DANSKO HOLDINGS, INC. v. BENEFIT TRUST COMPANY
Filing
51
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE JAN E. DUBOIS ON 11/21/17. 11/21/17 ENTERED AND COPIES EMAILED TO COUNSEL.(jaa, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
DANSKO HOLDINGS, INC.,
Plaintiff,
CIVIL ACTION
v.
BENEFIT TRUST COMPANY,
Defendant.
NO. 16-324
DuBois, J.
November 21, 2017
MEMORANDUM
I.
INTRODUCTION
This case involves a contract dispute arising out of a trust agreement between Benefit
Trust Company (“BTC”) and Dansko Holdings, Inc. (“Dansko”). BTC is a trustee services
provider which Dansko selected as trustee for its employee stock ownership program (“ESOP”).
See Second Am. Compl., ¶ 4. Shortly after selecting BTC as trustee, Dansko sought to refinance
its debt obligations. Id. at ¶ 5. Dansko alleges that BTC violated the terms of the trust
agreement when it failed to provide trustee services for the refinancing transaction, causing
Dansko to incur more than $2 million in damages. Id. at ¶ ¶ 9, 10. On September 27, 2016,
Dansko filed its Second Amended Complaint asserting claims based on breach of contract,
breach of oral contract, promissory estoppel, and fraud in the inducement. Second Am. Compl.,
¶ 1. Presently before the Court is Dansko’s Motion to Compel Production of Documents.
Dansko’s fraud in the inducement claim is the only claim relevant to the Motion.
With respect to the fraud in the inducement claim, Dansko alleges that BTC intentionally
failed to disclose that it was under investigation by the Department of Labor (“DOL”) at the time
it entered into the trust agreement. See Pl.’s Mot. to Compel at ¶ ¶ 3–6. Dansko contends that if
BTC had disclosed that it was under investigation by the DOL, Dansko would have conducted
further inquiry or declined to retain BTC. See Pl.’s Mot. to Compel at ¶ 10.
Dansko now moves to compel production by BTC of documents related to the DOL
investigation. On June 5, 2017, the Court ordered BTC to provide copies of the documents at
issue for in camera review. The documents consist of correspondence between BTC, its
attorneys at Lathrop & Gage and The Groom Law Firm, its insurance broker, and its insurance
company. Notably, in twenty of the twenty-seven documents provided by Dansko and reviewed
by the Court, no attorney authored or received the correspondence.
In response to the motion, BTC claims that the documents Dansko seeks are not relevant
because it concedes that it was under investigation by the DOL. BTC further asserts that the
documents are protected by the attorney-client privilege or work product doctrine—even where
there is no attorney involved—because the communications were created for the “purposes of
obtaining and maintaining insurance coverage related to the DOL matter and communicating
with the insurer regarding strategy and possible settlement . . . .” Def.’s Resp. to Pl.’s Mot. to
Compel at 1.
It is Dansko’s position that the attorney-client privilege and work product doctrine do not
extend to communications which do not involve an attorney. Dansko also argues that the
privilege is waived with respect to communications with a third-party insurance broker or carrier.
Pl.’s Mot. to Compel at ¶ 16.
II.
APPLICABLE LAW
Federal Rule of Civil Procedure 26(b)(1) provides that “[p]arties may obtain discovery
regarding any nonprivileged matter that is relevant to any party’s claim or defense.” Two
2
privileges are relevant for purposes of this Motion—the attorney-client privilege and the workproduct doctrine.
