Fifth Third Bancorp et al v. Certain Underwriters at Lloyd's Subscribing to Policy Numbers B0509QA048710, B0509QA051310, and 81906760 et al
MEMORANDUM OPINION AND ORDER granting in part 116 Defendants AXIS Insurance Company, Certain Underwriters at Lloyd's Subscribing to Policy Numbers B0509QA048710, B0509QA051310, and 81906760 and Federal Insurance Company's Motion to Compel Production of Documents Improperly Withheld or Redacted, consistent with this Memorandum Opinion and Order; denying 122 Plaintiffs Fifth Third Bancorp and Fifth Third Bank's Motion for a Protective Order. Signed by Magistrate Judge Stephanie K. Bowman on 5/9/2017. (km)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
FIFTH THIRD BANCORP, et al.,
Case No. 1:14-cv-869
CERTAIN UNDERWRITERS AT LLOYD’S, et al.,
MEMORANDUM OPINION AND ORDER 1
The above case initially was consolidated with a related case, RLI Insurance
Company v. Fifth Third Bancorp., Case No. 1:14-cv-802, solely for purposes of
discovery and pretrial proceedings. On January 9, 2017, both cases were reassigned to
U.S. District Judge Timothy S. Black for all further proceedings. Although the cases
were previously set for trial on different dates, (see Docs. 27, 70 in Case No. 14-802,
Docs. 33, 77 in Case No. 14-869), both cases are presently set for trial on October 23,
Currently before the undersigned are two motions filed solely in Case No. 1:14cv-869: (1) the Underwriters’ motion to compel Fifth Third to produce certain materials
as to which Fifth Third has claimed attorney client and/or work product privilege; and (2)
The parties’ respective motions and memoranda have been filed under seal. In ruling on prior motions
filed under seal, the undersigned filed her Memorandum Opinion and Order under seal, while
simultaneously filing a much shorter public Order that contained no reference to the parties’ designated
confidential materials. The undersigned has elected not to follow the same practice concerning this Order,
as the Sixth Circuit has made clear that filing documents under seal in a public record is highly
disfavored, and the undersigned does not believe that any compelling interests exist in favor of nondisclosure of this Order, or that such interests would outweigh the interests of the public in an open
record. See, e.g., Danley v. Encore Capital Group, Inc., ___ Fed. Appx. ___, 2017 WL 710470 (6th Cir.
Feb. 22, 2017) (citing Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299, 305-309 (6th
Cir. 2016), emphasizing court’s obligation to set forth specific findings to justify nondisclosure to the
public, stating that a court’s failure to explain compelling interests in support of nondisclosure, and why
the seal is no broader than necessary, is grounds for vacating seal). Following a similar course, on May
2, 2017, Judge Black filed a public Order in Case No. 14-cv-802 that ruled on a motion filed under seal.
Fifth Third’s motion for a protective order. Although Fifth Third has requested oral
argument, the undersigned concludes that such argument is not needed and would not
be beneficial to resolution of the fully briefed issues.
See Whitescarver v. Sabin
Robbins Paper Co., Case No. C–1–03–911, 2006 WL 2128929, at *3, 2006 U.S. Dist.
LEXIS 51524, at *7 (S.D.Ohio July 27, 2006) (exercising discretion under Local Rule
7.1(b)(2) to deny request for oral argument).
For the reasons that follow, the undersigned will partially grant the Underwriters’
motion and deny Fifth Third’s motion.
The two related cases concern Fifth Third’s attempt to collect $100 million dollars
on multiple bonds that it purchased from a number of insurers, including the Defendants
in this case (hereinafter “the Underwriters”).
The bonds, commonly referred to as
fidelity bonds, generally insure against employee dishonesty or fraud. 2 The period of
coverage is July 1, 2010 through June 30, 2011.
The bonds cover loss “first
discovered” during the bond period, even if the dishonesty or fraud occurred long before
the discovery as is alleged in this case.
Related Case No. 1:14-cv-802 was first filed by RLI Insurance Company (“RLI”),
one of the insurers participating in the subject bond policies. RLI’s complaint seeks a
declaratory judgment that it owes nothing on its bond. Fifth Third counterclaimed for
breach of contract, seeking coverage. A month after RLI initiated its case, Fifth Third
filed the above-captioned case against the Underwriters, all of whom also issued and/or
participated in similar fidelity bonds.
Fidelity bond insurance is distinguishable from Errors and Omissions or professional liability coverage,
which usually covers losses caused by an employee’s negligence while excluding intentional conduct
resulting from dishonesty or fraud. Compare Hantz Financial Services, Inc. v. Nat’l Union Fire Ins. Co. of
Pittsburgh, PA, 130 F. Supp.3d 1089 (E.D. Mich. 2015).
The disputed claims arise out of actions taken by former Fifth Third employee,
Mathew Ross, while he was a loan officer employed in the bank’s structured finance
Ross resigned from Fifth Third prior to the inception of bond coverage. 3
However, Fifth Third alleges that within the bond coverage period, it discovered it had
incurred losses in excess of the bond policy limits due to Ross’s misconduct.
Over a long period of time, with significant events taking place from 2007 through
2009, Ross allegedly caused Fifth Third to fund “fraudulent loan facilities” for the benefit
of an individual who was Ross’s undisclosed business partner (Edward Netherland), a
company called InsCap Management LLC (“InsCap”), 4 and affiliated entities and
persons. Specifically, Ross allegedly caused Fifth Third to fund a credit facility for use
in InsCap’s “Ultra” loan program, 5 resulting in the issuance of 78 Ultra loans that were
used to fund the purchase of life insurance policies on wealthy individuals, with Fifth
Third receiving fees and a security interest in each policy as collateral for each loan.
All of the insurers raise similar defenses, maintaining that Fifth Third discovered
Ross’s misconduct and/or its losses prior to the inception of the policy period, or
alternatively, at a time that otherwise excludes coverage. They allege that when Fifth
Third purchased the bonds, it was already aware of significant issues with the loan
program, due in part to litigation in state court that included accusations of Ross’s
involvement in fraud. (Case No. 14-cv-869, Doc. 93 at 11). In addition, all insurers
seek to deny coverage based upon untimely notice. Though not relevant to the current
discovery dispute, the insurers also appear to dispute the amount of covered loss
and/or their respective maximum exposure under the various bonds.
Ross resigned from Fifth Third on April 10, 2010. (Case No. 14-cv-869, Doc. 93-2 at 44). He has
asserted his Fifth Amendment right not to testify concerning LIPF II. (Case No. 14-cv-802, Doc. 93 at 5).
InsCap later became known as Concord Capital Management, LLC, the entity that sued Fifth Third in
related state court litigation.
The Ultra facility/program is also referred to as the “LIPF II” facility/program.
Fifth Third asserts that even though Ross is alleged to have acted dishonestly as
long ago as 2005, Ross effectively concealed his conduct from his employer for years.
