Flanagan et al v. Nationwide Property And Casualty Insurance Company

Filing 45

ORDER granting 32 Motion to Compel. Signed by Magistrate Judge Michael T. Parker on August 4, 2017. (js)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
CRAIG FLANAGAN, ET AL.

PLAINTIFFS

v.

CIVIL ACTION NO. 2:17-cv-33-KS-MTP

NATIONWIDE PROPERTY AND
CASUALTY INSURANCE COMPANY

DEFENDANT
ORDER

THIS MATTER is before the Court on Plaintiff’s Motion to Compel [32]. Having
considered the parties’ submissions and the applicable law, the Court finds that the Motion [32]
should be granted.
BACKGROUND
In this action, Plaintiffs assert a bad faith claim against Defendant Nationwide Property
and Casualty Insurance Company (“Nationwide”) arising from Nationwide’s alleged wrongful
failure to pay the total amount of proceeds owed to Plaintiff Craig Flanagan (“Flanagan”) under
an uninsured/underinsured motorist coverage policy after Flanagan was involved in a motor
vehicle accident on May 31, 2014. (Amended Complaint [22]). During the investigation of the
accident, Nationwide sought the services of Attorney William McDonough with the law firm of
Copeland Cook Taylor and Bush. (Motion [32]; Nationwide’s Brief [38]). Subsequently,
McDonough assisted Nationwide in its investigation of Flanagan’s uninsured motorist claim.
On March 7, 2017, Plaintiffs filed this action. Thereafter, Plaintiffs served its first set of
requests for production upon Nationwide, which included the following request:
Request No. 3: Produce all documents and other materials . . . that comprise your
claims file(s)/investigative files(s)/special investigative file(s)/outside counsel
file(s) relating to the subject claims up until the date that you retained the law firm
of Upshaw Williams to defend this matter.
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([32-3]).
Nationwide objected to this request, asserting the attorney-client privilege and the work
product doctrine. Notwithstanding this objection, Nationwide pointed Plaintiff to its initial
disclosures and produced other documents. Nationwide, however, withheld certain other
documents, which included communications between McDonough and Nationwide, and listed
those documents in a privilege log. ([32-3]; [32-4]).
Additionally, on June 22, 2017, Plaintiffs had a subpoena issued to and served on
McDonough, requesting that he produce, inter alia, “[a]ll billing records or invoices for
Copeland Cook Taylor and Bush, including billing guidelines and records documenting billings
that Nationwide refused to pay . . . .” ([25-1]). Both McDonough and Nationwide objected to the
subpoena, arguing that the billing statements are protected by the attorney-client privilege and
the work product doctrine. ([30], [31]).
On July 7, 2017, Plaintiffs filed the instant Motion [32], requesting that the Court compel
Nationwide to produce its communications with McDonough and compel McDonough to
produce his billing records or invoices and billing guidelines. Plaintiff argue that they are
entitled to the documents because the protections afforded by the attorney-client privilege and
the work product doctrine were either inapplicable to the documents at issue or waived by
Nationwide.
ANALYSIS
Attorney-Client Privilege
Pursuant to Federal Rule of Evidence 501, state law determines the applicability of a
privilege in diversity actions such as the case sub judice. Thus, Mississippi law governs this
privilege issue. In Mississippi, the attorney-client privilege is defined as the client’s right to

