Pearson v. Travelers Insurance Company
MEMORANDUM OPINION AND ORDER that the plaintiff's objections are OVERRULED and the Magistrate Judge's order stands as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 3/31/2014. (AHI)
2014 Mar-31 PM 04:00
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
TRAVELERS HOME & MARINE
Case Number: 4:11-cv-01846-JHE
MEMORANDUM OPINION AND ORDER
Plaintiff Joanne Pearson initiated this action against her insurer, defendant
Travelers Home & Marine Insurance Company, for bad faith arising out of
defendant’s denial of an insurance claim. (Doc. 1-1). The matter is now before the
court because plaintiff objects to a discovery order entered by Magistrate Judge
Robert R. Armstrong, Jr. (Doc. 76).
I. Procedural History
During discovery, defendant produced a redacted claims file, which reflected
conversations between defendant and its counsel occurring prior to defendant’s
decision to deny plaintiff’s insurance claim. Plaintiff moved to compel, seeking an
order compelling defendant to produce the material in unredacted form. (Doc. 38).
Defendants opposed the motion, contending attorney-client privilege protected the
redacted information plaintiff sought. (Doc. 42).
After considering the parties’ submissions, United States Magistrate Judge
Robert R. Armstrong, Jr. denied plaintiff’s motion to compel. (Doc. 48). Noting that
“[p]arties may obtain discovery regarding any nonprivileged matter that is relevant
to any party’s claim or defense,” Fed. R. Civ. P. 26(b)(1), Magistrate Judge
In this case [sic] Travelers insists that the redacted portions of the file
are protected by the attorney-client privilege, and thus not within the
scope of discovery. In a diversity case such as this one, state law
governs application of the attorney-client privilege. Fed. R. Evid. 501
(“[I]n a civil case, state law governs privilege regarding a claim or
defense for which state law supplies the rule of decision.”). In Alabama
[t]he party asserting the attorney-client privilege bears the
burden of establishing that the privilege attaches to the
documents requested. Lynch v. Hamrick, 968 So.2d 11, 14
(Ala.2007); Ex parte DCH Reg'l Med. Ctr., 683 So.2d 409,
412 (Ala.1996). “The burden is on the party asserting the
attorney/client privilege to establish the existence of . . .
facts demonstrating the claim of privileged information.”
683 So.2d at 412.
Ex parte Tucker, 66 So. 3d 750, 753 (Ala. 2011).
(Doc. 48 at 1-2). Relying on Ex parte Nationwide Mutual Insurance Company, 990
So. 2d 335 (Ala. 2008), and other Alabama Supreme Court decisions, Magistrate
Judge Armstrong determined the sought after correspondence was protected by
attorney-client privilege. (Doc. 48). He noted the Alabama Supreme Court’s holding
in Ex parte Great American Lines Insurance Company, that a coverage opinion letter
by an attorney to the insurer “represents a communication from the attorney to the
client, and that it is, therefore, a privileged communication,” and found no reason the
privilege would not extend to other attorney-client communications in a claims file
prior to the denial (citing Ex parte Great Am. Lines Ins. Co., 540 So. 2d 1357, 1358
(Ala. 1989). (Doc. 48 at 4) . Magistrate Judge Armstrong determined this conclusion
was supported by the Alabama Supreme Court’s holding Ex parte Meadowbrook
Insurance Group, Inc., a bad faith case in which it explained:
It is undisputed that the “correspondence and e-mails between [the
company] and [the lawyer] hired by [the company]” are subject to the
attorney-client privilege. “The general rule is that an attorney cannot
disclose the advice he gave to his client about matters concerning which
he was consulted professionally, nor can the client be required to
divulge the advice that his attorney gave him.”
987 So. 3d 650, 550 (Ala. 2007) (quoting Ex parte Great Am. Surplus Lines Ins. Co.,
540 So. 2d 1357, 1358 (Ala. 1989)). Magistrate Judge Armstrong then explained that
it was only after the Alabama Supreme Court noted the material was privileged that
the court addressed whether the privilege could be waived when the privileged
communication is injected into the case by the party enjoying the protection. (Doc.
