Pollock v. Nationwide Mutual Insurance Company, et al.
MEMORANDUM DECISION AND ORDER - The Second Motion to Compel (Dkt. 39 ) is GRANTED IN PART, DENIED IN PART, AND RESERVED IN PART as follows: 1) The Motion is granted as to the payment records identified in the privilege log dated March 12, 2021, on p ages 10-13, and the materials withheld or redacted based only on the work product doctrine. Defendant must produce the unredacted payment records and the work product materials to Plaintiff by July 30, 2021. 2) Nationwide is ordered to review the Tri al Division Documents identified in the privilege log dated March 12, 2021, and submit a revised privilege log for any materials Nationwide claims are privileged by July 26, 2021. Any materials in the Trial Division Documents that Nationwide determin es are not privileged must be produced to Plaintiff by July 30, 2021. The Motion is denied as to the remainder of the records identified in the privilege log dated March 12, 2021. Signed by Judge Candy W. Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jd)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
Case No. 1:19-cv-00304-CWD
NATIONWIDE MUTUAL INSURANCE
COMPANY, an Ohio Corporation, licensed
ORDER RE: PLAINTIFF’S
SECOND MOTION TO
Before the Court is Pollock’s Second Motion to Compel Discovery. (Dkt. 39.) The
motion is fully briefed and at issue. The parties presented argument on July 8, 2021.
Having carefully considered the briefing, arguments, and entire record, the Court will
grant in part, deny in part, and reserve ruling in part the motion for the reasons that follow.
This action involves a claim of insurance bad faith brought by Leon Pollock against
Nationwide Mutual Insurance Company (Nationwide). (Dkt. 1 at 1.) The claim arises from
a motor vehicle accident that occurred on June 25, 2014. Pollock was seriously injured
when an uninsured motorist failed to stop and struck the vehicle Pollock was driving.
ORDER - 1
Pollock alleges that, despite submitting an adequate proof of loss for payment of the
uninsured motorist policy limit of one million dollars, Nationwide failed to make a
reasonable investigation or evaluation of his claim and refused to make a reasonable
settlement offer. (Dkt. 1-1 at ¶ 26); (Dkt. 1-1, Ex. A at 65-67, 81.) On March 8, 2016,
Pollock filed suit against Nationwide in state court, asserting breach of the insurance
contract. (Dkt. 15-2, Ex. A.) After the state case was filed, Nationwide paid Pollock
$25,000.00 in undisputed lost wages and $100,000.00 in undisputed damages. (Dkt 1-5,
Answer at ¶ 10.) However, Nationwide disputed the total amount of damages Pollock was
entitled to recover and agreed to submit the determination of the amount of damages to
binding arbitration. (Dkt. 15-6, Ex. E at 3.)
On June 19, 2017, the arbitrator issued a decision finding Nationwide liable for
compensatory damages, prejudgment interest, and attorney fees and costs. (Dkt. 15-3, Ex.
B.) The arbitrator awarded Pollock a net amount of damages of $1,399,299.80, calculated
after deducting offsets for other payments previously received by Pollock from Nationwide
and workers compensation.
On June 29, 2017, Pollock filed an application for confirmation of the arbitration
award and a petition for prejudgment interest. (Dkt. 15-3, Ex. B); (Dkt. 15-4, Ex. C); Dkt.
15-5, Ex. D.) On July 11, 2017, Nationwide filed a motion to vacate or modify the
arbitration award and an objection to Pollock’s petition for prejudgment interest. (Dkt 15-6,
Ex. E.) The state court modified and confirmed the arbitration award on October 5, 2017,
reducing the award to the policy limit, deducting the offsets, and awarding Pollock
prejudgment interest accruing from the date of the arbitration decision. (Dkt. 15-6, Ex. E.)
ORDER - 2
Judgment was entered against Nationwide in the amount of $875,000.00, on November 20,
2017. (Dkt. 15-7, Ex. F.) Satisfaction of judgment was filed on January 3, 2018. (Dkt. 15-8,
Ex. G.) However, Pollock alleges in this lawsuit that Nationwide did not pay the attorney
fees awarded in the arbitration until January 8, 2018. (Dkt. 1 at ¶ 39.)
On January 8, 2019, Pollock filed the present case against Nationwide asserting
claims involving breach of the insurance contract and breach of the implied covenant of
good faith and fair dealing relating to the handling of the insurance claim. (Dkt. 1-1, Ex. A.)
Nationwide filed a motion for judgment on the pleadings. (Dkt. 15.) The Court granted in
part and denied in part Nationwide’s motion, dismissing all claims except for the bad faith
tort claim. (Dkt. 22.) However, the Court limited the surviving bad faith claim to
Nationwide’s conduct following the arbitration decision on June 19, 2017. (Dkt. 22.)