Fifth Third submitted its initial Proof of Loss Statement (“Loss Statement”) on October
14, 2011. In the Loss Statement, Fifth Third alleged that “Ross and InsCap’s owners
and principal officers created, operated and manipulated these [Ultra] loan facilities and
received undisclosed and illegal financial benefits which resulted in InsCap’s owners
and principal officers receiving tens of millions of dollars in fraudulent, undisclosed and
illegal payments and Mathew Ross receiving at least $75,000 in improper financial
benefit.” (Case No 1:14-cv-869, Doc. 93-2 at 6). After Ross “established the LIPF II
premium finance credit facility for Netherland’s company, InsCap,” Fifth Third “funded
more than $100 million in premium finance loan advances between 2007 and 2009.”
(Id., Doc. 93-2 at 7-8). As implemented and executed, Fifth Third characterizes the
program as “riddled with fraud from its inception….” (Id. at 8)
The Loss Statement
reports that “Ross withheld information as to the actual extent of the fraud in early 2009,
when InsCap purportedly disclosed the fraudulent activity which had occurred in
connection with the LIPF II program (described as ‘ineligible fundings’). Ross continued
to manipulate and conceal information with respect to the program, which caused Fifth
Third to continue funding and increased its losses.” (Case No. 14-cv-869, Doc. 93-2 at
Just before the policy inception date of the subject bonds, on June 11, 2010, Fifth
Third filed suit in Illinois state court to collect on a 23.5 million dollar loan against
Concord (previously InsCap), Columbus Nova, and individual guarantors that related to
the issuance of loans under the Ultra program. Concord filed a counterclaim, and in
September 2010 Concord filed a new complaint in New York State Court, 6 alleging that
Fifth Third had aided and abetted Concord’s insiders in looting the assets of Concord,
through conduct by Ross. (Id., Doc. 93-2 at 10).
Fifth Third maintains that it did not learn of facts that would give rise to a fidelity
bond claim until after it hired an external investigator, James Rechel, in January 2011,
within the covered loss period. Fifth Third maintains that it promptly filed its Notice of
Claim on February 8, 2011, immediately after discovering that a fraudulent wire transfer
had been made to Ross in the amount of $75,100 on September 12, 2008. (Doc. 93-2
at 11). Although Fifth Third seeks no damages other than those recoverable up to the
policy limits of each bond, Fifth Third has included allegations that the Insurers have
acted in bad faith. No separate bad faith claim is stated in the complaint, and discovery
on bad faith allegations has been stayed pending resolution of the underlying breach of
contract claims. 7
In the Court’s most recent Calendar Order, discovery closes on May 15, 2017.
The current dispositive motion deadline, for motions that pertain to the underlying
breach of contract claims, is June 3, 2017.
Analysis of the Parties’ Motions
Considering the amount in controversy, it is not surprising that discovery in the
two federal cases has been contentious, with multiple prior disputes having been
presented to this Court. 8 Most of the Underwriters’ current motion to compel, as well as
The New York case was later dismissed. The Illinois case is ongoing.
Fifth Third suggests that it is likely to seek an award of attorney’s fees under Ohio law if it can prove its
bad faith allegations.
On March 31, 2017, following a telephonic conference on a related dispute, the Court entered a
Stipulated Order that, subject to Fed. R. Civ. P. 502(d), required Fifth Third to produce, documents that:
(1) pre-date February 8, 2011; and (2) contain facts concerning: (i) Ross’s actual or alleged activities; (ii)
any factual or alleged fraud or misconduct relating to the LIPF II Program, or (iii) an actual or potential
claim in which it is alleged that Fifth Third is liable to a third party Ross, the LIPF II Program, or Concord
f/k/a InsCap, or the Clean-Up Loans. (Doc. 117). Rule 502(d) and the Stipulated Order preserved Fifth
Fifth Third’s counter-motion for a protective order, relates to the issue of when Fifth
Third “first discovered” Ross’s fraudulent conduct, or as the Underwriters put it, “what
did Fifth Third know and when did it know it?” (Doc. 116 at 10).
The Underwriters seek, as improperly withheld under the claim of privilege,
additional documents in multiple broad categories: (1) any documents sent to or from
Ross; (2) documents sent to or from all Discovery Agents; (3) documents concerning
Fifth Third’s internal investigation into the allegedly fraudulent conduct; (4) internal
documents concerning Fifth Third’s deliberations related to its reports to regulators
about Ross’s misconduct; (5) documents withheld as work product created prior to any
litigation between InsCap and Fifth Third; and (6) documents that the Underwriters
believe were improperly logged, and/or for which the privilege log is insufficiently
specific to demonstrate any privilege. 9 In a separate motion for a protective order, Fifth
Third seeks to cordon off the scope of questions directed to three attorney witnesses,
also based on attorney-client and/or work product privilege.
The burden of proof is on Fifth Third, as the party objecting to discovery, to prove
that its asserted privilege applies. See generally Fed. R. Civ. P. 26(b)(5); Ross v. City
of Memphis, 423 F.3d 596, 606 (6th Cir. 2005). The undersigned concludes that Fifth
Third has failed to meet its burden of proof for a significant number of the referenced
documents, and also has failed to meet its burden to limit the scope of the attorneywitness testimony.
Third’s claims of privilege as to any information produced under the Order. Unfortunately, a subsequent
telephonic conference and the instant motions underscore that the Stipulated Order resolved little of the
parties’ ongoing dispute.
The Underwriters identify nine separate categories of documents. The undersigned has grouped
together categories that allege similar deficiencies of Fifth Third’s privilege log.
A. Focusing on When Fifth Third Discovered Its Loss
As the insured, Fifth Third bears the burden of showing that it “first discovered”
the claim within the relevant time period. See generally FDIC v. N.H. Ins. Co., 953 F.2d
478, 482-83 (9th Cir. 1991). In its Notice of Claim, Fifth Third asserts that it did not
discover Ross’s alleged fraud until January 30, 2011.
The timing and extent of Fifth Third’s knowledge is equally critical to the
Underwriters’ contention that payment is not owed because Fifth Third’s Discovery
Agents were “aware of” the fraud prior to purchasing the bonds.
Several of the
Underwriters’ defenses also would preclude coverage even if Fifth Third first discovered
the loss within the bond period, based upon the timing of Fifth Third’s Notice and Proof
of Loss, which time frames are defined by reference to the date of “discovery” of the
loss. For example, the bonds required Fifth Third to provide notice at “the earliest
practicable moment, not to exceed 90 days” after discovery of the loss, and to provide
proof of loss within six months after discovery, “duly sworn to, with full particulars.” (See
Doc. 24-1 at 33). Based upon the February 8, 2011 Notice date, the Underwriters
assert that Fifth Third’s claim will be barred for untimely notice if it “first discovered” its
loss before November 10, 2010, and/or barred for untimely proof of loss if discovery
occurred prior to January 9, 2011. 10
Last, the timing of Fifth Third’s discovery is
relevant to the Underwriters’ assertion that a termination provision in the bonds limited
(or possibly eliminated) lability under the bonds for losses caused by Ross’s
misconduct. Pursuant to Section 12 of the Conditions and Limitations section of the
The parties agree that Fifth Third’s proof of loss should be considered to have been filed on June 9,
2011. The Underwriters assert that the proof of loss would be untimely if discovery occurred prior to
January 9, 2011, based upon a provision that requires proof of loss to be filed within six months of the
discovery of the loss. (Doc. 127 at 7, n.2).
