In this
proceeding, the petitioner sought a writ of prohibition to preclude the trial
court from enforcing its order requiring the disclosure of insurance reserve
information. The petitioner argued that the insurance reserve information was
protected from disclosure by the work product doctrine. The majority opinion
granted the writ, but for reasons different than that argued by the petitioner.
The majority opinion determined that the writ should be issued for the purpose
of requiring the trial court to make a determination of whether the insurance
reserve information was relevant or reasonably calculated to lead to the discovery
of admissible evidence. I concur in the grounds selected by the majority opinion
to grant the writ. I have chosen to write separately to make clear that even
if insurance reserve information is found to be relevant or reasonably calculated
to lead to the discovery of admissible evidence, it may still be found to be
undiscoverable under the work product doctrine or the attorney-client privilege. (See
footnote 1) Both issues, in the context presented, are
of matters first impression for this Court.
There
are two types of work product set out under Rule 26(b)(3) of the West Virginia
Rules of Civil Procedure: factual and opinion. (See
footnote 2) Under Rule 26(b)(3), factual work product refers to
documents and tangible things that were prepared in anticipation of litigation
or for trial (1) by or for a party, or (2) by or for that party's representative,
which includes an attorney, consultant, surety, indemnitor, insurer, or agent. (See
footnote 3) When “'factual' work
product is involved, the party demanding production must show a 'substantial
need' for the material and establish that the same material or its equivalent
cannot be obtained through other means without 'undue hardship.'” Franklin
D. Cleckley, Robin J. Davis and Louis J. Palmer, Jr., Litigation Handbook
on West Virginia Rules of Civil Procedure, § 26(b)(3), at 557 (2000).
Opinion work product consists of mental impressions, conclusions, opinions
or legal theories that are contained in factual work product. “Where opinion
work product is involved, the showing required to obtain discovery is stronger
than that for factual work product, because the rule states that 'the court
shall protect against disclosure of mental impressions, conclusions, opinions
or legal theories.'” Id. Opinion work product “enjoys a nearly
absolute immunity and can be discovered in only very rare and extraordinary
circumstances.” Id., at 557-58. (See
footnote 4) The cases discussing requests to produce reserve information
do so in the context of the opinion work product doctrine. (See
footnote 5)
There
are two leading cases addressing the issue of the application of the opinion
work product doctrine to reserve information. The two cases have reached different
conclusions. For the sake of analysis, I refer to the two cases as the Simon view
and the Rhone-Poulenc view.
1.
Simon view. Simon v. G.D. Searle & Co., 816 F.2d 397 (8th Cir.
1987), cert. denied, 484 U.S. 917, 108 S. Ct. 268, 98 L. Ed. 2d 225
(1987), sets out principles for application of the opinion work product doctrine
to reserve information. Simon was a products liability case that was reviewed
by the Eighth Circuit Court of Appeals on two certified questions. One of the
issues in the certified questions concerned whether the opinion work product
doctrine barred discovery of risk management documents compiled by nonlawyers,
but which contained “aggregate” reserve information that was derived
from “individual” reserve information that was determined by lawyers.
The Court of Appeals examined this issue in three parts.
First,
the decision held that the risk management documents, themselves, were not prepared
in anticipation of litigation, and were, therefore, not protected from disclosure
by the opinion work product doctrine. Next, Simon addressed in the abstract
the issue of the individual reserve information commingled with risk management
documents as follows:
Although
the risk management documents were not themselves prepared in anticipation of
litigation, they may be protected from discovery to the extent that they disclose
the individual case reserves calculated by Searle's attorneys. The individual
case reserve figures reveal the mental impressions, thoughts, and conclusions
of an attorney in evaluating a legal
claim. By their very nature they are prepared in anticipation of litigation
and, consequently, they are protected from discovery as opinion work product.
Simon, 816 F.2d at 401. Finally, Simon indicated the following
with respect to the aggregate reserve information that was derived from individual
reserve information:
We
do not believe, however, that the aggregate reserve information reveals the individual
case reserve figures to a degree that brings the aggregates within the protection
of the work product doctrine. The individual figures lose their identity when
combined to create the aggregate information. Furthermore, the aggregates are
not even direct compilations of the individual figures; the aggregate information
is the product of a formula that factors in variables such as inflation, further
diluting the individual reserve figures. Certainly it would be impossible to
trace back and uncover the reserve for any individual case, and it would be a
dubious undertaking to attempt to derive meaningful averages from the aggregates,
given the possibility of large variations in case estimates for everything from
frivolous suits to those with the most serious injuries. The purpose of the work
product doctrine--that of preventing discovery of a lawyer's mental impressions--is
not violated by allowing discovery of documents that incorporate a lawyer's thoughts
in, at best, such an indirect and diluted manner. Accordingly, we hold that the
work product doctrine does not block discovery of [the] risk management documents
or the aggregate case reserve information contained therein.
