Walker v. GEICO Indem. Co.
Walker v. GEICO Indem. Co.
2016 WL 11578803 (M.D. Fla. 2016)
July 11, 2016
Spaulding, Karla R., United States Magistrate Judge
Summary
The Cunningham Law Firm inadvertently produced the entire Sutton Litigation File, which contained 17,326 documents, many of which were electronically stored. The court found that the production was inadvertent and that Walker had taken reasonable steps to rectify the error. The court also noted that Federal Rule of Civil Procedure 26(b)(5)(B) requires parties to take reasonable steps to retrieve information if it is disclosed before being notified of a claim of privilege or protection.
Additional Decisions
Nadine WALKER, Plaintiff,
v.
GEICO INDEMNITY COMPANY, Defendant
v.
GEICO INDEMNITY COMPANY, Defendant
Case No: 6:15-cv-1002-Orl-41KRS
United States District Court, M.D. Florida, Orlando Division
Signed July 11, 2016
Counsel
Todd Stephen Stewart, Law Offices of Todd S. Stewart, P.A., Jupiter, FL, for Plaintiff.Inguna Varslavane-Callahan, Callahan Law Firm LLC, Saint Petersburg, FL, Kelly J. McAuley, Smolker Bartlett Loeb Hinds & Thompson P.A., Tampa, FL, Weslee Leigh Ferron, Jennifer Claire Worden, Daniel A. Martinez, Martinez Denbo, LLC, St. Petersburg, FL, for Defendant.
Spaulding, Karla R., United States Magistrate Judge
ORDER
*1 This cause came on for consideration on the following motion filed herein:
MOTION: PLAINTIFF’S RENEWED MOTION TO COMPEL RETURN OF INADVERTENTLY PRODUCED DOCUMENTS, AND MOTION FOR SANCTIONS AGAINST GEICO AND ITS COUNSEL (Doc. No. 67)
FILED: June 6, 2016
I. BACKGROUND.
Plaintiff, Nadine Walker, alleges in her complaint that Defendant, GEICO Indemnity Company (“GEICO”), acted in bad faith by failing to settle the case of Walker v. Condemarin, a personal injury case filed in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida (the “Underlying Action”) (Doc. No. 1-1, at 1-3). In the Underlying Action, Walker alleged that Condemarin, driving an automobile insured by GEICO, injured her when Condemarin struck Walker while Walker was attempting to cross a street. Doc. No. 1-1, at 1-2. A jury awarded Walker more than $3 million in the Underlying Action. Doc. No. 1, at 3.
In the present case, Walker alleges that GEICO acted in bad faith by failing to settle the Underlying Action. Doc. No. 1. She is represented in this case by Fred Cunningham, Esq., and Gregory M. Yaffa, Esq., attorneys with Domnick Cunningham & Whalen (the “Cunningham Law Firm”). GEICO is represented in this case by B. Richard Young, Esq., Amanda L. Kidd, Esq., and Stephanie Ann McQueen, Esq., attorneys with Young, Bill, Boles, Palmer & Duke, P.A. (the “Young Law Firm”).
The present dispute arises from the Cunningham Law Firm producing in discovery allegedly attorney-client privileged and work-product protected documents to the Young Law Firm. As discussed below, counsel for Walker contends that the production was inadvertent and that GEICO and counsel for GEICO should be sanctioned for their allegedly improper review and utilization of the privileged and protected documents. Doc. No. 67. Counsel for Walker filed a second amended privilege log (the “Final Privilege Log”), affidavits and various other documents in support of the motion. Doc. Nos. 67-1 through 67-12.
Pursuant to my order, counsel for the parties conferred and have agreed that Walker has made a prima facie showing that the documents listed on the Final Privilege Log are privileged or protected, as claimed. Doc. No. 67, at 9. Counsel for GEICO contends, however, that the production was not inadvertent, that the attorney-client privilege and work-product protection claims were waived, and that GEICO has an overwhelming need for the work-product documents. Counsel for GEICO further asserts that the review and utilization of the allegedly privileged and work-product protected documents was appropriate. Doc. No. 68; see also Doc. No. 67-9. GEICO supported its response to the motion with orders entered in other cases, Doc. Nos. 68-1 through 68-5, but it offered no evidence in support of its position.
I will first address the facts of record before turning to the parties’ arguments.
II. STATEMENT OF FACTS.
On September 23, 2015, GEICO served a request for production of documents that, inter alia, requested production of documents from the Underlying Action. Doc. No. 67-1. GEICO specifically excluded from the request “all those materials ... legitimately protected by the attorney-client privilege.” Id. at 1-3. However, the request also provided as follows:
*2 If you contend that any documents responsive to the foregoing requests constitute work product and/or are protected by the attorney-client privilege, you must provide a log of said documents to GEICO stating the basis of your objection pursuant to Rule 26 of the Federal Rules of Civil Procedure.
Id. at 3.
