Netscape Communications Corporation Et Al v. Federal Insurance Company Et Al - Document No. 131

Netscape Communications Corporation et al v. Federal Insurance Company et al Doc.
131
Case 5:06-cv-00198-JW Document 131 Filed 04/12/2007 Page 1 of 15
1 ABELSON | HERRON LLP

Michael Bruce Abelson (State Bar No. 130739)
2 Leslie A. Pereira (State Bar No. 180222)
333 South Grand Ave, Suite 1550
3
Los Angeles, California 90071-1559
4 Telephone: (213) 402-1900
Facsimile: (213) 402-1901
5
BERGESON, LLP
6 Hway-ling Hsu (State Bar No. 201329)
303 Almaden Boulevard, Suite 500
7
San Jose, California 95110-2712
8 Telephone: (408) 291-6200
Facsimile: (408) 297-6000
9
Attorneys for Plaintiffs
10 NETSCAPE COMMUNICATIONS
11 CORPORATION and AMERICA ONLINE, INC.
12
UNITED STATES DISTRICT COURT
13
NORTHERN DISTRICT OF CALIFORNIA – SAN JOSE DIVISION
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NETSCAPE COMMUNICATIONS CASE NO. 5:06-CV-00198 JW (PVT)
15 CORPORATION, et al.;
16 PLAINTIFFS’ OPPOSITION TO
Plaintiffs, ST. PAUL’S MOTION TO AMEND
17 ADMISSION
v.
18 Magistrate Judge Patricia V. Trumbull
FEDERAL INSURANCE COMPANY, et al.,
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Date: April 17, 2007
20 Defendants. Time: 10:00 a.m.
Dept.: 5
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USDS CASE NO. C-06-00198 JW (PVT)
Dockets.Justia.com
1 TABLE OF CONTENTS
2 I. INTRODUCTION ............................................................................................................. 1
3 II. FACTUAL BACKGROUND............................................................................................ 1
4 A. Plaintiffs Produced Significant Information Regarding the So-

Called “Advertising” Aspects of this Claim During the Summer of
5 2006........................................................................................................................ 2
6 B. Plaintiffs Propounded RFAs on St. Paul to Identify Its Coverage

Defenses and Narrow the Issues Prior to the Parties’ Cross-
7 Motions .................................................................................................................. 3
8 III. LEGAL ARGUMENT....................................................................................................... 7
9 A. The Purpose of RFAs is to Eliminate Issues from the Case .................................. 7
10 B. St. Paul’s Motion Is Not Necessary to Insure Presentation of this

Action on the Merits .............................................................................................. 8
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C. Plaintiffs Will Be Prejudiced If St. Paul is Allowed to Retract its
12 Prior, Affirmative Admission at this Late Date ..................................................... 8
13 D. There is No Good Cause for St. Paul’s Failure to Bring Its Motion
to Amend Sooner ................................................................................................. 10
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E. If Allowed, St. Paul’s Amended Admission Will Merely Bolster an
15 Argument Which is Extremely Weak on the Merits............................................ 11
16 F. St. Paul’s Proposed Amended Response is Legally Improper............................. 11
17 IV. CONCLUSION................................................................................................................ 12
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USDS CASE NO. C-06-00198 JW (PVT) PLAINTIFFS’ OPPOSITION TO ST. PAUL’S MOTION TO
AMEND ADMISSION
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1 TABLE OF AUTHORITIES
2 Federal Cases
3 999 v. C.I.T. Corp.,

