Arrowood Indem. Co. v. Lubrizol Corp.
Arrowood Indem. Co. v. Lubrizol Corp.
2013 WL 12130641 (N.D. Ohio 2013)
August 6, 2013

Oliver Jr., Solomon,  United States District Judge

In Camera Review
Bad Faith
Attorney-Client Privilege
Attorney Work-Product
Failure to Produce
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Summary
The court granted in part and denied in part a motion to compel discovery of ESI related to a bad faith claims processing counterclaim. The court determined that the requested documents were not protected by attorney-client privilege or the work-product doctrine, and ordered Arrowood to produce them for in-camera inspection. However, the court denied Lubrizol's request to depose Arrowood's attorneys at this time.
ARROWOOD INDEMNITY COMPANY, Plaintiff
v.
THE LUBRIZOL CORPORATION, Defendant
Case No.: 1:10 CV 2871
United States District Court, N.D. Ohio, Eastern Division
Signed August 06, 2013

Counsel

Deborah J. Campbell, Dentons U.S., St. Louis, MO, John I. Grossbart, M. Keith Moskowitz, Aimee E. Graham, Lindsey A. Trachtenberg, Dentons U.S., Chicago, IL, Amanda M. Gatti, Janik, David Ross, Reminger & Reminger, Cleveland, OH, for Plaintiff.
Jodi Spencer Johnson, Ice Miller, Cleveland, OH, Joseph P. Thacker, Thacker Robinson Zinz, Toledo, OH, Julie A. Harris, Lubrizol Corporation, Wickliffe, OH, for Defendant.
Oliver Jr., Solomon, United States District Judge

