eDiscovery Assistant

In re Lincoln Nat'l COI Litig.

2020 WL 1157172 (E.D. Pa. 2020)

March 9, 2020

Pappert, Gerald J., United States District Judge

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Summary

The court found that the ESI submitted for review by the parties was not privileged and must be disclosed to the Plaintiffs. The court noted that evidentiary privileges are highly disfavored in Pennsylvania, so the scope of such third-party situations must remain narrowly tailored. The court concluded that the ten documents were not privileged and must be disclosed to the Plaintiffs.

Additional Decisions

IN RE: LINCOLN NATIONAL COI LITIGATION EFG BANK AG, CAYMAN BRANCH, et al., Plaintiffs,
v.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, Defendant

No.: 16-cv-06605-GJP, No.: 17-cv-02592-GJP

United States District Court, E.D. Pennsylvania

Filed March 09, 2020

Counsel

For LINCOLN NATIONAL COI LITIGATION, IN RE (2:16-cv-06605-GJP): STACEY J. RAPPAPORT, MILBANK, TWEED, HADLEY & MCCLOY LLP, NEW YORK, NY.
For JOHN J. SOROKO, ESQ., Special Master (2:16-cv-06605-GJP): JOHN J. SOROKO, LEAD ATTORNEY, DUANE MORRIS LLP, PHILADELPHIA, PA.

For BHARTI R. BHARWANI, ROBERT A. ZIRINSKY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiffs (2:16-cv-06605-GJP): JEFFREY W. GOLAN, LEAD ATTORNEY, BARRACK RODOS & BACINE, PHILADELPHIA, PA; ANDREW S. FRIEDMAN, BONNETT, FAIRBOURN, FRIEDMAN AND BALINT, P.C., PHOENIX, AZ; FRANCIS JOSEPH BALINT , JR., BONNETT FAIRBOURN FRIEDMAN & BALINT, PHOENIX, AZ; HOWARD M. BUSHMAN, THE MOSKOWITZ LAW FIRM PLLC, CORAL GABLES, FL; JILLIAN HEWITT, SUSMAN GODFREY LLP, NEW YORK, NY; JOHN G EMERSON, EMERSON SCOTT LLP, LITTLE ROCK, AR; JULIE PALLEY, BARRACK, RODOS & BACINE, PHILADELPHIA, PA; P. RYAN BURNINGHAM, SUSMAN GODFREY LLP, SEATTLE, WA.

For US LIFE 1 RENDITEFONDS GMBH & CO. KG, US LIFE 2 RENDITEFONDS GMBH & CO. KG, Plaintiffs (2:16-cv-06605-GJP): DOUGLAS E. ROBERTS, LEAD ATTORNEY, PIETRAGALLO GORDON ALFANO BOSICK & RASPANTI, PHILADELPHIA, PA; GAETAN ALFANO, KEVIN E. RAPHAEL, LEAD ATTORNEYS, PIETRAGALLO GORDON ALFANO BOSICK [*2] & RASPANTI LLP, PHILADELPHIA, PA; JEFFREY W. GOLAN, LEAD ATTORNEY, BARRACK RODOS & BACINE, PHILADELPHIA, PA; SETH ARD, LEAD ATTORNEY, JILLIAN HEWITT, SUSMAN GODFREY LLP, NEW YORK, NY; STEVEN G SKLAVER, LEAD ATTORNEY, SUSMAN GODFREY LLP, LOS ANGELES, CA; ANDREW S. FRIEDMAN, BONNETT, FAIRBOURN, FRIEDMAN AND BALINT, P.C., PHOENIX, AZ; FRANCIS JOSEPH BALINT , JR., BONNETT FAIRBOURN, PHOENIX, AZ; HOWARD M. BUSHMAN, THE MOSKOWITZ LAW FIRM PLLC, CORAL GABLES, FL; JOHN G EMERSON, EMERSON SCOTT LLP, LITTLE ROCK, AR; JULIE PALLEY, BARRACK, RODOS & BACINE, PHILADELPHIA, PA; P. RYAN BURNINGHAM, SUSMAN GODFREY LLP, SEATTLE, WA.