776 F.2d 866 (9th Cir. 1985) ...................................................................................................... 7
4
Conlon v. United States,
5 474 F. 3d 616 (9th Cir. 2007) ..................................................................................... 7, 8, 10, 11
6 Federal Statutes
7 Federal Rule of Civil Procedure
8 Rule 26(b)(1)............................................................................................................................. 12
9 Rule 36 ........................................................................................................................................ 7
10 Rule 36(b) ......................................................................................................................... 7, 8, 11
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AMEND ADMISSION
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1 I. INTRODUCTION
2 St. Paul’s Motion to Amend seeks to change a prior, unqualified “Admit” to a 15-line,
3 objection-laden “Deny.” At issue is St. Paul’s response to Plaintiffs’ Request for Admission
4 (“RFA”) No. 4 asking the insurer to “Admit that the SMARTDOWNLOAD CLAIM does not
5 involve ‘3rd party advertising.’” As the record here reflects, St. Paul previously admitted, under
6 oath, that “3rd party advertising” was not at issue. Now, after the close of discovery, and after
7 submission of all briefing on the parties’ Cross-Motions for Summary Judgment, St. Paul seeks
8 to change its position. St. Paul’s evidentiary flip-flop should not be allowed. A retraction is not
9 necessary to allow St. Paul’s presentation of its case on the merits, but Plaintiffs will be severely
10 prejudiced by such a change in position. Accordingly, this Court should not exercise its
11 discretion in permitting such a dramatic change at the eleventh hour.
12 II. FACTUAL BACKGROUND
13 In this action, Plaintiffs are seeking coverage for their substantial costs defending against
14 four civil actions alleging that Netscape’s SmartDownload software violated consumers’ privacy
15 rights (the “SmartDownload Claim”). As set forth more fully in the parties’ pending Cross-
16 Motions for Partial Summary Judgment Re: Duty to Defend (“Cross-Motions”), 1 the following
17 are two of the significant issues being litigated in this coverage action:
18 1. Insuring Agreement. Whether the underlying SmartDownload Claim satisfied
19 the policy’s insuring agreement by alleging that Plaintiffs made consumers’ private information
20 known to any third parties (including ad-serving companies); and
21 2. Online Activities Exclusion. Whether the St. Paul policy’s online activities
22 exclusion barred coverage for the SmartDownload Claim. In relevant part, that exclusion states
23 the following:
24 For the purposes of advertising injury and personal injury, all Online Activities
25 are excluded from these coverages.
26
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1
All papers submitted in connection with the parties’ Cross-Motions are incorporated herein by
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reference.
AMEND ADMISSION
1
“Online Activities” is defined as [1] providing e-mail services, [2] instant

1 messaging services, [3] 3rd party advertising, [4] supplying 3rd party content and
2 [5] providing Internet access to 3rd parties.
3 (Hereinafter, the “Online Activities Exclusion.”) (Bracketed numbers added for clarity.)
4 On June 19, 2006, the Court held a case management conference. Declaration of Leslie
5 A. Pereira (“Pereira Decl.”), ¶ 2. During that conference, the parties jointly agreed and proposed
6 that this coverage litigation proceed in two phases. Id. “Phase One” would include discovery
7 and motion practice on the issue of whether St. Paul had a duty to defend AOL and Netscape
8 under its policy.2 Id. As part of Phase One, the parties’ would file Cross-Motions for Partial
9 Summary Judgment Re: Duty to Defend (the “Cross-Motions”). Id. Thereafter, “Phase Two”
10 would proceed (if necessary) on the contingent issues relating to the causes of action for breach
11 of the covenant of good faith and fair dealing and unfair business practices. Id. Immediately
12 after the conference, and consistent with the parties’ proposals made therein, the Court entered
13 an order setting the hearing on the parties’ Cross-Motions for November 20, 2006. Id. at ¶ 3.
14 For a variety of reasons, the hearing date was changed on multiple occasions. Id. The parties’
15 Cross-Motions are currently set to be heard on April 30, 2007. Id.
16 A. Plaintiffs Produced Significant Information Regarding the So-Called
17 “Advertising” Aspects of this Claim During the Summer of 2006
18 The parties immediately proceeded with discovery pertinent to the issues to be raised in
19 the Cross-Motions. Pereira Decl., ¶ 4. In response to St. Paul’s discovery requests, Plaintiffs
20 produced the following information during the summer of 2006:
21  The deposition of former Netscape employee David Park, including all exhibits
22 thereto. Id.
23  A settlement presentation prepared by the claimants’ attorney, Joshua Rubin, in
24 the underlying SmartDownload litigations (the “Settlement Presentation”). Id.
25 The Settlement Presentation – produced to St. Paul on June 22 – made numerous
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At the time, it was also envisioned that Phase One would include discovery and motion practice
pertinent to St. Paul’s reformation counter-claim, but St. Paul ultimately dismissed its counter-
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claim.
AMEND ADMISSION
2
1 advertising-related allegations, including its repeated assertions that Netscape was
2 partnered with an ad-serving company called “AdForce” and sent the claimants’
3 private information collected by SmartDownload to AdForce. Id.
4 Plaintiffs’ written discovery responses made it clear to St. Paul that they would argue that
5 the SmartDownload Claim involved allegations Plaintiffs shared consumers’ private information
6 with third parties, including AdForce. For example, St. Paul served Plaintiffs with an RFA
7 asking that Plaintiffs admit that the SmartDownload Actions did not allege that any user
8 information was “made known to any third person.” Pereira Decl., ¶ 6; Ex. 1 to Pereira Decl.
9 [St. Paul RFA #12]. Because Plaintiffs disputed this contention, they responded on July 28,
10 2006 by denying the RFA. Id. Furthermore, Plaintiffs explained the basis for their denial of the
11 RFA in a correlative interrogatory response stating that “information allegedly collected by
12 Netscape and/or AOL either was – or was to have been – shared with third parties.” Pereira
13 Decl., ¶ 7; Ex. 2 to Pereira Decl. [Supp. Responses to Rogs 9-11]. In support thereof, Plaintiffs
14 specifically referenced the Settlement Presentation which alleged that claimants’ private
15 information was shared with AdForce. Id. Given these details, Plaintiffs’ early discovery
16 responses – both written and documentary – made it clear to St. Paul that Plaintiffs would argue
17 in this action that the SmartDownload claimants asserted that their private information was
18 shared with third parties, including AdForce, a third-party ad-serving company.
19 B. Plaintiffs Propounded RFAs on St. Paul to Identify Its Coverage Defenses

