South Capitol Bridgebuilders v. Lexington Insurance Company

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SOUTH CAPITOL BRIDGEBUILDERS,
Plaintiff,
v. Case No. 1:21-cv-1436-RCL
LEXINGTON INSURANCE COMPANY,
Defendant.
MEMORANDUM OPINION
This case involves a breach-of-contract dispute between plaintiff South Capitol
Bridgebuilders ("SCB") and defendant Lexington Insurance Company ("Lexington"). SCB moves
to compel the production of several documents that Lexington has withheld during discovery,
citing the attorney-client and work-product privileges. Pl.'s Mot., ECF No. 44. 1 Lexington
opposes, Def. 's Opp'n, ECF No. 47, and SCB filed a reply, Pl. 's Reply, ECF No. 48. Upon an
initial review of the parties' filings, the Court concluded that its determination would be aided by
viewing the documents in camera. ECF No. 49. Lexington delivered the withheld documents to
the undersigned's chambers for review in camera. ECF No. 50. SCB's motion is now ripe for
review.
Upon consideration of the parties' filings, ECF Nos. 44, 47, 48, 50, the documents at
issue, applicable law, and the entire record, the Court will GRANT IN PART and DENY IN
PART SCB's motion to compel.
1 SCB amended its initial motion to compel. See ECF Nos. 43, 44. The amended motion is the operative pleading, so
the Court will DISMISS AS MOOT the initial motion to compel.
1
I. BACKGROUND
SCB is a single-purpose joint venture comprised of Archer Western Construction, LLC and
Granite Construction Company. Compl. 1, ECF No. 1 Its purpose is to build the Fredrick
Douglass Memorial Bridge in the District of Columbia. Id. ff 1, 14, ECF No. 1. Construction
began in the summer of 2017. Id. 1 22. In advance of beginning construction, SCB procured a
builder's risk insurance policy (the "Policy") issued by Lexington. Id. ,r 2.
As part of the construction process, SCB poured concrete into molds for the components
to be used in constructing the bridge. See id. ,r 20. Around September 2019, SCB discovered that
the dried cement contained "honeycombing" and "voiding"-essentially, unwanted pockets of air.
Id. ,r,r 26-29. Honeycombing "results in weakness in the concrete and caused the structures to be
insufficient to meet the load requirements ... of ... the Bridge." Id. ,r 27. Because the structural
integrity of the concrete components had been undermined by honeycombing and voiding, the
components required extensive repairs. Id. ,r 31-32.
On October 24, 2019, SCB filed a claim with Lexington for the repair costs. See Deel. of
John A. Catania ("Catania Deel."), ECF No. 47-1. The claim was assigned to John A. Catania of
AIG Claims. 2 Id. ,r 2. Mr. Catania retained Charles Klehr of Charles Taylor Adjusting to serve
as an outside insurance adjuster and DeSimone Consulting Engineers ("DeSimone") to assist with
investigating the claim. Id. ,r,r 2-3. Mr. Klehr and personnel at DeSimone-including DeSimone
engineers-visited the Bridge's location in the District and conducted a factual investigation of
the damage. See id. ,r,r 3-5. On February 18, 2020, DeSimone issued a report concluding that
2
Lexington Insurance Company is an affiliate of AIG and is a direct, wholly owned subsidiary of AIG Property
Casualty U.S., Inc. See ECF No. 19.
2
SCB's workmanship-specifically, SCB's failure to properly vibrate the molds while concrete
was being poured-was the most likely cause of the defects. Id. 15; ECF No. 1-2 at 12-13.
Mr. Catania stated that after he reviewed the DeSimone report, he believed that SCB's
claim did not appear to be covered by the Policy, that "SCB was likely to dispute a declination of
coverage," and that such a dispute was likely to result in litigation. Id. 16. Accordingly, Mr.
Catania retained Steptoe & Johnson LLP ("Steptoe") "for purposes of having Steptoe provide legal
advice as to whether SCB's claim was within coverage." Id. 17. Steptoe did not conduct any
factual investigation, but reviewed the relevant materials prepared by Charles Taylor and
DeSimone and prepared written advice for Mr. Catania and a draft letter to SCB. Id. 1 8. Mr.
Catania shared these materials with his direct and indirect supervisors, Mark Handy and John
Roberts. Id. 19. Mr. Catania ultimately denied coverage of SCB's claim, which he conveyed in
a letter dated April 9, 2020. Id. 1 10. After receiving a request for reconsideration, Lexington
stood by its initial decision denying coverage. Id.
SCB filed this lawsuit shortly thereafter in the Northern District of Illinois. See Compl.