48 at 5) (citing Id.). Because waiver was not an issue, Magistrate Judge Armstrong
held attorney-client privilege protected the information sought. (Doc. 48 at 5). He
explained that unlike the defendant in Nationwide, defendant had not asserted an
“advice of counsel” defense and, thus, had not injected the privileged
communications into the litigation. (Id.).
Plaintiff then moved for reconsideration, acknowledging the applicability of
Alabama law, but citing law from other jurisdictions. (Doc. 52). Magistrate Judge
Armstrong denied the motion for reconsideration, noting there was no dispute
Alabama law applied, and plaintiff cited no Alabama law (other than Ex parte
Nationwide Mutual Insurance Co.) on the issue of attorney-client privilege in bad
faith actions. (Margin Order dated June 22, 2012).
On August 1, 2012, Magistrate Judge Armstrong entered an order explaining
that, after further consideration, he decided to hold oral argument on the attorneyclient discovery issue. (Margin Order dated August 1, 2012). Prior to oral argument,
plaintiff submitted additional briefing. (Doc. 67). On August 15, 2012, Magistrate
Judge Armstrong held oral argument. (Minute Entry for August 15, 2012). The
parties and the magistrate judge agreed the court would conduct an in camera review
of defendant’s unredacted claims file to assess plaintiff’s objections to defendant’s
privilege log related to the redacted claims file. (Doc. 75 at 1). After an in camera
review, Magistrate Judge Armstrong found all of defendant’s claims of attorney-client
privilege and work-product protection were properly designated, and ruled defendant
was not required to provide any of the redacted information. (Doc. 75). As to certain
“work-product” designations, the magistrate judge expressly found plaintiff had not
demonstrated the requisite substantial need and undue hardship to overcome the
protection. (Doc. 75).
Plaintiff objected to Magistrate Judge Armstrong’s ruling.
Defendant has submitted a response to Plaintiff’s objections. (Doc. 77).
II. Standard of Review
The order at issue in this case is “nondispositive.” “A magistrate judge ruling
on a nondispositive matter does not somehow mutate into a ruling on a dispositive
matter simply because that ruling ultimately affects the outcome of a claim or
defense.” Pigott v. Sanibel Dev., LLC, CIVA 07-0083-WS-C, 2008 WL 2937804 at
*4 (S.D. Ala. July 23, 2008).
This court may reconsider such orders “where it has been shown that the
magistrate judge’s order is clearly erroneous or contrary to law.” 28 U.S.C. §
636(b)(1)(A); Fed. R. Civ. P. 72(a) (“The district judge in the case must consider
timely objections and modify or set aside any part of the order that is clearly
erroneous or is contrary to law.”); Merritt v. Int’l Broth. Of Boilermakers, 649 F.2d
1013, 1017 (5th Cir. Unit. A June 1981).1 (“Pretrial orders of a magistrate [judge]
under [§] 636(b)(1)(A) are reviewable under the ‘clearly erroneous and contrary to
law’ standard; they are not subject to a de novo determination . . . .”); Dees v.
Hyundai Motor Mfg. Ala., LLC, 524 F. Supp. 2d 1348, 1352 (M.D. Ala. 2007) (“[T]he
question for a court reviewing a magistrate judge’s order on the issue is whether the
magistrate judge was clearly erroneous, that is, whether he abused his discretion.”).
Clear error is “a highly deferential standard.” Holton v. City of Thomasville
Sch. Dist., 425 F.3d 1325, 1350 (11th Cir. 2005).
As the Supreme Court has explained, a “finding is ‘clearly erroneous’
when although there is evidence to support it, the reviewing court on the
entire evidence is left with the definite and firm conviction that a
mistake has been committed.” Anderson v. City of Bessemer City, 470
U.S. 564, 573, 105 S. Ct. 1504 (1985) (quoting United States v. United
States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525 (1948)).
