Thomas A Seaman v. Sedgwick LLP

Filing 115

MINUTE ORDER IN CHAMBERS by Judge David O. Carter: ORDER OVERRULING OBJECTION AND ADOPTING PROPOSED REPORT AND RECOMMENDATION OF SPECIAL MASTER 107 , 104 . (twdb)

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 11-0664-DOC(RNBx)

Date: July 28, 2014

Title: THOMAS A. SEAMAN -V- SEDGWICK, LLP

PRESENT: THE HONORABLE DAVID O. CARTER, JUDGE
Julie Barrera
Courtroom Clerk

Not Present
Court Reporter

ATTORNEYS PRESENT FOR
PLAINTIFF:
None Present

ATTORNEYS PRESENT FOR
DEFENDANT:
None Present

PROCEEDINGS (IN CHAMBERS): ORDER OVERRULING OBJECTION AND
ADOPTING PROPOSED REPORT AND
RECOMMENDATION OF SPECIAL
MASTER [104] [107]
Before the Court is Defendant Sedgwick’s Objection (Dkt. 107) to the Proposed
Report and Recommendation of the Special Master (Dkt. 104). The Court finds this
matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15.
After considering the objection, the Court OVERRULES the objection and ADOPTS the
Special Master’s Report and Recommendation.
I.

Background

The parties have litigated the question of Request for Production (“RFP”) 57 over
the course of several motions to compel. See Abdollahi Decl. Exs. 6-14. Sedgwick
asserts that all of the responsive documents that the Receiver claims are privileged should
be disclosed because the Receiver waived any privilege by placing the contents of the
documents “in issue.” Specifically, Sedgwick claims the documents address the
Receiver’s research and investigation into filing lawsuits against attorneys and law firms
associated with the MedCap receivership, and so are relevant to Sedgwick’s statute of
limitations defense.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 11-0664-DOC(RNBx)

Date: July 28, 2014
Page 2

The Receiver asserted in his Third Amended Complaint (“TAC”) that he was
reasonably diligent in investigating the claims at issue, and that after time accounted for
in tolling agreements, “the date or dates upon which the Receiver discovered or should
have discovered the facts constituting Sedgwick’s wrongful acts were within one year of
the filing of the original Complaint in this action.” TAC ¶ 30. The Receiver alleged that
he did not discover the pertinent facts until he had the opportunity to review certain files
and interview Sedgwick personnel. TAC ¶¶ 28-29. This process was delayed by the
need to quickly locate and secure the receivership assets. Id.
The specific dispute is over the Receiver’s responses to RFP 57. Sedgwick served
RFP 57 on July 3, 2013, requesting:
All DOCUMENTS not previously produced in YOUR possession, custody
or control (including DOCUMENTS in the possession, custody or control
of YOUR counsel) concerning the LAW FIRMS between the date of
YOUR appointment as Receiver and the date of the filing of YOUR lawsuit
against SEDGWICK, and specifically including, but not limited to, any
DOCUMENTS concerning YOUR investigation of YOUR claims against
the LAW FIRMS and any COMMUNICATIONS relating thereto.
Report (Abdollahi Decl. Ex. 18) at 2. In November 2013, the Special Master ordered the
Receiver to respond to RFP 57, with the following limits:
Plaintiff is ordered to respond to Request for Production No. 57 with two
limitations. First, the term “LAW FIRMS” in the request shall be defined to
include the following three law firms, and their partners, associates, and
employees: (a) Sedgwick LLP; (b) Manatt, Phelps & Phillips, LLP; and (c)
Thomas R. Fazio as general counsel of Medical Capital or any of his law
firms (Fazio, Rynsky & Associates LLP, Blodnick, Fazio & Associates,
PC, and/or Blodnick, Conroy, Fazio & Diglio, PC). Second, the scope of
the request shall be limited to the production of documents concerning
Plaintiff’s investigation of the LAW FIRMS and communications related
thereto, from the date of Plaintiff’s appointment until the filing of his
lawsuit against Sedgwick. This limitation on the request is made without
prejudice to Sedgwick requesting a broader production in the event that the
documents produced by plaintiff justify a broader scope of production.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 11-0664-DOC(RNBx)