A. Attorney-Client Privilege
Under Pennsylvania law, the attorney-client privilege protects “confidential client-toattorney or attorney-to-client communications made for the purpose of obtaining or providing
professional legal advice.” Gillard AIG Ins. Co., 15 A.3d 44, 59 (Pa. 2011). 1 To successfully
invoke the protections of attorney-client privilege, a litigant must show: “(1) The asserted holder
of the privilege is or sought to become a client[;] (2) The person to whom the communication
was made is a member of the bar of a court, or his subordinate[;] (3) The communication relates
to a fact of which the attorney was informed by his client, without the presence of strangers, for
the purposes of securing either an opinion of law, legal services or assistance in a legal matter,
and not for the purpose of committing a crime or tort[; and] (4) The privilege has been claimed
and is not waived by the client.” In re Flonase Antitrust Litigation, 723 F.Supp.2d 761, 761
(E.D. Pa. 2010) (applying Pennsylvania law). The party asserting the privilege has the burden of
showing that the doctrine applies. Conoco Inc. v. U.S. Dep’t of Justice, 687 F.2d 724, 730 (3d
Cir. 1982).
The attorney-client privilege “exists to protect not only the giving of professional advice
to those who can act on it but also the giving of information to the lawyer to enable him to give
sound and informed advice.” In re Processed Egg Prod. Antitrust Litig., 278 F.R.D. 112, 117
1
Pennsylvania privilege law applies because Pennsylvania tort law governs the fraud in the inducement claim. See
Fed. R. Civ. P. 501 (“[I]n a civil case, state law governs privilege regarding a claim or defense for which state law
supplies the rule of decision.”); Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 32 F.3d 851, 861-62 (3d Cir. 1994)
(“As the claims and defenses in issue in this action arise under state law, Federal Rules of Evidence 501 and 1101(c)
provide that [the Court] should apply state law in determining the extent and scope of the attorney-client
privilege.”)). The parties make no argument regarding choice of law with respect to the attorney client privilege;
however, the Court notes that the only law cited by the parties on this issue, Serrano v. Chesapeake Appalachia,
LLC, 298 F.R.D. 271 (W.D. Pa. 2014), is a federal district court case applying, in relevant part, Pennsylvania
attorney-client privilege law.
3
(E.D. Pa. 2011). However, “[b]ecause the attorney-client privilege obstructs the truth-finding
process, it is construed narrowly. The privilege protects only those disclosures—necessary to
obtain informed legal advice—which might not have been made absent the privilege.”
Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1423–24 (3d Cir. 1991)
(internal citations omitted).
“Communications between attorney and client are not privileged if made in the presence
of or communicated to third parties.” Barr Marine Products, Co. v. Borg-Warner Corp., 84
F.R.D. 631, 634 (E.D. Pa. 1979). Further, “[d]isclosing a communication to a third party
unquestionably waives the privilege.” In re Teleglobe Commc’ns Corp., 493 F.3d 345, 361 (3d
Cir. 2007), as amended (Oct. 12, 2007). There are numerous exceptions and nuances to this
general rule, one of which is relevant in this case.
Disclosures made to a third-party consultant do not constitute a waiver when the
disclosure is “necessary for the client to obtain informed legal advice” or if the disclosure is
made “to an ‘agent’ assisting the attorney in giving legal advice to the client.” Westinghouse,
951 F.2d at 1424. Pennsylvania law recognizes that“[t]he protection of the attorney-client
privilege involving communications regarding the availability of insurance can extend to those
agents who are necessary to effectuating the representation [which] can include communications
between an insured and an insurance carrier and their respective agents where the disclosures to
the agents are in furtherance of the purpose of the privilege.” Serrano v. Chesapeake
Appalachia, LLC., 298 F.R.D. 271, 282 (W.D. Pa. 2014) (citing Levy v. Senate, 34 A.3d 243,
254–55 (Pa. Commw. Ct. 2011), aff’d in part and rev’d in part on other grounds, 65 A.3d 361
(Pa. 2013). Accordingly, “[s]uch communications are within the privilege to the extent that they
involve communications from the client to the carrier or the carrier to the client for the purpose
4
of obtaining legal representation and advice, effectuating the representation, and related matters
such as options regarding strategy and settlement.” Id.
