Debra A. and George SIMON, et al., Appellees, v. G.D. SEARLE & CO., Appellant.
No. 85-5334.
United States Court of Appeals, Eighth Circuit.
April 13, 1987.
Rehearing and Rehearing En Banc Denied July 7, 1987.
816 F.2d 397
It is so ordered.
Submitted March 13, 1986.
Gregory L. Wilmes, Minneapolis, Minn., for appellant.
Roger Brosnahan, Minneapolis, Minn., for appellees.
Before JOHN R. GIBSON and WOLLMAN, Circuit Judges, and HARRIS,* Senior District Judge.
G.D. Searle & Co. appeals the district court‘s order permitting discovery of certain Searle documents. Pursuant to
Searle manufactures an intrauterine contraceptive device known as the “Cu-7.” Approximately forty products liability actions pending against Searle in the United States District Court for the District of Minnesota and seeking damages for injuries alleged to have resulted from use of the Cu-7 were consolidated for discovery and have generated this appeal. The dis-
The district court1 originally ordered Searle to produce “each and every document contained in its files which relates to the Cu-7 IUD.” Although Searle produced approximately 500,000 documents to apрellees and has continued to provide documents, it resisted the discovery of certain documents from its risk management department. Searle‘s risk management department monitors the company‘s products liability litigation and analyzes its litigation reserves, apparently utilizing individual case reserve figures determined by the legal department‘s assessment of litigation expenses. The risk management department also has responsibility for the company‘s insurance coverage. Insofar as Searle‘s products liability insurance has a high deductible amount, the company is in some respects self-insured.
Pursuant to a district court order, the documents at issue were provided to the special master for in camera review. The special master filed with the court his Reports I and II, containing his recommendations concerning the individual documents. He found that the risk management documents were protected by the work product doctrine to the extent that they revealed “specific litigation strategy or mental impressions of attorneys in evaluating cases, or setting a reserve for a specific case,” and by the attorney-client privilege if they included communications between an attorney and client concerning legal advice made and kept in confidence. Report I of Special Master, Simon v. G.D. Searle & Co., No. 4-80-160, at 5-7 (D.Minn. Aug. 22, 1984). Documents that revealed aggregate reserve information not identified with individual cases were found discoverable. Id. at 5-6. The district court adopted the special master‘s reports and granted Searle‘s request for certification pursuant to
posed the questions for appeal, which the district court accepted and certified. The district court also stayed its June 7 order so far as it related to risk management and insurance documents, pending the outcome of this appeal. We granted Searle‘s petition for permission to appeal.
The questions certified for appeal are as follows:
1. To what extent, if any, should Searle‘s “Risk Management” documents, prepared by nonlawyer corporate officials in an attempt to keep track of, control and anticipate costs of product liability litigation for business planning purposes (including budgetary, profitability and insurance analysis), be protected from discovery by the Work Product Doctrine or the Minnesota attorney-client privilege because some portions of the documents reveal aggregate case reserves and aggregate litigation expenses for all pending cases when each individuаl case reserve is determined by Searle‘s lawyers on a confidential basis in anticipation of litigation?
2. To what extent, if any, does
Fed.R.Civ.P. 26(b)(2) limited [sic] the discoverability of Searle‘s “Risk Management” documents that relate to insurance considerations?
I
STANDARD OF REVIEW
A preliminary question confronting us is the standard of review applicable to an appeal of discovery orders under
II
WORK PRODUCT DOCTRINE
Searle‘s first argument is that its risk management documents are protected from discovery by the work product doctrine. That doctrine was established in Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947), and is now expressed in
The special master found that the risk management documents at issue were generated in an attempt to keep track of, control, and anticipate the costs of Searle‘s products liability litigation; the documents have been so identified in the district court‘s first certified question. Report I of Special Master, supra, at 2. Many of the documents include products liability litigation reserve information that is based on reserve estimates obtained from Searle‘s legal department. When Searle receives notice of a claim or suit, a Searle attorney sets a case reserve for the matter. Case reserves embody the attorney‘s estimate of
The work product doctrine will not protect these documents from discovery unless they were prepared in anticipation of litigation.