Primary Policy, coverage terminates “as soon as” any person in a defined group at Fifth
Third “learns of any dishonest or fraudulent act committed by such person….”
In short, the date of Fifth Third’s discovery of its loss is crucial to Fifth Third’s
ability to prove its claim, as well as to the Underwriters’ affirmative defenses. Given the
centrality of the “discovery condition” in the bonds, this Court turns to the explicit
language of that provision to resolve the pending motions.
The language in the Insuring Agreement of the Primary Bond (the “Fidelity
Insuring Agreement”) states:
This bond applies only to loss first discovered by the Chief Risk Officer,
Office of Risk Management, Office of General Counsel, Internal Audit,
Loan Review or any Executive Officer of the first named Insured during
the Bond Period [July 1, 2010 to July 1, 2011]. Discovery occurs at the
earlier of the Chief Risk Officer, Office of Risk Management, Office of
General Counsel, Internal Audit, Loan Review, or Any Executive Officer of
the first named Insured being aware of:
a. Facts which a reasonable person would expect to result in a loss of a type
covered by this bond;
b. An actual or potential claim in which it is alleged that the Assured is liable
to a third party,
Regardless of when the act or acts causing or contributing to such loss
occurred, even though the amount of loss does not exceed the applicable
Deductible Amount, or the exact amount or details of loss may not then be
(Doc. 24-1, page 31 of 64, Section 3).
Although the parties have engaged in extensive discovery, the fact that Fifth
Third’s Discovery Agents include attorneys in its Office of General Counsel has led to
many of the current conflicts concerning the scope of Fifth Third’s asserted privileges.
B. Discerning Ohio Law on Attorney-Client Privilege
Ohio law is controlling in a diversity case on the applicability of the attorney-client
privilege. Fifth Third relies almost exclusively on a single Ohio case, Jackson v. Greger,
110 Ohio St. 3d 488, 854 N.E.2d 487 (Ohio 2006), which it insists controls the outcome
of this discovery dispute. The Underwriters argue that Jackson is distinguishable, and
rely instead almost as exclusively on a case from the Illinois Court of Appeals as
The undersigned finds no controlling law on point, but is
persuaded that Ohio courts would conclude that most of the subject materials are
outside the scope of the asserted privileges.
In Jackson, the plaintiff had filed a legal malpractice claim against her former
criminal defense attorney. Aware that his client intended to pursue a § 1983 claim
relating to her arrest and conviction, the attorney nevertheless advised her to plead
guilty. Plaintiff alleged that the advice was negligent and led to the dismissal of her
later-filed civil rights case. In defense of the malpractice case, the criminal defense
attorney sought discovery of Jackson’s attorney-client communications in her civil case.
Both parties believed that the common law doctrine of “implied waiver,” set forth in
Hearn v. Rhay, 68 F.R.D. 574 (E.D. Wash. 1975), applied, although they disagreed on
whether the criteria for implied waiver had been met. The lower courts also relied on
Hearn. However, the majority opinion in Jackson 11 found Hearn inapplicable on the
Instead, the court found Ohio’s codification of its attorney-client
privilege in R.C. § 2317.02 to be controlling, rejecting any “judicially created waiver to
the statutorily created privilege.”
In relevant part, the Ohio statute states that an
The opinion was a fractured one, signed by four justices. Justice Lanzinger concurred in the judgment
only, writing a separate dissent to stress disagreement with the majority’s implicit rejection of Hearn and
broadening of the statute. Justice Pfeifer also dissented in part, disagreeing that the statute abrogates
the common law. Justice O’Donnell dissented without opinion.
attorney shall not testify “except that the attorney may testify by express consent of the
client…and except that, if the client voluntarily testifies…the attorney may be compelled
to testify on the same subject.” R.C. §2317.02(A)(1).
In the decade since its publication, courts have clarified that Jackson was not
intended to wipe clean the pre-existing body of common law exceptions to privilege in
Ohio. See, e.g., Squire, Sanders & Dempsey, L.L.P. v. Givaudon Flowers Corp., 127
Ohio St. 3d 161, 937 N.E.2d 533 (2010) (recognizing exceptions to the attorney-client
privilege including the crime/fraud exception, a claim of a lack of good-faith effort to
settle a case; and the joint representation or common interest exception); State v.
Montgomery, 997 N.E.2d 579, ¶¶ 24-26 (Ohio Ct. App. 2013) (holding R.C. 2317.02
privilege is not absolute, recognizing “waiver” under common law where criminal
defendant raises a Sixth Amendment claim of ineffective assistance of counsel in a
post-conviction claim); Waite, Schneider, Bayless & Chesley LPA v. Davis, 2013 WL
4757486 (compelling attorney communications from outside counsel in fee dispute case
based on importance of documents to resolution of underlying fee dispute).
In Squire, Sanders, Justice O’Donnell (who dissented in Jackson) wrote for the
majority and explicitly rejected an argument that judicially-created exceptions to the
attorney-client privilege were forbidden after Jackson. 12 In Waite, Schneider, Bayless &
Chesley LPA, U.S. District Judge Carr undertook an extensive analysis of Ohio law,
including pre- and post-Jackson. Judge Carr held that the pre-Jackson implied waiver
cases applying the Hearn test remained “relevant to understanding and interpreting the
scope of the self-protection exception” that Jackson ultimately applied. Id. at 4; see also
Squire Sanders was a somewhat stronger majority opinion, with five justices joining the majroity.
Justice Lanzinger concurred only in the judgment, based upon her view that “common-law exceptions are
really no different than common-law waivers,” disagreeing with the majority’s distinction between the two.
No justices dissented; Justice Brown did not participate.
generally Dinsmore & Shohl LLP v. Gray, Case No. 1:14-cv-900, 2016 WL 7852522 at
*7-8 (S.D. Ohio Jan. 5, 2016) (upholding privilege, but discussing Ohio’s retreat since
In addition to concluding that common law waiver and exceptions were not
entirely eliminated by Jackson, the undersigned emphasizes that most of the current
dispute involves document production. The Sixth Circuit has interpreted Ohio’s privilege
statute as applicable only to the attorney-client testimonial privilege, and not to privilege
claims over documents. See In re Professionals Direct Ins. Co., 578 F.3d 432, 440 (6th
Cir. 2009) (finding no error in lower court’s ruling that “by its terms §2317.02(A) applies
to attorney testimony, not documents”); see also Grace v. Mastruserio, 182 Ohio App.3d
243, 249, 912 N.E.2d 608 (Ohio Ct. App. 2007) (limiting statute to cases in which a
party is seeking to compel testimony of an attorney for trial or at a deposition – as
opposed to cases where a party is seeking to compel production of nontestimonial
documents.”). The few cases cited by Fifth Third to the contrary are not persuasive, nor
does the undersigned find that Jackson resolved the issue, as the issue was discussed
only in a dissenting opinion. Instead, the undersigned finds persuasive William Powell
Co. v. Nat’l Indem. Co., Case No. 1:14-cv-807 (Doc. 119), 2017 U.S. Dist. LEXIS
55148, at *60 (S.D. Ohio Apr. 11, 2017), a bad faith case in which Magistrate Judge
Litkovitz held that the “statute is limited to attorney testimony and does not extend to
documents related to coverage issues that were created prior to the denial of coverage.”
