Transamerica Life Ins. Co. v. Richards
Transamerica Life Ins. Co. v. Richards
2024 WL 4866693 (C.D. Cal. 2024)
April 29, 2024
Castillo, Pedro V., United States Magistrate Judge
Summary
The court ruled on a Motion to Compel filed by the defendants, who argued that certain redactions made by the plaintiff to ESI were not protected by attorney-client or work product privileges. After conducting an in-camera review of the disputed documents, the court ordered the plaintiff to produce some documents without redactions and partially redact others. The court also clarified the legal standards for asserting privilege and reminded the plaintiff of their good faith obligations to produce discoverable evidence.
TRANSAMERICA LIFE INS. CO., Plaintiff,
v.
JAMES RICHARDS & CHRISTOPHER GURICH, Defendant
v.
JAMES RICHARDS & CHRISTOPHER GURICH, Defendant
Case No. CV 22-0284 HDV (PVCx)
United States District Court, C.D. California
Filed April 29, 2024
Castillo, Pedro V., United States Magistrate Judge
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO COMPEL PRODUCTION
*1 On March 20, 2024, Defendants and Counterclaim Plaintiffs James Richards and Christopher Gurich (Defendants) filed a Joint Stipulation presenting a Motion to Compel Discovery (Motion) against Plaintiff and Counterclaim Defendant Transamerica Life Insurance Company (Plaintiff or Transamerica)). For the reasons stated below, the Motion to Compel is GRANTED IN PART and DENIED IN PART (Dkt. No. 111).
I.
BACKGROUND
When a motion to compel is filed under Federal Rule of Civil Procedure (Rule) 26, the moving party is required to make an initial showing that the documents, information or materials sought are relevant and proportional to the allegations, claims and defenses in the case. Fed. R. Civ. P. 26(b)(1) and (b)(3). Relevance and proportionality are contextual, so analysis of the pending motion begins with a summary of the allegations, claims and counterclaims asserted by the parties.
A. Factual Allegations
In 2001 James Richards applied for a Long-Term Care (LTC) insurance policy with Transamerica. Transamerica approved the application on or about October 1, 2001, and issued him Comprehensive Long Term Care Insurance Certificate, No. 890928864 (Certificate). Mr. Richards paid all policy premiums until he initiated a claim for benefits under the Certificate on or about August 9, 2018.
After Transamerica approved Richards' claim for benefits in 2018, Richards hired Right at Home Conejo Valley (“Right at Home”), a home healthcare agency in the business of facilitating long term care services for individuals such as Mr. Richards. (“Joint Stip.”) at 4). At all relevant times, Robert Gurich worked for Right at Home as a home health care aide. Gurich is Richards' stepson. Richards asked Right at Home to staff Gurich as his paid home health care provider and Right at Home complied. Right at Home, in turn, submitted invoices for Gurich's services to Richards directly to Transamerica. (Joint Stip. at 4-5).
In June of 2019, Transamerica began to suspect insurance fraud based on observed discrepancies (dates and times when care did not appear to be provided) on invoices Right at Home submitted to Transamerica for Gurich's home health care services to Richards. These suspicions led Transamerica to begin an internal investigation that involved surveillance of Richards and Gurich by claims bureau investigators.
The first period of surveillance began around June 13, 2019, and continued up to the date when Transamerica filed suit against Defendants. All totaled Transamerica engaged in seven separate periods of surveillance of Richards and three separate periods of surveillance of Gurich.” (Joint Stip. at 4). Transamerica did not conduct any surveillance or otherwise investigate the Right at Home Agency. During these many periods of surveillance, Plaintiff alleges that Gurich was never once seen providing care to Richards and almost never seen outside the home together. The only time that investigators reported seeing Gurich with Richards was when Transamerica required Richards to undergo an independent medical examination (“IME”) in a doctor's office. (Joint Stip. at 5-7).
B. Claims, Counterclaims & Defenses
*2 In a Second Amended Complaint, Plaintiff alleges, inter alia, that Defendants were fraudulently billing Transamerica for care under Richards' LTC Certificate for dates and at times when care was not being provided. Plaintiff asserts that it will prove its fraud claim by introducing surveillance video taken of the Defendants and surveillance reports by investigators hired by Transamerica to observe Richards and Gurich. (Joint Stip. at 7).
Defendants, however, have filed a counterclaim against Plaintiff alleging bad faith, a claim based on the theory that Transamerica acted tortiously because it delayed and denied payment of policy benefits unreasonably and without proper cause. See Wilson v. 21st Century Ins. Co., 171 P.3d 1082, 1088 (Cal. 2007) (“[a]n insurer's good or bad faith must be evaluated in light of the totality of the circumstances surrounding its actions.”). Defendants need evidence to prove that Plaintiff acted unreasonably when it terminated benefit payments to Richard for all home health care services (not just those allegedly not provided by Gurich) and terminated the LTC Policy. See Bosetti v. U.S. Life Ins. Co. v. City of N.Y., 175 Cal. App. 4th 1208, 1236 (2009) (“[t]he ultimate test of [bad faith] liability in ... first party [insurance] cases is whether the refusal to pay policy benefits was unreasonable.”) (internal citation and quotations omitted). Undoubtedly this is why Defendants seek to compel production and complete redaction of all claims file documents and other emails and information used by Plaintiff to justify its termination and delay or denial of payment decisions See Chateau Chamberay Homeowners Ass'n v. Assoc. Intern. Ins. Co., 90 Cal. App. 4th 325, 347 (2001) (this is a “question of law where the evidence is undisputed and only one reasonable inference can be drawn from the evidence”).
Plaintiff defends against disclosure of evidence responsive to Defendants bad faith counterclaim, which falls within the scope of Rule 26(b)(3), because it was produced or communicated in anticipation of litigation, as part of attorney work product or attorney-client communications. Defendants assert that the disputed information is discoverable because it involves claims file communications related only to the business decisions related to managing Richards' claim for benefits, prepared by non-attorneys and non-parties.
II.
MOTION TO COMPEL HEARINGS & IN CAMERA REVIEW
Defendants filed a Motion to Compel on March 20, 2024 (Dkt. No. 111). In the Motion, Defendants seek production of unredacted copies of the documents that are responsive to RFP No. 4. Prior to the filing of this Motion, the Court held an informal discovery conference (IDC) on February 26, 2024. The same disputes raised by the Motion were discussed during the IDC. After the IDC, Plaintiff produced documents responsive to RFP Nos. 4, 32 and 33, in response to the Court's Minute Order and submitted a Privilege Log (Ex. A, Motion to Compel, Dkt. 111). Plaintiff claimed that redacted portions of the documents produced were not discoverable under Rule 26(b)(3), because they were prepared or part of communications in anticipation of litigation and fall within the scope of applicable attorney-client or work product privileges. Plaintiff produced a Privilege Log with the redacted documents sent to Defendants after the IDC. (See Ex. A to Motion to Compel) Not satisfied with the redacted production or the sufficiency of the Privilege Log, Defendants initiated a Motion to Compel and emailed its part of the joint stipulation to Plaintiff on or about March 13, 2024. In response, Plaintiff made a supplemental production (one that satisfied and mooted the issues raised in the Motion concerning RFP Nos. 32 and 33), but it maintained its privilege objections to the documents produced in response to RFP No. 4.[1]
A. The Motion Hearing
*3 On April 11, 2024, the Court held an in-person motion hearing by ZOOM videoconference. Counsel for both parties appeared and made their arguments. Defendant established that the documents sought were relevant under Rule 26 and proportional to the needs of the case (e.g., the evidence is necessary to defendant against Plaintiff's claim of fraud, to prosecute their bad faith counterclaim and to defend against the pending motion for partial summary judgment on the bad faith counterclaim filed by Plaintiff. Plaintiff, for its part, dropped the initial boilerplate objections to RFP No. 4 and represented that it produced all responsive documents in compliance with the Court's prior IDC directives. (See Joint Stip. at 17 (“Transamerica has left no stone unturned and produced all documents related to the claim file as requested by Defendants, withholding only privileged information from those documents. For the foregoing reasons, any additional demands of Defendants should be denied”)). The only issue, therefore, concerned whether the redactions to the produced fell within documents a recognized privilege and Rule 26(b)(3) as documents prepared in anticipation of litigation.