ORDER

*1 Currently pending before the court in the above-captioned case is Defendant The Lubrizol Corporation's (“Lubrizol”) Motion to Compel Discovery (ECF No. 97) from Plaintiff Arrowood Indemnity Company (“Arrowood”). Lubrizol's Motion is granted in part and denied in part for the reasons stated below.
I. BACKGROUND
As the underlying facts of this action have been repeatedly described in a number of previous Orders (see, e.g., ECF No. 108), this Order only sets forth the facts directly pertinent to the instant Motion. On March 12, 2012, Lubrizol filed the instant Motion to Compel (ECF No. 32), arising out of Arrowood's refusal to provide documents and deposition testimony allegedly relevant to Lubrizol's bad faith claims processing counterclaim (Am. Countercl., ECF No. 32). Specifically, Lubrizol seeks to discover all of Arrowood's claim file before December 20, 2010, the date Arrowood filed suit. Lubrizol also seeks to depose up to three of Arrowood's attorneys (only one of whom is named) regarding the handling of Lubrizol's claim. Arrowood argues that the sought-after documents are protected by the attorney-client privilege, that some documents are also protected by the work-product doctrine, and that the attorney-client privilege prevents Lubrizol from deposing Arrowood's attorneys.
II. MOTION TO COMPEL REQUIREMENTS
Federal Rule of Civil Procedure 37 permits a party to move the court to compel a non-responsive party to comply with discovery requests. Rule 37(a)(3)(B) provides, in pertinent part, that:
(B) To Compel a Discovery Response. A party seeking discovery may move for an order compelling an answer, designation, production, or inspection. This motion may be made if ... (iii) a party fails to answer an interrogatory submitted under Rule 33[.]
Under Rule 37(a)(4), the court must treat “an evasive or incomplete disclosure, answer, or response ... as a failure to disclose, answer, or respond.”
The Sixth Circuit has determined that the “scope of discovery is ... within the broad discretion of the trial court.” Lewis v. AB Bus. Servs., Inc., 135 F.3d 389, 402 (6th Cir. 1998). Evidence is discoverable if it is non-privileged and relevant to the claims or defenses of either party or “appears reasonably calculated to lead to the discovery of admissible evidence.” Fed.R.Civ.P. 26(b)(1); see also Lewis, 135 F.3d at 402.
III. LAW AND ANALYSIS
A. Ohio Attorney–Client Privilege
In Ohio, both statutory and common law define the scope of the attorney-client privilege in the context of a bad faith claim raised by an insured against its insurer. The common law is clear: “attorney-client communications ... are subject to disclosure during discovery on bad-faith claims.” Garg v. State Auto. Mut. Ins. Co., 800 N.E.2d 757, 762 (2d Dist. Ohio Ct. App. 2003). Because a bad faith claim goes to the alleged breach of an insurer's fiduciary relationship with its insured, documents that “may cast light” on whether the insurer acted in bad faith are “unworthy of protection.” Boone v. Vanliner, 744 N.E.2d 154, 156–58 (Ohio 2001).
*2 Section 2317.02(A) of the Ohio Revised Code modifies the common law exemption to require a prima facie showing of bad faith before an insurer's attorney can be compelled to testify. In relevant part, the statute provides:
The following persons shall not testify in certain respects:
(A) (1) An attorney, concerning a communication made to the attorney by a client in that relation or the attorney's advice to a client, except that the attorney may testify by express consent of the client or, if the client is deceased, by the express consent of the surviving spouse or the executor or administrator of the estate of the deceased client. However, if the client voluntarily testifies or is deemed by section 2151.421 of the Revised Code to have waived any testimonial privilege under this division, the attorney may be compelled to testify on the same subject ....
(2) An attorney, concerning a communication made to the attorney by a client in that relationship or the attorney's advice to a client, except that if the client is an insurance company, the attorney may be compelled to testify, subject to an in camera inspection by a court, about communications made by the client to the attorney or by the attorney to the client that are related to the attorney's aiding or furthering an ongoing or future commission of bad faith by the client, if the party seeking disclosure of the communications has made a prima-facie showing of bad faith, fraud, or criminal misconduct by the client.
Arrowood argues that § 2317.02(A)(2) also applies to the production of documents, but both the case law and the plain text of the statute foreclose this conclusion. Section 2317.02(A), is “by its very terms ... a mere testimonial privilege,” State ex rel Leslie v. Ohio Hous. Fin. Agency, 824 N.E.2d 990, 996 (Ohio 2005). Further, the Sixth Circuit has held that § 2317.02(A) “applies to attorney testimony, not documents held by defendants.” In re Professionals Direct Ins. Co., 578 F.3d 432, 440 (6th Cir. 2009) (citing Leslie, 824 N.E.2d at 996). Although subsection (A)(2) was added in 2010, after Leslie and Professionals Direct, nothing in that subsection suggests that it should be construed differently than the rest of the section. Indeed, “it is well-settled that subsection (A)(1) does not apply to the production of documents.” Little Italy Dev., LLC v. Chicago Title Ins. Co., No. 1:11–CV–112, 2011 WL 4944259 at *2 (N.D. Ohio Oct. 17, 2011) (Gaughan, J.). The operative text of subsection (A)(2) does not significantly differ from that of subsection (A)(2): both subsections are directed at “persons” “testifying,” and “[a] plain reading of the statute clearly limits the statute's application to cases in which a party is seeking to compel testimony of an attorney for trial or at deposition–as opposed to cases where a party is seeking to compel production of nontestimonial documents.” Grace v. Mastruserio, 912 N.E.2d 608, 612 (1st Dist. Ohio Ct. App. 2007). Furthermore, the vast majority of courts have followed this reasoning to hold that subsection (A)(2) does not apply to the production of documents. See, e.g., Little Italy Dev., LLC, 2011 WL 4944259 at *2; Creatore v. Assurance Co. of America, No. 5:09–CV–1877, 2010 WL 4366093 at *2 (N.D. Ohio Oct. 28, 2010) (Boyko, J.); Cobb v. Shipman, 2012–Ohio–1676 ¶ 65 (11th Dist. Ohio Ct. App. 2012). The one federal case that held otherwise, Galion Comty. Hosp. v. Hartford Life and Accident Ins. Co., No. 1:08–CV–1635, 2010 WL 359126 at *3 (N.D. Ohio Jan 29, 2010), has been rejected as unpersuasive by the two courts to address its analysis. Little Italy Dev. 2011 WL 4944259 at *2 n.2; Creatore, 2010 WL 4366093 at *2. Accordingly, this court finds that the Sixth Circuit's holding in In Re Professionals applies to subsection (A)(2).
