Century Indemnity Company v. The Marine Group, LLC et al
Filing
950
OPINION and ORDER - Third-Party Plaintiffs' Motion 921 for Reconsideration of Discovery Ruling is DENIED and the prior Opinion and Order is affirmed as clarified in this Opinion and Order. The court also orders Third-Party Plaintiffs to prepare an order agreeable to all parties limiting production of requested documents to attorneys and experts only. DATED this 10th day of May, 2016, by United States Magistrate Judge John V. Acosta. (peg)
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
CENTURY INDEMNITY COMPANY,
a Pennsylvania Corporation,
Plaintiff,
Case No.: 3:08-CV-1375-AC
OPINION AND
ORDER
v.
THE MARINE GROUP, LLC, a California
limited liability company, as affiliated with
Northwest Marine, Inc.; NORTHWEST
MARINE, INC., an inactive Oregon
corporation, as affiliated with Northwest
Marine Iron Works; NORTHWEST
MARINE IRON WORKS, an inactive
Oregon corporation,
Defendants.
THE MARINE GROUP, LLC, a California
limited liability company, as affiliated with
Northwest Marine, Inc.; NORTHWEST
MARINE, INC., an inactive Oregon
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corporation, as affiliated with Northwest
Marine Iron Works; NORTHWEST
MARINE IRON WORKS, an inactive
Oregon corporation; and BAE SAN DIEGO
SHIP REPAIR, INC., a California
corporation,
Third-Party Plaintiffs,
v
AGRICULTURAL INSURANCE
COMPANY and AGRICULTURAL
EXCESS AND SURPLUS INSURANCE
COMPANY, each an Ohio corporation;
AMERICAN CENTENNIAL INSURANCE
COMPANY, a Delaware corporation;
CHICAGO INSURANCE COMPANY, an
Illinois corporation; CONTINENTAL
INSURANCE COMPANY, a Pennsylvania
corporation; EMPLOYERS MUTUAL
CASUALTY COMPANY, an Iowa
corporation; FEDERAL INSURANCE
COMPANY, an Indiana corporation;
GRANITE STATE INSURANCE
COMPANY, a Pennsylvania corporation;
HARTFORD INSURANCE COMPANY, a
Connecticut corporation; INSURANCE
COMPANY OF THE STATE OF
PENNSYLVANIA, a New Jersey
corporation; INSURANCE COMPANY OF
NORTH AMERICA, a Pennsylvania
corporation; CERTAIN UNDERWRITERS
AT LLOYD’S, LONDON and CERTAIN
LONDON MARKET INSURANCE
COMPANIES, each a foreign corporation;
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA, a
Pennsylvania corporation; NEW
ENGLAND REINSURANCE COMPANY,
a Connecticut corporation; OLD REPUBLIC
INSURANCE COMPANY, an Illinois
corporation; PACIFIC MUTUAL MARINE
OFFICE INC., a New York corporation;
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RELIANCE INSURANCE COMPANY, a
Pennsylvania corporation; ROYAL
INDEMNITY COMPANY, a Delaware
corporation; ST. PAUL FIRE & MARINE
INSURANCE COMPANY, individually
and as successor to ST. PAUL MERCURY
INDEMNITY COMPANY, a Minnesota
corporation; TWIN CITY FIRE
INSURANCE COMPANY, an Indiana
corporation; WATER QUALITY
INSURANCE SYNDICATE, a syndicate
of foreign corporations; WEST COAST
MARINE MANAGERS, INC., a New York
corporation; AMERICAN MANUFACTURER’S
MUTUAL INSURANCE COMPANY, an
Illinois corporation; DANIELSON
NATIONAL INSURANCE COMPANY,
successor to MISSION NATIONAL
INSURANCE COMPANY, a California
corporation; FM GLOBAL INSURANCE
AGENCY, successor to ARKWRIGHT
BOSTON MANUFACTURER’S MUTUAL
INSURANCE COMPANY, a Delaware
corporation; STERLING CASUALTY
INSURANCE COMPANY, successor to
NATIONAL AUTOMOBILE AND
CASUALTY COMPANY, a California
corporation; and JOHN DOE INSURANCE
COMPANIES,
Third-Party Defendants.
