will testify regarding

Shenon’s ability to perform Activities of Daily Living (“ADLs”) and her physical

condition. Id. NYL contends Rosenfield’s testimony is inadmissible under Federal Rule

of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993),

because (1) she does not possess sufficient training, experience, or education to be qualified

as an expert: (2) her testimony will not assist the trier of fact in determining the facts at

issue in this case; and (3) her testimony is duplicative of testimony from plaintiff's other

retained experts who are more medically qualified. Id. at Notice 2. NYL further contends

that (4) Rosenfield’s testimony is inadmissible under Rule 403 because her “role in this

litigation is to serve as Plaintiffs mouthpiece for her ailments and complaints” and

therefore her testimony would confuse and mislead the jury as well as cause undue

prejudice to NYE. Id. at Notice 2, 5.

The Court disagrees. First, Rosenfield is qualified to testify as expert. See Heston

v. Taser Int'l, Inc., 431 F. App’x 586, 588 (9th Cir. 2011) (holding that “board-certified”

professionals “with extensive experience in the field” are “sufficiently qualified by

“knowledge, skill, experience, training, or education’” to testify as experts) (citing Fed. R.

Evid. 702). Rosenfeld is a Geriatric Care Manager who, for more than 30 years, has

managed client care in clients’ homes. ECF No. 95 at 4. She obtained a nursing degree in

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

1979 and has board certification from the National Academy of Certified Care Managers.

ECF No. 70 at 3. Although not a medical doctor, she has the requisite training and

experience—including experience making in-home patient assessments—to opine on

Shenon’s restrictions, limitations, and need for assistance in her home.

Second, whether Rosenfeld’s testimony will actually “assist” the jury is not a proper

function of a motion in limine brought pursuant to Rule 702 since it goes to the weight

rather than the admissibility of the evidence. See United States v. Sandoval-Mendoza, 472

F.3d 645, 654 (9th Cir. 2006) (“Daubert makes the district court a gatekeeper, not a fact

finder.”). At this point, “[w]e are concerned not with the correctness of [an] expert’s

conclusions but the soundness of [her] methodology.” Estate of Barabin v. AstenJohnson,

Inc., 740 F.3d 457, 463 (9th Cir. 2014).

Third, while the Court would be inclined to exclude cumulative testimony, it is

premature to do so at this juncture. See Apple iPod iTunes Antitrust Litig., No. 05-CV-

0037 YGR, 2014 WL 12719192, at *1 (N_D. Cal. Nov. 18, 2014) (denying motion in limine

“to exclude cumulative expert testimony” without prejudice “as premature” because while

expert “reports may have overlapping material” that “does not necessitate the Court

excluding the presentation of such evidence in advance,” and instead concluding that if

“defendant introduce|s] purportedly cumulative expert testimony at trial, plaintiffs may

raise an appropriate objection at that time which the Court can then consider 1n context.”).

The Court reserves judgment as to any objection made at trial that Rosenfeld’s testimony

is cumulative.

And fourth, defendant’s Rule 403 objection is not well-taken to the extent that

Rosenfeld’s testimony is limited to demonstrating Shenon’s inability to perform her

activities of daily living, in accordance with the opinions disclosed in her report.

Accordingly, NYL’s MIL No. | is DENIED, without prejudice.

B. NYL’s MIL No. 2

NYL next moves to exclude the testimony of Laura Parker, Shenon’s bad faith

expert, on the basis that Shenon has “failed to carry her burden to establish by a

preponderance of the evidence that Parker is a qualified expert.” ECF No. 75 at 1. NYL

specifically contends that Parker should not be allowed to testify on corporate motive and

intent, on her legal opinions, on custom and practice opinions, and that her testimony will

not assist the trier of fact. See Id. at 3-7. Shenon answers that Parker is a qualified expert,

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

and that her testimony is necessary to explain to the jury the process and standard of

handling an insurance claim, something which Shenon alleges is foreign to a jury member.

ECF No. 90 at 1. Shenon also states that Parker will not offer legal conclusions at trial,

and that NYL’s concerns regarding the credibility of her testimony can be addressed at

cross-examination and is ultimately an issue for the jury to determine. Id.

NYL’s attempt to exclude this witness is without merit. Parker is qualified to testify

as an expert on the ordinary insurance claims process. She has more than 25 years of

“extensive experience” working in the insurance industry, through which she has

developed specialized knowledge regarding industry standard claims handling practices.

See Heston, 431 F. App’x at 588. She has testified as an expert about claims procedures in

numerous other cases, and has personally handled insurance claims in the State of

California. “Clearly, this lays at least the minimal foundation of knowledge, skill, and

experience required in order to give expert testimony on the practices and norms of

insurance companies in the context of a bad faith claim.” Hangarter v_ Provident Life &

Accident Ins. Co., 373 F.3d 998, 1016 (9th Cir. 2004) (internal marks omitted) (emphasis

original) (citing Thomas v. Newton Int'l Enters, 42 F.3d 1266, 1269 (9th Cir. 1994))

(finding that the district court did not abuse its discretion in concluding that a bad faith

expert with twenty-five years’ experience working for insurance companies and prior

expert testimony in insurance cases was qualified to testify as an expert witness).