On October 20, 2020, Pollock filed his first motion to compel responses to requests
for production of documents. (Dkt. 30.) The parties disputed the scope of relevant discovery
in light of the Court’s ruling limiting Pollock’s bad faith claim to conduct occurring after
the arbitration decision was issued. (Dkt. 28, 30-32.) The Court granted the motion to
compel, and ordered Nationwide to respond to Pollock’s requests for production numbered
4, 6, 9, 10, and 11. (Dkt. 33.)
Nationwide served responses to the requests for production on January 11 and 22,
2021. (Dkt. 39-5.) Some of the materials provided by Nationwide were produced in their
entirety. Other materials were either withheld or produced with redactions based on
Nationwide’s assertion that they contain privileged attorney-client communications and
work product. Nationwide provided a privilege log dated March 12, 2021, of the materials it
ORDER - 3
claims are undiscoverable. Consequently, Pollock filed a second motion to compel seeking
production of the withheld and the redacted documents under Federal Rules of Civil
Procedure 34 and 37. The second motion is presently before the Court. (Dkt. 39.)
STANDARDS OF LAW
A party may move for an order compelling discovery pursuant to Federal Rule of
Civil Procedure 37(a) when an opposing party fails to respond or fails to adequately
respond to requests for production permissible under Federal Rule of Civil Procedure 34.
Fed. R. Civ. P. 37(a)(3)(iv). “If a party…fails to obey an order to provide or permit
discovery,…the Court where the action is pending may issue further just orders.” Fed. R.
Civ. P. 37(b)(2). “[A]n evasive or incomplete disclosure, answer, or response must be
treated as a failure to disclose, answer, or respond.” Fed. R. Civ. P. 37(a)(4).
If a party withholds discovery information on the basis of privilege, “the party must:
(i) expressly make the claim; and (ii) describe the nature of the documents,
communications, or tangible things not produced or disclosed-and do so in a manner that,
without revealing information itself privileged or protected, will enable other parties to
assess the claim.” Fed. R. Civ. P. 26(b)(5). The party wishing to withhold documents as
privileged has the burden of establishing the privileged character of the communications.
Kirk v. Ford Motor Co., 116 P.3d 27, 34 (Idaho 2005)). Boilerplate objections or blanket
refusals inserted into a response to a Rule 34 request for production of documents are
insufficient to assert a privilege. Burlington Northern & Santa Fe Ry. Co. v. U.S. District
Court, 408 F.3d 1142, 1149 (9th Cir. 2005).
ORDER - 4
On this motion, Pollock seeks to compel production of the materials contained in
Nationwide’s privilege log in their entirety and without redaction. Alternatively, Pollock
requests that the Court conduct an in camera review of the undisclosed materials.
Nationwide opposes the motion, arguing the withheld documents and the redacted
portions of documents all contain privileged material or work product as reflected in the
privilege log. Further, Nationwide asserts that the Court’s Order did not require production
of privileged documents. (Dkt. 40.) Nationwide has submitted unredacted copies of the
materials in question to the Court for an in camera review.
To most completely address the issues raised on this motion, the Court has
conducted a single, multi-purpose in camera review of the materials provided by
Nationwide. See e.g. Taladay v. Metropolitan Grp. Prop. And Casualty Insur. Co., 2015
WL 12030116, at *6-7 (W.D. Wash. Dec. 18, 2015) (adopting the use of a single in camera
review to determine whether materials were discoverable or privileged). The Court’s
analysis and conclusions articulated below incorporate the Court’s findings from the in
camera review as applicable.
Discovery of Attorney-Client Privileged Materials
The Attorney-Client Privilege
The attorney-client privilege protects confidential disclosures made by a client to an
attorney in order to obtain legal advice, as well as an attorney’s advice in response to suchdisclosures. See United States v. Chen, 99 F.3d 1495 (9th Cir. 1996). The attorney-client
privilege in a diversity case is governed by state law. See Fed. R. Evid. 501.
ORDER - 5
Under Idaho law, “[f]or the attorney-client privilege to apply, the communication
must be (1) confidential within the meaning of the rule, (2) made between persons
described in the rule, and (3) for the purpose of facilitating the rendition of professional
legal services to the client.” Truckstop.Net, L.L.C. v. Sprint Communications Co., L.P.,
2007 WL 2480001, at *3 (D. Idaho Aug. 29, 2007); see also Idaho R. Evid. 502(b)
(providing a privilege for “confidential communications made for the purpose of facilitating
the rendition of professional legal services to the client” made between the persons as
described in the rule). “A communication is ‘confidential’ if not intended to be disclosed to
third persons other than those to whom disclosure is made in furtherance of the rendition of
professional legal services to the client or those reasonably necessary for the transmission
of the communication.” Idaho R. Evid. 502(a)(5).
The privilege protects only disclosure of communications; it does not protect
disclosure of the underlying facts by those who communicated with the attorney. Upjohn
Co. v. United States, 449 U.S. 383, 395 (1981). That a person is a lawyer does not make all
communication with that person privileged. Id.
