IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION
CIVIL ACTION NO. 3:10-CV-00101

ZURICH AMERICAN INSURANCE :

COMPANY, :
:
: ACE AMERICAN INSURANCE
Plaintiff, : COMPANY’S REPLY MEMORANDUM
: IN RESPONSE TO PLAINTIFF’S
v. : OPPOSITION TO ACE AMERICAN’S
: MOTION TO TRANSFER VENUE
ACE AMERICAN INSURANCE :
COMPANY, COMPASS HOLDINGS, INC. :
AND CROTHALL SERVICES GROUP :
:
:
Defendants.
:

Defendant ACE American Insurance Company (“ACE”), by and through its undersigned

counsel, respectfully submits this Reply Memorandum in Response to Plaintiff Zurich American

Insurance Company’s (“Zurich”) Opposition to ACE’s Motion to Transfer Venue (“Opposition”)

(Doc. No. 19).

ARGUMENT

A. Zurich Admits That Discovery in California is Necessary to Resolve a

Critical Threshold Coverage Issue.

As its principle argument, Zurich asserts in its Opposition that discovery in this coverage

litigation is unnecessary, since, in Zurich’s view, all of the facts relevant to a resolution of the

insurance issues presented already have been discovered in the underlying Weathersby

litigation. Therefore, Zurich reasons, there is no need for the parties to conduct additional

discovery in California, where (1) Ms. Weathersby, (2) her treating physicians, (3) the

employees of Crothall Services Group (“Crothall”) who instructed and trained her, and (4) her

former employers and coworkers at Cedars-Sinai Medical Center all reside. Consequently,

Case 3:10-cv-00101-RJC-DCK Document 27 Filed 09/10/10 Page 1 of 10

Zurich concludes that there is no need to transfer this case to the United States District Court for

the Central District of California since further discovery is superfluous.

Notwithstanding the emphasis Zurich affords to this argument, Zurich is simply wrong,

as the dispositive issues raised in this insurance coverage case were not the subject of discovery

or motion practice in the underlying Weathersby tort action. Indeed, by Zurich’s own admission,

the underlying action did not focus on the critical insurance issue of when Ms. Weathersby’s

injuries first began, an issue which Zurich freely admits is central to the present dispute. See

Opp. Br. at 6.

The lack of discovery on this point in the Weathersby action is perfectly understandable.

There, Ms. Weathersby and her experts were content in advancing the position that Ms.

Weathersby was injured in August 2006 because it was far easier for them to prove that her

chronic lung disease resulted from her August 2006 exposure to chlorine gas, rather than having

to go through the far-more complicated process of proving injury attributable to her exposure to

the chemical Crew during the period the Zurich Policy was in effect. In other words, for

purposes of proving liability and damages in a tort case, the catastrophic injury caused by Ms.

Weathersby’s exposure to chlorine gas rendered it unnecessary for her experts or her to delineate

precisely when her actual injuries began, including whether she was injured by exposure to Crew

alone. In fact, her treating physicians were never even questioned about the timing of her injury.

See Opp. Br. at 13.

Not surprisingly, Zurich attempts to minimize the irrefutable fact that the parties in the

Weathersby action were not concerned with the temporal trigger issue, which may be dispositive

here To the point, the evidence and proofs necessary to a disposition of the instant coverage suit

are dramatically different than those relevant to the underlying tort case. As such, the facts

needed to be discovered here require far more work than simply verifying depositions taken in

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the underlying Weathersby action, as Zurich would have it. Indeed, the seminal issues presented

here require ACE to develop substantial further evidence and testimony from witnesses who

reside in California, including Ms. Weathersby herself. See Opp. Br. at 17.1

Zurich further suggests that deposing Ms. Weathersby’s treating physicians to further

clarify when her injuries first began would be unnecessary because ACE can simply read through

Ms. Weatherby’s medical records. See Opp. Br. at 13. Again, however, such self-serving

statements simply serve to further Zurich’s strategy of depriving ACE from gaining access to

facts which would support ACE’s position that Ms. Weathersby was injured during the Zurich

Policy period and that the Zurich Policy was triggered. Put differently, while Zurich may choose

to limit the scope of its own discovery efforts, its litigation strategy cannot deprive ACE of its

right to pursue and obtain discovery relevant to the legal and factual issues presented, rights that

can and will be exercised in a California court.2

Perhaps most fatal to its wishful thinking that this forum is more appropriate than the

Central District of California, Zurich concedes that “[o]n balance, some evidence is in the

Central District of California, and some evidence is elsewhere in this coverage dispute.” Opp.

