CAROLINE PALADINO VS. AULETTO ENTERPRISES, INC., ETC. (L-2574-17, CAMDEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0232-18T1
CAROLINE PALADINO and
ROBERT PALADINO,
APPROVED FOR PUBLICATION
Plaintiffs-Respondents,
June 6, 2019
v. APPELLATE DIVISION
AULETTO ENTERPRISES, INC.
t/a AULETTO CATERERS,
Defendant-Appellant.
___________________________
Submitted January 15, 2019 – Decided June 6, 2019
Before Judges Rothstadt, Gilson, and Natali.
On appeal from Superior Court of New Jersey, Law
Division, Camden County, Docket No. L-2574-17.
Landman Corsi Ballaine & Ford PC, attorneys for
appellant (Gerald T. Ford, JonCarlo E. Villegas, and
Kristina M. Rogan, on the briefs).
Law Office of Andrew A. Ballerini, attorneys for
respondent (Richard J. Talbot, on the brief).
The opinion of the court was delivered by
GILSON, J.A.D.
In this appeal we clarify the standard for evaluating a claim of the work-
product privilege. Consistent with the language of Rule 4:10-2(c), we hold that
there is no per se or presumptive rule that materials prepared or collected before
litigation are not prepared in anticipation of litigation. Instead, as set forth in
Rule 4:10-2(c), there is a multi-part, fact-specific test. The first inquiry is
whether the materials were prepared or collected in anticipation of litigation or
trial by another party or that party's representative. If so, to obtain the materials,
a party must satisfy a two-part standard. The party seeking the materials must
(1) show a substantial need for the discovery, and (2) demonstrate that he or she
is unable, without undue hardship, to obtain the substantial equivalent of the
materials.
On leave granted, defendant appeals from an April 13, 2018 order that
compelled it to produce photographs and recorded witness statements taken and
obtained by an investigator for defendant's insurance carrier before a complaint
had been filed and before defense counsel was retained. The trial court ordered
the production of those materials, essentially reasoning that because there was
no pending litigation, the insurance carrier was not acting in anticipation of
litigation. We reject that analysis as inconsistent with Rule 4:10-2(c).
Accordingly, we reverse the order compelling discovery and remand for an
analysis under the standard set forth in this opinion.
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I.
We discern the facts and procedural history from the record developed on
the motion to compel discovery. On October 9, 2015, plaintiff Caroline Paladino
was a guest at a wedding reception at defendant's catering facility. As she was
walking down a staircase, she fell and injured her left knee, lower back, and
right ankle.
Plaintiff immediately reported her accident to defendant, and that same
day, defendant prepared an accident incident report. Defendant had general
liability insurance, and shortly after the accident, gave notice to its insurer. The
insurer then retained an investigator.
Two weeks after the accident, on October 22, 2015, a senior claims
examiner for defendant's insurer spoke with plaintiff about the accident. That
same day, the claims examiner sent plaintiff a letter advising her that an
investigator was looking into the accident. The claims examiner then requested
the investigator to photograph the accident scene and obtain statements from
plaintiff and representatives of defendant.
The claims examiner later certified that her purpose in retaining the
investigator was to "prepare a defense for [defendant] in the event that [plaintiff]
filed a lawsuit." The claims examiner also certified that the insurer was not
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disputing coverage and did not hire the investigator to look into whether the
insurer owed coverage to defendant.
The investigator arranged to meet with and take a recorded statement from
plaintiff on October 26, 2015. On the day of the appointment, the investigator
was contacted by an attorney who informed him that he had been retained by
plaintiff and the appointment with plaintiff was cancelled. The next day,
plaintiff's counsel sent a letter informing the insurance carrier that he was
representing plaintiff in connection with the fall.
On October 26, 2015, the investigator inspected defendant's catering
facility, took photographs of the staircase, and prepared a diagram of the
accident scene. The investigator also obtained recorded oral statements from
two of defendant's employees. Approximately one week later, on November 1,
2015, the investigator obtained a recorded oral statement from a third employee
of defendant.
On December 3, 2015, plaintiff's counsel and a photographer visited
defendant's facility. They measured, inspected, and photographed the staircase
where plaintiff had fallen. The following month, in January 2016, defendant's
insurance carrier provided plaintiff's counsel with a copy of video surveillance
that had captured plaintiff falling on the staircase. Plaintiff's counsel was also
provided with a copy of the incident report prepared on the day of the accident.
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On June 26, 2017, plaintiff and her husband filed suit against defendant.
Plaintiff alleged that defendant was liable for the injuries she suffered because
defendant had been negligent. Plaintiff also alleged that defendant had breached
its express and implied warranties and had not properly maintained its property.
Her husband alleged loss of consortium.
