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` UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
` - - -
`LIBERTY MUTUAL :
`INSURANCE CO., :
` Plaintiff, : No. CBM2012-00003
` vs. : (JL)
`PROGRESSIVE CASUALTY :
`INSURANCE CO., :
` Defendant. :
`
` DEPOSITION UNDER ORAL EXAMINATION OF
` MARY LOU O'NEIL, FCAS, MAAA, CLU, ChFC
` April 13, 2013
` New York, New York
`
` - - -
` REPORTED BY: DANA N. SREBRENICK, CRR CLR
` - - -
`
` JOB 59619
`
`TSG Reporting - Worldwide 877-702-9580
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` UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
` - - -
`LIBERTY MUTUAL :
`INSURANCE CO., :
` Plaintiff, : No. CBM2012-00003
` vs. : (JL)
`PROGRESSIVE CASUALTY :
`INSURANCE CO., :
` Defendant. :
`
` DEPOSITION UNDER ORAL EXAMINATION OF
` MARY LOU O'NEIL, FCAS, MAAA, CLU, ChFC
` April 13, 2013
` New York, New York
`
` - - -
` REPORTED BY: DANA N. SREBRENICK, CRR CLR
` - - -
`
` JOB 59619
`
`TSG Reporting - Worldwide 877-702-9580
`
`
`
`Page 2
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` Transcript of the deposition of
` MARY LOU O'NEIL, FCAS, MAAA, CLU, ChFC,
` called for Oral Examination in the
` above-captioned matter, said deposition taken
` pursuant to United States Patent and
` Trademark Office rules, by and before DANA N.
` SREBRENICK, a Federally-Approved Certified
` Realtime Reporter, a New Jersey Certified
` Court Reporter and a Certified Livenote
` Reporter, Notary Public for the State of New
` York, at the offices of Ropes & Gray,
` 1211 Avenue of the Americas, New York, New
` York, commencing at 9:10 a.m.
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`Page 3
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` APPEARANCES:
`
` Ropes & Gray
` BY: JAMES MYERS, ESQ.
` DARRELL STARK, ESQ.
` One Metro Center
` 700 12th Street, NW, Suite 900
` Washington, D.C. 20005
` Counsel for the Plaintiff,
` Liberty Mutual
`
` Jones Day
` BY: CALVIN GRIFFITH, ESQ.
` JAMES WAMSLEY III, ESQ.
` North Point
` 901 Lakeside Avenue
` Cleveland, Ohio 44114
` Counsel for the Defendant,
` Progressive Casualty Insurance
` Company
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` - - -
` I N D E X
` - - -
`
` Testimony of:
` MARY O'NEIL
` BY MR. GRIFFITH........................ 7
` BY MR. MYERS........................... 167
` BY MR. GRIFFITH.......................... 168
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` - - -
` E X H I B I T S
` - - -
`
` NO. DESCRIPTION PAGE
` Exhibit 1019 Document numbered CBM
` 2012-00002 ...............169
` Exhibit 1021 Document numbered CBM
` 2012-00004 ...............176
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` DEPOSITION SUPPORT INDEX
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` Directions to Witness Not to Answer
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` M. O'Neil
` THE VIDEOGRAPHER: This is
` the start of tape labeled number 1 of
` the videotaped deposition of Mary Lou
` O'Neil in the matter of Liberty Mutual
` Insurance versus Progressive Casualty
` Insurance. This deposition is being
` held at 1211 Avenue of the Americas,
` New York, New York on April 13, 2013
` at approximately 9:10 a.m. My name is
` Carlos Lopez. I'm the legal video
` specialist from TSG Reporting, Inc.
` The court reporter is Dana Srebrenick
` in association with TSG Reporting.
` Will counsel please introduce
` themselves?
` MR. GRIFFITH: Calvin Griffith
` on behalf of the patent owner,
` Progressive Casualty Insurance
` Company, and with me is my colleague
` James Wamsley, both of us from Jones
` Day.
` MR. MYERS: James Myers from
` Ropes & Gray representing Liberty
` Mutual.
