Meadows Indemnity Co. v. Nutmeg Insurance

Meadows Indemnity Company, Ltd. (Meadows) (plaintiff) filed suit in New York against the member companies (defendants) of a casualty insurance and reinsurance pool established and managed by Baccala & Shoop Insurance Services (Baccala) (defendant). Willis Corroon Corporation (Corroon) (defendant), a Nashville company, was the successor in interest to Corroon & Black Corporation, which owned Baccala. The insurance companies involved allegedly gained excessive commissions and fraudulently concealed information to increase profits within the pool. The New York federal court ordered arbitration of Meadows’ claims against several of the insurance companies and stayed litigation for its claims against Baccala and Corroon. Several of the companies countersued Meadows in California, and the California federal court also stayed those proceedings pending the arbitration outcome. In preparation for the arbitration hearing, Meadows requested the arbitration panel to subpoena a large number of documents from Baccala and Corroon as the managers of the pool. Corroon would produce the documents at its Nashville office and Meadows would review, sort, and copy useful documents before attending the hearing. The court issued the subpoena, and Corroon filed for a protective order in the United States District Court for the Middle District of Tennessee. Corroon claimed that under the Federal Arbitration Act (FAA), the arbitration panel did not have the power to demand documents from a third party who was not ordered to appear before the panel during an arbitration hearing. Corroon further argued that the discovery request was too large and placed an undue burden on the company.