The Defendants argued that the Motion to Compel should be granted because (1) all of the communications at issue concern Richards' claim and were between non-attorneys and non-clients, who are not the agents of attorneys; (2) all of the communications involved the day-to-day claims handling and/or the ongoing surveillance campaign that Transamerica conducted on Defendants, which were part of its normal business practices, and would have been communicated regardless of the ensuing lawsuit; (3) none of the communications were created in anticipation of litigation under Rule 26(b)(3), especially withheld documents created as early as June 2019—over a year and a half before litigation commenced on January 13, 2022; (4) “the emails and text messages that were part and parcel of its investigation, that form the basis for the lawsuit that Transamerica filed against its now-90-year old insured, and that involved no attorney whatsoever” do not fall within the scope of the attorney/client or work product privileges, because they were created and communicated by non-attorneys and non-clients; and (5) the supplemental production of documents that were unredacted in response to the filing of the Motion “reveals the extent to which Transamerica's initial redactions were unjustifiable under any protection or privilege.” (Joint Stip. at 9). Defendants also argued that the Privilege Log is deficient and does not comply with Rule 26(b)(5) or the Court's prior guidance during the IDCs. (Joint Stip. at 11).
Plaintiff opposed the Motion and justified withholding the redacted portions of the documents produced in response to RFP No. 4 on grounds that the redacted information was prepared and communicated by non-attorneys, but these actions were taken at the direction of an attorney “in the fraud investigation and preparing for litigation[.]” (Joint Stip. at 12). Plaintiff asserted that Rule 26(b)(3) protects this information from disclosure under both the attorney-client and work product privileges.
At the conclusion of the hearing, the Court could not determine from Plaintiff's arguments and the original Privilege Log whether Transamerica could carry its burden of establishing the Rule 26(b)(3) anticipation of litigation privileges asserted in the original Privilege Log for the identified documents produced in response to RFP No. 4. The Court also concluded that the parties could not resolve the privilege issues on their own.
Accordingly, the Court took the Motion to Compel under advisement and directed Plaintiff to produce a sample of the disputed documents and redactions for in camera review by the Court. The parties agreed and the in-camera documents, identified by Defendants, were produced on April 18, 2023, by an email that Plaintiff sent to the Court. The in-camera sample set of disputed documents contained all redactions identified by the bates numbers that Defendant verified, as well as additional documents voluntarily produced by Plaintiff.
*4 The bates number ranges for the documents Defendants designated for in camera review, which Transamerica submitted to the Court on April 18, 2024, are as follows (Bates prefix TA 00): 2175-2213; 5787-5788; 5790; 5805; 6509-6513; 6578-6580; 6610-6621; 6780; 6830-6835; 6967-6969. Plaintiff voluntarily produced additional documents with redactions marked as bates numbers 5786, 5795, 5802, 6563, 6775, 6795, 6797, 6875 and 6965.[2]
B. The In Camera Hearing
The follow-up hearing on the Motion to Compel and the in-camera review took place on April 22, 2024, by ZOOM. Counsel for both parties were present. The Court first heard Defendants' argument about why non-attorney insurance claims file communications are discoverable and not privileged under Rule 26; it then conducted an ex-parte conference with Plaintiff's counsel to discuss Transamerica's privilege claims for the in-camera documents.
During the ex parte conference (recorded but under seal), the Court reviewed the in-camera production on a document-by-document basis and questioned Plaintiff's counsel about application of the specific privileges it asserted for the redacted information. The conference lasted approximately two hours but produced concessions by Plaintiff's counsel dropping claims of privilege and agreeing to eliminate the redactions (completely or partially) for the following in camera documents:
Plaintiff's counsel conceded and dropped claims of privilege for all redactions in the documents marked as bates numbers 5787-5788; 6509-6510; 6578; 6830; 6832; and 6834.[3] Plaintiff further agreed to produce the following documents by eliminating some but not all of the prior redactions in documents marked as bates numbers 5790; 5795; 6511; 6513; 6579-80; 6611-12; 6614; 6616; 6618; 6620; 6795; 6797; 6835. The three documents that appear in bold are from the additional documents voluntarily produced in camera by Plaintiff.
Plaintiff, nevertheless, reasserted and maintained its original Rule 26(b)(3) original privilege objections to production of the following redacted documents, identified as part of the in-camera set: (a) continued original redactions of bates numbers 2175-2213; 5802; 5805; 6563; 6621; 6780; 6967-6969; and (b) continued partial redactions of bates numbers 5790; 5802; 6579-80; 6611-12; 6613-14; 6616; 6618, 6620; 6795; 6797; 6835; 6967-69.
At the end of the hearing on April 22, 2024, Plaintiff agreed to produce the newly unredacted information to Defendants no later than April 29, 2024. Plaintiff further agreed to update the original Privilege Log (Ex. A to Motion, Dkt. 111) with an updated Privilege Log (now filed as Dkt. No. 127), which includes the redacted portions of all in camera documents for which it maintains and reasserts a privilege under Rule 26(b)(3).
*5 The Court will rule on the privilege objections asserted and maintained for the redactions in each of the in-camera documents (identified above). In doing so, the Court will organize the in-camera documents by four types: (1) claims file documents; (2) emails chains from and to non-attorney/non-parties; (3) email chains between non-attorney/non-parties with reference to or in consultation with legal counsel; (4) investigation or surveillance letters or reports).
The Court cannot reasonably review in camera the hundreds of remaining documents with redactions that are part of the larger production. Nevertheless, the Court reminds Plaintiff of its good faith obligations to produce discoverable evidence. Using the Court's rulings and explanations for why the asserted privileges apply or don't apply to the representative sample documents reviewed in camera, Plaintiff is ordered to produce to Plaintiff unredacted documents identified in this Order as well as documents which were not reviewed in-camera but are not subject to the asserted privileges to Defendants by May 3, 2024.
The legal standards applicable to the in-camera production and redacted documents for which Plaintiff maintains its privilege objections are summarized first. Discussion and rulings on the specific documents will follow.
III.
