Roy v. Government Employees Insurance Co. ( 2023 )

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
23-JAN-2023
08:09 AM
Dkt. 143 OP
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
–––O0O–––
STEPHEN KEAWE ROY and REBECCA ROY,
Plaintiffs-Appellees,
v.
GOVERNMENT EMPLOYEES INSURANCE CO.,
GEICO INSURANCE AGENCY, INC., Defendants-Appellants
and
TIMOTHY DAYTON, RICHARD DWYER, and JOHN DORNAN,
Defendants-Appellees,
and
DOE ENTITIES 1-10, Defendants
NO. CAAP-XX-XXXXXXX
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 13-1-2053-07 (KKH))
JANUARY 23, 2023
GINOZA, C.J., AND LEONARD AND WADSWORTH, JJ.
OPINION OF THE COURT BY WADSWORTH, J.
In 2013, Plaintiffs-Appellees Stephen Keawe Roy (Roy)
and Rebecca Roy (collectively, the Roys) sued Defendants-
Appellants Government Employees Insurance Co. and GEICO Insurance
Agency, Inc. (collectively, GEICO), as well as certain
individuals, for alleged violations of the Hawai#i Whistle
Blowers' Protection Act and other purported wrongdoing. The
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
parties settled the case, and in January 2014, the Circuit Court
of the First Circuit (Circuit Court) entered an order approving
the parties' stipulation to seal the court's case file (Sealing
Order).1/ The case was dismissed with prejudice. In May 2018, Ed
Wagner (Wagner), a GEICO policyholder who was not a party to the
underlying case, filed a motion to unseal the case records. The
Circuit Court granted the motion and subsequently denied GEICO's
motion to reseal portions of the records.2/
GEICO appeals from the July 6, 2018 "Order on Motion to
Unseal (Filed May 22, 2016 [sic])" (Unsealing Order) and the
July 31, 2018 "Findings of Fact, Conclusions of Law and Order
Denying GEICO's Motion to Reseal Filed Documents"
(FOFs/COLs/Order) (collectively, Unsealing Orders), both entered
by the Circuit Court.
On appeal, GEICO contends that the Circuit Court erred:
(1) in granting Wagner's motion to unseal the case file on the
basis of the public right of access, because the court failed to
give adequate weight to countervailing compelling interests; and
(2) in denying GEICO's motion to reseal selected portions of the
case file, because the court failed to recognize the compelling
interests in sealing those portions, the substantial harm to
those interests from not sealing, and the lack of alternatives to
sealing.3/
We hold that the Circuit Court properly evaluated the
Sealing Order in light of the procedural and substantive
requirements for sealing court records, as set forth in Grube v.
Trader, 142 Hawai#i 412, 420 P.3d 343 (2018). As to the
substantive requirements, GEICO failed to demonstrate that there
were no less restrictive alternatives to sealing the entire case
file that would adequately protect any compelling interest
1/
The Honorable Karen T. Nakasone presided.
2/
The Honorable Keith K. Hiraoka presided.
3/
Pursuant to this court's August 24, 2022 Order Granting in Part
and Denying in Part Motion to Substitute and to Dismiss for Lack of Appellate
Jurisdiction, Civil Beat Law Center for the Public Interest has been
substituted in place of non-party Wagner.
2
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asserted by GEICO. The Circuit Court thus did not err in
ordering the case file unsealed and delaying implementation of
the unsealing to allow GEICO to file a motion to reseal specific
portions of the record.
We further hold that GEICO failed to meet its burden to
prove that its request to reseal and redact portions of the
record would serve a compelling interest. GEICO asserts three
purportedly compelling interests that would be served by such
resealing: protecting the attorney-client privilege, work
product, and trade secrets. Based on our review of the record,
including the documents at issue, we conclude that the Circuit
Court did not err in determining that GEICO failed to meet its
burden to prove that: (1) the purported attorney-client
communications it sought to reseal were made for the purpose of
facilitating the rendition of professional legal services by Roy
to GEICO; (2) the materials it sought to reseal were protected by
the work-product doctrine; and (3) the information it sought to
redact constituted trade secrets.
Accordingly, we affirm the Unsealing Orders.
I. Background
The following findings of fact by the Circuit Court are
unchallenged on appeal and thus binding on the parties and this
court, see State v. Rodrigues, 145 Hawai#i 487, 494, 454 P.3d
428, 435 (2019):
FINDINGS OF FACT
1. GEICO does business in the State of Hawai #i as a
motor vehicle insurer.
2. . . . Roy is licensed to practice law in the State
of Hawai#i.
3. GEICO employed Roy as Managing Attorney for its
Honolulu-based litigation department.
4. One of Roy's job duties was to defend persons
insured by GEICO against lawsuits arising from motor vehicle
accidents.
5. Roy's supervisor was Richard Dwyer, GEICO's Staff
Counsel Director. Dwyer is a lawyer but was never licensed
to practice in the State of Hawai#i.
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6. Roy worked with John Dornan, GEICO's Hawai #i
Branch Claims Manager. Dornan is not a lawyer.
7. Roy also worked with Timothy Dayton, GEICO's
Hawai#i Branch Office Manager. Dayton is not a lawyer.
8. Kekuailohia M. Beamer is licensed to practice law
in the State of Hawai#i and worked as an attorney in GEICO's
Honolulu-based litigation department.
9. Clarence S.K. Kekina is licensed to practice law
in the State of Hawai#i and worked as an attorney in GEICO's
Honolulu based litigation department.
10. Dee White, Christine Kaakua and Kathy A.T.
Harimoto were claims examiners employed by GEICO and worked
in GEICO's Honolulu claims office in non-managerial
capacities on behalf of GEICO's insureds.
11. Roy's complaint was filed on July 24, 2013.
12. Roy's amended complaint was filed on
September 18, 2013.
13. The complaint and first amended complaint allege,
among other things, that GEICO violated HRS § 378-62 (part
of the Hawai#i Whistleblowers' Protection Act) and that
GEICO defamed Roy in his profession.
14. The complaint and first amended complaint also
allege that GEICO interfered with Roy's ethical obligations
to, exercise of independent judgment for, and attorney-
client relationships with, GEICO's insureds.
15. GEICO, through its Corporate Counsel Susan H.
Hamburg [(Hamburg)], take the position that Roy "had as his
client, on the one hand, [GEICO], and, simultaneously on the
other hand, [GEICO's] insureds."
16. GEICO never filed a motion to seal or redact
Roy's complaint or amended complaint, or any of the exhibits
to those documents, before settling this lawsuit.
17. On January 30, 2014, the court entered an order
approving the parties' stipulation — entered into as part of
a settlement — to seal the court's entire case file [ i.e.,
the Sealing Order].
18. A stipulation for dismissal of this lawsuit was
filed on January 31, 2014.
19. Ed Wagner was a GEICO policyholder. His insured
vehicle was damaged, and he made a claim with GEICO. He
disagreed with GEICO's repair estimate, which called for the
use of so-called "aftermarket" parts rather than original
equipment manufacturer parts. He is a vocal critic of GEICO
who has, among other things, emailed GEICO executives,
submitted testimony to the Hawai#i state House of
Representatives, created his own YouTube channel and posted
a story about GEICO on an internet website.
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FOFs/COLs/Order at 2-4 (some brackets added; footnote omitted).4/
Following the 2014 dismissal of the case, nothing
further happened until April 20, 2018, when the Circuit Court's
Chief Judge received a letter from Wagner dated April 18, 2018,
along with an unfiled motion to unseal the court's case file.