20 and Narrow the Issues Prior to the Parties’ Cross-Motions
21 Thereafter, in an effort to identify St. Paul’s purported defenses to coverage, and to
22 narrow the issues that required briefing in the parties’ Cross-Motions, Plaintiffs served St. Paul
23 with a set of nine requests for admission (“RFA”). Pereira Decl., ¶ 8; Ex. 3 to Pereira Decl. The
24 RFAs were served on July 24, 2006. Id. The first six of the RFAs directly related to determining
25 whether St. Paul intended to rely on the Online Activities Exclusion as a defense to Plaintiffs’
26 claim and, if so, how. Id. As noted above, the Online Activities Exclusion defined “online
27 activities” as five specific categories of conduct, and precluded coverage only for those
28 activities. Thus, to identify and narrow the coverage defenses at issue here, Plaintiffs asked that
AMEND ADMISSION
3
1 St. Paul admit that the SmartDownload Claim did not involve “online activities” and then, in five
2 separate RFAs, requested that St. Paul admit that the SmartDownload Claim did not involve any
3 of the five categories of conduct listed in the Online Activities Exclusion.3 Id. At issue here is
4 RFA No. 4 which is as follows:
5 REQUEST FOR ADMISSION NO. 4:
6 Admit that the SMARTDOWNLOAD CLAIM does not involve “3rd party
7 advertising.”
8 Plaintiffs’ RFA No. 4 was clear and unambiguous. (Indeed, St. Paul made no objections
9 to the form of the request.) It requested that St. Paul admit that the SmartDownload Claim does
10 not involve “3rd party advertising.” Now. In this coverage action. Its clear purpose was to
11 identify St. Paul’s current contentions and eliminate, if possible, potential defenses prior to the
12 parties’ depositions and motions. Contrary to St. Paul’s current assertions, RFA No. 4 did not
13 ask St. Paul whether this particular prong of the Online Activities Exclusion was relied on to
14 deny the SmartDownload Claim at the time of tender.4 Such a “backward-looking” RFA makes
15 no sense, and would not have been propounded by Plaintiffs, because an insurer’s defenses in a
16 coverage action are generally not limited to those raised by the insurer at the time of tender.5
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Simultaneously, Plaintiffs propounded corollary interrogatories which requested that, for each
23 RFA that St. Paul failed to admit, St. Paul (1) identify and describe the basis for its response; (2)
identify the persons with knowledge of its response; and (3) identify the documents upon which
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St. Paul relies for its response. Pereira Decl., ¶ 9; Ex. 4 to Pereira Decl. [Netscape’s First Set of
25 Specially Prepared Interrogatories to Defendant St. Paul] at 3 [Rogs 13-15].
4
Indeed, St. Paul’s “re-drafted” RFA would not even have been pertinent to Phase One issues
26 given that St. Paul is entitled to raise any defense to coverage, even those not raised in its denial
letter.
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St. Paul knows this. Indeed, it wouldn’t have been able to assert the policy’s “Deliberately
Breaking the Law” exclusion as a defense to this action without such a rule since it never raised
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this exclusion at any time prior to this litigation.
AMEND ADMISSION
4
1 With full knowledge of Plaintiffs’ discovery and legal contentions, St. Paul responded as
2 follows to RFA No. 4 on August 28, 2006:
3 RESPONSE TO REQUEST FOR ADMISSION NO. 4:
4 Admit.
5 Pereira Decl., ¶ 10; Ex. 5 to Pereira Decl. St. Paul made no objection to the form of the request,
6 and did not qualify its response in any way. Id. Because of this unqualified admission,
7 Plaintiffs’ corollary interrogatories asking that St. Paul identify the factual basis, witnesses, and
8 documents supporting any denied RFAs went unanswered. Pereira Decl., ¶ 11; Ex. 6 to Pereira