________________________________________
ACOSTA, Magistrate Judge:
Introduction
Third-Party Plaintiffs the Marine Group, LLC; Northwest Marine, Inc.; Northwest Marine
Iron Works; and BAE Systems San Diego Ship Repair, Inc., (collectively referred to as “Third-Party
Plaintiffs”) seek reconsideration and clarification of the court’s Opinion and Order (ECF No. 899)
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on St. Paul Fire and Marine Insurance Company’s (“St. Paul”) motion to compel. The court’s ruling
ordered Third-Party Plaintiffs to produce documents requested by St. Paul relating to costs incurred
in the defense of Third-Party Plaintiffs with respect to the assessment, removal, and remediation of
hazardous materials released at the Portland Harbor Superfund Site (the “Environmental Claims”).
St. Paul specifically sought: “(1) communications between or among TPPs,1 the Portland Harbor
Superfund Site Participation and Common Interest Group (“PCIG”), participants in the PCIG or any
other cost allocation process, the Portland Harbor Natural Resources Trustee Council, the Lower
Willamette Group, and/or the U.S. EPA regarding the Portland Harbor Superfund Site; and (2)
defense-related documents produced or exchanged with TPPs’ attorneys and consultants, regarding
work performed or to be performed on TPPs’ behalf concerning their involvement at the Portland
Harbor Superfund Site.” (St. Paul Renewed Mot. to Compel (ECF No. 695), at 2-3.) The court held
such documents are relevant and that St. Paul has a substantial need for the documents to meet its
burden at trial, and that such need outweighs any burden to Third-Party Plaintiffs resulting from the
production of such documents. Third-Party Plaintiffs contend the court made several clear errors
in determining the documents requested by St. Paul must be produced.
Legal Standard
The Federal Rules of Civil Procedure do not explicitly discuss motions for reconsideration.
Allen v. Nw. Permanente, P.C., No. 3:12-cv-0402-ST, 2012 WL 5996935, at *1 (D. Or. Nov. 30,
2012). However, several rules contemplate a situation where the court may revisit prior decisions
and order them amended, rescinded, or reversed. FED. R. CIV. P. 59(e), 60(b) (2016). After the court
has entered a final judgment in a matter, a party may seek relief from that judgment “under either
1
St. Paul refers to Third-Party Plaintiffs as TPPs.
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Federal Rule of Civil Procedure 59(e) (motion to alter or amend a judgment) or Rule 60(b) (relief
from judgment).” Allen, 2012 WL 5996935, at *1 (quoting Sch. Dist. No. 1J, Multnomah County,
Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)). Rule 60(b) provides that a court may
“relieve a party or its legal representative from a final judgment, order or proceeding for the
following reasons:”
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been
discovered in time to move for a new trial under Rule 59(b);
(3) fraud . . . , misrepresentation or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier
judgment that has been reversed or vacated; or applying it prospectively is no longer
equitable; or
(6) any other reason that justifies relief.
FED. R. CIV. P. 60(b). Rule 59(e) does not articulate a test to determine when a court should
reconsider a prior decision, but courts have determined that reconsideration under Rule 59(e) is
“appropriate if the district court (1) is presented with newly discovered evidence, (2) committed a
clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in
controlling law.” Sissoko v. Rocha, 440 F.3d 1145, 1153-54 (9th Cir. 2006); Kona Enters., Inc. v.
Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). Under either rule, “a motion for reconsideration
should accomplish two goals: (1) it should demonstrate reasons why the court should reconsider its
prior decision and (2) set forth law or facts of a strongly convincing nature to induce the court to
reverse its prior decision.” Romtec, et al. v. Oldcastle Precast, Inc., 08-06297-HO, 2011 WL
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690633, at *8 (D. Or. Feb. 16, 2011) (citing Donaldson v. Liberty Mut. Ins. Co., 947 F. Supp. 429,
430 (D. Haw. 1996)).