On May 22, 2018, the Circuit Court issued a notice of ex parte
communication with attachments that included a filed copy of
Wagner's motion. The motion sought to unseal the court's case
file "[p]ursuant to the constitutional right of access provided
by the First Amendment of the U.S. Constitution and article I,
section 4 of the Hawai#i Constitution[.]" On June 28, 2018,
GEICO filed a memorandum in opposition to the motion to unseal.
On July 2, 2018, Wagner filed a reply memorandum and the Roys
filed a statement of no position. The motion was heard on
July 6, 2018.
Following the hearing, the Circuit Court entered the
Unsealing Order, which granted Wagner's motion to unseal. The
court concluded that the January 30, 2014 Sealing Order failed to
satisfy the procedural requirements for public notice and
findings to support sealing. The court also addressed the
substantive arguments for sealing, concluding in part that the
interests recited in the parties' stipulation - "speculation,
rumors and damage to [the parties'] reputations" - were not
compelling. As to GEICO's arguments about trade secrets and
attorney-client communications, the court noted that GEICO had
failed to present an adequate record for the court to find a
substantial probability that, absent closure, these compelling
interests would be harmed. The Circuit Court directed the clerk
of the court to unseal the file, but delayed implementation of
the order until August 16, 2018, "to allow GEICO to file a motion
to re-seal and file redacted versions of specific documents
contained in the court's case file."
4/
We note that the FOFs/COLs/Order, which describes the documents at
issue in some detail, is part of the public record on appeal, as further
explained infra. Our descriptions of the documents at issue (see infra) thus
rely on, and provide no further detail than, the corresponding descriptions in
the FOFs/COLs/Order.
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On July 16, 2018, GEICO filed a motion to reseal filed
documents and to file redacted documents (motion to reseal).
Specifically, GEICO sought to seal Exhibits 1, 2, 4, and 6 of the
July 24, 2013 verified complaint (Complaint) and the
September 18, 2013 verified first amended complaint (Amended
Complaint) (collectively, the complaints).5/ Additionally, GEICO
sought to redact "Complaint Paragraphs 13, 22-31, 33-35, 37-41,
44, 48-49, 52, 68-69, 86, 88, 90, 92, 94-96, 98, and 100" and
"Amended Complaint Paragraphs 11, 20-29, 31-33, 35-41, 44, 48-53,
57, 74-75, 92, 94, 96, 98, 100-102, 104, and Plaintiff's prayer
for relief in the Amended Complaint Paragraph 1." GEICO argued:
"There are four compelling interests supporting [GEICO's]
proposed redactions: (1) attorney-client privilege,6/ (2) work-
product doctrine; (3) the integrity of [GEICO's] sensitive trade
secrets; and (4) the propriety of the judicial process."
(Footnote added.) On July 23, 2018, Wagner filed a memorandum in
opposition to the motion to reseal.
Following a hearing on July 31, 2018, the Circuit Court
entered the FOFs/COLs/Order, denying GEICO's motion to reseal.
The Circuit Court ruled in part:
MIXED FINDINGS OF FACT
AND CONCLUSIONS OF LAW
1. None of the exhibits GEICO seeks to redact are
"confidential communications made for the purpose of
facilitating the rendition of professional legal services
[by Roy] to [GEICO]". [Hawai#i Rules of Evidence (HRE)]
Rule 503(b). They are not subject to or protected by
GEICO's attorney-client privilege.
[Discussion of individual exhibits]
2. In the case of Exhibit 2, even if the emails were
subject to GEICO's attorney-client privilege, GEICO waived
its privilege by copying the emails to White, Kaakua and
Harimoto.
. . . .
3. None of the allegations contained in the complaint
or amended complaint describe "confidential communications
5/
The exhibits to the Complaint and the Amended Complaint are
substantially the same.
6/
"Attorney-client privilege" and "lawyer-client privilege" are used
interchangeably throughout this opinion.
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made for the purpose of facilitating the rendition of
professional legal services [by Roy] to [GEICO]". HRE Rule
503(b). . . . They are not protected by the attorney-client
privilege.
4. None of the contents GEICO seeks to redact are
protected by the "work product" rule because they were not
"prepared [by GEICO] in anticipation of [this] litigation or
for trial" of this lawsuit. [Hawai#i Rules of Civil
Procedure (HRCP)] Rule 26(b)(4). Rather, they are the
subjects of this lawsuit.
5. None of the contents GEICO seek to redact
constitute "trade secrets."
. . . .
6. Even if any of the content GEICO seek to redact
constituted "trade secrets," GEICO did not make efforts that
were reasonable under the circumstances to maintain their
secrecy.
. . . .
7. The possibilities that Wagner's motion to unseal
was motivated by "his animus toward GEICO" (Dornan
declaration ¶3), that Wagner could use the pleadings filed
in this case to further an alleged "vendetta against GEICO"
(Dornan declaration ¶7) or that Wagner "is endeavoring to
use this Court as a vehicle to gratify his spite against
GEICO and Mr. Dayton and promote public scandal" (Dornan
declaration ¶12) are not compelling interests that override
the constitutional presumption that court records shall be
open to the public.
a. As a member of the public, Wagner has a
constitutional right of access to court
proceedings and records, including the records
in this case.
FOFs/COLs/Order at 19-25 (some brackets added).
Thus, the Circuit Court denied GEICO's motion to reseal
based on Wagner's constitutional right of access to court
proceedings and records. The Circuit Court ordered: "The
court's file for this case . . . shall be unsealed in its
entirety and without redaction on August 16, 2018, pursuant to
the [Unsealing Order]." Id. at 26.
On August 6, 2018, GEICO filed its notice of appeal,
with attached copies of the Unsealing Orders, in this court. On
August 7, 2018, GEICO filed a motion to stay execution of the
Unsealing Orders in the Circuit Court.
On August 14, 2018, the Circuit Court entered an "Order
on GEICO's Motion to Stay," which denied the motion as moot,
"because the court lost jurisdiction to unseal the case file on
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August 6, 2018, when GEICO filed their notice of appeal." The
Circuit Court further ordered:
The clerk of the court is directed to not unseal the court's
file, and to take no action other than to transmit the
sealed portion of the record, the court's order publicly
filed on July 6, 2018, and the documents and orders publicly
filed thereafter, to the Intermediate Court of Appeals
pursuant to HRAP Rule 11(b).
For purposes of the record on appeal, the Circuit Court thus
distinguished "the sealed portion of the record" from the
publicly filed July 6, 2018 Unsealing Order and the documents and
orders publicly filed after that date.
On October 1, 2018, in compliance with the Circuit
Court's Order on GEICO's Motion to Stay, the Circuit Court clerk
transmitted to this court the "RECORD ON APPEAL (PART 1 OF 2 -
SEALED)," which was filed under seal at appellate docket 28, and
the "RECORD ON APPEAL (PART 2 OF 2)," which was publicly filed at
appellate docket 30. Part 2 of the record on appeal includes the
Unsealing Order and all documents publicly filed in the Circuit
Court after July 6, 2018, including GEICO's July 16, 2018 motion
to reseal, along with supporting declarations and redacted
exhibits, as well as the July 31, 2018 FOFs/COLs/Order.
The Circuit Court's Order on GEICO's Motion to Stay is
not at issue in this appeal.