9 Decl. Plaintiffs understood this admission to mean that St. Paul would not defend against this
10 coverage action on the ground that the Online Activities Exclusion applied because the
11 SmartDownload Claim involved “3rd party advertising.” Pereira Decl., ¶ 12.
12 Throughout the fall, Plaintiffs took numerous depositions of St. Paul’s witnesses,
13 including claim handlers Daniel Weiss and Dale Evensen, and underwriter Michelle Midwinter.
14 Pereira Decl., ¶ 13. In response to Plaintiffs’ request that St. Paul designate a corporate
15 representative to testify regarding its written discovery responses – including its RFA responses
16 – St. Paul designated all three of these individuals. Id. Plaintiffs took Ms. Midwinter’s
17 deposition in September, 2006, and took Mr. Weiss’ and Mr. Evensen’s depositions in October
18 and November, 2006.6 Id.
19 In its current Motion, St. Paul now seeks to change its prior, unqualified admission – six
20 months after the discovery cut-off and more than two months after summary judgment briefing
21 was complete – to what is effectively a denial. Its proposed response is as follows:
22 SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 4:
23 Based upon the information provided to St. Paul at the time the class action suits
24 and AG Investigation involving the SmartDownload product were tendered to St. Paul
25 the response was: ADMIT.
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Although the discovery cut-off in this case was October 17, 2006, for a variety of reasons the
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parties agreed to allow completion of these Minnesota depositions after that date.
AMEND ADMISSION
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1 St. Paul objects to the consideration of or admission of any information that was
2 not provided to St. Paul at the time the class action suits and AG Investigation involving
3 the SmartDownload product were tendered to St. Paul. Such information is irrelevant
4 and contrary to Virginia and California law. Fed. Rule of Evid. 401, 402. See, e.g.,
5 Resource Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631, 636 (4th Cir.
6 2005) (applying Va. Law); America Online, Inc. v. St. Paul Mercury Ins. Co., 347 F.3d
7 89, 93 (4th Cir. 2003); Waller v. Truck Ins. Exchg., 44 Cal.Rptr.2d 370, 378 (Cal. 1995);
8 Safeco Ins. Co. v. Parks, 19 Cal.Rptr.3d 17, 24-25, 27 (Cal.App. 2004); Haggerty v.
9 Federal Ins. Co., 32 Fed.Appx. 845, 848 (9th Cir. 2002). St. Paul further objects to the
10 term “involve” as vague and ambiguous such that Request for Admission No. 4 cannot be
11 meaningfully be answered.
12 Subject to these objections, St. Paul further responds as follows. Based upon the
13 new information plaintiffs provided during discovery in this coverage lawsuit and in the
14 arguments now being advanced in support of their motion for partial summary judgment,
15 the response to the request is: DENY.
16 Pereira Decl., ¶ 14; Ex. 7 to Pereira Decl.
17 In connection with its proposed amended response to RFA No. 4 (now a denial), St. Paul
18 also served amended responses to Interrogatory Nos. 13-15 on February 15, 2007. Pereira Decl.,
19 ¶ 15; Ex. 8 to Pereira Decl. St. Paul’s supplemental response to Interrogatory No. 14 identifies
20 St. Paul employee Dan Weiss as a witness with knowledge about the basis for St. Paul’s
21 amended response to RFA No. 4. Id.
22 At the time Plaintiffs deposed Mr. Weiss in October and November, 2006, Plaintiffs were
23 not aware that St. Paul contended that the “3rd party advertising” prong of the Online Activities
24 Exclusion barred coverage, or that Mr. Weiss had information in that regard.
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AMEND ADMISSION
6
1 III. LEGAL ARGUMENT
2 A. The Purpose of RFAs is to Eliminate Issues from the Case

