TELAMON CORPORATION v. THE CHARTER OAK FIRE INSURANCE COMPANY et al

Filing 102

ORDER denying Non-Party Paul Chamberlain International's 90 Motion for Protective Order (see Order). Signed by Magistrate Judge Debra McVicker Lynch on 1/17/2014. (SWM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
TELAMON CORPORATION,
Plaintiff,
vs.
THE CHARTER OAK FIRE
INSURANCE COMPANY and
TRAVELERS CASUALTY AND
SURETY COMPANY OF AMERICA,
Defendants.

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Case No. 1:13-cv-00382-RLY-DML

Order on Motion for Protective Order
This matter is before the court on a motion by non-party Paul Chamberlain
International (“Chamberlain”) for a protective order prohibiting discovery by the
defendants of its investigative file. (Dkt. 90).
Background
In April 2011 plaintiff Telamon Corporation conducted a study of its
inventory turnover and on June 8, 2011, sent an employee to its Dayton, New
Jersey warehouse to investigate, question employees, and inspect the inventory
there. The employee discovered that substantial inventory was indeed missing, and
he found the explanations offered by various workers suspicious. Telamon
contacted its lawyers at Barnes & Thornburg about hiring seasoned fraud
investigators, and five days after the employee’s visit to the warehouse, on June 13,
2011, Barnes & Thornburg entered into a Consulting Agreement with Chamberlain

to investigate the inventory loss, which Telamon suspected was the result of
intracompany illegal activity involving a worker named J.B.
Chamberlain’s investigation led it to conclude that J.B. had stolen the subject
inventory. Based at least in part on Chamberlain’s investigation, Telamon made
the insurance claims to defendants Charter Oak and Travelers that are the subject
of this litigation, in which Telamon contends that the insurance companies
wrongfully denied coverage and acted in bad faith in doing so. Telamon’s proof of
claim under the Travelers policy is dated July 1, 2011, and asserts that Telamon
suffered a loss of nearly $2 million. In August or September 2011, Telamon made
an insurance claim to Charter Oak that it had suffered a loss exceeding $2 million.
At some later point before January 2012, Telamon determined that its loss from the
inventory theft is about $5 million.
Barnes & Thornburg and Telamon reported Chamberlain’s conclusions to the
FBI via (1) a Probable Cause Letter sent by Barnes & Thornburg on September 21,
2011, and (2) a PowerPoint presentation on November 10, 2011, that was created by
Chamberlain.
Chamberlain argues that its investigative work for Telamon and its counsel
are protected from disclosure as the work product of a non-testifying, consulting
expert prepared in anticipation of litigation. It also claims that the contents of its
investigative file fall within the attorney-client privilege. On these bases,
Chamberlain objects to producing the following documents requested in discovery:
A complete copy of [Chamberlain’s] entire file, including but not
limited to, all correspondence, memoranda, emails, notes, interviews,
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audio or video recordings, photographs (moving and still), summaries,
reports or any other documentation in your possession pertaining to
your investigation for Barnes & Thornburg, LLP and Telamon in
2011—your report reference “2011-039FY.”
(Charter Oaks’ subpoena for documents to Chamberlain). Chamberlain has
supplied to the defendants only (a) the PowerPoint presentation that was shared
with the FBI, (b) its Consulting Agreement with Barnes & Thornburg, and (c) one
report dated August 15, 2011, summarizing the results of its preliminary
investigation of the circumstances surrounding the inventory loss.
The defendants counter that Chamberlain’s investigative file materials are
not protected work product because they were not prepared primarily because of
litigation. They also argue that even if some or all of the materials were work
product, that protection was waived by the selective disclosure by Telamon of the
August 15, 2011 Chamberlain report, which it provided to the insurers to support
Telamon’s insurance claims. The defendants also challenge Chamberlain’s
invocation of an attorney-client privilege.
The court will first address the work product objection to disclosure, and then
the issues surrounding the attorney-client privilege.
Work Product
Chamberlain’s ability to withhold documents based on the work product
doctrine is a question of federal law. E.g., Flomo v. Bridgestone Americas Holding,
Inc., 2010 WL 2484266 at *1 (S.D. Ind. June 14, 2010). The work product doctrine
protects from disclosure (1) documents or tangible things (2) prepared in
“anticipation of litigation” or for trial (3) by or for a party or its representatives.
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Fed. R. Civ. P. 26(b)(3). Chamberlain’s description of itself as Telamon’s or Barnes
& Thornburg’s consulting expert and invocation of Rule 26(b)(4)(D) as a further
basis for withholding its file similarly requires proof of an “anticipation of litigation”
element.
The party seeking to withhold documents has the burden of proving that they
qualify for protection under the strictures of the federal rules. Logan v. Commercial
Union Ins. Co., 96 F.3d 971, 976 (7th Cir. 1996). The burden requires proving that
the documents were prepared “‘because of the prospect of litigation,’” or because
“‘some articulable claim, likely to lead to litigation,’ had arisen.” Binks Mfg. Co. v.
National Presto Industries, Inc., 709 F.2d 1109, 1120 (7th Cir. 1983) (quoting
Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 604 (8th Cir. 1977), and Coastal
States Gas Corp. v. Department of Energy, 617 F.2d 854, 865 (D.C. Cir. 1980))
(emphasis in original). Documents created for reasons other than litigation do not
satisfy the element of having been prepared in anticipation of litigation and are not
work product. Binks, 709 F.2d at 1118. Sometimes a document is prepared for dual
purposes; in that case, if the “‘primary motivating purpose behind the creation of a
document or investigative report [is] to aid in possible future litigation,’” then it
may be withheld as work product. Id. (quoting Janicker v. George Washington
Univ., 94 F.R.D. 648, 650 (D.D.C. 1982)).
Chamberlain has not shown that the documents it created or gathered as
part of the investigation for Telamon and its lawyers are work product.
Chamberlain cannot even identify any particular litigation, the prospect of which

