TRAVELERS CASUALTY AND SURETY COMPANY et al v. BECTON DICKINSON AND COMPANY
OPINION AND ORDER denying 93 Motion to Compel. Signed by Magistrate Judge James B. Clark on 6/20/17. (sr, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
TRAVELERS CASUALTY AND
SURETY COMPANY, et al.,
Civil Action No. 14-4410 (JMV)
OPINION AND ORDER
BECTON DICKINSON AND COMPANY,
CLARK, Magistrate Judge
THIS MATTER comes before the Court on a motion by plaintiffs Travelers Casualty and
Surety Company and Travelers Property Casualty Company of America (collectively “Plaintiff”
or “Travelers”) to compel Defendant Becton Dickinson and Company’s (“Defendant” or “BD”)
production of documents related to the underlying lawsuits and settlements at issues in this action.
[Docket Entry No. 93]. Defendant opposes Plaintiff’s motion. [Docket Entry No. 94]. For the
reasons set forth below, Plaintiff’s Motion to Compel is DENIED.
By way of background, Travelers instituted this action on July 11, 2014, seeking a
declaratory judgment that it owed no defense or indemnity coverage for groups of antitrust lawsuits
(the “Underlying Actions”) that BD settled before tendering to Travelers. [Docket Entry No. 1].
The first action (the “Retractable Action”) was brought in state court in 1998, then as a federal
action in 2001, and was settled by BD in July 2004. The second group of suits (the “Class
Actions”) were commenced between 2005 and 2007 by direct and indirect purchasers of BD’s
hypodermic products. BD settled the direct-purchaser suits in April 2009, and the indirectpurchaser suits in July 2013.
In December 2013, BD tendered the Class Actions to Travelers seeking coverage.
Travelers initially declined coverage, but later withdrew its declination under the relevant policies
and reserved its rights. In response to requests for additional information regarding the Class
Actions, BD stated that the “[u]nderlying defense counsel prepared no evaluations or status reports
during the class actions litigations” and the “underlying actions settled before the parties engaged
in any discovery concerning any issue other than standing.” [Docket Entry No. 4-4]. In June 2014,
BD tendered the Retractable Action to Travelers, which declined coverage under the relevant
After filing the instant action in July 2014, Travelers moved for judgment on the pleadings
arguing that it owed no coverage for the Underlying Actions because BD breached various policy
conditions when it handled and settled those matters before tendering them to Travelers. BD
opposed, claiming that Travelers must show “appreciable prejudice” stemming from a condition
breach and, to do so, must prove that it: (1) irretrievably lost substantial rights; and (2) would have
defended successfully against the Underlying Actions. [Docket Entry No. 18 at 16-19]. Denying
Travelers’ motion for judgment on the pleadings, Judge Vazquez found that New Jersey’s
“appreciable prejudice” rule applies to occurrence-based policies and there is an “open issue” on
whether the rule has a “good-faith” prerequisite. [Docket Entry No. 43.] Judge Vazquez further
held that there were material issues of fact in dispute, including whether: (1) Travelers was
appreciably prejudiced by BD’s late notice and failure to cooperate and (2) “assuming that there
is a good faith prequalification, whether Defendant failed to act in good faith”. [Id.]
Thereafter, the parties exchanged written discovery and served responses in July 2016.
With respect to BD’s “appreciable prejudice” defense, Travelers sought information regarding
BD’s litigation and settlement of the Underlying Actions which included communications with
counsel, and evaluations of strategy and the merits of the claims. [Docket Entry No. 93-2, 93-3].
Travelers further sought information regarding BD’s good faith; specifically, information
concerning BD’s evaluation of potential coverage for those actions. BD objected to these requests,
invoking the attorney-client privilege and work-product doctrines. That issue is now before us the
Court on the instant motion.
THE PARTIES’S POSITIONS
A. Travelers’ Position
Travelers contends that BD has waived any attorney-client privilege or work–product
protection over the requested documents by affirmatively placing those documents “at issue”.
Specifically, BD asserted as an affirmative defense that “Plaintiffs cannot meet their burden of
proving appreciable prejudice arising from any alleged untimely notice of the underlying action.”
BD further stated in its opposition to Travelers’ motion for judgment on the pleadings, that
appreciable prejudice can only be shown by proving: (1) that it irretrievably lost substantial rights;
and (2) it would have defended successfully against the Underlying Actions. BD further stresses
the inability to prove the latter point, by arguing that Travelers “cannot allege it would have hired
better counsel or achieved a better outcome than that secured by [BD’s counsel]”. Taken all
together, these statements place the advice of BD’s counsel “at issue”. And such information
cannot be obtained from a less intrusive source because a determination of whether Travelers could
have been more successful in the underlying actions is dependent on the actions taken by BD’s
counsel—documents only BD maintains.
With regard to documents related to BD’s counsel’s evaluation of potential insurance
coverage for the Underlying Actions, Travelers argues that these documents are not protected by
the work product doctrine because they were not prepared in anticipation of litigation. Even if
they were, there is a substantial need for these documents because: (1) Travelers has no
alternative to show good faith; and (2) deposition testimony is insufficient without
B. BD’s Position
On the other hand, BD argues that the documents sought by Travelers are protected by
the attorney-client privilege and work-product doctrines. These privileges have not been waived
nor should be pierced for several reasons. First, BD has not placed its counsels’ statements at
issue with regards to Traveler’s claim of appreciable prejudice. Second, BD argues that those
privileges should remain intact because Travelers can obtain the requested information from
other less intrusive sources without undue hardship. Specifically, documents related to BD’s
“defense and settlement of the Underlying Actions” and “how [its] counsel evaluated various
strategy options” can be gleaned from the millions of pages of documents BD was preparing to
produce in this matter, through court filings, and deposition testimony of corporate designee and
When a case is based on federal diversity jurisdiction, courts are to decide issues of
privilege based on state law. See In re Ford Motor Corp., 110 F.3d 954, 965-66 (3d Cir. 1997).