3 Rule 36 of the Federal Rules of Civil Procedure governs requests for admission
4 (“RFAs”). RFAs “serve two vital purposes” – “first to facilitate proof with respect to issues that
5 cannot be eliminated from the case, and secondly, to narrow the issues by eliminating those that
6 can be.” See Fed. R. Civ. Proc., Rule 36, Advisory Committee Notes, 1970 Amendment; see
7 also Conlon v. United States, 474 F. 3d 616, 622 (9th Cir. 2007). It is for this reason that
8 litigants seeking to amend prior admissions must do so by motion, and courts considering the
9 issue have urged that such motions be granted cautiously. 999 v. C.I.T. Corp., 776 F.2d 866, 869
10 (9th Cir. 1985). “Unless the party securing an admission can depend on its binding effect, he
11 cannot safely avoid the expense of preparing to prove the very matters on which he has secured
12 the admission, and the purpose of the rule is defeated.” See Fed. R. Civ. Proc., Rule 36,
13 Advisory Committee Notes, 1970 Amendment; see also Conlon, 474 F. 3d at 625.
14 Rule 36(b) sets forth the requirements for amending a prior admission. First, it can be
15 done only by motion. Fed. R. Civ. Proc. 36(b). Second, such motions are entirely within the
16 court’s discretion. Fed. R. Civ. Proc. 36(b); Conlon, 474 F. 3d at 624. A court presented with
17 such a motion is required to consider (1) whether presentation of the merits of the action will be
18 subserved if amendment is not permitted; and (2) whether the party who obtained the admission
19 will be prejudiced by the amendment. However, even if the court finds that this two-part test is
20 satisfied, it is not required to grant relief to the moving party. Conlon, 474 F. 3d at 624. Rather,
21 “[t]he text of Rule 36(b) is permissive,” and the court “may consider other factors, including
22 whether the moving party can show good cause for the delay and whether the moving party
23 appears to have a strong case on the merits.” Id.
24 St. Paul’s Motion strongly presents a scenario where this Court should be “cautious” and
25 refuse to exercise its discretion to permit St. Paul to retract its prior admission.
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AMEND ADMISSION
7
1 B. St. Paul’s Motion Is Not Necessary to Insure Presentation of this Action on