Discovery of Attorney-Client Privileged Materials in the Context of Bad
Faith Insurance Claims
In their briefs and during the hearing, both parties rely on the approach developed in
Washington state caselaw for evaluating discovery of attorney-client privileged materials in
the context of a bad faith insurance claim. (Dkt. 39, 40, 41.) “Under Washington law, it is
presumed that when an insured brings a [first party] bad faith claim against its insurer, the
attorney-client privilege does not protect from disclosure the communications between the
insurer’s attorney and the insurer’s adjuster.” Phoenix Insur. Co. v. Diamond Plastics
ORDER - 6
Corp., 2020 WL 4261419, at *3 (W.D. Wash. July 24, 2020) (citing Cedell v. Farmers
Insur. Co. Wash., 295 P.3d 239, 246 (Wash. App. 2013)). An insurer may overcome the
presumption of discoverability by showing, either in camera or otherwise, “that its attorney
was counseling the adjuster as to the insurer’s own potential for liability rather than
investigating, evaluating, or processing the insured’s claim. Upon such a showing, the
insurer is ordinarily entitled to the redaction of notes that reflect the attorney’s mental
However, Washington state courts have expressly declined to apply the presumption
of discoverability in the context of underinsured motorist (UIM) bad faith claims. Cedell,
295 P.3d at 246 (“[I]n first party insurance claims by insured’s claiming bad faith in the
handling and processing of claims, other than UIM claims, there is a presumption of no
attorney-client privilege.); Hoff v. Safeco Insur. Co., 449 P.3d 667, 675 (Wash. App. 2019)
(“In UIM claims, we do not presume that the insurer has waived attorney-client privilege.”);
Leahy v. State Farm Mut. Auto. Insur. Co., 418 P.3d 175, 181-182 (Wash. App. 2018). This
is so because,
[U]nlike other first party bad faith claims, ‘[t]he UIM insurer steps into the
shoes of the tortfeasor and may defend as the tortfeasor would defend. Thus,
in the UIM context, the insurance company is entitled to counsel's advice in
strategizing the same defenses that the tortfeasor could have asserted.’
Leahy, 418 P.3d at 182 (quoting Cedell, 295 P.3d 246). Thus, “in a UIM case… the insured
must overcome a higher bar before it can discover privileged information.” Id. One way to
do so “is by showing that the party’s opponent ‘was engaged in or planning a fraud at the
time the privileged communication was made, and ... the communication was made in
furtherance of that activity.’” Id.; see also Richardson v. Government Employees Insur. Co.,
ORDER - 7
403 P.3d 115, 121-122 (Wash. App. 2017).
“Generally, the [fraud] exception is invoked only when the insured presents a prima
facie showing of bad faith tantamount to civil fraud. To strip a communication of the
attorney-client privilege, the party seeking discovery must show that (1) its opponent was
engaged in or planning a fraud at the time the privileged communication was made, and (2)
the communication was made in furtherance of that activity.” Barry v. USAA, 989 P.2d
1172, 1176 (Wash. App. 1999); see also Leahy, 418 P.3d at 182.
Courts in the District of Idaho have applied Washington’s presumption of
discoverability in the context of bad faith insurance claims involving property loss. See
Stewart Title Guar. Co. v. Credit Suisse, Cayman Islands Branch, No. 1:11–CV–227–
BLW, 2013 WL 1385264, at *4–6 (D. Idaho Apr. 3, 2013); Hilborn v. Metro. Grp. Prop.
And Cas. Ins. Co., No. 2:12-cv-00636-BLW, 2013 WL 6055215 (D. Idaho Nov. 15, 2013);
Mogadam v. Liberty Mutual Fire Insur. Co., 2:14-cv-00224-EJL-CWD, 2015 WL 6510352
(D. Idaho Oct. 28, 2015). Neither this District nor the Idaho state courts have spoken
directly on the application of the presumption in the context of UIM bad faith claims or, as
applicable here, to uninsured motorist (UM) bad faith claims. Id.; see also Cedillo v.
Farmers Insur. Co., 408 P.3d 886, 896 n. 1 (Idaho 2017) (Burdick dissenting) (recognizing
that the presumption of discoverability has been “limited and not extended to the UIM
context,” but that “bad faith defenses made to deny insurance claims are not exempt from
discovery under the attorney-client privilege.”).
Here, the Court finds it most likely that Idaho courts would analyze the
discoverability of privileged material in the UIM and UM context in a similar fashion to the
ORDER - 8
approach developed in Washington’s caselaw. Id. 1 Accordingly, the Court will apply
Washington’s framework to evaluate the discoverability of the materials identified in
Nationwide’s privilege log.
Pollock argues the presumption of discoverability applies to all of the materials
identified in Nationwide’s privilege log despite the fact that this case involves a UM bad
faith claim. (Dkt. 39, 41.) 2 Pollock contends that the circumstances in this lawsuit are akin
to a first party insurance claim where a duty of good faith existed between the insured and
the insurer in the claims adjusting process such that the presumption applies. Nationwide
disagrees, arguing the presumption of discoverability does not apply in connection with a
UM bad faith claim. (Dkt. 40.)