Thus, the Court considers the attorney-client and work-product privilege under New Jersey law.
The attorney-client privilege exists to promote full and frank discussions between attorneys
and their clients, see United Jersey Bank v. Wolosoff, 196 N.J. Super. 553, 561 (App. Div. 1984),
and protects confidential communications made in the course of a professional relationship. See
N.J.S.A. 2A:84A-20; Rivard v. Am. Home Prod., Inc., 391 N.J. Super. 129, 153 (App. Div. 2007).
Unlike the federal privilege, the New Jersey state attorney-client privilege is qualified and may be
required to yield when the need for information is legitimate, the information is relevant and
material to the issues before the Court, and such information cannot be obtained from any less
intrusive source. See In re Kozlov, 79 N.J. 232, 243-44 (1979). The typical setting in which the
attorney-client privilege has not been sustained under Kozlov is where the party claiming the
privilege has implicitly waived it by putting the confidential communications “at issue” in the
litigation. See Kinsella v. Kinsella, 150 N.J. 276, 300 (N.J. 1997). This occurs when a party has
placed in issue “a communication which goes to the heart of the claim in the controversy.” Id.
A. Privileged Documents Relating to the Litigation and Settlement of the Underlying Actions
Travelers claims that BD waived the attorney-client privilege related to the Underlying
Actions when it asserted as an affirmative defense, that “Plaintiffs cannot meet their burden of
proving appreciable prejudice arising from any alleged untimely notice of the underlying
action[s]” and later argued that Travelers “cannot allege it would have hired better counsel or
achieved a better outcome than that secured by [BD’s counsel]”. Assuming arguendo that these
statements affirmatively placed the privileged documents “at issue”, thereby satisfying the first
prong of Kozlov’s waiver analysis, Travelers’ arguments nevertheless fail on the remaining prongs.
Surprisingly, Travelers does not address the second prong of the Kozlov analysis—whether
the documents are relevant and material to the issues before the Court. In order to prove
appreciable prejudice, Travelers bears the burden of showing: (1) that substantial rights have been
irretrievably lost, and (2) the likelihood of success of the insurer in defending against the victim’s
claim. See CSR Ltd. v. CIGNA Corp., 2006 U.S. Dist. LEXIS 8149, *39 (D.N.J. Feb. 10, 2006);
Cont'l Ins. Co. v. Beecham, Inc., No. 95-2947 (HAA), 836 F. Supp. 1027, 1047-48 (D.N.J. 1993)
(stating that the insurer must show an irretrievable loss of substantial rights and that it would have
had a meritorious defense had there been timely notification.) In order to prove the “likelihood of
success” prong, Travelers hopes to bolster its arguments by reviewing all of the actions and
decisions made by BD’s counsel, and then arguing that it could have done better. But this is not
the inquiry set forth under the “appreciable prejudice” analysis. The question is not what BD did,
but what Travelers could have done, but for the untimely notice. See Morales v. National Grange
Mut. Ins. Co., 176 N.J. Super. 347, 356 (Law Div. 1980) (“For that reason the carrier should be
required to show the likelihood that it would have had a meritorious defense had it been informed
of the accident in a timely fashion.”) The effectiveness of BD’s counsel is not material to this
inquiry. The focus of the inquiry is what Travelers would have done faced with the same lawsuit.
Even if the requested information was relevant and material, this same information can be
obtained from far less intrusive non-privileged sources, including pleadings, motions, depositions
transcripts, communications between opposing counsel, and any discovery produced in the
Underlying Actions. These documents themselves evidence the strategy and actions taken by BD
for which Travelers can make their comparison. Accordingly, this Court denies Travelers’ Motion
to Compel BD’s privileged documents relating to the litigation and settlement of the Underlying
B. Documents Related to BD’s Evaluation of Potential Insurance Coverage for the
Travelers also seeks information pertaining to BD’s evaluation of potential insurance for,
and whether to tender, the Underlying Actions. Travelers contends that these evaluations speak to
BD’s “good faith” with respect to the policy agreements. BD objects, claiming that these
documents are privileged.
The attorney-client privilege protects communications between an attorney and his client
made in confidence to obtain or provide legal advice. N.J.S.A. § 2A:84A-20; N.J. R. Evid. 504;
Blakey v. Cont’l Airlines, Inc., No. CIV. 93-2194 (WGB), 1995 WL 464477, at *6 (D.N.J. June
16, 1995); NL Indus., Inc. v. Commercial Union Ins. Co., 144 F.R.D. 225, 229 (D.N.J. 1992);
Wolosoff, 196 N.J. Super. at 562. The evaluations prepared by BD’s counsel satisfy this privilege.
The documents were prepared by BD’s counsel, McCarter & English, for its client, BD, in
confidence, to provide legal advice regarding insurance coverage for the Underlying Actions. As
such, Travelers’ arguments related to the work product doctrine are moot. Travelers does not argue
an exception to the attorney-client privilege, focusing its arguments on the work-product privilege.
As these documents are protected under the attorney-client privilege, this Court declines to address
Travelers’ work-product arguments.
III. CONCLUSION AND ORDER
The Court having considered the papers submitted pursuant to Fed. R. Civ. P. 78, and for
the reasons set forth above;
IT IS on this 20th day of June, 2017,
ORDERED that Plaintiffs Motion to Compel is DENIED; and it is further
ORDERED that the Clerk of the Court terminate the motion at Docket Entry No. 93.
s/ James B. Clark, III
JAMES B. CLARK, III
United States Magistrate Judge
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