On November 13, 2015, Attorney Cunningham served a response to the request.[1] Doc. No. 67-2. He provided copies of responsive documents in Walker’s possession. He stated that other responsive documents would likely be in the litigation file of Morgan & Morgan, the law firm that represented Walker in the Underlying Action, among other locations. He stated that he anticipated that “the responsible parties will prepare a privilege log relating to said files.” Id. at 2.
Communications between counsel for the parties about production of the Morgan & Morgan litigation file from the Underlying Action ensued. Doc. No. 67-3. Counsel for the parties informally agreed that the Cunningham Law Firm would obtain the Morgan & Morgan litigation file from Michael Sutton, Esq., Walker’s counsel in the Underlying Action. Doc. No. 67-5, at 2. No deadlines were established regarding when the file would be produced.[2] Id.
Sometime before December 16, 2015, Attorney Yaffa requested the entire litigation file from Attorney Sutton. Doc. No. 67-12, at 1. Attorney Sutton avers that his understanding, after speaking with Attorney Yaffa, was that attorneys with the Cunningham Law Firm would remove privileged items from the file, prepare a privilege log and produce only non-privileged portions of the file to GEICO. Id.
On December 16, 2015, Attorney Yaffa called the Young Law Firm and advised that he had received the Morgan & Morgan litigation file from Attorney Sutton. Doc. No. 67-3, at 4 (the “Sutton Litigation File”). The file was contained in nine banker’s boxes. Id. Attorney Yaffa sent an email to Attorney Kidd that day asking if GEICO wanted all of the non-privileged documents, to which Attorney Kidd responded that “we will just go ahead and take it all.” Id. at 3. Attorney Kidd requested that the file be scanned to a CD with optical character recognition (“OCR”). Id. at 2.
*3 On December 16, 2015, Attorney Yaffa’s legal assistant, Laura Sabbatino, sent the Sutton Litigation File to a copying service for Bates stamping and copying. Doc. No. 67-5, at 3; Doc. No. 67-6, at 2. The Cunningham Law Firm received the original and a complete copy of the Sutton Litigation File on December 28, 2015 from the copying service. Doc. No. 67-5, at 3; Doc. No. 67-6, at 2. On January 7, 2016, Attorney Yaffa discovered that the Sutton Litigation File had not been Bates stamped. Ms. Sabbatino sent the file back to the copying service for Bates stamping that day. Doc. No. 67-5, at 3; Doc. No. 67-6, at 3.
On January 7, 2016, Ms. Sabbatino received an email from the Young Law Firm inquiring when they could expect to receive the Sutton Litigation File. Doc. No. 67-6, at 3.
The Cunningham Law Firm received the file back from the copying service on January 13, 2016. The file contained 17,326 documents. Doc. No. 67-5, at 3.
On January 20, 2016, Ms. Sabbatino received another email from the Young Law Firm inquiring when the Sutton Litigation File would be delivered. Doc. No. 67-6, at 3. Ms. Sabbatino knew that the standard operating procedure for the Cunningham Law Firm was to have the assigned attorney review the litigation file in an underlying action and prepare a privilege log. After that occurred, Ms. Sabbatino was to prepare a transmittal letter for an attorney to sign and the privilege log would be provided to opposing counsel. Id. at 2; accord Doc. No. 67-4, at 2; Doc. No. 67-5, at 2. Ms. Sabbatino admits that she did not follow this standard operating procedure. Doc. No. 67-6, at 4. Rather, “[f]eeling badly about the delay caused by the file not being [B]ates stamped originally when it was sent to the copy service,” on January 20, 2016, Ms. Sabbatino emailed the Young Law Firm and advised that she would send the Sutton Litigation File on a CD to the law firm via overnight mail. Id. at 3. Because she was in a rush, Ms. Sabbatino forgot that the privileged documents still needed to be removed, and she sent the entire file to the Young Law Firm. Id. at 4. She did not copy Attorney Cunningham or Attorney Yaffa on the email she sent to the Young Law Firm advising that she would send the file. Also contrary to the standard operating procedure, she drafted the transmittal letter for her own signature “in an effort to be efficient.” Id. Neither Attorney Cunningham nor Attorney Yaffa had any idea that the complete Sutton Litigation File had been sent to the Young Law Firm on January 20, 2016. Doc. No. 67-4, at 3-4; Doc. No. 67-5, at 4; Doc. No. 67-6, at 4.
Counsel for GEICO did not advise counsel for Walker that the Young Law Firm had received the entire Sutton Litigation File. Cf. Doc. No. 26, at 4 (Attorney Kidd represented that no documents appeared to have been withheld from the Sutton Litigation File and that no privilege log had been produced). Attorney Kidd states in the response to the motion that the Sutton Litigation File was reviewed.[3] Doc. No. 68, at 4, 19. In another filing, Attorney Kidd stated that she sent emails to GEICO that reference the substance of the allegedly attorney-client privileged and workproduct protected documents. Doc. No. 44, at 1.
