Nationwide Agribusiness Insurance Company et al v. Meller Anlagenbau GMBH

Filing 33

DECISION AND ORDER signed by Judge Rudolph T Randa on 8/29/2013 GRANTING 27 Meller's Motion to Compel Production of Witness Statements and Incident Report; and GRANTING 32 Meller's Motion to Supplement the Record on its Motion to Comp el Production of Witness Statements and Incident Report. If the plaintiff wants the Court to conduct an in camera review of the documents at issue in ECF No. 27, it should submit those documents under seal within 10 days of the date of this Order. The Scheduling Order, ECF No. 24, is amended as follows: the deadline for Fact Discovery is 2/28/2014; the deadline for Expert Discovery is 6/13/2014. (cc: all counsel) (Zik, Linda)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
NATIONWIDE AGRIBUSINESS
INSURANCE COMPANY,
Plaintiff,
FRANSISCO ALCALA,
Involuntary Plaintiff,
Case No. 12-C-1227

-vsMELLER POULTRY EQUIPMENT, Inc. and
MELLER ANLAGENBAU GMBH,
Defendants.
DECISION AND ORDER

Francisco Alcala fell through a platform while working at the S&R Egg Farm
facility in Palmyra, Wisconsin

The platform was designed by the defendants, a

Canadian corporation and a German corporation, collectively referred to as “Meller.”
In this lawsuit, S&R’s workers compensation insurer, Nationwide Agribusiness
Insurance Company, is pursuing subrogated claims against Meller. Now before the
Court are two issues related to discovery.
First, the parties submitted briefs regarding their disagreement over the
appropriate deadline for fact discovery. Meller argues that fact discovery should stop
before expert discovery starts because ongoing fact discovery would invite wasteful

supplemental expert reports that increase the expense of litigation. Nationwide wants
fact discovery to continue while expert discovery is ongoing, but at this stage of the
proceedings, Nationwide has no idea if it will actually need to conduct additional fact
discovery in response to Meller’s experts.

Therefore, the Court will adopt the

discovery schedule proposed by Meller. Nationwide can always move to re-open fact
discovery if it can establish “good cause.” Fed. R. Civ. P. 16(b)(4).
Second, Meller moves to compel the production of certain witness statements
and an incident report, which Nationwide claims are protected work product.
“Ordinarily, a party may not discover documents and 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)(A). As the Court noted just over a year ago, the “key phrase
in the rule is whether the documents were produced ‘in anticipation of litigation.’”
Farr v. Paikowski, No. 11-C-789, 2012 WL 3150291, at *1 (E.D. Wis. July 31, 2012).
“Prudent parties anticipate litigation, and begin preparation prior to the time suit is
formally commenced. Thus the test should be whether, in light of the nature of the
document and the factual situation in the particular case, the document can fairly be
said to have been prepared or obtained because of the prospect of litigation.” Binks
Mfg. v. Nat’l Presto Indus., Inc., 709 F.2d 1109, 1118-19 (7th Cir. 1983) (emphasis in
original).
In the insurance context, the following formulation regarding the work product
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privilege is persuasive:
Fed. R. Civ. P. 26(b)(3) requires that a document or thing produced or
used by an insurer to evaluate an insured’s claim in order to arrive at a
claims decision in the ordinary and regular course of business is not
work product regardless of the fact that it was produced after litigation
was reasonably anticipated. It is presumed that a document or thing
prepared before a final decision was reached on an insured’s claim, and
which constitutes part of the factual inquiry into or evaluation of that
claim, was prepared in the ordinary and routine course of the insurer’s
business of claim determination and is not work product. Likewise,
anticipation of litigation is presumed unreasonable under the Rule
before a final decision is reached on the claim. The converse, of course,
is presumed for documents produced after claims denial. To overcome
these presumptions, the insurer must demonstrate, by specific
evidentiary proof of objective facts, that a reasonable anticipation of
litigation existed when the document was produced, and that the
document was prepared and used solely to prepare for that litigation,
and not to arrive at a (or buttress a tentative) claim decision.
Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655, 663-64 (S.D. Ind. 1991) (emphases
added). In other words, because it is “reasonable to assume that a reasonable insurer
would make a claims decision only after it possessed the minimum amount of
information it required to make that decision,” courts will “presume that documents
which were produced by an insurer for concurrent purposes before making a claims
decision would have been produced regardless of litigation purposes and therefore do
not constitute work product.” Stout v. Ill. Farmers Ins. Co., 150 F.R.D. 594, 605 (S.D.
Ind. 1993). The presumption can be overcome by “specific evidentiary proof of
objective facts to the contrary.” Id.
The Court presumes that litigation was reasonably anticipated simply as a
result of the accident that injured Alcala. Floors should not just collapse under the
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weight of one man. However, it is apparent, although not explicitly admitted by
Nationwide, that the documents and statements at issue were all generated before
Nationwide decided to pay Alcala’s claim. Thus, in the language of the Harper
decision, Nationwide must demonstrate that the documents Meller is seeking were
“prepared and used solely to prepare for that litigation, and not to arrive at a (or
buttress a tentative) claim decision.” Despite its best efforts, Nationwide has failed to
meet this burden.
Nationwide provided the affidavit of Renata Schuch, the adjuster who is
handling Alcala’s workers compensation claim. Shuch’s affidavit essentially concedes
that the “sole purpose” standard has not been met. For example, she avers as follows:
[I]n certain other cases, including particularly this case where at all
times the circumstances of the injury raised the prospect of litigation
over [Nationwide’s] subrogation interests, the primary purposes of
obtaining the injured worker’s statement are more varied and the
prospect of litigation took on a fundamental level of importance. One
purpose, obviously, for taking Mr. Alcala’s statement was simply to
obtain information about the event so that next steps can be taken with
respect to the claim, both for litigation purposes and for the purposes of
handling the workers compensation claim.
Schuch Aff., ¶ 9 (emphases added). Similarly, Schuch concedes that the “first primary
purpose” in interviewing Thomas Mendez, Alcala’s supervisor, “was to investigate the
accident to determine claims and defenses in any case that might be filed against
[Nationwide] or [its] insured by Mr. Alcala.”