2 the Merits
3 St. Paul argues that allowing it to retract its prior admission at this late date will “aid in
4 having the action resolved on the merits.” Motion at 9. Not only is this not so, but it is not
5 enough. At issue here is nothing more than St. Paul’s desire to make one additional argument
6 about application of one additional aspect of the Online Activities Exclusion. All of its other
7 purported coverage defenses – of which there are many – are unaffected by this single admission,
8 and will be presented to the Court on the parties’ Cross-Motions regardless of whether this
9 Motion is granted. Thus, St. Paul’s existing response to RFA No. 4 is not case dispositive and, if
10 retained, will not “eliminate[] any need for a presentation on the merits.” Conlon, 474 F. 3d at
11 622. St. Paul’s Rule 36(b) motion is not like that in Conlon, and most of the other reported
12 decisions seeking relief under Rule 36(b), where a party is seeking relief from deemed
13 admissions which fully establish a case against him. Rather, this is plainly a situation where St.
14 Paul belatedly recognized a potential legal argument that it felt might be strategically beneficial.
15 This is too little, too late, and certainly does not warrant the relief that St. Paul is now seeking.
16 C. Plaintiffs Will Be Prejudiced If St. Paul is Allowed to Retract its Prior,

17 Affirmative Admission at this Late Date
18 A court considering whether to exercise its discretion to permit withdrawal of an
19 admission must consider the prejudice to the party who obtained the admission. Fed. R. Civ.
20 Proc. 36(b). Here, Plaintiffs will be severely prejudiced if St. Paul is permitted to change its
21 prior admission to a denial.
22 First, Plaintiffs relied on St. Paul’s August 28 admission in preparing for depositions they
23 took in October and November. It was at this time that Plaintiffs’ counsel traveled to Minnesota
24 several times to depose the St. Paul claim handlers who denied the SmartDownload Claim (Dan
25 Weiss, Dale Evensen, and Michelle Enright). If Plaintiffs had known that St. Paul was
26 contending that the SmartDownload Claim involved “3rd party advertising,” they would have
27 questioned these claim handlers extensively about how this prong of the Online Activities
28 Exclusion purportedly operated and how it applied to the facts of this case. Plaintiffs did not do
AMEND ADMISSION
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1 so because they understood that St. Paul’s response to RFA No. 4 effectively relinquished such
2 an argument.7
3 Second, Plaintiffs relied on St. Paul’s admission in preparing their Cross-Motion. They
4 understood St. Paul’s admission to mean that St. Paul did not contend that the SmartDownload
5 Claim triggered the “3rd party advertising” prong of the Online Activities Exclusion. Thus,
6 Plaintiffs’ Cross-Motion only addresses the entirely distinct issue of whether or not the
7 “providing Internet access” prong of the exclusion applies. If Plaintiffs had known that St. Paul
8 would contend that the SmartDownload Claim involved “3rd party advertising,” they would have
9 addressed this portion of the exclusion in their briefing.
10 Third, Plaintiffs’ reliance on St. Paul’s admission caused it to forego other factual
11 investigation and/or discovery it would have taken. If Plaintiffs had known that St. Paul would
12 contend that the SmartDownload Claim involved “3rd party advertising,” they would have
13 conducted some investigation into the business operations and practices of AdForce, and “ad
14 serving” company (versus an “advertising company”). Moreover, it is possible that Plaintiffs
15 would have determined it necessary to consult and/or retain an expert regarding the nature and
16 differences of “ad serving” versus “advertising.” Such distinctions might have been critical, as
17 would information about the types of advertisements being served by AdForce (i.e. were they
18 Plaintiffs’ advertisements or those of other third parties?).
19 Plaintiffs’ substantial reliance on St. Paul’s admission was entirely reasonable. This is
20 not a situation like Conlon which involved deemed admissions, where as party is stuck with an
21 admission they may not have intended based on the fact that they failed to timely respond to
22 RFAs. Rather, this is a case where St. Paul affirmatively responded with an unqualified
23 admission through its outside counsel. Moreover, St. Paul’s unqualified admission was verified
24 by an internal St. Paul attorney. Ex. 5 to Pereira Decl. Thus, several pairs of eyes reviewed St.
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The deposition testimony attached to the Declaration of Christopher Kerby demonstrates that
27 Plaintiffs did not ask the specific questions that would reasonably be asked if they had believed
St. Paul contended that the “3rd party advertising” prong of the Online Activities Exclusion
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barred their claim.
AMEND ADMISSION
9
1 Paul’s response to RFA No. 4 before it was disclosed to Plaintiffs on August 28, 2006.
2 Plaintiffs’ subsequent reliance on this unqualified admission during its depositions, in its
3 dealings with its technical expert, and in its summary judgment briefing was therefore entirely
4 justified.
5 D. There is No Good Cause for St. Paul’s Failure to Bring Its Motion to Amend
6 Sooner
7 In deciding whether to exercise its discretion to permit withdrawal of an admission under
8 Rule 36(b), a court may consider other factors, including “whether the moving party can show
9 good cause for the delay” in moving to withdraw its admission. Conlon, 474 F. 3d at 625. Here,
10 no such good cause exists.
11 St. Paul’s Motion erroneously argues that “[t]here is no dispute that it was not until the
12 filing of AOL/Netscape’s Cross-Motion and Carome’s Declaration that St. Paul became aware”
13 that Plaintiffs would argue in this action that the SmartDownload claimants’ alleged that
14 Plaintiffs transmitted their private information to third parties, including AdForce. Motion at 9.
15 Plaintiffs absolutely dispute this. As demonstrated above, Plaintiffs’ discovery – first provided
16 to St. Paul in mid-2006 – made it absolutely clear that Plaintiffs intended to argue that the
17 SmartDownload claimants asserted that their private information was shared with AdForce, a
18 third-party ad-serving company. Thus, the “3rd party advertising issue” – if, indeed, there is one
19 – first arose when Plaintiffs responded to St. Paul’s discovery more than nine months ago.
20 Even assuming, however, that St. Paul could credibly claim it was unaware of Plaintiffs’
21 position until Plaintiffs filed their Cross-Motion, it still fails to justify its delay of 2+ months in
22 bringing this Motion. St. Paul filed its response to Plaintiffs’ Cross-Motion on February 9, 2007.
23 At this time, it could have (and should have) filed this Motion. It failed to do so. Instead, it
24 simply served Plaintiffs with an amended admission, ignoring the plain and unambiguous
25 requirements of Rule 36. Moreover, Plaintiffs pointed-out St. Paul’s procedural error in papers
26 filed on March 2nd. Instead of moving promptly to correct its error at that time, St. Paul waited
27 another four weeks – until March 29 – to file its motion. In short, St. Paul’s Motion is not only
28 unmeritorious, but late, and should be denied.