*4 Between February 22, 2016 and March 7, 2016, an attorney with the Cunningham Law Firm reviewed the Sutton Litigation File to identify and flag all privileged documents. Doc. No. 67-4, at 3. Between March 8, 2016 and March 10, 2016, Attorney Yaffa also reviewed the entire Sutton Litigation File to ensure that no privileged documents were missed. Attorney Yaffa then isolated the privileged documents and began to create a privilege log. Doc. No. 67-5, at 3-4.
On March 15, 2016, counsel for GEICO requested a deposition of Attorney Cunningham. Doc. No. 67-4, at 3. After learning of this request, Attorney Yaffa discovered for the first time that Ms. Sabbatino had sent the entire Sutton Litigation File, including the privileged and protected documents, to the Sutton Law firm. Id. at 4. He advised Attorney Cunningham of the disclosure of the entire Sutton Litigation File. Id. at 3. Attorneys Cunningham and Yaffa then immediately called the Young Law Firm to discuss the disclosure, but Attorneys Kidd and Young were not available. Id. at 4. The next day, Attorney Yaffa sent a letter to the Young Law Firm demanding the return of the entire Sutton Litigation File. Doc. No. 67-5, at 5. Attorney Kidd responded to the letter on March 22, 2016, refusing to return the Sutton Litigation File because, she contended, the disclosure was not inadvertent. Doc. No. 67-9, at 1. Attorney Kidd agreed “to not review or utilize the documents for a sufficient length of time so that the court can determine whether production of over 17,000 pages without a privilege log is considered to be a waiver.” Id. Despite this agreement, on March 25, 2016, Attorney Kidd filed a motion to compel Attorney Cunningham’s deposition. In that motion, Attorney Kidd disclosed the substance of some of the allegedly attorney-client privileged and work-product protected information. Doc. No. 26, at 4, 9.[4]
Attorney Yaffa and Ms. Sabbatino aver that had Ms. Sabbatino followed the Cunningham Law Firm’s standard operating procedure, including drafting the transmittal letter over the signature of a lawyer, the production of privileged and protected documents would not have occurred. Doc. No. 67-5, at 4; Doc. No. 67-6, at 4. Attorney Cunningham avers that in twenty-four years of litigating bad faith cases, the Cunningham Law Firm has never produced the entire file of the underlying claimant’s attorney and that it has always prepared and served a privilege log. Doc. No. 67-4, at 4.
On March 29, 2016, Attorney Cunningham filed the first motion for return of the allegedly inadvertently produced documents. Doc. No. 27. The motion was supported by a privilege log. Doc. No. 27-10. I required an amended privilege log, and further briefing and argument ensued. Ultimately, I denied the motion without prejudice and required counsel for the parties to engage in a good faith conference to determine whether they could agree that counsel for Walker had established a prima facie showing that documents on the Final Privilege Log are attorney-client privileged or protected work product. Doc. No. 66. Following that successful good faith conference, the above-referenced renewed motion was filed.
III. ANALYSIS.
This case is before the Court under its diversity jurisdiction and, therefore, Florida law provides the substantive law in this case. Fed. R. Evid. 502. Nevertheless, the procedure for asserting privilege and protection objections is governed by federal law. Rynd v. Nationwide Mut. Fire Ins. Co., No. 8:09-cv-1556-T-27TGW, 2010 WL 5161838 at *4, 2010 U.S. Dist. LEXIS 136626 at *12-13 (M.D. Fla. Dec. 14, 2010).
*5 GEICO contends that privileges and protections were waived under a number of theories. It also asserts that the work-product doctrine does not apply to materials created prior to the date of the resolution of the Underlying Action. Finally, GEICO argues that it has a substantial need for the work-product protected documents. I will address these arguments in turn. Thereafter, I will address Walker’s request for sanctions against GEICO and its counsel.
As discussed above, counsel for the parties have agreed that Walker has made a prima facie showing that documents listed in the Final Privilege Log are protected by the attorney-client privilege and the work-product doctrine.[5] Nevertheless, counsel for GEICO asserts that those privileges and protections have been waived. I will address GEICO’s various waiver arguments in turn.
1. Waiver By Failing to Timely Provide a Privilege Log.
Counsel for GEICO argues that Walker waived all privilege and protection claims by failing to produce a privilege log within the time for filing a response to GEICO’s requests for production of documents. Doc. No. 68, at 5-7. Although GEICO argues that the time for responding was thirty days after the discovery requests were served, the record reflects that GEICO agreed to extend the time for Walker to respond until November 2015. On November 13, 2015, the Cunningham Law Firm timely responded to the requests for production. Attorney Cunningham agreed to produce responsive documents within Walker’s possession. He indicated that Walker did not have possession of the Sutton Litigation File. Doc. No. 67-2, at 2. Thereafter, counsel for the parties agreed that the Cunningham Law Firm would obtain the Sutton Litigation File from Attorney Sutton.