When a party moves for reconsideration based on new evidence, the court applies the same
test regardless of whether the motion is brought under Rule 59 or Rule 60. Jones v. Aero/Chem
Corp., 921 F.2d 875, 878 (9th Cir. 1990), (citing 11 CHARLES ALAN WRIGHT & ARTHUR R. MILLER,
FEDERAL PRACTCIE AND PROCEDURE: CIVIL § 2859 (1973)). “Under this test the movant must show
the evidence (1) existed at the time of the [original decision], (2) could not have been discovered
through due diligence, and (3) was of such magnitude that production of it earlier would have been
likely to change the disposition of the case.” Jones, 921 F.2d at 878 (internal quotation marks
omitted).
Reconsideration is an “extraordinary remedy, to be used sparingly in the interests of finality
and conservation of judicial resources.” Kona Enterprises, Inc., 229 F.3d at 890. Motions for
reconsideration should not be frequently made or freely granted. Twentieth Century–Fox Film Corp.
v. Dunnahoo, 637 F.2d 1338, 1341 (9th Cir. 1980).
Discussion
In 2012 the court determined St. Paul has a duty to defend Third-Party Plaintiffs with regard
to the Environmental Claims. Century Indem. Co. v. Marine Group, LLC, Civ No. 08-cv-1375-AC,
848 F. Supp. 2d 1238 (D. Or. Jan. 26, 2012); Century Indem. Co. v. The Marine Group, Civ No. 081375-AC, Opinion and Order, at 3 (D. Or. Dec. 26, 2012) (“the court concludes that Insurers have
a duty to defend [Insureds].”). Thus, St. Paul must contribute to the defense costs incurred by Third-
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Party Plaintiffs and Argonaut Insurance Company (“Argonaut”)2 in accordance with the provisions
of the Oregon Environmental Cleanup Assistance Act (OR. REV. STAT. 465.475-465.484) (the
“Act”). The court will determine the amount of recoverable defense costs under the Act at a trial
scheduled for October 2016.
At the trial, Argonaut and Third-Party Plaintiffs will bear the burden of establishing that the
expenses they seek to recover are properly characterized as defense costs. Once the expenses have
been identified as defense costs, “Argonaut and [Third-Party Plaintiffs] bear the burden of proof on
the existence and amount of the claimed defenses costs, including documentation of the hours
expended, and [St. Paul] must prove the requested costs were unreasonable or unnecessary.”
Century Indem. Co. v. Marine Group, LLC, No. 3:08-cv-1375-AC, 2015 WL 810987, at *1 (D. Or.
Feb. 25, 2015).
Because it bears the burden of proving the defense costs requested by Third-Party Plaintiffs
and Argonaut are unreasonable or unnecessary, St. Paul sought documents relating to costs incurred
in the defense of Third-Party Plaintiffs with respect to the Environmental Claims. In its initial
briefing, Third-Party Plaintiffs argued St. Paul’s discovery request was overly broad and unduly
burdensome due to the sheer volume of documents that St. Paul had requested and the amount of
attorney hours it would require to produce the documents.
Second, Third-Party Plaintiffs argued many of the documents sought by St. Paul were
covered by the work-product doctrine and attorney-client privilege. Despite asserting those
privileges, Third-Party Plaintiffs did not produce a privilege log, apparently because of the sheer size
2
Argonaut voluntarily agreed to defend Third-Party Plaintiffs and to date has expended
millions of dollars in defense costs of the Environmental Claims.
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of the request, which would cover tens of thousands of documents.
Third-Party Plaintiffs additionally argued they are part of a number of joint-defense
agreements. All parties to the joint-defense agreements, according to Third-Party Plaintiffs, seek to
limit their liability arising from environmental contamination at the Portland Harbor Superfund Site
(“Site”). This common interest, Third-Party Plaintiffs opined, necessitates confidentiality, which
would be breached if certain documents are shared with St. Paul.