SCB filed a motion to compel production of several withheld documents, ECF No. 32, which
Judge Mary M. Rowland in the Northern District of Illinois denied upon granting Lexington's
motion to transfer the case to this District, ECF Nos. 39, 40.
After the case was assigned to the undersigned, SCB again moved to compel production of
several documents. Pl.' s Mot. Almost all these documents-emails and attachments that
Lexington claims are protected from disclosure by the attorney-client privilege and work-product
doctrine-were created after Mr. Catania retained Steptoe but before Lexington issued its coverage
decision. Lexington filed an opposition, Def.'s Opp'n, and SCB replied, Pl.'s Reply. Upon an
3
initial review of the parties' filings, the Court ordered defendant to produce the withheld
documents for in camera review. ECF No. 49. SCB's motion to compel is ripe for consideration.
II. LEGAL STANDARD
"When a party objects to a request for production of documents under Federal Rule of Civil
Procedure 34(a)(l), the requesting party may move for an order compelling disclosure of the
withheld material." Felder v. Wash. Metro. Area Transit Auth., 153 F. Supp. 3d 221,224 (D.D.C.
2015) (citing Fed. R. Civ. P. 37(a)). The movant "bears the initial burden of explaining how the
requested information is relevant." Jewish War Veterans ofthe United States ofAm., Inc. v. Gates,
506 F. Supp. 2d 30, 42 (D.D.C. 2007). "The burden then shifts to the non-moving party to explain
why discovery should not be permitted." Long v. Motion Picture Ass 'n ofAm., No. 19-cv-2088
(CRC), 2021 WL 5446278, at *2 (D.D.C. Nov. 22, 2021) (quoting Felder, 153 F. Supp. 3d at224).
"If a party has withheld documents on the grounds that they are privileged, the withholding party
'bears the burden of proving the communications are protected."' Id. (quoting Felder,
153 F. Supp. 3d at 224).
III. DISCUSSION
For the reasons set forth below, the Court will GRANT IN PART and DENY IN PART
SCB 's motion to compel. SCB argues that the withheld materials are relevant because they go to
"Lexington's handling of SCB's claim-i.e., the nature and substance of the investigation,
assessment and analysis that led to Lexington's decision that led to deny the claim." Pl.'s Mot. 3.
SCB has met its burden to explain the relevance of the withheld materials. Thus, the burden shifts
to Lexington to explain why discovery should not be permitted. The Court will address
Lexington's attorney-client privilege and work-product privilege claims in turn. The Court's
holdings and analysis will cite to the relevant documents by their privilege log numbers. See ECF
No. 44-6.
4
A. Attorney Client Privilege
1. The Court Will Apply Illinois Law to Attorney-Client Privilege Issues
The parties agree that the attorney-client privilege disputes in this case implicate matters
of state law. See Pl.'s Mot. 9; Def.'s Opp'n 5-6; see also Fed. R. Evid. 501. Accordingly, the
Court begins its analysis by determining the applicable state's choice-of-law rules. The Supreme
Court has held that where defendants seek transfer under 28 U.S.C. § 1404(a), "the transferee
district court must be obligated to apply the state law that would have been applied if there had
been no change of venue." Van Dusen v. Barrack, 376 U.S. 612, 639 (1964). In this case,
defendants moved for-and were granted-transfer from the Northern District of Illinois pursuant
to § 1404(a). See ECF Nos. 16 & 39. Thus, the Court must apply the choice-of-law rules that
would be applied by the Northern District of Illinois. A federal court applies the choice-of-law
rules applied by the courts of the state in which it sits. See, e.g., Klaxon Co. v. Stentor Elec. Mfg.
Co., 313 U.S. 487, 496 (1941). Because the Northern District of Illinois would have applied
Illinois choice-of-law rules, this Court will also apply Illinois choice-of-law rules.
Illinois courts engage in choice-of-law analysis only "if there is a conflict between Illinois
law and the law of another state such that a difference in law will make a difference in the
outcome." Bd. of Forensic Document Examiners, Inc. v. Am. Bar Ass 'n, 922 F.3d 827, 831
(7th Cir. 2019) (internal quotation marks and citation omitted); accord Townsend v. Sears,
Roebuck & Co., 879 N.E.2d 893, 898 (Ill. 2007). Otherwise, the court applies the law of the forum
state. See Bd. ofForensic Document Examiners, 922 F.3d at 831. The party seeking a choice of
law determination bears the burden of "establish[ing] the existence of an outcome-determinative
conflict." Id. (quoting W. Side Salvage, Inc. v. RSUI Indem. Co., 878 F.3d 219, 223 (7th Cir.