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was a motivating reason for its hiring or its work. Chamberlain does not contend
that its hiring or the conduct of its investigation was because of likely insurance
coverage litigation. Instead, it points to the FBI’s involvement and to J.B.’s filing of
a charge of discrimination with the EEOC as satisfying the “anticipation of
litigation” element. But neither of these circumstances tends to show that Barnes
& Thornburg or Telamon hired Chamberlain, or that Chamberlain conducted its
investigation, because “‘some articulable claim, likely to lead to litigation,’” had
arisen. See Sandra T.E. v. South Berwyn School Dist. 100, 600 F.3d 612, 622 (7th
Cir. 2010) (quoting Binks, 709 F.2d at 1120) (Work product protection extends only
to documents prepared because “some articulable claim, likely to lead to litigation,
has arisen.”)
J.B. filed her EEOC charge of discrimination on December 8, 2011—many,
many months after Chamberlain was hired. Chamberlain provides no basis for a
conclusion that Telamon or its lawyers hired Chamberlain or that Chamberlain
performed its work because of any belief that J.B. was likely to accuse Telamon of
employment discrimination, or that litigation by J.B. was feared, or that litigation
by Telamon against J.B. was at all contemplated.
The fact that Telamon’s counsel and Chamberlain provided information from
Chamberlain’s investigation to the FBI does not tend to establish that the primary
motivating purpose for Chamberlain’s work was the prospect of litigation, for at
least two reasons. One, Chamberlain does not counter the fact that it was the
results of its investigation that led Chamberlain and the lawyers to reach out to the

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FBI; Chamberlain’s hiring and its work were not primarily for the purpose of
assisting the FBI in gathering evidence for potential criminal proceedings. Second,
any contemplated criminal proceedings involved J.B. and perhaps other rogue
employees as the suspects and potential defendants, with Telamon always as
victim. The anticipated litigation for which an entity or its representative may
create documents protectable as work product must be litigation to which one
expects to be a party, and there is no indication that anyone feared Telamon might
be targeted as a potential defendant in any criminal proceeding. See Sandra T.E.,
600 F.3d at 618 (emphasis added) (“The work-product doctrine protects documents
prepared by attorneys in anticipation of litigation for the purpose of analyzing and
preparing a client’s case”).
The connection between Chamberlain’s hiring and investigation to any
potential litigation is even more tenuous than that considered by the Seventh
Circuit in Binks, which the court found did not meet the “anticipation of litigation”
requirement for work product protection. Industrial equipment Binks
Manufacturing had sold to Presto Industries malfunctioned, and Binks and Presto
began threatening one another in sharply worded letters that nevertheless always
fell “short of stating [an intention] to institute litigation.” Binks, 709 F.2d at 1120.
Later, Presto’s lawyers conducted an investigation, including interviews, about
which the lawyers prepared memoranda. Binks sought to discover the memoranda
prepared by the lawyers in the course of that investigation, and Presto objected that
the documents were work product. The district court disagreed and the Seventh