Counsel for Walker could not prepare a privilege log for the Sutton Litigation File to serve with the response to the requests for production because the undisputed evidence is that counsel for Walker did not have possession of that file when Attorney Cunningham served the response to GEICO’s request for production. Accordingly, counsel for Walker could not create a privilege log for documents they had not yet seen. Under these circumstances, there was no waiver of privileges and protections arising from Walker’s failure to produce a privilege log simultaneously with service of the response to the requests for production. See Universal City Dev. Partners, Ltd. v. Ride & Show Eng’g, Inc., 230 F.R.D. 688, 695 (M.D. Fla. 2005) (adopting a case-by-case determination of waiver when a privilege log is not produced with a timely response to a request for production); cf. Fifth Third Bank v. ACA Plus, Inc., 73 So.3d 850, 852 (Fla. 5th Dist. Ct. App. 2011) (holding, under Florida law, that failure to produce a privilege log by the due date for a response to a request for production of documents did not waive privileges and protections).
Counsel for GEICO also argues that counsel for Walker waived privileges and protections by failing to produce a privilege log until two weeks after they learned of the disclosure of the Sutton Litigation File. Doc. No. 68, at 8. This argument overlooks the evidence that upon learning of the disclosure, counsel for Walker did exactly what they were required to do under Federal Rule of Civil Procedure 26(b)(5)(B), as discussed in more detail below. It was not until they received Attorney Kidd’s letter dated March 22, 2015 that they learned that counsel for GEICO would not return the documents. They acted promptly after receiving this letter by filing the first motion for return of inadvertently produced documents and a privilege log. For these reasons, the fourteen-day delay in serving a privilege log after discovering the disclosure of the entire Sutton Litigation File does not constitute a waiver of privileges and protections.
2. Waiver By Failing to Object
*6 GEICO next argues that Walker waived all objections based on privilege because she did not assert such objections in the response to the request to produce. Doc. No. 68, at 7. GEICO expressly did not request production of “all those materials ... which are legitimately protected by the attorney-client privilege.” Doc. No. 67-1, at 1-2. Therefore, no objection to production of attorney-client privileged documents was needed because the request did not call for production of privileged documents.
GEICO contends that the response to the request for production was insufficient to assert an objection based on work-product protection. Doc. No. 68, at 13. However, as I observed during a hearing in this case, counsel for both parties sometime refer to work product as privileged information, supporting a conclusion that counsel understood references to privileges to also include work-product protection. Doc. No. 61 (digital recording). Additionally, the response to the request for production indicated that counsel for Walker anticipated that a privilege log would be prepared related to the Sutton Litigation File. Privilege logs are used to assert both privileges and other legal protections, such as work product. The statement that a privilege log would be prepared is sufficient to preserve privilege and protection objections, under the factual circumstances underlying the present motion, because the statement put GEICO on notice that privilege and protection claims would likely be asserted. Accordingly, I find that Walker did not waive her attorney-client privilege and work-product protection claims by failing to state them with specificity in the response to GEICO’s request for production.
3. Waiver by Disclosure.
GEICO also argues that Walker waived her claims of privileges and protections by producing the entire Sutton Litigation File to its counsel. Doc. No. 68, at 7-10. The issue of waiver by allegedly inadvertent disclosure is governed by federal law. Specifically, Federal Rule of Evidence 502(f) provides that Rule 502 applies even if state law provides the rule of decision in a case.
Accordingly, I look to Rule 502(b) to determine whether the production of allegedly privileged and protected documents operates as a waiver. Rule 502(b) provides that there is no waiver if:
(1) the disclosure was inadvertent;
(2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and
(3) the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).[6]
All three of these elements must be met to prevent a waiver of privilege. Thermoset Corp. v. Building Materials Corp. of Am., No. 14-60268-CIV, 2015 WL 1565310, at *7 (S.D. Fla. Apr. 8, 2015) (citing Heriot v. Byrne, 257 F.R.D. 645, 654 (N.D. Ill. 2009) ). The disclosing party bears the burden of proving that the elements of Rule 502(b) have been met. Id.
The undisputed evidence in this case establishes that the Cunningham Law Firm took reasonable steps to prevent disclosure of privileged and protected materials. Its standard operating procedure required that attorneys review documents for privilege and protection and prepare a privilege log before documents were produced. Additionally, documents and the privilege log were to be produced only with a transmittal letter signed by an attorney, which was an additional, reasonable step to ensure that document production would not occur without authorization of an attorney. Accordingly, had Ms. Sabbatino followed this standard operating procedure, an attorney would not have signed the transmittal letter authorizing disclosure of the entire Sutton Litigation File because there was no privilege log to accompany the production.
