SMITH v. PROGRESSIVE SPECIALTY INSURANCE COMPANY

Filing 23

MEMORANDUM ORDER granting in part Plaintiff's 19 MOTION TO COMPEL AND/OR EXTEND THE DISCOVERY DEADLINE, as set forth therein. Signed by Judge Terrence F. McVerry on 11/04/15. (mcp)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
FRANCINE SMITH,
Plaintiff,
v.
PROGRESSIVE SPECIALTY INSURANCE
COMPANY,
Defendant.

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MEMORANDUM ORDER
Pending before the Court is a MOTION TO COMPEL AND/OR EXTEND THE
DISCOVERY DEADLINE (ECF No. 19) filed by Plaintiff Francine Smith with a brief in
support (ECF No. 21). Defendant Progressive Specialty Insurance Company filed a brief in
opposition (ECF No. 22). For the reasons that follow, the motion is GRANTED IN PART.
Plaintiff commenced this action on March 23, 2015 by filing a Complaint against her
automobile insurance carrier, Progressive, in the Court of Common Pleas of Allegheny County,
Pennsylvania, alleging state law claims for breach of contract and bad faith relative to an
underinsured motorist (“UIM”) claim. Progressive timely removed the action to this Court. The
Court thereafter entered a Case Management/Scheduling Order that required the completion of
all fact discovery on or before November 6, 2015.
As part of the discovery process, Plaintiff served Defendant with her First Set of
Interrogatories and Request for Production of Documents in which she sought copies of the
entire claims file(s), including “any and all notes that were hand written or computer generated,
and notes of any meetings concerning Plaintiff’s claims . . . .” In response, Defendant stated that
it “w[ould] produce the non-privileged portions of the confidential UIM claims notes (SMITH

1000-1054 AND SMITH 2000-2006) upon receipt of a reasonable Confidentiality Agreement,”
which Plaintiff ultimately executed.
Following that exchange, Defendant provided Plaintiff with “the non-privileged portions
of the confidential UIM claim notes” along with a Privilege Log. The Privilege Log generically
describes the (redacted) document(s) as “[m]ental impressions, opinion, and conclusions
regarding value and merits of claim, strategy and tactics, reserve information” and asserts
privileges which it identifies as some variation of “[n]on-relevant, confidential and proprietary
work product” or based upon the “[a]ttorney-client privilege.”

According to Plaintiff,

Defendant’s response suggests that it redacted signification of the claim file pertaining to
reserves as well as the insurance adjusters’ impressions, conclusions, and opinions,
Plaintiff has filed a motion to compel in which she argues that the redactions related to
Defendant’s valuations of her UIM claim and reserves are “relevant to [her] bad faith claim, as it
has been alleged that [Progressive] failed to properly investigate and evaluate her case in
accordance with the duty of good faith and fair dealing.” From her perspective, the “unredacted
and complete claim file” is thus “essential to the preparation of Plaintiff’s case,” including the
depositions of those persons who allegedly investigated and evaluated her UIM claim – i.e.,
Chad Walker, Christina Romanelli, and/or Jane Kennedy. Accordingly, Plaintiff requests that
the Court enter an order directing Defendant to (1) produce any reserve information it had
redacted in the claims file; (2) produce all entries it has redacted in the UIM claim notes based
upon the “work product doctrine” for an in camera review and determination of whether those
documents were prepared in anticipation of litigation; and (3) produce any portion of the claim
file redacted pursuant to the so-called “confidential and proprietary” privilege in light of the
parties’ execution of the Confidentiality Agreement.

