In Cicon v. State Farm Mutual Automobile Insurance Company, the insured brought an uninsured motorist bad faith claim against an insurer refusing to pay policy limits. In discovery, the insurer had produced a privilege log claiming attorney client privilege and work product protection; and further asserting reserves are not discoverable.
The court first observed the breadth of the attorney client privilege under Pennsylvania law. The insured argued that it could obtain attorney client communications that occurred before the insured filed the bad faith action. The court appeared to accept the notion that somehow attorney client communications could be discoverable if not related to the defense of the case, but were only related to mere business purposes; but concluded that there was no evidence to show the communications concerned anything other than defending against the insured’s claims.
As to the work product doctrine, which went to the internal communications of the insurer’s representatives other than attorneys, the court readily protected such communications after the date the insured’s counsel threatened litigation, presuming that “all inter-office communications in this file after that date were prepared in anticipation of litigation and are, thus, properly excluded from discovery except in the redacted form [the insurer] has proposed.” In doing so, the court was not necessarily ruling that an express threat of litigation was required to create “anticipation of litigation”; but the parties here had offered no details about prior events that would have revealed an earlier date to anticipate litigation.
However, as to the communications described in the privilege log predating the express threat of litigation, where the insurer court not “reasonably be seen as having anticipated litigation”, the court found these communications were “prepared in the ordinary course of business, and, consequently, are not subject to work product protection.” The court did refuse to allow discovery of these materials “to the extent that any of these documents contain explicit discussion of an attorney’s advice or direction,” recognizing these discussions would be redacted. This would imply that the attorney client privilege is broader that what the court appeared to earlier suggest, i.e., that even a communication with an attorney during a time period when this was in the ordinary course of business is still protected.
Finally, while recognizing a split in the district courts, the court ruled that discovery of reserve information in bad faith cases in permissible.
Date of Decision: August 21, 2015
Cicon v. State Farm Mut. Auto. Ins. Co., Case No. 3:14-CV-2187, 2015 U.S. Dist. LEXIS 111104 (M.D. Pa. August 21, 2015) (Conaboy, J.)