Newport News Holdings, LLC v. Great American Insurance Company

Filing 22

OPINION & ORDER. 15 Motion to Quash is SUSTAINED; the subpoena for Andrew C. Macleay is QUASHED. ORDERED that Newport News Holdings produce a privilege log for any document in Macleay's file over which it claims privilege within 15 days of the date of this Order. Signed by District Judge Henry C. Morgan, Jr., on 1/31/18. (bpet)

FILED

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Newport News Division

JAN 3 1 20lij
CLERK. U.S. DISTRICT COURT
NORFOLK. VA

NEWPORT NEWS HOLDINGS, LLC,
Plaintiff,
Civil Action No. 4:17cvl24

V.

GREAT AMERICAN INSURANCE COMPANY,
d/b/a Great American Insurance Group,
Defendant.

OPINION & ORDER

This matter came before the Court on Plaintiff Newport News Holdings, LLC's

("Newport News Holdings's" or "Plaintiffs") Motion to Quash Defendant Great American
Insurance Company's ("GAIC's" or "Defendant's") Subpoena Duces Tecum to Andrew C.
Macleay ("Macleay"). Doc. 15 ("Motion"). The Court held a hearing on the instant Motion on

January 30, 2018, and SUSTAINED the Motion from the bench. The Court now issues this
Opinion & Order further explaining its ruling.
1.

BACKGROUND

This case involves the owner of a hotel in Newport News suing its insurance company for
coverage of alleged damage that occurred during alleged vandalism to its hotel. See senerallv
Doc. 1, Ex. 1 ("Compl."). Newport News Holdings filed its complaint in the Circuit Court for
the City of Newport News on September 26, 2017. S^ id. GAIC timely removed the case to
this Court on October 31, 2017. Doc. 1. On November 27, 2017, the Parties jointly moved to
bifiircate bad faith claims from the remainder of the insurance claims.

Doc. 13.

The Court

GRANTED that bifurcation on November 28, 2017. Doc. 14. The Court entered a Rule 16(b)

scheduling order on November 30,2017. Doc. 17.

Newport News Holdings filed the instant Motion on November 29, 2017.

Doc. 15.

GAIC responded in opposition on December 13, 2017. Doc. 18. Newport News Holdings
replied on December 18, 2017. Doc. 20.
II.

LEGAL STANDARD

Federal Rule of Civil Procedure 45 governs the issuance, service, and quashing of

subpoenas, including subpoenas duces tecum. See Fed. R. Civ. P. 45. Rule 34(c) permits a party
to serve a request to produce documents within the scope of Rule 26(b) on a non-party. S^ Fed.
R. Civ. P. 34(c).
III.

ANALYSIS

This Motion presents two (2) issues: whether Macleay is an expert such that Newport

News Holdings has a privilege interest in Macleay's files, and whether a Rule 45 subpoena is an

appropriate method for obtaining an expert's files.'
While GAIC does not phrase it as such, its first argument is essentially a standing
argument. "Ordinarily, a party does not have standing to challenge a subpoena issued to a

nonparty unless the party claims some personal right or privilege in the information sought by
the subpoena." Singletarv v. Sterling Transo. Co.. 289 F.R.D. 237, 239 (E.D. Va. 2012) (quoting
United States v. Idema. 118 F. App'x 740, 744 (4th Cir. 2005)). Newport News Holdings claims
privilege over "[cjommunications with a retained or anticipated expert," namely, Macleay, and
"draft version of final reports.. .." Doc. 16 at 4. GAIC counters that Macleay is a public

adjuster and that his files were prepared for pursuing claims, not in anticipation of litigation.
Doc. 18 at 5.

Newport News Holdings attaches its contract with Goodman-Gable-Gould

Company ("GGG"), Macleay's employer, in reply, observing that the agreement states that

' Newport News Holdings agreed at tiie hearing that GAIC remedied two (2)procedural violations originally raised
in the instant Motion.