1
Zurich states that in the underlying action, Ms. Weathersby “testified to facts that ACE,
Compass, and Crothall believe could favor their position on trigger-of-coverage, namely that
[she] coughed when using only Crew from the very start of her work at Cedars-Sinai, during the
final few days of the Zurich Policy.” Opp. Br. At 12. According to Zurich, this limited and
cursory testimony should be sufficient evidence for ACE with respect to the trigger issue, and,
as such “only limited discovery should be needed to decide the trigger issue.” Opp. Br. At 13.
Of course, it is in Zurich’s best interests to say so, because it does not want ACE to discover
evidence that Ms. Weathersby suffered bodily injury during the Zurich Policy period which, in
turn, triggered Zurich’s coverage obligation.
2
Zurich proposes a hail of alternative discovery methods if this case were to remain in
North Carolina, including taking depositions by remote means pursuant to Rule 30(b)(4),
utilizing depositions in the Weathersby action pursuant to Fed. R. Civ. P. 32(a)(4) and Fed. R.
Evid. 803, 804, and 807, and utilizing Local Rule 45.1. See opp. Br. at 14-15. This litany of
procedural devices is an attempt to avoid the unassailable fact that most efficient solution is to
simply transfer the case to California.

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Br. at 17. Tellingly, Zurich does not assert that any evidence is in North Carolina. The reason

for this omission is simple: there is no relevant evidence here.

In short, Zurich’s position that the location of the evidence does not favor transferring

this case to California is unsupported, unsupportable, and undermined by the facts and by

Zurich’s own words. Conversely, as discussed in ACE’s original Memorandum in support of the

instant Motion, there is ample reason for the Court to transfer this case to the venue with the

strongest connection to the evidence necessary to resolve the parties’ insurance coverage dispute:

the Central District of California.

B. Other Flaws in Zurich’s Opposition Argument.

Zurich presents several other arguments to support its position that the instant coverage

litigation should remain in this forum. Yet again, however, Zurich’s rationales do not justify

keeping this case here, rather than transferring it to California, where it belongs.

1. Crothall Does Not Agree With Zurich That Ms. Weathersby

Was First Injured in August 2006.

Zurich states that Crothall initially believed that the Zurich Policy was not impacted by

Ms. Weathersby’s claims because her experts focused only on August 2006 as the date of her

injury. See Opp. Br. at 3-4. Presumably, Zurich presents this observation in order to suggest

that Crothall agrees with Zurich’s position that Ms. Weathersby was not injured during the

Zurich Policy period.

What Zurich neglects to mention, however, is that even if Crothall had advocated such a

position in the Weathersby litigation, its posturing on this point would not be dispositive of the

coverage trigger issue presented here. Indeed, given that the trigger issue was not relevant to or

a consideration in the underlying tort litigation, any such position would not have been

formulated for the purpose of addressing it.

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 Moreover, as Zurich later concedes, Crothall’s suggestion during the very early stages of

the Weathersby litigation that Ms. Weathersby may have been injured in August 2006 may have

been presented simply to avoid having to pay two self-insured retentions under the relevant

insurance policies and not for purposes of trigger or any other insurance issues. See Opp. Br. at

5. In other words, contrary to Zurich’s insinuation, Crothall did not state as a matter of fact or

law that Ms. Weathersby was injured in or after August 2006.

In any event, Zurich undermines the value, if any, of Crothall’s initial view by asserting

later in its Opposition that "it should matter little that Crothall vigorously challenged Ms.

Weathersby every step of the way." Opp. Br. at 16. On this point, Zurich concedes that Crothall

amended its position that the Zurich Policy had been triggered by Ms. Weathersby’s injuries.

See Opp. Br. At 6. In recognizing, but discounting, this countervailing position (which in fact

supports ACE’s argument that the Zurich Policy was triggered by Ms. Weathersby’s injuries),

Zurich appears to be of the opinion that Crothall’s views only matter when they seemingly favor

Zurich, but not when they don’t, as here.

