Channel Construction, Inc., Plaintiff, v. Northland Services, Inc., et al., Defendants CASE NO. C14-1231-JCC Signed October 23, 2015 Counsel Terence K. McGee, David Tyler McGee, McGee Law Offices PLLC, Bothell, WA, for Plaintiff. Mark A. Krisher, Matthew Clayton Crane, Bauer Moynihan & Johnson, Seattle, WA, for Defendants. Coughenor, John C., United States District Judge ORDER ON MOTIONS TO COMPEL *1 This matter comes before the Court on the parties' cross motions to compel (Dkt. Nos. 85, 87, 89). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS in part and DENIES in part the Defendants' motion (Dkt. No. 85) and DISMISSES in part and DENIES in part the Plaintiffs' motions (Dkt. Nos. 87, 89) for the reasons explained herein. I. BACKGROUND This case arises from damage to Barge ITB 312 (“the Barge”), a vessel chartered by Plaintiff Channel Construction (“Channel”) to Defendant Northland Services, Inc. (“Northland”) in 2010, 2011, and 2012. (See Dkt. No. 1 at 3-4.) Plaintiff brings the present suit against Northland, alleging liability for the damage to the Barge, and against Northland's underwriters (“the Underwriters”), alleging bad faith in handling Channel's claim for damage to the Barge. (Dkt. No. 1 at 5-8.) The factual background of this conflict has been thoroughly summarized by the Court in a prior order. (See Dkt. No. 66.) The Underwriters now move to compel Channel to produce e-mails it withheld pursuant to a claim of work product privilege, as well as three photographs of the Barge in JPEG format. (Dkt. No. 85 at 1, 10.) Channel also brings two motions to compel, one against Northland and one against Underwriter National Casualty Company (“National”). (Dkt. Nos. 87, 89.) Channel asserts that National and Northland failed to provide verified answers to interrogatories and asks this Court to strike objections made by National and Northland to Channel's discovery requests. (Dkt. No. 87 at 2-3; Dkt. No. 89 at 2-3.) II. DISCUSSION A. Scope of Discovery “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.” Fed. R. Civ. P. 26(b)(1). For purposes of discovery, relevant information is that which is “reasonably calculated to lead to the discovery of admissible evidence.” Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992). If requested discovery is not answered, the requesting party may move for an order compelling such discovery. Fed. R. Civ. P. 37(a)(1). However, discovery is not unlimited: “like all matters of procedure, [it] has ultimate and necessary boundaries.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). Accordingly, the court must limit the scope of discovery otherwise allowable under the federal rules if it determines that “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.” Fed. R. Civ. P. 26(b)(2)(C)(iii). The party resisting discovery bears the burden to show that its documents are protected by privilege.[1] Everest Indem. Ins. Co. v. QBE Ins. Corp., 980 F.Supp.2d 1273, 1277 (W.D. Wash. 2013). B. Underwriters' Motion to Compel *2 The Underwriters move to compel Channel to produce two categories of documents: (1) e-mails withheld pursuant to a privilege log asserting work product privilege and (2) photographs of the Barge in their native JPEG format, rather than the PDF version provided. (Dkt. No. 85 at 6, 10.) 1. Work Product Privilege The Underwriters assert that Channel should be compelled to produce the withheld emails, because Channel has not shown that they were prepared in anticipation of litigation. (Dkt. No. 85 at 7.) Channel responds that it saw litigation as extremely likely from December 17, 2012 onward, and that expectation of litigation “was the constant that prompted or at least informed all of the [withheld] communications.” (Dkt. No. 111 at 2-3.) “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). This rule, also referred to as the work product doctrine, “protects trial preparation materials that reveal an attorney's strategy, intended lines of proof, evaluation of strengths and weaknesses, and inferences drawn from interviews.” Heath v. F/V ZOLOTOI, 221 F.R.D. 545, 549 (W.D. Wash. 2004); see also Hickman v. Taylor, 329 U.S. 495, 512 (1947) (recognizing the underlying policy against “invading the privacy of an attorney's course of preparation”). “To qualify for work-product protection, documents must: (1) be prepared in anticipation of litigation or for trial and (2) be prepared by or for another party or by or for that other party's representative.” United States v. Richey, 632 F.3d 559, 567 (9th Cir. 2011) (internal quotes omitted). If a document was not prepared exclusively for litigation, courts apply the “because of” test: whether, “in light of the nature of the document and the factual situation in the particular case, the document can be fairly