2017)). Defendant acknowledges that "there is no apparent outcome-determinative difference
between Illinois law and District of Columbia law with respect to attorney-client privilege." Def.'s
5
Opp’n 6. Both parties apply Illinois law in their filings. Accordingly, the Court will apply Illinois
law regarding attorney–client privilege. See W. Side Salvage, 878 F.3d at 223 (citing Bridgeview
Health Care Ctr., Ltd. v. State Farm Fire & Cas. Co., 10 N.E.3d 902, 905 (Ill. 2014)) (“If the party
fails to establish the existence of such a conflict, the court applies the law of the forum state.”).
2. Existence of an Attorney–Client Relationship
For the attorney–client privilege to apply, there must be an attorney–client relationship. In
the corporate setting, Illinois courts apply the “control group” test to determine which employees
qualify as the “client,” so communications between an attorney and those employees will qualify
for the privilege’s protection. See, e.g., Favala v. Cumberland Eng’g Co., 17 F.3d 987, 989 (7th
Cir. 1994); Gibson v. Chubb Nat’l Ins. Co., No. 20-CV-1069, 2021 WL 4401434, at *5 (N.D. Ill.
Sept. 27, 2021). At its core, this test focuses on the status of the employee within the corporate
hierarchy and asks whether she is in a position to control or play a substantial role in a decision
for which the corporation might rely upon an attorney’s advice. See Consolidation Coal Co. v.
Bucyrus-Erie Co., 432 N.E.2d 250, 255 (Ill. 1982). Because the underlying relationship between
a corporate client and its employee is one of principal and agent, the control-group analysis may
sometimes accommodate non-employee agents working within the scope of their authority. See
Caremark, Inc. v. Affiliated Comp. Servs., Inc., 192 F.R.D. 263, 267 (N.D. Ill. 2000).
Under Illinois law, two categories of individuals fall within the control group. The first
category includes the decisionmakers and top management with authority to control the relevant
action. See Consolidation Coal Co., 432 N.E.2d at 257. The second category includes
“employee[s] whose advisory role to top management in a particular area is such that a decision
would not normally be made without [their] advice or opinion, and whose opinion in fact forms
the basis of any final decision by those with actual authority.” Id. at 258. But individuals who
6
merely play a role in supplying information to others in these categories do not fall within the
control group. Id. For example, an individual "is not in the control group if his 'role was one of
supplying the factual bases upon which were predicated the opinions and recommendations of
those who advised the decisionmakers."' Favala, 17 F .3d at 990 (quoting Consolidation Coal,
432 N .E.2d at 258). The party asserting the privilege bears the burden of proving that an individual
falls within the control group. Id. (citing Consolidation Coal, 432 N .E.2d at 257).
"It is well-settled that distribution of otherwise privileged materials to individuals outside
the corporation's control group destroys the privilege." Gibson, 2021 WL 4401434, at *5 (cleaned
up); see Midwesco-Paschen Joint Venture for Viking Projects v. Imo Indus., Inc., 638 N.E.2d 322,
329 (Ill. App. Ct. 1994). That is because each communication protected by the attorney-client
privilege must "originate[] in a confidence that it would not be disclosed . . . and remain[]
confidential." Favala, 17 F.3d at 990 (quoting Consolidation Coal, 432 N.E.2d at 257).
Disclosure outside of the control group terminates this required confidentiality.
Several persons identified by Mr. Catania in his declaration are "decisionmakers" that
clearly fall within the control group. These are Mr. Catania himself, Mr. Handy, and Mr. Roberts.
Mr. Catania explains that "[a]s the claims professional assigned to the SCB claim, [he] had
authority to deny coverage on behalf of Lexington with [his] manager's approval." Catania Deel.
,I 10. His direct and indirect supervisors were Messrs. Roberts and Handy. Id. ,I 9. In its reply,
SCB acknowledges as much. Pl.'s Reply 8. All three are members of the control group.
Mr. Klehr and personnel from DeSimone are not members of the control group. Lexington
argues that these individuals ''were the personnel on which Mr. Catania relied for the factual
materials that informed his decision to deny SCB's claim." Def. 's Opp'n 12. That is true. But
merely supplying information or the factual bases upon which control group members relied for
7
their decision does not bring the supplying individual within the control group. See Consolidation
Coal, 432 N.E.2d at 258. The Court agrees with SCB that Lexington has provided no information
that Mr. K.lehr or DeSimone personnel played any role in assessing coverage for SCB's claim by
evaluating the information they gathered. See Pl. 's Reply 9. Accordingly, the Court concludes
that these individuals are not members of the control group and disclosure to them waives any
claim of privilege.