NYL’s other objections are unavailing. To the extent NYL objects to the weight, as

opposed to the admissibility, of Parker’s testimony, that argument fails. See AstenJohnson,

Inc., 740 F.3d at 463 (cited supra). Moreover, there is no basis at this point to conclude

that Parker will necessarily only “summarize evidence.” Rogers v. Raymark, 922 F.2d

1426, 1431 (9th Cir. 1991). “[T]he average juror is not likely to be familiar with the

practices and procedures involved in insurance claims handling,” and Parker’s testimony

may shed light on these issues. See Camacho v. Nationwide Mut. Ins. Co., 2014 WL

1396427 at *17 (N.D. Ga. Mar. 31, 2014) (citing other courts that have reached the same

conclusion). Parker shall be permitted to explain these procedures at trial, provided she

does not offer any conclusions that invade the province of the jury. Should Parker’s

testimony stray from what is admissible pursuant to the Federal Rules of Evidence, NYL

shall be free to make an objection at that time.

NYL’s MIL No. 2 1s accordingly DENIED without prejudice.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

C. NYL’s MIL No. 3

NYL moves to exclude “|t|estimony, evidence or documents regarding, or

presenting any argument relating to [Shenon’s] prior claim with [NYL].” ECF No. 86 at

Notice 2. This prior claim (“the Prior Claim”) was filed by Shenon with NYL for long-

term care benefits on January 7, 2010, and settled on June 21, 2017. Id. at 1; ECF No. 116

at 2. To record their settlement, the parties entered into a confidential settlement agreement

(“the Settlement Agreement”). See ECF No. 86-1.

NYL claims that the Settlement Agreement prevents Shenon from referring to the

Prior Claim in this litigation, and that Shenon also agreed to keep the facts and

circumstances regarding the Prior Claim confidential. ECF No. 86 at 3. As result, NYL

argues that any evidence related to the Prior Claim is inadmissible. Id. at 4. Additionally,

NYL contends that evidence related to the Prior Claim is irrelevant to the claim at issue in

this litigation (“the Present Claim”) and prejudicial because it would invite the jury to

unfairly speculate as to the Prior Claim. Id. at 4-5.

At the hearing on this motion, Shenon’s counsel explained that the evidence it seeks

to introduce from the Prior Claim file is a May 21, 2017 document that Shenon contends

demonstrates that NYL made previous findings that support the veracity of Shenon’s

current claim. Shenon argues the document is relevant because it supports a finding that

would trigger coverage for the present claim. She adds that NYL, at a minimum, reviewed

this evidence when it selectively relied on other documents in the Prior Claim file to make

its determination on the claim at issue in this litigation. As to NYL’s objection under the

Settlement Agreement, Shenon responds that NYL materially breached the Settlement

Agreement by providing “cherry-picked” information from the Prior Claim case file to Dr.

Theresa Oney for the purpose of defending this lawsuit, with the result that Shenon is

released from performing the agreement’s obligations. See Brown v. Grimes, 192 Cal.

App. 4th 265, 277 (2011) (“When a party’s failure to perform a contractual obligation

constitutes a material breach of the contract, the other party may be discharged from its

duty to perform under the contract.”). In anticipation of this argument, NYL contends that

sharing the selected records with Dr. Oney was permitted by an exception recorded in the

a

See ECF No. 86-1 § 3(b).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

Based on the record before the Court, the motion appears to be moot because the

only Prior Claim document that Shenon intends to introduce at trial is exempted by the

plain language of the agreement. Specifically, whether or not NYL materially breached

the Settlement Agreement by providing materials to Dr. Oney (and it appears it did not),

the Settlement Agreement (oS Shenon or NYL from

po] (i.e., using in a proceeding) documents from the Prior Claim to

adjudicate a new claim if those documents □

Poo See ECF No. 86-1 § 3(b). The only Prior Claim document that Shenon

apparently intends to Tl is the May 21, 2017 document that, based on

the proffer made by Shenon’s counsel at the hearing on this motion, is

to her current claim.

For these reasons, NYL’s MIL No. 3 is DENIED AS MOOT.

D. NYL’s MIL No. 4

NYL moves to restrict the testimony from seven of Shenon’s treating physicians and

medical providers who were designated as experts, but who did not provide an expert report

in accordance with Federal Rule of Civil Procedure 26(a)(2)(B)}—namely Drs. Elena

Spektor, Stephen Kay, Andrew Spitzer, Daniel Rosen, Martin Cooper, Faina Zlatogorov,

and physical therapist Julia Karchemsky (collectively, “the Challenged Providers”). ECF

No. 69 at 1. Specifically, NYL moves to limit the Challenged Providers’ testimony to the

opinions they formed during the course of their treatment at the time it was rendered,

excluding any opinions they developed from independent sources (including records

produced in litigation). See Goodman v. Staples The Office Superstore, 644 F.3d 817, 826

(9th Cir. 2011) (holding that a treating physician may provide expert testimony without

submitting a written report, but only if the physician offers opinions that were formed

“during the course of treatment’).