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Defendant opposes this motion on several grounds – some of which smack of
gamesmanship.1 Be that as it may, its argument boils down to the position that its UIM claim
notes and reserve information are protected from discovery as opinion work product.
Alternatively, Defendant urges the Court to conduct an in camera review of the allegedly
privileged documents in question before ordering the production of same.
A. Reserve Information
“There is competing treatment of whether reserve information is discoverable in a bad
faith lawsuit.” Shaffer v. State Farm Mut. Auto. Ins. Co., No. 1:13-CV-01837, 2014 WL 931101,
at *3 (M.D. Pa. Mar. 10, 2014). As the United Stated States District Court for the Middle
District of Pennsylvania recently explained:
Some courts have determined that information related to reserve values is not
discoverable. See, e .g., Kaufman v. Nationwide Mut. Ins. Co., Civ. No. 97–cv–
1114, 1997 WL 703175, *1 (E.D. Pa. 1997) (“[P]rocedure for setting reserves . . .
is confidential information which a court should not order to be disclosed unless
the relevance of the information is clear and disclosure is necessary.”). Other
courts, however, have found that “reserves, of course, must have some
relationship to the insurer's estimation of the insured’s potential liability.
Otherwise, the setting aside of reserves would serve little, if any purpose.” North
River Ins. Co. v. Greater N.Y. Mut. Ins. Co., 872 F. Supp. 1411, 1412 (E.D. Pa.
1995). Thus, the amount set aside for reserves “is certainly germane to any
analysis [the defendant-insurer] made of” the claim’s value and is relevant to
the determination of whether the defendant-insurer acted in bad faith in
processing the claim. Id.
Keefer v. Erie Ins. Exch., No. 1:13-CV-1938, 2014 WL 901123, at *3 (M.D. Pa. Mar. 7, 2014)
(emphasis added). Applying that standard, the court “agree[d] with Plaintiff that the amount of
reserve, if any, assigned to Plaintiff’s UIM claim should be produced.” Id.

1. For instance, Defendant states that “[a]s Plaintiff has executed a Confidentiality Agreement, Progressive will no
longer argue that it is entitled to protection of the reserve information on the basis that it is confidential and
proprietary. However, Progressive remains entitled to protect the reserves from discovery because the reserves
constitute opinion work product.” This sort of hide-the-ball approach does little to advance this litigation.

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The Court finds that decision instructive. Accordingly, on or before November 12, 2015
Defendant shall produce to Plaintiff any reserve information it had previously redacted in the
claim file.
B. The UIM Claims File
“The defendant’s claims file is discoverable in a bad-faith case like this one, as
information in that file on defendant’s decision to deny the claim is relevant or could lead to
potentially relevant information.” Consugar v. Nationwide Ins. Co. of Am., No. 3:10CV2084,
2011 WL 2360208, at *2 (M.D. Pa. June 9, 2011) (collecting cases). At the same time, “[c]ourts
have found that institution of a bad faith claim does not automatically waive attorney-client
privilege or the work product doctrine.” Berry v. Ohio Cas. Ins. Co., No. CIV.A. 3:14-1262,
2015 WL 4066683, at *3 (M.D. Pa. July 2, 2015) (citing McCrink v. Peoples Benefit Life Ins.
Co., No. CIV.A.2:04CV01068LDD, 2004 WL 2743420, at *3 (E.D. Pa. 2004). And where, as
here, a party has lingering concerns that information is being wrongfully withheld on attorneyclient or work product privilege grounds, s/he may of course challenge those assertions through
an appropriate motion with the court. See Consugar, 2011 WL 2360208, at *3 (citing Fid. &
Deposit Co. of Maryland v. McCulloch, 168 F.R.D. 516, 524 (E.D. Pa. 1996); Provident Life &
Acc. Ins. Co. v. Nissenbaum, No. Civ. A. 97–5666, 1998 WL 800323, * 1 (E.D. Pa. November
17, 1998)).
Plaintiff has done so in this case. Without an in camera review, however, the Court
cannot decide whether particular documents in the claim file are subject to Defendant’s blanket
assertions of privilege. Accordingly, on or before on or before November 12, 2015, Defendant
shall produce to the Court all entries it has previously redacted in the UIM claim notes (i.e.,
SMITH 1000-1054 AND SMITH 2000-2006) based upon the work product doctrine.

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If,

however, Defendant voluntarily produces that information to Plaintiff before the deadline
imposed, it shall notify the Court forthwith.
C. Confidential / Proprietary Information
As to any portion of the claim file Defendant redacted pursuant to its so-called
“confidential and proprietary” privilege, disclosure of that information appears adequately
protected by the parties’ confidentiality agreement. If Defendant maintains a different view, it
may file a (joint) motion for a protective order. Accordingly, on or before November 12, 2015
Defendant shall produce to Plaintiff any information it had previously redacted pursuant to this
designation.
D. Post-Discovery Status Conference
The Post-Discovery Status Conference scheduled on Friday, November 6, 2015 is hereby
CANCELLED, which the Court will reschedule at its convenience after it conducts an in
camera review of the material at issue. In the meantime, the parties should endeavor to reach an
amicable resolution of this dispute.
SO ORDERED, this 4th day of November, 2015.
BY THE COURT:
s/Terrence F. McVerry
Senior United States District Judge
cc:

Anthony J. Erlain
Email: [e-mail]
Daniel J. Twilla
Email: [e-mail]
Jeffrey A. Ramaley
Email: [e-mail]

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