Having carefully reviewed the relevant case law and the parties’ arguments, the
Court finds the application of the analytical framework discussed above differs between
three time periods during which the nature of the parties’ relationship changed relevant to
the bad faith claim presented in this lawsuit. The first time period began at the time Pollock
submitted his claim for benefits under the policy and lasted until the filing of the state court
breach of contract action on March 8, 2016. The second time period commenced after the
Courts often treat UM and UIM cases as nearly interchangeable. See Government Employees Ins. Co. v.
Dizol, 176 F.Supp.2d 1005, 1028 (D. Hawai’i 2001) (interpreting Hawai’i caselaw); Melton v. Discover
Prop. and Cas. Ins. Co., 760 F.Supp.2d 633, 635 n. 2 (W.D. VA 2011) (interpreting Virginia code); Miller v.
American Standard Ins. Co. of Wisconsin, 759 F.Supp.2d 1144, 1149 (D. Ariz. 2010) (noting identical
policy considerations generally apply to UM and UIM coverage questions but recognize possible differences
in the recoverable damages).
Pollock also argues Nationwide waived any claim of privilege by failing to raise it when responding to the
first motion to compel. The Court disagrees. Nationwide asserted the privilege in response to the requests for
production at issue in the first motion to compel and maintained that position by incorporating it in its
supplemental responses. (Dkt. 39-5.)
ORDER - 9
breach of contract lawsuit was filed and continued until the issuance of the arbitration
decision on June 19, 2017. The third time period encompasses the time period following the
arbitration decision. The Court will discuss each time period in turn below.
Time Period Prior to the filing of the State Court Lawsuit
During the first time period, from the time of the policy claim until the filing of the
breach of contract lawsuit, Pollock and Nationwide were in a first-part fiduciary
relationship. Thus, the presumption of discoverability applies to any claimed privileged
communications made during that time. Nationwide may overcome the presumption by
establishing that “its attorney was not engaged in the quasi-fiduciary tasks of investigating
and evaluating or processing the claim, but instead in providing the insurer with counsel as
to its own potential liability….” Cedell, 295 P.3d at 246. Having carefully reviewed the
records, the Court finds the presumption is rebutted.
There are a limited number of documents identified in the privilege log that were
generated during this first time period. The Court reviewed these documents in camera and
finds that all but one of the documents contain privileged confidential communications of
Nationwide’s general counsel acting solely in the capacity as legal counsel. The documents
contain legal opinions concerning Idaho law as it relates to the workers compensation
exclusion in the UM endorsement provision of the insurance policy, and Idaho case law
regarding payment of undisputed general damages. Nothing in these documents concerns
investigating, evaluating, or processing the claim itself. The materials contain only legal
opinions of whether and to what extent coverage existed under Idaho law and the applicable
policy provisions, and Nationwide’s potential liability. The documents reflect that
ORDER - 10
Nationwide’s general counsel was not acting in a quasi-fiduciary capacity prior to the state
court lawsuit. The Court therefore finds that the presumption has been rebutted as the
materials created during this time period that are privileged.
The one exception to this finding is the redaction at PF 06840 of the privilege log.
The redacted portion of PF 06840 appears to be overly expansive such that it encompasses
non-privileged material in the form of a comment by the claims adjuster regarding the
processing of Pollock’s claim. The non-privileged portion of the redaction is discoverable.
Nationwide will therefore be ordered to correct the redaction on PF 06840 so that only the
legal opinion of general counsel is redacted. The corrected redaction must be produced to
Pollock on or before July 30, 2021. The remainder of the materials from this time period are
Next, the Court reviewed the materials to determine whether the fraud exception
applies. That is to say, whether Pollock has shown that Nationwide “‘was engaged in or
planning a fraud at the time the privileged communication was made, and...the
communication was made in furtherance of that activity.’” Leahy, 418 P.3d at 182;
Richardson, 403 P.3d at 121-122. Having reviewed the materials and the parties’
arguments, the Court finds there is no evidence that Nationwide was engaged in fraud
during this time period. 3 Therefore, the privilege is intact as to the materials identified in
the privilege log as having been created during this time period. Accordingly, Pollock’s
motion will be denied as to the materials generated prior to the filing of the breach of
contract lawsuit with the exception of the redaction at PF 06840, which contains nonThis determination is limited to resolving the issues presented in this motion. The Court makes no ruling
on the merits of Pollock’s bad faith claim in this order.
ORDER - 11
privileged material. Nationwide will be ordered to correct the redaction at PF 06840 and
produce the non-privileged material to Pollock.
Time Period Prior to the Arbitration Decision
Upon the filing of the state court breach of contract action, the parties were actively
litigating Pollock’s claim for payment of benefits under the UM provision of the policy.
