Insurers’ Goal Line Stand: California Coverage Action Stayed While New York Case Marches On

National Football League v. Fireman’s Fund Ins. Co.
(Cal. App. Ct. May 28, 2013)
A California appellate court recently affirmed a stay of California litigation commenced by the NFL against multiple insurers seeking coverage for traumatic brain injury cases. The court held that the NFL was not a California resident for purposes of a forum non conveniens analysis even though it has three teams in California.

The NFL administration and its intellectual property marketing arm were sued in multiple states by dozens of former players alleging lifelong brain damage from on-field injuries dating back to the 1950’s. The NFL and NFL Properties LLC, in turn, filed an action in Los Angeles Superior Court, seeking a declaration of the coverage duties of 32 insurance carriers pursuant to 187 commercial liability policies that were issued over a 50–60 year period. The same entities are parties to parallel coverage actions filed by some of the insurers in New York state courts at approximately the same time as the California case.

The defendant insurers sought a dismissal or stay of the California case on a theory of forum non conveniens. Pursuant to California Code Civ. Proc. § 410.30(a), when a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum outside the state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just. California courts have held that if the plaintiff is a California resident, its choice of a forum should rarely be disturbed unless the balance is strongly in favor of the defendant.

The California trial court ordered the California proceeding stayed pending the outcome of the New York actions. The NFL appealed, but the appellate court affirmed. In so ruling, the court noted that no California case had decided the issue of residency of an unincorporated association in the inconvenient forum context. It held that a multi-state unincorporated association is not necessarily entitled to a strong presumption of the convenience of a California forum simply because some of its members reside there. Rather, the court ruled that, in its forum non conveniens analysis, a trial court must evaluate the nature of the plaintiff’s organization and activities, including any principal place of business aside from those of its members, as part of the overall duty of determining the relationship of the case and parties to the forum.

The court held that although the NFL had three teams in California, it operated in New York independently of its teams. Multi-state unincorporated associations were not necessarily entitled to a strong presumption of the convenience of a California forum simply because some of its members resided there.