Shenon does not dispute that, under Goodman, the Challenged Providers’ testimony

must be limited to the opinions that these providers formed during the course of their

treatment since they did not submit expert reports. However, Shenon contends that the

Challenged Providers “should be allowed to testify about all of their opinions formed

during the course of their treatment of Ms. Shenon, regardless of whether such opinions

are based upon or informed by information or documents” collected through litigation. Id.

at 3-4 (internal marks omitted).

The Ninth Circuit held in Goodman that “a treating physician is only exempt from

Rule 26(a)(2)(B)’s written report requirement to the extent that his opinions were formed

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

during the course of treatment.” Goodman, 644 F.3d at 826. This decision limits the

testimony of a physician who does not file a written report to opinions drawn or derived

from the treatment they provide. Id. Medical opinions formed from the consideration of

Shenon’s prior medical records, physician reports, and other related documents (however

obtained) fall within the range of admissible testimony under that standard, provided that

these documents informed the Challenged Providers’ ongoing treatment of Shenon. The

Challenged Providers shall be permitted to offer such testimony at trial. What the

Challenged Providers cannot discuss, however, are any legal conclusions about whether

Shenon’s condition entitles her to the benefits of the insurance policy at issue in this case,

or any prognoses as to Shenon’s future condition and abilities. See Lee v. First Nat’ Ins.

Co., No. 09-CV-06264-MMM CWx), 2010 WL 11549637, at *10 (C.D. Cal. Dec. 22,

2010) (concluding that “such opinions fail to assist under Rule 702” since they “do nothing

more for the jury than tell it what verdict to reach”) (citing Wright & Gold, 29 Fed. Prac.

& Proc. Evid. § 6264 (2d ed.)).

For these reasons, NYL’s MIL No. 4 is GRANTED in that the Challenged

Providers’ testimony shall be limited by Goodman, but DENIED to the extent NYL seeks

to preclude the Challenged Providers from offering opinions based upon a review of

documents they considered during their course of treating Shenon.! Shenon’s counsel is,

however, directed to explain in more detail what specific documents the Challenged

Providers relied upon to treat Shenon that they intend to testify about at trial.

E. NYL’s MIL No.5

NYL moves for an order “to exclude evidence of plaintiff's disability benefits or the

legal standards applicable to disability benefits” with reference to the private insurance and

Social Security disability benefits Shenon is receiving. ECF No. 71 at 1. NYL contends

that such evidence is irrelevant to Shenon’s claims, would be confusing to the jury,

prejudicial to NYL, and—without citing or discussing any legal authority—conclusively

asserts that such testimony is accordingly inadmissible. Id. Shenon answers that her

receipt of disability payments, and the underlying basis for those payments, are facts that

Shenon contends that if NYL raises any subject matter beyond the scope of the

Challenged Providers’ treatment on cross-examuination, then Shenon should be permitted

to probe those subjects on redirect. The Court reserves decision to rule on the objections to

the scope of any cross-examination or redirect at trial.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

NYL had an obligation to investigate when it considered Shenon’s claim, that NYL’s

failure to investigate those facts are relevant to her bad faith claim, and that the jury

instructions will ensure that these facts should only be considered for this purpose, and that

“there will be no confusion concerning which standard the jury 1s to apply.” ECF No. 89

at 3-4. At the hearing on this motion, Shenon’s counsel made clear that Shenon does not

intend to offer the evidence to suggest she is entitled to policy benefits from NYL because

she has been found to be disabled by the Social Security Administration, but only to

demonstrate that NYL did not adequately investigate her claim.

The Court agrees with Shenon that the probative value of the federal disability

benefits in this case are considerable, at least as they relate to NYL’s obligation to

investigate Shenon’s disability claim. Moreover, evidence that a plaintiff receives federal

disability benefits—pursuant to the pertinent legal standard—is not inadmissible or

prejudicial per se in a case involving a claim for benefits under a different standard. See

Creer v. AT & T Umbrella Ben. Plan No. 1, No. 09-CV-02210-MCE, 2012 WL 397717,

at *6 (E_D. Cal. Feb. 7, 2012) (concluding in an ERISA case that “the fact that the disability

standard for [Social Security Disability Insurance (“SSDI’)]| purposes may be different does

not mean Plaintiffs social security award was irrelevant.”’) (citing Letvinuck v. Aetna Life

Ins. Co., 439 F. App’x 585, 586 (9th Cir. 2011) for the proposition that the “Social Security

Admiunistration’s (SSA) decision that Letvinuck was disabled” was “relevant evidence” in

ERISA action for wrongful denial of coverage).

The Court accordingly DENIES NYL’s MIL 5. The parties are instructed to propose

a limiting instruction addressing how the jury should consider the evidence of Shenon’s

SSDI benefits.

F. |NYL’s Unopposed MIL No. 6

NYL’s MIL No. 6 to exclude any reference to the court’s ruling on defendant’s

motion for partial summary judgment, ECF No. 72, is not opposed by Shenon, see ECF

No. 96, and therefore this MIL is GRANTED.

