Lillieroos v. Starr Indemnity & Liability Company

Filing 211

ORDER Denying re 134 MOTION to Compel Production or for In Camera Inspection of Documents with Opening Brief filed by Co-Ordinated Benefit Plans Inc. Signed by Honorable Timothy D. DeGiusti on 2/8/2016. (mb)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
RONG L. LILLIEROOS,
Plaintiff,
-vsSTARR INDEMNITY &
LIABILITY COMPANY, a
foreign insurance company,
Defendant,
-andSTARR INDEMNITY &
LIABILITY COMPANY, a
foreign insurance company,
Defendant/Third-Party Plaintiff,
-vsCO-ORDINATED BENEFIT
PLANS, INC.,
Third-Party Defendant.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Case No. CIV-12-1359-D

ORDER
The facts surrounding the present dispute have been set forth in the Court’s
Order of August 26, 2015 (“Order”) [Doc. No. 179] and do not need to be restated
here. In that Order, the Court directed Third-Party Plaintiff Starr Indemnity &
Liability Company (“Starr”) to produce, for in camera review, documents its

representative reviewed and relied upon in reaching an earlier settlement with
Plaintiff, Rong Lillieroos. The Court found production was necessary to assist the
Court in determining whether Starr had waived the attorney-client privilege by
placing the advice of its counsel at issue. See Order at 5. In response, Starr produced
four documents: (1) a memorandum from Starr counsel Doug Crosno, dated June 19,
2013, (2) another memorandum from Mr. Crosno dated December 19, 2013, (3)
Plaintiff’s demand letter, and (4) Starr’s Mediation Statement.1 The Court has now
completed its in camera review of the documents and makes the following findings.
As previously noted, the doctrine of “at issue” waiver recognizes that attorneyclient communications cannot be used as both a sword and shield. Seneca Ins. Co.,
Inc. v. Western Claims, Inc., 774 F.3d 1272, 1278 (10th Cir. 2014); Lindley v. Life
Investors Ins. Co. of Am., 267 F.R.D. 382, 392-93 (N.D. Okla. 2010). The three
factors applied to determine whether Starr has placed certain privileged documents
“at issue,” and thereby waived the privilege, are: (1) whether the assertion of the
privilege is the result of some affirmative act, such as filing suit or asserting an
affirmative defense, (2) whether the asserting party, through the affirmative act, put
the protected information at issue by making it relevant to the case, and (3) whether
1

John Cabrita, Starr’s Associate Vice President of Business Claims, testified
he reviewed these documents in connection with his evaluation of the case. Order at
9, n. 4.
2

applying the attorney-client privilege would deny the opposing party access to
information that was vital to the opposing party’s defense. Seneca, 774 F.3d at 1276.
Upon review of the parties’ submissions, including the documents for which
the attorney-client privilege is invoked, the Court finds that all of the so-called Hearn
factors2 militate against waiver, and that CBP’s motion should be denied. As
previously noted by the Court, the first two factors, assertion of the privilege as the
result of an affirmative act, which renders the protected information at issue, are
crucial requirements. Seneca, 774 F.3d at 1277. Simply bringing a claim for
indemnification, and mere relevance of the protected information, are not enough. Id.
at 1277-78. Here, in seeking indemnification Starr did not inject advice of its counsel
into the case, nor did it rely on advice of counsel to supply an element of its
indemnification claim. Starr has affirmatively asserted that it will not rely on the
advice of counsel in attempting to meet its burden at trial to establish the
reasonableness of the settlement.
In addition, as evidenced by the documents reviewed by Cabrita, the factual
basis underlying Starr’s decision to settle and seek indemnity from CBP is supported
by sources beyond the communications at issue. Although Cabrita did consider
counsel’s advice in making the decision to settle, there is no evidence such advice
2

Hearn v. Rhay, 68 F.R.D. 574 (E.D. Wash. 1975).
3

controlled or otherwise substantially directed his decision. Reliance on an attorney’s
advice is commonplace in such matters, and the Court concludes Starr did not place
such information “at issue” under the facts presented. In the Court’s view, a contrary
finding under the circumstances here would subject any such advice susceptible to
discovery, a blanket result that neither Seneca nor its predecessor, Hearn, could have
possibly intended. Moreover, counsel for CBP already has one of the documents
reviewed by Cabrita and produced for in camera inspection: the March 11, 2014
demand letter from Plaintiff’s counsel which details the “RBRVS System” allegations
which were discussed during the mediation resulting in the settlement between Starr
and Plaintiff. Thus, in addition to the testimony of Cabrita, other sources exist
regarding the nature of the RBRVS allegations and their relative importance in the
settlement context. The requirement that the information sought be “vital” to the
defense (the third Hearn factor), “necessarily implies” that the information “is
available from no other source.” Frontier Refining, Inc. v. Gorman-Rupp Co., Inc.,
136 F.3d 695, 701 (10th Cir. 1998) (citations omitted).
Starr is not here using the asserted privilege as a sword and a shield, and thus
it has not waived the attorney-client privilege with regard to the confidential
communications arising out of the underlying settlement and present action.
Accordingly, CBP’s Motion to Compel [Doc. No. 134] is DENIED. If, however,
4

Starr should change its position in this litigation and affirmatively rely on advice of
counsel in establishing the elements of its cause of action, CBP may reassert its
request for the information in question.
IT IS SO ORDERED this 8th day of February, 2016.

5