The arbitration proceedings was a part of the state court litigation between Pollock and
Nationwide to resolve the parties’ dispute over the total amount of damages recoverable
under the UM term of the insurance policy. In this context, the parties’ relationship
assumed an adversarial posture, with Nationwide standing in the shoes of the uninsured
motorist and asserting the defenses available to the tortfeasor in that role. Leahy, 418 P.3d
at 182. As such, the presumption of discoverability does not apply to documents generated
during the time period after the state court UM lawsuit was filed until the arbitration
decision was issued. Hoff, 449 P.3d at 675; Leahy, 418 P.3d at 181; Cedell, 295 P.3d at 245.
Thus, to the extent Nationwide can demonstrate that the documents are in fact
privileged – e.g., “confidential communications made for the purpose of facilitating the
rendition of professional legal services to the client which were made…between the client
or the client representative and the client’s lawyer…” – they may be withheld or redacted.
Idaho R. Evid. 502. The Court finds, upon review, that the documents identified in the
privilege log for this time period fall within the purview of the attorney-client privilege,
with certain exceptions.
First, the Court finds that the records of Nationwide’s payments of attorney fees and
ORDER - 12
costs (the “payment records”) are not privileged. 4 The payment records do not contain nor
reveal any confidential communications or legal advice made for the purpose of facilitating
legal services. Accordingly, Nationwide will be ordered to disclose the unredacted payment
records identified in the privilege log. 5
Second, the Court’s in camera review of the records contained in the Trial Division
Documents section of the privilege log reveals that certain of the withheld documents and
redactions do not appear to be privileged. For instance, some of the withheld documents do
not appear to contain confidential attorney client communications within the guise of Idaho
Rule of Evidence 502. Further, some of the redactions are overly expansive and include
non-privileged material. 6
The Court has expended a great deal of time and resources in reviewing the
submitted materials. However, Nationwide’s privilege log fails to provide an adequate
explanation of why some of the materials in the Trial Division Documents section of the
privilege log are privileged. The Court therefore cannot determine whether these materials
are privileged without further clarification from Nationwide. Accordingly, the Court will
order Nationwide to review anew the Trial Division Documents identified in the privilege
The payment records are located in the privilege log on pages 10-13, in the section entitled “Claim Activity
Log Redactions.” These documents are records of Nationwide’s payments of attorney fees and costs made
during the state court litigation and arbitration time period as well as the time period following the
arbitration decision, which is discussed below.
Nationwide’s privilege log also indicates that the payment records are irrelevant. The relevance of the
payment records to Pollock’s bad faith claim is not readily determinable at this time. The Court finds
disclosure of the payment records is appropriate in this bad faith lawsuit given the broad scope of discovery
provided for in Rule 26(b)(1).
These examples are not an exhaustive list of the types of non-privileged materials that appear in the
withheld and redacted records. Given the number of documents and Nationwide’s failure to demonstrate
how the materials are privileged, Nationwide will be directed to review the Trial Division Documents
submitted for review to ensure they are truly privileged as discussed above.
ORDER - 13
log that it asserts are privileged, and determine whether the withheld documents and
redactions contain privileged material. Any documents or redactions that do not contain
privileged material must be produced to Pollock by July 30, 2021. As to the materials
Nationwide maintains are privileged, Nationwide must submit a revised privilege log
clarifying the basis for asserting the privilege. In doing so, Nationwide is directed to use the
same numbering for the revised privilege log that is used in the privilege log dated March
12, 2021, consistent with the numbers reflected on the documents that have been submitted
The remainder of the documents identified in the privilege log that were created
during Nationwide’s defense in the state court lawsuit and the arbitration proceeding are
privileged. Nationwide hired litigation counsel, Clifford Payne, to defend it in the state
court action and the arbitration proceedings. The documents generated during this time
period, other than the attorney fee payment records, contain Mr. Payne’s legal opinions
regarding Nationwide’s potential liability and defense against Pollock’s breach of contract
action and the arbitration proceeding. The communications were made between Nationwide
and Mr. Payne. These were confidential communications made for the purpose of
facilitating the rendition of professional legal services between the attorney and the client
and are therefore privileged. Idaho R. Evid. 502(b). Likewise, the materials identified in the
privilege log that relayed and referenced Mr. Payne’s legal advice between and among
Nationwide representatives are also privileged. Idaho R. Evid. 502(b).