B. Work Product Doctrine
“Unlike the attorney client privilege, the work product privilege is governed, even in
diversity cases, by a uniform federal standard embodied in Federal Rule of Civil Procedure.
26(b)(3).” United Coal Cos., 839 F.2d at 966. A party may claim as privileged any documents
that contain attorney work product—“tangible things that are prepared in anticipation of
litigation or for trial by or for another party or its representative (including the other party’s
attorney, consultant, surety, indemnitor, insurer, or agent).” Fed. R. Civ. P. 26(b)(3). As the
party claiming the work product doctrine in this case, defendants have the burden of establishing
that it applies. Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir.
2000).
The purpose of the work product doctrine is to “protect material prepared by an attorney
acting for his client in anticipation of litigation.” In re Processed Egg Prod. Antitrust Litigation,
278 F.R.D. at 119 (quoting United States v. Rockwell Int’l, 897, F.2d 1255, 1265 (3d Cir. 1990)).
Despite this, “federal courts have consistently ruled that the work product doctrine is not
inapplicable merely because the material was prepared by or for a party’s insurer or agents of the
insurer.” United Coal Cos., 839 F2d. at 966; see also Golden Trade, S.r.L. v. Jordache, 143
F.R.D.508, at *6 (S.D.N.Y. Aug. 10, 1992) (“[D]ocuments may come within the scope of the
work-product doctrine even if they do not reflect in any meaningful way the analysis of the
attorney.”)); RR Salvage of Conn., Inc. v. Japan Freight Consolidators (U.S.A.), Inc., 97 F.R.D.
37, 41 (E.D.N.Y. 1983) (holding that the defendant’s correspondence with its insurer’s that were
5
“written as a consequence of pending litigation for the purpose of mounting a defense to the
claim” were trial preparation materials within the meaning of Rule 26(b)(3)).
The work product doctrine protects documents prepared in anticipation of litigation,
rather than “in the ordinary course of business, or pursuant to public requirements unrelated to
litigation.” U.S. v. Rockwell Intern, 897 F.2d 1255, 1264 (3d Cir. 1990) (quoting U.S. v. El Paso
Co., 682 F.2d 530, 542 (5th Cir. 1982)). Several courts have noted the difficulty in determining
whether documents prepared by an insurance company were prepared in anticipation of litigation
or in the ordinary course of business, because an insurance company “has a duty to investigate,
evaluate and make a decision with respect to claims made on it by its insured.” Lyvan v.
Harleysville Ins. Co., No. 93-CV-6145, 1994 WL 533907, at *3 (E.D. Pa. Sep. 29, 1994); see
also Jet Plastica Industries, Inc. v. Goodson Polymers, Inc., No. 91-CV-3470, 1992 WL 10474,
at * 2 (E.D. Pa. 1992) (“it is equally clear that Rule 26(b)(3) ‘was not intended to protect all
insurance claim files from discovery’”) (quoting Basinger v. Glacier Carriers, Inc., 107 F.R.D.
771, 774 (M.D. Pa. 1985)). The point at which an insurer’s routine claim investigation shifts to
anticipation of litigation depends on the facts of each case. Lyvan, 1994 WL 533907, at *4.
Courts consider factors like “the nature of the documents, the nature of the litigation, the
relationship between the parties and any other facts peculiar to the case.” Brown v. Nicholson,
No. 06-CV-5149, 2007 WL 1237931, at *2 (E.D. Pa. Apr. 25, 2007) (quoting Lyvan, 1994 WL
533907, at *3). “In addition, courts have considered the involvement of an attorney to be ‘highly
relevant, although not necessarily [the] controlling factor.’ ” Id.
6
III.
DISCUSSION
BTC submitted thirty entries from its privilege log for in camera review. 2 The Court first
addresses the parties’ arguments regarding the relevance of those documents. Next, the court
addresses those documents over which BTC asserts only attorney-client privilege before turning
to the remaining documents with respect to which it claims protection under both the attorneyclient privilege and work product doctrine.
