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Azad v. Tokio Marine Hcc - Medical Insurance Services Group

United States District Court, N.D. California

May 26, 2017

MOHAMMED AZAD, et al., Plaintiffs,


          PHYLLIS J. HAMILTON United States District Judge

         Before the court is defendants' motion to stay discovery pending the resolution of a number of motions to dismiss the complaint. Dkt. 63. The matter is fully briefed and suitable for decision without oral argument. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court hereby DENIES the motion as premature, without prejudice.


         This putative class action was filed on February 7, 2017 by plaintiffs Mohammed Azad and Danielle Buckley. Dkt. 1 (“Compl.”). Plaintiffs make claims against Tokio Marine HCC - Medical Insurance Services Group (“HCC”), a seller of short-term medical insurance, and other entities who allegedly worked with HCC. Also named as defendants are HCC Life Insurance Company (“HCC Life Insurance”), a subsidiary of Tokio Marine Holdings, LLC; Health Insurance Innovation, Inc. (“HII”); and Consumer Benefits of America (“CBA”). Compl. ¶¶ 5-7.

         HCC contracted with plaintiffs to provide them short-term medical insurance policies (“STMs”). Compl. ¶¶ 8-9. HCC Life Insurance was the underwriter on the polices. Compl. ¶ 16. HII is allegedly a “close affiliate” of HCC that works with HCC “in the sale, administration, and/or servicing” of the policies. Compl. ¶ 17. CBA provides discounts and other benefits to its members, and allegedly “works with” the other defendants to provide HCC policies to consumers. Compl. ¶¶ 7, 57.

         In brief, plaintiffs allege that HCC falsely represented that their policies provided comprehensive coverage and fair claim processing. In reality, plaintiffs allege that HCC misled policyholders about the scope of the coverage and made it unreasonably difficult to make a claim. Plaintiffs further allege that HCC had a common policy and practice of marketing their polices in a misleading manner, delaying and refusing to pay claims, providing deliberately unhelpful customer service, and generally obstructing policyholders' claims in bad faith.

         Much of the complaint is devoted to the experiences of the putative class representatives, who allegedly were told to submit burdensome documentation and had the payment of their claims delayed and denied in bad faith. Compl. ¶¶ 19-38. The complaint then reviews the aspects of HCC's marketing materials, policies, and application forms that plaintiffs allege are misleading. Compl. ¶¶ 39-57. Finally, plaintiffs allege that HCC trains its customer service representatives to obstruct policyholders and give them the “runaround, ” refusing to help and referring claimants to a “highly confusing” website. Compl. ¶¶ 58-72.

         Plaintiffs assert claims for (1) violations of the California Unfair Competition Law (the “UCL”); (2) violations of the California False Advertising Law (“FAL”); (3) breach of contract; (4) breach of the implied duty of good faith and fair dealing; and (5) unjust enrichment. The putative class is all “individuals who have purchased HCC health insurance policies from Defendants in the State of California, and/or all California residents for whom HCC denied their insurance claim, since a date to be ascertained through discovery.” Compl. ¶ 82.

         On April 13 and 14, 2017, the defendants separately filed motions to dismiss the complaint and/or strike its allegations, which are all noticed for hearing on June 14, 2017. Dkt. 48, 49, 58, 60. Currently, the initial case management conference is scheduled for the following day, June 15, 2017. Dkt. 65.

         On April 20, 2017, defendants filed a motion to stay discovery pending resolution of the motions to dismiss. Dkt. 63. This matter is fully briefed and ripe for decision.


         A. Legal Standard

         District courts have “broad discretion” to stay discovery pending the disposition of a dispositive motion. See Hall v. Tilton, No. C 07-3233 RMW (PR), 2010 WL 539679, at *2 (N.D. Cal. Feb. 9, 2010). In particular, a district court may “stay discovery when it is convinced that the plaintiff will be unable to state a claim for relief.” Wenger v. Monroe, 282 F.3d 1068, 1077 (9th Cir. 2002) (quotation omitted).

         Since a discovery stay requires a protective order, the moving party must show “good cause.” Mlejnecky v. Olympus Imaging Am., Inc., No. 2:10-CV-02630, 2011 WL 489743, at *5 (E.D. Cal. Feb. 7, 2011); Fed.R.Civ.P. 26(c)(1). In general, the party seeking a stay of discovery carries a “heavy burden” to make a “strong showing” why discovery should be denied. Gray v. First ...

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