For LOWELL RAUCH, CAROL ANNE RAUCH ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Plaintiffs (2:16-cv-06605-GJP): BRIAN D. PENNY, LEAD ATTORNEY, GOLDMAN SCARLATO & PENNY PC, CONSHOHOCKEN, PA; JEFFREY W. GOLAN, LEAD ATTORNEY, BARRACK RODOS & BACINE, PHILADELPHIA, PA; PATRICK F. MADDEN, LEAD ATTORNEY, BERGER MONTAGUE PC, PHILADELPHIA, PA; PAUL J. SCARLATO, LEAD ATTORNEY, GOLDMAN, SCARLATO & PENNY, PC, CONSHOHOCKEN, PA; SHANON J. CARSON, LEAD ATTORNEY, BERGER MONTAGUE PC, Philadelphia, PA; ANDREW S. FRIEDMAN, BONNETT, FAIRBOURN, FRIEDMAN AND BALINT, P.C., PHOENIX, [*3] AZ; HOWARD M. BUSHMAN, THE MOSKOWITZ LAW FIRM PLLC, CORAL GABLES, FL; JILLIAN HEWITT, SUSMAN GODFREY LLP, NEW YORK, NY; JOHN G EMERSON, EMERSON SCOTT LLP, LITTLE ROCK, AR; JULIE PALLEY, BARRACK, RODOS & BACINE, PHILADELPHIA, PA; P. RYAN BURNINGHAM, SUSMAN GODFREY LLP, SEATTLE, WA.

For BARRY MUKAMAL, AS TRUSTEE OF THE MUTUAL BENEFITS KEEP POLICY TRUST, MILGRIM INVESTMENTS, LP, A NEW JERSEY LIMITED PARTNERSHIP ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiffs (2:16-cv-06605-GJP): ADAM M. MOSKOWITZ, LEAD ATTORNEY, The Moskowitz Law Firm, PLLC, Coral Gables, FL; GAIL A. MCQUILKIN, LEAD ATTORNEY, KOZYAK TROPIN & THROCK MORTON PA, CORAL GABLES, FL; JEFFREY W. GOLAN, LEAD ATTORNEY, BARRACK RODOS & BACINE, PHILADELPHIA, PA; ANDREW S. FRIEDMAN, BONNETT, FAIRBOURN, FRIEDMAN AND BALINT, P.C., PHOENIX, AZ; FRANCIS JOSEPH BALINT , JR., BONNETT FAIRBOURN FRIEDMAN & BALINT, PHOENIX, AZ; JILLIAN HEWITT, SUSMAN GODFREY LLP, NEW YORK, NY; JOHN G EMERSON, EMERSON SCOTT LLP, LITTLE ROCK, AR; JULIE PALLEY, BARRACK, RODOS & BACINE, PHILADELPHIA, PA; P. RYAN BURNINGHAM, SUSMAN GODFREY LLP, SEATTLE, WA.

For JOEL STEPHEN AGEL, Plaintiff (2:16-cv-06605-GJP): ANGELICA M. ORNELAS, DANIEL C. GIRARD, LEAD ATTORNEYS, [*4] GIRARD SHARP LLP, SAN FRANCISCO, CA; DAVID J. COHEN, LEAD ATTORNEY, STEPHAN ZOURAS LLP, PHILADELPHIA, PA; JAMES B. ZOURAS, RYAN F. STEPHAN, LEAD ATTORNEYS, STEPHAN ZOURAS LLP, CHICAGO, IL; JEFFREY W. GOLAN, LEAD ATTORNEY, BARRACK RODOS & BACINE, PHILADELPHIA, PA; HOWARD M. BUSHMAN, THE MOSKOWITZ LAW FIRM PLLC, CORAL GABLES, FL; JILLIAN HEWITT, SUSMAN GODFREY LLP, NEW YORK, NY; JOHN G EMERSON, EMERSON SCOTT LLP, LITTLE ROCK, AR; JULIE PALLEY, BARRACK, RODOS & BACINE, PHILADELPHIA, PA; P. RYAN BURNINGHAM, SUSMAN GODFREY LLP, SEATTLE, WA.