*7 The decision in U.S. Fidelity & Guarantee Co. v. Liberty Surplus Insurance Corp., 630 F.Supp.2d 1332 (M.D. Fla. 2007) (“Liberty”), upon which counsel for GEICO relies, is factually distinguishable from the present case. In Liberty, a paralegal misunderstood instructions from an attorney regarding which documents were to be copied and delivered to opposing counsel. When the copies of these documents, which included allegedly privileged documents, were ready for production, the attorneys working on the case were not available to sign the transmittal letter. The paralegal took the transmittal letter to another attorney who was not familiar with the case. This attorney signed the transmittal letter without making an inquiry regarding the propriety of the production. Id. at 1340. The court observed that if the attorney who signed the transmittal letter had looked at the documents to be produced, he would have seen that some of the documents stated on their face that they were privileged and confidential and that one of the documents was an opinion letter. Id. at 1340-41. The court found that this production was not inadvertent because the attorney who signed the transmittal letter did not take reasonable precautions to prevent inadvertent disclosure. Id. at 1341. In contrast, in the present case no attorney was consulted by Ms. Sabbatino about production of the entire Sutton Litigation File and no attorney signed the transmittal letter. Therefore, no attorney was on notice in the present case of the disclosure of the allegedly privileged and protected information.
The next question is whether the production was inadvertent. Rule 502 does not define “inadvertent disclosure.” While some courts rely on pre-Rule 502 law to determine whether disclosure was inadvertent, other courts have simplified the analysis and “essentially ask[ ] whether the party intended privileged or work-product protected documents to be produced or whether the production was a mistake.” Thermoset Corp., 2015 WL 1565310, at *8 (quoting Coburn Grp., LLC v. Whitecap Advisors LLC, 640 F.Supp.2d 1032, 1037-38 (N.D. Ill. 2009) ) (internal quotation marks omitted). Some judges in the Eleventh Circuit have adopted the simpler analysis and focused on the intent of the producing party. Id. This approach is consistent with well-established law that waiver is an intentional relinquishment of a known right. See, e.g., In re Garfinkle, 672 F.2d 1340, 1347 (11th Cir. 1982).
The undisputed evidence establishes that Ms. Sabbatino did not intend to waive Walker’s claims of privileges and protections. Rather, she made a mistake by failing to follow the Cunningham Law Firm’s standard operating procedure because she felt pressured to produce the Sutton Litigation File due to the delay in production arising from the copying service’s failure to Bates stamp the documents at the time they were originally delivered for copying. Because there is no evidence that the Cunningham Law Firm intentionally elected to waive Walker’s attorney-client privilege and work-product protection claims, the production here was inadvertent.
The last element of Rule 502(b) is whether the Cunningham Law Firm promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B). Once again, the undisputed evidence is that attorneys with the Cunningham Law Firm were not aware of the production of the entire Sutton Litigation File until March 15, 2016, when GEICO’s request to depose Attorney Cunningham caused an internal inquiry to be made during which Attorney Yaffa first discovered that Ms. Sabbatino had disclosed the entire Sutton Litigation File. Attorneys Cunningham and Yaffa took steps to rectify the error by immediately calling counsel for GEICO, who were unavailable, and by sending a letter to GEICO’s counsel the next day demanding return of the Sutton Litigation File. This is exactly the procedure required by Rule 26(b)(5)(B).
Counsel for Walker could have reasonably assumed that counsel for GEICO would fulfill its duties under Rule 26(b)(5)(B), which requires as follows:
After being notified [of a claim of privilege or protection over documents produced in discovery], a party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; must take reasonable steps to retrieve the information if the party disclosed it before being notified; and may promptly present the information to the court under seal for a determination of the claim.
*8 It was not until counsel for Walker received Attorney Kidd’s letter dated March 22, 2016, that they learned that GEICO refused to return the documents and that they would only agree not to review or utilize the documents for a sufficient length of time for the Court to determine whether the production constituted a waiver, rather than until such time as the issues of privilege, protection and waiver were resolved.
Upon receipt of Attorney Kidd’s letter, counsel for Walker acted promptly to seek relief from the Court. On March 29, 2016, they filed the first motion to compel return of inadvertently produced documents supported by evidence, a privilege log and other documents. Doc. No. 27. After this motion was filed, Attorney Kidd continued to act in derogation of her responsibilities under Rule 26(b)(5)(B). Contrary to her representation in the March 22, 2016 letter, Attorney Kidd used and disclosed portions of the allegedly privileged and protected information in her motion to compel a deposition of Attorney Cunningham, which she filed on March 25, 2016. Doc. No. 26. The record also suggests that Attorney Kidd did not take reasonable steps to retrieve the information she disclosed to GEICO until the Court required her to do so. Doc. Nos. 62, 64.
For these reasons, I find that the Cunningham Law Firm established each element of Rule 502(b). Therefore, there was no waiver of attorney-client privilege and work-product protection by the inadvertent disclosure of the entire Sutton Litigation File.