A. Relevance
The Court must first determine whether the documents sought are relevant to Dansko’s
fraud in the inducement claim. See Fed. R. Civ. P. 26(b)(1) (“Parties may obtain discovery
regarding any nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case . . . .”). BTC argues that the documents are not relevant
because (1) the claim for fraud in the inducement fails as a matter of law; and (2) BTC concedes
that the DOL investigation was, in fact, an investigation. Def.’s. Resp. to Pl. Mot. to Compel, at
2–3. The Court rejects these arguments.
With respect to BTC’s first contention—that the claim for fraud in the inducement fails
as a matter of law—the Court denied BTC’s motion to dismiss on that issue. That issue will be
addressed, if necessary, when the Court rules on any motions for summary judgment.
Accordingly, the Court rejects this argument on the present state of the record.
The Court also rejects BTC’s argument that its concession that the DOL investigation
was in fact an investigation renders these communications irrelevant. “The elements of fraud in
the inducement are as follows: (1) a representation; (2) which is material to the transaction at
hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or
false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the
2
Of the thirty entries, four entries are duplicates.
7
misrepresentation; and (6) the resulting injury was proximately caused by the reliance.” Eigen v.
Textron Lycoming Reciprocating Engine Division, 874 A.2d 1170, 1185 (Pa. Super. Ct. 2005).
The fact that BTC now concedes that the DOL investigation was an investigation is insufficient
to satisfy all of the elements of fraud in the inducement. Dansko must show not only that BTC
falsely represented that it was not involved in a DOL investigation, but did so knowingly or
recklessly and with the intent to mislead. BTC’s characterization of the DOL Investigation in its
communications with its insurers is certainly relevant to establishing the elements of fraud in the
inducement. See Fed. R. Evid. 401 (“Evidence is relevant if: (a) it has any tendency to make a
fact more or less probably than it would be without the evidence; and (b) the fact is of
consequence in determining the action.”).
B. Attorney-Client Privilege
In this case, the Court must determine whether communications between BTC and its
insurance carrier and insurance broker are protected by the attorney-client privilege
notwithstanding the fact that an attorney neither authored nor received the communications. This
issue requires a discussion of the relationship between an insurance carrier and broker, an
insured, and an attorney for an insured who is paid by the insurer.
In Piro v. Bell, 25 Pa. D. & C.3d 668, 671 (Pa. Com. Pl. 1981), the defendant argued for
an expansion of the attorney-client privilege to permit the free flow of information between the
insurance company, the insured, and the attorney, stating that “the insurance situation is unique
because of the interlocking relationship between the attorney, the insured, and the insurance
company.” Id. Although the Piro court ultimately declined to extend the attorney-client
privilege to the communication at issue because it occurred prior to the insured’s retention of
counsel, it noted that “the rationale of those cases upholding the privileged nature of
8
communications between an insured and insurer where the insurer is under an obligation to
defend is more persuasive . . . .” Id. at 673 (quoting People v. Ryan, 197 N.E.2d 15, 17 (Ill.
1981)). Other Pennsylvania state cases extended the attorney-client privilege to insurance
carriers on the grounds that “an anomalous relationship exists among the attorney, the insured,
and the insurance company by virtue of the insurance contract . . . [where the] insurance policy
requires the insurance company to defend the insured.” O’Brien v. Tuttle, 21 Pa. D. & C.3d, 319
322 (Pa. Com. Pl. 1981) (relying on a theory of joint representation); see also Smith v. St. Luke’s
Hosp., 40 Pa. D & C.3d 54, 57 (Pa. Com. Pl. 1984) (same). 3
In Serrano, the court did not rely on a theory of joint representation, but instead
concluded that Pennsylvania law extends the attorney-client privilege to agents who assist in
facilitating the relationship between the attorney and the client. See Serrano, 298 F.R.D. at 282.