AIG's in-house counsel Ann O'Connor presents a more difficult issue. While SCB is
correct that Ms. O'Connor's title does not, without more, establish that she was part of the control
group, her title as in-house counsel is relevant evidence that she may be the type of individual
''whose advisory role to top management in a particular area is such that a decision would not
normally be made without h[er] advice or opinion." Consolidation Coal Co., 432 N.E.2d at 258;
see Dawson v. N.Y. Life Ins. Co., 901 F. Supp. 1362, 1367 (N.D. Ill. 1995) (concluding that
corporation's general counsel falls within the control group); ECF No. 44-6 at 5 (listing Ms.
O'Connor's position). Mr. Catania's declaration does not mention Ms. O'Connor by name. But
after receiving legal advice with a recommendation about how to proceed, Mr. Catania explains
that he "shared Steptoe' s coverage opinion with . . . [his] direct and indirect supervisors . . . to
ensure that there was consensus support for [his] decision." Catania Deel. ,r 9. Ms. O'Connor is
copied on these specific communications and the responses from Steptoe. ECF No. 44-6 at 4. And
as the privilege log reflects, Mr. Catania "comment[ed] on [Steptoe's] legal advice" and
"request[ed] additional legal analysis." Id. The Court's in camera review confirms that these are
exactly the type of communications on which a corporate actor may rely on the opinions of in-
house counsel. Based on Ms. O'Connor's job title and the circumstances of these
communications-as detailed in Mr. Catania's declaration and confirmed by the Court's in camera
8
review-it is plausible to infer that Ms. O'Connor falls within the control group, that is, as
someone ''upon whose opinions and advice the decision-makers rely." Dawson,
901 F. Supp. At 1367 (citing Consolidation Coal, 432 N.E.2d at 257-58).
The remaining issues are whether the lack of detail in Mr. Catania's declaration about Ms.
O'Connor's specific role in the SCB coverage determination and the absence of any
communications from Ms. O'Connor herself are fatal to Lexington's privilege claim. See Pl.'s
Reply 8. They are not. There appears to be some divergence in the caselaw on whether a party
asserting privilege must show that the recipient actually participated in the decision-making
process. Compare Mlynarsld v. Rush Presbyterian-St. Luke's Med. Ctr., 572 N.E.2d 1025, 1028-
29 (Ill. App. 1991) ("The extent to which Goldsberry participated in the decision-making process,
the nature of her opinions, ... and the weight given her opinions should themselves be subject to
inquiry."), with Claxton v. Thackston, 559 N.E.2d 82, 86 (Ill. App. 1990) (framing inquiry as
whether individual's "opinion would in fact form the basis for any decision by others with authority
in the company" (emphasis added)). But in the absence of additional binding authority by the
Illinois Supreme Court, the Court is not persuaded that the narrower reading of Consolidation Coal
is the correct one. As another court has explained:
The [Illinois Supreme] Court was not advocating an ex post analysis,
under which the application of the privilege is determined by
whether "top management" actually relied in the particular situation
on the advice of those whose function it is to give it. Rather, the
proper inquiry is whether the views ofa particular advisor or group
of advisors are usually factored into management's decisions. The
Court stressed that this approach is in accord with modem corporate
realities and recognizes that decision-making within a corporation is
a process rather than a final act.
Goswami v. DePaul Univ., 8 F. Supp. 3d 1004, 1011 (N.D. Ill. 2014) (emphasis added). Indeed,
the Illinois Supreme Court focused its inquiry on the "status" of the particular employee to
9
determine whether the communication is protected from disclosure. See Consolidation Coal,
432 N.E.2d at 258. Here, the Court concludes, based on Ms. 0 'Connor's title and the
circumstances of the communications at issue, that Ms. 0' Connor is one whose opinions would
"usually factor" into top-management's decisions. Ms. O'Connor is a member of the control
group.
Mr. Catania' s declaration is silent about Eric Zimmerman's role in the decision-making
process. All that appears in the privilege log is Mr. Zimmerman's title--"Builders Risk &
Construction Property Head (US)." ECF No. 44-4 at 5. But unlike Ms. O'Connor's title as in-
house counsel, Mr. Zimmerman's title tells the Court nothing about the role he played in the
decision-making process. Nor did the Court find any evidence during its review in camera from
which it may draw an inference that Mr. Zimmerman was one of the decision-makers or an
individual who directly advises top management. The absence of any information about Mr.
Zimmerman's role in the decision-making process is fatal to Lexington's claim of privilege.
Disclosure to Mr. Zimmerman thus breaks confidentiality and such communications must be
produced in discovery.