Id., ¶ 11 (emphasis added).

The

existence of multiple purposes defeats the claim of privilege with respect to these
documents.
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Schuch also avers that the statement of Jesus Rivera “most likely would not
have been obtained but for the likelihood that litigation would occur arising out [of]
Mr. Alcala’s injuries. It is not routine for [Nationwide] to take a co-employee’s
statement with respect to workers’ compensation claims.” Id., ¶ 15. Simply because
this interview was unusual, or even that it would not have been taken but for the
likelihood of prospective litigation, does not demonstrate that it was taken for the sole
purpose of aiding in that litigation. Again, Alcala’s workers’ compensation claim was
still outstanding, so claim adjustment was a presumptive motivating factor.
Finally, Nationwide sought information from S&R concerning “‘the company
name that was responsible for erecting the second floor structure, when it was done,’
among other information.” Id., ¶ 12. In response, S&R “furnished a confidential
statement of investigation, in which it . . . specifically notes that the report is for
[Nationwide’s] ‘investigation and potential litigation against Meller.’” Id., ¶ 13. This
vague description of the report’s content is not enough to meet Nationwide’s burden
under the sole purpose test articulated above. That said, Nationwide insists that if
there is any doubt about the nature of this report (and, for that matter, the statements
discussed above), the Court should conduct an in camera review. If Nationwide still
thinks that it is entitled to the privilege, even in light of the foregoing discussion, the
Court will conduct an in camera review at Nationwide’s request. Subject to that
possibility, Meller’s motion to compel will be granted.

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NOW, THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY
ORDERED THAT:
1.

The Scheduling Order, ECF No. 24, is amended as follows.

The

deadline for fact discovery is February 28, 2014. The deadline for expert discovery is
June 13, 2014; and
2.

Meller’s motions to compel [ECF No. 27] and to supplement [ECF No.

32] are GRANTED. If Nationwide wants the Court to conduct an in camera review of
the documents at issue in ECF No. 27, it should submit those documents under seal
within ten (10) days of the date of this Order.
Dated at Milwaukee, Wisconsin, this 29th day of August, 2013.

BY THE COURT:

__________________________
HON. RUDOLPH T. RANDA
U.S. District Judge

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