Id., Doc. 119 at 40. After extensive analysis of the case law, Judge Litkovitz concluded
that “the overwhelming weight of authority holds that the testimonial privilege….set forth
in § 2317.02(A)(2) does not apply to documents.” 13 Id., Doc. 119 at 42.
Having explained the limitations of Jackson, the undersigned turns next to the
primary case relied upon by the Underwriters, Sharp v. Trans Union L.L.C. See Sharp v.
Trans Union L.L.C., 364 Ill. App. 3d 64 (Ill. App. 2006). In Sharp, an Illinois court
affirmed an order compelling disclosure of privileged documents reflecting the Assured’s
general counsel’s knowledge in context of Errors and Omissions policy, where the
policy language contained broad cooperation clause and identified “General Counsel”
as a discovery agent, because the policy “was negotiated and written to require the
disclosure of [the Assured]’s general counsel’s knowledge, work product, and
communications regarding the pre-policy litigation.” Id. at 72.
Fifth Third urges this Court to reject Sharp in part because it was based on an
earlier Illinois case, Waste Management, Inc. v. Int’l Surplus Lines Ins. Co., 579 N.E.2d
322 (Ill. 1991), that Fifth Third proclaims to be “markedly different from, and inconsistent
with, controlling Ohio law.”
(Doc. 121 at 7).
It is true that Ohio has not adopted
wholesale the Waste Management, Inc. approach, in which the Illinois court took an
expansive view of a waiver of attorney-client privilege in a coverage dispute between an
insurer and its insured. While Ohio’s approach may differ, however, the undersigned
does not agree that Sharp is utterly without persuasive value.
Functionally speaking, Ohio’s law is not as unique as Fifth Third proclaims. The
analysis of Waite, Schneider, Bayless & Chesley LPA is instructive. In that case, the
court explained that – regardless of whether it is termed an “exception” or a “waiver,”
the ultimate test in Ohio is fashioned from a “rule of necessity.” Id. at *5 (internal
Magistrate Judge Litkovitz denied a request to certify the issue to the Ohio Supreme Court. The
undersigned recognizes that objections to Magistrate Judge Litkovitz’s Order remain pending before the
presiding district judge.
citation omitted); see also id., at *7 (noting that Ohio’s decision in Squire Sanders
employed a rationale that was “functionally identical to that which Ohio’s appellate
courts used when applying the doctrine of implied waiver.”)
In addition, Ohio law on
attorney-client privilege does not differ in any significant respect from federal law. See
Lucas v. Gregg Appliances, Inc., 2014 WL 6901518, at note 1 (S.D.Ohio,2014) (quoting
MA Equip. Leasing I, L.L.C. v. Tilton, 980 N.E.2d 1072, 1079–80 (Ohio App. 2012), for
the proposition that “[t]here is no material difference between Ohio's attorneyclient privilege and the federal attorney- client privilege.”)
C. The “Rule of Necessity” Exception to Privilege in Ohio
Fundamentally, many of the disputed documents fall outside the scope of any
privilege based upon the core subject matter of this litigation.
Fifth Third cannot
withhold evidence that it has placed so squarely in issue. Just as a client suing his
former lawyer for legal malpractice or a prisoner-petitioner suing for a violation of his
Sixth Amendment right to the effective assistance of counsel cannot claim privilege for
all documents relating to his prior attorney/client relationship, so too is Fifth Third
precluded from asserting its privilege for many of the withheld documents.
In addition to the various exceptions recognized in Squire, Sanders, the
undersigned finds persuasive by analogy the exception to attorney-client privilege (and
work product doctrine) recognized by Ohio in cases in which an insured brings a
separate claim against its insurer for bad faith denial of coverage. 14 See Boone v.
Vanliner Ins. Co., 744 N.E.2d 154, 157-158 (Ohio 2001) (holding materials are not
worthy of protection); see also Garg v. State Auto. Mut. Ins. Co., 800 N.E.2d 757, 762
(Ohio Ct. App. 2001). In discovery disputes related to such claims, “[t]he critical issue is
As previously noted, Fifth Third has not filed a separate bad faith claim in this case, and of course, the
instant discovery is not being sought by the insured against the insurer, but instead by the insurer against
whether the documents ‘may cast light’ on whether the insurer acted in bad faith.”
William Powell Co., Doc. 119 at 36 (additional citations omitted). The Boone exception
– akin to a “rule of necessity” exception in Ohio - has been applied post-Jackson.
(holding that exception continues was not abrogated by §2317.02(A)(2)).
As the plaintiff in Case No. 1:14-cv-869, Fifth Third has the burden to prove the
essential elements of its claim, including Ross’s fraudulent conduct, the causal link
between Ross’s conduct and Fifth Third’s claimed loss, and that it “first discovered” the
covered loss within the relevant period. Considering the critical issues at stake, the
express language of the discovery condition and defined Discovery Agents, it would be
contrary to the interests of justice to permit Fifth Third to assert privilege as broadly as it
seeks to do here.
C.f., FDIC V. Fidelity and Deposit Co. of Maryland, 2013 WL
2421770 (S.D. Ind. June 3, 2013) (finding waiver where bank had placed attorney’s
knowledge “at issue” rendering attempt to withhold all communications in time leading
up to discover of loss to be improper), modified in part at 2013 WL 5938149 (S.D. Ind.
Nov. 6, 2013).
Fifth Third cannot simultaneously rely on privileged information to prove its
claims, while brandishing the “shield” of privilege to prevent the Underwriters from
obtaining the same information. See Squire, Sanders & Dempsey, L.L.P. v. Givaudon
Flowers Corp., 127 Ohio St. 3d at 171 (recognizing “that the attorney-client privilege
cannot at once be used as a shield and a sword.”).
By way of example, the
Underwriters persuasively points to Fifth Third’s redaction of five of six pages of a
memo from Susan Clayton, an employee in the Bank Protection division of Fifth Third’s
Office of Risk Management, to Marc Brandt, an attorney in the Office of General
Counsel, dated 12/22/2010 but memorializing a conference call held on March 30, 2010
“to discuss InsCap Management, LLC, its commercial lending relationship and
allegations made against Fifth Third employee, Matt Ross.” (Doc. 116, Exh. P). Both
Clayton and Brandt worked in offices defined as “Discovery Agents,” and other
Discovery Agents attended the same meeting. Despite redacting as “privileged” most of
the memo, Fifth Third has cited a principal’s participation in the same March 30, 2010
call in responses to interrogatories seeking the factual basis for its claims. (Doc. 116,
Exh. Q, responses 2 & 9).