Accordingly, that court concluded that “[c]ommunications between an insured and its carrier. . . .
are within the privilege to the extent that they involve communications . . . [made] for the
purpose of obtaining legal representation and advice, effectuating the representation, and related
matters such as options regarding strategy and settlement.” Id. at 283. With respect to
communications involving the insurance carrier and broker, the Serrano court stated that the
relevant question is whether the communications were made for the purpose of obtaining legal
representation or advice. This Court agrees with the Serrano court that communications between
an insured, an insurance carrier, and its broker, are privileged if the communications “are
necessary to procure and/or provide the representation in a manner necessary to maintain the
availability of coverage and/or effectuate strategy and tactics of counsel.” Id.
3
This Court previously declined to create a per se rule that indemnification by an insurance carrier creates a joint
representation of the insured and the insurance carrier. CAMICO Mut. Ins. Co. v. Heffler, Radetich & Saitta, LLP,
2013 WL 315716 (E.D.Pa. Jan. 28, 2016) (holding that a co-client relationship does not exist simply by virtue of the
insurer-insured relationship).
9
a. Properly Withheld Documents
The Court first concludes that nineteen of the documents at issue were properly withheld:
BTC privilege log entries 3, 4, 4 6, 7, 5 8, 9, 10, 6 12, 13, 14, 18, 19, 20, 21, 26, 27, 28, 29, and 30.
The Court first addresses Dansko’s argument that communications between BTC, its attorneys,
and SRA and XL Insurance cannot be protected because the parties’ interests are not sufficiently
aligned, before addressing each document in turn.
Dansko asserts that the withheld communications cannot be protected by attorney-client
privilege because the provision of coverage was subject to a reservation of rights and thus the
parties’ interests are not sufficiently aligned. The Court rejects that argument. “In the insurance
context, where a suit is brought by a third party against the insured, an anomalous relationship
exists among the attorney, the insured, and the insurance company by virtue of the insurance
contract.” O’Brien, 21 Pa.D & C.3d, at 322. This is true even where an insurer’s duty to
indemnify is subject to a reservation of rights. See Serrano, 298 F.R.D. at 280 (“the potential for
Patterson to have to indemnify the rig operator for its liability to plaintiff gives Patterson a
sufficient nexus with the instant litigation.”); Eckman v. Erie Ins. Exchange, 21 A.3d 1203, 1209
(PA. Super. 2011) (rejecting the argument that “ ‘any’ attorney selected by Appellee to represent
insureds under a reservation of rights has a conflict, suggesting . . . that any or all attorneys paid
by an insurer would breach their ethical obligations to the insured/client . . . to frame claims as
excluded from coverage”).
4
Privilege log entry number 4 is duplicated at privilege log entry number 25. BTC asserts protection under the
attorney-client privilege with respect to entry number 4, but asserts protection under both the attorney client
privilege and work product doctrine with respect to entry number 25. The Court addresses both the attorney-client
privilege and the work product doctrine with respect to these entries.
5
Privilege log entry number 7 is duplicated at privilege log entry number 26.
6
Privilege log entry number 10 is duplicated at privilege log entry number 21.
