*1 The parties seek a determination as to whether certain documents disclosed by Defendants in discovery—specifically, two reports from consultants Milliman and Willis Towers Watson (“WTW”), who were engaged by Defendants through their outside counsel, Greenberg Traurig—(1) were protected by the attorney-client privilege, and (2) if so, whether that privilege was then waived by their production such that any and all “related documents,” heretofore withheld from production by Defendants as privileged, are now also perforce discoverable because the privilege as to the two reports was waived. (Discovery Dispute of February 8, 2019, as amended on February 11, 2019, Dkt. 66.)[1] Although not unprecedented, see, e.g., Lerman v. Turner, No. 10 C 2169, 2011 WL 62124 (N.D. Ill. Jan. 6, 2011), this dispute presents the unusual situation where it is Defendants, for whom the documents were created, who are claiming that the attorney-client privilege never attached to the two reports, while it is Plaintiffs who are claiming the documents were in fact privileged in the first instance.

Because Defendants take the position that the documents were never privileged, they argue that, by definition, their intentional disclosure of those documents in discovery could not waive any concomitant privilege for other related, but as of yet undisclosed, documents. For their part, Plaintiffs take the position that these two reports were privileged in the first instance, which Plaintiffs then argue means that the disclosure of the two reports, by definition, has effectuated a subject matter waiver of some unspecified dimension, but certainly including the waiver of that privilege for all other “related” documents. In terms of such other related documents, Plaintiffs have referred to “the work performed, and instructions and input received, by the consultants in preparing the Reports.” (Dkt. 66, at 5.)

Plaintiffs’ submission is not specific in terms of what documents they would consider to be encompassed within the possible “subject matter waiver” that they assert was effectuated as a result of the production of the two reports. For example, at one point in their submission, Plaintiffs claim they are entitled to “all documents related to the Reports.” (Id.) Certainly, that likely would be too broad under any circumstances. However, during the telephonic argument held on May 31, 2019, Plaintiffs stated that they were only seeking a more limited subset of documents related to the reports that include “the work performed, and instructions and input received, by the consultants in preparing the Reports.” (Id.)

As discussed below, both sides have presented colorable arguments regarding the attachment or non-attachment of the privilege in the first instance, i.e., when the reports were created. However, for the reasons discussed below, the determination of that question of privilege and any waiver of privilege is not, as a practical matter, necessary to resolve the present discovery dispute.

*2 “It is well-settled that when a client voluntarily discloses privileged communications to a third party, the privilege is waived.” Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1424 (3d Cir. 1991). However, when such a disclosure of privileged communications is made, “the waiver extends to an undisclosed communication or information ... only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together.” Fed. R. Evid. 502(a) (emphasis added). The Explanatory Note to Rule 502 further explains that such an extension of a privilege waiver to as yet undisclosed documents “is ‘reserved for those unusual situations in which fairness requires a further disclosure of related, protected information, in order to prevent a selective and misleading presentation of evidence to the disadvantage of the adversary.’ ” Thomas v. City of Philadelphia, Civ. A. No. 17-4196, 2019 WL 265138, at *2 (E.D. Pa. Jan. 18, 2019) (emphases added) (quoting Fed. R. Evid. 502 Explanatory Note). The Third Circuit has also explained that “[w]hen a party discloses a portion of otherwise privileged materials while withholding the rest, the privilege is waived only as to those communications actually disclosed, unless a partial waiver would be unfair to the party's adversary.” Westinghouse, 951 F.2d at 1426 n.12; see also Shionogi Pharma, Inc. v. Mylan Pharm., Inc., Civ. No. 10-1077, 2011 WL 6651274, at *4 n.1 (D. Del. Dec. 21, 2011) (discussing the consistency between the Explanatory Note to Rule 502 and the Third Circuit's opinion in Westinghouse).

A. Plaintiffs’ Case for the Documents in Question Being Privileged

Documents that are created by outside consultants (non-lawyers) may in certain instances yet be protected by the attorney-client privilege. Although it is generally the case that a party waives any attorney-client privilege by disclosing privileged information to a third party, courts have recognized an exception where “disclosure to the third party is necessary to receive informed legal advice.” Serrano v. Chesapeake Appalachia, LLC, 298 FRD 271, 283 (W.D. Pa. 2014) (citing Westinghouse, 951 F.2d at 1423). As a result, “courts have held that the client may allow disclosure to an ‘agent’ assisting the attorney in giving legal advice to the client without waiving the privilege.” Westinghouse, 951 F.2d at 1423; see also United States v. Kovel, 296 F.2d 918, 921 (2d Cir. 1961) (because “the complexities of modem existence prevent attorneys from effectively handling clients’ affairs without the help of others,” the attorney-client “privilege must include all the persons who act as the attorney's agents”).