In summary, members of the control group include Mssrs. Catania, Handy, Roberts, and
Ms. O'Connor. Mssrs. Klehr and Zimmerman, as well as DeSimone personnel, are not members
of the control group. Communications between control group members and Steptoe attorneys may
be protected by the attorney-client privilege, provided the remaining attorney-client privilege
requirements are satisfied. Accordingly, privilege log item numbers 1, 6, 7, 8, 10, and 20 are not
protected by the attorney-client privilege because they involve disclosures to persons outside of
the control group.
3. Existence ofPrivileged Information
Having determined which individuals constitute the "client" for purposes of the attorney-
client privilege, the Court must next determine what information is protected by the privilege. In
Illinois, ''where legal advice of any kind is sought from a professional legal advisor in his capacity
as such, the communications relating to that purpose, made in confidence by the client, are
protected from disclosure by himself or the legal adviser, [unless] the protection [is] waived."
Fischel & Kahn, Ltd. v. van Straaten Gallery, Inc., 727 N.E.2d 240, 243 (Ill. 2000) (citing In re
Himmel, 533 N.E.2d 790 (Ill. 1988)). "Attorney-client privilege extends to both communication
from client to attorney, as well as from attorney to client." Equity Residential v. Kendall Risk
Mgmt., Inc., 246 F.R.D. 557, 563 (N.D. Ill. 2007) (citing Midwesco-Paschen Joint Venture for
Viking Projects, 638 N.E.2d at 327). Nevertheless, Illinois also maintains a "strong policy of
encouraging disclosure," so the privilege is construed "within its narrowest possible limits." Ill.
Emcasco Ins. Co. v. Nationwide Mut. Ins. Co., 913 N.E.2d 1102, 1105 (Ill. App. 2009) (quoting
Waste Mgmt., Inc. v. Int'/ Surplus Lines Ins. Co., 579 N.E.2d 322, 327 (Ill. 1991))). The Court
finds that the remaining documents at issue-those that do not involve a waiver by disclosure
outside of the control group-are protected by the attorney-client privilege. Similarly, almost all
the entries in the redaction log are protected by the privilege.
In Illinois, the privilege applies only to "legal advice" or communications related to that
purpose. Fischel & Kahn, 727 N.E.2d at 243. Generally speaking, "legal advice, as contrasted
with business advice, 'involves the interpretation and application oflegal principles to guide future
conduct or to assess past conduct."' BankDirect Cap. Fin., LLC v. Cap. Premium Fin., Inc.,
326 F.R.D. 176, 181 (N.D. Ill. 2018) (quoting In re County of Erie, 473 F.3d 413, 419
(2d Cir. 2007)). SCB argues that Steptoe did not "render[] legal advice" to defendant, but instead
11
"engaged in the business function of investigating and analyzing SCB's claim for the purpose of
making a coverage determination." Pl.'s Mot. 8-9. In response, Lexington argues that Steptoe's
role was "to provide legal advice to Lexington regarding whether the facts, as developed in an
investigation in which Steptoe had no role, gave rise to a covered claim." Def.'s Opp'n 9-10.
Several federal courts have applied Illinois attorney-client privilege law in the insurance
context. The "general rule is that communications between an insurer and its outside coverage
counsel" may also be protected by attorney-client privilege provided that the other requirements
applied by Illinois courts are satisfied. Slaven v. Great Am. Ins. Co., 83 F. Supp. 3d 789, 794 (N.D.
Ill. 2015) (citing Ill. Emcasco Ins. Co., 913 N .E.2d at 1106). This means that the attorney must be
acting in his capacity as a lawyer; "to the extent that an attorney acts as a claims adjuster, claims
process supervisor, or claims investigation monitor, and not as a legal advisor, the attorney/client
privilege does not apply." Id. (citation omitted); Chicago Meat Processors, Inc. v. Mid-Century
Ins. Co., No. 95 C 4277, 1996 WL 172148, at *3 (N.D. Ill. Apr. 10, 1996).
SCB's submissions do not illuminate Steptoe's role. Lexington's privilege log, which
repeatedly describes the need for "legal advice regarding coverage issues presented by SCB' s
claim," see ECF No. 44-6 at 1-4, is largely conclusory. John Catania's declaration is more helpful.
Mr. Catania describes how, after factual investigation of plaintiffs claim was complete, "Steptoe
provided written legal advice to [him] regarding whether the SCB claim was within the coverage
of the Policy, as well as a draft letter to SCB." Catania Deel. ,r 8. These additional details support
Lexington's argument that Steptoe was not involved in the factual investigation of the claim or the
adjusting process. And interpreting contracts-like the Policy-is a quintessential instance of
legal work.