LEGAL STANDARDS
As the party moving to compel production of redacted information from document production, Defendants bear the initial burden of showing that the information sought is relevant and proportional to the legal issues at the heart of this case. “In turn, the party opposing discovery has the burden of showing that discovery should not be allowed [ ] and ... clarifying, explaining and supporting its [privilege] objections with competent evidence.” DIRECTV, Inc. v. Trone, 209 F.R.D. 455, 458 (C.D. Cal. 2002). Plaintiff's representation that all responsive documents have been produced, albeit in partially redacted form, satisfies their duty under Rule 34(b)(2)(C), so the Court will focus, instead, on relevance, proportionality, and the privilege objections recently asserted in the updated privilege log filed by Plaintiff on April 25, 2024, in response to the Court's order of April 23, 2024.
A. Rule. 26(b)(1)
Federal Rule of Civil Procedure 26(b)(1), as amended on December 1, 2015, provides:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1).
Evidence 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. “The relevance standard is commonly recognized as one that is necessarily broad in scope in order to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Raya v. Barka, 2022 WL 686460, at *4 (S.D. Cal. Mar. 8, 2022) (citation omitted). Evidence is proportional to the needs of the case if it is important to the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources and possibly the privacy interests of the party resisting discovery. See Henson v. Turn, Inc., No. 15-cv-01497-JSW, 2018 WL 5281629, *5 (N.D. Cal., Oct. 22, 2018). See also Rule 26(b)(1), advisory committee's note to 2015 amendment.
B. Rule 26(b)(3)
*6 Plaintiff bears the burden of establishing that the redacted portions of the documents produced are not discoverable under Rule 26(b)(3). Rule 26(b)(3) provides in relevant part:
... a party may obtain discovery of documents ... otherwise discoverable under subdivision (b)(1) of this rule and prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means. In order discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.
Fed. R. Civ. P. 26(b)(3).
Plaintiff argues that the redacted portions of the documents produced before or before March 15, 2023, are not discoverable under Rule 26(b)(3) because the contents were produced as work product in anticipation of litigation or part of protected attorney-client communications. See HLC Properties Ltd. v. Super. Ct., 35 Cal. 4th 54, 59 (2005) (the party claiming attorney-client communications privilege “shoulders the burden of showing the evidence it seeks to suppress falls within the terms of an applicable statute.). In re Syncor ERISA Litig., 229 F.R.D. 636, 644 (C.D. Cal. 2005) (like the attorney-client privilege, the party claiming work product privilege must bear the burden of establishing it).
The legal standards that govern the application of privileges under Rule 26 vary based on whether the case arises under the diversity or subject matter jurisdiction of the federal district court. When parties to a federal diversity action assert evidentiary privileges during discovery litigation, state law privileges apply to the extent that state law provides the rule of decision. See Fed. R. Evid. 501. See also In re Cal. Pub. Utils. Comm'n v. Westinghouse Elec. Corp., 892 F.2d 778, 781 (9th Cir. 1989) (“In diversity actions, questions of privilege are controlled by state law.”).
The attorney-client communication privilege is an evidentiary privilege. Thus, in diversity cases arising in California federal courts, California's common law of privilege rather than federal law applies. See Kandel v. Brother Intern. Corp., 683 F. Supp. 2d 1076, 1081 (C.D. Cal. 2010) (“In a federal action such as this based on diversity of citizenship jurisdiction, state law governs attorney-client privilege claims.”). But, unlike the attorney-client privilege, the work product privilege is considered a procedural, not an evidentiary privilege, so its application in diversity cases is determined under federal law. Baker v. Gen. Motors Corp., 209 F.3d 1051 (8th Cir. 2001). See also Star Editorial, Inc. v. Dist. Court, 7 F.3d 856, 859 (9th Cir. 1993).
C. Privilege Objections
“The attorney-client privilege has been the hallmark of Anglo-American jurisprudence for almost 400 years.” Mitchell v. Super. Ct., 37 Cal. 3d 591, 599 (1984), Its fundamental purpose is to “encourage full and open communication between client and attorney.” Zimmerman v. Super. Ct., 220 Cal. App. 4th 389, 396 (2013) (internal quotations omitted). Under California law, the attorney-client privilege is governed by statute and applies to confidential communications between client and lawyer during the attorney-client relationship. See Cal. Evid. Code § 952.
*7 In California, the test is whether the dominant purpose of the relationship between the parties to the communication is one of attorney-client. See Costco Wholesale Corp. v. Super. Ct., 196 Cal.App.4th 37, 52 (2011). The focus for a Court determining the attorney-client communication privilege under California law is not the content of the communication but [rather] the relationship of the communicators.” Clark v. Super. Ct., 196 Cal.App.4th 37, 52 (2011) (cleaned up).[4] Simply put, the California privilege law focuses on whether the attorney and client shared a relationship with the dominant purpose of transmitting confidential communications and whether the communication at issue occurred within the scope of that confidential relationship.
California extends the attorney-client privilege to necessary intermediaries, including family members, business associates, corporate client representatives or agents of the party, in circumstances where sharing the communication furthers the interest of the attorney-client consultation and relationship).[5] See California Earthquake Authority v. Metropolitan West Securities, LLC, 285 F.R.D. 585, 595 (E.D. Cal. 2012); Zurich American Ins. Co. v. Super. Ct., 155 Cal. App. 4th 1485, 1501 (2007). Confidential communications are shielded when these third persons are necessary to transfer confidential communications between the attorney and client and “further the interest of the client ... or the accomplishment of the purpose for which the lawyer is consulted ...” Id. § 952. This means that the purpose of the communication is not tested, and the relationship is not defined by the prospect or anticipation of litigation. The attorney-client communication privilege in California is wholly dependent on the dominant purpose of the relationship and whether that relationship was established to seek or share confidential information.
When dual purpose documents are at issue (those where the communication serves both a business and a legal interest), the attorney-client privilege is arguably broader than it is under federal law, because California tests the privilege based on the dominant purpose of the relationship between the attorney and client, not the primary purpose of the communication.[6] Under California law, confidential communications unrelated to the anticipation of litigation can be protected, because “the privilege protects the transmission of information,” not the contents of the information. Costco, 47 Cal. 4th at 733-35.
*8 Nevertheless, an attorney-client privilege does not attach to an attorney's communications “when the client's dominant purpose in retaining the attorney was something other than to provide the client with a legal opinion or advice.” Costo, 47 Cal. 4th at 736 (e.g., when the purpose of consultation is to seek non-confidential business advice, the attorney-client privilege does not apply because the relationship between the parties to the communication is not one of attorney-client.”). Id. (citing Aetna Cas & Sur. Co. v. Super. Ct., 153 Cal. App3d 467, 475 (1984)); see also 2022 Ranch, LLC v. Super. Ct., 113 Cal. App.4th 1377, 1398 (2003) (attorney-client privilege protects “communications that constitute the actual rendering of, or request for, legal advice, not those communications reflecting” factual investigation of an insurance claim by attorneys also working as or with insurance adjusters).
