State of Wisconsin Local Government Property Insurance Fund v. Lexington Insurance Company et al

Filing 114

ORDER signed by Judge J.P. Stadtmueller on 6/28/2017 GRANTING 88 Defendant Lexington Insurance Company's Motion to Compel. Plaintiff ORDERED to produce withheld documents as specified. See Order for further details. (cc: all counsel) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
STATE OF WISCONSIN LOCAL
GOVERNMENT PROPERTY
INSURANCE FUND,

v.

Case No. 15-CV-142-JPS-JPS

Plaintiff,

LEXINGTON INSURANCE
COMPANY, THE CINCINNATI
INSURANCE COMPANY, and
MILWAUKEE COUNTY,

ORDER

Defendants.
On May 17, 2017, Defendant Lexington Insurance Company
(“Lexington”) filed a motion to compel production of certain documents
from Plaintiff State of Wisconsin Local Government Property Insurance
Fund (the “Fund”). (Docket #88). Lexington sent subpoenas to three nonparty engineering consultation firms the Fund had hired soon after it
received Milwaukee County’s (the “County”) claim underlying this matter:
Neenah Engineering (“Neenah”), Amset, Inc. (“Amset”), and Unified
Investigations & Sciences, Inc. (“Unified). (Docket #89 at 2; Docket #92 at 23). The subpoenaed documents were produced to the Fund, who withheld
some on the basis of the work product doctrine. (Docket #89 at 3; Docket
#92 at 5). Lexington disputed the Fund’s assertion of the doctrine and
claimed that the Fund’s privilege logs were lacking requisite detail. (Docket
#89 at 3). Though the parties have since been able to agree on certain
additional productions, the core of their dispute about the work product
doctrine remains. (Docket #92 at 5-6).

Codified at Federal Rule of Civil Procedure 26(b)(3), the workproduct doctrine is designed to serve dual purposes: (1) to protect an
attorney’s thought processes and mental impressions against disclosure;
and (2) to limit the circumstances in which attorneys may piggyback on the
fact-finding investigation of their more diligent counterparts. Sandra T.E. v.
S. Berwyn Sch. Dist. 100, 600 F.3d 612, 621–22 (7th Cir. 2010); see also Hickman
v. Taylor, 329 U.S. 495 (1947). The doctrine protects from discovery
“documents and tangible things that are prepared in anticipation of
litigation or for trial by or for another party or its representative.” Fed. R.
Civ. P. 26(b)(3)(A); Appleton Papers, Inc. v. E.P.A., 702 F.3d 1018, 1022 (7th
Cir. 2012). A party claiming work-product protection must show that the
materials sought are: “(1) documents and tangible things; (2) prepared in
anticipation of litigation or for trial; and (3) by or for a party or by or for a
party’s representative.” Boyer v. Gildea, 257 F.R.D. 488, 490 (N.D. Ind. 2009)
(citation omitted); see Binks Mfg. Co. v. Nat'l Presto Indus., Inc., 709 F.2d 1109,
1118 (7th Cir. 1983).
The Seventh Circuit notes “a distinction between precautionary
documents ‘developed in the ordinary course of business’ for the ‘remote
prospect of litigation’ and documents prepared because ‘some articulable
claim, likely to lead to litigation, [has] arisen.’” Sandra T.E., 600 F.3d at 622
(quoting Binks, 709 F.2d at 1120). Only documents prepared in the latter
circumstances receive work-product protection. Sandra T.E., 600 F.3d at 622.
“While litigation need not be imminent, the primary motivating purpose
behind the creation of a document or investigative report must be to aid in
possible future litigation.” Binks, 709 F.2d at 1119 (citation omitted). In other
words, the party seeking work product protection must point to “objective
facts establishing an identifiable resolve to litigate[.]” Id. (citation omitted).
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“[D]ocuments that are created in the ordinary course of business or that
would have been created irrespective of litigation are not under the
protection of the work product doctrine.” Caremark, Inc. v. Affiliated
Computer Servs., Inc., 195 F.R.D. 610, 614 (N.D. Ill. 2000) (citation omitted).
Thus, “whether a document is protected depends on the motivation behind
its preparation, rather than on the person who prepares it.” Id. at 615.
Judge Foster of the Southern District of Indiana provides an excellent
formulation of this standard as applied to insurance companies:
Based on [its] review of the law, the Court concludes
that 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).
The Court finds that the subject documents are not entitled to
protection under the work product doctrine. Preliminarily, it is important
to note that the Fund bears the burden to prove that the doctrine applies. It
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has not carried this burden for three reasons. First, in accordance with
Harper, the Court presumes that the Fund’s investigation was part of its
business as an insurance company to evaluate the County’s claim. The Fund
may have defeated this presumption by showing that it made a final
decision on the County’s claim at a certain point, thereby establishing at
least an arguable basis for work product protection after that time. The
Fund has made no such argument.1
Second, the parties disagree on the proper standard to determine
what is “prepared in anticipation of litigation.” The Fund maintains that its
investigation efforts can have multiple purposes, namely adjusting a claim
and anticipating litigation, and still merit protection, so long as the
anticipation purpose is primary. Lexington counters that dual purposes
defeat an assertion of the work product doctrine, and that in any event, the
anticipating litigation purpose must be proven by objective facts
establishing “a substantial and significant threat of litigation[.]” MSTG, Inc.
v. AT&T Mobility LLC, No. 08-C-7411, 2011 WL 221771, at *9 (N.D. Ill. Jan.
20, 2011) (quotation omitted).
The Court believes that in the context of insurance companies, as
observed by Harper, the standard favors Lexington’s formulation. To that
end, the testimony of the Fund’s manager does not provide objective facts
demonstrating a threat of litigation beyond what attends the business of
insurance companies. The fact that the claim was large, the investigation
was extensive, and the possibility of subrogation or reinsurance was