Simon, 816 F.2d at 401-02. See also General Elec. Capital
Corp. v. DIRECTV, Inc., 184 F.R.D. 32 (D. Conn. 1998) (relying
on Simon to require reserve information be disclosed); Gutter v.
E.I. Dupont de Nemours & Co., No. 95-C-2152, 1998 WL 2017926 (S.D. Fla.
May 18, 1998) (same); Athridge v. Aetna Cas. & Sur. Co.,
184 F.R.D. 181 (D.D.C. 1998) (reserve information was not prepared in anticipation
of litigation and therefore not protected by
opinion work product rule); In re Pfizer Inc. Secs. Litig., No. 90 Civ.
1260 (SS), 1993 WL 561125 (S.D. N.Y Dec. 23, 1993) (relying on Simon to
require reserve information be disclosed); Champion Int'l Corp. v. Liberty
Mut. Ins. Co., 128 F.R.D. 608 (S.D.N.Y. 1989) (reserve information was
not prepared in anticipation of litigation and therefore not protected by opinion
work product rule); Cook v. Wake County Hosp. Sys., Inc., 482 S.E.2d
546 (N.C. Ct. App. 1997) (relying on Simon to find risk management
documents discoverable).
In sum, Simon stands
for four propositions. First, risk management documents that are not prepared
in anticipation of litigation are not protected by the opinion work product rule.
Second, attorney generated individual reserve information is protected by the
opinion work product rule. Third, risk management documents that are not prepared
in anticipation of litigation, but which contain attorney generated individual
reserve information, are protected by the opinion work product rule. Fourth,
aggregate reserve information that is compiled by nonlawyers, but is derived
from individual reserve information compiled by lawyers, is not protected by
the opinion work product rule.
2.
Rhone-Poulenc view. Rhone-Poulenc Rorer Inc. v. Home Indemnity Co.,
139 F.R.D. 609 (E.D. Pa. 1991), established sightly different principles for
the application of the opinion work product doctrine to reserve information. Rhone-Poulenc was
an AIDS-related litigation brought by corporate policyholders against their insurers.
One of the
issues addressed in the opinion was a motion by the plaintiffs requesting information
and documents concerning the reserves that the insurers had created for the
underlying AIDS-related claims. In resolving this issue, the Rhone-Poulenc court
addressed the issues of individual reserve information, aggregate reserve information,
and risk management documents.
With
respect to individual reserve information Rhone Poulenc held succinctly
that:
The
individual case reserve figures reveal the mental impressions, thoughts, and
conclusions of an attorney in evaluating a legal claim. By their very nature
they are prepared in anticipation of litigation, and consequently, they are protected
from discovery as opinion work-product.
Rhone-Poulenc, 139 F.R.D. at 614. Addressing the issue of aggregate
reserve information derived from individual reserve information, Rhone Poulenc held:
[T]he
aggregate reserve figures may give some insight into the mental processes of
the lawyers in setting specific case reserves. This is inevitable, considering
that these aggregates and averages are based upon the attorney's evaluations
of the value of specific claims. Notably, this is not a situation where mental
impressions are merely contained within and comprise a part of another document
and can easily be redacted. Instead, the aggregate and average figures are derived
from and necessarily embody the protected material. They could not be formulated
without the attorney's initial evaluations of specific legal claims. Thus it
is impossible to protect the mental impressions underlying the specific case
reserves without also protecting the aggregate figures.
Rhone-Poulenc, 139 F.R.D. at 614-15. Finally, in resolving the issue
of risk management documents, the decision in Rhone Poulenc addressed
the issue in two ways:
Although
these risk management documents being sought by plaintiffs may not have in themselves
been prepared in anticipation of litigation, they may be protected from discovery
to the extent that they disclose the individual case reserves calculated by defendants'
attorneys. . . .
.
. . .
It
can be argued, of course, that while this Court is protecting the mental impression/opinion
work product concerning the attorney's evaluation of the reserve necessary for
each lawsuit that I should not grant similar protection to any risk management
department's opinion work-product concerning an aggregate reserve necessary for
the underlying litigation. I find no basis in Rule 26(b)(3) for this distinction.
Rule 26(b)(3) requires a court to “protect against disclosure of the mental
impressions, conclusions opinions or legal theories of an attorney or other representative
of a party concerning the litigation.” Thus protective work product is not
confined to information or materials gathered or assembled by a lawyer. Instead,
it includes materials gathered by any consultant, surety, indemnitor, insurer,
agent, or even the party itself. The only question is whether the mental impressions
were documented, by either a lawyer or non-lawyer in anticipation of litigation.
