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No More Secrets: Case Funding is Now Fair Game in Discovery

The Appellate Division First Department, in Lituma v. Liberty Coca-Cola Beverages, LLC, an unpublished decision, determined that case funding materials can be discoverable. The Court found that the evidence of case funding was material and necessary to establish a financial motive to fabricate the accident. It should be noted that this decision does not address prior decisions that have held that case funding information is not discoverable. 

Of note, the defendants in this case had successfully pleaded fraud as an affirmative defense. The defendants provided an affidavit from an insurance agent who provided a chronology linking numerous plaintiffs, medical providers, and others involved in suspicious activities. The alleged fraud in this case involves a staged accident, where the amended answer alleges that the plaintiff accelerated his vehicle to get in front of the defendant's vehicle and then stopped suddenly, allegedly attempting to stage an accident. It is unclear whether this decision will be applied to all cases or only to those that allegedly involve fraud.

"Full disclosure is required of 'all matter material and necessary' to the defense of an action...[T]he words material and necessary are to be interpreted liberally to require disclosure of any facts bearing on the controversy. Defendants established that the demanded information is material and necessary by explaining that it could reveal a financial motive for fabricating the accident".

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first department, fraud, discovery, litigation, articles, insight, news, business-and-commercial-litigation, class-action-complex-litigation, construction-law, product-liability-and-torts, new york