G. NYL’s MIL No.7

NYL moves to exclude evidence related to its “handling of other claims submitted

by other insureds and other lawsuits.” ECF No. 76 at 4. NYL claims that such evidence

is irrelevant because there is no “evidentiary link between information about other

claimants and the issues being tried in this case,” and that it would violate third party

privacy rights to disclose this information. Id. at 2. NYL further contends that even if this

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CoO., ET AL.

was not the case, the evidence should be excluded pursuant to Rule 403 because NYL

would “necessarily be forced” to present evidence showing that its claim handling was

reasonable, proper, and done in good faith, resulting in certain prejudice to NYL and likely

confusion of the jury. Id. at 3.

Shenon answers that this MIL must be denied because NYL “failed to identify any

specific evidence or other claims that it seeks to preclude.” ECF No. 117 at 2. Shenon

further contends that she “must be able to reference other claims” in order to prove that her

claim was unfairly targeted for differential treatment, and in order to prove that NYL had

a pattern or practice of denying claims like hers in bad faith. Id. at 6-7.

The Court agrees that evidence related to NYL’s handling of other claims and

lawsuits could be relevant to show a pattern of NYL’s claim handling process that is related

to Shenon’s bad faith claim. See MSJ Order at 10 (addressing Shenon’s bad faith claim).

Moreover, in the absence of any particular evidence targeted for exclusion, it is premature

to decide whether the proffer of such evidence, even if relevant, would be substantially

more prejudicial than probative. “[A] district court cannot properly exercise its discretion

to decide whether the probative value of evidence objected to under Rule 403 outweighs

the risk of unfair prejudice without examining the evidence” first. See United States v.

McElmurry, 776 F.3d 1061, 1067 (9th Cir. 2015). For this reason, “the Court is not in a

position to rule n the request” at this time. United States v. Cervantes, No. 12-CR-00792-

YGR, 2016 WL 345600, at *9 (N.D. Cal. Jan. 28, 2016) (denying motion in limine

grounded in Rule 403 without prejudice).

The Court adds that while Federal Rule of Evidence 404(b)(1) precludes the

admission of prior acts evidence “to prove the character” of a defendant “in order to show

action in conformity with that character,” the evidence at issue in this case falls into the

exception set forth in Rule 404(b)(2) “which allows the admission of prior conduct for the

purposes of proving motive, opportunity, intent, preparation, plan, knowledge, identity, or

absence of mistake or accident.” United States v. Arambula-Ruiz, 987 F.2d 599, 602 (9th

Cir. 1993) (citing Fed. R. Evid. 404).

Accordingly, MIL No. 7 is DENIED without prejudice. The court reserves the right

to preclude evidence of prior claims and lawsuits on a case-by-case basis at trial.

Additionally, the parties are ordered to propose a limiting instruction addressing how the

jury should consider the evidence of NYL’s prior claims and lawsuits in accordance with

Rule 404.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

H. NYL’s MIL No. 8

NYL moves for an order that the Court either (1) exclude certain unspecified

financial documents (“the Financial Documents”) discussed at the deposition of Aaron

Ball or, in the alternative, (2) preclude Shenon from referring to these unspecified Financial

Documents in her opening statement and handle objections on a document-by-document

basis at trial. ECF No. 77 at 1. Shenon answers that NYL has, among other problems with

its motion, failed to specifically identify the evidence it seeks to exclude. ECF No. 99 at

2-4.

The Court agrees with Shenon that this MIL lacks the requisite specificity that would

allow the Court to rule on its merits, at least at this point. District courts routinely deny

MILs that fail to identify the specific materials they seek to exclude. See, e.g., Bullard v.

Wastequip Mfg. Co., LLC, 2015 WL 13757143, at *7 (C.D. Cal. May 4, 2015)

(“defendants’ failure to specify the evidence they seek to exclude constitutes a sufficient

basis upon which to deny their motion”); Colton Crane Co., LLC v. Terex Cranes

Wilmington, Inc., 2010 WL 2035800, at *1 (C.D. Cal. May 19, 2010) (“motions in

limine must identify the evidence at issue and state with specificity why such evidence is

inadmissible” and “motions in limine should rarely seek to exclude broad categories of

evidence, as the court is almost always better situated to rule on evidentiary issues 1n their

factual context during trial’); Engman v. City of Ontario, 2011 WL 2463178, at *3 (C.D.

Cal. June 20, 2011) (“Because defendants have not identified any particular statement that

they seek to preclude, the Court finds that it would be premature to address the instant

motion in limine’’).

Accordingly, this MIL is DENIED without prejudice. NYL will have an

opportunity to renew this motion at trial with reference to the specific financial documents

it seeks to exclude.

With respect to evidence addressed in opening statements, it is the Court’s practice

to require the parties to exchange the evidence they intend to reference in their respective

opening statements before the beginning of trial. If either party objects to the use of

evidence in the other party’s opening, the evidence shall not be referenced until received

into evidence at trial.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CoO., ET AL.

I. NYL?’s MIL No. 9

NYL moves to “either (1) exclude any reference to Granville Elliott, or,

alternatively, (2) preclude Plaintiff from referring to Elliott in opening statement, and

handle objections during trial.” ECF No. 78 at 3.

