Travelers Indemnity Co. v. Excalibur Reinsurance Corp.
Absent evidence of bad faith, a court can sustain a company's decision to designate the deposition transcripts of senior company executives as "confidential." Gulf Insurance entered into a reinsurance contract with the defendant, Excalibur Reinsurance. The plaintiff, Travelers Indemnity, as the successor in interest to Gulf Insurance, issued errors and omissions policies to an insurance and reinsurance broker. The broker's clients brought claims against the broker for losses from reinsurance spirals. The broker sought coverage from Travelers, its affiliates and unaffiliated insurance companies. In 2010, Travelers and its affiliates reached a settlement with the broker. Travelers sought to recover from its reinsurer, Excalibur. Travelers sued Excalibur, alleging it refused to pay $1.5 million in reinsurance claims. Excalibur filed documents that purported to contain settlement discussions between Travelers and the broker, and legal advice obtained by the broker. Travelers moved to seal. The District Court found that Travelers seeks to protect confidential, proprietary information, documents and client data. Clear and compelling reasons exist to seal. The proposed sealing is narrowly tailored. The District Court granted Travelers' motions to seal documents that include privileged communications between Travelers and its counsel and between nonparties and their counsel. The court also granted Travelers' motion to redact documents that include legal advice from counsel. "[I]t is well settled within the Second Circuit," wrote the court, "that the attorney-client privilege may be a sufficiently compelling reason to defeat the public's right of access." The court granted Travelers' motion to redact exhibits that contain confidential settlement discussions. The 2nd Circuit recognizes the value of confidentiality in settlement negotiations, to permit the free flow of information that may result in settlement. Excalibur sought to designate deposition transcripts as confidential on the basis that company presidents and vice presidents were questioned about Excalibur's policies about claims handling and payment. Travelers objected that a party may not designate the entire transcript as confidential, merely because it contains confidential information. Absent evidence of bad faith, the court upheld Excalibur's designation of the transcripts as confidential. In the event that Excalibur requests sealing, it must indicate each line it seeks to seal.