As to the documents that the Court has found to be privileged, Pollock may pierce
the privilege by establishing the fraud exception. Richardson, 403 P.3d at 122 (citing
ORDER - 14
Cedell, 295 P.3d 239). To that end, the Court has reviewed the privileged materials created
during this time period to determine whether Nationwide “‘was engaged in or planning a
fraud at the time the privileged communication was made, and... the communication was
made in furtherance of that activity.’” Leahy, 418 P.3d at 182; Richardson, 403 P.3d at 121122. Upon that review, the Court finds no indication that Nationwide was engaged in or
planning a fraud during the time these privileged communications were made. 7
Nothing in the privileged documents gives rise to a reasonable belief that an act of
“bad faith tantamount to civil fraud” had occurred. The communications contained in the
privileged materials involve routine assessments of Nationwide’s potential liability and
defenses. Particular to Pollock’s assertion of fraud made in this motion, the materials
identified in the privilege log from this time period contain Mr. Payne’s recommendations
for litigating the breach of contract claim, his evaluation of the likely outcome of the
anticipated arbitration proceeding, and his assessment of the arbitrator’s award after it was
issued. There is nothing in the privileged materials indicative of a scheme or conduct by
Nationwide intended to trick Pollock into forfeiting his bad faith claims as suggested in
Pollock’s briefing and during oral argument on the motion. (Dkt. 41 at 5-6.) The Court
therefore finds that the fraud exception has not been established and that the privilege
applies to the materials identified in the privilege log that were created after the state court
lawsuit was filed until the arbitration decision was issued, except for the payment records
and Trial Division Documents discussed above.
This determination is limited to resolving the issues on this motion. It is not a ruling on the merits of
Pollock’s bad faith claim.
ORDER - 15
Time Period After the Arbitration Decision
The Presumption of Discoverability
Following the arbitration decision, the parties relationship reverted to a first-party
insurer status where the attorney-client privilege is presumed waived. Once the arbitration
decision was issued, Nationwide no longer asserted defenses available to the tortfeasor.
Leahy, 418 F.3d at 182. Rather, Nationwide challenged the arbitration award based on the
policy limits of the UM endorsement, a defense not available to the tortfeasor who was
without insurance. As such, the presumption of discoverability applies to the documents
identified in the privilege log that were generated after the date the arbitration decision was
issued, June 19, 2017.
To rebut the presumption, Nationwide must establish that its attorneys were “not
engaged in the quasi-fiduciary tasks of investigating and evaluating or processing the claim,
but instead in providing the insurer with counsel as to its own potential liability….” Cedell,
295 P.3d at 246. There are several documents identified in the privilege log that fall into
this time frame. The Court has carefully reviewed these materials and concludes that
Nationwide has succeeded in overcoming the presumption of discoverability.
Within days of the arbitration decision being issued, Nationwide hired Idaho
coverage counsel, Michael Brady, to replace Mr. Payne. The documents identified in the
privilege log from this time period demonstrate that Mr. Payne and Mr. Brady both served
solely as legal counsel to Nationwide. Neither attorney engaged in quasi-fiduciary tasks
such as investigating, evaluating, or processing Pollock’s claim. Rather, the materials
involve the transition of Nationwide’s legal representation from Mr. Payne to Mr. Brady,
ORDER - 16
and Mr. Brady’s assessment of Nationwide’s legal options for addressing the arbitration
decision. Thus, the presumption of discoverability has been rebutted. The attorney-client
privilege applies to documents generated during this time period which Nationwide can
demonstrate contain privileged communications.
Having reviewed the documents provided in camera, the Court finds the materials
identified in the privilege log that were created after the arbitration decision contain
confidential privileged communications with the exception of the payment records and the
materials identified in the Trial Division Documents section of the privilege log. As
previously discussed, the records of Nationwide’s payments to its attorneys do not contain
any confidential communications made for the purpose of facilitating legal services. Idaho
R. Evid. 502(b). Therefore, Nationwide must produce the unredacted payment records. 8
Further, the Trial Division Documents appear to contain non-privileged materials or
redactions that are overly expansive. Nationwide will be ordered to review the Trial
Division Documents and either: 1) produce the non-privileged materials or 2) submit a
revised privilege log as discussed above.
The remainder of the documents identified in the privilege log that were created after
the arbitration decision, other than the payment records and the Trial Division Documents,
however, are privileged. These materials contain the legal opinions, analysis, and
recommendations of Mr. Payne and Mr. Brady made to Nationwide of Nationwide’s
potential liability and possible avenues for contesting the arbitration award. These are
confidential privileged communications between Nationwide and its attorneys and,
As noted above, the Court rejects Nationwide’s position that the payment records are irrelevant. See
Footnote 5 supra.
ORDER - 17
therefore, privileged. Idaho R. Evid. 502(b).
Pollock can pierce the privilege through the fraud exception, which Pollock has
asserted here. See Leahy, 418 P.3d at 624; Hoff, 449 P.3d at 670. The Court finds as
The Fraud Exception
When the fraud exception is asserted, the Court engages in a two-step process to
determine if piercing the attorney-client privilege is appropriate.
First, the court determines whether there is a factual showing adequate to
support a good faith belief by a reasonable person that wrongful conduct
sufficient to evoke the fraud exception has occurred. Second, if so, the court
subjects the documents to an in camera inspection to determine whether there
is a foundation in fact for the charge of civil fraud. The in camera inspection
is a matter of trial court discretion.
