Hurtado et al v. May Trucking Company et al
Filing
62
ORDER granting 55 Plaintiffs' Request for In Camera Review of Documents Contained Within Defendant's First Amended Privilege Log and Motion to Compel Disclosure of Documents Not Disclosed as Referenced in Defendant's First Amended Privilege Log. Defendant shall produce the documents at issue (in the first and second amended privilege logs) without redaction on or before 07/05/2011, by Magistrate Judge Kristen L. Mix on 06/27/2011.(wjc, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-cv-00625-MSK-KLM
RAUL HURTADO, and
ALTAGRACIA HURTADO,
Plaintiffs,
v.
PASSMORE & SONS, L.L.C., an Oklahoma company,
Defendant.
_____________________________________________________________________
ORDER GRANTING MOTION TO COMPEL DISCOVERY
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiffs’ Request for In Camera Review of
Documents Contained Within Defendant’s First Amended Privilege Log and Motion
to Compel Disclosure of Documents Not Disclosed as Referenced in Defendant’s
First Amended Privilege Log [Docket No. 55; May 25, 2011] (the “Motion”). Prior to the
Motion’s filing, the Court conducted a hearing to attempt to informally resolve the parties’
dispute [Docket No. 54]. Finding that further briefing was necessary, the Court directed (1)
Defendant to amend its privilege log; (2) Plaintiffs to file the Motion; and (3) Defendant to
file a Response [Docket No. 61]. The Motion is now fully briefed and ripe for resolution.
Having considered the parties’ oral arguments and briefing,
IT IS HEREBY ORDERED that the Motion is GRANTED for the reasons set forth
below.
This matter involves the alleged injuries sustained by Plaintiffs resulting from an
automobile accident with a vehicle being driven by Defendant’s employee.1
See
Scheduling Order [#14] at 3-4. Defendant denies that its driver caused or negligently
contributed to the accident and attributes Plaintiffs’ alleged injuries to the conduct of Plaintiff
Raul Hurtado and others. Id. at 5. The Court’s jurisdiction is based on the diversity of
citizenship of the parties pursuant to 28 U.S.C. § 1332.
The Motion pertains to discovery of the insurance claim file prepared by Defendant’s
insurance carrier following the accident. Pursuant to Defendant’s supplemental initial
disclosures, Defendant disclosed a portion of the insurance claim file but withheld the
remainder based on an assertion that the documents and emails were protected by the
work product privilege. See Motion [#55] at 3. As a preliminary matter, Plaintiffs contend
that Defendant’s privilege log is insufficient and fails to provide a necessary explanation of
the nature of the documents so as to allow determination of whether the work product
privilege applies. Id. at 3-4. To this end, Plaintiffs request that the Court conduct an in
camera review of the documents. Id. at 4. Plaintiffs also contend that the documents and
emails were prepared or created in the ordinary course of business and are not protected
by the work product privilege. Id. 4-6.
In response, Defendant argues that the documents and emails withheld from the
insurance claim file were prepared by counsel or were created for purposes of
communicating necessary information to counsel in conjunction with counsel’s investigation
of the accident at issue. Response [#61] at 4-6. Defendant characterizes the fruits of the
1
Plaintiffs also sued a second Defendant, May Trucking Company, whose employee
allegedly contributed to the accident. Plaintiffs resolved their claims against this Defendant and
voluntarily dismissed it as a party [Docket Nos. 27 & 28].
2
investigation conducted by counsel as work product because the investigation was
conducted in relation to a third party claim in anticipation of litigation. See id. at 5.
As an initial matter, the parties appear to disagree as to the law that controls the
applicability of the work product privilege. Plaintiffs do not directly address the issue, but
cite to Colorado state law. Motion [#55] at 4-6. By contrast, Defendant contends that
federal law applies to this issue and limits its analysis to cases addressing the privilege
pursuant to federal law. Despite the fact that jurisdiction in the case is based on diversity
of citizenship between the parties, federal law supplies the parameters of the work product
privilege. Frontier Refining, Inc. v. Gorman-Rupp Co., 136 F.3d 695, 702 n.10 (10th Cir.