[T]he test should be 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. But the converse of this is that even though litigation is already in prospect, there is no work product immunity for documents prepared in the regular course of business rather than for purposes of litigation.
8 C. Wright & A. Miller, Federal Practice and Procedure § 2024, at 198-99 (1970) (footnotes omitted); see Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 604 (8th Cir.1977), on rehearing, 572 F.2d 606 (8th Cir.1978) (en banc); The Work Product Doctrine, 68 Cornell L.Rev. 760, 844-48 (1983). The advisory committee‘s notes to
Although the risk management documents were not themselves prepared in anticipation of litigation, they may be protected from discovery to the extent that they disclose the individual case reserves calculated by Searle‘s attorneys. The individual case reserve figures reveal the mental impressions, thoughts, and conclusions of an attorney in evaluating a legal claim. By their very nature they are prepared in anticipation of litigation and, consequently, they are protected from discovery as opinion work product. Hickman, 329 U.S. at 512, 67 S.Ct. at 394; In re Murphy, 560 F.2d 326, 336 (8th Cir.1977). We do not
III
ATTORNEY-CLIENT PRIVILEGE
Searle also argues that its risk management documents are protected by the attorney-client privilege. Rule 501 of the Federal Rules of Evidence provides that evidentiary privileges are to be determined in accordance with state law in diversity actions. Consequently, the Minnesota attorney-client privilege, codified at
The risk management documents reflect attorney-client communications running in two directions. First, the aggregate reserve information contained in the documents incorporates the individual case reserve figures communicated by the legal department to the risk management department—an attorney-to-client communication. Second, the record indicates that some of the risk management documents themselves were delivered to Searle attorneys—a client-to-attorney communication.
Assuming arguendo that the attorney-client privilege attaches to the individual case reserve figures communicated
Although the aggregate reserve information does not confer attorney-client privilege protection to the risk management documents, those documents that were given to Searle attorneys may still be privileged client-to-attorney communications. The special master devoted only a very brief discussion to this matter. Relying on Brown v. St. Paul City Ry., 62 N.W.2d 688 (Minn.1954), the special master stated: “A business document is not made privileged by providing a copy to counsel. *** Thus, those documents from one corporate officer to another with a copy sent to an attorney do not qualify as attorney client communications.” Report I of Special Mastеr, supra, at 7 (citation omitted). We perceive no error in this statement of the law, which appears to have been carefully ap-
plied by the special master to the point of redacting sections of privileged material from within individual documents.
Minnesota adheres to Professor Wigmore‘s classic statement of the attorney-client privilege, which requires that an attorney-client communication relate to the purpose of obtaining legal advice before it is protected.7 Brown v. St. Paul City Ry., 241 Minn. 15, 62 N.W.2d 688, 700 (1954) (quoting 8 Wigmore, Evidence § 2292 (3d ed.)); see National Texture Corp. v. Hymes, 282 N.W.2d 890, 895-96 (Minn. 1979). Moreover, a number of courts have determined that the attorney-client privilege does not protect client communications that relate only business or technical data. See First Wis. Mortgage Trust v. First Wis. Corp., 86 F.R.D. 160, 174 (E.D.Wis. 1980); SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 515 (D.Conn.) (“[l]egal departments are not citadels in which public, business or technical information may be placed to defeat discovery and thereby ensure confidentiality“), appeal dismissed, 534 F.2d 1031 (2d Cir.1976). Just as the minutes of business meetings attended by attorneys are not automatically privileged, see International Tel. & Tel. Corp. v. United Tel. Co., 60 F.R.D. 177, 185 (M.D.Fla. 1973); Air-Shield, Inc. v. Air Reduction Co., 46 F.R.D. 96, 97 (N.D.Ill.1968), business documents sent to corporate officers and employees, as well as the corporation‘s attorneys, do not become privileged automatically. Searle argues, however, that
IV
SCOPE OF RULE 26(b)(2)
The district court‘s second certified question concerns whether
A party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment.