Fourth, Third-Party Plaintiffs argued that most of the materials requested by St. Paul were
irrelevant because a co-insurer in breach of an insurance contract is precluded from challenging the
reasonableness and necessity of defense costs in an equitable contribution action. The only category
of defense costs St. Paul could challenge, according to Third-Party Plaintiffs, were defense costs
arising from the insurance contract and work product related to those defense costs.
In addressing these claims, the court found, first, that St. Paul’s request was reasonable
because it “bears the burden of proving the defense costs requested by Third-Party Plaintiffs and
Argonaut are unreasonable or unnecessary.” Century Indem. Co. v. Marine Group, LLC, Case No.:
3:08-CV-1375-AC, 2015 WL 9294792, at *2 (D. Or. Dec. 21, 2015). In order to feasibly meet that
burden, the court stated, St. Paul needed “access to information establishing the purpose of the costs
and the context in which they were incurred,” and St. Paul requested information establishing the
defense costs incurred by Third-Party Plaintiffs and Argonaut. Id. The documents requested thus
went directly to the relevant issue at hand.
Next, with respect to whether the production request was unduly burdensome, the court
acknowledged the many attorney hours Third-Party Plaintiffs likely would incur as a result of St.
Paul’s request, but held that Third-Party Plaintiffs, in seeking to recover their defense costs, had put
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the issue of reasonableness and necessity of such costs at issue. Thus, the court would not allow
Third-Party Plaintiffs to withhold relevant documents that St. Paul could use in meeting its burden
of proof at trial, based solely on the attendant inconvenience.
Third, regarding attorney-privilege, the court observed it had already ordered St. Paul to
contribute to, if not participate in, the defense of the Environmental Claims. Furthermore, St. Paul’s
counsel is required to represent and protect the interest of their insureds, Third-Party Plaintiffs.
Thus, the court reasoned, St. Paul was not an adversary or an unrelated third party but instead was
“more akin to co-counsel.” Id. at 8. Consequently, the court held that Third-Party Plaintiffs failed
to establish the entirety of the communications at issue were truly confidential.
With respect to work product, the court determined, based on the standard set forth in Federal
Rule of Civil Procedure 26(b)(3), that St. Paul would be unable to meet its burden to prove the
defense costs requested by Third-Party Plaintiffs are unreasonable or unnecessary without the
requested documents. Further, St. Paul is unable to obtain their equivalent by any other means, as
Third-Party Plaintiffs retained control over such documents. Accordingly, the court held that the
work-product doctrine did not protect the requested documents.
Finally, the court did not find Third-Party Plaintiffs’ “common purpose” argument
compelling. Id. at 8-9. The court stated St. Paul shares a common interest with Third-Party
Plaintiffs and the other identified potentially responsible parties because the court has ordered St.
Paul to, at the very least, aid Third-Party Plaintiffs by contributing to the defense of the
Environmental Claims.
Because the court determined the documents requested by St. Paul were relevant, St. Paul
had a substantial need for the documents, and there was a common interest between St. Paul and
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Third-Party Plaintiffs in the defense of the underlying litigation, vitiating any argument that
production of the documents would violate any privileges claimed by Third-Party Plaintiffs, the court
ordered Third-Party Plaintiffs to produce the documents St. Paul requested and to bear the cost of
such production.
Third-Party Plaintiffs assert the court committed clear error in reaching this conclusion.
First, Third-Party Plaintiffs argue the court wrongfully determined St. Paul is participating in ThirdParty Plaintiffs’ defense and that St. Paul is akin to Third-Party Plaintiffs’ co-counsel. Such a
conclusion, Third-Party Plaintiffs argue, is based on a mistake of fact and is an improper
characterization of the relationship between St. Paul and Third-Party Plaintiffs, as well as an
incorrect interpretation of Oregon law.