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refuse to disclose and prevent others from “disclosing confidential communications made for the
purpose of facilitating the rendition of professional legal services to the client . . . .” Miss. R.
Evid. 502(b).
“‘The attorney-client privilege is the oldest of the privileges for confidential
communications known to the common law. Its purpose is to encourage full and frank
communication between attorneys and their clients and thereby to promote broader public
interests in the observance of law and administration of justice.’” Hewes v. Langston, 853 So. 2d
1237, 1244 (Miss. 2003) (quoting Upjohn Co. v. U.S., 449 U.S. 383, 389 (1981)). This privilege
is broad, but it may be waived. A waiver may occur when a client reveals otherwise privileged
communications to a third party. A client may also waive the attorney-client privilege and make
information discoverable “‘[b]y voluntarily injecting into a litigated case, a material issue which
requires ultimate disclosure by the attorney of the information, ordinarily protected by the
privilege . . . .”’ Jackson Med. Clinic of Women, P.A. v. Moore, 836 So. 2d 767, 773 (Miss.
2003) (quoting American Standard, Inc. v. Nedix Corp., 80 F.R.D. 706, 708 (W.D. Mo. 1978)).
The United States Court of Appeals for the Fifth Circuit explained that
The attorney-client privilege was intended as a shield, not a sword. When
confidential communications are made a material issue in a judicial proceeding,
fairness demands treating the defense as a waiver of the privilege. The great weight
of authority holds that the attorney-client privilege is waived when a litigant places
information protected by it in issue through some affirmative act for his own
benefit, and to allow the privilege to protect against disclosure of such information
would be manifestly unfair to the opposing party.
Conkling v. Turner, 883 F.2d 431, 434 (5th Cir. 1989) (internal citations and quotations omitted).
“[T]he general rule, which Mississippi appears to follow, is that a waiver of the privilege
is deemed to encompass all information related to that topic.” Baptist Health v. Bancorpsouth
Ins. Servs., Inc., 270 F.R.D. 268, 273 (N.D. Miss. 2010) (citing Bennett v. State, 293 So. 2d 1, 4
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(Miss. 1974)). “‘The waiver doctrine entails the result not only of the claim for the particular
document, but for any other document relating to the same subject matter.’” Id. at 274 (quoting
Wright, Miller & Marcus, Federal Practice and Procedure § 2016.2 at 238 & n. 7 (1994)).
Plaintiffs argue that Nationwide is relying upon the advice and actions of McDonough as
a defense despite Nationwide’s insistence that it is not asserting an “advice of counsel” defense.1
According to Plaintiffs, “Nationwide has produced a number of communications between
Nationwide and Copeland Cook in support of its defense to the bad faith allegations, but has
chosen to cherry-pick which communications to produce in discovery and which
communications to withhold on a claim of privilege.” ([32] at 2). Plaintiffs also point to the fact
Nationwide identified McDonough as a witness in its initial disclosures and point to
Nationwide’s interrogatory responses:
Interrogatory No. 7: Describe the role, duties, and extent of participation in the
handling of the Plaintiffs claim for each person identified in response to the
preceding Interrogatory.
Response: See claims files previously produced which sets forth all factual
activities of the adjusters and Bill McDonough.
Interrogatory No. 17: Set forth the bases of your advice of counsel defense
identifying the attorney(s) who provided the advice you relied upon, and the advice
counsel provided to you justifying your decisions regarding the Plaintiffs claims
for policy benefits.
Response: The Defendant has not plead advise of counsel. All factual statements
and investigations done by Nationwide’s outside counsel, Bill McDonough, has
been produced. Mr. McDonough will testify as to what activities he did and the
length of time for those activities to take place.
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Plaintiff also argues that documents and communications made prior to May 1, 2015, should be
produced because McDonough was acting as counsel for Plaintiffs from the time he was hired by
Nationwide on June 3, 2014, until April 30, 2015. As the Court is ruling on other grounds, the
Court does not reach this issue, though there are a number of references in the documents at issue
which tend to support this disputed assertion. See, e.g., [32-1], [40-1], [40-5].
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([32-15]).
In its Response [38], Nationwide argues that it has not pled and is not relying on advice
of counsel as a defense.2 Nationwide also argues that the documents it produced, including
communications between it and McDonough, reveal “objective facts involved in the handling of
this claim,” not advice and work product of McDonough. According to Nationwide, the
production of objective facts regarding its actions does not require the introduction of privileged
communications.
A review of the documents produced by Nationwide, however, reveals that Nationwide
did not simply disclose “objective facts” as it alleges, but also disclosed McDonough’s opinions
regarding Flanagan’s evidence supporting his loss of income claim, Flanagan’s ability to prove
cognitive impairment, the need to hire experts, the benefits and risks involved in scheduling a
medical examination, and the timeliness of Nationwide’s investigation and payment to Flanagan.
([32-6], [32-10], [32-13], [32-14]).
For example, in a November 9, 2016, email, McDonough told James Downey with
Nationwide, “I don’t feel we have unnecessarily delayed payment of this claim, and in fact have
advanced something like $2 million. Yes, we have had some unexpected delays, and the fact
counsel sat on the report of Dr. Jim Irby caused further delay.” ([32-10]). In another email sent
on October 20, 2016, McDonough told Downey “I understand you will be calling counsel for the
claimant to assure him we are not ‘dragging our feet’, but rather diligently working to get the
neuro-psyc piece together in order to evaluate the remainder of the claim.” ([32-9]).