In August 2017, defendant filed an answer. Thereafter, in response to
interrogatories, defendant disclosed that the investigator had taken photographs
of the staircase where plaintiff fell, had prepared a diagram, and had obtained
recorded statements from three of defendant's employees. Defendant
represented that none of those employees witnessed plaintiff's fall. Defendant
did not produce the photographs, diagram, or statements, asserting that they
were protected by the work-product privilege.
In March 2018, plaintiff filed a motion to compel the production of the
photographs and the recorded statements by defendant's three employees.
Plaintiff had initially also sought the diagram prepared by the investigator, but
later withdrew that request.
Without hearing oral argument, the trial court granted plaintiff's motion
in an order entered on April 13, 2018. That same day, the court placed its
reasons for that order on the record. In its oral decision, the trial court relied on
Pfender v. Torres, 336 N.J. Super. 379 (App. Div. 2001), and reasoned that
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because the photographs and statements were obtained before litigation, the
insurer "may have" had interests apart from protecting its insured's rights. Thus,
the trial court ordered the photographs and statements produced.
Defendant sought leave to appeal the order compelling the production.
We denied leave, but the Supreme Court granted leave to appeal and re manded
the appeal to us "to consider [it] on the merits." Paladino v. Auletto Enters.,
Inc., 234 N.J. 576 (2018).
II.
On this appeal, defendant makes two arguments. First, it contends that
we should reject the rationale of Pfender and, instead, adopt the reasoning set
forth in Medford v. Duggan, 323 N.J. Super. 127 (App. Div. 1999). Second,
defendant argues that, applying the standard set forth in Medford, we should
reverse the trial court because plaintiff did not satisfy the requirements of Rule
4:10-2(c).
A.
We begin with an overview of the work-product doctrine and Rule 4:10-
2(c). Initially, the doctrine and rule should be understood as exceptions to New
Jersey's general policy of encouraging full and open discovery of all relevant
information. In most situations, parties to litigation have the right to discovery
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of all relevant information concerning the action. See Rule 4:10-2(a); Capital
Health Sys., Inc. v. Horizon Healthcare Servs., Inc., 230 N.J. 73, 80 (2017).
There are, however, exceptions to that general rule. Under one exception,
a party may withhold "privileged" information. In that regard, Rule 4:10-2(a)
states in relevant part:
Parties may obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter
involved in the pending action, whether it relates to the
claim or defense of the party seeking discovery or to
the claim or defense of any other party, including the
existence, description, nature, custody, condition and
location of any books, documents, electronically stored
information, or other tangible things and the identity
and location of persons having knowledge of any
discoverable matter.
One of the recognized privileges is the work-product doctrine. See
O'Boyle v. Borough of Longport, 218 N.J. 168, 188 (2014). That doctrine was
first recognized by the United States Supreme Court in Hickman v. Taylor, 329
U.S. 495 (1947). "In Hickman, the owners and underwriters of a tug boat hired
a law firm to defend against potential litigation after the boat sank and five
crewmembers drowned." O'Boyle, 218 N.J. at 188 (citing Hickman, 329 U.S.
at 498). One of the lawyers who had been hired "interviewed survivors and
prepared a report based on his notes of the interviews." Ibid. (citing Hickman,
329 U.S. at 498-99). "The Court protected those documents from discovery,
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concluding that such materials 'fall[] outside the arena of discovery and
contravene[] the public policy underlying the orderly prosecution and defense
of legal claims.'" Ibid. (alterations in original) (quoting Hickman, 329 U.S. at
510).
The Court reasoned that lawyers need to "work with a certain degree of
privacy, free from unnecessary intrusion by opposing parties and their counsel."
Id. at 189 (quoting Hickman, 329 U.S. at 510). The Court also reasoned that
without adequate protection of an attorney's work product, a client's best
interests would be undermined. Ibid. (citing Hickman, 329 U.S. at 511).
Consequently, the Court held that "'the general policy against invading the
privacy of an attorney's course of preparation' is so important 'that a burden rests
on the one who would invade that privacy to establish adequate reasons to justify
production.'" Ibid. (quoting Hickman, 329 U.S. at 512).
"New Jersey first codified the work-product doctrine in 1948." Ibid. The
rule was broader than the rule recognized by the Court in Hickman. Ibid. (first
citing Crisafulli v. Pub. Serv. Coordinated Transp., 7 N.J. Super. 521, 523 (Cty.
Ct. 1950); then citing Note, Discovery: New Jersey Work Product Doctrine, 1
Rutgers L.J. 346, 348-49 (1969)).
Currently, the work-product doctrine is memorialized in Rule 4:10-2(c).
That rule provides:
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[A] party may obtain discovery of documents,
electronically stored information, and tangible things
otherwise discoverable under R[ule] 4:10-2(a) and
prepared in anticipation of litigation or for trial by or
for another party or by or for that other party's
representative (including an 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 case and 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.