Here, Plaintiffs point to a number of factors that could support an argument that the two reports were, in the first instance, protected or capable of being protected as privileged. For example, Plaintiffs note the language in the consultants’ engagement letters for the two reports stating that they were being engaged in order to aid Lincoln's outside counsel in providing legal advice to Lincoln. (See Dkt. 62-1 (engagement letter between WTW and Greenberg Traurig, stating that the work performed by WTW will “assist and facilitate Law Firm's provision of legal advice to its client Lincoln National Life Insurance Company”); Dkt. 62-2 (consulting agreement between Milliman and Greenberg Traurig stating that Greenberg Traurig “has engaged Milliman to perform consulting services in order to assist and facilitate Client's provision of legal advice to Lincoln National Life Insurance Company”).) These same engagement letters further state that any work product by the consultants would be protected by the attorney-client privilege. (Dkt. 62-1 (engagement letter with WTW); Dkt. 62-2 (consulting agreement with Milliman).) Plaintiffs also note that the “footer” on the Milliman report states that the report is an “Attorney Client Privileged Communication.” (Exhibit C to February 8, 2019 Submission, filed under seal). These factors may be capable of supporting the view that Defendants, the consultants, and Greenberg Traurig all intended for these reports to be protected by any and all applicable privileges and protections at the time the reports were created. Cf. Scott v. Chipotle Mexican Grill, Inc., 94 F. Supp. 3d 585, 594 (S.D.N.Y. 2015) (declining to extend the privilege to a human resources consultant for Chipotle in part because no contemporaneous “documents from Chipotle indicate that she was in fact hired to assist ... in providing legal advice”).

B. Defendants’ Case for the Documents Not Being Privileged

*3 On the other hand, Defendants present an equally plausible argument that these reports were not privileged because they were created solely for business purposes, rather than to aid Greenberg Traurig in providing legal advice to Defendants. As Defendants note, “[i]f what is sought is not legal advice but only [consulting] service[s] ... or if the advice sought is the [consultant's] rather than the lawyer's, no privilege exists.” United States v. Antolini, 271 F. App'x 268, 271 n.1 (3d Cir. 2008) (quoting Kovel, 296 F.2d at 922). Defendants argue that the Milliman and WTW reports were created “in the ordinary course of [Defendants’] business and were not in aid of legal advice or work product.”[2] (Dkt. 66, at 6.)

To support further their contention that the reports were only created and used in connection with the ordinary course of business, Defendants submitted a declaration from Jeffrey Smith, Lincoln's in-house counsel, and a declaration from Michael Berlin, Lincoln's outside counsel from Greenberg Traurig. Mr. Smith stated that the Milliman and WTW reports were “used by Lincoln to set new COI rates for the Policies.” (Dkt. 62-12, ¶ 5.) Mr. Smith also explained the privilege designations and statements in the engagement letters regarding privilege as follows:

In all, there is certainly a credible argument that the work performed by Milliman and WTW was never protected by the attorney-client privilege or the work product protection, which would mean, in turn, that the disclosure of these reports could not waive any applicable protection or privilege as to any other ostensibly privileged documents.

*4 As set forth above, it is certainly something of a close question whether: (1) the consultants’ reports were privileged, but the privilege has been waived by Defendants’ production of the reports; or (2) the reports were not privileged in the first instance. However, in reviewing Defendants’ privilege log, it appears that certain entries relate to documents that might well be discoverable irrespective of whether Plaintiffs’ argument for privilege waiver or Defendants’ argument for no such waiver prevailed.

During oral argument, Defendants’ counsel provided an example of what these communications might be. According to Defendants’ counsel, Milliman may have been asking for clarification from Lincoln (and Lincoln's counsel) about what a term in the insurance policies means for purposes of their actuarial analysis, such as the meaning of the word “expenses.” Defendants have claimed that such communications—including Lincoln's response—pertains to Defendants’ legal interpretation of the insurance contracts and thus are privileged.

However, as discussed below, such communications could well be discoverable under either Plaintiffs’ or Defendants’ characterization of the two underlying reports, i.e., whether the reports were privileged and the privilege was then waived or whether the reports were never privileged.