The parties do not dispute that Elliott was a licensed and appointed representative of

NYL who administered Shenon’s policy, but NYL contends that Shenon has failed to

establish how Elliott is relevant to the handling of Shenon’s claim, or this litigation. Id. at

5. Shenon answers that there is circumstantial evidence that her claim was “tracked and

handled as suspicious and potentially fraudulent, at least in part, because her policy had

been [administered] by Granville Elliott.” ECF No. 118 at 6 (internal marks omitted).

This evidence consists of testimony by Aaron Ball, ECF No. 118-1 (“Calvert Decl.”), Ex.

3 (“Ball Depo.”), testimony by Elliott himself, Calvert Decl., Ex. 1 (“Elliott Depo.”), and

evidence from documents produced in discovery that policies sold and/or handled by Elliott

were targeted for denial based on allegations that these policies tended to generate a greater

than average loss ratio. See, e.g., Calvert Decl., Ex. 5 ((NYLIC 2274”) and Ex. 6 (“NYLIC

2310”). Shenon contends that this evidence, taken together, demonstrates that Elliott’s role

in administering Shenon’s policy may have contributed to the subsequent denial of her

claim in bad faith.

The Court agrees with Shenon, and does not find the evidence involving Elliott

inadmissible as a matter of law at this juncture. Even if a plaintiff who claims that a

company policy led to the denial of her claim were required to supply evidence of a

“specific nexus” between that alleged policy and her claim denial before she could put on

evidence of the alleged policy, see Starr-Gordon v. Massachusetts Mut. Life Ins. Co., No.

03-CIV-0368-LKK (GGH), 2006 WL 3218778, at *13 (E.D. Cal. Nov. 7, 2006) (discussed

in NYL’s motion at 5), the record evidence (including the evidence discussed above that

NYL scrutinized policies handled by Elliott) does precisely that. Moreover, as the Court

concluded in its motion denying NYL’s partial motion for summary judgment, Shenon has

presented evidence that raises a triable issue “that the BIU was created for, and in the case

of her claim used to, ‘search for ways to avoid paying a claim.’”” MSJ Order at 10

(emphasis added) (quoting Tomaselli v. Transamerica Ins. Co., 25 Cal. App. 4th 1269,

1281 (1994) (cited in Croskey et al., Cal. Prac. Guide: Insurance Litig., § 12:889)

(“Croskey”)). Shenon has presented evidence that raises a triable issue that NYL created

the BIU to deny claims in bad faith, including by targeting claims brought by insureds (like

Shenon) whose policies are serviced by particular sales agents.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

Accordingly, NYL’s MIL No. 9 is DENIED.

J. NYL’s MIL No. 10

NYL moves to exclude any “comment, reference, evidence or argument regarding

the reserves set on Plaintiff's claim or the reserves set on any other claim submitted to

[NYL] or any of its parent or affiliated companies.” ECF No. 73 at Notice 2. NYL

contends that a policy’s claims reserves are based on statistical factors and statutory

requirements, and as such are not relevant to Shenon’s claim. Id. at 2. NYL further

contends that even if found to be relevant, all reference to reserves should be excluded on

the basis that any purported relevance would be substantially outweighed by unfair

prejudice to NYL, confusion of issues for the jury, and delay and waste of the court’s time

pursuant to Rule 403. Id. Shenon answers that she does not intend to introduce evidence

of NYL’s claims reserves, but must be allowed to discuss the separate settlement and/or

litigation reserves (i.e., liability reserves) that NYL set aside for certain policies—

specifically, those policies administered or sold by Granville Elliott—because she contends

these greater than average figures are relevant to show that NYL had an incentive to

monitor and target claims like hers for denial.

Although “in first party” bad faith cases “the question of potential liability reserves”

is typically “not relevant,” this is because the usual first party bad faith case focuses on the

adequacy of a defendant insurance company’s “good faith in investigating the loss and

denying coverage.” American Protection Ins. Co. v. Helm Concentrates, Inc., 140 F.R.D.

448, 450 (E.D. Cal. 1991) (cited by NYL). This case is different, however, because its

theory of bad faith hinges on an alleged NYL policy to target certain claims for denial,

including on grounds that the insured making the claim held a policy that was handled by

Granville Elliott. See MSJ Order at 10-11. From what the Court understands, Shenon

intends to offer evidence of the relatively high liability reserves on her and other allegedly

affected policies to show NYL’s motive for developing and plan for executing this policy

to reduce the liability risk from Elliott’s clients. For this reason, the evidence could be

relevant in this case.

Accordingly, MIL No. 10 is DENIED without prejudice. The Court reserves

judgment as to whether individual exhibits or certain testimony are substantially more

prejudicial than probative.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

K. NYL’s MIL No. 11

NYL moves to exclude any evidence, reference, or argument that Shenon may be

entitled to recover future benefits, regardless of whether the jurors find NYL acted in bad

faith. ECF No. 79 at 6. Ordinarily, a jury may award damages for future policy benefits

consistent with the policy provisions. See Egan v. Mut. of Omaha Ins. Co., 24 Cal. 3d 809,