B.
Defendant argues that a conflict exists in our case law concerning the
scope of the work-product doctrine as discussed in Pfender compared to
Medford. Specifically, defendant contends that Pfender essentially establishes
a bright-line rule that material prepared by an insurer or an agent of the insurer
before litigation is not protected by the work-product doctrine. In contrast,
according to defendant, Medford establishes a case-by-case test, under which
material prepared by or for an insurer can be protected under the work-product
doctrine if it was prepared in anticipation of litigation and the parties seeking
the material cannot establish a substantial need for the material.
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We do not agree with defendant's reading of Pfender and Medford.
Instead, we believe that the rationales and holdings of Pfender and Medford can
be reconciled. We, however, agree that the rationale and holding of Pfender
needs to be clarified and properly understood as consistent with a case-by-case
analysis.
In Pfender, the plaintiff "was injured at a gas station when defendant
Joseph A. Torres drove his employer's car over her foot." 336 N.J. Super. at
383. Following the accident, Torres gave two tape-recorded statements to an
insurance investigator who was acting as an agent for the insurer of Torres's
employer. Id. at 384-85. Plaintiff filed a pre-trial motion for discovery of
Torres's statements to his employer's insurer. Id. at 383. The trial court denied
the motion on the grounds that those statements were protected from discovery
by the attorney-client privilege and the work-product doctrine. Ibid.The case proceeded to trial and Torres testified that he entered the gas
station at a speed of approximately five miles per hour and that as he was coming
to a stop "something or someone" who he had not previously observed, "stepped
out and right into [his] right fender." Id. at 383-84. We directed defense counsel
to produce for in camera review the transcripts of the two tape-recorded
statements given by Torres. Id. at 384. That review revealed that Torres's
statements were inconsistent with his trial testimony. Id. at 385.
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On appeal, we reversed. Id. at 394. Initially, we held that the statements
to the insurer's investigator were not protected by the attorney-client privilege
because no attorney was involved in taking the statements. See id. at 388-89.
Moreover, we held that defendant's statements were not privileged because the
insurance adjuster's primary motive was to determine whether to provide a
defense and the statements were not secured because of the potential for
litigation. Id. at 388. Turning to the work-product privilege, we held that
defendant Torres's recorded statements were not privileged because the
statements described details of the accident that were inconsistent with
defendant's trial testimony and plaintiff had no equivalent access to those
inconsistent statements. Id. at 391-92.
In Medford, a dog startled a horse, causing the horse to rear up and throw
off its rider, plaintiff Nancy Medford. 323 N.J. Super. at 130. Nearly two years
later, the plaintiff sued defendant Doreen Duggan, who owned the dog. Ibid.Shortly thereafter, the defendant's insurance carrier obtained statements from an
eyewitness to the accident and the defendant. See ibid. Over a year after those
statements were taken, the plaintiff deposed the defendant and the eyewitness.
See id. at 131.
The plaintiff thereafter filed a pre-trial motion to compel production of
the statements given by the defendant and the eyewitness to the defendant's
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insurance carrier. Id. at 132. The trial court granted the motion, finding the
statements were "the result of a routine investigation and were not prepared in
anticipation of litigation." Ibid. The trial court also found the plaintiff had a
substantial need for the eyewitness's statement because that witness could no
longer recall the accident. Ibid.The defendant appealed that discovery order, and we affirmed in part and
reversed in part. Id. at 132, 139. We concluded that resolution of the issues
required "a case-by-case, fact-sensitive analysis" to determine whether the
statements given to the defendant's insurance carrier were taken in anticipation
of litigation. Id. at 135. On that point, we found the statements at issue were
obtained in anticipation of litigation as they were taken almost immediately after
the defendant was served with the plaintiff's complaint. Ibid.We then considered whether the plaintiff had shown substantial need for
the requested documents and whether she was unable, without undue hardship,
to obtain the substantial equivalent of the statements by other means. Id. at 136-
37. We concluded that because the defendant had been deposed, and had a clear
memory of the events, the plaintiff was not entitled to discovery of the
defendant's statement. Id. at 137. In contrast, we allowed discovery of the
witness's statement because at her deposition she lacked a memory of the events.
Id. at 137-38. Thus, the plaintiff had met her burden of substantial need and an
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inability to obtain the substantial equivalent of the statement given by the
witness. Id. at 138.
As already noted, we do not read Pfender and Medford to establish
inconsistent rules. Instead, both Pfender and Medford should be understood to
require a case-by-case, fact-specific analysis. See Carbis Sales, Inc. v.