10
The Court concludes that BTC privilege log entries 3, 6, 7, 12, 18, 29, and 30, were
properly withheld under the attorney-client privilege because those entries consist of
communications in which attorneys give, request, or are provided with information for the
purpose of providing legal advice. Entry number 3 is an email from BTC’s outside counsel
Richard Bien of Lathrop & Gage to: BTC’s president, Brad Scaffe; BTC’s chief financial
officer, Stacey Perry; and two representatives from BTC’s insurance agent, Schifman Remley
Associates (“SRA”), regarding an updated tolling agreement between the DOL and BTC. Entry
numbers 6 and 7 consist of a string of emails addressed to Bien from both SRA and BTC
executives that convey information regarding XL Insurance’s reservation of rights and
information related to the insurance policy in effect at the time of the claim. Similarly, entry
number 12 is an email from Bien to SRA and BTC providing an update on the status of the
investigation. Entry number 18 is an email from Perry to two attorneys at The Groom Law Firm,
a firm BTC engaged as co-counsel with Lathrop & Gage, conveying information about the
insurance policy in effect at the time of the DOL claim. Def.’s Resp. to Pl.’s Mot. to Compel at
8. 7 Entries number 29 and 30 consist of an email chain in which Scafe relays the substance of a
telephone call with BTC’s insurance carrier, XL Insurance, to SRA representatives, BTC
employees, and Bien, to which an SRA representative responds. The Court finds that each of
these emails was either drafted by an attorney or conveyed information to an attorney for the
purpose of providing legal advice and is thus protected by attorney-client privilege.
The Court concludes that BTC’s privilege log entry numbers 4, 8, 9, 10, 13, 14, 19, 20,
27, and 28 were properly withheld as precisely the type of communication that the Serrano court
protects from disclosure. Several of the emails are communications regarding the initial
7
BTC notes that it claimed privilege over this communication based on the attorney-client and insurer-insured
privilege. The reference to insurer-insured communication on the privilege log was in error as no representatives
from SRA or XL Insurance authored or received the email. See Def.’s Resp. to Mot. to Compel at 8 n.5.
11
notification of BTC’s potential claim to the insurance carrier, while others involve information
about the insurance policy as it related to settlement of the DOL claim.
Entry number 14 is an email communication in which Scafe asked SRA to notify XL
Insurance of BTC’s claim for coverage under its insurance policy and informed SRA of its intent
to retain Bien as its attorney in the matter. SRA confirmed that it would submit the notice of the
claim to XL Insurance with its email in entry number 28 and subsequently confirmed that it had
indeed submitted the claim with its email in entry number 13. Subsequently, XL Insurance
confirmed by the letter listed at entry number 10 “that there appeared to be coverage for issues
raised by the DOL’s . . . letter, acknowledged Rick Bien of Lathrop & Gage would be
representing BTC in the matter, enclosed the insurer’s billing guidelines, and asked that BTC
forward all of Mr. Bien’s invoices to it.” Def.’s Mot. to Dismiss Pl.’s Sec. Am. Compl., Ex. 3,
Decl. of Bradley Scafe (“Scafe Decl.”) at ¶ 11. Entry number 9 is the insurer’s email
transmitting that letter to BTC and entry number 8 is an email in which BTC forwards the letter
to SRA.
Entry number 4 is an email from Perry to representatives from both XL Insurance and
SRA conveying settlement updates. Similarly, entry number 27 is an email from Perry to two
SRA employees providing a settlement update, including information about the advice that BTC
received from its attorneys with respect to a possible settlement of the DOL investigation. Entry
number 20 is an email from an XL Insurance representative to an SRA that describes BTC’s
insurance policy coverage. The email was subsequently forwarded to Perry with instructions to
review the email from XL Insurance at entry number 19. These two emails were then forwarded
to attorneys at the Groom Law Firm to provide them with information necessary to determine a
course of legal action. See P.L. Entry No. 18.