said to have been prepared or obtained because of the prospect of litigation.” Id. at 567-68. In applying this test, “courts must consider the totality of the circumstances and determine whether the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of litigation.” Id. at 568 (internal quotes omitted). Channel's privilege log indicates the following: The vast majority of the e-mails withheld under the work product privilege pertained to one or both of the following subjects: (1) Channel's claim against Northland and (2) the Underwriters' investigation of Channel's claim for damage. (See Dkt. No. 85, Ex. 1 at 84-115.) One e-mail pertained to Channel's anticipated litigation against IMU. (See Dkt. No. 85, Ex. 1 at 90.) All of the e-mails were between Channel's counsel[2] and one or more of the following: (1) Channel; (2) Channel's expert witness; (3) Channel's insurers; and (4) Channel's broker. (See Dkt. No. 85, Ex. 1 at 84-115.) The dates of the e-mails generally ranged from late December 2012 to March 12, 2015.[3] (Dkt. No. 85, Ex. 1 at 84-115.) *3 Channel's counsel submitted a declaration stating: On the basis of more than 30 years' experience litigating against [the firm representing Northland and the Underwriters], I believed from the outset that it was highly likely, if not a foregone conclusion, that it would be necessary for Channel to litigate to vindicate its rights .... Therefore, from December 17, 2012, forward, Channel and I anticipated litigation, and the challenge presented to us was to perform Channel's obligation of cooperation under the [insurance policy] without prejudice to Channel's position in the litigation that we saw as extremely likely. The specter of having to litigate against Northland and [the Underwriters] was the constant that prompted or at least informed all of the communications between Channel or me and Channel's brokers, insurers, and experts, and our experience in dealing with counsel through the purported claim investigation confirmed our belief that it was but a precursor to litigation. (Dkt. No. 112 at 2.) While counsel's affidavit is an appropriate form of proof in this circumstance, see U.S. Inspection Servs., Inc. v. NL Engineered Solutions, LLC, 268 F.R.D. 614, 626 (N.D. Cal. 2010), the Court does not accept his declaration as definitive proof that the e-mails are privileged. First, as the Underwriters observe, Channel has not been consistent regarding the timing of its anticipation of litigation. (See Dkt. No. 113 at 3.) Specifically, counsel's claim that Channel anticipated litigation as of December 17, 2012 conflicts with Channel's earlier statement that its “anticipation of this litigation began when Northland returned the Barge after the 2011 Charter and Channel found four compartments flooded due to stray-current corrosion of the Barge's bottom.” (See Dkt. No. 114 at 3 (response to discovery requests).) Moreover, Counsel's declaration indicates that some of the e-mails might not have been prepared exclusively for litigation. (See Dkt. No. 112 at 2 (“The specter of having to litigate ... prompted or at least informed all of the communications.”) (emphasis added).) Thus, this Court applies the “because of” test to determine whether the withheld e-mails are discoverable. E-mails regarding Channel's claim against Northland: Regarding Channel's claim against Northland, the salient facts are as follows. In December 2012, Channel discovered that the Barge was seriously damaged by electrolysis (Dkt. No. 43 at 5), hired counsel (Dkt. No. 45 at 4), took the position that Northland was at fault for the damage (Dkt. No. 45 at 4), and made a claim against Northland's insurance. (Dkt. No. 85 at 1.) On January 2, 2013, Channel notified Northland by letter that it would “pursue Northland for all [its] losses.” (Dkt. No. 85, Ex. 1 at 116.) During 2013 and part of 2014, the Underwriters investigated Channel's claim. (Dkt. No. 85 at 1.) In March 2014, Channel filed for bankruptcy. (Dkt. No. 1 at 5.) On June 23, 2014, Channel indicated that there was a “possible litigation claim [it] might assert against [the Underwriters].” (Dkt. No. 85, Ex. 1 at 12.) On August 6, 2014, Channel advised that it intended to file suit against Northland and the Underwriters. (Dkt. No. 85 at 2.) On August 11, 2014, Channel brought the current suit. (Dkt. No. 1.) *4 The Underwriters assert that, after Channel's January 2013 letter, “[n]othing suggests that Channel anticipated litigation with Northland until a few days before [the present] suit was filed when [Channel] notified the Bankruptcy Court of its intent to do so.” (Dkt. No. 85 at 8.) This Court disagrees. First, the standard is not that a party must be actively and consistently pursuing litigation; rather, the standard is whether a party anticipated