In short, the positions advocated by Crothall in the context of the underlying Weathersby

litigation do nothing to undermine the facts that (1) additional discovery is required to determine

the timing of Ms. Weathersby’s injuries and the critical issue of trigger, and (2) such discovery

must take place in California.

2. Zurich Exaggerates the Burden ACE Bears to Show That Transfer of Venue
is Justified.

Zurich claims that ACE has a "particularly heavy burden" to meet in seeking to transfer

venue because a plaintiff's choice of forum is a paramount consideration. See Opp. Br. at 1, 8-9.

While it is true that ACE bears some burden of proving that a transfer of venue would be

beneficial, the heightened standard cited by Zurich is not applicable in cases such as this, where

the plaintiff is not a resident of the forum State, in this circumstance North Carolina. See

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Commercial Equip., Inc. v. Barclay Furniture Co., 738 F. Supp. 974, 977 (W.D. N.C. 1990)

(plaintiff was North Carolina corporation with its principal place of business in Charlotte, North

Carolina) (citing Phillips v. S. Gumpert Co., Inc., 627 F. Supp. 725 (W.D. N.C. 1986) (plaintiff

was resident of North Carolina when alleged injury occurred and witnesses resided in North

Carolina)). Zurich recognizes this distinguishing factor and attempts to minimize its impact by

citing to inapposite authority from other jurisdictions which suggest that a plaintiff’s choice of

forum still warrants deference even if it is not a resident of the forum, provided that the action

has significant connections to the forum. See Opp. Br. at 9. Of course, none of these out-of-

state cases is remotely relevant to this litigation, particularly on the facts presented herein.

By its own admission, Zurich is not a resident of North Carolina. While Zurich states

that it has a claims handling office in North Carolina, that fact is wholly irrelevant, as Zurich has

claims handling offices across the entire country, including in California. Even if the presence of

a Zurich office in North Carolina was somehow relevant, such relevance is negated by the fact

that this office apparently had no involvement with the claim at issue in this case, as Zurich

plainly acknowledges that if ACE desires to depose its employees about the issues presented

herein, those depositions would likely be taken in Illinois, where Zurich is headquartered. See

Opp. Br. at 16.

With regard to the residency of the other parties to the litigation, it is clear that North

Carolina, at best, has a limited connection to this dispute. Zurich plays up the import of the fact

that Compass Holdings, Inc. (“Compass”) is headquartered in North Carolina. But Compass’s

domicile is wholly irrelevant to the matters at issue, as it was not a party to the Weathersby

action and is only a nominal party here, included strictly for purposes of seeking a declaratory

judgment. As such, its residency is of little practical significance.

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 Far more meaningful than a nominal defendant’s residence is that fact that the most

critical witnesses, including Ms. Weathersby herself, are located in California. While Zurich

contends that Ms. Weathersby’s residence is insignificant because she is not a party to this case,

it cannot dispute the fact that her testimony is critical to, perhaps dispositive of, the seminal

coverage question of when she was first injured. Equally compelling, and as Zurich correctly

notes, Ms. Weathersby cannot be compelled to appear in North Carolina, but can be compelled

to appear in California, a factor that favors transferring this matter to that State. See Opp. Br. at

17-18.

At the same time, Crothall, a defendant in the underlying action, trained and supervised

Ms. Weathersby at her job in Los Angeles, California (where she was injured). As such, all of

her supervisors, co-workers and other potential witnesses are located there. So too, all of Ms.

Weathersby’s treating physicians and medical records are located in California.

In short, all of the critical - indeed dispositive - evidence to be discovered in this case is

located in California, not here. That is why a transfer of venue is not simply convenient, it’s

necessary.

3. Whether California Courts Hear More Cases Than North Carolina Courts
Makes No Difference Here.

Zurich’s speculation that transfer to California may affect the efficient administration of

justice is unfounded. On the one hand, Zurich states that “the Central District of California

appears to be a significantly more congested district than the Western District of North

Carolina.” On the other, however, it correctly recognizes that “the times from filing an action to

its disposition and from filing an action to its trial are comparable in both districts.” Opp. Br. at

20. Given the latter - and for more relevant - fact regarding case disposition, the number of cases

filed in each District makes no practical difference and is a non-factor with respect to the Court’s

consideration of ACE’s Motion to Transfer Venue.

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 4. ACE’s Motion to Transfer Venue Is Not Untimely.