Eisenberg, 397 N.J. Super. 64, 81-82 (App. Div. 2007) (treating Medford and
Pfender as applying the same standard in determining whether a document
prepared by an insurance investigator was discoverable). Accordingly, we
clarify that there is no per se or presumptive rule that materials prepared or
collected before litigation are not prepared in anticipation of litigation. Instead,
as set forth in Rule 4:10-2(c), there is a multi-part, fact-specific test. The first
inquiry is whether the materials were prepared or collected in anticipation of
litigation or trial by another party or that party's representative. See R. 4:10-
2(c). The representative can be an "insurer or agent" of the party. Ibid.If the materials were prepared in anticipation of litigation or trial, to obtain
the materials, there is a two-part standard that must then be satisfied. See ibid.The party seeking the materials must (1) show a substantial need for the
discovery; and (2) demonstrate that he or she is unable, without undue hardship,
to obtain the substantial equivalent of the materials. Ibid. See also Carbis Sales,
Inc., 397 N.J. Super. at 82 (first citing Medford, 323 N.J. Super. at 133; then
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citing Pfender, 336 N.J. Super. at 391). Moreover, if such work-product
materials are compelled to be produced, "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." R. 4:10-
2(c).
The scope of the work-product doctrine has other limitations. It has long
been established that the doctrine only protects documents or prepared
materials; accordingly, it does not protect facts. See Hickman, 329 U.S. at 513;
R. 4:10-2(c); O'Boyle, 218 N.J. at 188-89. Moreover, in considering statements,
the doctrine does not protect statements that are prepared in the normal course
of business. See Miller v. J.B. Hunt Transp., Inc., 339 N.J. Super. 144, 148
(App. Div. 2001) (quoting Payton v. N.J. Tpk. Auth., 148 N.J. 524, 554 (1997)).
Finally, we have previously clarified that the protection of a statement will
usually be lost if the person who gave the statement is later called to testify at
trial. See Dinter v. Sears, Roebuck & Co., 252 N.J. Super. 84, 100 (App. Div.
1991). In Dinter, we held that "where a fact witness testifies for an adverse
party, the factual statement of that witness must be produced on demand for use
in cross-examination as a potential tool for impeachment of credibility." Ibid.A-0232-18T1
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C.
Here, we hold that the trial court failed to apply the appropriate fact-
specific analysis required by the work-product doctrine and Rule 4:10-2(c). The
trial court here simply reasoned that Pfender stood for the proposition that
statements given to investigators hired by an insurer before the commencement
of litigation were not protected. The issue called for a more detailed analysis.
In that regard, the court needed an appropriate record to allow it to determine
whether the photographs and statements were prepared in anticipation of
litigation or trial. The court did not need to accept the certification submitted
by the insurance claims examiner, but the court did need to evaluate that
certification. Furthermore, to reject the certification, the court needed an
evidentiary record that would allow it to make such a factual or credibility
finding.
Here, the current record does not allow an analysis of the second part of
the test. The information in the current record is insufficient for us to determine
whether plaintiff showed a substantial need for the discovery and whether she
was unable, without undue hardship, to obtain the substantial equivalent of the
photographs or statements.
With regard to the photographs, the insurance investigator took
photographs of the stairs on October 26, 2015. Plaintiff's counsel and a
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photographer took photographs of the stairs on December 3, 2015. There is also
a video recording, which shows plaintiff's fall. On remand, the court will need
to consider that evidence and make a determination whether there is any showing
that there was a change to the staircase that plaintiff was not able to capture in
the photographs that her counsel took in December 2015.
The trial court will also need to analyze the witness statements. We have
previously held that statements of a party or witness always satisfy the first part
of the standard; that is, there is a substantial need for the discovery of such
statements. Medford, 323 N.J. Super. at 137. Here, plaintiff acknowledges in
her brief that the three witnesses who gave statements to the insured's
investigator have not been deposed. Plaintiff therefore should be given the
opportunity to conduct those depositions. See ibid. (explaining a deposition
"may often constitute the substantial equivalent of [a] prior statement"); Carbis
Sales, Inc., 397 N.J. Super. at 82. If the witnesses can recall the facts given in
their statements to the insurer's investigator, then plaintiff may not be able to
demonstrate that she is unable to obtain the substantial equivalent of the
statements. See Medford, 323 N.J. Super. at 137. If, in contrast, any of the
witnesses cannot recall the circumstances of the accident, then plaintiff may be
able to demonstrate that she is unable to obtain the substantial equivalent of the
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statements. See id. at 137-38. In that situation, the statement or statements
would need to be produced. See ibid.In summary, we reverse the April 13, 2018 order compelling defendant to
produce photographs and recorded witness statements. We remand with the
direction to conduct further proceedings and apply the appropriate case-by-case,
fact-specific analysis to determine whether the photographs and witness
statements are within the ambit of the work-product doctrine.
Reversed and remanded. We do not retain jurisdiction.
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