I. Whether a Special Relationship Exists Between St. Paul and Third-Party Plaintiffs
With respect to their first argument, the court finds Third-Party Plaintiffs have failed to
establish the court committed clear error. Third-Party Plaintiffs argue the court incorrectly
interpreted Oregon law3 and that, according to Oregon case law, St. Paul is not akin to Third-Party
Plaintiffs’ co-counsel. To support this proposition, Third-Party Plaintiffs cite to Georgetown Realty,
Inc. v. Home Ins. Co., 313 Or. 97 (1992). First, Georgetown’s facts are dissimilar to those here,
because the issue in Georgetown was whether an insurer can be subjected to tort liability if the
insurer undertakes to defend the insured. Id. 110-11. Nonetheless, the case is helpful in defining
the relationship between Third-Party Plaintiffs and St. Paul. In Georgetown, the Oregon Supreme
3
Oregon law applies to actions that address the existence of insurance coverage for costs
incurred investigating or remediating environmental contamination, as well as for costs incurred
defending a suit against an insured for such costs, where the contaminated property is in the State
of Oregon. OR. REV. STAT. 465.483(2)(a)(2013).
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Court held that an insurer who undertakes to defend its insured against a third-party claim enters into
a relationship with the insured whereby the insurer must act in the insured’s best interests. Id.; see
also Shin v. Sunriver Preparatory School, Inc., 199 Or. App. 352, 366 (2005) (stating an insurer who
steps in to defend the insured against a third-party claim “stands in a special relationship with the
insured”). Here, “St. Paul’s counsel,” the court stated, “is tasked with representing and protecting
the interests of Third-Party Plaintiffs, its insureds.” Century Indem. Co., 2015 WL 9294792, at *3.
Because St. Paul’s counsel is tasked with representing and protecting Third-Party Plaintiffs’
interests, it must act in Third-Party Plaintiffs’ best interests, including by contributing to the defense
of the Environmental Claims. St. Paul thus is not an adversary or an unrelated third party; instead,
as this court stated in its opinion granting St. Paul’s motion to compel, St. Paul’s status is more akin
to co-counsel. Third-Party Plaintiffs have therefore failed to meet their burden to establish the court
committed a clear error of fact or law on this issue.
II. Oregon’s Independent Counsel Requirement
Third-Party Plaintiffs argue the court “turns the principle of independent counsel on its head
by stating that St. Paul’s coverage counsel has a unity of interest with [Third-Party Plaintiffs], and
an obligation to protect [Third-Party Plaintiffs].” (Third-Party Plaintiffs’ Am. Mot. for Clarification
& Recons. (“Mot.”) (ECF No. 921.), at 9.) The court’s prior ruling does not impair Third-Party
Plaintiffs’ right to have independent counsel to defend the Environmental Claims. See OR. REV.
STAT. 465.483(1) (2013) (stating the insurer shall provide independent counsel to defend insured
if required by the parties’ insurance policy or insured’s potential liability exceeds the limits of the
parties’ insurance policy). The court also recognizes that independent counsel represents only the
insured, not the insurer. OR. REV. STAT. 465.483(1). The right to have independent counsel,
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however, does not abrogate the insured’s responsibilities to cooperate with the insurer pursuant to
the terms of the insurance contract. OR. REV. STAT. 465.483(1).
The terms of the parties’ insurance contract requires Third-Party Plaintiffs to “cooperate with
[St. Paul] . . . in the conduct of suits.” ( Rycewicz Decl., dated Apr. 20, 2011, Ex. 15 (ECF No. 307),
at 24.) By refusing to provide St. Paul with the requested documents, Third-Party Plaintiffs do not
fulfill their duty to cooperate with St. Paul. The Oregon statute at issue envisioned cooperation
between coverage and defense counsel. The court’s ruling implements the terms of the insurance
contract by requiring Third-Party Plaintiffs to cooperate with St. Paul pursuant to the terms of the
parties’ insurance contract. Third-Party Plaintiffs’s argument that the court has turned the principle
of independent counsel on its head is therefore unfounded, as the court’s ruling is consistent with
Oregon law. Third-Party Plaintiffs failed to meet their burden to establish the court committed a
clear error of fact or law on this issue.