4. Waiver of Attorney-Client Privilege by Issue Injection.
GEICO argues that Walker also waived the attorney-client privilege by injecting the issue of whether GEICO could have settled the Underlying Action into this litigation. Counsel for GEICO cites specifically to the following allegation in the amended complaint:
20. GEICO, through its agents, employees and representatives, breached its duties of good faith to Priscilla Condemarin by, including but not limited to: ...
k. failing to settle the WALKER claim where a reasonable, prudent person, faced with the prospect of paying the total recovery, would do so ....
Doc. No. 68, at 12 (citing Doc. No. 14 ¶ 20).
In Lee v. Progressive Express Insurance Co., 909 So.2d 475 (Fla. 4th Dist. Ct. App. 2005), Florida’s Fourth District Court of Appeal directly addressed the issue-injection argument raised by GEICO in this case. In that bad faith failure to settle action, Progressive Express Insurance Co. (“Progressive”) requested discovery of communications between Plaintiff Lee and his attorney regarding counsel’s authority to settle the Underlying Action filed by Lee against Progressive’s insured. Progressive believed that Lee’s attorney orchestrated the rejection of Progressive’s policy limits tender solely to set Progressive up for a bad faith action. Lee filed a privilege log and moved for a protective order, maintaining that the requested documents were protected by the attorney-client privilege and the work-product doctrine. Id. at 476. The court rejected Progressive’s argument that by initiating a bad faith action, Lee injected specific communications with his attorney into the litigation and, thereby, waived the attorney-client privilege. The court wrote, “The motives of Lee and his attorney regarding the timing of the settlement offer and rejection of Progressive’s subsequent settlement offer are not elements that Lee has to prove to establish a bad faith claim against Progressive.” Id. at 477 (citing Berges v. Infinity Ins. Co., 896 So.2d 665 (Fla. 2004) ).
*9 In Tolz v. GEICO General Insurance Co., No. 08-80663-CIV, 2010 WL 384745 (S.D Fla. Jan. 27, 2010), the trustee in bankruptcy for GEICO’s insured, Jennifer Beebe, filed a bad faith failure to settle claim against GEICO arising from its failure to settle a claim made by Maria Granados, an injured party, against Beebe. Among other things, the plaintiff alleged that “[i]f GEICO had timely tendered to GRANADOS the available policy limits, GRANADOS would have accepted same.”[7] The law firm of Searcy Denney Scarola Barnhart & Shipley, P.A. (“Searcy”) represented Granados in the underlying action. The central issue in the bad faith case was whether GEICO acted in bad faith in handling and failing to settle the claim against Beebe. As an affirmative defense, GEICO asserted that Granados acted unreasonably by refusing to accept GEICO’s tender of the policy limits. Id. at *1. During the litigation, GEICO served a subpoena duces tecum on Searcy seeking the production of its litigation files in the underlying action. Searcy objected to the subpoena and produced a privilege log in which it asserted attorney-client privilege and work-product protection objections. GEICO then filed a motion to compel in which it sought production from Searcy of: “(1) all documents withheld by Searcy which constituted ‘fact work-product,’ and (2) all documents withheld by Searcy which were created prior to December 1, 2005, the date that GEICO learned that Granados was rejecting GEICO’s tender of its policy limits.” Id.
In its motion, GEICO argued that the mental state, thoughts, and impressions of Granados and her attorneys during the time prior to her rejection of GEICO’s tender of its policy limits are a central issue in the instant action because they are the best evidence of whether GEICO had a realistic opportunity to settle Granados’ claim against Beebe within the policy limits. GEICO argued that it therefore [was] entitled to the production of these documents on the basis that special and extraordinary circumstances existed which justified their production, and on the basis that Granados had waived her privilege through the doctrine of waiver by issue injection.
Id. The court rejected GEICO’s issue-injection argument. Relying on Lee, the court found that GEICO injected the issue of Granados’ allegedly unreasonable refusal to accept GEICO’s tender of the policy limits as an affirmative defense and, thus, that GEICO injected the issue, not the plaintiff. Id. at *4.
Just as the courts found in Lee and Tolz, Walker did not inject the issue of her communications with her attorney into this case by filing the complaint. Rather, GEICO injected the issue of Walker’s willingness to settle the case in its Fourth Affirmative Defense, which reads, “As its Fourth Affirmative Defense, GEICO states that WALKER was unwilling to settle her claim within the applicable policy limits.” Doc. No. 16, at 5. For these reasons, I find that Walker did not waive her attorney-client privilege through issue injection.
Counsel for GEICO argues that work-product protection does not apply to documents created before the Underlying Action was resolved. They also assert that Walker may not claim work-product protection for documents created in the Underlying Action, not in the present case. They argue, alternatively, that they have a substantial need for the work product created before the resolution of the Underlying Action.