Zurich alleges that ACE unreasonably delayed filing its Motion to Transfer Venue and

that it has been “prejudiced” as a result of having to incur legal fees in North Carolina “that it

would not have incurred had the motion been timely filed.” Opp. Br. at 23. As with Zurich’s

other arguments, this assertion has no factual or legal foundation.

First, it is important to recognize that there is no deadline for filing a motion to transfer

venue. Thus, ACE is free to file its motion at any appropriate time. And now is as appropriate as

any other.

Second, and equally compelling, this case is in its infancy. Zurich has filed a Complaint.

ACE, Crothall and Compass have Answered and ACE has Counterclaimed. Lastly, the parties

have prepared a joint discovery plan, the scope of which will remain the same if the case is

transferred to California. Equally meaningful, the parties’ agreement on a discovery plan

eliminates the need for them to address this threshold procedural matter when the case is

transferred to California. In other words, no unnecessary or arguably duplicate work has been

performed while this case has been venued here. In turn, no discovery has been taken or

exchanged. As such, Zurich would not be prejudiced if this case were transferred to California.

Third, and perhaps most fatal to Zurich’s unfounded “prejudice” argument, Zurich was

well aware that ACE took issue with its choice of venue from the outset of this litigation.

Indeed, ACE raised the issue of improper venue early on in this case, specifically asserting in its

Answer that “Venue is improper in this Court such that this matter should be dismissed or

transferred to the United States District Court for the Central District of California. . . .” See

ACE’s Answer at ¶ 57. Even before that time, counsel for ACE discussed the issue of venue

transfer with Zurich's counsel, as this was one of the threshold issues on the table when Zurich

first filed and served its complaint. See Affidavit of Tracy Eggleston, Esq., attached hereto as

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Ex. A. As such, this motion comes as no surprise to Zurich, as it was well aware that such a

motion would be filed from the outset of this litigation.

In short, Zurich’s attempt to characterize ACE’s motion as anything other than the

inevitable result of ACE’s continuously expressed concern over the choice of venue should be

soundly rejected. Likewise, Zurich’s effort to characterize ACE’s motion as some sort of

prejudicial dilatory tactic is unfounded and should have no bearing on the Court’s consideration

of the merits of ACE’s motion.

C. CONCLUSION

For the reasons set forth above, ACE respectfully requests that its Motion to Transfer

Venue to the Central District of California be GRANTED.

COZEN O’CONNOR

By: s/ Tracy L. Eggleston_______________

Tracy L. Eggleston, Esquire
NC State Bar No. 18471
301 South College Street, Suite 2100
One Wachovia Center
Charlotte, SC 28202
Tel. No.: (704) 348-3409
Fax No.: (704) 334-3351
E-mail: teggleston@cozen.com
Counsel for Defendant
ACE American Insurance Company

Richard J. Bortnick, Esquire

Cozen O’Connor
200 Four Falls Corporate Center. Suite 400
West Conshohocken, PA 19428
Tel. No.: 610.832.8357
Fax No.: 215.701.2351
Email: rbortnick@cozen.com

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 CERTIFICATE OF SERVICE
The undersigned certified that a copy of ACE American Insurance Company’s Reply

Brief to Defendant’s Opposition to Motion to Transfer Venue was served by electronic means to

the following counsel of record on this 10th day of September, 2010:

Edward Taylor Stukes

Nexsen Pruet, LLC
201 South Tryon Street, Suite 1200
Charlotte, NC 28209
E-mail: tstukes@nexsenpruet.com
Counsel for Plaintiff

James W. Bryan, Esq.

Nexsen Pruet, LLC
P. O. Box 3463
Raleigh, NC 27603
E-mail: jbryan@nexsenpruet.com
Counsel for Plaintiff

Kathleen H. Dooley
Ann Terrell Dorsett
McGuire Woods LLP
100 North Tryon Street, Suite 2900
Charlotte, NC 28202
E-mail: kdooley@mcguirewoods.com
E-mail: adorsett@mcguirewoods.com
Counsel for Defendants
Compass Holdings Inc. and
Crothall Services Group

COZEN O’CONNOR

By: s/ Tracy L. Eggleston

TRACY L. EGGLESTON, ESQ.

Case 3:10-cv-00101-RJC-DCK Document 27 Filed 09/10/10 Page 10 of 10