824 n.7 (1979). NYL contends, however, that Egan only applies to future disability

benefits, pursuant to a disability policy, and not to the kind of long-term care (“LTC”)

benefits that are at issue in this case. ECF No. 79 at 2. According to NYL, disability

benefits are unique in that they “provide fixed monthly indemnity disability benefits

designed to replace income,” whereas LTC benefits reimburse the insured for covered

expenses already paid for. Id. Because LTC benefits effectively operate as a

reimbursement policy, NYL argues that “damage claims based on future [LTC] benefits

are fatally speculative” and “impossible to calculate.” Id. at 3. Furthermore, NYL alleges

that because the conditions to Shenon’s right to receive future benefits have not yet

occurred (i.e. the expense events that would require re1mbursement have not yet taken

place), a jury could not predict without speculating what LTC benefits Shenon may be

entitled to receive in the future. Id. at 4. Finally, NYL contends that an award of future

LTC benefits would allow Shenon to recover long-term care benefits without certification

of chronically ill status by a licensed health care practitioner in violation of the Internal

Revenue Code. See 26 U.S.C. § 7702B.

Shenon responds that Egan applies to her case in full force. The Court agrees. While

Egan concerns fixed monthly indemnity disability benefits, Egan, 24 Cal. 3d at 815, NYL

cites no authority that Egan cannot apply to rembursement policies such as the one at issue

in this case. In fact, as Shenon correctly notes, the Ninth Circuit in Hangarter indicated the

opposite. See Hangarter, 373 F.3d at 1012 (holding “Egan to apply to insurance bad faith

claims generally”). The Court therefore sees no reason to exclude evidence of future

benefits on this basis.

NYL’s remaining arguments are without merit. First, NYL cites no authority to

support the proposition that an award of future LTC benefits would violate the Internal

Revenue Code. Second, there is no basis to exclude the evidence because of a speculative

damage award that might result. “Under California law, the damages recoverable in any

case must be susceptible of ascertainment with a reasonable degree of certainty|.|” Yuyjin

Robot Co. v. Synet Elecs., Inc., 744 F. App’x 338, 340 (9th Cir. 2018). This burden is

sufficient to ensure that the jury will not award “fatally speculative” future disability

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

benefits to Shenon. NYL may challenge any award that is contrary to this rule of law, or

not supported by the clear weight of the evidence, through post-trial motions.

Accordingly, NYL’s MIL No. 11 is DENIED.

L. NYL’s MIL No. 12

NYL moves to exclude “[a|ny evidence relating or referring to purported emotional

distress sustained by Shenon due to any act or omission by [NYL].” ECF No. 80 at 2.

NYL alleges that emotional distress damages are only recoverable if Shenon establishes

that she has sustained economic loss, and that Shenon has already stipulated that no

economic loss occurred in her case. Id. at 3-4; ECF No. 80-1 (“Shea Decl.”) at 2. NYL

further contends that even if evidence related to emotional distress is to be found

admissible, it would be substantially outweighed by the unfair prejudice that would result

to NYL and the confusion of issues that would result to the jury. ECF No. 80 at 4.

Shenon claims that she only agreed to withdraw her claim for financial distress, not

her claim for financial harm. ECF No. 104 at 2. Shenon argues that “financial harm

connotes an actual loss” while “financial distress” is “the actual or potential loss of her

home, immediate failure of her ability to pay her bills, etc.” Id. Shenon contends that she

has suffered and continues to suffer financial harm every two weeks when she pays for her

care out of her own pocket, and that “[t]he emotional turmoil [Shenon] experienced

naturally flowed from this economic loss.” Id. at 3-4.

“{E|motional distress damages are recoverable in first and third party bad faith cases

only when the insureds have suffered financial loss.” Waters v. United Servs. Auto. Ass’n.,

41 Cal. App. 4th 1063, 1069 (1996). In Waters, the California Court of Appeal reversed a

jury’s award of emotional distress damages to the insureds on the basis that they:

“"_.did not put on any evidence of any kind of financial loss—no medical or

hospital bills paid (or even incurred), no attorneys' fees, no interest paid on

borrowed funds, no interest lost because personal funds had to be advanced to

cover . . . expenses, no loss of an investment opportunity because personal

capital was committed to the restoration effort—in short, nothing to suggest

the Waters spent a penny of their own (or lost income they would have

otherwise received) as a result of USAA's delay in paying the amounts

claimed under the policy.”

Id. (emphasis in original).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CoO., ET AL.

The Court agrees with Shenon that, in contrast to the insureds in Waters, Shenon has

experienced and continues to experience financial loss resulting, at a minimum, from her

biweekly payments to her caretaker Naratovska, the potential interest lost on those funds,

and the litigation expense she is incurring as a result of this suit. ECF No. 104 at 3-4.

NYL’s contention that these payments cannot constitute loss are not well-taken: the

reduction in a fixed asset, or fund, plainly constitute damages.

The Court also agrees with Shenon that the joint stipulation entered by NYL and

Shenon on February 14, 2020 (“the Joint Stipulation”), ECF No. 68, does not preclude

Shenon from claiming emotional distress damages on the basis of financial harm. The

Joint Stipulation only precludes Shenon from “making a claim against [NYL] for financial

distress or hardship because of the non-receipt of long-term care benefits from NYL,” and

does not apply to the financial loss Shenon alleges as the basis for her emotional distress

claim. Id. at 2.

Accordingly, NYL’s MIL No. 12 is DENIED.