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` M. O'Neil
` MR. STARK: Darrell Stark also
` from Ropes & Gray.
` - - -
` MARY O'NEIL, FCAS, MAAA, CLU,
` ChFC, after having been duly sworn,
` was examined and testified as follows:
` - - -
` DIRECT EXAMINATION BY MR. GRIFFITH:
` - - -
` Q. Good morning, Ms. O'Neil.
` A. Good morning.
` Q. I'm Calvin Griffith and I'll be
` asking you some questions today. Would
` you state your full name for the record,
` please?
` A. Mary L. O'Neil.
` Q. What is your work address, Ms.
` O'Neil?
` A. 230 Parkside Lane, Pittsburgh,
` Pennsylvania 15236.
` Q. And what is your residence
` address?
` A. 230 Parkside Lane, Pittsburgh
` 15236.
`
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` M. O'Neil
` Q. And you've been retained by
` Liberty Mutual in connection with a number
` of proceedings that are pending in the
` patent offices; is that your
` understanding?
` A. Yes.
` Q. You're an expert in insurance
` and you're offering consulting to Liberty
` as an expert in insurance; is that right?
` A. Yes.
` Q. The -- the matters that bring us
` here today are something called CBMs
` 2012-2 and -4. I'll represent to you that
` you may or may not know the caption
` numbers for these matters. And I'm going
` to be asking you questions about two
` declarations that you signed that were
` filed in connection with those matters,
` both of which relate to a Progressive
` patent that end in the numbers '970. Do
` you recall reviewing the '970 patent of
` Progressive in connection with a couple of
` declarations?
` A. Yes, I recall that.
`
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` M. O'Neil
` Q. Is it agreeable to you if I
` refer to that as the '970 patent for short
` rather than the full seven-digit number of
` the patent?
` A. Yes, that is fine.
` Q. Have you had your deposition
` taken before in connection with legal
` proceedings?
` A. Yes.
` Q. Many times, I take it?
` A. At least once, perhaps more.
` Q. All right. You've testified on
` many of occasions in connection with legal
` proceedings, correct?
` A. Correct.
` Q. And I gather that only one time
` or a few number of times did your
` testimony involve a deposition?
` A. Correct.
` Q. Are you familiar with the
` deposition process?
` A. I believe so.
` Q. Let me just say if I ask a
` question that seems unclear to you and you
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` M. O'Neil
` need it cleared up, let me know. I would
` ask you to do that; is that all right?
` A. Yes, thank you.
` Q. Did you meet with counsel to
` prepare for your deposition?
` A. Yes, I did.
` Q. And did you review your two
` declarations regarding the '970 patent to
` prepare for your deposition today?
` A. Yes, I did.
` Q. Did you review the '970 patent?
` A. Yes, I reviewed the patent.
` Q. And your two declarations
` regarding the '970 patent included a list
` of materials considered. Did you review
` the materials considered as identified in
` your two declarations?
` A. Yes, I reviewed those materials
` as well.
` Q. Are there any other materials
` that you reviewed to prepare for your
` deposition today?
` A. Not for preparation of my
` deposition, no.
`
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` M. O'Neil
` Q. Now, in connection with the '970
` patent, are you aware that the Board that
` is adjudicating these two CBM matters that
` I've identified has issued a decision in
` each matter?
` A. Yes, I'm aware of that.
` Q. Have you -- have you reviewed
` those decisions?
` A. Yes, briefly.
` Q. Approximately when did you
` review those decisions?
` A. Sometime during the last week.
` Q. All right. In connection with
` preparing for this deposition?
` A. I just reviewed them. I don't
` know if I would call that deposition
` preparation, but nonetheless, I did review
` them.
` Q. All right. Anything else that
` you reviewed in the -- in the past week
` that relates to the two CBMs 2012-2 and -4
` relating to the '970 patent?
` A. I believe there were plaintiff
` and defendant, I'll call those, documents.
`
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` M. O'Neil
` Q. Okay. Just so that we're on the
` same wavelength in terms of terminology,
` Liberty Mutual in this matter is called
` the petitioner. You might think of them
` as the plaintiff, but they're called
` petitioner and Progressive is sometimes
` referred to as the patent owner.