Another limitation on the attorney-client privilege is that it protects only the “disclosure of communications between the attorney and the client; it does not protect disclosure of underlying facts which may be referenced within a qualifying communication.” State Farm Fire & Casualty Co. v. Super. Ct., 54 Cal. App. 4th 625, 639 (1997) (emphasis in bold added but italics in original). See also Zimmerman v. Super. Ct., 220 Cal. App. 4th 389, 396 (2013) (“The privilege protects the disclosure of communications between attorney and client. It does not protect disclosure of the underlying facts which were communicated” and “it does not extend to independent witnesses”). Documents prepared independently by a party, including witness statements, do not become privileged communications or work product merely because they are turned over to counsel.” Wellpoint Health Networks, Inc. v. Super. Ct., 59 Cal. App. 4th 110, 119 (1997); see also Costco, 47 Cal. 4th at 735 (the privilege “does not extend to subject matter otherwise unprivileged merely because that subject matter has been communicated to the attorney”[7]
Finally, the attorney-client privilege is narrowly applied, even if it is broader than the federal privilege by the same name. As an evidentiary privilege, the attorney-client privilege should be narrowly construed because it prevents the admission of relevant and otherwise admissible evidence. People v. Sinohui, 28 Cal. 4th 205, 212 (2002). California courts are not entirely indifferent to situations in which it would be unfair to shield from disclosure information at the heart of a case. See Chicago Title Ins. Co. v. Super. Ct., 174 Cal. App. 3d 1142, 1149 (1985) (implied waiver “occurs where the plaintiff has placed in issue a communication which goes to the heart of the claim in controversy”); Merritt v. Super. Ct., 9 Cal. App. 3d 721, 730 (1970) (finding waiver in bad faith insurance lawsuit where plaintiff placed in issue the decisions, conclusions and mental state of his prior attorneys). California courts recognize the inherent unfairness of allowing a party to use privilege as both a sword and a shield (i.e., by bringing a claim that necessitates a defense based on confidential information).
*9 Once the party opposing discovery establishes facts necessary to support a prima facie claim of privilege, the communication is presumed to have been made in confidence and the opponent of the claim of privilege has the burden of proof to establish the communication was not confidential or that the privilege does not for other reasons apply”). See Costco, 47 Cal. 4th at 733.
The work product privilege, unlike the attorney-client communications privilege, is applied using a federal common law standard even when the case involves state law claims and the federal court's jurisdiction is based on diversity under 28 U.S.C. § ___. In the Ninth Circuit, the case providing the rule for decision is In re Grand Jury, 23 F.4th 1088 (9th Cir. 2022) (amending and superseding 13 F.4th 710), cert. granted by In re Jury, 143 S.Ct. 80 (Oct. 3, 2022) and dismissed as improvidently granted by ___ U.S. ___, 143 S. Ct. 543 (2023). There, in a case of first impression,the Ninth Circuit upheld and affirmed the Central District of California's decision in a federal criminal case that theprimary purpose test for determining whether a communication is subject to attorney-client privilege under federal common law also applies to dual-purpose communications between attorney and client. Compare Costco, 47 Cal. 4th 725, 736 (2009). See also Clark v. Super. Ct., 196 Cal. App. 4th 37, 51 (2011) (the “focus of the inquiry” is “the dominant purpose of the relationship between the parties to the communication”).
Pursuant to the work product doctrine, material obtained and prepared by an attorney or the attorney's agent in anticipation of litigation or preparation for trial may be immune from discovery. Fed. R. Civ. P. 26(b)(3); Hickman v. Taylor, 329 U.S. 495, 509– 12(1947). Like the attorney-client privilege, the party claiming work product privilege must bear the burden of establishing it. In re Syncor ERISA Litig., 229 F.R.D. 636, 644 (C.D. Cal. 2005). Determination of whether a document or information in a document falls within the work product privilege is a question of fact. To establish the privilege, the party asserting it can provide the court with a detailed privilege log and an explanatory affidavit or declaration of counsel or the person who prepared the document setting forth the factual basis establishing that it was prepared in anticipation of litigation and attorney work-product. See In re Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 925 (8th Cir. 1997).
One of the primary purposes of the work product doctrine is to prevent one party exploiting the other party's efforts to prepare for litigation. Holmgren v. State Farm Mut. Auto. Ins. Co., 976 F.2d 573, 576 (9th Cir. 1992); Admiral Ins. Co. v. U.S. Dist. Court for Dist. of Arizona, 881 F.2d 1486, 1494 (9th Cir. 1989). Pursuant to the work product doctrine, material obtained and prepared by an attorney or the attorney's agent in anticipation of litigation or preparation for trial may be immune from discovery. Fed. R. Civ. P. 26(b)(3); Hickman v. Taylor, 329 U.S. 495, 509–12 (1947).
The work product privilege, however, may be waived. In cases where the document constitutes “ordinary work product” (i.e., documents prepared in the ordinary course of business where the prospect of litigation exists), a party seeking such material may obtain it simply by showing a substantial need for the document and undue hardship would result from attempting to secure equivalent information. Fed. R. Civ. P. 26(b)(3)(A)(ii). In first party insurance cases, for example, where the insurer is the only party with the information as to what it knew at the time it denied a claim, the insured has met its burden of establishing substantial need for all of the insurance investigative file. See, e.g., St. Paul Reinsurance Company, Ltd.v. Commercial Financial Corp., 197 F.R.D. 620, 639 (N.D. Iowa 2000) (citing to Mission Nat'l Ins. Co. v. Lilly, 112 F.R.D. 160, 164 (D. Minn. 1986). Surveillance tapes are almost always the type of discovery that establishes substantial need because it is impossible to procure a substantial equivalent elsewhere. Gutshall v. New Prime, Inc., 196 F.R.D. 43, 46 (W.D. Va. 2000); Fletcher v. Union Pac. R.R., 194 F.R.D. 666, 671 (S.D. Cal. 2000). In such cases, the court ordering production must protect against disclosure of the mental impressions, conclusions, opinions or legal theories of a party's attorney or other representative concerning the litigation. Fed. R. Civ. P. 26(b)(3)(B). Work product privilege may also be waived by disclosure. The privilege is broader than the attorney-client privilege because its purpose is to protect the adversary process. An attorney may independently invoke the work product privilege, because the attorney has an independent interest in privacy, if invoking the privilege would not harm the client's interests. See Hobley v. Burge, 433 F.3d 946, 949 (7th Cir. 2006).
*10 Thus, more than a remote possibility of litigation is required when a document is created to shield it from discovery using work product privilege. There simply is no work product privilege for documents prepared in the regular course of business rather than for purposes of litigation. See, e.g., Simon v. G.D. Searle, 816 F.2d 397, 401 (8th Cir. 1987) (individual information about case reserves was deemed protected as work product but the aggregate amount was not in case where information communicated by non-attorneys in a risk management department not tasked or involved in giving legal advice or mapping legal strategy). See also Connecticut Indem. Co. v. Carrier Haulers, Inc., 197 F.R.D. 564, 571 (W.D.N.C. 2000) (in a fist party insurance claim, investigation documents are not typically prepared in anticipation of litigation because they are found to be done in the ordinary course of business where insurer owes a contractual duty to the party to adjust the claim).
