Law of Cards: Only Upper Deck Could Make Insurance Litigation Interesting

Law of Cards: Only Upper Deck Could Make Insurance Litigation Interesting

Two weeks ago, a group of attorneys were in my office trying to decide what type of legal work was the most boring, least rewarding and, frankly, most painful in existence. I suggested attorneys who specialized in arguing constitutional issues. I was quickly one-upped when a colleague suggested attorneys who prepared patent applications for paints and adhesives.

But then, we were both bested when another suggested, “those guys that argue insurance coverage." Bing! We had a winner. Everyone groaned and was thankful that while we could be pretty boring sometimes, we didn't have to review page after page of incomprehensible insurance policies, and then come up with excuses under those policies about why our clients did not need to pay out.

And then, a week later, Upper Deck proved us wrong and made insurance coverage cases funny.

Over a year ago, Upper Deck sued the Endurance American Specialty Insurance Company because Endurance allegedly failed to “fully defend and indemnify Upper Deck against losses" in the Konami lawsuit (the suit that involved counterfeit Yu-Gi-Oh! cards that I wrote about here and here when covering the Upper Deck v. Upper Deck suit).

Legal translation of “fully defend and indemnify" - Most large companies like Upper Deck have insurance policies that protect them from just about everything, including lawsuits. These insurance policies are supposed to cover the company's litigation costs (attorneys fees, settlements, etc.) in the event they get sued. Like most insurance policies, however, there are many exceptions.

At some point Endurance stopped paying for the Konami suit, allegedly sticking Upper Deck with the bill. Now Upper Deck wants money from Endurance to cover what it paid.

Endurance doesn't think it should have to pay Upper Deck anything. In fact, it countersued Upper Deck for the money it already paid to Upper Deck because it believes Upper Deck “engage[ed] in a willful scheme to infringe the copyright protections of Konami by counterfeiting the most rare and valuable Yu-Gi-Oh! trading cards and failed to disclose this scheme to Endurance."

Legal translation - Apparently, Endurance's insurance policy required Upper Deck to disclose any fraudulent behavior Upper Deck may have been engaged in so that Endurance could determine whether or not that fraudulent behavior was included in Upper Deck's coverage (Wait, you mean to tell me my insurance policy doesn't cover fraudulent activities I was engaged in before I got the insurance policy?).  And because Upper Deck didn't disclose its alleged fraudulent behavior first, Endurance not only does not want to pay the claim. Instead, they want a refund.

Normally, a lawsuit about a company failing to “fully defend and indemnify" (I'm trying not to yawn as I type that) its client would be too boring to write about other than to note the lawsuit's existence, and then two years later to report the outcome. This lawsuit is more noteworthy and it's not just because Upper Deck is a party. Rather, both sides are acting like spoiled kids and the judge is trying to pull them apart.

I love this case because it's clear to me that the judge hates the case, the attorneys and the parties. Why? No need for me to summarize, let's take it straight from the judge's order:

“[T]he parties have presented the Court with a litany of discovery disputes and have fought with each other every step of the way."

Legal translation of the judge's statement: “You both are acting like whiny little children."

And that's just an introduction. Both sides have ticked the judge off so much, he needed an entire paragraph to vent:

“Counsel for Endurance and counsel for Upper Deck and McWilliam both make allegations regarding the other's unprofessional conduct. These allegations include lobbing obscenities at each other, refusing to meet and confer on scheduling and discovery issues, and improperly filing joint papers with the Court. The undersigned has experienced all too much of the unprofessional conduct that has taken place between counsel in this case and will not engender to lay blame more heavily on one party. Part of the reason the Court has been so heavily involved in discovery in this case is due to counsel's inability to communicate with each other as reasonable professionals. That being said, the Court will not engage in the mud-flinging in deciding the motion currently before it."

Unprofessional conduct, lobbing obscenities, counsel's inability to communicate with each other, mud-flinging--all good stuff for observers. But nothing but pain for a judge. Really, all this judge wants to do is to find someone either guilty or innocnt, and move on to more interesting matters like murder trials or high-profile corporate litigation, especially when both sides are, well, acting like jerks.

Heck, even patent infringement actions on how fast paint dries would be more enjoyable for the judge.

This case will be fun to watch for the sideshows, for the obscenities and for the name calling and not for the meat of the case. I mean, who really cares if Endurance or Upper Deck has to ultimately pay for the Konami suit? Sure, I'll tell you who has to pay when that happens, but I'll only take three sentences to do that.

The information provided in Paul Lesko's “Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.

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Paul Lesko is a shareholder at Simmons Hanly Conroy and the chair of its Intellectual Property Department (http://www.simmonsfirm.com). Don’t hold the fact that Paul is a lawyer against him, he’s also a rabid baseball and college basketball fan, and an avid baseball card collector. Paul can be found on Twitter @Paul_Lesko and Google+.

User Comments

  1. And you expected something different from Richard McWilliam and UD in general? It’s only been 22 years he’s been pulling this crap. oops is that an obscenity?

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