AMEND ADMISSION
10
1 E. If Allowed, St. Paul’s Amended Admission Will Merely Bolster an Argument

2 Which is Extremely Weak on the Merits
3 In determining whether to exercise its discretion to allow withdrawal of an admission
4 under Rule 36(b), a court is permitted to consider “whether the moving party has a strong case on
5 the merits.” Conlon, 474 F.3d at 625. Here, no credible argument can be made that the
6 SmartDownload claim involved “3rd party advertising.”
7 St. Paul seeks to withdraw its admission to support the argument made in its Cross-
8 Motion reply brief that the Online Activities Exclusion bars coverage for the SmartDownload
9 claim because “AdForce is plainly ‘3rd party advertising.’” (SP Reply at 25.) St. Paul’s
10 argument is nonsensical and wrong.
11 AdForce is not “advertising” – it was an “ad serving” company. Thus, it had two
12 functions. The first was to serve advertisements to web site visitors. The second was to collect
13 information regarding internet users’ habits so that it could perform its first function better.
14 Indeed, only with user-specific data could more profitable “targeted advertising” be sent (i.e.
15 advertisements that match the user’s demographic profile or product preference.) But, critically,
16 the SmartDownload Actions have nothing to do with AdForce’s first function: They do not
17 allege that any “3rd party advertising” was sent to the claimants, and do not allege that any “3rd
18 party advertising” invaded claimants’ privacy. Rather, those actions complain only about the
19 fact that Plaintiffs shared their private information with AdForce. Thus, claimants’ complaint
20 would have been the same regardless of whether Plaintiffs allegedly shared their private
21 information with an ad server company like AdForce, a demographic researcher, the mailman, or
22 anyone else they did not consent to receive their (allegedly) private information. The
23 SmartDownload Actions are about disclosure of private information; they are not about “3rd
24 party advertising.”
25 F. St. Paul’s Proposed Amended Response is Legally Improper

26 St. Paul’s proposed amended response to RFA No. 4 is legally improper for several
27 reasons.
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AMEND ADMISSION
11
1 First, it improperly contains an admissibility objection (and long string of case law
2 citations) that must be raised by way of separate motion. See Fed. R. Civ. Proc. 26(b)(1). Thus,
3 the entire following paragraph should be stricken from its response: “St. Paul objects to the
4 consideration of or admission of any information that was not provided to St. Paul at the time the
5 class action suits and AG Investigation involving the SmartDownload product were tendered to
6 St. Paul. Such information is irrelevant and contrary to Virginia and California law. Fed. Rule
7 of Evid. 401, 402. See, e.g., Resource Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d
8 631, 636 (4th Cir. 2005) (applying Va. Law); America Online, Inc. v. St. Paul Mercury Ins. Co.,
9 347 F.3d 89, 93 (4th Cir. 2003); Waller v. Truck Ins. Exchg., 44 Cal.Rptr.2d 370, 378 (Cal.
10 1995); Safeco Ins. Co. v. Parks, 19 Cal.Rptr.3d 17, 24-25, 27 (Cal.App. 2004); Haggerty v.
11 Federal Ins. Co., 32 Fed.Appx. 845, 848 (9th Cir. 2002).”
12 Second, St. Paul cannot now make any objection to the form of the RFA since it failed to
13 make such objection at the time it first responded to RFA No. 4.8 Such objection was therefore
14 waived. Thus, the Court should strike the following from St. Paul’s proposed response: “St.
15 Paul further objects to the term ‘involve’ as vague and ambiguous such that Request for
16 Admission No. 4 cannot be meaningfully answered.” It is also interesting to note that Plaintiffs’
17 other RFAs also used the term “involve” and St. Paul did not object to use of that term and had
18 no problem responding to those RFAs.
19 IV. CONCLUSION
20 For all of these reasons, St. Paul’s Motion to Amend Admission should be denied.
21 Dated: April 12, 2007 ABELSON | HERRON LLP

Michael Bruce Abelson
22 Leslie A. Pereira
23
24 By ___________/s/______________
Leslie A. Pereira
25 Attorneys for Plaintiffs
Netscape Communications Corporation and
26 America Online, Inc.
27
8
St. Paul fails to provide any explanation as to why this objection was not made (and could not
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have been made) at the time it first responded to Plaintiffs’ RFAs.
AMEND ADMISSION
12

Netscape Communications Corporation Et Al v. Federal Insurance Company Et Al - Document No. 131

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Netscape Communications Corporation Et Al v. Federal Insurance Company Et Al - Document No. 131

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Netscape Communications Corporation et al v. Federal Insurance Company et al Doc.