12
But any lingering ambiguity stems from a line-drawing issue: is applying the Policy's
provisions to SCB's claim the job of a lawyer, or claims adjuster? To the extent that this question
might pose challenges in the abstract, the Court's in camera review confirms that Steptoe served
as a legal advisor with no authority to make a final decision in connection with SCB's claim.
Indeed, many of the emails and documents are like those in Slaven, so the Court is instructed by
the analysis there. The clearest examples of Steptoe's role as a legal advisor are its memoranda.
(Privilege Log Nos. 15, 17, 19, 20.) Steptoe conducted no factual investigation of its own.
Instead, Steptoe relied on the materials created during DeSimone's investigation or other
documents provided to plaintiff in discovery (or to which plaintiff already has access, like the
Policy itself). Steptoe's memoranda contain "purely legal assessment[s]" ofSCB's claim, Slaven,
83 F. Supp. 3d at 802, and discuss governing law, analogize to caselaw, and interpret the Policy's
provisions. Finally, the memoranda provide recommendations to defendant. Crucially, they do
not purport to adjust SCB's claim, but instead provide Steptoe's "opinion[s]" about the Policy's
terms. Id. Such memoranda are prototypical examples of a lawyer's work for a client.
Drafts of the letter ultimately sent from Mr. Catania to SCB also implicate Steptoe's role
as a legal advisor. (Privilege Log Nos. 15, 17, 19, 20.) These drafts-sent before Mr. Catania had
reached a final decision to convey the denial-accompanied the memoranda and thus were part
and parcel of Steptoe' s legal advice. Such letters "were prepared by the lawyers for their client in
the pursuit of their providing legal services and are thus protected from disclosure." Slaven,
83 F. Supp. 3d at 802; cf BankDirect, 326 F.R.D. at 183-84 (analyzing under federal privilege).
The factual investigation materials generated by Charles Taylor and DeSimone-which
are attached to several email communications sent to Steptoe-are not protected by the attorney-
client privilege because they were generated in the ordinary course of investigating SCB' s claim.
13
See Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 152 F.R.D. 132, 138 (N.D. Ill. 1993); Chicago
Meat Processors, 1996 WL 172148, at *3 (“[T]he factual results of such an investigation are
discoverable in cases challenging the denial of the claim, to the same extent as if such factual
investigation were conducted by its own adjusters or claims department.”). But Lexington does
not dispute this and has represented that these materials have already been disclosed during the
discovery process. Lexington has only withheld them in conjunction with the communications
sent to Steptoe.
So the Court turns next to the withheld emails. The Court’s in camera review confirms
that the emails sharing or discussing the memoranda and draft letters fall within the ambit of the
privilege because they either convey legal advice or are related to this purpose. And while the
attachments themselves are not privileged, the emails to Steptoe conveying factual information,
like the DeSimone reports, also satisfy this particular requirement. This is because “[a]
communication disclosing non-privileged information to an attorney might be privileged on the
grounds that the fact of disclosure has its own, independent significance. The goal is to protect not
the underlying information, but the significance implicit in the fact that the client chose to
communicate that information to his attorney.” Jentz v. ConAgra Foods, No. 10-CV-0474-MJR-
PMF, 2011 WL 5325669, at *4 (S.D. Ill. Nov. 3, 2011). These communications were integral to
the Steptoe’s role as an attorney-advisor and thus are protected by the privilege.
Finally, the Court turns to Lexington’s redaction log.3 It is true that Lexington’s
explanations for its redactions are barebones, stating only that these notes “reflect[] legal advice
3
In its opposition, Lexington expresses its understanding that SCB is not seeking the unredaction of Lexington’s
reserves (liabilities) information and argues that, in any event, such information is protected from discovery and not
relevant to the dispute. Def.’s Opp’n 15. Neither SCB’s motion nor its reply mention this reserves information or
argue that the information is relevant as required to compel disclosure. See Felder, 153 F. Supp. 3d at 224 (citing Fed.
R. Civ. P. 37(a)). This argument is forfeited.
14
of outside counsel detailed in [Lexington’s] privilege log.” ECF No. 44-6 at 5. And as SCB
argues, Lexington makes no effort to match the entries in its redaction log to the communications
or withheld documents listed in its privilege log. Pl.’s Mot. 7. Additionally, several redacted
entries are categorized only as “General,” rather than “Litigation.” See ECF No. 44-2. But despite
Lexington’s shortcomings here, the Court’s in camera review confirms that almost all these entries
reflect quintessential attorney–client communications. For example, and without divulging
details, several entries reflect discussions between Mr. Catania and Steptoe regarding actions taken
during in this litigation. Other entries have no corresponding document in the privilege log—or
apparently correspond to several communications, both privileged and unprivileged.