*3 Because Ohio Rev. Code § 2317.02(A)(2) does not apply to documents, Lubrizol does not need to make out a prima facie case of bad faith by Arrowood in order to view the documents it has requested during discovery. Such documents are discoverable under Ohio law insofar as “they may cast light” on whether Arrowood acted in bad faith. Boone,744 N.E.2d at156–58. Therefore, Arrowood must provide the court with the documents requested by Lubrizol which Arrowood has listed as privileged in its privilege log. The court will conduct an in-camera review of such documents to determine whether they are discoverable. See Stewart v. Siciliano, 985 N.E.2d 226, 235–36 (11th Dist. Ohio Ct. App. 2012).
In contrast to its document discovery request, Lubrizol's motion to depose Arrowood's attorneys is subject to Ohio Rev. Code § 2317.02(A)(2), and Lubrizol is required make out a prima facie case of bad faith claims handling. However, Lubrizol's request to depose Arrowood's attorneys is premature. Lubrizol indicates that it may depose up to three attorneys, but it has only identified one of those three. Further, Lubrizol makes clear that it might seek testimony from those attorneys regarding documents discovered pursuant to the bad-faith exception discussed above. It is, however, not yet clear which documents are relevant to Lubrizol's bad faith claim. To allow the depositions to occur before the court can determine which documents are discoverable would waste resources and unduly impinge on the attorney-client privilege.
Accordingly, Lubrizol's requested depositions are premature in light of both its failure to identify the attorneys it seeks to depose and the fact that Lubrizol has not yet viewed the documents about which it will seek testimony. Lubrizol may file a motion to compel the attorneys’ testimonies after it has determined which attorneys it seeks to depose and the communications about which it seeks such testimony. If and when Lubrizol files such a motion, it would be required to clearly show a prima facie case of bad faith by Arrowood, including a showing of how Arrowood's alleged bad faith harmed Lubrizol.
B. Federal Work-Product Doctrine
Because the work-product doctrine is a procedural rule, federal law governs work-product questions in diversity proceedings. In re Professionals Direct Ins. Co., 578 F.3d at 438 (citing In re Powerhouse Licensing, LLC, 441 F.3d 467, 472 (6th Cir. 2006)). The doctrine exists to “preserve the integrity of the adversarial process” by protecting from disclosure an attorney's “trial preparation materials.” In re Professionals Direct Ins. Co., 578 F.3d at 438 (citing Hickman v. Taylor, 329 U.S. 495, 510–14 (1947)). The doctrine is made operative by Rule 26(b)(3), which protects “documents and tangible things that are prepared in anticipation of litigation ... by or for another party or its representative.”
In determining if materials were prepared “in anticipation of’ litigation, the court will evaluate “(1) whether a document was created because of a party's subjective anticipation of litigation, as contrasted with an ordinary business purpose, and (2) whether that subjective anticipation was objectively reasonable.” United States v. Roxworthy. 457 F.3d 590, 594 (6th Cir. 2006). The party claiming protection bears the burden of showing that “anticipated litigation was ‘the driving force behind the preparation of each requested document.’ ” In re Professionals, 578 F.3d at 439 (quoting Roxworthy, 457 F.3d at 595 (citation omitted)). In the insurance context, “[m]aking coverage decisions is part of the ordinary business of insurance.” Id. Accordingly, if the ‘driving force’ behind the preparation of these documents was to assist ... in deciding coverage, then they are not protected by the work-product doctrine.” Id.
*4 The court cannot make a determination regarding the work-product dispute between the parties without conducting an in-camera inspection of the disputed documents, since “whether the documents at issue here were in fact prepared in anticipation of litigation can only be determined from an examination of the documents themselves and the context in which they were prepared.” Id. (citing Roxworthy, 457 F.3d at 595). Accordingly, Arrowood must produce to the court any documents requested by Lubrizol that it has identified in its privilege log as protected by the work-product doctrine. Thereafter, the court will make a determination as to whether they are covered by the work-product doctrine.
IV. CONCLUSION
For the foregoing reasons, Lubrizol's Motion to Compel (ECF No. 97) is granted in part and denied in part. Arrowood must produce to the court those documents listed in its privilege log as being protected by the attorney-client privilege or the work-product doctrine for in-camera inspection.[1] Arrowood shall produce such documents by August 15, 2013. Lubrizol's Motion is denied in regard to its request to depose Arrowood's attorneys. However, Lubrizol may refile such a Motion after it has identified the attorneys it seeks to depose, defined the scope of their depositions, and provided such evidence as it maintains will meet its burden to show a prima facie case of bad faith by Arrowood.
IT IS SO ORDERED.

Footnotes

One of these documents is the subject of a separate request by Lubrizol made pursuant to Federal Rule of Evidence 612. (ECF No. 110.) Because the court's in-camera review made pursuant to this Order may moot Lubrizol's subsequent request, the court will defer ruling on that request.