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Circuit affirmed the decision. The Seventh Circuit acknowledged that the threats
exchanged by the parties that had prompted the lawyers’ investigation hinted at a
“prospect of litigation,” but that prospect was “remote,” and not “likely,” as the work
product doctrine requires. Id. at 1120.
The fact that Barnes & Thornburg—rather than Telamon itself—hired
Chamberlain does not tip the scale to satisfy the anticipation of litigation
requirement. Chamberlain relies heavily in its opening and reply briefs on the
same case for the proposition that “the involvement of attorneys in the direction and
creation of the document is often, but not always, conclusive on the question of
litigation related purpose.” ABN Amro Mortgage Grp., Inc. v. Promised Land
Mortgage, LLC, 2007 WL 101812 at *2 (S.D. Ind. Jan. 8, 2007). As Binks itself
shows, attorney involvement does not settle the issue; the focus must be on whether
some articulable claim likely to result in litigation was the primary motivation. See
also Sandra T.E., 600 F.3d at 622 (investigation conducted by counsel was “not
merely in anticipation of likely litigation but in response to the actual filing of this
lawsuit”); Logan v. Commercial Union Ins. Co., 96 F.3d 971, 977 (7th Cir. 1996)
(documents protected by work product “were written after Logan’s claim had been
processed, investigated, and denied, and after Logan had already filed suit for
benefits”); Hartford Fire Ins. Co. v. Pure Air on the Lake L.P., 154 F.R.D. 202, 207
n.8 (N.D. Ind. 1993) (investigative report of accident prepared by insured after
accident site had been “swarmed with lawyers, adjusters, engineers, work crews,
and others,” and insurance company refused to participate in a joint investigation

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with the insured was work product and had been prepared when “litigation was
inevitable, probably imminent”).
Chamberlain has not met its burden to show that it was hired, or that it
conducted its work, because of any particular matter that Telamon or its lawyers
thought likely to lead to litigation involving Telamon. Instead, the evidence
demonstrates that Chamberlain was hired, and prepared and gathered the
documents in its investigative file, because Telamon had a strong business need to
determine how hundreds of thousands of dollars of inventory went missing and
which of its employees was responsible, wholly apart from the prospect of any
litigation.
The court therefore concludes that no part of Chamberlain’s investigative file
materials may be withheld from disclosure under the work product protections of
Rules 26(b)(3)(A) and 26(b)(4)(D).
Attorney-Client Privilege
Chamberlain also contends that all of its file materials can be withheld as
attorney-client privileged communications. The court rejects Chamberlain’s
invocation of the attorney-client privilege on a number of grounds. First,
Chamberlain’s argument is perfunctory and conclusory. Chamberlain cites the
Seventh Circuit’s description of the elements of the attorney-client privilege but
does not try to show how any particular documents are privileged communications.
Instead, it contends that all documents are privileged and invites the court to “see
from its in camera examination” that the communications and documents at issue