“The phrase ‘in anticipation of litigation’ has both temporal and motivational components.” Equal Rights Center v. Post Properties, Inc., 247 F.R.D. 208, 210 (D.D.C. 2008) (quoting Fed. R. Civ. P. 26(b)(3)). In determining whether the document is entitled to work product protection, the Ninth Circuit looks to the totality of the circumstances surrounding the creation of the document. See In re Grand Jury Subpoena (Mark Torf/Torf Environmental Management), 357 F.3d 900, 908 (9th Cir. 2004).
The question of entitlement to work product protection cannot be decided simply by looking at one motive that contributed to a document's preparation. The circumstances surrounding the document's preparation must also be considered. In the “because of” Wright & Miller formulation, “the nature of the document and the factual situation of the particular case” are key to a determination of whether work product protection applies. Wright & Miller § 2024 (emphasis added). When there is a true independent purpose for creating a document, work product protection is less likely, but when two purposes are profoundly interconnected, the analysis is more complicated.
Id.
At the time the attorney prepared the document, he or she “ ‘must at least have had a subjective belief that litigation was a real possibility, and that belief must have been objectively reasonable.’ ” In re Sealed Case, 146 F.3d 881, 884 (D.C. Cir. 1998); see also Fox v. California Sierra Fin. Servs., 120 F.R.D. 520, 524 (N.D. Cal. 1988).
IV.
DISCUSSION
For the reasons discussed below, Plaintiff has carried the burden of establishing attorney-client and work product privileges as to some but not all the redacted documents submitted for in camera review. The Court's rulings as to specific documents reviewed in camera are as follows.
A. Claims File Notes
Defendants argue that bates numbers 2175-2213 are claims file notes created in the ordinary scope of business between non-attorney/non-parties. As such, they are not entitled to any privilege protection and should be fully discoverable under Rule 26. Plaintiff did not assert any specific privilege for the redactions in documents with bates numbers 2175-2213 in the original Privilege Log; instead, Transamerica's position in the Joint Stipulation was that compelled production of “logged [ ] notes and communications including directions from legal relating to the fraud investigation and anticipated litigation” should be denied, because Defendants “seek[ ] the production of communications and notes that, although drafted by claims representatives, contain thoughts, impressions, conclusions, opinions, and/or legal theories regarding communications with and directions from an attorney regarding the potential for this fraud litigation.” (Joint Stip. at 15-16). Plaintiff has also not submitted an affidavit or declaration to support its assertions of work product privilege. The representations made by Plaintiff's counsel during the in-camera hearing, on the record, however, are sufficient for the Court to find and conclude as follows.
*11 Claims file notes with dates before June 13, 2019, are too attenuated in time to be reasonably related to any real prospect of litigation. Plaintiff admits that the investigation into Transamerica's suspicion of fraud did not begin until June 2019. Prior to that time, Defendants' LTC claim had been granted and was being paid. There is no basis, therefore, to infer that the prospect of litigation was real before June 13, 2019. There is also no evidence to show that these claims file notes were prepared outside the ordinary course of business to manage Richards' LTC claim. Even if attorneys were monitoring the claims file notes there is no reason to redact or protect as privileged the claims file notes prior to this period.
Fairly read, the claims file notes from before June 13, 2019, arguably appear to have at most a “dual purpose” inasmuch as they appear to have been created for both business and legal purposes. Dual purpose documents are do not fall within the scope of the attorney client privilege under California law where the dominant purpose of the relationship is for the transfer of business advice, rather than legal counsel.
Granted, a claims handler may be an agent of the client designated to communicate about confidential information related to prospective litigation with an attorney. But, to fall within the privilege under California law, the claims file redactions would need to be confidential communications that were transmitted to further the attorney-client relationship. The attorney-client privilege does not apply if the attorney is acting as the client's business advisor.
The claims file documents that pre-date June 13, 2019 – the date that Plaintiff began its fraud investigation into Defendants – appear to relate only to business communications about whether to grant the claim filed by James Richards and how to manage that claim after Transamerica approved it. Costo, 47 Cal. 4th at 736 (e.g., when the purpose of consultation is to seek non-confidential business advice, the attorney-client privilege does not apply because the relationship between the parties to the communication is not one of attorney-client.”). Id. (citing Aetna Cas & Sur. Co. v. Super. Ct., 153 Cal. App3d 467, 475 (1984)); see also 2022 Ranch, LLC v. Super. Ct., 113 Cal. App.4th 1377, 1398 (2003) (attorney-client privilege protects “communications that constitute the actual rendering of, or request for, legal advice, not those communications reflecting” factual investigation of an insurance claim by attorneys also working as or with insurance adjusters). Plaintiff has not met its burden of showing that legal counsel about confidential issues was the dominant purpose of any attorney-client communication prior to June 13, 2019.
The claims file notes prior to June 2019 also appear to be facts, not confidential communications. See State Farm Fire & Casualty Co. v. Super. Ct., 54 Cal. App. 4th 625, 639 (1997) (The attorney-client privilege protects only the “disclosure of communications between the attorney and the client; it does not protect disclosure of underlying facts which may be referenced within a qualifying communication.”) (emphasis in bold added but italics in original). Furthermore, “documents prepared independently by a party, including witness statements, do not become privileged communications or work product merely because they are turned over to counsel.” Wellpoint Health Networks, Inc. v. Super. Ct., 59 Cal. App. 4th 110, 119 (1997); see also Costco., 47 Cal. 4th at 735 (the privilege “does not extend to subject matter otherwise unprivileged merely because that subject matter has been communicated to the attorney”).
The work product privilege also does not protect most of the claims file notes from disclosure. Even though a fraud investigation may have begun on June 13, 2019, there is no evidence presented to show that the redacted documents at issue were created, prepared or transmitted by Plaintiff's attorney or someone acting on the attorney's behalf during a period when litigation could reasonably be anticipated. Only if every fraud investigation initiated by Plaintiff created a reasonable prospect of litigation would the claims file documents that pre-date June 13, 2019, fall within an attorney-client or work product privilege based on anticipation of litigation. Since the investigation led to the evidence Plaintiff says it intends to offer at trial to prove its claims and provides the evidence to defend against the counterclaim filed by Defendants (as argued in Plaintiff's pending motion for partial summary judgment), the Court will not assume or presume that litigation was a foregone conclusion prior to June 13, 2019.
*12 Plaintiff's counsel did not persuade the Court that the redacted documents with dates before June 13, 2019, constitute attorney work product. They were created by and communicated between non-attorney/non-parties and there is no evidence that these persons were agents of an attorney conveying the thought processes or strategies formulated in anticipation of litigation. Moreover, the temporal scope of claims file notes before June 2019 is too remote to be reasonably construed as attorney work product prepared in anticipation of actual or prospective litigation. See In re Grand Jury Subpoena (Mark Torf/Torf Environmental Management), 357 F.3d 900, 908 (9th Cir. 2004). At the time the attorney prepared the document, he or she “ ‘must at least have had a subjective belief that litigation was a real possibility, and that belief must have been objectively reasonable.’ ” Id. (quoting In re Sealed Case, 146 F.3d 881, 884 (D.C. Cir. 1998)); see also Fox v. California Sierra Fin. Servs., 120 F.R.D. 520, 524 (N.D. Cal. 1988).