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Nationwide did assert advice of counsel as a defense in its original Answer [3] filed on March
28, 2017. ([3] at 10). However, Nationwide did not include advice of counsel as a defense in its
Amended Answer [27] filed on June 26, 2017.
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Additionally, on April 25, 2016, McDonough sent an email to Downey explaining that “[w]ith
no liability defense, Flanagan would no doubt receive a verdict for at least $3 million. To get
this under the $6.75 total policy limit, we’re going to have to chip away at the economic
damages. However, even the most conservative, hand picked experts on our behalf are still
going to have to concede tremendous economic damages.” ([32-14]).
An insured cannot force an insurer to waive the protections of the attorney-client
privilege merely by bringing a bad faith claim. Nationwide’s prior production, however, has put
at issue Nationwide’s confidential communications with McDonough. Nationwide has
voluntarily injected its counsel’s advice into this case by purposely disclosing, inter alia, its
counsel’s opinion that Nationwide has not “unnecessarily delayed payment of [Flanagan’s] claim
. . . .” ([32-10]). To allow Nationwide to use the attorney-client privilege to withhold additional
information related to counsel’s advice “would be manifestly unfair” to Plaintiffs. Conkling, 883
F.2d at 434; Jackson Med. Clinic, 836 So. 2d at 773.
The Court finds that Nationwide has waived the attorney-client privilege for all
communications between it and McDonough regarding insurance coverage advice or opinions
related to Flanagan’s claim for insurance proceeds or regarding the accident at issue.
Work Product Doctrine
Nationwide also contends that the documents at issue are protected by the work product
doctrine. The work product doctrine is governed by Federal Rule of Civil Procedure 26(b)(3).
“The work product doctrine does not exist to protect a confidential relationship but to promote
the adversary system by safeguarding the fruits of an attorney’s trial preparations from the
discovery attempts of an opponent.” Liberty Mutual Ins. Co. v. Tedford, 644 F. Supp. 2d 753,
764 (N.D. Miss. 2009).

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Even if the work product doctrine is applicable to the information at issue, Nationwide
waived its protections. “Where a party puts in issue an attorney’s opinion or work product . . .
both the attorney-client privilege and protections afforded by the work product doctrine are
waived.” Liberty Mutual Ins. Co. v. Tedford, 644 F. Supp. 2d 753, 764 (N.D. Miss. 2009) (citing
Cincinnati Ins. Co. v. Zurich Ins. Co., 198 F.R.D. 81 (W.D.N.C. 2000)). As previously
discussed, Nationwide injected McDonough’s advice into this case.3
Documents to Be Produced
Nationwide shall produce all written communications (or notes describing such) in its
possession between Nationwide and McDonough regarding Flanagan’s claim for benefits under
the Nationwide policy at issue in this case up until the date that Nationwide retained the law firm
of Upshaw Williams to defend this matter. Additionally, McDonough shall produce his billing
records or invoices and billing guidelines.
IT IS, THEREFORE, ORDERED that:
1. Plaintiff’s Motion to Compel [32] is GRANTED.
2. On or before August 11, 2017, Nationwide shall produce the documents at issue as set
forth herein.
3. On or before August 11, 2017, McDonough shall produce the documents as set forth
herein.
4. The Clerk of Court is directed to mail a copy of this order to:
William McDonough
Copeland Cook Taylor & Bush
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Additionally, Plaintiffs have demonstrated a “substantial need” for the information at issue. See
U.S. v. El Paso Co., 682 F.2d 530, 542 (5th Cir. 1982) (holding that materials protected by the
work product doctrine “may be discovered if: (i) they are otherwise discoverable under Rule
26(b)(1); and (ii) the party shows that it has substantial need for the materials to prepare its case
and cannot, without undue hardship, obtain their substantial equivalent by other means.”)
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P.O. Box 10
Gulfport, MS
39502-0010
SO ORDERED this the 4th day of August, 2017.

s/Michael T. Parker
UNITED STATES MAGISTRATE JUDGE

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