Fifth Third argues strenuously that “[r]elevance alone is insufficient to overcome
privilege.” (Doc. 132 at 2). That is undoubtedly a correct statement of law, but it does
not begin to describe the critical nature of information relating to Fifth Third’s date of
discovery of its loss, or the lack of any alternative source of that information to the
Underwriters. Because information vital to the core issues of this case remains within
the exclusive control and knowledge of Fifth Third, the requested documents simply are
outside the scope of, and are excepted from, any privilege.
Fifth Third appears to agree – at least in some small respect – that it must
provide the Underwriters with some of its investigatory materials. It maintains, however,
that it has provided everything necessary relevant to the inquiry of “what did Fifth Third
know and when did they know it” by providing the Underwriters with all of the underlying
facts related to its discovery of its loss. In that respect, the parties’ dispute arises from
differing interpretations of the discovery condition.
Fifth Third maintains that the express language is restricted to the Discovery
Agents’ knowledge of wholly objective “facts.”
Thus, Fifth Third argues that the
Discovery Agents (including but not limited to in-house counsel) may hold fast to their
“mental impressions” under their asserted attorney-client privilege.
By contrast, the
Underwriters assert that the discovery condition requires analysis of both the objective
facts and the subjective knowledge possessed by the Discovery Agents, meaning that
“mental impressions” and similar information that otherwise might be protected by
privilege falls outside the scope of any privilege for purposes of this lawsuit.
Preliminary review of the bond language is necessary to resolve this dispute. In
undertaking that review, the undersigned is guided by the principles set forth by the
Sixth Circuit in Construction Contractors Employer Group, LLC v. Federal Insurance
Company, 829 F.3d 449, 453 (6th Cir. 2016).
Ohio state law dictates that interpretations of insurance contracts are
questions of law for a court to answer. Costanzo v. Nationwide Mut. Ins.,
161 Ohio App.3d 759, 832 N.E.2d 71, 77 (2005). Ohio courts “examine the
insurance contract as a whole and presume that the intent of the parties is
reflected in the language used in the policy.” Westfield Ins. v. Galatis, 100
Ohio St.3d 216, 797 N.E.2d 1256, 1261 (2003). The scope of insurance
coverage is determined by construing the contract “in conformity with the
intention of the parties as gathered from the ordinary and commonly
understood meaning of the language employed.” Allstate Ins. v. Eyster,
189 Ohio App.3d 640, 939 N.E.2d 1274, 1280 (2010) (quoting King v.
Nationwide Ins., 35 Ohio St.3d 208, 519 N.E.2d 1380, 1383 (1988)). When
reviewing provisions regarding coverage exclusions, Ohio presumes that
anything not clearly excluded from the policy is covered. Home Indem. Co.
of N.Y. v. Vill. of Plymouth, 146 Ohio St. 96, 64 N.E.2d 248, 250 (1945).
Therefore, “if a policy does not plainly exclude a claim from coverage, then
an insured may infer that the claim will be covered.” Andersen v. Highland
House Co., 93 Ohio St.3d 547, 757 N.E.2d 329, 332 (2001).
The first clause of the discovery condition defines a key date in terms of when
Discovery Agents became aware of “facts which a reasonable person would expect to
result in a loss of a type covered by this bond.” In general, cases reviewing similar
provisions have held that “[m]ere suspicion of loss is not sufficient to demonstrate that
an insured discovered the loss.” Construction Contractors Employer Group, LLC v.
Federal Insurance Co., 829 F.3d at 454 (citing FDIC v. Aetna Cas. & Sur. Co., 903 F.2d
1073, 1079 (6th Cir. 1990)). Instead, the “reasonable person” standard anticipates that
the date of discovery occurs when “the insured discovers facts showing that dishonest
acts occurred and appreciates the significance of those facts.” FDIC v. Aetna & Sur.
Co., 903 F.2d at 1079 (internal citations omitted, emphasis added). The emphasis on
“appreciate[ing] the significance” of facts strongly suggests that the standard embodies
some degree of subjective analysis, including (according to the Underwriters) the legal
analysis and mental impressions of a “reasonable person” who may be an attorney.
See, e.g. Construction Contractors Employer Group, LLC, 829 F.3d at 453-54 (citing
Resolution Trust Corp. v. Fidelity & Deposit Co., 205 F.3d 615, 631 (3rd Cir. 2000) for
principle that trier of fact may analyze “the full range of information the insured
knew…based on all the circumstances”).
In addition to concluding that the first clause contains a subjective component,
the undersigned finds that the discovery condition as a whole clearly entitles the
Underwriters to much of the discovery they seek. In part, that is because the second
clause defines the critical date in terms of when Discovery Agents became “aware
of…an actual or potential claim in which it is alleged that the Assured is liable to a third
party.” Read as commonly understood and in the context of the totality of the fidelity
bond, this language pins the date of discovery to when any Discovery Agent
subjectively believed that an “actual or potential claim” under the bond had arisen. For
Discovery Agents who are not attorneys, their “awareness” of any “actual or potential
claim” against Fifth Third would include becoming “aware of” a claim from Fifth Third’s
counsel. In other words, unlike most cases, the bond’s terms require, or make
necessary to Fifth Third’s cause of action (as well as the Underwriter’s affirmative
defenses), the mental impressions of the Discovery Agents, which necessarily excludes
from protection the type of information that might otherwise fall within the asserted
Fifth Third argues valiantly for a different interpretation of the clause that
pinpoints discovery as when a Discovery Agent becomes aware of “an actual or
potential claim in which it is alleged that the Assured is liable to a third party.” By
zeroing in on the word “alleged,” Fifth Third advocates for an objective interpretation, in
which subjective beliefs or conclusions are irrelevant, so long as the Discovery Agents
were not aware of any actual third party “allegations” of a claim. In this fashion, Fifth
Third would limit the scope of discovery to when its Discovery Agents became aware of
either objective “facts” or third party “allegations” about a claim. (Doc. 132 at 6). In Fifth
Third’s view, any legal conclusions or mental impressions of its Discovery Agents are
irrelevant. Thus, it would not matter if Fifth Third’s counsel subjectively believed that
Fifth Third could be liable to a third party based on Ross’s misconduct, so long as a
hypothetical “reasonable person” would not have drawn that conclusion, and so long as
no formal “allegations” had been made regarding a covered loss.
In the context of this discovery dispute, the undersigned finds Fifth Third’s
interpretation to be overly strained and unduly limited in a manner not supported by the
language of the contract as a whole.
