1 2 3 4 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 5 AT TACOMA 6 SCOTT KEE, et al., Case No. 3:24-cv-05535-TMC 7 Plaintiffs, v. ORDER DENYING PLAINTIFFS’ 8 MOTION TO COMPEL (DKT. 109), UNITED STATES FIDELITY & AND DENYING REQUEST FOR IN 9 GUARANTY COMPANY, et al., CAMERA REVIEW 10 Defendants. 11 Plaintiffs filed a motion to compel against defendants United States Fidelity & 12 Guaranty Company (“USF&G”), Insurance Company of North American and Federal 13 Insurance Company (together “Chubb”), and Granite State Insurance Company 14 (“GSIC”) (together, “defendants”), and asserted the defendants failed to properly 15 designate and describe information that was not disclosed in their respective privilege 16 logs, based on attorney-client privilege and work product protection. Dkt. 109. This 17 motion was referred to the Magistrate Judge by the Honorable Tiffany M. Cartwright. 18 The Court will not repeat the basic factual context, as the parties are familiar with 19 the underlying litigation in state court, and the allegations of the Amended Complaint in 20 this case. Plaintiffs assert in their motion to compel that defendants’ attorneys 21 (Christopher Wadley, Jonathan Toren, Gabriel Baker, and Scott Meyers) were engaged 22 in quasi-fiduciary tasks of investigating and evaluating or processing insurance claims, 23 and therefore, the attorney-client privilege does not apply. As for work product 24 1 protection, plaintiffs assert the insurers’ claims files, including notes and documents that 2 comprise the claims files, should not be protected by the work-product doctrine because 3 the documents would have been created regardless of the pending litigation. Plaintiffs 4 assert that defendants did not split claims files for McCarthy and Cornwell, and one 5 global file was kept to document, adjust, and settle the Kiwanis, McCarthy, and Cornwell
6 claims together. 7 Plaintiffs contend that because documentation of the carriers’ investigative steps, 8 evaluation efforts, and settlement efforts as to each claimant are extensively comingled, 9 it appears defendants are withholding any information that has a bearing on claims 10 against Kiwanis, resulting in heavily redacted claims notes and thousands of withheld 11 communications that could be relevant. 12 Plaintiffs request the Court order defendants to turn over the withheld 13 information. In the alternative, plaintiffs request that the Court conduct an in camera 14 review of the documents and communications being withheld or appoint a special
15 master (at the expense of plaintiffs) to conduct an in camera review and to handle the 16 discovery issues. Dkt. 109. 17 The parties have fully briefed the issues presented by plaintiffs’ motion; the 18 plaintiffs have filed five briefs (Dkts. 109, 125, 132, 148, 155), evidence and exhibits 19 (Dkt. 110 [including exhibits 1-39]; Dkt. 126 [including exhibits 1-10]) to support the 20 motion (Dkt. 109), and three defendants filed a total of nine briefs (Dkts. 113, 115, 117, 21 128, 131, 149, 152, 153, 154) evidence and exhibits (Dkts. 114, 116, 118, 119, 120, 22 121, 145, 146, 147) and updated privilege logs (Dkts. 145-1, 146-1, 147-1) to support 23 their responses. 24 1 Legal framework 2 The Court is reviewing the issues in a case of diversity jurisdiction (Dkt. 5, 3 Amended Complaint, at 6); the only portion of the discovery issues raised by plaintiff 4 governed by Washington State law is the substantive Cedell argument. MKB 5 Constructors v. Am. Zurich Ins. Co., C13-0611-JLR, 2014 WL 2526901 (W.D. Wash.,
6 May 27, 2014). 7 Applying Washington law, the Court considers attorney-client privilege in first- 8 party bad-faith insurance cases under the holding in Cedell v. Farmers Ins. Co. of 9 Washington, 176 Wn. 2d 686, 699 (2013). 10 Under Cedell, this Court begins with the “presumption that there is no attorney- 11 client privilege relevant between the insured and the insurer in the claims adjusting 12 process,” and that the attorney-client privilege is “generally not relevant.” Id. 13 A defendant insurer may overcome this “presumption of discoverability by 14 showing its attorney was not engaged in the quasi-fiduciary tasks of investigating and
15 evaluating or processing the claim, but instead in providing the insurer with counsel as 16 to its own potential liability; for example, whether or not coverage exists under the law.” 17 Id. But even if the insurer overcomes the presumption of discoverability, an insured may 18 still overcome the assertion of attorney-client privilege by showing “a reasonable person 19 would have a reasonable belief that an act of bad faith tantamount to civil fraud has 20 occurred” and by demonstrating “a foundation to permit a claim of bad faith to proceed.” 21 Id. at 700. 22 The work-product doctrine is a procedural immunity that protects from discovery 23 “documents and tangible things that are prepared in anticipation of litigation or for trial 24 1 by or for another party or its representative.” Fed. R. Civ. P. 26(b)(3)(A). The work- 2 product doctrine is governed by Federal Rule of Civil Procedure 26(b)(3) and applicable 3 federal case law. The work-product doctrine only applies to documents prepared in 4 anticipation of litigation or for trial, by or for another party, or by or for that other party’s 5 representative. United States v. Richey, 632 F.3d 559, 567 (9th Cir. 2011). If a