Nevertheless, these entries reflect the information that was exchanged between Mr. Catania and
Steptoe as part of the representation. Because these communications implicate legal advice or are
related to that purpose, they are protected by the privilege. Fischel & Kahn, 727 N.E.2d at 243.
And an entry by Ms. Wiltz—an AIG claims assistant—reflects billing information between AIG
and Steptoe. Even if Ms. Wiltz falls outside of the control group for purposes of this specific
communication, this information cannot lead to the discovery of relevant information for SCB’s
claims or defenses.
The only communication that does not appear to be “legal advice” or strictly related to this
purpose under Illinois law is the redaction for February 26, 2020. ECF No. 44-2 at 5. This
redaction instead reflects a communication between Mr. Catania and Mr. Roberts authorizing Mr.
Catania to engage Steptoe. While this communication does reflect the scope of Steptoe’s role, the
Court is not convinced that Lexington has satisfied its burden as to this communication in light of
the Illinois Supreme Court’s instruction that the privilege should be construed within its narrowest
possible limits. Waste Mgmt., 579 N.E.2d at 327.
15
The Court holds that the remaining documents-those that do not involve a waiver due to
disclosure outside of the control group-are properly withheld under the attorney-client privilege.
The Court also holds that Lexington's redactions may be properly withheld under the privilege,
with the exception of the entry on February 26, 2020.
B. Work-Product Doctrine
Lexington also claims that most of the withheld documents at issue here are shielded by
the work-product doctrine. The work-product doctrine is a principle of federal law. See, e.g.,
Hickman v. Taylor, 329 U.S. 495 (1947); FTC v. Boehringer Ingelheim Phann., Inc.,
778 F.3d 142, 148 (D.C. Cir. 2015); Fed. R. Civ. P. 26(b). Accordingly, the Van Dusen rule does
not apply and the Court's determination is governed by federal law as developed in this Circuit.
See, e.g., In re Korean Air Lines Disaster of Sept. 1, 1983, 829 F.2d 1171, 1175-76 (D.C. Cir.
1987); 15 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure§ 3846 (4th
ed.).
The work-product doctrine protects parties from divulging information used to prepare for
litigation. As the Federal Rules of Civil Procedure state:
Ordinarily, a party may not discover documents and tangible things
that are prepared in anticipation of litigation or for trial by or for
another party or its representative (including the other party's
attorney, consultant, surety, indemnitor, insurer, or agent).
Fed. R. Civ. P. 26(b)(3}(A). Rule 26(b)(3) allows a court to order disclosure when the requesting
party can show a "substantial need" for the material and an inability to procure equivalent
information ''without undue hardship." Fed. R. Civ. P. 26(b)(3)(A)(ii). But a court ordering
disclosure under this provision must nevertheless "protect against disclosure of the mental
,·impressions, conclusions, opinions, or legal theories of a party's attorney or other representative
16
concerning the litigation." United States v. Deloitte LLP, 610 F.3d 129, 135 (D.C. Cir. 2010)
(quoting Fed. R. Civ. P. 26(b)(3)(B)).
Because the Court has already held that several documents may be properly withheld under
the attorney-client privilege, the Court will focus its analysis on the remaining documents that are
not protected by the attorney-client privilege. Here, SCB does not dispute that many of the
withheld documents contain the mental impressions, conclusions, opinions, and legal theories of
Steptoe attorneys. Instead, SCB disputes whether the withheld documents were prepared in
anticipation of litigation. Pl.'s Mot. 13-14.
To determine whether a document was prepared in anticipation of litigation, the D.C.
Circuit, like most circuits, asks whether a particular document was created "because of' the
anticipated litigation. See Deloitte, 610 F.3d. at 136. First, the attorney who created the document
must have "had a subjective belief that litigation was a real possibility," and that belief must have
been "objectively reasonable." Nat 'l Ass 'n of Crim. Def Laws. v. Dep 't of Just. Exec. Off for
United States Att'ys, 844 F.3d 246,251 (D.C. Cir. 2016) (quoting In re Sealed Case, 146 F.3d 881,
884 (D.C. Cir. 1998)). Next, the Court must ask ''whether, in light of the nature of the document
and the factual situation in the particular case, the document can fairly be said to have been
prepared or obtained because of the prospect of litigation." Deloitte, 610 F.3d at 137 (quoting In
re Sealed Case, 146 F.3d at 884). Notably, "material generated in anticipation of litigation may
also be used for ordinary business purposes without losing its protected status." Id. at 138. But if
a document would have been created "in substantially similar form" regardless of the litigation,
work product protection is not available. Boehringer lngelheim Pharms., 778 F .3d at 149 (quoting
Deloitte, 610 F.3d at 138). The D.C. Circuit does not require a showing that the "primary
motivating purpose" behind the document was to aid in litigation. Deloitte, 610 F.3d at 138.