For LINCOLN NATIONAL CORP., Defendant (2:16-cv-06605-GJP): ANDREW PORTER, LEAD ATTORNEY, KATRINA LOYER, KIM GOLDBERG, MILBANK LLP, NEW YORK, NY; AARON L. RENENGER, MILBANK TWEED HADLEY & MCCLOY, WASHINGTON, DC; JOHN P. ESTEP, WASHINGTON, DC; JOHN WESLEY SCOTT, TIMOTHY D. KATSIFF, BALLARD SPAHR LLP, PHILADELPHIA, PA; MICHAEL L. HIRSCHFELD, STACEY J. RAPPAPORT, MILBANK, TWEED, HADLEY, NEW YORK, NY.

For LINCOLN NATIONAL LIFE, INSURANCE COMPANY, Defendant (2:16-cv-06605-GJP): ANDREW PORTER, LEAD ATTORNEY, ANTHONY PERRI, KATRINA LOYER, KIM GOLDBERG, MILBANK LLP, NEW YORK, NY; AARON L. RENENGER, MILBANK TWEED HADLEY & MCCLOY, WASHINGTON, DC; AMY L. PICCOLA, [*5] SAUL EWING ARNSTEIN & LEHR LLP, PHILADELPHIA, PA; JOHN P. ESTEP, WASHINGTON, DC; JOHN WESLEY SCOTT, TIMOTHY D. KATSIFF, BALLARD SPAHR LLP, PHILADELPHIA, PA; MICHAEL L. HIRSCHFELD, STACEY J. RAPPAPORT, MILBANK, TWEED, HADLEY & MCCLOY LLP, NEW YORK, NY; PAUL M. HUMMER, SAUL EWING ARNSTEIN & LEHR LLP, PHILADELPHIA, PA.

For JOHN J. SOROKO, ESQ., Special Master: JOHN J. SOROKO, LEAD ATTORNEY, DUANE MORRIS LLP, PHILADELPHIA, PA.

For EFG BANK AG, CAYMAN BRANCH, DLP MASTER TRUST, DLP MASTER TRUST II, DLP MASTER TRUST III, GWG DLP MASTER TRUST, GREENWICH SETTLEMENTS MASTER TRUST, PALM BEACH SETTLEMENT COMPANY, Plaintiffs (2:17-cv-02592-GJP): DARREN TESHIMA, LEAD ATTORNEY, ORRICK HERRINGTON & SUTCLIFFE LLP, SAN FRANCISCO, CA; GEOFFREY G. MOSS, LEAD ATTORNEY, ORRICK HERRINGTON & SUTCLIFFE LLP, LOS ANGELES, CA; JEFFREY R. LERMAN, LEAD ATTORNEY, MONTGOMERY MCCRACKEN WALKER & RHOADS LLP, PHILADELPHIA, PA; KHAI LEQUANG, LEAD ATTORNEY, ORRICK HERRINGTON & SUTCLIFFE LLP, IRVINE, CA; HEATHER M. BOYLAN CLARK, JENNIFER BUND JONES, ORRICK HERRINGTON & SUTCLIFFE LLP, WHEELING, WV; RIC T. FUKUSHIMA, ORRICK, HERRINGTON & SUTCLIFFE LLP, IRVINE, CA; RICHARD G. PLACEY, MONTGOMERY, MCCRACKEN, WALKER & RHOADS, LLP, [*6] PHILADELPHIA, PA.

For THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, Defendant (2:17-cv-02592-GJP): AARON L. RENENGER, LEAD ATTORNEY, MILBANK TWEED HADLEY & MCCLOY, WASHINGTON, DC; MICHAEL L. HIRSCHFELD, STACEY J. RAPPAPORT, LEAD ATTORNEYS, MILBANK, TWEED, HADLEY & MCCLOY LLP, NEW YORK, NY; AMY L. PICCOLA, PAUL M. HUMMER, SAUL EWING ARNSTEIN & LEHR LLP, PHILADELPHIA, PA.

For WELLS FARGO BANK, NATIONAL ASSOCIATION, AS SECURITIES INTERMEDIARY FOR EFG BANK AG, CAYMAN BRANCH, Movant (2:17-cv-02592-GJP): HEATHER M. BOYLAN CLARK, JENNIFER BUND JONES, ORRICK HERRINGTON & SUTCLIFFE LLP, WHEELING, WV; KHAI LEQUANG, LEAD ATTORNEY, ORRICK HERRINGTON & SUTCLIFFE LLP, IRVINE, CA; RICHARD G. PLACEY, MONTGOMERY, MCCRACKEN, WALKER & RHOADS, LLP, PHILADELPHIA, PA.