A. Federal Rule of Evidence 502(a)

Assuming for the sake of argument that Plaintiffs’ argument regarding privilege and waiver was correct, the next required step would be to consult Federal Rule of Evidence 502(a) in order to determine the actual scope and effect of any such possible waiver. Rule 502(a) provides that, in the event of an intentional waiver, other undisclosed communications or information would be discoverable, but only if “the disclosed and undisclosed communications or information concern the same subject matter,” and “they ought in fairness to be considered together.” Again using the example of the definition of “expenses,” as that term is used in the insurance policies at issue, this would appear to fit within the terms of Rule 502(a). As an example, documents reflecting or relating to how Milliman might have interpreted the word “expenses” in creating its report would appear to be within the same “subject matter” of Milliman's report. Moreover, as the interpretation given by Milliman to the term “expenses” is relevant to Milliman's analysis, Plaintiffs, in fairness, should be granted access to that information, as Plaintiffs may want to test or reconstruct Milliman's analysis and, to do so, Plaintiffs would likely need to know what “inputs” or assumptions Milliman used in creating the results.

Although the Advisory Committee Note to Rule 502 explains that “subject matter waiver (of either privilege or work product) is reserved for those unusual situations in which fairness requires a further disclosure of related, protected information, in order to prevent a selective and misleading presentation of evidence to the disadvantage of the adversary,” waiver is nevertheless appropriate where “a party intentionally puts protected information into the litigation in a selective, misleading and unfair manner.” This appears to be such a situation. Whether the reports themselves were privileged or not, were Defendants to use “selectively” the reports to their advantage in defending against Plaintiffs’ claims, it would be “unfair” to Plaintiffs were Plaintiffs not able to have discovery into, among other things, what assumptions the consultants used in crafting their methodology and reaching their findings. See Lerman, 2011 WL 62124, at *10 (ordering production of an investigative memorandum prepared by outside counsel where the subject matter of a disclosed report and the withheld memorandum was the same and concerns about fairness weighed in favor of discovery).

B. Federal Rule of Civil Procedure 26(b)(1)

*5 Alternatively, under Federal Rule of Civil Procedure 26, the scope of discovery includes “any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). Furthermore, a matter is relevant if “it has any tendency to make a fact more or less probable than it would be without the evidence; and ... the fact is of consequence in determining the action.” Fed. R. Evid. 401; see also UPMC v. CBIZ, Inc., Case No. 3:16-cv-204, 2018 WL 1542423, at *3 (W.D. Pa. Mar. 29, 2018).

As Defendants have made clear, their view is that Milliman and WTW were retained for ordinary business purposes, not to assist in providing legal advice, and thus the reports were not privileged. Thus, by extension, related communications between Defendants, Defendants’ outside counsel, and the consultants concerning the making of those reports would presumably likewise not be privileged. And certainly such communications, to the extent they involve interpretations of words like “expenses,” are clearly within the standard of relevancy under the Federal Rules of Civil Procedure and the Federal Rules of Evidence. Accordingly, such communications could well be discoverable even were it to be assumed, as argued by Defendants, that the two reports were never privileged in the first instance and thus no waiver, as argued for by Plaintiffs, ever occurred.

Accordingly, here Plaintiffs may be entitled to discovery of at least some portion—but by no means necessarily all—of the documents that Defendants have to this point withheld on the basis of privilege. However, this case is considerably more complicated than the fact pattern in the Lerman case referenced above since, here, not merely one or two documents, but a significant volume of documents have been withheld or redacted, and those withheld and/or redacted documents may or may not be properly discoverable as relevant to the two documents in question.

Accordingly, and in view of the practical overlap between Federal Rule of Evidence 502(a) and Federal Rule of Civil Procedure 26(b)(1), Plaintiffs shall identify, based on the descriptions provided by Defendants on their privilege logs, those specific documents withheld by Defendants that Plaintiffs contend relate to “the work performed, and the instructions and input received, by the consultants in preparing the Reports.” (Dkt. 66, at 5.)

Thereafter, as soon as practicable, the parties shall arrange a meet-and-confer to attempt to narrow the universe of documents for which the parties continue to disagree in terms of their discoverability. For those documents that the parties agree should be produced, Defendants are instructed to make such documents available to Plaintiffs. For those documents for which Defendants continue to claim that withholding those documents under a claim of attorney-client privilege or work product doctrine is warranted, Defendants shall produce, within ten (10) days of the meet-and-confer, an updated privilege log to Plaintiffs identifying and describing such documents.

*6 Plaintiffs may challenge Defendants’ designations and, if that challenge cannot be resolved, the parties may seek the assistance of the Special Master in resolving the matter, via in camera inspection or otherwise. Depending on the volume of documents that remain at issue, additional procedures may be appropriate to limit the number of documents that must be reviewed in camera.