Date: July 28, 2014
Page 3

Id.
Eventually, the Receiver produced 393 documents as responsive to RFP 57, and a
privilege log with 878 entries. See Abdollahi Decl. Ex. 13 at 5. On April 1, 2014,
Sedgwick moved via letter brief to enforce the Special Master’s most recent order and to
compel production of all of the documents listed in the Receiver’s privilege log on
several grounds, one of which being that the Receiver waived any work product doctrine
or attorney-client privilege. Id. at 6-14. The Receiver responded on April 15, 2014. Id.
Ex. 14. The Special Master held a hearing and issued a Report and Recommendation. Id.
Ex. 18.
In his Report, the Special Master recommended the following: (1) that the
Receiver produce to the Special Master the documents associated with three billing
records in the main MedCap case that Sedgwick identified as relating to the statute of
limitations; (2) that the Receiver must perform additional searches using specific terms
set out by the Special Master; (3) that the Receiver has not waived attorney-client
privilege or the work product doctrine on the basis of untimely objection or asserting the
discovery rule; and (4) that the Receiver must submit documents for in camera review
related to communications now-former employees for the Special Master to determine
whether the Receiver waived privilege regarding those communications in light of the
discovery rule or another basis. See Report at 3-7.
On the issue of the discovery rule, the Special Master specifically stated:
“Sedgwick argues that by alleging the discovery rule in his complaint so as to avoid the
statute of limitations bar, Plaintiff has waived the privilege and Sedgwick has no other
means of obtaining this vital information. Sedgwick’s request is denied. There has been
no waiver of either the attorney-client privilege or work product doctrine.” Id. at 7.
II.

Legal Standard

“[A]n implied waiver of the attorney-client privilege occurs when (1) the party
asserts the privilege as a result of some affirmative act, such as filing suit; (2) through
this affirmative act, the asserting party puts the privileged information at issue; and (3)
allowing the privilege would deny the opposing party access to information vital to its
defense.” Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1326 (9th Cir.
1995) (quoting Hearn v. Rhay, 68 F.R.D. 574, 581 (E.D. Wash. 1975)); see S. Cal. Gas
Co. v. Pub. Utils. Com., 50 Cal. 3d 31, 40 (1990). If the court finds a waiver, it must

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 11-0664-DOC(RNBx)

Date: July 28, 2014
Page 4

“impose a waiver no broader than needed to ensure the fairness of the proceedings before
it.” Bittaker v. Woodford, 331 F.3d 715, 720 (9th Cir. 2003). The scope of the waiver
should be “closely tailored . . . to the needs of the opposing party in litigating the claim in
question.” Id.
The Court reviews de novo all objections to the special master’s report, including
legal conclusions and findings of fact. Fed. R. Civ. P. 53(f)(3), (4). Parties may
stipulate, with the Court’s approval, to a clear error standard for factual findings, or that
factual findings are final. Fed. R. Civ. P. 53(f)(3)(A), (B); see Wright & Miller, 9C Fed.
Prac. & Proc. Civ. § 2612 (3d ed.). The order appointing the special masters in this case
contains no provision modifying the de novo standard for deciding objections. See Order
Appointing Special Masters (Dkt. 80) at 1.
III.

Discussion

The Court agrees with Sedgwick that, to the extent a document is pertinent to
when the Receiver became aware, or should have become aware, of the claims against
Sedgwick, the first two prongs of the implied waiver standard are met. The Receiver has
certainly put his knowledge of the facts underlying these claims “at issue,” and there is no
doubt that he filed suit. It is not so clear, however, that all of the documents in the
privilege log are “vital,” or that the scope of RFP 57 is narrow enough to have captured
only those documents for which the privilege was waived.
As to whether the documents are vital, Sedgwick states that it “has no other means
of testing such knowledge other than discovery into Plaintiff’s documents and
recollections.” Obj. at 13. The Court is unable to determine on the present record
whether some or all of the documents listed in the privilege log are “vital” to the defense.
To the extent that any of the produced documents might fall into a narrower scope of
discovery, however, it appears that those documents would meet the requirements for
being “vital.” The Receiver previously argued that Sedgwick could retrieve the same
information through depositions, interrogatories, or requests for admission. Abdollahi
Decl. Ex. 14 at 8. The fact that a party may take depositions or gather surrounding facts,
however, may not be sufficient to allow that party to test a claim. See United States v.
Amlani, 169 F.3d 1189, 1196 (9th Cir. 1999) (“If the government has no access to the
subpoenaed documents and other communications because of the privilege, it would be
forced to rely almost exclusively on Amlani’s and Katz’s characterization of events.”).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 11-0664-DOC(RNBx)