` A. Oh, okay.
` Q. Do you review a brief -- the
` briefs that were filed with the Board in
` connection -- by Liberty Mutual and
` Progressive respectively?
` A. Yes, I looked at those briefly.
` Q. All right. Ms. O'Neil, I'm
` going to hand you copies of your two
` declarations relating to the '970 patent
` and which were filed in connection with
` the two CBMs I mentioned. The first is
` Exhibit 1009 to Liberty Mutual's petition
` in CBM 2012-2. And the second is Liberty
` Mutual's Exhibit 1011 in petition -- or
` CBM 2012-4. And I'm going to start, Ms.
` O'Neil, with the declaration filed in CBM
` 2012-2, which is Exhibit 109 to Liberty
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` M. O'Neil
` Mutual's petition in that matter. To be
` clear, I meant to say Exhibit 1009.
` A. Yes.
` Q. On page 5 of that declaration,
` paragraph 14, it identifies materials
` considered. Do you see that?
` A. Yes, I see that list.
` Q. There's four items there. Do
` you see that?
` A. Yes.
` Q. Are there any other materials
` that you considered in forming your
` opinions expressed in this declaration
` besides those materials?
` A. Just my own personal experience.
` No other documents.
` Q. Did you have any discussions
` with Scott Andrews in preparing your
` opinions expressed in these
` declarations -- in this declaration?
` A. No, in fact, I don't think I've
` ever met him.
` Q. Have you ever spoken with him,
` to your knowledge?
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` A. No.
` Q. Did you have any discussions or
` meetings -- well, strike that.
` Did you have any discussions or
` meetings with any -- anyone besides
` Liberty's lawyers with regard to the
` preparation of your declaration that is
` Exhibit 1009?
` A. No, I did not.
` Q. Did you draft this declaration?
` A. Yes.
` MR. MYERS: Objection. Please
` give me time. I think that's
` something that's beyond inquiry given
` the rules of the PTAB, the Patent
` Trial and Appeals Board and also our
` stipulation.
` MR. GRIFFITH: I -- I -- I
` certainly agree that discussions with
` lawyers are -- we've agreed not to
` inquire of any discussions with
` counsel, so I don't intend to do that.
` I had not understood that discussions
` into who drafted the declaration --
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` we're not going to try to get drafts,
` so we've agreed not to pursue drafts.
` MR. MEYERS: I understand.
` There seems to be a decision in the
` Pevarello v. Land case by the Board of
` Patent Appeals and Interferences in
` 2007 which talks about that issue.
` Q. Okay. I've forgotten the answer
` to the question. Did you draft this
` declaration?
` A. Yes, I did.
` Q. Did counsel for Liberty Mutual
` assist in the drafting of the declaration?
` MR. MYERS: Objection.
` A. Yes, they did.
` Q. So some portions, I take it,
` were drafted by counsel for Liberty
` Mutual?
` MR. MYERS: Objection,
` privileged.
` A. Personally I wouldn't put it
` that way but...
` Q. All right. Ultimately I take
` it, Ms. O'Neil, that when you signed this,
`
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` M. O'Neil
` you viewed this as being -- describing
` your opinions and -- and this reflected
` your considerations and conclusions with
` respect to this matter, not someone
` else's; is that fair?
` A. That's correct.
` Q. Ms. O'Neil, are you an inventor
` on any patents?
` A. No, I'm not.
` Q. Have you ever consulted in
` connection with a patent case?
` A. No, I haven't.
` Q. Have you ever opined on any
` patents?
` A. No, I haven't.
` Q. Have you ever testified in a
` patent case?
` A. No, I haven't.
` Q. All right. Now, let me go back
` to your declaration in the CBM proceeding
` that is numbered 2012-4. And that
` declaration is Exhibit 1011 to Liberty
` Mutual's petition. Do you have that?
` A. Yes, I do.
`
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` M. O'Neil
` Q. And let me direct your attention
` to paragraph 14 of that. It's on page 5.
` That's a list of materials that you
` considered in connection with preparing
` this declaration; is that right?