The Fund refers to the fact that as of August 2, 2013, it had already
“advanced” $4 million on the claim. (Docket #92 at 4). It says nothing about the
status of the claim as a whole, and the word “advanced” suggests that a final
decision had not yet been made.
1

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present does not show a qualitative difference between this case and any
normal claim investigation and adjustment. The other primary fact the
Fund relies on is Lexington’s “combative attitude” from the outset of the
investigation. (Docket #93 at 4). This too is common for insurers; they are
generally loathe to quickly acknowledge coverage and make payments. In
sum, it is clear that the Fund could rightly anticipate litigation after it
received Lexington’s final decision to deny coverage. Prior to that time,
however, the Fund has not convinced the Court that its primary aim in
hiring the subject consultants was to fight Lexington rather than carrying
out its own investigation duties.
Third, the Fund gestures at an argument that the consultant firms’
files are protected from discovery because they are non-testifying experts.
See Fed. R. Civ. P. 26(b)(4)(D) (“Ordinarily, a party may not, by
interrogatories or deposition, discover facts known or opinions held by an
expert who has been retained or specially employed by another party in
anticipation of litigation or to prepare for trial and who is not expected to
be called as a witness at trial.”). Though the Fund references this position
in the introduction and statement of facts portions of its brief, it fails to
develop the point in the argument portion. The Court will not complete the
argument on the Fund’s behalf. United States v. Leo, 792 F.3d 742, 749 (7th
Cir. 2015) (“As we often warn litigants, it is not our responsibility to make
the parties’ arguments for them.”).2 Further, Rule 26(b)(4)(D) operates as an
extension of the work product doctrine. Appleton Papers, Inc. v. E.P.A., 702

In this same vein, the Fund has not argued that Lexington’s request is
improper on any ground besides a violation the work product doctrine, such as
overbreadth, undue burden, or not being subject to proper time constraints. The
Court will, therefore, grant Lexington precisely what it asked for.
2

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F.3d 1018, 1024 (7th Cir. 2012). For the same reasons discussed above, that
doctrine does not apply to the consultants’ work.
Finally, the Court notes that the Fund’s response mentions its desire
for the Court to compel more complete privilege logs from Lexington.
(Docket #92 at 11-12). This is not presented in the form of a motion, nor does
the Fund offer a Civil Local Rule 37 certification as to its discussions with
Lexington on this issue. The Court cannot, therefore, compel Lexington to
do anything with respect to its privilege logs. The Court nevertheless trusts
that all parties will provide the most complete document productions
possible, including appropriately detailed privilege logs, and revise any
that are outstanding which may not meet the applicable requirements. See
Fed. R. Civ. P. 26(b)(5)(A)(ii); Brooks v. Gen. Cas. Co. of Wis., No. 06-C-996,
2007 WL 218737, at *2 (E.D. Wis. Jan. 26, 2007) (describing level of detail
required in a privilege log, lest the desired privilege be waived entirely).
Accordingly,
IT IS ORDERED that Defendant Lexington Insurance Company’s
motion to compel (Docket #88) be and the same is hereby GRANTED; and
IT IS FURTHER ORDERED that Plaintiff State of Wisconsin Local
Government Property Insurance Fund produce:
1.

All documents withheld from the Unified production;

2.

All documents withheld form the Neenah production;

3.

All documents withheld from the Amset production created
before November 24, 2014, as well as the eight emails listed
on page 20 of 32 of the Amset log dated November 25, 2014
and December 1, 2014.

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Dated at Milwaukee, Wisconsin, this 28th day of June, 2017.
BY THE COURT:

____________________________________
J. P. Stadtmueller
U.S. District Judge

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