Rhone-Poulenc, 139 F.R.D. at 614-15 (internal citations omitted). See
also Frank Betz Assocs., Inc. v. Jim Walter Homes, Inc., 226 F.R.D. 533
(D.S.C. 2005) (opinion work product rule protected disclosure of reserve information); Boston
Gas Co. v. Century Indem. Co., No. Civ. A. 02-12062-RWZ, 2005 WL 2150530
(D. Mass. Aug. 31, 2005) (same); J.C. Assocs. v. Fidelity & Guar.
Ins. Co., No. Civ. A. 01-2437 RJLJM, 2003 WL 1889015 (D.D.C. Apr. 15, 2003)
(same); Mordesovitch v. Westfield Ins. Co., 244 F. Supp. 2d
636 (S.D. W. Va.
2003) (same); Chambers v. Allstate Ins. Co., 206 F.R.D. 579 (S.D. W. Va.
2002) (same); Certain Underwriters at Lloyds, London v. Fidelity & Cas.
Ins. Co. of New York, No. 89 C 876, 1998 WL 142409 (N.D. Ill. Mar. 24,
1998) (same); Montgomery v. Aetna Plywood, Inc., No. 95 C 3193, 1996
WL 189347 (N.D. Ill. Apr. 16, 1996) (citing to Rhone-Poulenc in
finding valuation reports prepared by consultants protected by opinion work
product doctrine); Independent Petrochemical Corp. v. Aetna Cas. & Sur.
Co., 117 F.R.D. 283 (D.D.C. 1986) (opinion work product rule protected
disclosure of reserve information); Stevens v. Hartford Ins. Co. of the
Midwest, 646 So. 2d 981 (La. Ct. App. 1995) (opinion work product
rule protected disclosure of reserve information); PECO Energy Co. v. Insurance
Co. of N. Am., 852 A.2d 1230 (Pa. Super. Ct. 2004) (relying on Rhone-Poulenc to
find reserve information not discoverable).
In sum, Rhone-Poulenc stands
for four propositions. First, individual reserve information involving input
by an attorney is protected by the opinion work product rule. Second, aggregate
reserve information that is compiled by nonlawyers, but is derived from individual
reserve information compiled by lawyers, is protected by the opinion work product
rule. Third, risk management documents that are not prepared in anticipation
of litigation are protected by the opinion work product rule, to the extent they
embody individual reserve information compiled by attorneys. Fourth, risk management
documents that are prepared in anticipation of litigation are protected by the
opinion work product rule, if compiled by
attorneys or nonlawyers.
(3)
Reconciling Simon and Rhone-Poulenc. Simon and Rhone-Poulenc are
not completely at odds with each other. Both courts agree that individual reserve
information involving input by an attorney is protected by the opinion work product
rule. Further, both decisions agree that risk management documents that are not
prepared in anticipation of litigation are protected by the opinion work product
rule, to the extent that they embody individual reserve information compiled
by attorneys. (See footnote
6) The opinions disagree, however, on the issue of aggregate reserve
information that is compiled by nonlawyers, but is derived from individual reserve
information compiled by lawyers. Simon takes the position that such information
is not protected by the opinion work product rule; while Rhone-Poulenc takes
the opposite view.
I believe
that the positions taken by Simon and Rhone-Poulenc, on the issue
of
commingled aggregate reserve information, both have merit. To the extent that
aggregate reserve information is not compiled in anticipation of specific litigation,
but is merely done as a routine business practice, then Simon is correct
in holding that the opinion work product rule does not shield the information. See Kidwiler
v. Progressive Paloverde Ins. Co., 192 F.R.D. 536, 543 (N.D. W. Va.
2000) (“[It was] determined properly that these documents were not subject
to the work product doctrine because they were notes 'taken as a routine business
practice.' A document created in the ordinary course of business is not created
under the anticipation of litigation and, therefore, is not protected by the
work product doctrine.”). See also St. Paul Reinsurance Co., Ltd. v.
Commercial Fin. Corp., 197 F.R.D. 620, 634 (N.D. Iowa 2000) (“'[C]ourts
have routinely recognized that the investigation and evaluation of claims is
part of the regular, ordinary, and principal business of insurance companies.
Thus, even though litigation is pending or may eventually ensue does not cloak
such routinely generated documents with work product protection.'” (quoting Piatkowski
v. Abdon Callais Offshore, L.L.C., No. Civ. A. 99-3759, 2000 WL 1145825
(E.D. La. Aug. 11, 2000))).
However,
if the aggregate reserve information is compiled in anticipation of specific
litigation, then the position taken by Rhone-Poulenc is correct. Such
information is protected by the opinion work product rule. The reasoning, as
was discussed in Rhone- Poulenc in context of the risk management documents,
is that Rule 26(b)(3) expressly states
that the opinion work product rule applies to “the mental impressions,
conclusions, opinions, or legal theories of an attorney or other representative
of a party concerning the litigation.” (Emphasis added). Rule 26(b)(3)
states that examples of other representatives “includ[e] the party's attorney,
consultant, surety, indemnitor, insurer, or agent[.]” See J.C.