Fifth Third protests that this Court should not accept the Underwriters’
interpretation, because if fidelity bonds were so construed, “the cases would be legion
to support their contention that the attorney-client privilege is waived in every single
For example, the Underwriters point to a document from Fifth Third’s outside counsel, Michael Gill, to
enumerated Discovery Agents dated May 13, 2010, referring to information that on May 11, 2010,
“Columbus Nova’s lawyers suggested that not only do they intend to defend the claim on the guarantees
based on valuation fraud, but that they are exploring the possibility of bringing a separate claim against
Fifth Third, among others, for damages Columbus Nova has sustained.” (See Doc. 127 at Exh. U). The
last page of the document - which appears to discuss Matt Ross and Columbia Nova’s potential claims –
is largely redacted.
case where an insured seeks coverage under a fidelity bond.”
(Doc. 132 at 7).
However, the lack of case law on this precise issue signifies little.
Fidelity bonds are
negotiated with language specific to each contract. The cases cited by Fifth Third
contain variations in language, such as not including the “Office of General Counsel” in
the defined Discovery Agents, and/or including only the “reasonable person” standard
tied to “facts” without the addition of alternative “potential claim” language.
Additionally, one of the seminal cases upon which Fifth Third relies to support its
contention that the language is restricted to the Discovery Agents’ knowledge of
objective “facts” supports the Underwriters’ interpretation. Fifth Third cites Resolution
Trust Corp. v. Fidelity and Deposit Co. of Maryland, 205 F.3d 615, for the proposition
that an attorney’s testimony was limited to facts “detail[ing] the various pieces of
information [insured’s] legal department discovered during the bond period.” (Doc. 132
at 8). But the Third Circuit explicitly held that the “reasonable person” standard at issue
in that case was “comprised of a subjective and objective component.” Resolution
Trust, 205 F.3d at 630. Moreover, the summary of the attorney’s testimony in the case
makes clear that counsel’s testimony was not limited to “facts,” but instead detailed her
mental impressions, and subjective beliefs and conclusions about those facts, including
her analysis of the bank’s exposure. See generally id., at 627-630.
Thus, what the Discovery Agents knew about the loss for which Fifth Third seeks
recovery under the fidelity bonds, prior to the expiration of the coverage period, includes
both their subjective opinions and objective facts, even if their subjective understanding
was informed by information that in another context, could fall within a privilege. At the
same time, any similar information first discovered about Ross at a later time, after the
end of the bond period, is not relevant to the issue of whether Fifth Third “first
discovered” Ross’s misconduct during or prior to the inception of the bond period.
Accord Fidelity Nat’l Financial, Inc. v. Nat’l Fire Ins. Co., 2014 WL 4909103 at *22 (S.D.
Ca. Sept. 30, 2014) (noting that later acquired knowledge is not relevant to discovery
D. The Cooperation Clause
As additional support for compelling the information it seeks, the Underwriters
rely upon the bonds’ cooperation clause, in which Fifth Third agreed to turn over “all
pertinent records” relevant to the knowledge of its defined discovery agents. Section
7(d) of the Primary Policy provides: “Upon the Underwriter’s request and at reasonable
times and places designated by the Underwriter the Insured shall…(2) produce for the
Underwriter’s examination all pertinent records; and (3) cooperate with the Underwriter
in all matters pertaining to the loss.” Under this clause, the Underwriters assert that all
documents that bear on the issue of Fifth Third’s “discovery” of Ross’s alleged
misconduct and/or discovery of InsCap’s liability claim are required to be produced.
Accord Sharp, 364 Ill. App. 3d at 72.
Fifth Third objects to reliance on the cooperation clause, arguing that such
consideration may be consistent with Waste Management, but runs afoul of Ohio’s more
guarded view toward expanding exception or waiver to the time-honored privilege.
Although Ohio tends to read cooperation clauses more narrowly, the fidelity bond
contracts also must be read as a whole. Therefore, the cooperation clause must be
read in light of the “discovery” condition that requires Fifth Third to affirmatively prove
that its Discovery Agents – including but not limited to attorneys in the Office of General
Counsel - “first discovered” the insured loss at a time that would fall within the coverage
period. To the extent that the undersigned concludes that Ohio would take a practical
“rule of necessity” approach to Fifth Third’s broad assertion of privilege, the cooperation
clause at issue provides modest additional support for the exception determined to
apply to the facts of this case. Fifth Third alone is in possession of key information
critical to resolution of core issues, and must share its evidence on the issue of the date
of discovery with its insurer.
E. The Bank Examination Privilege and SARs Information
The Underwriters also seek documents that Fifth Third has declined to disclose
under a “bank examination privilege,” including documents concerning Fifth Third’s
internal investigation into the allegedly fraudulent conduct, and internal documents
concerning Fifth Third’s deliberations related to its reports to regulators about Ross’s
The bank examination privilege belongs to the Federal Reserve.
See In re
Bankers Trust Co., 61 F.3d 465, 472 (6th Cir. 1995). Regulations require any party
seeking information protected by the privilege to “file a written request with the General
Counsel of the Board….” 12 C.F.R. § 261.22(b)(1).
Fifth Third urges this Court to deny Underwriters’ motion in part because they
have not stated that they have exhausted their administrative remedies through such a
request, though the Underwriters counter that it is Fifth Third that should make the
request. Additionally, and in the alternative, Fifth Third argues that even if Underwriters
had exhausted its administrative remedies, courts balance the competing interests of
the parties when considering whether to compel evidence subject to the bank
examination privilege, including the relevance of the evidence, the availability of other
evidence, the seriousness of the litigation and issues involved, the role of the
government in the litigation, and the possibility of future timidity by government
employees who will be forced to recognize that their secrets are violable. In re Bankers
Trust Co., 61 F.3d at 471-472. Both parties agree that the bank privilege is not absolute
but instead is a qualified privilege.
Fifth Third argues that none of the documents withheld under the “bank
examination privilege” pertain to any actual or alleged misconduct by Ross, implying without admitting that regulatory documents pertaining to Ross may have been withheld
under a different privilege (the “SARs privilege”) discussed below. Thus, Fifth Third
contends that the Underwriters are not able to make the type of strong showing or
relevance required to overcome the bank examination privilege Fifth Third retains for
communications with its regulators. In addition, the Bank asserts that any relevant
information contained in documents withheld under the bank examination privilege has
been produced through other documents.
The Underwriters argue that “scores of documents” have been withheld under
the “bank examination privilege” even though they do not appear to be communications
to or from any bank regulator. (Doc. 127 at 20). However, the Underwriters also state
they are not seeking documents that are plausibly subject to the bank examination
privilege, but instead, are focusing their efforts on documents showing Fifth Third’s
“internal deliberations about, and awareness of, Ross’s conduct,” (Doc. 127 at 20),
which Fifth Third indicates have not been withheld on grounds of bank examination
Unfortunately, neither party has provided sufficient information to this Court, or it appears - to each other - regarding the precise documents that the Underwriters seek.
