MAY 2007 BAD FAITH CASES COURT RECONSIDERS PRIOR ORDER TO PRODUCE ALLEGEDLY PRIVILEGED DOCUMENTS FROM LEGAL COUNSEL (Middle District)

In Pengate Handling Systems, Inc. v. Westchester Surplus Lines Insurance, the Court reconsidered its prior decision (summarized in the March 2007 Archive on this site) requiring an insurer to produce allegedly privileged documents.  In the first decision, Judge Rambo found that the insurance carrier failed to show that “the attorney involved was acting solely in his professional capacity as a lawyer at all times and that a number of the communications at issue are not shielded by the attorney-client privilege.” Essentially the attorney was treated as a claims investigator, rather than a legal advisor.  The court had framed the issues as “whether Defendant may withhold the discovery sought by Plaintiff by asserting the attorney-client and work product privileges. The attorney-client inquiry turns on whether Defendant’s attorney was acting in a legal capacity, while the work product inquiry depends upon whether documents were prepared in anticipation of litigation.”  In this later decision, the court did not explicitly change its ruling; however, following an in camera inspection of some documents that the carrier was asserting were privileged, the court found certain documents to “clearly constitute communications that fall within…the attorney-client privilege.”  The Court did not state that these documents were clearly privileged because the attorney was acting as a “lawyer” as opposed to an “adjuster”;  or whether some adjuster-type communications made by attorneys are still protected by the privilege.

Date of Decision:  April 20, 2007

Pengate Handling Systems, Inc. v.  Westchester Surplus Lines Ins. Co., United States District Court for the Middle District of Pennsylvania, No. 06-00993, 2007 U.S. Dist LEXIS 29290 (M.D. Pa. April 20, 2007) (Rambo, J.)