Leahy, 418 P.3d at 182 (quoting Barry v. USAA, 989 P.2d at 1176) (citations omitted)).
Pollock argues Nationwide engaged in a “carefully laid trap” tantamount to fraud by
refusing to pay and delaying payment after the arbitration decision was issued to trick
Pollock into forfeiting his bad faith claim. (Dkt. 41 at 5-6.) Pollock contends that, once the
arbitration decision established that the value of the claim was in excess of the policy limits,
Nationwide had a fiduciary duty to pay the claim. Instead of paying the claim, Pollock
asserts, Nationwide tactically forced Pollock to reduce the arbitration award to a final
judgement to foreclose and trick Pollock into forfeiting his bad faith claim. (Dkt. 41 at 5-6.)
Having carefully reviewed the record, the Court finds Pollock has failed to establish
The Court’s discussion of the fraud exception relevant to this time frame is more comprehensive than the
preceding time periods because Pollock’s fraud contentions are directed more particularly to the time period
following the arbitration decision.
ORDER - 18
a good faith belief that Nationwide engaged in wrongful conduct sufficient to invoke the
fraud exception to the privilege. First, the allegations making up Pollock’s bad faith claim,
although sufficient to plead a prima facie case, do not, in and of themselves, suffice for
waiver of the attorney-client privilege between Mr. Payne and Nationwide based on the
civil fraud exception. See Barry, 989 P.2d at 1177 (finding that while allegations of bad
faith “may be sufficiently supported by the record to establish a prima facie case of bad
faith insurance…, they do not, in and of themselves, constitute a good faith belief that [the
insurer] committed fraud.”). Something more than a claim of bad faith is required to invoke
the fraud exception. Id.
Turning to the particular contentions of fraud, Pollock argues Nationwide tricked
him into forfeiting his bad faith claim by not paying the arbitration award and forcing him
to obtain a final judgment before receiving payment. (Dkt. 39, 41.) The facts in the record
do not support such a finding.
The arbitration decision was issued June 19, 2017. Nationwide successfully
contested the amount awarded by the arbitrator and obtained a modification from the state
court reducing the award amount. Thus, the final amount of the arbitration award was not
known until the state court issued its decision modifying the arbitration award on October 6,
2017, and entered a final judgment on November 20, 2017. 10 Thereafter, Nationwide
remitted checks for payment of the modified, final arbitration award amount and
prejudgment interest on December 18, 2017 – less than thirty days after the final judgment
was entered. (Dkt. 1-1 at ¶ 35.) However, the first checks did not clear. New checks were
The Court notes that the judgment was entered three days before Thanksgiving day, which occurred on
November 23, 2017.
ORDER - 19
issued and the payment was made on December 21, 2017. (Dkt. 1-1 at ¶ 39.) Nationwide
remitted payment for attorney fees on January 8, 2018.
Even if these facts as alleged by Pollock in the Complaint are true, they do not
establish by themselves a good faith belief that wrongful conduct occurred sufficient to
evoke the fraud exception. Nationwide’s contest of the arbitration decision was not
baseless. Indeed, the challenge proved fruitful given the state court’s decision modifying
the award. Once the final arbitration amount was resolved, Nationwide submitted payment
of the arbitration award within approximately one month of the final judgment being
entered. The problem with the first checks issued in December of 2017, while undoubtedly
frustrating, again does not amount to fraud. The new checks were issued in a reasonable
time given the holiday season. Simply put, the record does not give rise to a factual
showing adequate to support a good faith belief that Nationwide engaged in wrongful
conduct tantamount to fraud with regard to its handling and payment of the arbitration
Plaintiff has therefore failed to establish step one of the fraud exception. Thus, the
Court need not proceed to the second step and inspect the privileged documents in camera.
Nevertheless, as indicated above, the Court has undertaken an in camera review of the
materials provided by Nationwide and finds as follows on step two.
The second step of the fraud inquiry requires an in camera review of the documents
to determine whether there is in fact a basis for the claim of civil fraud. The materials in
This ruling is limited to the determinations regarding the attorney client privilege raised on this motion.
The Court makes no determination regarding the merit of Pollock’s substantive bad faith claim.
ORDER - 20
dispute are contained within four categories of documents as organized in Nationwide’s
privilege log dated March 12, 2021 (Dkt. 39-6):
Claim File Documents (PF Log 1-127);
Trial Division Documents (PF 128-582);
Claim Activity Log Redactions (PF 4160-4508); and
Email Redactions (PF 4775-4794) and (PF 14278-14307).
Having performed a careful review of the privileged materials, the Court finds
nothing in the documents that would permit a reasonable person to believe that an act of
“bad faith tantamount to civil fraud” has occurred. 12 The privileged materials contain
confidential communications between Nationwide and its litigation attorney, Mr. Payne,
and its coverage counsel, Mr. Brady. These materials consist of legal opinions,
recommendations, and advice from Mr. Payne and Mr. Brady to Nationwide regarding its
potential liability and their assessments of the legal options available to Nationwide to
address and potentially challenge the arbitration decision.