II. Standard of Review
The question whether the public has a qualified
constitutional right of access to court records is a question of
law, which we review de novo. See Hussey v. Say, 139 Hawai#i
181, 185, 384 P.3d 1282, 1286 (2016) ("The appellate court
reviews 'questions of constitutional law de novo, under the
right/wrong standard.'"); see also Grube, 142 Hawai#i at 426
n.17, 420 P.3d at 357 n.17 ("There is nothing in the sealed
documents to demonstrate on their face that disclosure would pose
a threat to an interest of adequate gravity to overcome the
public's constitutional right of access."); Times Mirror Co. v.
United States, 873 F.2d 1210, 1212 (9th Cir. 1989) ("The question
whether the public has a qualified First Amendment right of
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access to search warrants and supporting affidavits during the
pre-indictment stage of a criminal investigation is a question of
law, which we review de novo.").
III. Discussion
A. The Unsealing Order
GEICO contends that the Circuit Court erred in
unsealing the case file and ignoring "the compelling interest in
favor of promoting judicial settlements[.]" GEICO argues that
the court-approved stipulation to seal the case file, given Roy's
"spurious allegations" and the confidential information he
included in and attached to the complaints, "was a vital benefit
of the bargain for GEICO." GEICO maintains that its reliance
interest "outweighs any right of public access to the long-sealed
and long-settled judicial records." GEICO further argues that
the interest in promoting settlements is particularly compelling
here, because the sealed materials never should have been
"docketed," i.e., publicly filed, in the first instance, and are
no longer current. GEICO also contends that the Circuit Court
"erred in sanctioning the use of the judicial process for
improper purposes[,]" because "[i]t is clear from [Wagner's]
vitriolic and widespread attacks against GEICO that Wagner is
attempting to use the unsealing of the records in this case to
further his campaign of disparaging and harassing GEICO."
Courts in Hawai#i "have a long tradition of
accessibility by the public[.]" Oahu Publications Inc. v. Ahn,
133 Hawai#i 482, 494, 331 P.3d 460, 472 (2014) (tracing the
history of public access to judicial records). Accordingly, the
Hawai#i Supreme Court "has recognized a tradition of public
access, declaring it 'firmly embedded in our system of
jurisprudence' as a 'general policy of open trials.'" Id. at
495, 331 P.3d at 473 (quoting Gannett Pac. Corp. v. Richardson,
59 Haw. 224, 228, 580 P.2d 49, 54 (1978)). The supreme court has
further explained:
The right of public access corresponds with our
system's "deeply ingrained" traditional mistrust for secret
trials . . . . Gannett Pac. Corp.[, 59 Haw. at 228, 580
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P.2d at 54]. The right of access thus functions not only to
protect the public's ability to obtain information—a
requisite "to the enjoyment of other First Amendment
rights"—but also "as a safeguard of the integrity of our
courts." Ahn, 133 Hawai#i at 494-95, 331 P.3d at 472-73(quoting Globe Newspaper Co. v. Superior Court for the Cty.
of Norfolk, 457 U.S. 596, 604, 102 S. Ct. 2613, 73 L. Ed. 2d
248 (1982); State v. Hashimoto, 47 Haw. 185, 200, 389 P.2d
146, 155 (1963)).
Grube, 142 Hawai#i at 422, 420 P.3d at 353.
In Ahn and Grube, the supreme court examined the right
of public access in the context of criminal proceedings. In Ahn,
the court ruled that the U.S. Constitution and article I, section
4 of the Hawai#i Constitution grant the public a qualified right
of access to observe court proceedings in criminal trials. 133
Hawai#i at 494, 496, 331 P.3d 460, 472, 474. In Grube, the court
further ruled that the public's "right of access to court
proceedings in criminal cases . . . is not limited to merely
observing criminal trials." 142 Hawai#i at 422, 420 P.3d at 353(footnote and citations omitted). Rather, "the public has a
constitutional right of access to criminal proceedings generally,
as well as the records thereof." Id. (citing Ahn, 133 Hawai#i at
498-99, 331 P.3d at 476-77).
Although Ahn and Grube involved criminal proceedings,
the court in Ahn recognized that "[t]he reasons underlying
openness in the criminal context, as enunciated in Gannett Pac.
Corp., are equally compelling in the civil context." Ahn, 133
Hawai#i at 496 n.18, 331 P.3d at 474 n.18 (original brackets
omitted) (quoting In re Estate of Campbell, 106 Hawai#i 453, 462,
106 P.3d 1096, 1105 (2005)); see also Nixon v. Warner Commc'ns,
Inc., 435 U.S. 589, 597 (1978) ("It is clear that the courts of
this country recognize a general right to inspect and copy public
records and documents, including judicial records and documents."
(footnote omitted)); Courthouse News Serv. v. Planet, 947 F.3d
581, 590 (9th Cir. 2020) ("The Supreme Court has yet to
explicitly rule on whether the First Amendment right of access to
information reaches civil judicial proceedings and records, but
the federal courts of appeals widely agree that it does. Indeed,
every circuit to consider the issue has uniformly concluded that
the right applies to both civil and criminal proceedings."
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(citations omitted)).
Grube reiterated the reasons for open proceedings, but
also recognized that "[n]otwithstanding these serious
considerations, the public's constitutional right of access is
not absolute." 142 Hawai#i at 423, 420 P.3d at 354 (citing Ahn,
133 Hawai#i at 496, 331 P.3d at 474). "In 'rare and compelling
circumstances,' court proceedings may be closed to protect an
interest 'that outweighs the value of openness.'" Id. (citing
Ahn, 133 Hawai#i at 495-96, 331 P.3d at 473-74); see also In re
Estate of Campbell, 106 Hawai#i at 465, 106 P.3d at 1108(adopting a balancing approach in which the party seeking closure
must show that "strong countervailing reasons" outweigh the
public's right of access to judicial proceedings and records).
Grube discussed the procedural and substantive
requirements for closing court proceedings or sealing records in
a criminal case. 142 Hawai#i at 423-428, 420 P.3d at 354-59.
The procedural requirements are: "(1) those excluded from the
proceeding must be afforded a reasonable opportunity to state
their objections; and (2) the reasons supporting closure must be
articulated in findings." Id. at 423, 420 P.3d at 354 (quoting
Ahn, 133 Hawai#i at 497-98, 331 P.3d at 475-76). The substantive
factors that the court must consider in its findings are: "(1)
the closure serves a compelling interest; (2) there is a
substantial probability that, in the absence of closure, this
compelling interest would be harmed; and (3) there are no
alternatives to closure that would adequately protect the
compelling interest." Grube, 142 Hawai#i at 424, 420 P.3d at 355(brackets omitted) (quoting Ahn, 133 Hawai#i at 497–98, 331 P.3d
at 475–76).
The supreme court and this court have indicated that
these procedural and substantive prerequisites for sealing court
documents should be applied in at least some, if not all, civil
proceedings. See, e.g., Civil Beat Law Ctr. for Pub. Interest v.
