Proof of Claim Bankruptcy Documents Ruled Discoverable with Redaction of Settlement Amounts and Sensitive Medical Information

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Supreme Court of the State of New York, County of Monroe, July 15, 2021

In this case, the plaintiff moved for a protective order granting partial relief from Subpoenas Duces Tecum served on non-party bankruptcy trusts. The plaintiff requested redactions of information regarding settlement amounts, nonparty-affiant personal information, highly sensitive and personal medical issues, and claim specific identification information generated by the trusts. The plaintiff additionally moved for in-camera inspection citing privacy concerns, while conceding that there was not privilege or prejudice.

The defendants opposed the protective order, arguing that the “issue really comes down to whether or not nonparty-affiant information and claim identification can be withheld from the defendants,” citing three specific tenants to that argument.

The first argument made by the defendants was that the information was “discoverable and [] not subject to privilege.” The second argument made was that “nothing that would result in prejudice to the plaintiff if [the nonparty affiants’ information] were disclosed to the defendant.” The third argument was that “In-camera review is not necessary since the materials are neither privileged or would result in prejudice to the plaintiff.”

The defendants relied on past New York law that “POC-supporting materials, such as the affidavit and transcripts, are discoverable and not subject to privilege;” arguing specifically that “affidavits of nonparties supporting these trust submissions have been specifically recognized by New York courts as not only discoverable but highly relevant, probative and essential to the defense at trial.”

The defendants especially relied on the decision of Justice Chimes, in Bauer v A.O. Smith Water Products, and the Third Department’s decision in Willis v. Cassia, 255 AD2d 800, while citing similar decisions in Wright, and Farrenkopf. In Bauer, Justice Chimes held that the defendant was entitled to receive all documents filed by or on behalf of the plaintiff with bankruptcy trust as to its proposed subpoena. Justice Chimes further ruled that “the claimant’s HIV status or drug and/or alcohol abuse specifically could be redacted.” This was in line with the Third Department in Willis v. Cassia, which ruled that it is a rare case in which CPLR 3101 is applied to deny disclosures.

The plaintiff argued that releasing the information would be a “privacy issue,” conceding that the plaintiff was not arguing either discoverability or privilege. In supporting the redaction of nonparty-affiant personal information listed in the POCs, the plaintiff attempted to rely on protocol in NYCAL, citing Matter of New York City Asbestos Litigation, for the use of in-camera review of these documents. The plaintiff argued that “Judge Hietler ruled … that the court is sensitive … to the privacy issues concerning the nonparty affiant,” holding specifically that “defendants are entitled only to that factual information in the nonparty affidavits, the exposure, to investigate alternative exposures and not the affiant’s personal information.”

The plaintiff further argued that the distinctions between the trust systems and the tort systems, specifically the lower standard of proof in the trust system, mean that even if the defendants were given the identification of the nonparty affiant, such information would not be admissible evidence in the tort system.

In analyzing the arguments on both sides, the court started its analysis by considering the request for an in-camera review, stating that “the movant needs to establish that the material sought to be protected is privileged.” As the plaintiff conceded that their argument did not allege privilege as the basis for an in-camera review, the court ruled that “[t]o require the court to examine all requested discovery material is impractical and an unnecessary burden.”

The court turned next to the whether the plaintiff would be prejudiced by the release of this material; finding that “the plaintiff has failed to establish prejudice” and that the material was directly relevant. The court cited its decision in Bauer v A.O. Smith Water Products, as directly pertinent in entitling the defendants to “all documents filed by or on behalf of the plaintiff with the bankruptcy trusts” while allowing redaction of “settlement amounts, social security numbers and highly-sensitive medical information”. As such. the court went on to grant the plaintiff’s motion for protective order only on the “settlement amounts, social security numbers and highly-sensitive medical information,” while denying all other respects.

Upon a brief, clarifying question by the defense counsel, the court specified that the definition of “highly-sensitive medical information” was in line with the decision in Bauer v A.O. Smith Water Products; referring specifically to “claimant’s drug and/or alcohol abuse and HIV status.”

Read the full decision here.