12
The Restatement (Third) of the Law Governing Lawyers states in relevant part that “the
privilege covers communications by a client-insured to an insurance-company investigator who
is to convey the facts to the client’s lawyer designated by the insurer . . . in providing a progress
report or discussing litigation strategy or settlement.” See Serrano, 298 F.R.D. at 282–83 n.1,
(quoting RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 70 cmt. f (2000)). The
purpose of the attorney-client privilege is to foster communication between attorneys and their
clients “to protect not only the giving of professional advice to those who can act on it but also
the giving of information to the lawyer to enable him to give sound and informed advice.” In re
Processed Egg Prod. Antitrust Litig., 278 F.R.D. at 117. Where an insurance carrier defends a
corporation against a legal claim, the insurance carrier and broker are “agents who are necessary
to effectuating the representation.” Serrano, 298 F.R.D. at 282 (citing Levy v. Senate, 34 A.3d
243, 254–55 (Pa.Commw.Ct. 2011)). In this context then, an attorney’s ability to give sound and
informed advice will depend on the assessment of the claim and other information conveyed to
the client by the insurance carrier and by the client to the insurance carrier. Because the
communications addressed above were “necessary to procure and/or provide the representation
in a manner necessary to maintain the availability of coverage and/or effectuate strategy and
tactics of counsel in that setting fall within the attorney-client privilege,” the Court concludes
that they are protected by the attorney-client privilege. Id. at 283; see also Upjohn Co. v. United
States, 449 U.S. 383, 390 (1981) (“the privilege exists to protect not only the giving of
professional advice to those who act on it but also the giving of information to the lawyer to
enable him to give sound and informed advice”) (citations omitted); Fed. Trade Comm’n v.
Abbvie, Inc., No. 14-CV-5151, 2015 WL 8623076, at *3 (E.D.Pa. Dec. 14, 2015) (“Under the
third-party consultant exception, disclosure does not waive the attorney-client privilege so long
13
as ‘disclosure is necessary to further the goal of enabling the client to seek informed legal
assistance.’”) ( citations omitted)).
b. Improperly Withheld Documents
The Court now turns to documents that BTC improperly withheld—2 , 15, 16, and 17—
and concludes that BTC has not established that the communications were made for the purpose
of securing legal advice.
Entries number 2, 15, 16, and 17, 8 are not protected by the attorney-client privilege
because they relate to routine scheduling matters and do not involve an attorney. Entry number 2
is an email from an SRA representative to Scafe to set up a conference call. Similarly, entry
number 15 is an email from an SRA representative to Scafe notifying him of a conference call
with XL Insurance. And entry number 16 is an email from SRA to representatives from XL
Insurance and BTC requesting updates for a telephone call. “A proper claim of privilege
requires a specific designation and description of the documents within its scope as well as
precise and certain reasons for preserving their confidentiality.” SmithKline Beecham Corp. v.
Apotex Corp., 232 F.R.D. 467, 482 (E.D.Pa. 2005). BTC asserts the attorney-client privilege on
the basis that this communication involves “Attorney Advice re DOL Investigation.” P.L. at 1.
The Court is not persuaded. Because these communications relate to scheduling telephone
conferences and no attorney is named on the communications, BTC failed to provide evidence
demonstrating that the purpose of the communication was to secure legal advice. See e.g., State
Farm Mut. Auto. Ins. Co. v. Metropolitan Family Practice, No. 03-CV-969, 2015 WL 3434000,
at *15 (E.D.Pa. Dec. 12, 2005) (requiring disclosure of an email that contained only facts related
to scheduling); MapleWood Partners, L.P. v. Indian Harbor Ins. Co., 295 F.R.D. 550, 594 (S.D.
8
The Court notes that entry number 17 is a duplicate of entry numbers 15 and 16. For the same reasons, entry
number 17 is not protected by the attorney-client privilege.
14
Fla. 2013) (nothing that communications related to “scheduling . . . were not communications
made for the purpose of legal advice”); Gucci Am., Inc. v. Guess?, Inc., 271 F.R.D. 58, 64 n.12
(S.D.N.Y. 2010) (“the fact that a conference call took place . . . is not privileged” where “the
documents . . . reveal no underlying legal advice”).
C. Work Product Doctrine
Defendants also submitted four documents—22, 23, 24, and 25—over which they assert
protection under both the work product doctrine and the attorney-client privilege. The Court first
addresses whether those communications were properly withheld under the work product
doctrine, before turning to the attorney-client privilege.
With respect to the work product doctrine, the Court must determine whether those
communications were prepared in anticipation of litigation or in the regular course of business.