litigation and the document was prepared out of that anticipation. Here, from a logical standpoint, the most likely reason Channel would communicate regarding its “claim against Northland” would be to resolve Northland's liability. This is especially likely given that Northland denied liability for the damage and the Underwriters' claim investigation lasted well over a year. Thus, the facts of this case indicate that Channel anticipated the need for legal action against Northland in the future. This is bolstered by counsel's declaration, wherein he relates his trepidation—based on his experience working with opposing counsel—that litigation would ultimately be necessary. (See Dkt. No. 112 at 2.) Thus, under the totality of the circumstances, one can fairly say that the emails regarding Channel's claim against Northland were created in anticipation of litigation. However, a question still remains: when did that anticipation arise? As discussed above, counsel's declaration on this point conflicts with Channel's previous discovery responses. On this record, the first clear, objective indication of Channel's willingness to litigate is the January 2, 2013 letter. Thus, this Court FINDS that the work product doctrine applies to the e-mails regarding Channel's claim against Northland beginning January 2, 2013. E-mails regarding Underwriters' investigation of Channel's claim: The Underwriters assert that the investigation of an insurance claim does not normally entail the anticipation of litigation until the claim is denied. (Dkt. No. 85 at 8.) They cite authority for the proposition that “[t]here is a rebuttable presumption that documents or things prepared before the final decision on an insured's claim are not work product.” Royal Bahamian Ass'n, Inc. v. QBE Ins. Corp., 268 F.R.D. 695, 698 (S.D. Fla. 2010) (internal quotes omitted). Accord Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655, 662-63 (S.D. Ind. 1991); Schmidt v. Cal. State Auto. Ass'n, 127 F.R.D. 182, 184 (D. Nev. 1989). However, these cases involve documents withheld by the insurance company in a dispute over the underlying merits of the insurance claim. Royal Bahamian, 268 F.R.D. at 697-98; Harper, 138 F.R.D. at 663; Schmidt, 127 F.R.D. at 184. Specifically, the cases reason that “it is the very nature of an insurer's business to investigate and evaluate the merits of claims. Reports and documents produced for this purpose will likely be relevant to later litigation over a claim as well.” Harper, 138 F.R.D. at 662. Here, by contrast, the documents are withheld by an insurance claimant who alleges that the insurer handled its claim in bad faith. In other words, the e-mails about the Underwriters' investigation of Channel's claim pertain to the propriety of the Underwriters' conduct—not the merits of Channel's insurance claim. Thus, the principle underlying these cases—i.e., that a claim investigation is not presumptively litigious until the claim is denied—does not apply here. Instead, the Court again looks to the totality of the circumstances to determine whether the subject e-mails are discoverable. Channel filed a claim against the Underwriters on December 17, 2012. (Dkt. No. 85 at 1; Dkt. No. 1 at 5.) Counsel avers that, based on his experience with opposing counsel, he was immediately concerned that litigation was “extremely likely.” (Dkt. No. 112 at 2.) The e-mails about the Underwriters' investigation began January 2, 2013, coinciding with Channel's letter indicating a willingness to litigate this issue. (See Dkt. No. 85, Ex. 1 at 87.) Thus, under the totality of the circumstances, one can fairly say that the emails regarding the Underwriters' investigation of Channel's claim were created in anticipation of litigation. The Court thus FINDS that the work product doctrine applies to the e-mails regarding the Underwriters' investigation. E-mail regarding anticipated litigation against IM: The privilege log explicitly states that this e-mail was prepared in anticipation of litigation, and the e-mail was sent after IMU refused to cover the damage to the Barge. (Dkt. No. 85, Ex. 1 at 90; Dkt. No. 48 at 2.) Therefore, it can fairly be said that e-mail was sent in anticipation of litigation. The Court FINDS that the work product doctrine applies to the e-mail regarding anticipated litigation against IMU. *5 Waiver of privilege: The Underwriters assert that Channel waived its work product protection by sharing multiple e-mails with IMU. (Dkt. No. 85 at 9.) This is so, the Underwriters reason, because Channel made a claim for damage against IMU, making IMU Channel's adversary. (Dkt. No. 85 at 9.) But, the claim against IMU is a separate proceeding; IMU is not adverse to Channel in the present litigation. Cf. Fed. R. Civ. P. 26(b)(3)(A) (listing party's insurer as representative whose work product is protected). Nor does the disclosure of the emails per se invalidate the privilege. See Goff v. Harrah's Oper. Co., Inc., 240 F.R.D. 659, 661 (D. Nev. 2007) (“The work product rule is not based on the confidentiality of the attorney-client relationship, and it does not disappear when the balloon wall of confidentiality is breached unless the breach has substantially increased the opportunities for potential adversaries to obtain the information.”). The Court FINDS that Channel has not waived its work product privilege. 