Searle argues that
The advisory committee‘s notes to
V
CONCLUSION
Although we have no disagreements with the law as stаted by the special master, we
With the foregoing qualifications, the order of the district court is affirmed.
JOHN R. GIBSON, Circuit Judge, dissenting.
The court today correсtly concludes that individual case reserves set by Searle‘s attorneys are protected as mental impressions, thoughts, and conclusions under the opinion work product doctrine. It then concludes that averages and aggregates derived from these reserves are not protected. There is a deep inconsistency in protecting the parts but determining that the sum of the parts and calculations based upon the protected figures are not protected.
The court properly reasons that because the Searle attorneys’ specific case reserve figures “embody the attorney‘s [sic] estimate of anticipated legal expenses, settlement value, length of time to resolve the litigation, geographic considerations, and other factors,” they reveal the attorneys’ mental impressions cоncerning Searle‘s pending litigation and are therefore protected opinion work product. Ante at 401. The court then denies protection to the risk management documents, which were derived from the nondiscoverable mental impressions of Searle‘s attorneys and, as the
special master found, “arguably [give the] plaintiffs some insight into Searle‘s attorneys’ thought processes of setting reserves.” Report I of Special Master, Simon v. G.D. Searle & Co., No. 4-80-160, at 5-6 (D.Minn. Aug. 22, 1984). In allowing discovery of the risk management documents, the court fails to consider the full import of the mental impression/opinion work product doctrine, which gives virtually absolute protection to both the mental impressions of Searle‘s attorneys—as contained in the specific case reserve figures and necessarily reflected in the risk management documents—and the mental impressions of Searle‘s representatives, as contained in the risk management reports.
Since the Supreme Court‘s decision in Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947), the courts have recognized that particular solicitude is given mental impression/opinion work product as contrasted to the ordinary work product protection accorded other documents and materials prepared in anticipation of litigation. In Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981), the Supreme Court recognized mental impression/opinion work product as “deserving special protection” under Rule 26. Id. at 400, 101 S.Ct. at 688. The Court considered, but found unnecessary to decide, whether any showing of necessity could ever overcome the protection afforded such work product. It recognized, however, that simply showing “substantial need and inability to obtain the equivalent without undue hardship” is not sufficient. Id. at 401, 101 S.Ct. at 688. In Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir.1986), we observed that the work product doctrine protects not only materials obtained or prepared in anticipation of litigation, “but also the attorney‘s mental impressions, including thought processes, opinions, conclusions, and legal theories.” Id. at 1328; see also Sporck v. Peil, 759 F.2d 312, 316 (3d Cir.) (“Rule 26(b)(3) recognizes the distinction between ‘ordinary’ and ‘opinion’ work product first articulated by
In the present case, we are asked to protect mental processes that go to the essence of the lawyer‘s expertise—establishing the value of a legal claim and the fees and expenses that may be incurred in its defense. The litigation‘s ultimate cost to the client has great significаnce in determining whether a lawsuit will be tried or settled and, if settled, for what amount. Establishing the value of a claim is analytically complex, requiring an assessment of the body of evidence and the particular legal issues involved in each case, as well as an evaluation of the case‘s strengths and weaknesses. It is one of the more challenging and difficult tasks a lawyer confronts. In Work Product of the Rulesmakers, 53 Minn.L.Rev. 1269 (1969), Professor Edward H. Cooper discusses the importance of an attorney‘s private evaluation of a claim in facilitating the bargaining process inherent in our system of justice:
Some of the areas in which the work product doctrine forecloses discovery are easily comprehended *** as well. One obvious example is the need for protection against forced revelation of a party‘s evaluation of his case; as long as voluntary settlement is encouraged, it would be an intolerable intrusion on the bargaining process to allow one party to take advantage of the other‘s assessment of his prospects for victory and an acceptable settlement figure.
Id. at 1283.