Chang, No. SCPW-XX-XXXXXXX, 2022 WL 1490412, at *2 (Haw. May 11,
2022) (denying modified writ petition seeking to prohibit the
trial judge from enforcing a sealing order: "At this time, . . .
the more appropriate course of action is for petitioner to seek
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relief, as modified, in the underlying case, and for the
respondent judge, after all parties are heard on the matter, to
thereafter enter formal written findings consistent with
constitutional standards and case law, specifically Ahn and
Grube."); Rohrer v. Hoyte, No. CAAP-XX-XXXXXXX, 2019 WL 5457852,
at *1 n.2 (Haw. App. Oct. 24, 2019) (SDO) ("The Circuit Court's
order granting Defendants' ex parte motion to submit their motion
to dismiss under seal does not contain specific findings as
required by Grube v. Trader, 142 Hawai#i 412, 424, 420 P.3d 343,
355 (2018)." (citing Estate of Campbell, 106 Hawai#i at 462, 106
P.3d at 1105)).7/ Moreover, prior to Ahn and Grube, the supreme
court applied similar procedural and substantive standards for
sealing court records in a probate (i.e., civil) proceeding,
based on the right of public access to judicial proceedings and
records. See Estate of Campbell, 106 Hawai#i at 465, 106 P.3d at
1108 (holding that third parties have a right to challenge the
sealing of probate court records, and "the presumption of
openness requires the [party seeking closure] to demonstrate that
strong countervailing reasons weigh against the public's
presumptive right of general access to judicial proceedings and
records.") Accordingly, here, the Circuit Court properly
evaluated the Sealing Order in light of Grube's procedural and
substantive prerequisites for sealing court records.8/
7/
We also take judicial notice that on August 27, 2018, Wagner filed
a Petition for Writ of Prohibition and Writ of Mandamus ( Petition) in the
supreme court, seeking, among other things, a writ of mandamus ordering the
Circuit Court to unseal the underlying case. See Pet. for Writ of
Prohibition, Wagner v. Hiraoka, No. SCPW-XX-XXXXXXX, Judiciary Information
Management System dkt. 1 at 1, 26. The supreme court subsequently denied the
Petition. Id., 2018 WL 5044355, at *1 (Haw. Oct. 17, 2018). In denying the
Petition, the supreme court stated, in part: "Upon consideration of . . .
Wagner's [P]etition . . ., it appears that the respondent judge complied with
the procedure set forth in Grube v. Trader, 142 Hawai #i 412, 420 P.3d 343(2018) in addressing the sealing issue . . . ." Id., 2018 WL 5044355, at *1
(emphasis added).
8/
In Estate of Campbell, the supreme court noted:
We express no opinion as to the applicability of the
balancing test in situations where a specific statute or
rule mandates confidentiality or where such an approach may
be inappropriate, as might be the case, for example, in
certain family court matters. The balancing approach should
be applied on a case-by-case basis.
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The Circuit Court concluded that neither of the two
procedural requirements for sealing documents was satisfied when
the court entered the Sealing Order. On appeal, GEICO does not
challenge this ruling, focusing instead on the substantive
requirements to overcome the right of public access. As
discussed above, GEICO has asserted a number of interests that
are purportedly served by keeping the entire case file sealed.
However, we need not consider whether any of these interests is
"compelling" or would be harmed in the absence of closure, given
that GEICO has not demonstrated that "there are no [less
restrictive] alternatives to closure that would adequately
protect [any] compelling interest." See Grube, 142 Hawai#i at
427, 420 P.3d at 358 (original brackets omitted) (quoting
Oregonian Pub. Co. v. U.S. Dist. Court for Dist. of Or., 920 F.2d
1462, 1466 (9th Cir. 1990)); see also Estate of Campbell, 106
Hawai#i at 465, 106 P.3d at 1108 ("the presumption of openness
requires the estate to demonstrate that strong countervailing
reasons" outweigh the public's right of access (emphasis added)).
As the supreme court stated in Grube:
"Even where denial of access is appropriate, it must be no
greater than necessary to protect the interest justifying
it." United States v. Brooklier, 685 F.2d 1162, 1172 (9th
Cir. 1982). Thus, where a feasible alternative exists that
would protect the compelling interest while avoiding or
minimizing impairment of the public's constitutional right
of access, total sealing is inappropriate. Id. at 1169; see
also Oregonian Pub. Co., 920 F.2d at 1467 n.1 . . . .
142 Hawai#i at 427, 420 P.3d at 358.
Thus, even if GEICO could demonstrate the first two
substantive requirements for sealing court records, it offered no
cogent explanation below, and offers none on appeal, as to why
sealing the entire case file was necessary to protect its
asserted interests. Indeed, GEICO acknowledged, in moving to
reseal only selected portions of the complaints, "that the only
redacted paragraphs in these documents are those [whose
106 Hawai#i at 465 n.26, 106 P.3d at 1108 n.26. Similarly, here, we express
no opinion as to the applicability of the prerequisites for sealing documents
in civil cases where a specific statute or rule mandates confidentiality or
where such an approach is otherwise inappropriate.
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disclosure] would violate a compelling interest." Accordingly,
the Circuit Court did not err in ordering the case file unsealed
and delaying implementation of the unsealing for a period of
time, thereby allowing GEICO to file a motion to reseal specific
portions of the record.
B. The FOFs/COLs/Order
GEICO argues that the Circuit Court "compounded its
error by denying GEICO's motion to reseal selected portions of
the record." Specifically, GEICO sought to reseal Exhibits 1, 2,
4, and 6 and to redact numerous paragraphs of the complaints,
identified in section I above. GEICO identified four purportedly
compelling interests that would be served by the requested
resealing, three of which it asserts on appeal: protecting the
attorney-client privilege, work product, and trade secrets.
For the reasons discussed below, we hold that GEICO
failed to meet its burden to prove that its request to reseal and
redact portions of the record would serve a compelling interest.
We thus do not address the remaining requirements for sealing
court records.
1. Attorney-Client Privilege
GEICO contends that Exhibit 1 (which comprises two
emails), as well as several paragraphs of the complaints, are
subject to the attorney-client privilege.9/
The supreme court has recently explained:
In order for a document to be protected from disclosure
pursuant to the lawyer-client privilege, as defined in
[Hawai#i Rules of Evidence (HRE)] Rule 503, the document
must contain information communicated within the context of
a lawyer-client relationship. HRE Rule 503(b) provides for
an evidentiary privilege for confidential lawyer-client
communications: "a client has a privilege to refuse to
disclose and to prevent any other person from disclosing
confidential communications made for the purpose of
facilitating the rendition of professional legal services to
9/
GEICO asserts that the attorney-client privilege applies to: (1)
Exhibit 1 and the paragraphs that discuss that exhibit, i.e., paragraphs 24-26
of the Complaint, and paragraphs 22-24 of the Amended Complaint; and (2)
paragraphs 13, 22, 23, 27-31, 33, and 48 of the Complaint, and paragraphs 11,
20, 21, 25-28, 31, and 48 of the Amended Complaint.
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the client (1) between the client or the client's
representative and the lawyer or the lawyer's representative
. . . ."
Honolulu Civil Beat Inc. v. Dep't of Attorney Gen., 146 Hawai#i
285, 293, 463 P.3d 942, 950 (2020) (original brackets omitted).
"[P]roper practice requires preliminary judicial
inquiry into the existence and validity of the [lawyer-client]
privilege and the burden of establishing the privilege rests on
the claimant." Id. (quoting Sapp v. Wong, 62 Haw. 34, 38, 609
P.2d 137, 140 (1980)); see also Anastasi v. Fid. Nat. Title Ins.
Co. (Anastasi I), 134 Hawai#i 400, 418, 341 P.3d 1200, 1218 (App.