17
Mr. Catania's subjective belief that litigation could result from the denial of coverage is
undisputed on the present record. His declaration states that upon receiving DeSimone' s report,
he concluded that SCB 's claim did not appear to be covered and that SCB would likely dispute the
declination in coverage. Catania Deel. ,I 6. He believed that "the dispute would likely result in
litigation." Id. 4
Whether that belief was objectively reasonable is more a difficult question-but more
importantly, one that the Court need not answer to resolve Lexington's privilege claims.
Lexington relies solely on the monetary value of SCB's formal claim as evidence that a coverage
dispute would likely result in litigation. See Def.'s Opp'n 14. The Court agrees that the value of
SCB's claim is relevant evidence that SCB might file a lawsuit if its claim was denied. But even
expensive disputes may be resolved outside of the federal courts. Lexington's evidence of likely
litigation is a far cry from other cases with ''the hallmarks of a pre-litigation dispute," such as
evidence of "an adverse and antagonistic relationship" between the parties. Feld v. Fireman 's
Fund Ins. Co., 991 F. Supp. 2d 242,249 (D.D.C. 2013). 5
Ultimately, these problems focus the Court's analysis on the dispositive issue for
Lexington's work-product privilege claims. Here, Lexington has failed to meet its burden to show
that the remaining withheld documents "can fairly be said to have been prepared or obtained
because of the prospect of litigation." Deloitte, 610 F.3d at 137. Indeed, despite Mr. Catania's
statement that he believed SCB' s claim might not be covered, it is undisputed that Lexington was
continuing to evaluate that position, which is why it engaged Steptoe. Thus, as far as the Court
4
Notably, Lexington provides no information about the Steptoe attorneys' beliefs. For the reasons explained below,
this does not affect the outcome here.
5
It is possible that Mr. Catania's tentative decision to deny coverage, in light of Steptoe's early advice, increased the
probability that the case would ultimately result in litigation. But as noted, the Court need not resolve whether
Lexington's beliefs were objectively reasonable to adjudicate the present motion.
18
can tell from the privilege log and in camera review, the coverage memoranda would have been
created "in substantially similar form" regardless of the prospect of litigation, because Lexington
nevertheless needed to determine whether the Policy covered SCB 's claim. Boehringer Ingelheim
Pharms., 778 F.3d at 149 (quoting Deloitte, 610 F.3d at 138). 6 The emails transmitting factual
. . .· •.
~.
.... ·, ..
•, '•
information also likely would have existed in substantially similar form;~regatdless··of the prospect
of litigation, because they served the same goal of determining coverage. The lack of additional
facts about the likelihood of litigation reinforces the Court's conclusion. If Lexington could
identify additional facts suggesting an objectively reasonable likelihood of litigation, perhaps the
Court could have tied the contents of the withheld materials to those facts. Lexington did not do
so. In fact, Lexington failed to address this requirement at all in its briefing, and thus forfeited any
potential arguments that the withheld documents were "prepared or obtained because of the
prospect of litigation." Deloitte, 610 F.3d at 137.
Accordingly, the Court finds that the remaining documents not protected by the attorney-
client privilege-Privilege Log Nos. 1, 6, 7, 8, 10, and 20, and the Redaction Log entry for
February 26, 2020-are also not protected by the work-product privilege.
IV. CONCLUSION
Based on the foregoing, the Court will GRANT IN PART and DENY IN PART the
motion to compel by separate order. Privilege Log Nos. 1, 6, 7, 8, 10, and 20, and the Redaction
Log entry for February 26, 2020, must be disclosed to SCB because Lexington has failed to meet
its burden to withhold the documents under the attorney-client or work-product privileges. The
6 While Lexington does not make the argument, the governing law sections of the memoranda ask what law a court
would apply if the coverage denial ultimately resulted in a lawsuit. The Court is not convinced that this section
indicates the memoranda were prepared in anticipation of litigation. A memorandum interpreting the Policy's
provisions would need to engage in this same analysis in order to interpret the Policy.
19
. ' .
remaining privilege log items and redactions may properly be withheld under the attorney- client
privilege.
~ c. ~
Royce C. Lamberth
United States District Judge
20