United States District Court, W.D. Washington, Seattle
C. COUGHENOUR, UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendant Axis Surplus
Insurance Company's motion to quash three discovery
subpoenas issued by Plaintiffs to non-parties (Dkt. No. 52);
Plaintiffs' response, which includes a request for
attorney fees in responding to Defendant's motion (Dkt.
No. 54); and Defendant's reply (Dkt. No. 57). Having
thoroughly considered the parties' briefing and the
relevant record, the Court DENIES the motion to quash (Dkt.
No. 52) and GRANTS Plaintiffs' request for attorney fees
(Dkt. No. 54 at 12) for the reasons explained herein.
Court has described the underlying facts of this case in
previous orders and will not repeat them here. (See
Dkt. Nos. 43, 50). Following the Court's order denying
Defendant's motion to dismiss, Defendant made its Federal
Rule of Civil Procedure 26(a)(1) initial disclosures, which
included a list of persons with discoverable information.
(Dkt. No. 55-1 at 2- 8.) Consultants GT Engineering, Wiss
Janey Elstner Associates, and NPC Energy Services
(collectively the "consultants") were on that list.
(Id.) Shortly thereafter, Plaintiffs issued
discovery subpoenas to the consultants seeking "[a]ll
documents . . . referring or relating in any way to
[Plaintiffs]." (DktNo. 53-1 at 2, 5, 8.) Defendant moves
to quash the subpoenas on the basis that the consultants are
"experts that [Defendant] specifically retained in
anticipation of litigation." (Dkt. No. 52 at 1) (citing
Fed. R. of Civ. P. 26(b)(4)(D)); (see Dkt. No. 55-1
at 7) (similar assertion in Defendant's initial
disclosures). In the alternative, Defendant moves to quash
the subpoenas on the basis that the consultants possess
protected work product or privileged attorney-client
communications. (Id.) (citing Fed. R. of Civ. P.
26(b)(3)). Plaintiffs seek attorney fees in responding to
Defendant's motion. (Dkt. No. 54.)
Defendant's Motion to Quash
Rule of Civil Procedure 26(b)(4)(D) provides that absent a
showing of exceptional circumstances, "a party may not.
. . discover facts known or opinions held by an expert who
has been retained or specially employed by another party in
anticipation of litigation or to prepare for trial and who is
not expected to be called as a witness at trial."
Similarly, Federal Rule of Civil Procedure 26(b)(3)(A)
provides that absent a showing of substantial need, "a
party may not discover documents . . . that are prepared in
anticipation of litigation or for trial by or for another
party or its representative." Correspondingly, the Court
must grant a timely motion to quash a subpoena that requires
disclosure of protected matter. Fed.R.Civ.P.
45(d)(3)(A)(iii). The party moving to quash bears the burden
of persuasion. See, e.g., Jones v. Hirschfeld, 219
F.R.D. 71, 74-75 (S.D.NY2003).
claims that it received anonymous information that Plaintiffs
were attempting to intentionally inflate their insurance
losses. (Dkt. No. 52 at 2.) Defendant asserts that based on
this information it anticipated Plaintiffs' insurance
claim would result in litigation and retained counsel to
advise it as to "potential fraud defenses and/or claims
and to prepare for anticipated litigation regarding these
issues." (Id.) Defendant further asserts that
it then retained the consultants to "evaluate the
claimed damage in order to assist [counsel] in analyzing the
possible fraud and prepar[e] for litigation."
(Id.) On this basis, Defendant claims the
consultants' files are protected from discovery.
order to determine whether an expert was retained "in
anticipation of litigation" the Court applies the
"because of standard. U.S. Inspection Services, Inc.
v. NL Engineered Sols., LLC, 268 F.R.D. 614, 618 (N.D.
Cal. 2010) (citing In re Grand Jury Subp. (Mark Torf/Torf
Envtl. Mgt.), 357 F.3d 900, 907 (9th Cir. 2004)). A
similar standard applies to dual purpose documents prepared
on behalf of a party. U.S. v. Richey, 632 F.3d 559,
568 (9th Cir. 2011). An expert must be retained and/or a
document must be prepared because litigation was reasonably
anticipated. In making this assessment, the Court must
consider the totality of the circumstances. Id.; In re
Grand Jury, 357 F.3d at 908. "The [mere] fact that
a defendant anticipates the contingency of litigation"
is not sufficient to invoke discovery protections. Binks
Mfg. v. Nat'l Presto Indus., Inc., 709 F.2d 1109,
1119 (7th Cir. 1983). A defendant must put forward
"objective facts establishing an identifiable resolve to
litigate prior to the investigative efforts."
supports its assertion with representations from counsel that
Defendant engaged the consultants in anticipation of
litigation. (Dkt. No. 53 at 2-3.) It offers nothing else.
"Insurance companies are in the business of paying an
assured's just claim." St. James Stevedoring
Co., Inc. v. Femco Mach. Co., 173 F.R.D. 431, 433 (E.D.
La. 1997) (internal citation and quotation marks omitted). An
investigation of the justness of a claim, whether undertaken
internally or through outside consultants, is part of
Defendant's business, even if fraud is suspected.
Therefore, more than mere assertions from Plaintiffs counsel
is required from Defendant to convince the Court that it
engaged the consultants "because of
litigation. In re Grand Jury, 357
F.3d at 907; Richey, 632 F.3d at 568. Further,
Defendant's previous statements to the Court cut against
it assertions. (See Dkt. Nos. 23 at 3, 24 at 2)
(Defendant states in previous filings that it retained
outside consultants to "evaluate the claimed
damage" without reference to anticipated litigation).
Therefore, Defendant's arguments supporting the
application of the discovery protections afforded by Federal
Rules of Civil Procedure 26(b)(3)(A) and 26(b)(4)(D) fail.
Defendant's assertion of attorney-client privilege,
Defendant neither claims that the consultants worked under
the direction of Defendant's attorney, nor provides
sufficient facts for the Court to plausibly conclude that the
consultants' files contain privileged communications with
Defendant's counsel. See Upjohn Co. v. U.S., 449
U.S. 383, 394 (1981); U.S. v. Judson, 322 F.2d 460,
462 (9th Cir. 1963). Therefore, Defendant's arguments in
support of discovery protections based on attorney-client
privilege similarly fail.
Court DENIES Defendant's motion to quash (Dkt. No. 52).
Plaintiffs Request for Attorney Fees
to Federal Rule of Civil Procedure 37(a)(5)(A), a party that
has failed to block discovery must pay his opponent
reasonable fees. The Court may decline to order such an award
when the losing party's conduct was "substantially
justified, " the successful party filed their motion
before making a good faith attempt to obtain discovery
without court action, or doing so would be unjust.
Fed.R.Civ.P. 37(a)(5)(A). None of these exceptions apply
here. Defendant's conduct was not substantially justified
given the merits of its argument, and Plaintiffs properly