Date: July 28, 2014
Page 5

The scope of RFP 57 is also too broad for all responsive documents to fit into the
“at issue” waiver of privilege. The request covers “the production of documents
concerning Plaintiff’s investigation of the LAW FIRMS and communications related
thereto, from the date of Plaintiff's appointment until the filing of his lawsuit against
Sedgwick.” The Rambus court rejected a similar scope, noting that an order to produce
“any and all documents . . . that discuss, refer, or relate to” the facts at issue “does not
demonstrate narrow tailoring.” Rambus Inc. v. Samsung Electronics Co., Ltd., C-0502298 RMW, 2007 WL 3444376, at *6 (N.D. Cal. Nov. 13, 2007). Instead, the Court
permitted document production only as to: “(1) documents demonstrating Samsung’s
subjective knowledge of Steinberg’s work for Rambus, or the objective circumstances
relating to Steinberg’s work for Rambus, prior to the critical date(s) for Samsung’s tolling
allegations, and (2) documents demonstrating the confidential information that Steinberg
knew which Samsung now alleges Steinberg and Rambus misused in breach of
Steinberg’s fiduciary duties.” Id. at *7.
This is consistent with limitations imposed by other courts. See Conkling v.
Turner, 883 F.2d 431, 435 (5th Cir. 1989) (finding that deposition of plaintiff’s attorneys
was appropriate to determine when plaintiff should have known facts vital to RICO
claim, but narrowing deposition questions to only those necessary to determine “what
Conkling knew and when he knew it”); Landmark Screens, LLC v. Morgan, Lewis &
Bockius LLP, C08-02581 JF (HRL), 2009 WL 3415375, at *3 (N.D. Cal. Oct. 21, 2009)
objections overruled, C 08-2581 JF (HRL), 2009 WL 4981156 (N.D. Cal. Dec. 15, 2009)
(finding privilege waived only as to “communications that demonstrate when and how
[plaintiff] learned of the alleged fraud, as well as communications that relate to whether
[plaintiff] had actual or presumptive knowledge of facts such that [plaintiff] was on
inquiry of such fraud”); In re Imperial Corp. of Am., 179 F.R.D. 286, 290 (S.D. Cal.
1998) (limiting discovery on statute of limitations issue to when Plaintiff’s attorneys
became aware of facts placing them on notice of claim, and what those specific facts
were, noting that an implied waiver of privilege did not constitute a “wholesale waiver”
of all privileged information).
The Court therefore agrees with the Special Master that no blanket waiver of
privilege has occurred with respect to all documents responsive to RFP 57. The Court
also cannot determine if any of the documents noted in the privilege log are “vital” to the
defense and fall within an appropriately narrow scope. The Special Master has already
ordered specific documents relevant to these questions submitted for in camera review.
The proper scope for the waiver should include only those documents demonstrating

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 11-0664-DOC(RNBx)

Date: July 28, 2014
Page 6

when the Receiver and his counsel learned of the facts putting them on notice of their
claims, and what those specific facts are.
Sedgwick further asks the Court to exercise its equitable power over the
receivership to force disclosure. The Court declines to do so.
IV.

Disposition

Because the Court finds that Sedgwick has failed to meet its burden to show that
the Receiver waived privilege with respect to all documents responsive to RFP 57,
Sedgwick’s objection is OVERRULED. After de novo review, the Court ADOPTS the
Report and Recommendation of the Special Master (Dkt. 104). This is without prejudice,
however, to Sedgwick requesting narrower production or in camera review of items in the
privilege log that appear responsive to a narrower scope, by whatever procedure the
Special Master deems appropriate.
The Clerk shall serve a copy of this minute order on counsel for all parties in this
action.
MINUTES FORM 11
CIVIL-GEN

Initials of Deputy Clerk: jcb