1. Documents Created Before the Underlying Action was Resolved.
In Allstate Indemnity Co. v. Ruiz, 899 So.2d 1121 (Fla. 2005), Plaintiffs Joaquin and Paulina Ruiz made a claim for collision coverage on vehicle to their insurer, Allstate. Allstate denied the claim based on a mistake of one of its agents, who had incorrectly deleted the vehicle from the insurance policy. After the Ruizes filed a lawsuit against Allstate, Allstate admitted its obligation for collision coverage. The Ruizes maintained that Allstate’s failure to resolve their claims earlier was done in bad faith in violation of section 624.155, Florida Statutes. Id. at 1123. After the coverage issue was resolved, the Ruizes sought production of Allstate’s claim and investigative files, among other documents. Allstate asserted that responsive documents were protected work product and not discoverable. Id. at 1123-24. The Florida Supreme Court resolved the dispute, holding that “in connection with evaluating the obligation to process claims in good faith under section 624.155, all material, including documents, memoranda, and letters, contained in the underlying claim and related litigation file material that was created up to and including the date of resolution of the underlying matter and pertain in any way to coverage, benefits, liability, or damages” should be produced. Id. at 1129-30. The Court wrote: “[W]ork product protection that may otherwise be afforded to documents prepared in anticipation of litigation of the underlying coverage dispute does not automatically operate to protect such documents from discovery in the ensuing, or accompanying, bad faith action.” Id. at 1130.
*10 GEICO argues that Ruiz stands for the proposition that there is no work product protection for documents produced in anticipation of litigation by insureds in the litigation underlying a bad faith case before that underlying litigation was resolved. Ruiz does not sweep that broadly. Ruiz addressed only documents in the insurer’s files, not documents in the insured’s files.
Nevertheless, GEICO contends that the rationale of Ruiz should be extended to permit it to discover work-product documents listed on the Final Privilege Log that were created before the resolution of the Underlying Action. Some judges have agreed that fairness permits the insurers to discover work product of the insureds to evaluate the totality of the circumstances regarding whether the insurers acted in bad faith in handling a claim. See, e.g., Doc. Nos. 68-1, 68-2. None of these cases are binding precedent. I am not persuaded that there is no work-product protection for all of documents prepared in anticipation of the Underlying Action or that GEICO should not be required to make the showing of substantial need required for production of work product in federal court, discussed in more detail below. Therefore, GEICO’s contention that there is no work-product protection for documents listed on the Final Privilege Log that were created before the resolution of the Underlying Action is not well taken.
2. Work-Product Protection in Subsequent Litigation.
Federal Rule of Civil Procedure 26(b)(3)(A) provides: “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 ....” Walker is a party to this case, as well as a party in the Underlying Action. In another context, the United States Supreme Court observed that “the literal language of the Rule protects materials prepared for any litigation or trial as long as they were prepared by or for a party to the subsequent litigation.” FTC v. Grolier Inc., 462 U.S. 19, 25, 103 S.Ct. 2209, 76 L.Ed.2d 387 (1983) (citing 8 J. Wright & A. Miller, Federal Practice and Procedure § 2024, at 201 (1970) ).
The United States Court of Appeals for the Fifth Circuit observed as follows:
The emerging majority view among the circuits which have struggled with the issue thus far seems to be that the work product privilege does extend to subsequent litigation. One circuit, the Third Circuit, appears to extend the work product privilege only to “closely related” subsequent litigation. In re Grand Jury Proceedings, 604 F.2d 798, 803–04 (3d Cir.1979). A broader view, exemplified by the Fourth and Eighth Circuits, is that the privilege extends to all subsequent litigation, related or not. See United States v. Pfizer, Inc. (In re Murphy), 560 F.2d 326, 335 (8th Cir.1977); Duplan Corp. v. Moulinage et Retorderie de Chavanoz, 487 F.2d 480, 484–85, n.15 (4th Cir.1973); cf. United States v. Leggett & Platt, Inc., 542 F.2d 655, 660 (6th Cir.1976), cert. denied, 430 U.S. 945, 97 S.Ct. 1579, 51 L.Ed.2d 792 (1977).
In re Grand Jury Proceedings, 43 F.3d 966, 971 (5th Cir. 1994). Counsel have not cited a case from the Eleventh Circuit stating which view it will follow. I need not resolve that issue here because, even under the narrower view, the present bad faith action is closely related to the Underlying Action. Therefore, work-product protection may be claimed in this case for documents created in anticipation of the Underlying Action.
3. Substantial Need for Production of Work Product.
*11 The question of whether, and under what circumstances, work-product protected documents are discoverable is governed, in this federal court case, by Federal Rule of Civil Procedure 26(b)(3)(A)(ii). This Rule states that otherwise discoverable work product may be disclosed if the requesting party “shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.” Id. “Material that reflects an attorney’s mental impressions, conclusions, opinions, or legal theories, is referred to as ‘opinion work product.’ ” Cox v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1422 (11th Cir. 1994) (quoting In re Murphy, 560 F.2d 326, 336 (8th Cir.1977) ), opinion modified on reh’g, 30 F.3d 1347 (11th Cir. 1994). “[O]pinion work product enjoys a nearly absolute immunity and can be discovered only in very rare and extraordinary circumstances.” Id. (quoting In re Murphy, 560 F.2d at 336) (internal quotation marks omitted).