1998) (noting that, “[u]nlike the attorney client privilege, the work product privilege is
governed, even in diversity cases, by a uniform federal standard embodied in Fed. R. Civ.
P. 26(b)(3)”). Therefore, Plaintiffs’ citation to state law in support of their position is
inapposite and the Court looks to federal law to supply the standard governing the
applicability of the work product privilege.
Fed. R. Civ. P. 26(b)(3) exempts from disclosure all “documents and tangible things
that are prepared in anticipation of litigation.” As noted above, Defendant argues that the
documents and emails withheld from the insurance claim file were prepared in anticipation
of litigation and are protected from discovery by the work product privilege. The Court finds
the analysis in Weitzman v. Blazing Pedals, Inc., 151 F.R.D. 125 (D. Colo. 1993) to be
helpful in framing the issue. In Weitzman, a court in this District recognized a distinction
between first party and third party insurance claims when considering whether documents
contained in the claim file were protected by the work product privilege. Investigations of
first party insurance claims, e.g., claims made by the insured to his or her insurer, typically
3
“do not involve liability investigations . . . . When an insured presents a first party claim, he
is asking for payment under the terms of the insurance contract between him and the
insurance company. . . . There is no initial contemplation of litigation.” Id. at 126. In
investigations of third party claims, e.g., claims arising from conduct of the insured in
relation to the injury of another (as the claim can be characterized here), typically “the
investigation is made in anticipation of claims, which, if denied, likely will lead to litigation.”
Specifically,
Although a claim may be settled short of instigation of legal action, there
always is the possibility that the claim will end in litigation. The recognition
of this possibility provides the insurer the impetus to gather information
regarding the circumstances of the claim. In a sense, liability insurance is
nothing more than litigation insurance. For this reason, it is logical to
conclude that, while claim files generated in relation to first party claims are
made in the ordinary course of business and are discoverable, files
generated during the investigation of third party claims are made in
anticipation of litigation and are not discoverable.
. . . Because of the adversarial nature of the relationship between an
insurer and a third party claimant, this Court finds that the [insurance] claims
file is protected by the work product doctrine and is not discoverable, absent
a showing of substantial need.
Id. at 126-27 (citations omitted).
Furthermore, the Weitzman court noted that even applying the standard set forth in
Hawkins v. Dist. in and for the Fourth Judicial Dist., 638 P.2d 1372 (Colo. 1982), the state
law case primarily relied upon by Plaintiff here, third party insurance claim file documents
are not discoverable considering the exception recognized by the Colorado Supreme Court,
i.e., “under appropriate circumstances an insurance company’s investigation of a claim may
. . . shift from an ordinary business activity to conduct ‘in anticipation of litigation.’”
Weitzman, 151 F.R.D. at 126 (quoting Hawkins, 638 P.2d at 1378). The Weiztman court
4
found that a third party claim implicated an “appropriate circumstance” to deviate from the
normal rule that “insurance adjusters’ investigative reports are prepared in the ordinary
course of business and, therefore, are discoverable.” Id. at 127.
However, while crediting that there is a difference between first and third party
claims, I find that there is a crucial distinction between Weitzman and the facts at issue
here. In Weitzman, the insurance company had notice of an actual claim and had received
a settlement demand from the third party. The insurance company then hired counsel to
conduct an investigation. Documents and information derived thereafter were protected
by the work product privilege. See id. In the present case, no claim (either formal or
informal) had been filed by third parties (here, Plaintiffs) when counsel was hired and began
an investigation. In addition, neither Plaintiffs nor their counsel contacted Defendant or its
insurance carrier about filing a claim prior to or during the investigation. See Motion [#55]
at 2, 5; accord Response [#61] at 2, 5.