Pappert, Gerald J., United States District Judge

MEMORANDUM

*1 Plaintiffs and Lincoln National Life Insurance Company asked the Special Master to review in camera certain documents that Lincoln claimed were privileged. The Special Master issued an Opinion ruling that all or portions of twenty-one documents were not privileged and thus must be disclosed to the Plaintiffs. Lincoln now objects to that Opinion as it relates to ten documents. The Court overrules Lincoln’s Objections and adopts the Special Master’s Opinion.

Before this litigation arose, Lincoln, through its outside counsel (Greenberg Traurig, LLP) retained two consulting firms to help update its mortality assumptions and set new cost of insurance (COI) rates. See (Joint Statement of Discovery Disputes Ex. 2, at ¶¶ 3–5, ECF No. 62-12) (Smith Decl.).[1] The Consultants worked closely “with Lincoln non-legal personnel” regarding “the eventual redetermination of COI rates”; Lincoln “did not regard such work as privileged or protected work product.” (Id. at ¶ 7.) Rather, it intended the attorney-client privilege to attach to only those “privileged communications concerning issue-specific legal advice [Greenberg Traurig] provided to Lincoln.” (Id.) That said, Lincoln did envision that its in-house lawyers and Greenberg Traurig might rely on the consultants “in connection with the provision of legal advice to Lincoln.” (Id. at ¶ 6.) But as it turned out, “[t]he legal questions presented to [Greenberg Traurig] did not require [it] to rely on assistance regarding actuarial matters from either of the Consultants.” (Joint Statement of Discovery Disputes Ex. 4, at ¶ 8, ECF No. 62-17) (Berlin Decl.).

During discovery, Lincoln produced two reports the consultants had created but refused to turn over related documents that it claimed were privileged. See (Joint Statement of Discovery Disputes 1–2, 5–7, ECF No. 62). According to the Plaintiffs, the consultants’ reports were privileged, so by producing the reports Lincoln had waived any claim of privilege covering documents of the same subject matter. See (id. at 1–5). Lincoln, however, argued that the reports were not privileged, meaning there had been no waiver. See (id. at 7–9).

The Special Master deferred ruling on whether the reports themselves were privileged. Instead, he concluded that Plaintiffs may be entitled to some of the underlying documents under both parties’ theories. He then ordered the parties to work together to limit the disputed documents and then submit for in camera review only those documents about which they could not agree. See (ECF No. 77).

After the parties submitted documents for review, the Special Master concluded that twenty-one documents were not privileged and must be disclosed to the Plaintiffs. See (Special Master Op. 8–12, ECF No. 111). In ruling on ten of those twenty-one documents, the Special Master relied on BouSamra v. Excela Health, 210 A.3d 967 (Pa. 2019). See (id. at 10–11). He read that case as “declin[ing] to expand the attorney-client privilege to encompass outside consultants unless the consultants’ ‘presence was either indispensable to the lawyer giving legal advice or facilitated the lawyer’s ability to give legal advice to the client.’ ” (Id. at 10) (quoting BouSamra, 210 A.3d at 985). Noting that Lincoln had “disclaimed that the consultants’ services were necessary for the provision of legal advice,” the Special Master concluded that the ten documents were not privileged. (Id.)

*2 Lincoln objects to the Special Master’s Opinion regarding those ten documents.[2]It argues that the Special Master erred in ruling that, under BouSamra, the attorney-client privilege cannot attach to the consultants’ requests for legal advice from Lincoln’s in-house counsel. See (Objs. 1, ECF No. 113). According to Lincoln, the Special Master mistakenly read BouSamra as rejecting the functional-equivalent doctrine, under which “consultants are treated similarly to employees for purposes of privilege analysis.” (Id. at 2 (quoting King Drug Co. of Florence, Inc. v. Cephalon, Inc., 2013 WL 4836752, *6 (E.D. Pa. Sept. 11, 2013))). Lincoln adds that the Special Master also erred in believing that Lincoln had “disclaimed that the consultants’ services were necessary for the provision of legal advice.” (Id. at 5.)