Thus, the Court finds that Plaintiff did not establish the existence of an attorney-client relationship or work product privilege as to bates nos. 2175-2189 (up to the June 13, 2019, entry). These claims file notes were not redacted, but if they have not been produced, the Court orders Plaintiff to produce them to Defendants.
During the in-camera conference, Plaintiff's counsel pointed out that the claims file note dated June 13, 2019 (bates number 2189) refers to the start of Transamerica's investigation into whether the LTC claim of Defendants was fraudulent. This date is therefore an important starting point for Plaintiff and establishes an outer boundary for its argument that the claim file notes produced after that date were prepared in anticipation of litigation and in consultation with Transamerica's attorneys.
Nevertheless, the Court's in camera review of claims file notes with redactions to entries with dates after June 13, 2019, do not uniformly establish the existence of an attorney-client relationship under California law, nor do they reflect work product by an attorney under federal law. Redacted portions of documents created after June 13, 2019, that refer to a lawyer or “legal”, for example, necessarily qualify for privilege protection.
The attorney-client communication privilege is not established under California law simply because some of the redacted notes use the words “legal”, “counsel”, “lawsuit”, or “case” (e.g., bates numbers 2206 (04/01/21); 2201 (09/02/20); 2200 (07/07/20); 2197 (03/03/20); 2194 (10/09/19); 2191 (07/31/19); 2190 (06/20/19; 06/25/19); 2189 (06/13/19). The fact that these identified claim notes were taken referencing communication with “legal” does not establish that the dominant purpose of the relationship that existed between the preparer of the note and legal was to exchange confidences seeking legal advice rather than a business advice about an internal fraud investigation. If an email or note sent to an attorney is not enough to create a privilege, then the mere mention of “legal” certainly is not. See FTC v. Lights of America, Inc., 2011 WL 1515158 at *6 (C.D. Cal. Mar. 31, 2011) (“The fact that one of the many recipients of the emails was a lawyer for [defendant] does not protect the emails under the attorney-client privilege doctrine.”).
These claims file notes are also not privileged under the work product doctrine. The names of attorneys or reference to the word “lawyer” or “legal” are discoverable when the communication does not reveal thought processes, strategy, or other work product. Moreover, documents prepared independently by a party, including witness statements, do not become privileged communications or work product merely because they are turned over to counsel.” Wellpoint Health Networks, Inc. v. Super. Ct., 59 Cal. App. 4th 110, 119 (1997); see also Costco, 47 Cal. 4th at 735 (the privilege “does not extend to subject matter otherwise unprivileged merely because that subject matter has been communicated to the attorney”).
*13 The work product privilege also does not apply to claims notes simply because they reference an intention to wait for “direction from legal” (bates number 2189-90, 06/13/19, 6/20/19). These two redactions do not qualify for work product privilege. Claims notes that reflect only a need for legal to review the file are also not protected as work product (e.g., bates number 2194, 10/09/19).
However, when the words “direction from legal” or “still pending review by legal” are combined with facts about the investigation that an attorney may have shared with the claims adjusted because the attorney believed the facts were important to prospective litigation, then the note begins to take on the character of work product. Therefore, the redactions on bates number 2191 (07/31/19) and 2194 (10/09/19) will be protected as work product for that reason.
The dual-purpose claims file notes are those that include facts related to the business of claims handling and facts related to Plaintiff's anticipation of litigation. These notes are not easily parsed between business facts and facts that are arguably attorney-client communications or work product or both. For this reason, the Court will deny the motion to compel redactions to bates numbers 2197 (03/03/20), 2200 (07/07/20); 2201 (09/02/20); 2206 (04/01/21).
The Court will not require Plaintiff to remove redactions from claims file notes created after January 13, 2022, the date when litigation was filed in this case. Claim notes that reflect the Plaintiff's business decision to suspend the policy and claim for Richards will be protected by work product privilege as a dual-purpose document created in anticipation of litigation because it was entered after litigation began (e.g., bates numbers 2211-12 (e.g., 2/10/22 and 01/16/22)).
B. Non-Claims File Documents
The redacted documents submitted for in camera review that fall within the non- claims file notes categories are a mixed bag of facts and confidential, privilege information. There is not a simple legal principle that applies broadly. These documents required a document-by-document review for privilege.
Among the non-claims file documents, Plaintiff conceded the privilege for a fair number of the redactions originally made to the in-camera production. As indicated, Plaintiff's counsel conceded and dropped claims of privilege for all redactions in the documents marked as bates numbers 5787-5788; 6509-6510; 6578; 6830-6832; and 6833-6834. Plaintiff further agreed to produce the following documents by eliminating some but not all prior redactions in documents marked as bates numbers 5790; 5795; 6511-6513; 6579-80; 6611-12; 6614; 6616; 6618; 6620; 6795; 6797; 6835.
Plaintiff, nevertheless, reasserted and maintained its original Rule 26(b)(3) original privilege objections to production of the following redacted documents, identified as part of the in-camera set: (a) continued original redactions of bates numbers 2175-2213; 5802; 5805; 6563; 6621; 6780; 6967-6969; and (b) continued partial redactions of bates numbers 5786, 5790; 5802; 6579-80; 6611-12; 6613-14; 6616; 6618, 6620-21; 6775; 6795; 6797; 6835; 6967-69.
Rulings on the non-claims file documents for which Plaintiff reasserts and maintains its privilege objection are set forth below. To make the list comprehensive, in camera documents will be addressed by bates number. Where agreements were reached, they are noted. Where rulings are necessary, they are made.
*14 During the ex parte in camera conference, Plaintiff agreed to drop privilege objections for all but two of the in-camera documents with redactions from the email chains from and to non-attorney/non-parties category. But the Court finds and concludes that each of these documents should be unredacted and produced to Defendants because no privilege attaches. The emails that fall into this category contain facts related to business operations and decisions regarding Defendants' claim. Plaintiff therefore shall produce in completely unredacted form bates numbers 6512 and 6579.[8]
Most of the in-camera documents with redactions pertaining to the word “legal” or related to the thought processes of “legal” or some other attorney (mentioned by name or by the legal assistant's name) are privileged attorney-client communications or work product under the applicable legal standards. Thus, the partial redactions of bates number 5786 do not need to be disclosed because they contain attorney thought processes and names are protected by the attorney work product doctrine. Plaintiff also may maintain the partial redaction to bates number 5790 regarding the third and fourth emails in that document.
Plaintiff must eliminate the redaction of the first two emails in bates number 5790. Plaintiff also is directed to eliminate redactions to numbered paragraphs 1-3, but not numbered paragraph 4 in the document marked as bates number 5795. The redaction in paragraph 4 of number 5795 may be maintained because the information reflects attorney work product and communications.
Plaintiff agreed to redact some but not all documents marked as bates numbers 6511-6513. These two documents are duplicates that contain five emails. For these documents, the first three emails must be unredacted and produced. No privilege applies to these because they simply state facts. The fourth email may be partially redacted regarding the attorney's name. The fifth email may remain redacted because it is protected as attorney work product. Bates number 6512 must be entirely unredacted and produced.
Bates number 6563 may remain redacted as attorney work product.
As agreed, documents marked as bates number 6578-79 must be completely unredacted. None of this information falls within the scope of the attorney-client or work product privilege. The information constitutes facts about Defendants' claim and condition, as well as business operations.