2014), aff'd in part, vacated in part, 137 Hawai#i 104, 366 P.3d
160 (2016) (Anastasi II) ("[T]he party claiming the privilege has
the burden of establishing that the privilege exists and that it
applies as asserted." (citing DiCenzo v. Izawa, 68 Haw. 528, 536,
723 P.2d 171, 176 (1986); Sapp, 62 Haw. at 38, 609 P.2d at 140)).
"'An ipse dixit claim of privilege' clearly does not suffice."
DiCenzo, 68 Haw. at 536, 723 P.2d at 176 (quoting Sapp, 62 Haw.
at 38, 609 P.2d at 140); see also United States v. Martin, 278
F.3d 988, 1000 (9th Cir. 2002) (construing analogous federal law:
"A party claiming the privilege must identify specific
communications and the grounds supporting the privilege as to
each piece of evidence over which privilege is asserted. Blanket
assertions are 'extremely disfavored.'" (citations omitted)).
Thus, GEICO had the burden of establishing the asserted privilege
with respect to the purportedly protected portions of the record.
Under HRE Rule 503(a)(1), "[a] 'client' is a person,
public officer, or corporation, association, or other
organization or entity, either public or private, who is rendered
professional legal services by a lawyer, or who consults with a
lawyer with a view to obtaining professional legal services." An
insurer such as GEICO can come within the definition of a
"client," and "the purpose underlying the attorney-client
privilege applies when a confidential communication is made
between persons covered by HRE Rule 503 for the purpose of
facilitating the rendition of legal services to an insurer."
Anastasi I, 134 Hawai#i at 418, 341 P.3d at 1218.
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We have noted the challenges in determining whether the
privilege applies when a company's in-house attorney is involved:
[U]nlike the situation where a client individually engages a
lawyer in a particular matter, staff attorneys may serve as
company officers, with mixed business-legal responsibility;
whether or not officers, their day-to-day involvement in
their employers' affairs may blur the line between legal and
nonlegal communications; and their advice may originate not
in response to the client's consultation about a particular
problem but with them, as part of an ongoing, permanent
relationship with the organization. In that the privilege
obstructs the truth-finding process and its scope is limited
to that which is necessary to achieve its purpose, the need
to apply it cautiously and narrowly is heightened in the
case of corporate staff counsel, lest the mere participation
of an attorney be used to seal off disclosure.
Id. at 420, 341 P.3d at 1220 (quoting Rossi v. Blue Cross &
Blue Shield of Greater N.Y., 540 N.E.2d 703, 705 (N.Y. 1989)).
In addition, the supreme court has recognized the
potential for conflict inherent in the tripartite relationship
between insurer, insured and insurance defense counsel. See
Finley v. Home Ins. Co., 90 Hawai#i 25, 29, 975 P.2d 1145, 1149
(1998). "[R]etained counsel solely represents the insured when a
conflict arises between the interests of the insurer and the
insured." Id. at 32, 975 P.2d at 1152.
These principles guide our analysis of the privilege
claims asserted in GEICO's motion to reseal selected portions of
the record. As to the first email in Exhibit 1, GEICO argued:
The first document in Exhibit 1 contains confidential
communications created by [Roy] - acting in his capacity as
in-house counsel for [GEICO] - made for the purpose of
facilitating his professional legal services between both
[GEICO] and [GEICO's] insureds. Accordingly, it is
protected by the attorney-client privilege owned by [GEICO]
and [GEICO's] insureds.
As to the second email in Exhibit 1, GEICO argued:
The second document in Exhibit 1 contains confidential
communications to [Roy] solicited by [GEICO's] Staff Counsel
Director requesting legal advice and analysis from [Roy] in
his capacity as [GEICO's] in-house counsel. This document
is therefore likewise covered by the attorney-client
privilege.
GEICO made similar assertions of privilege regarding the
paragraphs of the complaints it sought to reseal. Additionally,
Hamburg stated in a declaration that: (1) "[Roy] managed
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litigation involving [GEICO's] insureds and effectively served as
local in-house counsel for [GEICO]"; (2) "[Roy] worked in
collaboration with other members of [GEICO's] Honolulu-based
litigation department, including . . . Dornan, . . . [and] was
supervised by . . . Dwyer"; (3) "[Roy] had as his client, on the
one hand, [GEICO], and, simultaneously on the other hand,
[GEICO's] insureds"; (4) "[i]n both these capacities, [Roy],
Dornan, Dwyer and others routinely engaged in confidential legal
strategy discussions subject to both the attorney-client
privilege and/or the work-product privilege"; and (5) "[b]oth the
Complaint and the Amended Complaint contained substantial and
detailed information protected by the attorney-client privilege
and/or the work-product privilege."10/
The Circuit Court described Exhibit 1 and concluded
that it was not protected by the attorney-client privilege, as
follows:
a. Exhibit 1 to the complaint and amended complaint is a
compilation of two emails:
i. the email from Roy to his supervisor, Dwyer,
dated August 19, 2012, is not a communication
made for the purpose of facilitating the
rendition of professional legal services by Roy
to GEICO. GEICO did not solicit legal advice
from Roy; the email is a discussion between
GEICO's staff counsel and his supervisor
questioning GEICO's policy about what staff
counsel may tell staff counsel's client —
GEICO's insured — about whether GEICO will
indemnify its insured for liability in excess of
the insured's policy limit in cases where GEICO
rejects a policy limits settlement demand, or
where GEICO refuses to agree to arbitration
pursuant to HRS § 431:l0C-213.5. It did not
"originate . . . in response to [GEICO's]
consultation about a particular problem" but as
part of a discussion about Roy's "ongoing,
permanent relationship with [GEICO]." Anastasi
I, 134 Hawai#i at 420. It is not protected by
GEICO's attorney-client privilege.
ii. the email from Dwyer to Roy, dated October 24,
2007 and copied to Beamer, is not a
communication made for the purpose of
facilitating the rendition of professional legal
services by Roy to GEICO. GEICO did not solicit
legal advice from Roy; Dwyer was telling Roy how
10/
We note that the Hamburg declaration is part of the public record
on appeal.
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Dwyer wanted Roy to do his job. The email
contains the allegedly slanderous statements
("smell like you are running scared" . . . "you
have never had a jury trial and have a
reputation, deserved or not, that you don't want
to try a case" . . . "you are going to have to
try a case someday — this is becoming
embarrassing"), published to a third person
(Beamer), upon which Roy's defamation claim was
based.
FOFs/COLs/Order at 19-20 (brackets in original; footnote
omitted).
Similarly, the Circuit Court ruled that none of the
allegations contained in the complaints were protected by the
attorney-client privilege because:
None of the allegations . . . describe "confidential
communications made for the purpose of facilitating the
rendition of professional legal services [by Roy] to
[GEICO]". HRE Rule 503(b). GEICO did not ask Roy for legal
advice. Roy did not provide legal advice to GEICO as
GEICO's lawyer. The communications between Roy, Dwyer,
Dornan and Dayton described in the complaint and amended
complaint concerned Roy's day-to-day employment by, and
relationship to, GEICO.
Id. at 23-24 (brackets in original).
