District Court in Idaho allows intrusive discovery in bad faith litigation

An Idaho federal court recently allowed intrusive discovery in bad faith litigation despite the insurer’s legitimate privacy concerns over disclosure of adjuster’s personal information.  Sapphire Hospitality Investments LLC v. Oregon Mutual Insurance Co., No. 3:23-cv-00146, 2025 WL 2210179 (D. Idaho Aug. 4, 2025).  On August 4, 2025, the federal court ordered a hotel owner’s insurer to produce documents relating to disciplinary history, compensation structures and qualifications of its claim adjusters, without a confidentiality/protective order in place. 

In Sapphire Hospitality, a hotel owner sued its insurer in April 2023, alleging that the insurer had deliberately delayed paying benefits for a fire loss the hotel sustained two years prior. The insured issued discovery requests seeking the following:

• Formal or informal customer complaints directed to particular adjusters whether related to fire loss claim or any other claim;
• Disciplinary actions or reprimands of particular adjusters whether related to the fire loss claim or any other claim those adjusters handled; 
• Documents relating to “cost containment,” benefits, perks, bonuses, incentives, and quotas for claims handling that related to adjusters and supervisors involved in the fire loss claim or in effect at the time the fire loss claim was evaluated; and 
• CVs of particular adjusters.

The insurer objected, including on the grounds that the requests sought third-parties’ confidential and personal information. Overruling the objections, the Court ordered the insurer to disclose all of the requested information. The Court ruled that the requests were sufficiently limited in time and scope, relevant to the insured’s bad faith claims, and the information sought proportionately outweighed any privacy concerns expressed by the insurer: “While the Court recognizes Oregon Mutual's concerns regarding the privacy of its employees, the requested personnel files are nevertheless discoverable because the requests are limited to information that is pertinent to the asserted claims and not for private and personal information.”  Notably, the full names of the adjusters appeared in the opinion and the discovery requests, and were not redacted or otherwise protected from publication. 

This decision reflects an increasing trend towards allowing broad discovery in bad faith litigation, including the discovery of an adjuster’s personal or private information.  Nevertheless, there are ways to protect the disclosure of this type of information. In Sapphire, the insurer objected on confidentiality grounds and suggested a protective order was warranted, but did not actually file a motion or provide proposed language.  In the appropriate case, acting to proactively seek a protective order, seeking to have information filed under seal, or entering into a confidentiality agreement early on in the litigation are tools that can be used to try and limit unwarranted disclosure.