To the extent that Defendant argues that it reasonably anticipated litigation under
these circumstances, courts have noted that “[t]he need for an investigation and the
knowledge that third parties may look to [the insurer] for damages reimbursement . . . does
not instantly transform . . . investigative material into material created in anticipation of
litigation protected by the work product doctrine.” Smith v. Marten Transp., Ltd., 10-cv00293-WYD-KMT, 2010 WL 5313537, at *2 (D. Colo. Dec. 17, 2010) (unpublished
decision); see also Wikel v. Wal-Mart Stores, Inc., 197 F.R.D. 493, 495 (N.D. Okla. 2000)
(noting that “because litigation is an ever-present possibility in American life, it is more often
the case than not that events are documented with the general possibility of litigation in
mind. Yet the mere fact that litigation does eventually ensue, does not, by itself, cloak
5
material with work product immunity”). In other words,
[i]t simply does not follow that there will be a need for actual litigation of any
one or more potential claims. Often cases such as this are simply resolved
by negotiation over a payment to be made to innocent third parties involved
in the accident. In fact this is the bread-and-butter work of insurance
companies.
. . . It is beyond cavil that such an accident would have to be
investigated to answer the why, how, who, what, when and where questions
concerning the origination of the accident before the [insured] could evaluate
liability and pay claims if appropriate. . . . When [an accident is investigated]
as any insurance company would[, the investigator] is not “anticipating
litigation” any more than anyone involved in any transaction or event with
persons may “anticipate litigation.”
Smith, 2010 WL 5313537, at *2-3 (emphasis added). Moreover, it cannot be understated
that “[a] substantial part of an insurance company’s business is to investigate claims made
by third parties against its insured. Therefore, courts uniformly hold that investigations
usually are part of the normal business activity” and information derived therefrom is
generally discoverable. Id. at *2 n.2 (emphasis added) (citation omitted).
While “at some point an insurance company’s activity shifts from claims evaluation
to anticipation of litigation,” such does not occur until “the probability of litigating the claim
is substantial and perhaps imminent.” Henderlong v. Allstate Ins. Co., No. 08-cv-01377CMA-MEH, 2009 WL 82493, at *2 (D. Colo. Jan. 13, 2009) (unpublished decision); see also
Wikel, 197 F.R.D. at 495 (noting that “[i]nvolvement of an attorney is not dispositive of the
‘in anticipation of litigation’ issue”). Because there was no actual claim pending when the
investigation was undertaken here, nor had Defendant been contacted by Plaintiffs or their
counsel about filing a potential claim, I find that the documents and information derived
therefrom are not protected by the work product privilege. It is Defendant’s burden to prove
that something particular about this investigation (where only the threat of potential third
6
party claims was present) prompts a different result. See Weitzman, 151 F.R.D. at 127.
It has not done so, and I find that the work product doctrine does not apply to the
documents at issue.
Nevertheless, where, as here, the investigation is conducted at least in part by
counsel, the materials contained in the insurance claim file may be protected by the
attorney-client privilege. See Smith, 2010 WL 5313537, at *3. However, the Court notes
that Defendant failed to raise the application of the attorney-client privilege either at the
hearing or in its first amended privilege log (which was prepared by defense counsel at the
Court’s prompting following the hearing) [Docket No. 55-1]. Defendant raises the objection
for the first time in its Response and submits a second amended privilege log [Docket No.
66-1] indicating that every document is protected both by the work product privilege and
now by the attorney-client privilege. Arguably, Defendant’s failure to timely raise the
objection related to attorney-client privilege waives its ability to pursue this objection here.
Pham v. Hartford Fire Ins. Co., 193 F.R.D. 659, 661-62 (D. Colo. 2000) (noting that any
ground for objection to producing requested discovery is waived if not timely raised).
However, because “the attorney-client privilege is personal with the client,” and can “be
waived only by the client,” the Court elects to consider whether the documents and
communications at issue are protected by the attorney-client privilege. See People v.
Madera, 112 P.2d 688, 690 (Colo. 2005) (citation omitted).
As a preliminary matter, the applicability of the attorney-client privilege to the
documents contained in the insurance claim file is governed by Colorado state law.
Bonanno v. Quizno’s Franchise Co., 255 F.R.D. 550, 554 (D. Colo. 2009). The party
claiming that the privilege applies bears the burden of proof on this issue. In re Foster, 188
7
F.3d 1259, 1264 (10th Cir. 1999). Not every document drafted by counsel or every
communication with counsel is protected by the attorney-client privilege. See Nat’l Farmers
Union Prop. & Cas. Co. v. Dist. Court, 718 P.2d 1044, 1049 (Colo. 1986). For example,
“the attorney-client privilege does not protect the results of a factual investigation
[conducted by counsel] relating to the issuance of a policy.” Id.