Based on our review of the record, including the
purportedly privileged communications, we conclude that the
Circuit Court did not err in determining that GEICO failed to
meet its burden to prove that the communications were made for
the purpose of facilitating the rendition of professional legal
services by Roy to GEICO. See Honolulu Civil Beat Inc., 146
Hawai#i at 295, 463 P.3d at 952 ("Notwithstanding the
Department's conclusory claims that the report was privileged and
confidential, the record before this court . . . fails to
establish that the Department was acting pursuant to a
lawyer-client relationship when it prepared the report and
provided it to the legislature.") In particular, given Roy's
dual role as in-house counsel for GEICO and counsel for GEICO's
insureds, it is not evident from the information provided by
GEICO (i.e., the Hamburg declaration) or the communications
themselves that each was made within the context of a lawyer-
client relationship between Roy and GEICO. For example, the
first email in Exhibit 1 reflects an August 2012 communication
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from Roy to Dwyer, his GEICO supervisor, "questioning GEICO's
policy about what staff counsel may tell staff counsel's client —
GEICO's insured — about [certain indemnification and arbitration
issues.]" FOFs/COLs/Order at 19. It is not apparent from the
email itself that Roy was communicating for the purpose of
facilitating the rendition of professional legal services to
GEICO.11/ The second email in Exhibit 1 reflects an earlier,
October 2007 communication from Dwyer to Roy (copied to Beamer)
in which Dwyer was, primarily, "telling Roy how . . . to do his
job." FOFs/COLs/Order at 20. GEICO notes that the email also
references a "particular claim," but it is not evident from the
email alone that Dwyer was communicating with Roy for the purpose
of facilitating the rendition of professional legal services to
GEICO. For similar reasons, the Circuit Court did not err in
determining that GEICO failed to prove that the paragraphs of the
complaints discussing Exhibit 1 and other communications to or
from Roy were made for the purpose of facilitating the rendition
of professional legal services by Roy to GEICO.
Accordingly, the Circuit Court did not err in
concluding that the e-mails contained in Exhibit 1 and the
communications between Roy, Dwyer, Dornan and Dayton described in
the complaints were not communications made for the purpose of
facilitating the rendition of professional legal services by Roy
to GEICO, and thus were not protected by GEICO's attorney-client
privilege.
2. Work-Product Doctrine
GEICO contends that the Circuit Court erred in ruling
that Exhibits 2, 4, and 6 and numerous paragraphs of the
complaints were not protected from disclosure under the work
11/
GEICO appears to contend that its request for legal advice was
implicit in the communications at issue. However, we cannot infer such a
request based solely on the contents of the communications, and GEICO has
provided no other information or evidence supporting the existence of such a
request.
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product doctrine.12/
As this court stated in Anastasi I:
"The primary purpose of the work product rule is to prevent
exploitation of a party's efforts in preparing for
litigation[,]" Holmgren v. State Farm Mut. Auto. Ins. Co.,
976 F.2d 573, 576 (9th Cir. 1992) (citation and internal
quotation marks omitted), and to "protect written
statements, private memoranda and personal recollections
prepared or formed by an adverse party's counsel in the
course of his legal duties." Metzler Contracting Co. v.
Stephens, 642 F. Supp. 2d 1192, 1205 (D. Haw. 2009)
(citation and internal quotation marks omitted).
134 Hawai#i at 423, 341 P.3d at 1223 (footnote omitted).
Hawaii's work-product doctrine is set forth in HRCP
Rule 26, which provides, in relevant part:
(b) Discovery Scope and Limits. Unless otherwise
limited by order of the court in accordance with these
rules, the scope of discovery is as follows:
(1) In General.
(A) Parties may obtain discovery regarding any
matter, not privileged, which is relevant to the subject
matter involved in the pending action . . . .
. . . .
(4) Trial Preparation: Materials. A party may obtain
discovery of documents, electronically stored information,
and tangible things otherwise discoverable under subdivision
(b)(1) of this Rule and prepared in anticipation of
litigation or for trial by or for another party or by or for
that other party's representative (including the other
party's attorney, consultant, surety, indemnitor, insurer,
or agent) only upon a showing that the party seeking
discovery has substantial need of the materials in the
preparation of the party's case and that the party is unable
without undue hardship to obtain the substantial equivalent
of the materials by other means. In ordering discovery of
such materials when the required showing has been made, the
court shall protect against disclosure of the mental
impressions, conclusions, opinions, or legal theories of an
attorney or other representative of a party concerning the
litigation.
"Thus, the relevant inquiry for determining whether a
document can be protected by work product doctrine is whether the
document was prepared in anticipation of litigation or trial."
12/
GEICO asserts that the work-product doctrine applies to paragraphs
27-31, 33-34, and 35 of the Complaint and paragraphs 25-29, 31-32, and 33 of
the Amended Complaint based on derivative information contained in the
exhibits. Additionally, GEICO claims the work-product doctrine applies to
paragraphs 13, 23, 24, 34, 48-49, 52, 68-69, 88, 92, 94-96, and 98 of the
Complaint and paragraphs 11, 21, 22, 32, 48-51, 57, 74-75, 92, 94, 96, and 98
of the Amended Complaint.
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Anastasi II, 137 Hawai#i at 113–14, 366 P.3d at 169–70. "[E]ven
though HRCP Rule 26(b)(4) generally prohibits the discovery of
documents prepared in anticipation of litigation or for trial,
'the difficulty of this issue is determining at what point work
produced by an insurer's in-house counsel acting in a dual role
becomes "work prepared in anticipation of litigation."'" Id. at
112, 366 P.3d at 168 (original brackets omitted) (quoting
Anastasi I, 134 Hawai#i at 425, 341 P.3d at 1225).
This court has also made clear that "the burden of
establishing work product protection lies with the proponent, and
it must be specifically raised and demonstrated rather than
asserted in a blanket fashion." Anastasi I, 134 Hawai#i at 425,
341 P.3d at 1225 (brackets omitted) (quoting Holliday v. Extex,
447 F. Supp. 2d 1131, 1138 (D. Haw. 2006)); see also Weber v.
Paduano, No. 02 CIV. 3392 (GEL), 2003 WL 161340, at *4 (S.D.N.Y.
Jan. 22, 2003) (construing analogous federal law: "[I]n the
insurance context, it is particularly important that the party
opposing production of the documents, on whom the burden of proof
as to privilege rests, demonstrate by specific and competent
evidence that the documents were created in anticipation of
litigation." (citing Harrigan v. Electronic Pre–Press Systems,
Inc., No. 90 Civ. 4081(MEL), 1992 WL 121438, at *3 (S.D.N.Y. May
15, 1992))).
Here, GEICO asserted work-product protection in the
Circuit Court, as follows:
[T]he Complaint and the Amended Complaint both contain
extensive materials protected by the work-product doctrine.
Specifically, Exhibit 2 contains strategy e-mails exchanged
between members of Defendant's Honolulu litigation team in
anticipation of litigation on behalf of multiple of
Defendant's insureds. As such, Exhibit 2 is protected by
the work-product privilege.
Additionally, Exhibit 4 contains an e-mail from Mr.
Dwyer to Plaintiff prepared with regard to the appropriate
litigation strategy for Plaintiff's cases. Exhibit 6
contains Plaintiff's response to Mr. Dwyer expressing his
view on the appropriate litigation strategy with regard to
his litigation cases. Both Exhibit 4 and Exhibit 6 are
therefore covered by work-product privilege because the
exhibits were prepared in anticipation of litigation.