Also as agreed, bates number 6580 contains two emails. Plaintiff agreed to completely redact the first email, but not the second. The second email is a duplicate of bates number 5795 and 6511-19. The first sentence may be redacted, but numbered paragraphs 1-3 should be unredacted and produced. The Court finds and concludes that paragraphs 1-3, standing alone, do not reveal privileged communications or work product. Numbered paragraph 4, however, may remain completely redacted and protected from disclosure by the attorney work product and attorney-client communications privileges.
Bates number 6610 contains five redacted emails. The first four emails should be unredacted and produced. The second sentence of the fifth email may remain redacted because it is protected by both attorney-client and work product privileges. The remaining two sentences must be unredacted and produced.
*15 Bates number 6611 contains the email with four numbered paragraphs. As with the other documents where this email appears, the first three numbered paragraphs must be unredacted because they constitute facts about Defendants claim that serves a business purpose, even if it was also created with an eye toward litigation. The email does not constitute attorney-client communications as to the first three paragraphs nor does it constitute attorney work product. The fourth paragraph, however, may remain redacted because it falls within the work product privilege and appears to be part of an attorney-client communication.
The same ruling made for 5795 and 6580 applies to bates numbers 6612-13. These two email strands include four emails that are redacted. The first three emails must be unredacted as pure fact. The fourth email is the one with four numbered paragraphs. Paragraphs 1-3 must be unredacted and produced. Paragraph 4 may remain redacted as privileged attorney communication and work product. Bates numbers 6614-15; 6616-17; and 6618-19 are duplicates of 6612-13. The same rulings apply.
Bates number 6620-21 is slightly different. The first redacted email contains a hybrid of business facts and one reference to legal matters. The reference to legal matters in the second clause of the first sentence may remain redacted. The rest of the first email must be unredacted and produced. The second email is a duplicate of the one with four numbered paragraphs. The first sentence may be redacted. The first three numbered paragraphs must be unredacted and produced. The fourth paragraph may remain redacted and protected by the attorney work product privilege.
Bates number 6775 contains three redacted emails. The first two emails must be unredacted and produced as facts related to the investigation and medical assessments of Defendants, which is discoverable under Rule 26. The two sentences following “For James Richards” may remain redacted as attorney work product. The remainder of the third email must be produced.
Bates number 6780 contains one redaction in the first of two emails. This redaction reflects an attorney-client relationship, and under the broad California standard can be withheld as privileged.
Bates number 6795 contains two emails. The first email must be unredacted because it contains simple numbers which are facts. The second email also must be unredacted except for the first sentence, which may remain redacted as privileged under the attorney-client work product and attorney-client communication doctrines.
Bates number 6797 contains a series of statements and two gray sections. Plaintiff conceded during the ex parte hearing that the first gray section which contains a table are facts that are discoverable; and counsel agreed to unredact the first table gray section. Plaintiff maintained an objection to disclosure of the second gray section and the first sentence and the remaining statements in the email. As to the second gray section, it also contains facts as to the investigation, which the court finds are not privileged. The Court will allow Plaintiff to retain the redactions to the statements that precede and follow the gray sections as attorney work product.
Bates number 6832-33 contains four redacted emails. The Court finds that none of these emails fall within the attorney-client or work product doctrines. Plaintiff is ordered to unredact this document and produce it to Defendants.
Bates number 6834 contains two redacted emails. Neither of these emails falls within a privilege either. Plaintiff is directed to remove the redactions and produce this document to Defendants.
*16 Bates number 6835 contains four redacted emails. The first two emails should be unredacted and produced. The third email may be redacted for the lawyer's name, but the rest of the third email should be unredacted and produced. The fourth email may remain redacted as an attorney-client communication and work product.
Bates numbers 6875, 6965, 6967 and 6968-69 may remain redacted as attorney-client communications.
The in-camera documents include what appears to be two investigation or surveillance letters or reports, in addition to the emails addressed above. The first document in the in-camera production is marked with bates number 5805 as an unredacted letter from the Claims Bureau to Mandie Winter. But there is an email printed at the top of the page with a redaction. This document presents a close call on the issue of privilege. It appears to be an opinion by Mandie Winter, not a summary of something an attorney communicated to her. For this reason, the Court will order Plaintiff to unredact this email and produce it to Defendants.
The second letter document is marked as bates number 6578 contains two redactions of emails that are included on the same page as the letter. These two redactions do not fall within an attorney-client privilege and must be disclosed to Defendants.
C. Summary of Rulings on In Camera Documents
In summary, the Court ruled on the following in camera documents with disputed redactions after the ex parte in camera conference on April 22, 2024. Only the documents with remaining disputes are summarized here. The documents with agreements were summarized at the beginning of the discussion. The reasons for the additional redactions on documents with partial agreements were explained in subsection B.
a) Produce unredacted all documents with dates before June 13, 2019. No privilege applies.b) Produce unredacted all documents with dates between June 13, 2019, and January 13, 2022, except: bates numbers 2191 (07/31/19) and 2194 (10/09/19); 2197 (03/03/20), 2200 (07/07/20); 2201 (09/02/20); 2206 (04/01/21). The excepted documents are privileged attorney-client communications or work product.c) Do not produce redacted documents with dates after January 13, 2022, marked as bates numbers 2211-12 (e.g., 2/10/22 and 01/16/22)). These documents were prepared in anticipation of litigation and are protected as confidential attorney-client communications.
a) email strands and letters without reference to legal
- Nos. 6512 and 6579. Produce unredacted.
b) email strands and letters that reference legal or an attorney's name for the following bates numbers:
- No. 5786. Plaintiff may maintain the partial redactions as attorney work product.
- No. 5790. Plaintiff is directed to eliminate redactions to the first two emails.
- No. 5795: Plaintiff is directed to produce eliminate redactions to numbered paragraphs 1-3, but numbered paragraph 4 may be redacted. The redaction in paragraph 4 may be maintained because the information reflects attorney work product and communications.
- Nos. 6511-13. The first three emails must be unredacted and produced. No privilege applies to these because they simply state facts. The fourth email may be partially redacted regarding the attorney's name only. The fifth email may remain redacted because it is protected as attorney work product. Bates number 6512 must be entirely unredacted and produced.[9]
- No. 6563 may remain redacted as attorney work product.
- No. 6580: Plaintiff is directed to eliminate redactions for the first three numbered paragraphs of the second email. The fourth email may remain redacted as privileged.
- No. 6610: five redacted emails. The first four emails should be unredacted and produced. The second sentence of the fifth email may remain redacted because it is protected by both attorney-client and work product privileges. The remaining two sentences must be unredacted and produced.
- No. 6611. A duplicate of 5795 and 6511-13. Same rulings apply.
- Nos. 6612-13. The same ruling made for 5795 and 6580 applies.
- Nos. 6614-15; 6616-17; and 6618-19. These are duplicates of 6612-13. The same rulings apply.
- Nos. 6620-21. The reference to legal matters in the second clause of the first sentence may remain redacted. The rest of the first email must be unredacted and produced. The second email is a duplicate of the one with four numbered paragraphs. The first sentence may be redacted. The first three numbered paragraphs must be unredacted and produced. The fourth paragraph may remain redacted.