M. NYL’s MIL No. 13

NYL requests a protective order pursuant to California Civil Code § 3295(a) to

prevent Shenon from putting on evidence of NYL’s financial condition until she has

established a prima facie case that she is entitled to punitive damages. ECF No. 74 at 2.

Specifically, the code section states that “[t]he court may, for good cause, grant any

defendant a protective order requiring the plaintiff to produce evidence of a prima facie

case of liability for [punitive damages], prior to the introduction of evidence of . . . [t]he

financial condition of the defendant.” Cal. Civ. Code § 3295(a). NYL contends that its

financial condition is not relevant to any issue, except in the event that the issue of punitive

damages is permitted to go to the jury, and if admitted before that point, would be unduly

prejudicial pursuant to Rule 403. Id.

Shenon opposes on grounds that (1) NYL’s financial condition and net worth are

relevant to proving NYL’s liability for bad faith because NYL’s financial information

shows that it had the resources to conduct a thorough investigation, and elected not to. ECF

No. 87 at 2-3, and (11) NYL has no basis to conclude that evidence of NYL’s net worth

would cause prejudice if introduced during Shenon’s case in chief. Id. at 3.

The Court notes that it has no obligation to grant a protective order pursuant to

§ 3295 because that provision of California state law is procedural and federal courts sitting

in diversity apply federal procedural law. See, e.g., Oakes v. Havlorsen Marine Ltd., 179

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

F.R.D. 281, 284-85 (C.D. Cal. 1998) (“Examining Civil Code Section 3295(a)-(c), this

Court find that it is clearly a procedural law’) (citing Hanna v. Plummer, 380 U.S. 460,

465 (1965)). Nonetheless, the Court has discretion to bifurcate trial pursuant to Federal

Rule of Civil Procedure 42.

It is well-established that evidence of an insurer’s net worth, while relevant to the

proof of punitive damages, may prejudice it during the liability phase of trial. See Croskey

et al., 13-C Cal. Prac. Guide: Ins. Litig. §§ 13.446, 13.571 (2019) (“Croskey”) (stating that

“Defendant’s wealth and income are important factors in assessing punitive damages,” but

agreeing that there is a “presumption” that “evidence of a defendant’s wealth can induce

factfinders to abandon their objectivity and return a verdict based on passion and

prejudice’) (citation omitted). For this reason, federal courts often exercise their discretion

to bifurcate the trial on an insured’s underlying claims for denial of coverage and the

entitlement to punitive damages, from the trial on the amount of punitive damages to be

awarded, if any. See, e.g., Fid. Nat. Fin., Inc. v. Friedman, No. 00-CV-06902-WJR (RZx),

2002 WL 34369457, at *1 (C.D. Cal. May 14, 2002) (concluding that financial condition

evidence “would be relevant only to the issue of punitive damages” and ordering “that the

trial of the respective punitive damage claims of plaintiffs/counterdefendants and of

defendant/counterclaimant . . . be bifurcated from, and conducted after, trial of the

underlying claims and counterclaims”).?

2 In some cases, a leading treatise suggests that it may even make sense to divide

trial into three phases—one for liability on the underlying denial of coverage claims, one

for entitlement to punitive damages, and one for the amount of punitive damages to

award—to account for the fact that proof of liability and the entitlement to punitive

damages are adjudicated under different legal standards, and often turn on different sets

facts. See generally Croskey §§ 13.355, 13.518, 13.550 (observing (1) that “a bad faith

claim in which punitive damages are sought involves two different standards of proof: the

bad faith (tort) claim need be proved only by a preponderance of the evidence” while the

“oppression, fraud or malice” necessary to establish an entitlement to punitive damages

“must be proved by clear and convincing evidence, and (11) that a claim for punitive

damages ordinarily “is not established merely by evidence that the insurer” tortiously

breached the implied covenant).

However, because this is a case where “the facts showing breach of the implied

covenant... may also constitute clear and convincing evidence of [malice] or other conduct

justifying punitive damages”—see, e.g., Campbell v. Cal-Gard Sur. Servs.. Inc., 62 Cal.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

Shenon contends that the Court should not bifurcate trial in this fashion because

financial condition demonstrates that it had the means to reasonably investigate

Shenon’s claim, but elected not to, and thus denied her claim in bad faith. That is a red

herring. Whether or not NYL was well-capitalized, it had an obligation to reasonably

investigate Shenon’s claim pursuant to its policy contract and the associated covenant of

good faith and fair dealing. See Guebara v. Allstate Ins. Co., 237 F.3d 987, 992 (9th Cir.

2001) (“The key to a bad faith claim is whether or not the insurer’s denial of coverage was

reasonable.”) (applying California law); e.g., Tomaselli v. Transamerica Ins. Co., 25 Cal.

App. 4th 1269, 1281 (1994) (insurer breaches this obligation in bad faith when it

“search|es| for ways to avoid paying a claim”) (discussed in MSJ Order at 10-11). NYL’s

financial condition has no bearing on the reasonableness of its decision to deny Shenon’s

claim. Shenon’s other argument—that NYL has not presented evidence that it would

necessarily be prejudiced by the introduction of this evidence during a liability phase of

trial—is also without merit in light of the “presumption,” discussed above, “that evidence

of a defendant’s wealth” can induce prejudice. See Croskey, § 13:571 (citing cases).