"GGG agrees to provide litigation services in support of legal matters described above in which

Client has retained C. Thomas Brown, Esq. ("Attorney") as their attorney." Doc. 20 at 4
(quoting Id, Ex. 2 at 1). It also states that its attorney arranged retention of GGG and Macleay
on June 1, 2016, in light of a May 11, 2016 letter from counsel retained by GAIC stating a full
reservation of rights and demanding formal examinations under oath as well as sixteen (16)
categories of documents. Si^ id at 3-4. It represents that it understood a letter from counsel

arriving four (4) months after a loss, with no decision, as preparation for litigation.

id

While GAIC is correct that not every public adjuster is an expert, it has offered no
persuasive explanation why Macleay cannot serve as both an expert and a public adjuster in this
case. GAIC notes that Macleay's contract includes some services that appear more closely
related to his role as a public adjuster than an expert, but it does not dispute the accuracy of the

language "litigation services" beyond arguing that the contract was written broadly to protect

Macleay's files. Even if Newport News Holdings was writing the contract in such a manner,
such a conclusion does not preclude the related conclusion that Newport News Holdings intends
to call Macleay as an expert. Thus, the Court FOUND that Macleay may be properly designated

as an expert, and further FOUND that a privilege interest applies here. The Court further

ORDERED Newport News Holdings to produce a privilege log for any document in Macleay's
file over which it claims privilege within fifteen (15) days of the date of this Order.
The privilege finding does not end the inquiry because Newport News Holdings only

asserts privilege as to some documents while arguing that the remainder of the file is not yet

discoverable. District courts are split on whether a Rule 45 subpoena is appropriate for obtaining
an expert's files, and this District has apparently never taken a position on the issue. Newport
News Holdings urges the adoption of the standard from the Western District of Virginia, which

holds that a bare Rule 45 subpoena duces tecum is an improper evasion of the exclusive expert
discovery provisions of Rule 26(b)(4). Doc. 16 at 3-4 (quoting Marsh v. Jackson. 141 F.R.D.
431,433 (W.D. Va. 1992)). At least one other court in this Circuit, the Western District of North

Carolina, has applied the Western District of Virginia's standard.

Newcomb v. Principal

Mut. Life Ins. Co.. No. I:07cv345, 2008 WL 3539520, at *3 (W.D.N.C. Aug. 11, 2008)
(applying Marsh and collecting cases regarding the Marsh standard). The contrary view is that
Rule 45 is an appropriate tool for discovery on all non-parties, and Rule 26 has no explicit ban
on using Rule 45 subpoenas duces tecum for experts. See, e.g.. Expeditors Int'l of Washington.
Inc. V. Vastera. Inc.. No. 04cv0321, 2004 WL 406999, at *3 (N.D. 111. Feb. 26, 2004) (collecting
cases).

This Court agrees with the Western District of Virginia that a bare Rule 45 subpoena to
an expert is an impermissible evasion of the process for expert discovery. Rule 26(b)(4)(A)

provides that "A party may depose any person who has been identified as an expert whose
opinions may be presented at trial. If Rule 26(a)(2)(B) requires a report from the expert, the
deposition may be conducted only after the report is provided." Fed. R. Civ. P. 26(b)(4)(A). It
then proceeds with detailed limits on what information is discoverable.

id. 26(b)(4)(B)-(D).

Rule 26 does not explicitly prohibit other discovery methods. Nevertheless, as the court in
Marsh observed, this framework "contemplate[s] gathering information first from the party viz
Rule 26(b)." Marsh. 141 F.R.D. at 433. Allowing Parties to serve a bare Rule 45 subpoena
duces tecum on experts before the Rule 26(b) disclosures would function as an end-run around
this framework for expert discovery.

Thus, the Court ADOPTED the standard in Marsh.

FOUND that GAIC's Rule 45 subpoena to Macleay is procedurally defective because it occurs

outside the Rule 26(b)(4) framework, and QUASHED the subpoena, SUSTAINING the instant
Motion.

Banning a Rule 45 subpoena at this stage does not give Newport News Holdings a license
to withhold a wide swath of files, though, because the scope of the privilege for expert files is a
qualified privilege. See Fed. R. Civ. P. 26(b)(4). It must produce materials at the appropriate
time for expert discovery, working cooperatively to facilitate expert discovery and deposition in
advance of trial. If any disputes arise regarding materials listed on the ordered privilege log and

whether they are truly privilege, the Court will reviews those documents in camera on receipt of
a proper motion.
IV.

CONCLUSION

For the reasons stated herein, the Court SUSTAINED the Motion to Quash, Doc. 15, and

QUASHED the subpoena to Andrew C. Macleay. The Court further ORDERED Newport

News Holdings to produce a privilege log for any document in Macleay's file over which it
claims privilege within fifteen (15) days of the date of this Order.
The Clerk is REQUESTED to send a copy of this Opinion & Order to all counsel of
record.
It is so ORDERED.

Henr)- Coke iVloruan, .Tr.
Senior United Slalcs District

HENRY COKE MORGAN, JR>
SENIOR UNITED STATES DISTRICT JUDGE

Norfolk, Virginia

January 3/ , 2018