GEICO has not established that it has a substantial need for all of the work product created before the Underlying Action resolved, much less a showing that this is a case involving very rare and extraordinary circumstances warranting the disclosure of opinion work product. Among other things, GEICO has not shown that it cannot discover from Walker the reasons she decided not to accept GEICO’s settlement offer. Because GEICO has not made the showing required to discover work product, its contention that is it entitled to discover all of the work product listed on the Final Privilege Log that was created before the Underlying Litigation was resolved is not well taken.[8]
Walker asks that “severe sanctions” be imposed against GEICO and its counsel arising from their failure to comply with the requirements of Rule 26(b)(5)(B) and Rule 4-4.4(b) of the Rules Regulating the Florida Bar.[9] Doc. No. 67, at 15 (adopting by reference Doc. No. 27). She has also filed a motion to disqualify the Young Law Firm. Doc. No. 29. It is appropriate to consider the sanctions argument in the present motion in conjunction with resolution of the motion to disqualify. Accordingly, I will enter a separate order regarding the procedure for resolving the motion to disqualify and the motion for sanctions.
IV. CONCLUSION.
For the reasons set forth above, it is ORDERED as follows:
A. Plaintiff’s Renewed Motion to Compel Return of Inadvertently Produced Documents (Doc. No. 67) is GRANTED. The Cunningham Law Firm shall promptly advise the Court in writing whether it wishes to pick up the complete Sutton Litigation File provided to the Clerk of Court by the Young Law Firm, formerly filed at Doc. Nos. 47-56, or whether it wishes the Clerk of Court to destroy those documents;[10]
*12 B. Plaintiff’s ... Renewed Motion for Sanctions against GEICO and Its Counsel (Doc. No. 67) is deferred pending further order of the Court.
DONE and ORDERED in Orlando, Florida on July 11, 2016.
Footnotes
This response date was agreed to by counsel. Doc. No. 67, at 3 n.2; Doc. No. 68, at 2.
Attorney Yaffa avers that after Attorney Cunningham served the response to GEICO’s request for production, counsel informally agreed that the Cunningham Law Firm would obtain the litigation file from Morgan & Morgan, remove all privileged documents and produce the non-privileged portion of the file to counsel for GEICO. Doc. No. 67-5, at 2. Attorney Kidd represents that the discussion about production of the litigation file from Morgan & Morgan occurred on August 21, 2015, during her meeting with Attorney Yaffa to prepare a case management report. Doc. No. 68, at 2. Because Attorney Yaffa presented a sworn statement and Attorney Kidd did not, the undisputed evidence establishes that the discussion about production of the litigation file from Morgan & Morgan did not occur until after the response to GEICO’s request for production was served.
During a hearing, Attorney Young stated that he had not reviewed any of the documents in the Sutton Litigation File, but he had considered information Attorney Kidd gave him about information in that file. During the same hearing, Attorney Kidd stated that she had reviewed some of the documents in the Sutton Litigation File but she could not recall which documents she reviewed. Doc. No. 61 (digital recording).
This motion has now been sealed by order of the Court.
Because of this agreement, Walker was not required to address specifically in the motion why the documents listed in the Final Privilege Log are privileged or protected.
GEICO relies on Ray v. Cutter Labs., Div. of Miles, Inc., 746 F.Supp. 86 (M.D. Fla. 1990), in support of its waiver-by-production argument. Doc. No. 68, at 7-10. Federal Rule of Evidence 502 was amended in 2008 to provide that it applies even if state law provides the rule of decision. Fed. R. Evid. 502(f). Ray was decided before this amendment to Rule 502 and, therefore, Ray is no longer persuasive authority on the question of inadvertent production.
The complaint in Tolz can be viewed at pacer.gov, District Courts -- Southern District of Florida -- Case No. 08-80663, Doc. No. 1, at 12 ¶ 38.
GEICO may file a motion to compel production of specific work product supported by evidence establishing that it has a substantial need for production of work product and that this is a rare and extraordinary case warranting production of specific opinion work product. Such a motion should not be filed, however, until the pending motion to disqualify GEICO’s counsel is resolved.
Rule 4-4.4(b) provides: “A lawyer who receives a document or electronically stored information relating to the representation of the lawyer’s client and knows or reasonably should know that the document or electronically stored information was inadvertently sent must promptly notify the sender.”
The Clerk of Court will continue to hold the documents filed by the Young Law Firm that were provided to GEICO pending resolution of the motions to disqualify and for sanctions. Doc. No. 64. The Cunningham Law Firm must preserve the CD of the entire Sutton Litigation File so that it can be produced, if requested, for review by the presiding District Judge.