` A. Yes, that's the list.
` Q. And are those all of the
` materials that you considered in forming
` your opinions aside from your knowledge
` and background as -- in insurance?
` A. Correct, that is the list of
` materials that were referenced.
` Q. And there's no other document
` that you consulted to prepare your
` opinions with respect to this declaration;
` is that right?
` A. That's correct.
` Q. And do the questions and answers
` we went through with respect to the prior
` declaration, the other declaration, in
` terms of the drafting the declaration and
` the embodiment of your opinions apply
` equally to this declaration?
` MR. MYERS: Objection --
`
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` A. Yes, everything would be the
` same.
` MR. MYERS: -- based on the
` Petrovello case -- excuse me,
` Pevarello case.
` Is now a convenient time to stop
` for a second?
` THE VIDEOGRAPHER: The time is
` 9:26 a.m. We're going off the record.
` (Whereupon, a brief recess is
` taken.)
` THE VIDEOGRAPHER: The time is
` 9:29 a.m. We're back on the record.
` Q. Ms. O'Neil, I previously handed
` you a copy of Liberty Mutual's Exhibit
` 1010 to its petition in CBM 2012-2.
` And I'm going to go through that
` now and ask you some questions about your
` educational experience and work
` experience. There was a similar, I think,
` exact identical CV filed in connection
` with the other CBM. I'll just use this
` for these questions. Your CV on page 2
` relates that you have a BS in mathematics
`
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` from Penn State. When did you receive
` that?
` A. 1970.
` Q. And then it relates that you
` have a -- an MA in statistics also from
` Penn State, correct?
` A. Correct.
` Q. And when did you receive that?
` A. 1971.
` Q. So you went into your master's
` program right after receiving your BS?
` A. Correct.
` Q. Did you seek employment or
` undertake employment up after receiving
` your master's degree?
` A. Yes.
` Q. Where?
` A. At General Reinsurance
` Corporation.
` Q. And for how long were you at
` General Reinsurance?
` A. About one year.
` Q. What did you do -- excuse me,
` what did you do there?
`
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` A. Well, as it states here, mostly
` statistical work.
` Q. Were you an actuary?
` A. No, when you graduate from
` college, you're generally not an actuary
` yet.
` Q. Did you rate insurance?
` A. No.
` Q. Did you determine the cost of
` insurance?
` A. No.
` Q. And then after General
` Reinsurance where did you go? I'm just
` asking about employment here.
` A. The next company I worked with
` was Prudential Property and Casualty
` Insurance Company.
` Q. For how long were you at
` Prudential?
` A. About 11 years.
` Q. I'd like to go through the
` positions that you held there, if we
` could, you know, from beginning to end. I
` think the end was assistant actuary; is
`
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` that right?
` A. Vice president and assistant
` actuary was the complete title.
` Q. Okay. So let's go back to the
` beginning. What did you do for Prudential
` when you started?
` A. I was an actuarial student. I
` think the title might have been actuarial
` assistant.
` Q. For how long were you that?
` A. Who knows. All the titles
` varied depending on the number of
` examinations of the Casualty Actuarial
` Society which were completed.
` Q. All right. And how many
` examinations of -- I'm sorry --
` A. Casualty Actuarial Society.
` Q. CAS?
` A. Yes.
` Q. How many examinations of CAS did
` you take and complete while you were at
` Prudential?
` A. 10.
` Q. 10. And so you held a series of
`
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` titles over that 11-year period at
` Prudential all relating to actuary --
` being an actuary?
` A. No.
` Q. All right. What -- so just in
` terms of substance, what positions did you
` have at Prudential over this time period
` regardless of what the particular title
` was?
` A. I had a number of positions.
` The actuarial student program with
` Prudential was one wherein the
` participants rotated in different
` positions within the company. My first
` position related to setting private
` passenger automobile and homeowner
` insurance rates as a new company. When I
` began with Prudential Property and
` Casualty Insurance Company, it was not
` operative in very many states, so the task
` was to get the company licensed and
` operating in all of the 50 states. And so
` most of the work was related to
` establishing new rates, new rate filings
`
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` for all of these states and getting those
` rates approved and into effect. There
` would be a lot of interaction with
` marketing executives. The executives were
` interested in how the rates would be
` competitive, how the additional market
` would help Prudential's agents. And once
` that task was completed, as it notes here,
` I was moved in a rotation to the marketing
` department. In the marketing department,
` we responded to letters to the president.