- No. 6775 contains three redacted emails. The first two emails must be unredacted and produced as facts. The two sentences following “For James Richards” may remain redacted as attorney work product. The remainder of the third email must be produced.
- No. 6780 contains one redaction in the first of two emails. This redaction reflects an attorney-client relationship withheld as privileged.
- No. 6795 contains two emails. The first email must be unredacted as facts. The second email also must be unredacted except for the first sentence, which may remain redacted as privileged under the attorney-client work product and attorney-client communication doctrines.
- No. 6797 contains a series of statements and two gray sections. Plaintiff conceded during the ex parte hearing that the first gray section contains a table of pure facts that are discoverable; and counsel agreed to unredact the table. As to the second gray section, the Court finds that it is discoverable and should be produced unredacted. Plaintiff maintained an objection to disclosure of the first sentence and the remaining statements in the email. The Court will allow Plaintiff to retain the redactions to the statements that precede and follow the gray sections as attorney work product.
- Nos. 6832-33 contain four redacted emails. The Court finds that none of these emails fall within the attorney-client or work product doctrines. Plaintiff should produce these emails in unredacted form.
- No. 6834 contains two redacted emails. Neither of these emails falls within a privilege either. Plaintiff is directed to remove the redactions and produce this document to Defendants.
- No. 6835 contains four redacted emails. The first two emails should be unredacted and produced. The third email may be redacted for the lawyer's name, but the rest of the third email should be unredacted and produced. The fourth email may remain redacted as an attorney-client communication and work product.
- Nos. 6875, 6965, 6967 and 6968-69 may remain redacted as attorney-client communications.
- No. 5805. This is an unredacted letter from the Claims Bureau to Mandie Winter, but there is an email printed at the top of the page with a redaction. Plaintiff must produce this email in unredacted form because there is no evidence that it is part of an attorney-client communication or attorney work-product.
- No. 6578 contains two redactions of emails that are included on the same page as the letter. These two redactions do not fall within an attorney-client privilege and must be disclosed to Defendants.
D. Order on Disclosure of Larger Production Responsive to RFP No. 4
Plaintiff is encouraged to use the legal standards and rulings regarding the redacted documents reviewed in camera and apply the principles articulated by the Court to make a final, supplemental production for the larger group of redacted and unredacted documents for which Plaintiff maintains privilege objections in the updated Privilege Log (Dkt. No. 127). To the extent that further concessions can be made, the Court Orders Plaintiff to make them and produce these documents without further delay. The Court is mindful of the upcoming hearing in the district court on Plaintiff's Motion for Partial Summary Judgment in ordering a prompt production of documents.
If Plaintiff believes that redacted documents in the larger set that were not reviewed in camera are still privileged, the Court encourages Plaintiff to identify those documents by bates number and resubmit a third Privilege Log that summarizes the final documents with redactions that it refuses to disclose. If absolutely necessary, the parties may request an Informal Discovery conference on this issue before May 3, 2024. Plaintiff is advised that, if any of the documents withheld on grounds of privilege later turn out to be discoverable evidence, a Motion for Sanctions may be entertained by the Court at the appropriate time.
V.
CONCLUSION
For the reasons stated above, the Court therefore GRANTS IN PART AND DENIES IN PART the Motion to Compel filed by Defendants on March 20, 2023. Defendants' request for sanctions is denied at this time for failure to comply with L.R. 7-3, 7-4 and 37-1. Plaintiff is ordered to produce in unredacted format the in-camera documents identified in this Order to Defendants by May 3, 2024. Also, by May 3, 2024, Plaintiff is further ordered to produce any documents not reviewed in camera, for which Plaintiff claimed privilege in the updated Privilege Log (Dkt. No. 127) and like those the Court has identified in this Order, that do not fall within the scope of Rule 26(b)(3) and attorney-client or work product privileges. Finally, Plaintiff is ordered to submit another updated privilege log with its production of May 3, 2024.
Footnotes
In a supplemental brief (Dkt. No. 112) accompanying the Motion to Compel, Defendants request an award of sanctions against Plaintiff, arguing that Plaintiff did not comply with the Court's prior orders in response to the IDCs held in October 2023 and February 2024. Defendants insist that the Plaintiff has intentionally delayed production of relevant, non-privileged discovery in violation of federal and local rules. Defendants' request for sanctions was not properly made in compliance with L.R. 37. (Id. at 1-2). The request for sanctions is therefore denied.
Among the additional documents voluntarily produced by Plaintiff, the redactions in, bates numbers 5786, 5795, 5802, 6563, 6775, 6795, and 6797 were identified on the original Privilege Log (Ex. A to Dkt. No. 111). The redactions in bates numbers 6875 and 6965 were not on the original Privilege Log. To the extent that privilege is still asserted for the redactions that remain these bates numbers and documents have been identified by the privilege asserted and added to the updated Privilege Log (Dkt. No. 127).
The Court notes that none of the concessions to redacted information are for documents that Plaintiff voluntarily produced for in camera review. Rulings on the privilege objections to these additional documents will be made in this Order.
Conversely, federal privilege law does not focus on the relationship but on the primary purpose for each individual communication that is challenged. See In re Grand Jury, 23 F.4th 1088 (9th Cir. 2022). In Grand Jury, the Ninth Circuit affirmed the district court's adoption of “primary purpose of communication” test for the attorney-client communication privilege and rejected an argument that the “because of” test (borrowed from the federal work product doctrine where test is whether document would not have been created in substantially similar form but for the prospect of litigation”) applied. The Supreme Court heard but dismissed the appeal in 2023, leaving the primary purpose relationship the standard to apply in the Ninth Circuit.
Involvement of and disclosure to an unnecessary third person, however, will waive the privilege over the confidential communication. Ins. Co. of N. America v. Super. Ct., 108 Cal. App. 3d 758, 765 (1980).
The federal attorney-client communication privilege is governed by the Ninth Circuit's decision in United States v. Richey, 632 F.3d 559, 566 (9th Cir. 2011).
The same principle applies under federal common law. “The fact that one of the many recipients of the emails was a lawyer for [defendant] does not protect the emails under the attorney-client privilege doctrine.” FTC v. Lights of America, Inc., 2011 WL 1515158 at *6 (C.D. Cal. Mar. 31, 2011) (emphasis in bold added); see also United States v. Martin, 278 F.3d 988, 999 (9th Cir. 2002) (“The fact that a person is a lawyer does not make all communications with that person privileged.”); Bell Microproducts, Inc. v. Relational Funding Corp., 2002 WL 31133195 at * 1 (N.D. Ill. Sept. 25, 2002) (attorney's instruction to employees to copy him as a recipient on any emails or documents to assure attorney-client privilege was incorrect as “the mere presence of a lawyer's name at the top or bottom of a document is not the bell that causes the dog named Privilege to salivate”) (emphasis in original).
The Court notes that Plaintiff agreed to drop its privilege objections for some original redactions to bates numbers 6512 and 6579 during the ex parte in camera conference. The Court now directs Plaintiff to eliminate all redactions to these documents and reproduce them to Defendants by the applicable dates set forth in the Conclusion.