1 ABELSON | HERRON LLP

3 II. FACTUAL BACKGROUND............................................................................................ 1

4 A. Plaintiffs Produced Significant Information Regarding the So-

6 B. Plaintiffs Propounded RFAs on St. Paul to Identify Its Coverage

8 III. LEGAL ARGUMENT....................................................................................................... 7

9 A. The Purpose of RFAs is to Eliminate Issues from the Case .................................. 7

10 B. St. Paul’s Motion Is Not Necessary to Insure Presentation of this

16 F. St. Paul’s Proposed Amended Response is Legally Improper............................. 11

3 999 v. C.I.T. Corp.,

10 Rule 36(b) ......................................................................................................................... 7, 8, 11

11 discretion in permitting such a dramatic change at the eleventh hour.

12 II. FACTUAL BACKGROUND

18 1. Insuring Agreement. Whether the underlying SmartDownload Claim satisfied

20 known to any third parties (including ad-serving companies); and

“Online Activities” is defined as [1] providing e-mail services, [2] instant

15 Cross-Motions are currently set to be heard on April 30, 2007. Id.

16 A. Plaintiffs Produced Significant Information Regarding the So-Called

17 “Advertising” Aspects of this Claim During the Summer of 2006

20 produced the following information during the summer of 2006:

23  A settlement presentation prepared by the claimants’ attorney, Joshua Rubin, in

24 the underlying SmartDownload litigations (the “Settlement Presentation”). Id.

25 The Settlement Presentation – produced to St. Paul on June 22 – made numerous

1 advertising-related allegations, including its repeated assertions that Netscape was

3 private information collected by SmartDownload to AdForce. Id.

11 RFA in a correlative interrogatory response stating that “information allegedly collected by

18 shared with third parties, including AdForce, a third-party ad-serving company.

19 B. Plaintiffs Propounded RFAs on St. Paul to Identify Its Coverage Defenses

4 RFA No. 4 which is as follows:

5 REQUEST FOR ADMISSION NO. 4:

2 follows to RFA No. 4 on August 28, 2006:

3 RESPONSE TO REQUEST FOR ADMISSION NO. 4:

11 SmartDownload Claim involved “3rd party advertising.” Pereira Decl., ¶ 12.

18 and November, 2006.6 Id.

21 was complete – to what is effectively a denial. Its proposed response is as follows:

22 SUPPLEMENTAL RESPONSE TO REQUEST FOR ADMISSION NO. 4:

25 the response was: ADMIT.

15 the response to the request is: DENY.

16 Pereira Decl., ¶ 14; Ex. 7 to Pereira Decl.

21 amended response to RFA No. 4. Id.

1 III. LEGAL ARGUMENT

2 A. The Purpose of RFAs is to Eliminate Issues from the Case

23 appears to have a strong case on the merits.” Id.

1 B. St. Paul’s Motion Is Not Necessary to Insure Presentation of this Action on

16 C. Plaintiffs Will Be Prejudiced If St. Paul is Allowed to Retract its Prior,

21 prior admission to a denial.

9 addressed this portion of the exclusion in their briefing.

14 serving” company (versus an “advertising company”). Moreover, it is possible that Plaintiffs

18 Plaintiffs’ advertisements or those of other third parties?).

10 no such good cause exists.

28 unmeritorious, but late, and should be denied.

1 E. If Allowed, St. Paul’s Amended Admission Will Merely Bolster an Argument

6 SmartDownload claim involved “3rd party advertising.”

10 argument is nonsensical and wrong.

25 F. St. Paul’s Proposed Amended Response is Legally Improper

11 Federal Ins. Co., 32 Fed.Appx. 845, 848 (9th Cir. 2002).”

18 no problem responding to those RFAs.

21 Dated: April 12, 2007 ABELSON | HERRON LLP

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