Assocs. v. Fidelity & Guar. Ins. Co., No. Civ. A. 01-2437 RJLJM, 2003
WL 1889015, *2 (D.D.C.) (“[I]t would certainly seem that reserve calculations
by claims adjusters qualify as work product under Fed. R. Civ. P.
26(b)(3). As that rule requires, they are prepared by the insured's agent and
their raison d'etre is the existence of litigation against the insured
or its anticipation.”). (See
footnote 7)
In
order to assert an attorney-client privilege, three main elements must be present:
(1) both parties must contemplate that the attorney-client relationship does
or will exist; (2) the advice must be sought by the client from that attorney
in his capacity as a legal adviser; (3) the communication between the attorney
and client must be identified to be confidential.
(Internal quotations and citations omitted).
Application
of the attorney-client privilege to reserve information has been addressed by
only one court in a meaningful manner. The decision in Simon addressed
the issue narrowly in the context of whether risk management documents, containing
aggregate
reserve information derived from individual reserve information, were protected
by the attorney-client privilege. Simon resolved the issue by stating:
Assuming
arguendo that the attorney-client privilege attaches to the individual case reserve
figures communicated by the legal department to the risk management department,
we do not believe the privilege in turn attaches to the risk management documents
simply because they include aggregate information based on the individual case
reserve figures. For the reasons that we have already stated in relation to the
work product doctrine, we do not believe that the aggregate information discloses
the privileged communications, which we are assuming the individual reserve figures
represent, to a degree that makes the aggregate information privileged. The attorney-to-client
communications reflected in the risk management documents are therefore not protected
by the attorney-client privilege.
Simon, 816 F.2d at 402-03. See In re Pfizer Inc. Secs. Litig.,
1993 WL 561125, *6 (“[T]he applicability of the [attorney-client] privilege
to correspondence from attorney to corporate client depends on whether the
subject matter was individual or aggregate case reserves. . . . [W]e believe
that documents containing aggregate information are not 'predominantly concerned'
with conveying legal advice, and are not therefore entitled to attorney-client
privilege protection.”).
I disagree
with Simon's sweeping analysis. I believe that the issue of whether the
attorney-client privilege attaches to aggregate reserve information depends upon
the level of input by the attorney. If individual reserve information, prepared
by an attorney for his/her client with the expectation of confidentiality, is
not a substantial component of the aggregate
reserve information, then the attorney-client privilege should not attach to
the aggregate reserve information. On the other hand, the attorney-client privilege
should attach to aggregate reserve information, if individual reserve information
prepared by an attorney is a substantial component of the aggregate reserve
information. The issue of substantiality requires a case-by-case determination.
The decision
in Simon noted that it was not taking a position on “whether the
attorney-client privilege in fact attaches to the individual case reserve figures,
other than to note that such a determination would require analysis of whether
the individual reserve figures are based on confidential information provided
by [the attorney].” Simon, 816 F.2d at 403 n.5. Other courts have
addressed the issue without substantive discussion, and held that “documents
containing individual case reserve figures are predominantly legal in nature.
Therefore, those are [protected by the attorney-client] privilege[].” In
re Pfizer Inc. Sec. Litig., 1993 WL 561125, *6. See also Boston
Gas Co. v. Century Indem. Co., 2005 WL 2150530 (attorney-client privilege
protected disclosure of reserve information); Coltec Indus., Inc. v. American
Motorists Ins. Co., 197 F.R.D. 368 (N.D. Ill. 2000) (same); Stevens
v. Hartford Ins. Co. of the Midwest, 646 So. 2d 981 (La. App. 1995)
(same); Hoechst Celanese Corp. v. National Union Fire Ins. Co. of Pittsburgh,
Pa., No. Civ. A. 89C-SE-35, 1995 WL 411805 (Del. Super. Ct. Mar.
17, 1995) (same); Guaranty Corp. v. National Union Fire Ins. Co. of Pittsburgh,
Pa., 1992 WL 78387, *2 (“[I]f reserve figures are based on
information provided by an attorney, they . . . may be covered by
the attorney-client privilege.”); Independent Petrochemical Corp. v.
Aetna Cas. & Sur. Co., 117 F.R.D. 283 (D.D.C. 1986) (attorney-client
privilege protected disclosure of reserve information). But see Champion
Int'l Corp. v. Liberty Mut. Ins. Co., 128 F.R.D. 608 (S.D.N.Y. 1989) (insurer
failed to show attorney-client privilege applied to reserve information).
The above
authorities make it clear that the attorney-client privilege attaches to individual
reserve information when the elements of that privilege are established.
In view
of the foregoing, I respectfully concur.