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are in fact protected by the attorney client privilege.” (Dkt. 97 at p. 10). The court’s
in camera examination reveals that nearly all of Chamberlain’s file materials could
not be classified as privileged attorney-client communications because they are
public records or Telamon’s business records. The gathering of public and business
records by an investigator, or the funneling of business documents through one’s
attorney’s office (or through one’s fraud investigator), does not make those
documents privileged. See., e.g., Lockhart v. ExamOne World Wide, Inc., 2012 WL
243688 at *2 (S.D. Ind. Jan. 25, 2012) (information gathering by non-attorney did
not constitute attorney-client privileged communication); Lexecon, Inc. v. Milberg
Weiss Bershad Specthrie & Lerach, 1993 WL 179789 at *7 (N.D. Ill. 1993) (attorneyclient privilege would only protect documents exchanged between client and lawyer
“whose production would reveal the content of privileged communications from
clients made for the purpose of securing legal advice”); Colton v. United States, 306
F.2d 633, 639 (2nd Cir. 1962) (person cannot prevent disclosure of documents by
“simple expedient of keeping them in the possession of his attorney”).
Second, some of the communications obviously were not made to obtain legal
advice, were not maintained in confidence, or were not even intended as a
confidential communication in the first place. For example, the communications
include (a) an email chain sent by the lawyers to Chamberlain lauding its
reputation as a fraud investigator; (b) emails to set up meetings; and (c) emails that
do not involve counsel at all or any bona fide connection to legal advice. Third,
documents within Chamberlain’s file reveal that Chamberlain’s investigatory work

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was not inextricable from Barnes & Thornburg’s provision of legal advice and that
its work was conducted because Telamon had a pressing business reason to uncover
what it believed was large-scale inventory fraud by one of its workers. Documents
indicate that the use of Barnes & Thornburg as the nominee client to Chamberlain
was for the purpose of attempting to shield Chamberlain’s work as privileged. It is
apparent, however, that Barnes & Thornburg did not in fact direct this
investigation, but that Chamberlain designed the investigation and determined the
records to gather and review, the persons to interview, the questions to be asked,
and the manner of interrogation.
In short, Chamberlain’s conclusory arguments regarding the application of
the attorney-client privilege fail to establish that the documents in Chamberlain’s
investigative file fall within the attorney-client privilege. See United States v.
White, 950 F.2d 426, 430 (7th Cir. 1991) (rejecting as insufficient a blanket assertion
of attorney-client privilege). The court is not inclined to engage in its own detailed
document-by-document analysis when Chamberlain chose an “all in” strategy in
asserting the privilege.1

Moreover, waiver principles would prevent the assertion of the privilege as to
the majority of the Chamberlain investigative file. Telamon provided to the
insurers a preliminary investigative report prepared by Chamberlain that it
otherwise asserts was a privileged communication. That report summarizes “key”
interviews and documents. When the privilege is waived as to an attorney-client
communication, the waiver extends to all communications on the same subject
matter. Rockies Express Pipeline, LLC v. 58.6 Acres, 2009 WL 5219025 at *6 (S.D.
Ind. 2009). “’The waiver extends beyond the document initially produced out of
concerns for fairness, so that a party is prevented from disclosing communications
that support its position while simultaneously concealing communications that do
not.’” Id. (quoting Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1349 (Fed. Cir.
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Conclusion
Chamberlain has not demonstrated that the contents of its investigative file
are protected from disclosure under Rules 26(b)(3)(A) or 26(b)(4)(D) or as privileged
attorney-client communications. Its motion for protective order (Dkt. 90) is
therefore DENIED.
So ORDERED.
____________________________________
Debra McVicker Lynch
United States Magistrate Judge
Southern District of Indiana

01/17/2014
Date: _____________

Distribution:
All ECF-registered counsel of record via email generated by the court’s ECF system

2005)). The subject matter of the preliminary report is the investigative work
conducted by Chamberlain. By producing the preliminary report (apparently for
the purpose of proving its insurance claim and the losses suffered), Telamon waived
the privilege with respect to the documents in the investigative file that are the
“nuts and bolts” source documents of Chamberlain’s work, including the interview
summaries, document analyses, and investigative background summaries.
The insurers contend that waiver principles also apply because Telamon
named Paul Chamberlain in its initial disclosures as a person with knowledge of
information relevant to its claims. The court does not agree, at least at this point.
Telamon has not named Mr. Chamberlain, or any other person who participated in
Chamberlain’s investigative work, as a testifying expert, or even a fact witness. If
Mr. Chamberlain or someone else who participated in the investigation were to be
used as a fact witness or testifying expert, that could be another reason for
compelling the disclosure of the knowledge base comprising the Chamberlain
investigation.
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