Holton, 425 F.3d at 1350-51. A magistrate judge’s order “is contrary to law when it
fails to apply or misapplies relevant statutes, case law or rules of procedure.” Pigott,
2008 WL 2937804 at *5.
After reviewing defendant’s privilege log and redacted document and
comparing those documents with the unredacted copies provided to the court under
In Bonner v. City of Prichard, the Eleventh Circuit adopted as binding precedent the
decisions of the former Fifth Circuit issued before October 1, 1981. 661 F.2d 1206, 1207 (11th
seal, the undersigned has determined Magistrate Judge Armstrong’s order was not
“clearly erroneous or contrary to law.” “Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense.” Fed. R. Civ.
P. 26(b)(1). In a diversity case, such as this one, state law governs the attorney-client
privilege. Fed. R. Evid. 501. Alabama law places the burden of establishing
privilege on the party asserting the privilege. Lynch v. Hamrick, 968 So. 2d 11, 14
(Ala. 2007). Accordingly, the magistrate judge’s decision that defendant met this
burden is not clearly erroneous or contrary to law.
Although factually distinguishable, the Alabama Supreme Court’s decision in
Ex parte Nationwide Mutual Insurance Company is instructive. 990 So. 2d 335 (Ala.
2008). In Nationwide, the Alabama Supreme Court held the insured (who sued his
insurer for bad faith) was entitled to discovery communications and documents
created before Nationwide denied coverage. Id. at 364. Notably, Nationwide had
asserted “advice of counsel” as a defense to the bad faith claim and, therefore, had
already produced the “pre-denial” documents during discovery. Id.at 363-64.
Unlike Nationwide, defendant has not asserted “advice of counsel” as a defense
to plaintiff’s bad faith claim and has unequivocally and affirmatively stated it does
not intend to do so in this case. Accordingly, defendant has not waived the attorneyclient privilege by inserting the issue into the litigation. See Ex parte Meadowbrook
Ins. Group, Inc., 987 So. 2d 540, 550-51 (Ala. 1989) (holding a defendant may
“waive the [attorney-client] privilege by asserting reliance on the advice of counsel
as an affirmative defense”).
Alabama Rule of Evidence 502, Attorney-Client Privilege provides:
A client has a privilege to refuse to disclose and to prevent any other
person from disclosing a confidential communication made for the
purpose of facilitating the rendition of professional legal services to the
(1) between the client or a representative of the client and the
client's attorney or a representative of the attorney, or
(2) between the attorney and a representative of the attorney,
(3) by the client or a representative of the client or the client's
attorney or a representative of the attorney to an attorney or a
representative of an attorney representing another party
concerning a matter of common interest,
(4) between representatives of the client and between the client
and a representative of the client resulting from the specific
request of, or at the express direction of, an attorney, or
(5) among attorneys and their representatives representing the
Ala. R. Evid. 502(b).
With regard to the work-product protection:
Documents and tangible things otherwise discoverable, which are
prepared in anticipation of litigation or trial by or for another party or
for that other party’s representative, are protected as work product and
are not ordinarily discoverable. Ex parte Meadowbrook identifies the
elements of the work-product exception to the general discovery rule as
follows: “(1) the materials sought to be protected are documents or
tangible things; (2) they were prepared in anticipation of litigation or for
trial; and (3) they were prepared by or for a party or representative of
that party.” [987 So. 2d 540, 548 (Ala. 2007)].
Ex parte Flowers, 991 So. 2d 218, 221 (Ala. 2008) (citations omitted).
Having reviewed the provided documents and assertions of privilege,
Magistrate Judge Armstrong’s order — finding defendant’s claims of attorney-client
privilege and work-product protection were properly designated as such — was not
clearly erroneous or contrary to law. Further, the magistrate judge’s conclusion that
plaintiff did not show a substantial need/undue hardship related to the materials
protected by work-product protection was not clearly erroneous or contrary to law.
See Fed. R. Civ. P. 26(b)(3)(A)(ii); Borders v. City of Huntsville, 875 So. 2d 1168
(Ala. 2003) (noting “the federal decisions construing the Federal Rules of Civil
Procedure are persuasive authority in construing the Alabama Rules of Civil
Procedure because the Alabama Rules were patterned after the Federal Rules.”).
The magistrate judge’s order was not “clearly erroneous or contrary to law.”
See 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). Accordingly, plaintiff’s
objections are OVERRULED and the magistrate judge’s order stands.
DONE this 31st day of March, 2014.
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?