Therefore, the Court invites the Underwriters to more clearly identify to Fifth Third each
and every one of the “scores” of documents as to which it seeks disclosure.
shall then respond or alternatively, provide further information (particularly if the
document is not to or from a bank regulator) as to why the privilege holds.
The undersigned agrees that the most relevant information is that pertaining to
However, the Underwriters are not entitled to any information relating to
Suspicious Activity Reports (“SARs”) that Fifth Third may have filed concerning Ross,
because Fifth Third is prohibited from disclosing that type of information under the
Annuzio-Wylie Anti-Money Laundering Act (the “Act”). Under the Act and corresponding
regulations, banks “are prohibited from disclosing either that [a] SAR has been filed or
the information contained therein.” Lee v. Bankers Trust Co., 166 F.3d 540, 544 (2nd
There is no exception for disclosure of an SAR “in the context of discovery in a
civil lawsuit.” Cotton v. PrivateBank & Trust Co., 235 F. Supp.2d 809, 814 (N.D. Ill
2002). Therefore, it is proper for Fifth Third to continue to decline to disclose whether or
not it ever prepared or filed an SAR relating to any issue in this lawsuit. At the same
time, however, Fifth Third may not refuse to disclose any documentation relating to
Ross, merely because it may overlap information used in furtherance of an SAR. In
Cotton and other cases, courts have held that the absolute privilege “applies only to the
SARs themselves and the information contained therein, but not to their supporting
documentation.” Gregory v. Bank One, Indiana, N.A., 200 F. Supp.2d 1000, 1002 (S.D.
Ind. 2002); see also Well v. Long Island Sav. Bank, 195 F. Supp.2d 383, 389 (E.D. N.Y.
2001). Therefore, while Fifth Third may legitimately object to production of any SARs or
information that was prepared solely under the Act, it cannot withhold “all of its internal
deliberations about Ross’s alleged misconduct” - if independently created as part of
Bank’s investigation - merely by asserting that it duplicates factual information that may
have been used in an SAR. See generally Bank of China v. St. Paul Mercury Insur. Co.,
2004 WL 2624673 (S.D.N.Y. 2004).
Citing Gregory, 200 F. Supp.2d at 1003, the Underwriters contend that Fifth Third
should be forced to forfeit its bond claims if the claims are predicated on privileged SAR
information. The Underwriters’ argument goes too far. There is no indication that Fifth
Third’s claims rest on an SAR that Fifth Third has justifiably refused to provide.
F. Prior Disclosures and Common Interest
The Underwriters also argue that Fifth Third has waived any privilege claims as
to communications “on the same subject matter” in light of prior selective disclosures
made by Fifth Third in response to other requests.
The Underwriters point to Fifth
Third’s limited disclosures of documents relating to internal decision-making about the
Ultra loan program, and its pre-bond and post-bond investigations of Ross, suggesting
that such disclosures create a broad waiver for nearly all documents the Underwriters
now seek pertaining to the same subjects. (Doc. 116 at 27).
The undersigned rejects the Underwriters’ argument that Fifth Third has
completely waived all privileges through its limited disclosures to date.
maintains that it has disclosed only factual information. (See Doc. 121 at 10-12). Fifth
Third’s assertion is borne out in part by the current dispute, as well as the related
dispute concerning the scope of the recent 502(d) Stipulated Order. The Underwriters’
argument that Fifth Third has essentially waived any privilege for virtually all documents
that form the subject matter of the pending motions is overbroad and unconvincing.
Likewise, the undersigned rejects the Underwriters’ argument that Fifth Third’s
prior position that it shared a “common interest” with RLI in the Illinois case should be
used to enforce a broad waiver of any privilege here. To defend against an argument
that Fifth Third had waived any privilege by providing documents to its insurer, Fifth
Third argued there that “RLI’s fidelity insurance policies obligate Fifth Third to cooperate
with RLI and to provide RLI with all requested information and documents.” (Doc 127 at
15, citing Exhibit V). Fifth Third specifically claimed that it had a “common interest” with
its insurers concerning the basis for its claim, in part based upon the “express
cooperation clauses” in RLI’s bonds that required Fifth Third to “cooperate…in all
matters pertaining to the loss.” Id.
Although the undersigned determined above that
the cooperation clause lends modest additional support to the exception to privilege
found in this case, the undersigned is less persuaded by the Underwriters’ attempt to
use Fifth Third’s defensive argument in state court offensively in this Court as some
type of waiver.
This Court will not hold Fifth Third to the same position given the
differing postures of the parties in the underlying Illinois case as well as the nuanced
differences in the approaches taken by the Illinois and Ohio courts.
G. The Relationship of Work Product to This Litigation
One of the categories of documents that the Underwriters seek to compel relates
to Fifth Third’s assertion of work product for materials created as long ago as 2007,
given that Fifth Third did not even begin litigation against InsCap until June 2010. The
Underwriters concede that they do not seek communications after the initiation of this
lawsuit in November 2014, 16 but they appear to seek most other materials claimed as
The Court will deny the Underwriters’ request for documents as to which work
product has been asserted “created long before litigation between InsCap and Fifth
The Underwriters’ definition of “work product” is too narrow, insofar as the Underwriters tie the privilege
to the date this litigation was filed. Fifth Third may claim a legitimate work product privilege for materials
prepared “in anticipation of litigation” for some reasonable period of time prior to date that this federal
litigation was filed.
Third.” (Doc. 116 at 21). Fifth Third explains it has asserted “work product” for 2007 and
2008 records that were created in anticipation of litigation with unrelated borrowers.
Federal law governs the work product doctrine. See In re Prof'ls Direct Ins.
Co., 578 F.3d 432, 438 (6th Cir.2009). Sixth Circuit case law supports the view that the
privilege shields all “work product” produced in anticipation of any litigation, including
litigation that is wholly unrelated to this action or the prior InsCap litigation. See U.S. v
Leggett & Platt, 542 F.2d 655, 660 (6th Cir. 1975); see also generally, F.T.C. v. Grolier
Inc., 462 U.S. 19, 25 (1983) (noting that the literal language of Rule 26 protects
materials prepared for any litigation or trial as long as they were prepared by or for a
party to the subsequent litigation.”).
Fifth Third argues that the 2010 documents that it withheld relate to Fifth Third’s
potential claims against Concord and the LIPF II facility, as opposed to Concord’s
claims against Fifth Third. It states that a single 2009 document was withheld on the
basis of attorney-client privilege, with “work product” inadvertently included as a
secondary basis for withholding.
The work product privilege is a qualified one that will give way if the requesting
party has a substantial need for the materials and an inability to obtain the information
by other means. See generally In re Pergo Co., 128 F.3d 430, 437 (6th Cir. 1997).
However, the undersigned will not compel the referenced 2007-2010 work product,
because the doctrine is not restricted to work product prepared in anticipation of this
federal litigation, and because the Underwriters have not made a strong showing of
relevance or substantial need.