GEICO further argued that several paragraphs of the complaints
(identified supra) that discussed Exhibits 2, 4, and 6 contained
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"derivative" work product, and that numerous other paragraphs of
the complaints also contained protected work product. In her
declaration, Hamburg generally asserted that "[b]oth the
Complaint and the Amended Complaint contained substantial and
detailed information protected by the attorney-client privilege
and/or the work-product privilege."
The Circuit Court described Exhibits 2, 4, and 6 as
follows:
b. Exhibit 2 to the complaint and amended complaint are
. . . compilations of emails:
i. the email from Beamer to Roy dated August 18,
2011, and copied to White, Kaakua, Harimoto and
Dornan . . . is a discussion among GEICO's staff
counsel — copied to GEICO's claim handlers and
their claim manager — about responding to a
plaintiff's attorney's proposal for arbitration
pursuant to HRS § 431:l0C-213.5 in two pending
cases. . . .
ii. Dornan's email response to Beamer and Roy, also
dated August 18, 2011, and also copied to White,
Kaakua and Harimoto . . . is a directive from
GEICO's Branch Claims Manager to two of GEICO's
staff counsel about who within GEICO is
authorized to decide on binding arbitration.
iii. the email from Dornan to Roy, Beamer and Kekina
dated March 13, 2012, and copied to Timothy
Dayton and "HI CU," . . . communicates
information from fee counsel about a plaintiff's
counsel's conduct during a Court Annexed
Arbitration Program hearing, and another
directive from GEICO's Continuing Unit Manager
to three of GEICO's staff counsel about who
within GEICO is authorized to decide on binding
arbitration.
c. Exhibit 4 to the complaint and amended complaint is
Dwyer's email to Roy, dated September 18, 2012,
responding to Roy's August 19, 2012 email (part of
Exhibit 1). . . . Dwyer was again telling Roy how
Dwyer wanted Roy to do his job. The email is GEICO's
Staff Counsel Director's directive to one of GEICO's
staff counsel concerning staff counsel's "ongoing,
permanent relationship with [GEICO]," Anastasi I, 134
Hawai#i at 420 . . . ."
d. Exhibit 6 to the complaint and amended complaint is
Roy's email to Dwyer, dated September 24, 2012,
responding to Dwyer's September 18, 2012 email
(Exhibit 4). . . . [T]he email is GEICO's staff
counsel acknowledging GEICO's Staff Counsel Director's
directive, questioning allegedly retaliatory and
discriminatory adverse employment actions taken by
GEICO, and requesting that GEICO preserve
electronically stored information from spoliation.
FOFs/COLs/Order at 20-22 (some brackets added; footnotes
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omitted).
As to Exhibits 2, 4, and 6 and the identified
paragraphs of the complaints, the Circuit Court concluded that
"[n]one of the contents GEICO seeks to redact are protected by
the 'work product' rule because they were not 'prepared [by
GEICO] in anticipation of [this] litigation or for trial' of this
lawsuit. HRCP Rule 26(b)(4)." Id. at 24 (some brackets added).
On appeal, GEICO argues that these materials reflect
discussions among GEICO's attorneys and representatives
"concerning actions and strategies to pursue in specific
litigation (the cases in which Roy represented GEICO's insureds)
and the scope of legal advice that was appropriate (or legally
required) to be given to GEICO's insureds during that
representation." GEICO also takes issue with the Circuit Court's
use of the word "this" in concluding that the materials at issue
were not protected because they were not prepared in anticipation
of this litigation. GEICO argues that the fact that the
materials at issue were created in anticipation of different
litigation does not abrogate the applicability of the work-
product doctrine.
GEICO is correct that the materials at issue need not
have been prepared in anticipation of this litigation, meaning
the lawsuit initiated by Roy's Complaint, if the materials are
otherwise protected by the work-product doctrine. By its terms,
HRCP Rule 26(b)(4) does not limit work-product protection to
materials prepared for the case in which the materials are
sought. Rather, to qualify for work-product protection, the
materials at issue must be prepared: (1) "in anticipation of
litigation or for trial," and (2) "by or for another party[,] or
by or for that other party's representative[.]" HRCP Rule
26(b)(4). A number of federal courts have construed
substantially similar language in Federal Rules of Civil
Procedure (FRCP) Rule 26(b)(3) as protecting materials prepared
for any litigation or trial as long as they were prepared by or
for a party to the litigation in which the protection is being
asserted. See, e.g., In re California Public Utilities Comm'n,
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892 F.2d 778, 781 (9th Cir. 1989) ("[W]e conclude that [FRCP Rule
26(b)(3)], on its face, limits its protection to one who is a
party (or a party's representative) to the litigation in which
discovery is sought."); Underwriters Ins. Co. v. Atlanta Gas
Light Co., 248 F.R.D. 663, 667 (N.D. Ga. 2008) ("[C]ourts have
generally found that documents produced in anticipation of
litigating one case remain protected in a subsequent case if they
were created by or for a party to the subsequent litigation."
(citing cases)); see also FTC v. Grolier, Inc., 462 U.S. 19, 25
(1983) (stating in dicta: "[T]he literal language of [FRCP Rule
26(b)(3)] protects materials prepared for any litigation or trial
as long as they were prepared by or for a party to the subsequent
litigation." (citing 8 J. Wright & A. Miller, Federal Practice
and Procedure § 2024, at 201 (1970))). Additionally, at least
one court has recognized that federal work-product protection
extends even to non-parties to the litigation in which the
information is sought. See Federal Election Comm'n v. The
Christian Coalition, 179 F.R.D. 22, 24 (D.D.C. 1998) ("The more
considered view appears to be that work product protection
applies (1) to materials prepared for any litigation; and that
(2) because the rule applies equally to one-time litigants and
repeat players, the protection survives the termination of the
litigation for which it was prepared; and that under the
rationale of Hickman[ v. Taylor, 329 U.S. 495 (1947)],
non-parties should be able to assert work product privilege
claims even though Rule 26(b)(3) is phrased only in terms of the
parties." (citations omitted)).
Based on its non-limiting language, we hold that HRCP
Rule 26(b)(4) protects materials prepared in anticipation of any
litigation and survives the termination of the litigation for
which it was prepared. We need not determine the precise
contours of Hawaii's work-product doctrine, i.e., whether its
protection extends to non-parties to the litigation in which the
information is sought, because, here, it appears that Exhibits 2,
4, and 6 were prepared by individuals who either are or represent
parties in this case. Thus, the materials at issue would qualify
for work product protection under HRCP Rule 26(b)(4), as long as
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they were prepared in anticipation of litigation.
Exhibits 2, 4, and 6 appear to be email communications
to or from one or more in-house attorneys for GEICO who allegedly
acted in a dual role. See FOFs/COLs/Order at 20-22. In these
circumstances, where documents are claimed to serve a dual
purpose, the "because of" test applies. See Anastasi II, 137
Hawai#i at 113, 366 P.3d at 169.
Dual purpose documents are deemed prepared because of
litigation if "in light of the nature of the document
and the factual situation in the particular case, the
document can be fairly said to have been prepared or
obtained because of the prospect of litigation." In
applying the "because of" standard, courts must
consider the totality of the circumstances and
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.'"
United States v. Richey, 632 F.3d 559, 567–68 (9th Cir.
2011)(citations omitted).
Id. (quoting Anastasi I, 134 Hawai#i at 425, 341 P.3d at 1225).