2. Photos in JPEG Format The Underwriters argue that Channel should be compelled to produce three photos of the Barge in their “native JPEG format,” rather than the previously provided PDF format. (Dkt. No. 85 at 10.) The Underwriters state that the PDF versions “appear to be with modified dimensions” and that the JPEG versions may be helpful for observing details relevant to the Underwriters' defense. (Dkt. No. 85 at 10.) In response, Channel asserts that the Underwriters never previously requested the photos in their “original format,” but that the requested photos have now been provided. (Dkt. No. 111 at 8.) The Underwriters reply that it “should have been implicit” that they desired the photos in that format and that, regardless, the newly produced JPEG photos are still not in their “native” format, because they were “all modified evidently to add Bates numbers.” (Dkt. No. 113 at 5-6.) The Underwriters' indignation is not well-taken; they requested “electronically stored information” and they received electronic files in return. (See Dkt. No. 113 at 5.) Nonetheless, it is now manifestly clear to Channel that the Underwriters request unaltered photos. Channel is therefore ORDERED to produce photos CCI 0331, CCI 0338, and CCI 0339 in their original, unaltered JPEG format. The Court welcomes no further hairsplitting on this issue. In sum, the Underwriters' motion to compel is DENIED as to the withheld e-mails, with the exception of any e-mails sent prior to January 2, 2013, and GRANTED as to the photos in native JPEG format. C. Channel's Motions to Compel Channel moves to compel National and Northland to provide verified answers to its interrogatories and asks this Court to strike the objections made by National and Northland to its discovery requests. (Dkt. No. 87 at 2-3; Dkt. No. 89 at 2-3.) 1. National Motion Verified answers: Channel asserts that National failed to verify its interrogatory answers as required by Fed. R. Civ. P. 33(b)(3). (Dkt. No. 87 at 2.) Rule 33(b)(3) states that “[e]ach interrogatory must, to the extent it is not objected to, be answered separately and fully in writing under oath.” National responds that Channel failed to confer with opposing counsel about this issue prior to bringing its motion, as required by Fed. R. Civ. P. 37(a)(1). (Dkt. No. 108 at 5.) Counsel both acknowledge that they held a Rule 37 teleconference on July 20, 2015, but they have differing positions as to whether this issue was raised. (See Dkt. No. 88 at 2; Dkt. No. 110 at 2.) Defense counsel Mr. Crane states that, “to the best of [his] recollection, Plaintiff's counsel Mr. McGee never raised the issue of the signing of interrogatory answers by either National Casualty or Northland, nor is the topic contained anywhere in my notes of our conference.” (Dkt. No. 110 at 2.) By contrast, Mr. McGee states that he “pointed out that National Casualty's answers to Channel's interrogatories were not verified, and Mr. Crane said that verification would be provided by August 7. National Casualty served unverified second supplemental responses on August 3, and both those answers and National Casualty's original answers remain unverified.” (Dkt. No. 88 at 2.) Channel provides evidence showing that National provided second supplemental responses to Channel's interrogatories on August 3, 2015, and that the responses were unverified. (Dkt. No. 88 at 32, 50, 60.) *6 The Court finds the specificity of Mr. McGee's declaration and the support its corresponding evidence more convincing than Mr. Crane's lack of recollection. The Court therefore determines that Channel adhered to Rule 37's requirements. However, the Court need not rule on this motion, as National provided Channel with the desired verification pages after Channel filed its motion to compel. (Dkt. No. 108 at 5-6; Dkt. No. 110 at 7-11.) Objections to discovery requests: Channel argues that the Court should strike National's objections to its discovery requests. First, Channel challenges National's objection to the interrogatory asking National to identify each person it consulted with as an expert in connection with the case. (Dkt. No. 87 at 2.) Channel states that it “has not sought disclosure of