III. St. Paul’s Lack of Joint-Defense Agreement with Third-Party Plaintiffs
Third-Party Plaintiffs argue the court’s determination that St. Paul and Third-Party Plaintiffs
have a common interest in the defense of the underlying litigation is factually and legally incorrect.
Third-Party Plaintiffs argue that no common interest exists, that production of the requested
documents will violate privileges claimed by Third-Party Plaintiffs, and that St. Paul seeks only to
defeat coverage.
As stated, this court held St. Paul has a duty to represent and protect the interests of ThirdParty Plaintiffs. In its Response to Third-Party Plaintiffs’ Motion for Reconsideration and
Clarification, St. Paul acknowledges its duty to defend. (St. Paul’s Resp. to Third-Party’s Plaintiffs’
Mot. (ECF. No. 936.), at 8.) The facts thus show there is a common interest between St. Paul and
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Third-Party Plaintiffs.
Moreover, Third-Party Plaintiffs do not explain in any detail which privileges will be violated
and how they will be violated. Third-Party Plaintiffs did not produce a privilege log showing which
documents fall under a claimed privilege. Third-Party Plaintiffs therefore fail set forth convincing
laws or facts which would induce the court to reverse its prior decision on this issue.
Third-Party Plaintiffs argue that if the court is unwilling to reverse its prior decision, at the
very least the court should address their confidentiality concern by ordering that the requested
documents be designated “attorney and expert eyes only.” (Third-Party Plaintiffs’ Reply in Supp.
of Mot. for Clarification and Recons. (“Reply”) (ECF. No. 942.), at 7.) Third-Party Plaintiffs point
out that St. Paul is an entity of Travelers, which has an obligation under numerous unrelated
insurance policies to defend or indemnify many other potentially responsible parties at the Site.
Consequently, Third-Party Plaintiffs argue, there is a risk that St. Paul could inadvertently disclose
sensitive documents to Travelers’ other insureds. Third-Party Plaintiffs ask the to court minimize
this risk by ordering the requested documents be designated “attorney and expert eyes only.” (Reply,
at 7.)
Such a designation is reasonable and will help to ensure confidential documents are not
disclosed beyond those persons who need to know the information for purposes of assessing the
reasonableness and necessity of attorney fees and costs. Also, there is no indication the designation
would cause St. Paul to suffer any disadvantages at trial that would outweigh the need to ensure
confidentiality. The court therefore agrees that limiting production of requested documents to
attorneys and experts only is warranted. Consequently, the court grants this part of Third-Party
Plaintiffs motion, and orders Third-Party Plaintiffs to prepare an order agreeable to all parties
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limiting production of requested documents to attorneys and experts only.
IV. Rule 503 of Oregon Evidence Code
Third-Party Plaintiffs argue the court misapplied Rule 503 of Oregon Evidence Code (“Rule
503”). Rule 503 protects confidential communications between lawyers and clients as well as
communications between associated representatives. Information between the client or the client’s
lawyer, and lawyers representing another party in a matter of common interest are protected as
confidential. Rule 5039(2)(c).
Like their previous arguments, Third-Party Plaintiffs argue St. Paul is not a party of common
interest and the production of these documents will violate privileges of confidentiality.
As
previously stated, St. Paul’s counsel is tasked with representing and protecting Third-Party Plaintiffs’
interests. Consequently, St. Paul’s counsel are lawyers representing another party – St. Paul – in
a matter of common interest. Any disclosure to St. Paul’s counsel therefore remains confidential
pursuant to Rule 503. Third-Party Plaintiffs thus have not shown the court misapplied or
misinterpreted Rule 503, or that the production of the requested documents would breach
confidentiality rules.