The special master‘s report states that the aggregate reserve figures may give some insight into the mental processes of the lawyers in setting specific case reserves. This is inevitable, considering that these aggregates and averages are based upon the attorneys’ evaluations of the value of specific claims. Notably, this is not a situation where mental impressions are merely contained within and comprise a part of another document and can easily be redacted. Instead, the aggregate and average figures are derived from and necessarily embody the рrotected material. They could not be formulated without the attorneys’ initial evaluations of specific legal claims. Thus, it is impossible to protect the mental impressions underlying the specific case reserves without also protecting the aggregate figures.
Apparently, the court reasons that if an attorney‘s mental impressions are revealed only indirectly and in a diluted manner, they are not protected as opinion work product. See ante at 401-02 & n. 3. This, however, has never been used as a criteria for applying the opinion work product doctrine. In Shelton v. American Motors Corp., supra, we held that an attorney could not be compelled to acknowledge whether specific corporate documents existed because such acknowledgments would reveal her mental processes, which are protected under the opinion work product doctrine. Id. at 1329. The selection of documents involves a substantially less complex mental process than does arriving at a case reserve figure. In selecting documents, an attorney assesses a document‘s relevance and materiality to the legal issues in the case, and considers its admissibility. This analysis stops short of the weighing and evaluating necessary to determine case reserves. Yet, in Shelton we protected this information, for the opinion work product doctrine does not merely protect materials that, as the majority suggests, directly reveal an attorney‘s undiluted mental impressions. Instead, the doctrine is premised on values fundamental to the American scheme of justice and protects information that even “tends to reveal the attorney‘s mental processes.” Upjohn Co., 449 U.S. at 399, 101 S.Ct. at 687. The risk management documents certainly fall within this protected ambit. The relationship between the attorneys’ mental impressions and these documents is no less tenuous than the relationship between the attorney‘s mental impressions and the in-
The court is equally in error in focusing solely on the mental impressions of Searle‘s lawyers. While the court protects the mental impression/opinion work product concerning the attorneys’ evaluation of the reserve necessary for each lawsuit, it fails to grant similar protection to the risk management department‘s opinion work product concerning the aggregate reserve necessary for the Cu-7 litigation. I find no basis in Rule 26(b)(3) for this distinction. Rule 26(b)(3) requires a court to “protect against disclosure of the mental impressions, conclusions, opiniоns, or legal theories of an attorney or other representative of a party concerning the litigation.”
The court concludes that the risk management documents cannot qualify for work product protection because they were not prepared in anticipation of litigation. It reasons that “Searle‘s business involves litigation,” and, therefore, the risk management documents are for business planning purposes. Ante at 401. The court thus concludes that the risk management documents fall into the “ordinary course of business” exception to the work product doctrine. See
First, we cannot authorize discovery of documents containing representatives’ mental impressions concerning pending litigation simply because the documents also serve a business purpose. It is difficult to imagine a document that is generated by a party‘s nonlawyer representatives in anticipation of litigation that does not also have some business purpose; the purposes are not mutually exclusive. Under the court‘s analysis, almost every document prepared by a nonlawyer is subject to discovery despite
Second, in the present case, the business purposes of the documents were to keep track of, control, and plan for the costs of Searle‘s pending products liability litigation. Only by concluding that Searle is in the business of litigation can the court convert these litigation-oriented documents into business planning doсuments. The court reaches just this conclusion, however,
