Presenting a live 90-minute webinar with interactive Q&A Attorney-Client Privilege in Insurance Disputes Protecting Confidentiality in Claims Handling and Litigation WEDNESDAY, MAY 22, 2013 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Louis A. Chiafullo, Partner, McCarter & English , Newark, N.J. Valarie H. Jonas, Partner, Murchison & Cumming , San Francisco The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Application of the Attorney-Client Privilege in Insurance Defense and in Insurance Coverage Disputes Louis A. Chiafullo, Esq. McCarter & English, LLP Newark, NJ Valarie Jonas, Esq. Murchison & Cumming, LLP San Francisco, CA
Attorney-Client Privilege – the Basics ♦ Evidentiary privileges are created by statute and courts are generally powerless to carve out exceptions or create new ones. ♦ The attorney- client privilege has been described as the “‘oldest rule of privilege known to the common law.’” Upjohn Co. v. United States , 449 U.S. 383, (1981), quoting Wigmore, Evidence §2290 (McNaughton Rev. 4 th ed. 1961).) ♦ For privilege to attach there must first be an attorney-client relationship, and it only protects confidential communications that are made for the purpose of obtaining or providing legal advice . 6
Privilege Defined Privilege attaches where: ♦ 1) legal advice of any kind is sought; ♦ 2) from a professional legal advisor in his capacity as such; ♦ 3) the communication relates to that purpose; and ♦ 4) the communication is made in confidence. ♦ United States v. Evans , 113 F.3d 1457 1461 (7 th Cir. 1997)(citing Wigmore Evidence §2290 (McNaughton Rev. 4 th ed. 1961).) 7
Privilege — the Basics ♦ Privilege protection extends only to communications , not facts. ♦ Upjohn Co. v. United States , 449 U.S. 383, 396(1981). 8
State Law Governs Scope of Privilege in Federal Diversity Cases ♦ Rule 501 of the Federal Rules of Evidence provides that evidentiary privileges are “governed by the principles of the common law as they may be interpreted by the courts of the United States in light of reason and experience. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness, person, government, State or political subdivision thereof shall be determined in accordance with State law.” ♦ See First Pacific Networks Inc. v. Atlantic Mut. Ins. Co ., 163 F.R.D. 574, 577 (N.D. Ca. 1995) (A federal court exercising diversity jurisdiction applies California law to issues relating to the attorney-client privilege.) 9
Who is the “Client” for Purposes of Privilege? ♦ The seminal case which defines who the corporate “client” is for purposes of the attorney client privilege is Upjohn Co. v. United States , 449 U.S. 383 (1981). ♦ In Upjohn, the U. S. Supreme Court rejected the “control group” test, which limited privilege protection to officers and agents responsible for directing the company’s actions, in favor of a broader application of privilege, extending to mid-level and lower level employees — all those who have relevant information needed by the attorney to adequately advise the client. 10
Is Disclosure Reasonably Necessary to Further the Purpose of the Legal Consultation? ♦ While the Court in Upjohn attempted to create a uniform rule that reflects the reality of corporate litigation, the case has not made application of privilege in the insurance context more predictable. Whether privilege attaches in the corporate context continues to be decided on a case by case basis. ♦ See, e.g., Zurich American Ins. Co . (2007) 155 Cal.App.4 th 1485 (remanding on the issue of whether corporate employees fall within the scope of the attorney- client privilege, on a “need to know” basis). 11
Who Owns the Attorney-Client Privilege? Who Can Waive It? ♦ Determined by state law in diversity cases. 12
Who Owns Privilege Where Corporation No Longer Exists? ♦ An April 2013, California Court of Appeal decision has addressed the issue of who owns the privilege where a corporation no longer exists. – Melendrez v. Superior Court , 2013 Cal. App. LEXIS 343 (April 30, 2013) Where a corporation no longer exists and the court is unable to appoint a director or officer to verify discovery, “we believe that the corporation’s attorney -client privilege would be passed to its insurers, the de facto assignee of its policies and the claims against them.”) 13
Scope of Waiver of Attorney-Client Privilege Also Governed by State Law ♦ Garcia v. Progressive Choice Insurance Co ., 2012 U.S. Dist. LEXIS 105932 (S.D. Ca. 2012) (Because attorney-client privilege is governed by state law in diversity cases, California controlled the scope of waiver of the privilege. California law narrowly construes any waiver of privilege and does not recognize “subject matter” waiver.) ♦ Employers Ins. of Wausau v. California Water Service Co ., 2007 U.S. Dist. LEXIS 77363 (N.D. Ca. 2007) (applying California’s narrow view of privilege waiver where documents inadvertently produced) 14
Work Product Doctrine Under FRCP Rule 26(b)(3)(B) ♦ In cases of diversity jurisdiction, federal courts will apply state law to questions of attorney-client privilege. Work product protection in federal diversity cases, on the other hand, is governed by F.R.C.P. 26(b)(3). ♦ But see, Ward v. Equilon Enterprises , 2011 U.S. Dist. LEXIS 75451 (N.D. Ca. 2011) (“Because the work product doctrine is a statutory privilege under California law, work product materials are not automatically discoverable under Rule 26(b)(1).”) 15
Scope of Work Product Protection ♦ F.R.C.P. 26(b)(3) provides that a party is not entitled to discovery of “documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative” unless a showing of substantial need and lack of undue hardship is made. ♦ “The work -product doctrine is a qualified immunity which protects from discovery documents and tangible things prepared by a party or that party’s representative in anticipation of litigation. …The party claiming the work - product privilege bears the burden of establishing that documents claimed as work product were prepared in anticipation of litigation.” ( Kintera Inc. v. Convio , 219 F.R.D. 503, 507 (S.D. Ca. 2003)) 16
Fact versus Opinion Work Product ♦ Fact Work-Product — qualified immunity. – “Fact work -product consists of factual material that is prepared in anticipation of litigation or trial. In determining whether documents were prepared in anticipation of litigation, the court should consider whether the documents ‘would have been generated but for the pendency or imminence of litigation.” ( Kintera, Inc. v. Convio , 219 F.R.D. 503, 507 (S.D. Ca. 2003), quoting Griffith v. Davis , 161 F.R.D. 687, 698- 99 (C.D. Ca. 1995)) 17
Fact versus Opinion Work Product ♦ Opinion Work-Product —“nearly absolute protection” – “Where the selection, organization, and characterization of facts reveals the theories, opinions, or mental impressions of a party or the party’s representative, that material qualifies as opinion work product. …In ordering discovery of such materials, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation. Fed.R.Civ.P. 26(b)(3). ( Kintera, Inc. v. Convio, Inc ., 219 F.R.D. 503, 507 (S.D. Ca. 2003)) – “Opinion work product receives ‘nearly absolute protection.” ( Id.) 18
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