` We advised different areas with respect to
` marketing. We interacted with the
` marketing executives at Prudential. Then
` I spent some time in reserving area,
` wherein we looked at all of the company's
` data and set the reserves for the company
` that would be included in the financial
` statements. I also worked in financial
` analysis. When I was in that area, we --
` that area was responsible for setting a
` financial plan for the company, and then
` each month results were compared to plan,
` reasons for the variance were determined
`
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` and a presentation was made to the board.
` I was responsible for making that
` presentation each month.
` After that, I was moved over to
` an area which focused mainly on special
` projects. And part of that was to work on
` interacting with the New Jersey State
` Legislator. In particular the Banking and
` Insurance Committee Chairman was
` interested in changing the private
` passenger automobile insurance system in
` New Jersey. So there were a number of
` meetings, conferences and so on,
` development of proposed legislation so
` that the residual marketing measurement in
` New Jersey was changed from assigned risk
` plan to a joint underwriting association.
` I basically prepared all of the materials
` for those meetings, attended all of the
` meetings prior to the establishment of the
` joint underwriting association. I worked
` with legal staff in the drafting of the
` legislation. I would analyze differences
` in the proposed language, how that might
`
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` affect pricing. I interacted directly
` with the chairman or the banking insurance
` committee. He had specific things that he
` wanted to see happen because he was
` representing Newark. Prior to this
` legislation, Newark had very, very high
` insurance rates particularly for young
` drivers and, therefore, a high proportion
` of uninsured. He thought that was
` unreasonable. So some of the legislation
` was aimed at reducing that difference
` across the state. Subsequent to that when
` the joint underwriting association statute
` became law, I was named chairman of the
` actuarial committee for that organization
` representing Prudential. And so,
` therefore, I assisted with everything
` related to actuarial science as related to
` the joint underwriting association.
` Other special projects that I
` worked on at Prudential were -- was a
` review of the classification plan system.
` The company had basically, when it started
` in insurance, copied or utilized the same
`
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` classification system that all other
` companies were using at the time. Because
` the company had no prior experience, it
` had to basically utilize what was in
` existence. So my review was to analyze
` and determine the appropriateness of those
` plans now that our own data were
` available. I'm sure that I had many other
` special projects during that time, but
` those are some of the highlights. And
` because I had so much contact with the
` state legislators, the insurance
` department, and so on, it turned out that
` the people at the insurance department and
` the state government, actually, asked
` Prudential if I could come there. So
` hence, that's how I ended up going to my
` next position.
` Q. The New Jersey Department of
` Insurance?
` A. Correct.
` Q. All right. Let me go through
` some of those and I appreciate that
` answer.
`
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` When you were setting up
` insurance rates for Prudential's private
` passenger auto line, how did you go about
` accomplishing that task?
` A. Once again, Prudential, being a
` new company, had no historical experience
` of its own. Therefore, generally what
` happened is, someone would visit an
` insurance department and gather
` publically-available information which
` would include competitors rate manuals,
` perhaps their rate filings. They would
` come back. We would lay these out for
` rate comparisons, see what the competition
` had been charging everyone for prices. We
` would try to set the initial rates
` somewhere within that range. If you price
` too high, you will get only the worst
` insureds. If you price too low, you'll --
` excuse me. If you price too low, you'll
` get only the worst insureds, and if you
` price too high, you probably won't get
` anyone at all.
` Q. It's like Goldilocks and the
`
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` Three Bears; it has to be just right.
` How long did that project -- did
` that effort last setting up their initial
` private passenger lines?
` A. It went over several years. I
` mean, it was not an easy process. Many
` states were reluctant to approve rates set
` on that basis. So we wanted more
` experience or we wanted more information
` or whatever. It took quite a while. So
` after a while, it became a dual task of
` updating the rates that were in existence
` and establishing new rates for other
` states that were not yet -- yeah, in
` effect.