facts provided or opinions held, but only the identity of such persons.” (Dkt. No. 87 at 2-3.) The Federal Rules of Civil Procedure explicitly prohibit discovery of a consulting expert's facts and opinions, but are silent as to whether a party may seek a consulting expert's identity. See Fed. R. Civ. P. 26(b)(4)(D). However, the Tenth Circuit has held that the identities of consulting experts are not discoverable absent a showing of “exceptional circumstances.” Ager v. Jane C. Stormont Hosp. & Training Sch. for Nurses, 62 F.2d 496, 503 (10th Cir. 1980). This has become the predominant position among courts and has been adopted by another district court in our circuit. See Todd v. Tempur-Sealy Int'l, Inc., 2015 WL 1022886 at *2 (N.D. Cal. 2015). And, this position is consistent with Fed. R. Civ. P. 26(b)(4)(B), which requires a showing of exceptional circumstances before the names of retained or specially employed consultants may be discovered. This Court therefore applies the Ager standard here. Channel has not established any exceptional circumstances warranting the disclosure of National's consulting expert's identity. The Court will not strike National's objection to this request. Second, Channel challenges National's objections to its First Requests for Production (RPs) Nos. 2-8 and 12-13. (Dkt. No. 87 at 3.) National responds that the parties agreed in their Rule 37 teleconference that National need not withdraw these objections if National supplemented its answers that it was not withholding any facts and identified the pages of the documents responsive to Channel's requests for production. (Dkt. No. 108 at 6.) Channel provides no argument or evidence to the contrary. Because National complied with the parties' agreement (see Dkt. No. 88 at 52-59), the Court declines to address this issue any further. Channel's motion as to National's verified answers is DISMISSED as moot. Channel's motion as to National's objections to discovery requests is DENIED. 2. Northland Motion Verified answers: Channel makes the same argument against Northland regarding verified answers. (Dkt. No. 89 at 2-3.) Northland, like National, failed to previously provide verified supplemental responses, but has since done so. The above analysis and conclusion regarding National's verified answers applies equally here. Objections to discovery requests: Channel challenges Northland's objections to its First Requests for Production (RPs) Nos. 2-7, 10, 14, and 16-17, as well as its Second Requests for Production No. 1. (Dkt. No. 89 at 3.) As with the discovery objections discussed above, Northland responds that the parties agreed in their Rule 37 teleconference that Northland need not withdraw these objections if Northland supplemented its answers that it was not withholding any facts and identified the pages of the documents responsive to Channel's requests for production. (Dkt. No. 109 at 6.) Channel provides no argument or evidence to the contrary. Because Northland complied with the parties' agreement (see Dkt. No. 90 at 55-66, 78-79), the Court declines to address this issue any further. *7 Channel's motion as to Northland's verified answers is DISMISSED as moot. Channel's motion as to Northland's objections to discovery requests is DENIED. D. Fees Both parties request fees for bringing or responding to the above-discussed motions. (See Dkt. No. 111 at 1; Dkt. No. 87 at 3; Dkt. No. 108 at 1; Dkt. No. 89 at 4; Dkt. No. 109 at 1.) The Court declines to award fees to either. First, the issues were evenly split between the parties, and a divvying of fees would likely result in a wash. Moreover, the Court is disappointed that the parties cannot deal with one another on a more professional level. If things do not improve, sanctions are likely to follow, to be paid by counsel, not their clients. III. CONCLUSION For the foregoing reasons, the Underwriters' motion (Dkt. No. 85) is GRANTED in part and DENIED in part. Channel's motions (Dkt. Nos. 87, 89) are DENIED in part and DISMISSED as moot in part. DATED this 23 day of October 2015. Footnotes [1] Channel asserts that courts are divided on which party bears the burden in this situation and asks this Court to adopt a rule placing the burden on the party seeking discovery. (Dkt. No. 111 at 5.) However, the rule cited here is the rule adopted by this Court in its previous order (Dkt. No. 66) and is the law of the case. See Mayweathers v. Terhune, 136 F.Supp.2d 1152, 1153-54 (E.D. Cal. 2001). [2] Some of the e-mails were from “counsel's office,” apparently counsel's paralegal. (See Dkt. No. 85, Ex. 1 at 85; Dkt. No. 112 at 3.) [3] There is also one e-mail from 2011. (Dkt. No. 85, Ex. 1 at 85.) This e-mail was part of a string that otherwise contained e-mails from 2014. (Dkt. No. 85, Ex. 1 at 85.)