Moreover, when considered within the increasingly common context of mass products liability litigation, the aggregate and average figures may take on even greater significance. Today‘s products liability litigation often involves hundreds of lawsuits against one or more сorporate defendants based upon a single or related products. The plaintiffs in these cases usually join forces and are represented by organized counsel. The defense, if not unified, is usually coordinated. Settlements can be negotiated so as to dispose of the claims of all or several plaintiffs at once. See, e.g., 3A L. Frumer & M. Friedman, Products Liability § 46A.07[1] (1986); Rubin, Mass Torts and Litigation Disasters, 20 Ga.L. Rev. 429, 431 (1986) (Agent Orange class estimated to include between 600,000 and 2.4 million plaintiffs; 4,500 plaintiffs’ lawyers settled claims for $180,000,000); Vairo, Multi-Tort Cases: Cause for More Darkness on the Subject, or a New Role for Federal Common Law, 54 Fordham L.Rev. 167, 170 n. 6 (1985) (settlement fund established to dispose of 680 asbestos claims). Just as a specific reserve figure gives an opponent an unfair advantage in settlement negotiations, an aggregate reserve figure would give attorneys representing a group of opponents an equally unfair advantage. In this instance, the cases of forty plaintiffs with claims based on the Cu-7 have been consolidated for discovery in the Minnesota district court. Material that may be of questionable value in one case becomes more meaningful when considered in the context of a number of cases. We would be naive not to recognize the sophisticated analysis that is possible in this day of the computer. Comparison between different groups of cases and periods of time conceivably could give one party substantial insight into the thought processes of the other. Therefore, when the aggregate and average figures are produced for attorneys representing a large group of opposing litigants and are examined with reference to the entire group, the opposition obtains information cоntaining the Searle attorneys’ mental processes that is much less diluted and indirect than the court acknowledges. When we deal with so sensitive a mental process as the calculation of individual case reserves, the foundation for all of the aggregates and averages,
Significantly, Searle is defending not one but rather hundreds of Cu-7 lawsuits. See Thornton, Intrauterine Devices, Trial, Nov. 1986, at 44, 46 (Searle defending more than 600 Cu-7 lawsuits). Searle is undoubtedly concerned with each lawsuit, and the court properly recognizes that the Searle attorneys’ mental impressions concerning each lawsuit are protected. Searle‘s greater concern, however, is its liability exposure and the costs related to defending this aggregate of lawsuits. When subjected to mass tort litigation, a defendant should be allowed to confidentially analyze the litigation as a whole, plan for its defense, and compare the costs of settlement with the costs of proceeding through trial. The aggregate and average reserves play an essential and unique role in these activities. By requiring Searle to share its assessments with its adversaries, the court unfairly hinders Searle‘s ability to organize its defense.
A party, in managing its litigation, should not be forced to provide materials to its opponent that necessarily reflect its lawyers’ mental impressions regarding the litigation and contain its agents’ mental impressions concerning the cost of the litigation. By concluding that the risk manage-
This is not a case where there has been limited discovery. Searle has produced over 500,000 documents. Those documents based on the mental impressions of its lawyers and representatives concerning litigation strategy and costs, which the court today admits may be of limited value, should not be the subject of discovery.
JOHN R. GIBSON
CIRCUIT JUDGE
Notes
The same observation also applies to Sporck v. Peil, 759 F.2d 312 (3d Cir.), cert. denied, 474 U.S. 903, 106 S.Ct. 232, 88 L.Ed.2d 230 (1985), and to this court‘s recent decision in Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir. 1986). Sporck involved discovery attempts relating to a group of documents that were used to prepare for a deposition. The court held that defense counsel‘s selection of certain documents, out of the thousands involved in the litigation, to prepare a deponent was protected by the work product doctrine, because allowing identification of the documents as a group would reveal counsel‘s mental impressions. Shelton involved a deposition of defendant‘s in-house counsel, who was questioned as to the existence of certain documents. The court held that the work product doctrine protected knowledge of the existence of the documents, because any recollection of a document‘s existence would mean that it was important enough to remember, and thus “necessarily would reveal [counsel‘s] mental selective process.” Shelton, 805 F.2d at 1329. As we have said, the nature of the aggregate reserve figures at issue here is such that revealing them will not necessarily reveal the specific case reserves and the protected mental impressions embodied therein. In both Sporck and Shelton, counsel‘s mental impressions, namely the impressions that certain documents were impоrtant or significant, would have been exposed to the world. Clairvoyants aside, no one will learn from the aggregate reserve figures what Searle‘s attorneys were thinking when they set individual case reserves.
An attorney cannot, without the consent of the attorney‘s client, be examined as to any communication made by the client to the attorney or the attorney‘s advice given thereon in the course of professional duty; nor can any employee of the attorney be examined as to the communication or advice, without the client‘s consent.
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.