IV. Alleged Inconsistency as to Joint-Defense Privileges
Third-Party Plaintiffs argue the court’s opinion is inconsistent as to joint-defense or commoninterest privileges. “The joint defense and common interest doctrines are not privileges in and of
themselves. Rather, they constitute exceptions to the rule on waiver where communications are
disclosed to third parties.” Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 578 (N.D. Cal.
2007).
Third-Party Plaintiffs argue the court incorrectly found that Third-Party Plaintiffs have a
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common interest with St. Paul but do not have a common interest with numerous defense groups
with whom Third-Party Plaintiffs have agreed to jointly work to minimize liability. Third-Party
Plaintiffs argue this is an error of fact and a misunderstanding of joint-defense or common-interest
privileges.
The court did not suggest and did not hold that Third-Party Plaintiffs do not have a common
interest with numerous defense groups with whom Third-Party Plaintiffs have agreed to work to
minimize potential liability. Such a determination is not, nor was it ever, at issue. Rather, because
“Third-Party Plaintiffs seek both a defense from, and indemnification of, the Environmental Claims
from St. Paul,” Century Indem. Co., 2015 WL 9294792, at * 4, and because St. Paul must contribute
to the defense incurred by Third-Party Plaintiffs, the court held St. Paul shares a common interest
between Third-Party Plaintiffs as well as other identified potentially responsible parties in seeking
to limit potential liability. Third-Party Plaintiffs provide nothing to show such a holding is a clear
error of fact or law.
Third-Party Plaintiffs argue that St. Paul’s interests are not aligned with Third-Party Plaintiffs
because, according to Third-Party Plaintiff’s, St. Paul argued “at a recent trial” that the only
insurance policy Third-Party Plaintiffs can collect from limits St. Paul’s exposure to $100,000 in
property-damage costs. (Reply, at 6.) By contrast, Third-Party Plaintiffs face over $2,000,000,000
in liability. Thus, Third-Party Plaintiffs argue, the parties’ financial interests are “radically
different.” (Reply, at 6.) Even assuming St. Paul were responsible only for $100,000 in liability –
which the court has now rejected – St. Paul still wants to limit potential liability as much as possible.
Therefore, St. Paul’s interests remain aligned with those of Third-Party Plaintiffs and other identified
potentially responsible parties, as each party’s goal is to limit potential liability. The court therefore
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made no clear error of law or fact with regard to its determination that St. Paul shares a common
interest with Third-Party Plaintiffs and other potentially liable parties. Thus, St. Paul shares a
common interest with Third-Party Plaintiffs and other potentially liable parties, an exception to the
rule on waiver applies, and Third-Party Plaintiffs will not waive the attorney-client privilege by
disclosing the requested documents to St. Paul.
V. Disclosing Documents Will Harm Third-Party Plaintiffs’ Defense
Third-Party Plaintiffs argue disclosing highly sensitive documents to St. Paul will harm
Third-Party Plaintiffs’ defense.4 Specifically, because, as mentioned, St. Paul is an entity of
Travelers, who has an obligation to defend or indemnify many other potentially responsible parties
at the Site, Third-Party Plaintiffs are concerned its defense strategy will be disclosed to insurers that
are defending other potentially responsible parties. First, St. Paul’s counsel is compelled to represent
and protect Third-Party Plaintiffs’ interests. Therefore, St. Paul’s lawyers represent another party
in a matter of common interest, and thus are more akin to co-counsel. As such, any information
provided to St. Paul’s counsel is confidential and may not be disclosed to third parties. See Rule
503(2) (stating information between the client or the client’s lawyer and lawyers representing another
party in a matter of common interest are protected as confidential). Moreover, as stated above, the
court orders Third-Party Plaintiffs to prepare an order agreeable to all parties limiting production
4
Third-Party Plaintiffs also argue OR. REV. STAT. 465.483 requires independent counsel for
the insured in part so the insured can control what type of defense material is disclosed to the insurer.
