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Channel Construction, Inc. v. Northland Services, Inc.

United States District Court, Western District of Washington, Seattle

February 24, 2015

CHANNEL CONSTRUCTION, INC., Plaintiff
v.
NORTHLAND SERVICES, INC., et al., Defendants.

ORDER DENYING MOTION TO QUASH AND COMPELLING PRODUCTION OF DOCUMENTS AND TESTIMONY

JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Plaintiff's motion to quash the subpoena served on expert witness Richard W. Blomquist (Dkt. No. 45) and Defendants' motion to compel production of documents and testimony by Mr. Blomquist. (Dkt. No. 43). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby DENIES the motion to quash (Dkt. No. 45) and GRANTS the motion to compel (Dkt. No. 43) for the reasons explained herein.

I. BACKGROUND

On three occasions between 2010 and 2012, Channel Construction Inc. (“Channel Construction” or “Channel”) chartered Barge ITB 312 (“the Barge”) to Defendant Northland Services, Inc. (“Northland”) as a platform for A/C generation and refrigeration of fish products. In the summer of 2011, the Barge began developing a starboard list, which Channel President William Tonsgard Jr. feared might have been caused by the generator system. (Dkt. No. 61, Ex. A at 2.) Mr. Tonsgard wrote to Northland on June 15, 2012, requesting that it examine whether the Barge had suffered electrolysis when it next took the Barge out on charter in a few days. (Dkt. No. 61, Ex. A at 2.) Northland responded, characterizing electrolysis as a “long-term maintenance issue[]” that it had neither the responsibly nor the time to address. (Dkt. No. 61, Ex. B at 1.) After that last charter ended in late 2012, the Barge sailed down from Southeast Alaska to Seattle, carrying a cargo of scrap metal. (Dkt. No. 1 at 4.) While passing near the San Juan Islands, the boat began to take on water. Channel contacted its maritime insurance broker, International Marine Underwriters (“IMU”) to arrange an emergency survey. (Dkt. No. 45 at 2.) The Barge was drydocked in Anacortes where IMU hired maritime surveyor Richard Blomquist to assess the damage.

Mr. Blomquist surveyed the Barge on December 8, 10, and 11, 2012. He issued a report on December 12 that found severe hull damage caused by stray-current corrosion, otherwise known as electrolysis. (Dkt. No. 43 at 5.) The report did not address potential issues of fault. On the same day Mr. Blomquist issued his report, IMU hired Mr. McVittie as their legal representative. (Dkt. No. 43 at 5.) Channel soon hired its own counsel, Mr. McGee, on December 14 to work alongside Mr. McVittie, allegedly to consider possible litigation against Northland. (Dkt. No. 45 at 4.) This collaboration ended in early February 2013 when IMU expressed its refusal to cover the damage. Mr. McVittie never again advised Channel. (Dkt. 48 at 2.) Subsequently, Channel filed for bankruptcy.

Over the course of the relevant proceedings, Northland and its underwriters sought access to Mr. Blomquist and his files in order to conduct a Rule 2004 hearing as interested parties. (Dkt. No. 61, Ex. D at 4, Ex. E.) The Bankruptcy Court for the District of Alaska granted their request, explaining that if Mr. Blomquist was ever Channels expert, this was certainly not the case “until some time after his December 12, 2012 report.” (Dkt. No. 61, Ex. D at 4, Ex. E.)

On October 11, 2014, Channel sued Northland and its underwriters (“Defendants”), alleging that the damage resulted from one of their charters. (Dkt. No. 1.) Defendants served Mr. Blomquist with two subpoenas on December 18, 2014, requesting the files underlying his December 12, 2012 survey report, and requesting that he testify at a deposition. (Dkt. No. 43.) Defendants theorized this evidence would show that the “natural seawater electrolysis damage was being caused by plaintiff's own failure to have sacrificial zincs on the barge and keep the bottom properly coated.” (Dkt. No. 64 at 6.) Defendants followed their subpoenas by filing the Motion to Compel on January 8, 2015. (Dkt. No. 43.) On the same day, Channel moved to quash only the subpoena issued for Mr. Blomquist's appearance. Channel argues that Mr. Blomquist is their expert witness because he was hired to prepare a report in anticipation of litigation, and that the files are protected work product because they were prepared in anticipation of litigation. (Dkt. No. 45.)

II. DISCUSSION

A. Standard of Discovery under Federal Rule of Civil Procedure 26(b)(1)

“Unless otherwise limited by court order . . . [p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.” Fed.R.Civ.P. 26(b)(1). The “discovery provisions [in Rule 26] are to be applied as broadly and liberally as possible, [with] the privilege limitation . . . restricted to its narrowest bounds.” Hickman v. Taylor, 329 U.S. 495, 506 (1947). The party resisting discovery therefore bears the burden to show that its documents are protected by privilege. Everest Indem. Ins. Co. v. QBE Ins. Corp., 980 F.Supp.2d 1273, 1277 (W.D. Wash. 2013).

B. Privilege for Work Product or Report Prepared in Anticipation of Litigation

Channel argues that the files underlying Mr. Blomquist's report are privileged work product. It also argues that Mr. Blomquist's testimony regarding that report is privileged because he was an expert retained for litigation at the time of the report's preparation. To assert either privilege requires that the report have been “prepared in anticipation of litigation.” Fed.R.Civ.P. 26(b)(3)(A). The work product doctrine “protects trial preparation materials that reveal an attorney's strategy, intended lines of proof, evaluation of strengths and weaknesses, and inferences drawn from interviews.” Heath v. F/V ZOLOTOI, 221 F.R.D. 545, 549 (W.D.Wash. 2004); see Hickman, 329 U.S. at 512 (recognizing the underlying policy against “invading the privacy of an attorney's course of preparation”). Given the liberality of the discovery rules, however, the court will not allow a party to withhold “relevant and non-privileged facts [that] remain hidden in an attorney's file” Hickman, 329 U.S. at 511. In sifting through that proverbial file, the court will only deem documents work product that were prepared in anticipation of litigation. This determination looks to the “nature of the document and the factual situation in the particular case.” United States v. Richey, 632 F.3d 559, 568 (9th Cir. 2011). Courts will most readily protect documents that were prepared exclusively for litigation.

Corporate actors will often create documents for routine or investigative purposes even as they are aware that there may eventually be a possibility of litigation. In analyzing such dual-purpose documents, courts must determine “whether the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of litigation.” Richey, 632 F.3d at 568 (internal citations omitted and emphasis added). Therefore, “[t]he fact that a defendant anticipates the contingency of litigation resulting from an accident or event does not automatically qualify an 'in house' report as work product.” Binks Mfg. v. National Presto Industries, Inc., 709 F.2d 1109, 1119 (7th Cir. 1983). The Seventh Circuit has articulated the requirements for this privilege by stating that the party claiming privilege must put forward “objective facts establishing an identifiable resolve to litigate prior to the investigative efforts resulting in the report.” Id.

Channel alleges it had litigation in mind when Mr. Blomquist was retained. It points to a short email written two years prior to litigation suggesting a concern that Northland may have been at fault for possible damage. (Dkt. No. 61, Ex. A at 2.) Assuming arguendo that the email does indicate a concern that Northland may have been at fault for possible damage, the email is nevertheless insufficient to protect the files or Mr. Blomquist's testimony. A suggestion of possible fault is distinct from “an identifiable resolve to litigate.” Any concern with the possibility of later litigation that may have been indicated by the email was overshadowed by the more imminent purposes of filing an internal claim with IMU and addressing the emergency that caused the Barge to be put in drydock. The nature of the report given the circumstances of its ...


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