See Lyvan, 1994 WL 533907, at * 3 (“whether an insurance company’s investigatory documents
were prepared in anticipation of litigation turns on the facts of each case”). To determine
whether the insurance company was acting in anticipation of litigation, the party asserting the
privilege must show that the “insurance company’s activity shift[ed] from mere claims
evaluation to a strong anticipation of litigation.” Atiyeh v. Liberty Mut. Ins. Co., No. 00-CV2661, 2000 WL 1796420, at *1 (E.D.Pa. Nov. 15, 2000).
Entry number 22 is an email between Perry and Scafe at BTC discussing an upcoming
call with its insurance carrier, XL Insurance, for the purpose of determining coverage and
discussing a strategy to resolve the DOL investigation. Similarly, entry number 25 is an email
from Perry to XL Insurance conveying its strategy for resolving the DOL investigation. Entry
numbers 23 and 24 consist of an email exchange between an SRA representative and an XL
Insurance representative discussing the potential for insurance coverage with respect to the DOL
15
investigation. These emails were subsequently forwarded to Perry, with instructions to review
XL Insurance’s assessment of the policy coverage with respect to the DOL investigation. Perry
then forwarded the emails to Scafe to “discuss[] internally the insurer’s participation in
settlement and related information it would need regarding the insurer’s contribution.” Scafe
Decl. at ¶ 20; P.L. at 22.
The Court concludes that entry numbers 22, 23, 24, and 25, were prepared in anticipation
of litigation and are thus protected under the work product doctrine. “[F]ederal courts have
consistently ruled that the work product doctrine is not inapplicable merely because the material
was prepared by or for a party’s insurer or agents of the insurer.” United Coal Cos., 839 F2d. at
966. Moreover, investigations by regulatory agencies provide reasonable grounds to anticipate
litigation. See e.g., Martin v. Bally's Park Place Hotel & Casino, 983 F.2d 1252, 1261 (3d Cir.
1993) (OSHA inquiry sufficient to anticipate litigation so that privilege protected defendant's
consultant's report); Martin v. Monfort, Inc., 150 F.R.D. 172, 173 (D. Colo. 1993) (“Investigation
by a federal agency presents more than a remote prospect of future litigation, and provides
reasonable grounds for anticipating litigation sufficient to trigger application of the work product
doctrine.”); Garrett v. Metropolitan Life Ins. Co., No. 95-CV-2406, 1996 WL 325725, at *3
(S.D.N.Y. June 12, 1996) (“Regulatory investigations by outside agencies present more than a
mere possibility of future litigation . . . .”); RR Salvage of Conn., Inc. v. Japan Freight
Consolidators (U.S.A.), Inc., 97 F.R.D. 37, 41 (E.D.N.Y. 1983) (holding that the defendant’s
correspondence with its insurers “written as a consequence of pending litigation for the purpose
of mounting a defense to the claim” were trial preparation materials within the meaning of Rule
26(b)(3)).
16
BTC received a subpoena from the DOL and, at the behest of its attorney, contacted XL
Insurance to discuss the defense of BTC in a government agency investigation. The Court
concludes that the email communications, which discuss in detail the status of the investigation
and the prospects of settlement, were prepared in anticipation of litigation that might grow out of
the investigation. The communications are thus protected as attorney work product.
The Court further concludes that entry numbers 22, 23, 24, and 25, are protected by the
attorney-client privilege under Pennsylvania law. The communications specifically relate to
“claim assessment and/or strategy . . . of a claim or defense or respecting strategy or tactics,”
which facilitated BTC’s ability to determine a legal strategy with respect to the DOL
investigation. Serrano, 298 F.R.D. 271, at 283.
IV.
CONCLUSION
For the foregoing reasons, the Court grants in part and denies in part plaintiffs’ Motion to
Compel.
An appropriate order follows.
17
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