Hurricane Ian Shoreline Loss: Four Policies, Oh Joy!
October 19, 2023
A federal district court held that insurance company employees’ mental impressions recorded after the filing of a complaint constitute protected work product shielded from disclosure, rejecting the insured’s argument that these materials are “necessarily relevant” to a bad faith claim. James T. Lane v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-011045-RDM (M.D. Pa. May 18, 2015) (J. Mariani).
The discovery dispute arose in litigation involving allegations of bad faith handling of an uninsured motorist (UM) claim. State Farm submitted a privilege log that listed redactions of certain communications by its employees subsequent to the filing of the complaint. After the insured moved to compel the production of the redacted materials, State Farm asserted the work product privilege as the materials were prepared in anticipation of litigation or trial and contained the employees’ mental impressions, conclusions, and legal theories concerning the litigation. The insured countered that the post-complaint communications are “necessarily relevant” to his bad faith claim, stating “the insurer had a continuing duty to investigate the insured’s claim even after the suit was filed. Since State Farm is still evaluating the UM claim, plaintiff is entitled to the discovery of records and materials post-dating the litigation.”
The court found that the insured’s argument suffered from “multiple deficiencies.” The argument that the records could potentially be relevant to the facts of the bad faith claim was too abstract and without sufficient justification or reasoning for the insured to carry the burden of breaching the privilege. The court noted “[c]ourts in the Third Circuit have held that the mere fact that plaintiff has asserted a bad faith claim does not make otherwise privileged information per se discoverable. Plaintiff would need to demonstrate more than the mere fact that a bad faith claim is at issue to establish an entitlement to privileged documents.”
Moreover, and on a more fundamental level, the insured could not show a substantial need for the discovery or the inability to obtain the substantial equivalent by other means. Under Fed.R.Civ.P. 26, the party seeking discovery still must show “it has a substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.” The insured failed to articulate any type of argument that he could not obtain the substantial equivalent by other means without undue hardship. The court recognized that the insured has the opportunity to conduct bad faith discovery, which may include deposing State Farm adjusters, to obtain the substantial equivalent of the information requested.
This opinion further establishes that an insurer may properly withhold from discovery the post-litigation mental impressions of its employees, even where bad faith is pled.