H. Alleged Deficiencies of Fifth Third’s Privilege Log
1. Unlogged Documents
The Underwriters ask this Court to compel Fifth Third to disclose more than
5,000 documents that the Underwriters claim that Fifth Third has withheld from
production, or produced only redacted copies, but has not properly included on its
communications with outside counsel or its investigator, James Rechel, prior to
commencement of this lawsuit.
In response, Fifth Third argues that the burden of showing what is missing from
the log should be on the Underwriters. I agree. The Underwriters assert that it made an
attempt to identify specific documents after it filed its motion to compel, on April 14,
2017, when it sent to Fifth Third two Excel spreadsheets listing a total of 6,357
documents that the Underwriters believe were not properly logged.
Underwriters concede that one of the two spreadsheets (referring to 165 pages) could
not be read. In its reply memorandum, Fifth Third explains that it was not provided
sufficient opportunity to review the second spreadsheet, which initially also appeared to
be unreadable but in fact contained 6,192 numbers identifying specifically disputed
The Underwriters’ efforts concerning the alleged inadequacies of Fifth Third’s
privilege log reflect less than a good faith effort to resolve the dispute to date. Fifth
Third maintains that many of the documents on the spreadsheet that it was able to
review actually were logged, produced or not redacted for privilege. 17 For example,
Fifth Third states that of the documents that it has been able to examine, 259 of the first
In a related discovery conference held on Monday, April 24, RLI submitted a copy of a privilege log that
was not helpful to the Court, insofar as it failed to accurately represent the more limited list of redacted
documents referenced in Fifth Third’s current privilege log. At this point, the Court will assume that RLI’s
use of an outdated exhibit was not intentionally misleading, but cautions counsel that any similar future
errors are likely to draw stronger criticism.
286 documents identified on the readable spreadsheet were in fact listed on Fifth
Third’s revised privilege log provided in January 2017. (Doc. 132 at 11, n.13).
The Court will require the Underwriters to identify more specifically in what way
each of the 6,357 documents were improperly logged. The Underwriters should identify
each document that they believe to have been excluded from Fifth Third’s most recent
log, or alternatively, what deficiency the Underwriters believe exists as to each
document for which additional production is sought.
At the same time, Fifth Third’s
alleged redactions “for non-responsive content” as to which there is no claim of privilege
are not proper and should immediately be produced. (See Doc. 132 at n. 13); see
generally Pavillion Bank v. OneBeacon American Ins. Co., 2013 WL 12126258 at *3
(N.D. Tx Nov. 13, 2013) (collecting cases).
2. Incomplete Descriptions
The Underwriters also argues that the privilege log is incomplete to demonstrate
privilege as to various documents that lack a sufficiently specific description of their
subject matter, or are to or from “unidentified” persons. However, Fifth Third notes that
several examples identified by the Underwriters do in fact contain descriptors identifying
the author as counsel, or refer to documents that have been subsequently produced.
This Court declines to grant the Underwriters’ motion to compel large categories
of documents on the basis of a general complaint that the descriptors provided on Fifth
Third’s log are insufficiently specific. As with the claim that Fifth Third has failed to
adequately log 6,357 documents, the Underwriters must provide a list to Fifth Third of
logged documents that the Underwriters believe contain insufficiently specific
descriptions of the basis for the asserted privilege. If additional discussion between
counsel concerning specifically identified documents does not yield further information,
the Court will consider an additional telephonic conference to painstakingly go through
each challenged document, after the Underwriters identify to this Court (and Fifth Third
confirms it will not provide further information) the precise alleged deficiency.
determining the specificity required, the undersigned directs both parties to the analysis
set forth in William Powell Co., supra.
Fifth Third’s Motion for a Protective Order
The Underwriters plan to depose three attorneys who previously worked in Fifth
Third’s Office of General Counsel, and who investigated Matt Ross and handled
Concord’s claims relating to the LIPF II Program. Paul Reynolds and James Hubbard
also were Executive Officers of Fifth Third. Both Executive Officers and the Office of
General Counsel are identified Discovery Agents. Fifth Third concedes that all three
attorneys played “various roles in the investigation of Ross’s misconduct and litigation
that was eventually brought by Concord against Fifth Third in connection with the LIPF II
Program.” (Doc. 122 at 2). However, while Fifth Third concedes that the attorneys may
be deposed to discover the “facts they knew about Ross’s dishonesty and when they
knew them,” (Doc. 121 at 20), Fifth Third maintains that the lawyers’ “mental
impressions, legal strategy, and legal advice” remain subject to attorney client privilege
and the work product doctrine. For the same reasons that the documentary evidence
relating to this subject matter is directly at issue and an exception from attorney-client
privilege, so too is the testimony of these three attorney-witnesses excepted from
privilege, consistent with the remainder of this opinion.
In addition, the undersigned concludes that although R.C. §2317.02.(A)(1) limits
testimony about “communications” with a client (other Fifth Third employees), it would
not limit questions concerning the three attorneys’ own subjective mental impressions
and evaluations of whether a covered “claim or potential claim” against Fifth Third
existed, or when they became aware of facts that would have led a reasonable person
to conclude that Fifth Third had experienced a covered loss under the bonds.
Last but not least, the Ohio privilege statute provides a potentially relevant
exception that may permit even otherwise privileged testimony. Namely, “if the client
voluntarily testifies…the attorney may be compelled to testify on the same subject.”
Fifth Third bears the burden of proof that its claim is not excluded under the discovery
condition through the objective or subjective knowledge of its Discovery Agents. Thus,
the Court can assume that Fifth Third already has provided testimony (and/or soon will,
in the context of its Rule 30(b)(6) deposition and this Order) about when its Discovery
Agents became aware of the claim, so as to trigger coverage under the bonds. To that
extent, the Ohio statute expressly permits counsel (who also are Discovery Agents) to
be compelled to give testimony.
Conclusion and Order
For the reasons explained above, Fifth Third should re-examine the documents it
has withheld in light of the determination that much of the withheld discovery is
excepted from any privilege under Ohio law and the facts of this case. However, the
undersigned declines to compel the wholesale production of the many broad categories
identified by the Underwriters.
Many of the categories are over-inclusive. For example, the Underwriters seek
“any” documents sent to or from Ross, and “all” documents sent to/from all Discovery
Agents, but that would likely include some documents unrelated to any claim or defense
in this litigation. Some of the categories would encompass materials as to which Fifth
Third maintains an absolute privilege (re SARs) and the Underwriters have not
demonstrated with sufficient specificity its need for any particular documents subject to
the bank examination privilege. The undersigned also declines to compel at this time
documents withheld as work product created prior to any litigation between InsCap and
Fifth Third; or the production of documents that the Underwriters believe were
improperly logged, and/or for which the Underwriters seek additional information to
verify the existence of privilege.
For the reasons stated, IT IS ORDERED THAT:
1. Underwriters’ motion to compel production of documents improperly withheld
or redacted (Doc. 116) is GRANTED in part consistent with this Memorandum
Opinion and Order;
2. Fifth Third’s motion for a protective order (Doc. 122) is DENIED.
s/ Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge
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