The Court reviews the Special Master’s findings of fact and conclusions of law de novo. See Fed. R. Civ. P. 53(f)(3), (4). Although some courts treat a Special Master’s discovery recommendations as procedural matters, which are reviewed for abuse of discretion, see, e.g., Ramos v. Banner Health, 2018 WL 4700707, at *2 (D. Colo. Aug. 8, 2018) (unpublished), other courts conduct de novo review for many discovery issues, see, e.g., In re Cathode Ray Tube (CRT) Antitrust Litig., 301 F.R.D. 449 (N.D. Cal. 2014). Given the nature of the discovery disputes here, the Court concludes that de novo review is appropriate. See Callwave Commc’ns LLC v. AT&T Mobility LLC, No. CV 12-1701-RGA, 2016 WL 3450736, at *1 (D. Del. June 16, 2016) (unpublished) (reviewing de novo objections relating to attorney-client privilege).

III

Pennsylvania law prohibits lawyers from revealing confidential communications made by a client, unless the client waives the privilege. Pa. Cons. Stat. Ann. § 5928. A party invoking attorney-client privilege must prove that: (1) the claimed “holder of the privilege is or sought to become a client”; (2) the communication was made to a lawyer or his subordinate; (3) “the communication relates to a fact of which the attorney was informed by his client, without the presence of strangers,” to get a legal opinion, “legal services or assistance in a legal matter”; and (4) “the privilege has been claimed and is not waived.” BouSamra, 210 A.3d at 983 (quotation and alterations in original omitted).

For corporations, “the attorney-client privilege ‘extends to communications between its attorney and agents or employees authorized to act on the corporation’s behalf.’ ” Id. (quotation omitted). But that privilege ordinarily does not attach to communications made in the presence of a third party. See id. 984. And disclosing an originally privileged communication to a third party waives the privilege. See id. at 985. An exception exists for third parties whose “presence was either indispensable to the lawyer giving legal advice or facilitated the lawyer’s ability to give legal advice to the client.” Id. But evidentiary privileges—such as the attorney-client privilege—are “highly disfavored in Pennsylvania,” so “the scope of such [third-party] situations must remain narrowly tailored.”Id. at 986 n.15.

The Special Master correctly ruled that the ten documents here are not privileged. For the communications between Lincoln’s in-house counsel and Lincoln employees, Lincoln fails to show that these intra-company communications were made to get a legal opinion, “legal services or assistance in a legal matter.” Id. at 983. Regarding the communications between Lincoln’s in-house counsel and the consultants, Lincoln cannot prove that the consultants’ “presence was either indispensable to the lawyer giving legal advice or facilitated the lawyer’s ability to give legal advice to the client.” Id. at 985. To the contrary, Lincoln has claimed that it used the consultants’ work “to adjust COI rates—an ordinary course business activity.” (Joint Statement of Discovery Disputes 9.) Nothing in the ten documents suggests that the relevant communications involved anything other than that ordinary business activity or that the consultants in any way facilitated in-house counsel’s legal advice to Lincoln.

*3 Lincoln’s objections miss the point. Although BouSamra did not reject the functional-equivalent doctrine, it clarified that the attorney-client privilege attaches to communications to third parties only if “the third-party’s presence was either indispensable to the lawyer giving legal advice or facilitated the lawyer’s ability to give legal advice to the client.” BouSamra, 210 at 985. The consultants do not fit within that narrow exception. Lincoln’s straw-man arguments on the functional-equivalent doctrine’s formal status in Pennsylvania cannot distract from that fact. In the end, Lincoln asks the Court to ignore the Pennsylvania Supreme Court’s guidance and expand a “highly disfavored” evidentiary privilege—all so Lincoln can withhold documents relating to reports that Lincoln itself put at issue. Id. at 986 n.15. The Court declines to do so.

An appropriate order follows.

BY THE COURT:

/s/ Gerald J. Pappert

GERALD J. PAPPERT, J.

Footnotes

[1]

As the Special Master and parties did, the Court cites the ECF numbers listed on the 17- 02592 docket. Identical versions of each document are also on the docket in the 16-06605 action.

[2]

Lincoln filed the disputed documents under seal. See (Exs. 2–11, ECF No. 116.) The Court has thoroughly examined each document.