Micron Technology, Inc. v. Factory Mutual Insurance Company

Background

Micron sought discovery about claims made by other insureds involving losses covered by the same or similar policy language. The requested documents concerned claims arising from certain equipment faults or malfunctions, claims involving particular policy exclusions, and losses at specified times or locations. The requests were contained in Requests for Production Nos. 62–78.

Micron argued that the information was relevant to interpreting “physical loss or damage” under the insurance contract. It pointed to evidence concerning Factory Mutual’s handling of Micron’s claim and another claim by Intel, as well as testimony from Factory Mutual claims adjuster Simon Ko about other claims involving safety interlocks and electrical equipment that failed to operate as intended.

Factory Mutual argued that Micron had agreed to limit the discovery to claims in the semiconductor industry, while Micron denied making that agreement. Factory Mutual also argued that the claims were irrelevant because they involved different perils, equipment, or circumstances. It asserted that reviewing the files for confidentiality and other issues would require well over 200 hours. Factory Mutual said that information about specific coverage or exclusions was not maintained in a searchable format, although some information was available through its electronic claims system.

Analysis

The court applied Federal Rule of Civil Procedure 26(b)(1), which permits discovery of nonprivileged information relevant to a claim or defense and proportional to the needs of the case. The court held that claims data involving other insureds may be relevant to an insurer’s application of policy language. It found that Micron had shown the requested other-claims data satisfied the rule’s relevance requirement.

The court rejected Factory Mutual’s burden arguments as a basis for denying the discovery. It noted that at least some information was searchable through Factory Mutual’s claims system, that confidentiality concerns could be addressed through the existing protective order or an amended protective order, and that the requests were not a blanket demand for all other-claims data.

To make the discovery proportional, the court limited the required production to claims involving the semiconductor industry, defined as semiconductor fabrication plants. The court stated that the order was without prejudice to Micron’s ability to seek information about claims outside that industry upon a specific showing of relevance.

Disposition

The court ordered Factory Mutual to produce, within 21 days of the order, all documents responsive to Micron’s Requests for Production Nos. 62–78 for claims in the semiconductor industry. This discovery order addressed the scope of information Factory Mutual must produce; it did not decide the ultimate interpretation of the insurance policy or whether Micron’s claimed loss was covered.