Given the risk that evidence of NYL’s net worth and financial condition may

prejudice NYL if considered during the the liability phase of trial, the Court will exercise

its discretion pursuant to Rule 42 to bifurcate the trial as follows: first, the Court will try

Shenon’s bad faith, breach of contract, and entitlement to punitive damages claims; second,

if Shenon prevails on her claim and establishes that she is entitled to punitive damages, the

Court shall hold an additional trial to determine the amount of punitive damages it shall

award, at which time the evidence of NYL’s financial condition will be admissible.

NYL’s MIL No. 13 is accordingly GRANTED in substance. Shenon shall not

introduce evidence of NYL’s financial condition unless and until she has established a

prima facie case that she is entitled to punitive damages.

N. NYL’s MIL No. 14

NYL alleges that at the pre-trial conference meeting between counsel on February

12, 2020, Shenon informed NYL that Shenon’s expert Glenna Tolbert will provide an

updated report to provide a more recent evaluation of Shenon’s condition. ECF No. 81 at

3. Considering that expert designations were due October 29, 2019 and rebuttal

App. 4th 563, 571 (1998) (evidence that the insurer “had an established practice of not

investigating claims” both established tortious breach of the implied covenant and

malice)—the Court declines to follow this approach. Croskey, § 13.550.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

designations were due November 27, 2019, NYL moves to exclude all testimony related to

this new report and to limit Tolbert’s testimony to the reports served with Shenon’s expert

designation. Id. at 6. NYL contends that Shenon is not allowed to use the information in

the new report as evidence in the trial pursuant to Federal Rule of Civil Procedure 37(c)(1),

and that any probative value of this testimony would be “far outweighed by the harms

elucidated in Rule 403.” Id. at 5.

Shenon answers that she is simply seeking to supplement Tolbert’s timely disclosed

reports and opinions in accordance with Federal Rule of Civil Procedure 26(e)(1)(A),

which requires a party to “supplement or correct its disclosure or response . . . if the party

learns that in some material respect the disclosure or response is incomplete or incorrect.”

ECF No. 92 at 2. Shenon claims that, absent supplementation, Tolbert’s timely disclosed

original report will be incomplete at the time of the trial because she was last evaluated by

Tolbert six months ago. Id. at 2-3. Supplementing the report, she contends, will “provide

the jury with the most current and accurate evidence concerning |Shenon’s| status.” Id. at

3.

“TS ]upplements are only for the narrow purpose of correcting inaccuracies or adding

information that was not available at the time of the initial report.” In re Asbestos Prod.

Liab. Litig. (No. VJ), 289 F.R.D. 424, 425 (E_D. Pa. 2013) (quoting Sancom, Inc. v. Qwest

Comm. Corp., 683 F.Supp.2d 1043, 1062-63 (D.S.D. 2010) (internal marks omitted).

“Rule 26(e) is not an avenue to correct failures of omissions because the expert did an

inadequate or incomplete preparation, add new opinion, or deepen or strengthen existing

opinions.” In re Asbestos, 289 F.R.D. at 425 (omitting internal marks and cites).

At this point—before any supplement has been drafted—the Court cannot conclude

that Shenon’s proposed updated report would impermissibly “add new opinion|s], or

deepen or strengthen existing opinions,” In re Asbestos, 289 F.R.D. at 425 (omitting

internal marks and cites), as opposed to providing a valid “supplement” under Rule

26(e)(1)(A). See Cross-Fit, Inc. v. Nat’] Strength & Conditioning Ass'n, 2018 WL

3491854, at *11 (S.D. Cal. July 18, 2018) (permitting supplement because “i]t is .. .

understandable that damages may increase and damages assessments may change over

time, especially when a case experiences lengthy delays . . . . Rule 26(e)(1)(A) permits a

party to supplement an expert report under these circumstances.”).

Accordingly, NYL’s MIL No. 14 is DENIED, without prejudice. Shenon shall be

permitted to supplement Tolbert’s report pursuant to Rule 26(e)(1)(A), and NYL retains

the right to object to the admissibility of any opinion based on the prepared supplement.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. 2:18-CV-00240-CAS (AGRx) Date March 16, 2020

Title SHENON V. NEW YORK LIFE INSURANCE CO., ET AL.

In the event a supplemental report is filed, NYL shall be permitted to conduct discovery

about the supplemental opinion, and, if appropriate, submit a rebuttal report. Shenon will

be entitled to conduct discovery with regard to any rebuttal report.

IV. CONCLUSION

For the foregoing reasons, the Court rules as follows: NYL’s MIL Nos. 1, 2, 7, 8,

10, and 14 are DENIED WITHOUT PREJUDICE; NYL’s MIL Nos. 5, 9, 11, and 12

are DENIED: NYL’s MIL Nos. 6 and 13 are GRANTED: NYL’s MIL No. 4 is

GRANTED in part and DENIED in part; and NYL’s MIL No. 3 is DENIED AS MOOT.

IT IS SO ORDERED.

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Initials of

Preparer CMJ