Attorney-Client Privilege — Advice Isn’t at Issue Merely Because It Is Relevant or May Affect a Client’s State of Mind — Opinion Work Product Enjoys a Nearly Absolute Immunity from Discovery (Good Quotes)

Smith v. Scottsdale Ins. Co., 2015 U.S. App. LEXIS 13290 (4th Cir. June 30, 2015):

Levert Smith and Nelson Radford, as administrators of the Estate of Joseph Jermaine Porter (the "Estate"), appeal the district court's orders affirming the magistrate judge's denial in part of the Estate's motion to compel discovery and granting summary judgment to Scottsdale Insurance Company ("Scottsdale") on the Estate's claim under the West Virginia Human Rights Act, W. Va. Code §§ 5-11-1 to 5-11-20 (2013) ("WVHRA"). The claim arises from a civil rights lawsuit filed by the Estate against Scottsdale's insured, the City of Huntington, West Virginia (the "City"). See Smith v. Lusk, 533 F. App'x 280 (4th Cir. July 18, 2013) (No. 12-2063). We affirm.


The Estate first challenges the district court's order denying [*2]  in part its motion to compel discovery of portions of Scottsdale's claim file. District courts and magistrate judges are afforded substantial discretion in managing discovery. United States ex rel. Becker v. Westinghouse Savannah River Co., 305 F.3d 284, 290 (4th Cir. 2002). We review discovery rulings for an abuse of discretion. Kolon Indus. Inc. v. E.I. DuPont de Nemours & Co., 748 F.3d 160, 172 (4th Cir.), cert. denied, 135 S. Ct. 437, 190 L. Ed. 2d 352 (2014). An abuse of discretion occurs when the district court's decision is "guided by erroneous legal principles" or "rests upon a clearly erroneous factual finding." Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir. 1999). We review de novo the district court's legal conclusion that the attorney-client and work product privileges are applicable. Hawkins v. Stables, 148 F.3d 379, 382 (4th Cir. 1998).

Because this is a diversity action, the elements of the attorney-client privilege are governed by West Virginia law. Fed. R. Evid. 501; Ashcraft v. Conoco, Inc., 218 F.3d 282, 285 n.5 (4th Cir. 2000) ("[I]n a diversity action the availability of an evidentiary privilege is governed by the law of the forum state."). Under West Virginia law, there are three elements necessary to establish this privilege: "(1) both parties must contemplate that the attorney-client relationship does or will exist; (2) the advice must be sought by the client from the attorney in his capacity as a legal advisor; [and] (3) the communication between the attorney and client must be intended to be confidential." State ex rel. Med. Assurance of W. Va., Inc. v. Recht, 213 W. Va. 457, 583 S.E.2d 80, 84 (W. Va. 2003). This privilege also applies to communications between [*3]  an attorney and a client that are shared with the client's insurance company. Id. at 89.

The Estate argues that when the attorney's activities in a discrimination case become an intimate part of the claimed discrimination, the privileged communications are discoverable, citing State ex rel. Westbrook Health Servs., Inc. v. Hill, 209 W. Va. 668, 550 S.E.2d 646 (W. Va. 2001). However, "privileged matters, although relevant, are not discoverable. As a result of this rule, many documents that could very substantially aid a litigant in a lawsuit are neither discoverable nor admissible as evidence." Recht, 583 S.E. 2d at 84. Moreover, the Supreme Court of Appeals of West Virginia in Hill did not conclude that documents related to an attorney's actions in a discrimination case are per se outside the protection of the privilege; instead, the court found that the employer failed to meet the three-part test for application of the privilege. 550 S.E.2d at 650-51.

The Estate further argues, however, that Scottsdale impliedly waived attorney-client privilege because the attorneys' communications are "at issue" in this case. "A party may waive the attorney-client privilege by asserting claims or defenses that put his or her attorney's advice in issue." State ex rel. Brison v. Kaufman, 213 W. Va. 624, 584 S.E.2d 480, 482 (W. Va. 2003) (internal quotation marks omitted). "[A]n attorney's legal advice only becomes an issue where [*4]  a client takes affirmative action to assert a defense and attempts to prove that defense by disclosing or describing an attorney's communication." State ex rel. Marshall Cnty. Comm'n v. Carter, 225 W. Va. 68, 689 S.E.2d 796, 805 (W. Va. 2010) (internal quotation marks omitted). We conclude that Scottsdale did not affirmatively place any attorney-client privileged matters at issue. "[A]dvice is not in issue merely because it is relevant, and does not come in issue merely because it may have some affect on a client's state of mind." State ex rel. U.S. Fid. & Guar. Co. v. Canady, 194 W. Va. 431, 460 S.E.2d 677, 688 n.16 (W. Va. 1995). Further, Scottsdale did not assert any claim or defense based on counsel's advice in the underlying case; instead, it maintained that its actions were based on its own evaluation of the case and the City's refusal to consent to a settlement.

The Estate also sought documents the magistrate judge concluded were protected under the work product doctrine. The work product doctrine "confers a qualified privilege on documents prepared by an attorney in anticipation of litigation." Solis v. Food Employers Labor Relations Ass'n, 644 F.3d 221, 231 (4th Cir. 2011). Work product is "generally protected and can be discovered only in limited circumstances." In re Grand Jury Proceedings, 33 F.3d 342, 348 (4th Cir. 1994). "Fact work product is discoverable only upon a showing of both a substantial need and an inability to secure the substantial equivalent of the materials by alternate means without undue hardship." [*5]  Chaudhry v. Gallerizzo, 174 F.3d 394, 403 (4th Cir. 1999) (internal quotation marks omitted). "[O]pinion work product enjoys a nearly absolute immunity and can be discovered only in very rare and extraordinary circumstances." Id. (internal quotation marks omitted).

The Estate argues that the attorney's opinions are "at issue" here because of the intimacy of the involvement of the attorneys and adjusters in determining the course of the civil rights lawsuit. Here, however, Scottsdale has never contended that it relied upon counsel's opinions in refusing to settle. It has consistently asserted that it made the decision based on its own conclusions and the City's decision, which was not made on the advice of counsel. Thus, because Scottsdale is not "attempt[ing] to use a pure mental impression or legal theory as a sword and as a shield in the trial of a case," In re Martin Marietta Corp., 856 F.2d 619, 626 (4th Cir. 1988), we conclude that the Estate has not demonstrated "extraordinary circumstances" to overcome the "nearly absolute immunity" afforded to opinion work product. See Chaudhry, 174 F.3d at 403.*

*   To the extent that the Estate summarily contends that documents containing Scottsdale's valuation of the case constituted fact work product rather than opinion work product, we conclude that the Estate has waived that argument by failing to submit [*6]  adequate briefing.

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