` Q. And did you work with others in
` this task?
` A. Yes, there was a team that was
` doing this.
` Q. Ultimately you got them
` approved -- Prudential approved in all 50
` states?
` A. I'm not sure what the final
` number was. I don't think it ended up
`
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` being all states because in the end, the
` company decided to not seek approval in
` some states based on some of the rate
` regulatory situations in those states.
` Q. And then I think you mentioned
` that -- and maybe it was in connection
` with special projects -- that you, after a
` period of time, looked at data that had
` been generated over the course of
` Prudential's experience now that they were
` in these lines, and looked at how it would
` be appropriate, I guess, to adjust or
` modify the insurance rating system that
` had been put in place at Prudential?
` MR. MYERS: Objection, Rule 403.
` A. We were actually looking at more
` than that. We were looking first at the
` overall prices that were charged in a
` state even after the rates had been in
` effect after a year. When we did a more
` detailed analysis of the rate structure,
` that was some years later when there was
` much more data available.
` Q. So what do you mean by "rate
`
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` structure" as opposed to rates?
` A. When I'm speaking of a rate
` analysis in general, that would just be
` the overall rates charged, in other words,
` the entire aggregate premium loss and
` expense experience, which is what is put
` in a rate filing, standard rate filing. A
` rate filing might look at greater detail
` and it might not.
` Q. All right, then you mentioned
` the New Jersey Department of Insurance,
` and that was after these 11 years or so at
` Prudential, correct?
` A. Correct.
` Q. Sometime in the early '80s, mid
` '80s?
` A. Mid.
` Q. Okay. And you were at the New
` Jersey Department of Insurance for a
` little under two years, correct?
` A. Correct.
` Q. And what did you do there?
` A. Everything. I was a chief
` actuary at the New Jersey Department of
`
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` Insurance. I was in charge of all lines
` of business, property, casualty, life and
` health. So that came with a large staff.
` I was responsible for recommending actions
` to the commissioner on basically all
` issues. I was also responsible for
` supervising that staff. There were so
` many issues that confronted the
` department, that it's hard to even name
` them. It's just a day-to-day thing. I
` also interacted, as it says here, with the
` Examinations Division on reserving. There
` were new companies seeking admittance.
` There were statutes that had been put into
` place that the department had to review
` the filing -- the rate filings for. Rate
` filings were constantly being made by
` individual insurers for all lines of
` insurance. Some of those were prior
` approval and had to have extensive
` analyses done within the department. Some
` were, depending if they were commercial
` lines, were file-and-use. So we had to
` look at those, but we did not have to do
`
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` an extensive analysis, but there were
` hundreds of rate filings coming in. There
` were issues all the time. There were
` insurers coming in with special requests.
` There were legislators that had questions.
` There was always it seemed proposed
` legislation the department should opine on
` or make recommendations. So there were
` constant interactions with other entities.
` Q. And did that -- did the
` responsibilities at the NJDOI extend to
` vehicle insurance?
` A. That's one of the lines of
` insurance, yes, private passenger.
` Personal lines means actually as I stated
` here, it includes private passenger
` automobile insurance, homeowners's
` insurance, probably personal umbrella
` insurance, anything that is related to
` purchase of insurance by individuals as
` opposed to a business entity.
` Q. Now, at the New Jersey
` Department of Insurance, were you involved
` in determining the cost of insurance for
`
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` policyholders?
` A. I'm not sure what you mean by
` "determining the cost of insurance."
` Q. Yeah. So it sounds to me like
` what you were doing at the New Jersey
` Department of Insurance was reviewing
` insurance rates and rate structures that
` insurance companies had put in place for
` their -- for their policy lines as opposed
` to setting the rates or determining the
` rates in the first instance; is that true?
` MR. MYERS: Objection, Rule 403.
` A. It seems to me you're trying to
` make a distinction between when you're on
` the company side, you're actually setting
` a price and proposing that to the
` regulator for approval; when you're the
` regulator, in the case of the State of New
` Jerse
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