The question of whether any of the eighteen (18) documents listed in the second
amended privilege log are subject to the attorney-client privilege is addressed by
considering whether: (1) the information was provided by agents of the corporate client “to
counsel acting as counsel” at the direction of supervisors, (2) the information was
necessary for the provision of legal advice, (3) the agents were aware that their
communications were made for the purpose of counsel rendering legal advice to the
corporate client; and (4) the communications were treated as confidential. Id. (citing
Upjohn Co. v. United States, 449 U.S. 383, 394-95 (1981)).
Addressing the second and third factors first, although Defendant suggests that the
documents or communications were created for the purpose of obtaining or rendering legal
advice, it refers only to the timing of when they were created, namely after retention of
counsel. See Response [#61] at 2-3. However, mere retention of counsel does not always
give rise to protection of the privilege. For example, where, as here, counsel’s activities
“consist[] of conducting interviews of various officers and employees for the purpose of
determining the factual circumstances [of the matter at hand,] . . . the attorneys [are] acting
more in the role of claims investigators than legal counsel.” Nat’l Farmers, 718 P.2d at
1049. Therefore, on these pleadings, I find that Defendant has not sufficiently shown that
the documents and communications were created for the purpose of obtaining or rendering
8
legal advice or that the participants were so advised.
In relation to the first and fourth factors, Defendant does not directly address
whether the communications were made at the direction of supervisors or whether the
participants were aware that their statements were going to be treated as confidential.
Although Defendant contends that counsel was acting as counsel, it does not specifically
explain how counsel’s actions deviated from those of an investigator. Therefore, on these
pleadings, I find that Defendant has not sufficiently shown that the documents and
communications fall within the remaining factors subjecting them to protection.
In the absence of these factors, the extension of the attorney-client privilege
to the circumstances of this case results in cloaking with confidentiality
communications [and documents] that, so far as the record shows, [sh]ould
have been forthcoming . . . [and Defendant’s] contention that the attorneyclient privilege protects [the materials of the investigation] from discovery is
not tenable under these circumstances.
Id. at 1049-50; see also Smith, 2010 WL 5313537, at *4 (rejecting assertion that sending
an investigative document or interview to counsel automatically “create[s] an attorney-client
privilege as to this document”).2 Where, as here, Defendant has not even minimally met
its burden to show that the attorney-client privilege applies, nor is it clear that review of the
documents would change the result, the Court does not find it necessary to conduct an in
camera review of the documents prior to disclosure. See generally Kovacs v. Hershey Co.,
2
Moreover, although my holding does not necessarily depend on the appropriateness of
either of Defendant’s privilege logs, the Court notes that there is no explanation as to how
certain documents (which do not appear to have been created by or sent to counsel) are
protected by the attorney-client privilege. See Docs. McMil-Email-009, McMil Rpt-001, McMil
Rpt-002, McMil Rpt-003, McMil Rpt-004, McMil Rpt-008. To the extent that one of the
individuals involved with these documents is an attorney, such information has not been
conveyed to the Court. See Horton v. United States, 204 F.R.D. 670, 673 (D. Colo. 2002) (“The
information provided in the privilege log must be sufficient to enable the court to determine
whether each element of the asserted privilege is satisfied.”).
9
No. 04-cv-01881-WYD-BNB, 2006 WL 2781591, at *11 (D. Colo. Sept. 26, 2006)
(unpublished decision) (noting that court is not required to conduct an in camera review
merely because privilege raised). Accordingly, the Motion is granted.3
IT IS FURTHER ORDERED that Defendant shall produce the documents at issue
(in the first and second amended privilege logs) without redaction on or before July 5,
2011.
Dated: June 27, 2011
BY THE COURT:
s/ Kristen L. Mix
Kristen L. Mix
United States Magistrate Judge
3
Although Plaintiffs request in camera review of the documents (assuming that the
Court credited the application of a privilege), the primary relief sought by Plaintiffs is disclosure
of the documents. Because disclosure is ordered, I determine that my decision is best
characterized as granting the Motion in full.
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