Relevant to Pollock’s particular contentions of fraud, the materials are devoid of any
indication that Nationwide devised a scheme to trick or trap Pollock into forfeiting his bad
faith claims following the arbitration decision as suggested in Pollock’s briefing. (Dkt. 41 at
5-6.) Rather, the contents of these materials convey the evaluations and recommendations
by Nationwide’s legal counsel concerning the arbitrator’s decision. There is no indication
that Nationwide contemplated or engaged in actions tantamount to fraud following the
arbitration decision in an effort to deprive Pollock of his bad faith claim.
Again, this determination is limited to resolving the issues on this motion, it is not a ruling on the merit of
Pollock’s substantive bad faith claim.
ORDER - 21
For these reasons, the Court finds Pollock has failed to establish the fraud exception.
Accordingly, the privileged materials created after the date of the arbitration decision were
properly withheld from production, with the exception of the payment records and the Trial
Division Documents. Nationwide must produce the payment records and proceed with a
review of the Trial Division Documents as directed above.
Work Product Doctrine
In addition to the attorney-client privilege, Nationwide also asserts that the work
product doctrine precludes discovery of certain materials identified in the privilege log.
(Dkt. 40.) The work product doctrine, codified in Federal Rule of Civil Procedure 26(b)(3),
is a qualified protection limiting discovery of “documents and tangible things” prepared by
a party or his or her representative in anticipation of litigation or trial. Admiral Ins. Co. v.
U.S. Dist. Court for Dist. of Ariz., 881 F.2d 1486, 1494 (9th Cir. 1989); see Upjohn, 449
U.S. at 397–402; Fed. R. Civ. P. 26(b)(3). The party claiming work product protection bears
the burden of establishing that the work product doctrine applies. United States v. Richey,
632 F.3d 559, 566 (9th Cir. 2011).
Under Rule 26(b)(3), “such documents may only be ordered produced upon an
adverse party’s demonstration of ‘substantial need [for] the materials’ and ‘undue hardship
[in obtaining] the substantial equivalent of the materials by other means.’” Hilborn, 2013
WL 6055215, at *3 (quoting Fed. R. Civ. P. 26(b)(3)). In the context of a bad faith
insurance claim, “opinion work product may be discovered and admitted when mental
impressions are at issue in a case and the need for the material is compelling.” Holmgren v.
State Farm Mut. Auto. Ins. Co., 976 F.2d 573, 577 (9th Cir. 1992). These elements are
ORDER - 22
The mental impressions of Nationwide are at issue in this bad faith insurance claim
settlement case. Id. (“In a bad faith insurance claim settlement case, the strategy, mental
impressions and opinion of [the insurer’s] agents concerning the handling of the claim are
directly at issue.”). Further, the need for the material is compelling because the information
is solely in the possession of the insurer. See Hilborn, 2013 WL 6055215, at *4 (citing Ivy
Hotel San Diego, LLC v. Houston Cas. Co., 2011 WL 4914941 (S.D. Cal. Oct.17, 2011)
(holding that compelling need existed for producing work product in bad faith case where
information was in “exclusive control” of insurer and insured had “no other way to probe
reasons [insurer] denied [the insured's] claim”)). Accordingly, the work product doctrine
does not apply here as a basis for withholding documents from production. Nationwide will
be ordered to produce any documents it withheld or redacted based only on the work
product doctrine. See e.g., (PF LOG 128-336, 339-360, 337-338, 361-376, 377-383, 478496, 529); (PF 4435-4437.) 13
This is a non-exhaustive list of materials in the privilege log that Nationwide asserted are undiscoverable based only
on the work product doctrine. Nationwide is directed to carefully review the privilege log and produce any materials
that it withheld or redacted based solely on the work product doctrine.
ORDER - 23
THEREFORE IT IS HEREBY ORDERED that the Second Motion to Compel
(Dkt. 39) is GRANTED IN PART, DENIED IN PART, AND RESERVED IN PART
The Motion is granted as to the payment records identified in the privilege
log dated March 12, 2021, on pages 10-13, and the materials withheld or redacted based
only on the work product doctrine. Defendant must produce the unredacted payment
records and the work product materials to Plaintiff by July 30, 2021.
Nationwide is ordered to review the Trial Division Documents identified in
the privilege log dated March 12, 2021, and submit a revised privilege log for any
materials Nationwide claims are privileged by July 26, 2021. Any materials in the Trial
Division Documents that Nationwide determines are not privileged must be produced to
Plaintiff by July 30, 2021. The Court will reserve ruling on any materials identified in the
revised privilege log that Nationwide asserts are privileged.
The Motion is denied as to the remainder of the records identified in the
privilege log dated March 12, 2021.
DATED: July 15, 2021
Honorable Candy W. Dale
Chief United States Magistrate Judge
ORDER - 24
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