While the statute requires the insurer to provide independent counsel under certain circumstances,
nothing in the statute compels the conclusion the independent counsel requirement is intended to
allow the insured to control the information to which the insurer has access. To the contrary, the
statute envisions cooperation between insured and insurer, as it specifically states the insured has a
duty to cooperate with the insurer under the terms of the parties’ insurance contract. OR. REV. STAT.
465.483(4). The court therefore finds this argument unpersuasive.
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of requested documents to attorney and experts only. This protective order should alleviate any
concern Third-Party Plaintiffs have that St. Paul will somehow disclose sensitive, confidential
information to other insurers.
VI. Disclosing Documents Will Harm Third-Party Plaintiffs’ Defense
Finally, Third-Party Plaintiffs argue the court should reconsider its order that Third-Party
Plaintiffs bear the cost of producing the documents St. Paul requested. Third-Party Plaintiffs argue
bearing the cost of production would cause manifest injustice because Third-Party Plaintiffs will be
forced to expend an enormous amount of financial resources and attorney hours preparing the
documents for production.
Federal Rule of Civil Procedure 26(b)(1) provides that: “Parties may obtain discovery
regarding any matter, not privileged, that is relevant to the claim or defense of any party.” “[T]he
presumption is that the responding party must bear the expense of complying with discovery
requests, but may invoke the district court’s discretion under Rule 26(c) . . . , including orders
conditioning discovery on the requesting party’s payment of the costs of discovery.” Oppenheimer
Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1978). Cost-shifting should only be considered when
discovery imposes an “undue burden or expense” that outweighs the likely benefit of the discovery.
FED. R. CIV. P. 26(b)-(c) (2016).
In arguing the court should reconsider its holding that Third-Party Plaintiffs bear the cost of
production, Third-Party Plaintiffs have not cited to any case law or presented any new facts to
support its position or analysis. Instead, Third-Party Plaintiffs simply ask that the court reconsider
its previous decision requiring Third-Party Plaintiffs to bear the costs of production of the
documents. Reconsideration is not to “be used to ask the Court to rethink what it has already
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thought.” Motorola, Inc. v. J.B. Rodgers Mechanical Contractors, 215 F.R.D. 581, 581 (D. Ariz.
2003). The court will not reconsider its prior ruling requiring Third-Party Plaintiffs to bear the cost
of production.
VII. Conclusion
As stated in its original Opinion and Order, the court finds the documents requested by St.
Paul are relevant, that St. Paul has substantial need for the documents to meets its burden at trial, and
that St. Paul’s substantial need outweighs any burden to Third-Party Plaintiffs potentially resulting
from the production of such documents. In addition, St. Paul, as Third-Party Plaintiffs’ insurer
participating in the defense of the Environmental Claims, has a common interest in the defense of
the underlying litigation. Because St. Paul and Third-Party Plaintiffs have a common interest in the
defense of the underlying litigation, production of the requested documents will not violate any
privileges claimed by Third-Party Plaintiffs. Moreover, the court orders Third-Party Plaintiffs to
prepare an order agreeable to all parties limiting production of requested documents to attorney and
experts only. Such a protective order should allay any concern Third-Party Plaintiffs have that St.
Paul will inadvertently disclose confidential information to other insurers or third parties. Finally,
Third-Party Plaintiffs shall bear the cost of such production and shall be prohibited from offering at
trial any documents not produced to St. Paul, as well as any testimony based on the review of such
withheld documents.
Conclusion
For the reasons stated above, Third-Party Plaintiffs’ Motion (ECF No. 921) for
Reconsideration of Discovery Ruling is DENIED and the prior Opinion and Order is affirmed as
clarified in this Opinion and Order. The court also orders Third-Party Plaintiffs to prepare an order
Page 18 - OPINION AND ORDER
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agreeable to all parties limiting production of requested documents to attorney and experts only.
DATED this 10th day of May, 2016
/s/ John V. Acosta
JOHN V. ACOSTA
United States Magistrate Judge
Page 19 - OPINION AND ORDER
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