The supreme court has further explained:
Under the "because of" test, courts are instructed to
consider whether given the totality of the circumstances it
can be fairly said that a document was prepared or obtained
because of the prospect of litigation. This test aligns
with the scope of the privilege as circumscribed in HRCP
Rule 26 because the statutory privilege protects only
materials prepared in anticipation of litigation or for
trial.
Id. at 114, 366 P.3d at 170.
Here, GEICO submitted Exhibits 2, 4, and 6 for the
Circuit Court's in camera review, but did not otherwise submit
any evidence regarding "the factual situation in the particular
case" or cases allegedly involved in these communications or in
the parts of the complaints that GEICO sought to redact. Id. at
113, 366 P.3d at 169. We are thus left to infer that Exhibit 2
concerns "actions and strategies to pursue in specific litigation
. . . in which Roy represented GEICO's insureds[,]" despite the
fact that the subject matter of this email compilation appears to
relate primarily to GEICO's policy regarding "who within GEICO is
authorized to decide on binding arbitration [proposals]."
FOFs/COLs/Order at 20-21. Similarly, we are left to speculate
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that Exhibits 4 and 6 concern litigation that Roy was handling
for GEICO's insureds, despite the fact that these emails appear
primarily to reflect Dwyer "again telling Roy how . . . to do his
job[,]" and Roy acknowledging that directive and "questioning
allegedly retaliatory and discriminatory adverse employment
actions taken by GEICO[.]" Id. at 22. In short, the substance
of the disputed materials appears to concern the broader question
of whether Roy could independently exercise his role as counsel
for his clients (the GEICO insureds), or whether GEICO could
control certain aspects of how he handled representing clients in
third-party cases. "[I]t is well established that documents
prepared in the ordinary course of business are not protected by
the work-product doctrine because they would have been created
regardless of the litigation." Anastasi II, 137 Hawai#i at 112,
366 P.3d at 168 (quoting Anastasi I, 134 Hawai#i at 425, 341 P.3d
at 1225).
Based on our review of the record, including Exhibits
2, 4, and 6, we conclude that GEICO failed to carry its burden of
establishing that the materials it sought to reseal or redact
"w[ere] created because of anticipated litigation, and would not
have been created in substantially similar form but for the
prospect of litigation." Anastasi II, 137 Hawai#i at 113, 366
P.3d at 169 (quoting Anastasi I, 134 Hawai#i at 425, 341 P.3d at
1225). Accordingly, the Circuit Court did not err in concluding
that Exhibits 2, 4, and 6 and the identified paragraphs of the
complaints were not protected by the work-product doctrine.13/
3. Trade Secrets
GEICO also contends that the Circuit Court erred in
failing to recognize that parts of the complaints contained trade
secrets and should have been protected from public disclosure on
13/
Relatedly, the Circuit Court's use of the word "this" in
concluding that the materials at issue were not protected because they were
not prepared in anticipation of this litigation was harmless error.
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that basis.14/
HRE Rule 508 states:
Trade secrets. A person has a privilege, which may be
claimed by the person or the person's agent or employee, to
refuse to disclose and to prevent other persons from
disclosing a trade secret owned by the person, if allowance
of the privilege will not tend to conceal fraud or otherwise
work injustice. When disclosure is directed, the judge
shall take such protective measure as the interests of the
holder of the privilege and of the parties and the
furtherance of justice may require.
HRS § 482B-2 (2008) defines a "trade secret" as
follows:
"Trade secret" means information, including a formula,
pattern, compilation, program device, method, technique, or
process that:
(1) Derives independent economic value, actual or
potential, from not being generally known to,
and not being readily ascertainable by proper
means by, other persons who can obtain economic
value from its disclosure or use; and
(2) Is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.
Here, GEICO argued below that the complaints "reveal
[GEICO's] trade secrets with regard to managing litigation;
specific techniques and alleged practices for creating and
enforcing GEICO's internal policies; and metrics for ensuring
control of costs and calculating remuneration of employees." It
does not appear that GEICO submitted any evidence supporting its
trade secret claims.
The Circuit Court concluded that "[n]one of the
contents GEICO seek to redact constitute 'trade secrets.'"
FOFs/COLs/Order at 24. The court reasoned:
a. GEICO have not shown that the information is novel or
materially different from the litigation strategies,
premium collection procedures or compensation plans of
their competitors. See Woo[ v. Fireman's Fund Ins.
Co.], 154 P.3d [236,] 240[ (Wash. Ct. App. 2007)].
14/
GEICO asserts that the following portions of the complaints contain
trade secrets: paragraphs 13, 23-31, 33-35, 37-41, 44, 48-49, 52, 68-69, 86,
88, 90, 92, 94-96, and 100 of the Complaint, and paragraphs 11, 21-29,31-33,
35-41, 44, 48-53, 57, 74-75, 92, 94, 98, 100-102, and 104 of the Amended
Complaint.
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GEICO have not, for example, submitted declarations
establishing that its litigation strategies, premium
collection procedures or compensation plans are
materially different from those of State Farm
Insurance Company, or Farmers Insurance Company, or
other of GEICO's competitors in the liability
insurance marketplace.
b. GEICO have not shown that the information, if obtained
by GEICO's business competitors, would unfairly hinder
GEICO's ability to compete in the liability insurance
marketplace.
c. GEICO have not shown that they expended significant
amounts of time, money or other commercial resources
to generate, develop or compile the information.
Id.
On appeal, GEICO reiterates that the information it
seeks to protect "is about methods, techniques, and processes
GEICO uses in very specific contexts to manage claims (including
in litigation), enforce its own internal policies, and control
costs." However, GEICO submitted no evidence below to support
its counsel's naked assertions that GEICO's claims management
strategies and other internal policies meet the definition of a
trade secret under HRS § 482B-2. Conclusory claims such as these
are insufficient to establish the existence of a trade secret.
See, e.g., Kona's Best Nat. Coffee LLC v. Mountain Thunder Coffee
Plantation Int'l, Inc., No. CAAP-XX-XXXXXXX, 2017 WL 3310451, at
*19 (App. 2017) (mem.) ("The Mountain Thunder Defendants did not
present specific evidence of the information they claimed
constituted trade secrets or why such information qualified as
trade secrets."); McCallum v. Allstate Prop. & Cas. Ins. Co., 204
P.3d 944, 951 (Wash. Ct. App. 2009) ("The conclusory statements
and unsubstantiated assertions in [the Allstate employees']
declarations are insufficient to establish the documents
contained trade secrets.").
On this record, we conclude that GEICO failed to meet
its burden to prove that the information in the complaints that
it sought to redact constituted trade secrets. Accordingly, the
Circuit Court did not err in so ruling.
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IV. Conclusion
For the reasons discussed above, we affirm the July 6,
2018 "Order on Motion to Unseal (Filed May 22, 2016 [sic])" and
the July 31, 2018 "Findings of Fact, Conclusions of Law and Order
Denying GEICO's Motion to Reseal Filed Documents," both entered
by the Circuit Court of the First Circuit.
On the briefs:
Barry W. Marr and /s/ Lisa M. Ginoza
Emily R. Marr, with Chief Judge
Cary B. Lerman (pro hac vice),
Chad Golder (pro hac vice), and /s/ Katherine G. Leonard
Dahlia Mignouna (pro hac vice) Associate Judge
for Defendants-Appellants
/s/ Clyde J. Wadsworth
Robert Brian Black and Associate Judge
Lisa Emily Engebretsen
for Non-Party-Appellee
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