6 document would have been created in substantially similar form in the normal course of 7 business, work product protection would not apply to such a business document — 8 even if litigation is anticipated. In re Grand Jury Subpoena (Mark Torf), 357 F.3d 900, 9 908 (9th Cir. 2004). 10 When a document serves a dual purpose—the document was not prepared 11 exclusively for litigation—the Ninth Circuit applies the “because of” standard. Id. at 907. 12 Under this standard, dual purpose documents are deemed prepared because of 13 litigation if “in light of the nature of the document and the factual situation in the 14 particular case, the document can be fairly said to have been prepared or obtained
15 because of the prospect of litigation.” Id. (citation omitted). In applying the “because of” 16 standard, courts do not consider “whether litigation was a primary or secondary motive 17 behind the creation of a document.” Id. at 908. Instead, courts consider the totality of the 18 circumstances to determine whether the “document was created because of anticipated 19 litigation and would not have been created in substantially similar form but for the 20 prospect of litigation.” Id. (citation omitted). 21 Even if documents are prepared in anticipation of litigation, they still may be 22 subject to discovery if the requesting party shows “substantial need” for the materials 23 and the inability to obtain their equivalent by other means. Fed. R. Civ. P. 26(b)(3)(A)(ii). 24 1 When a court orders disclosure of work product under this standard, however, “it must 2 protect against disclosure of the mental impressions, conclusions, opinions, or legal 3 theories of a party's attorney or other representative concerning the litigation.” Fed. R. 4 Civ. P. 26(b)(3)(B). Such materials, known as “opinion” work product, represent the 5 “core types of work product” the doctrine was designed to protect. Republic of Ecuador
6 v.
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1 2 3 4 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 5 AT TACOMA 6 SCOTT KEE, et al., Case No. 3:24-cv-05535-TMC 7 Plaintiffs, v. ORDER DENYING PLAINTIFFS’ 8 MOTION TO COMPEL (DKT. 109), UNITED STATES FIDELITY & AND DENYING REQUEST FOR IN 9 GUARANTY COMPANY, et al., CAMERA REVIEW 10 Defendants. 11 Plaintiffs filed a motion to compel against defendants United States Fidelity & 12 Guaranty Company (“USF&G”), Insurance Company of North American and Federal 13 Insurance Company (together “Chubb”), and Granite State Insurance Company 14 (“GSIC”) (together, “defendants”), and asserted the defendants failed to properly 15 designate and describe information that was not disclosed in their respective privilege 16 logs, based on attorney-client privilege and work product protection. Dkt. 109. This 17 motion was referred to the Magistrate Judge by the Honorable Tiffany M. Cartwright. 18 The Court will not repeat the basic factual context, as the parties are familiar with 19 the underlying litigation in state court, and the allegations of the Amended Complaint in 20 this case. Plaintiffs assert in their motion to compel that defendants’ attorneys 21 (Christopher Wadley, Jonathan Toren, Gabriel Baker, and Scott Meyers) were engaged 22 in quasi-fiduciary tasks of investigating and evaluating or processing insurance claims, 23 and therefore, the attorney-client privilege does not apply. As for work product 24 1 protection, plaintiffs assert the insurers’ claims files, including notes and documents that 2 comprise the claims files, should not be protected by the work-product doctrine because 3 the documents would have been created regardless of the pending litigation. Plaintiffs 4 assert that defendants did not split claims files for McCarthy and Cornwell, and one 5 global file was kept to document, adjust, and settle the Kiwanis, McCarthy, and Cornwell
6 claims together. 7 Plaintiffs contend that because documentation of the carriers’ investigative steps, 8 evaluation efforts, and settlement efforts as to each claimant are extensively comingled, 9 it appears defendants are withholding any information that has a bearing on claims 10 against Kiwanis, resulting in heavily redacted claims notes and thousands of withheld 11 communications that could be relevant. 12 Plaintiffs request the Court order defendants to turn over the withheld 13 information. In the alternative, plaintiffs request that the Court conduct an in camera 14 review of the documents and communications being withheld or appoint a special
15 master (at the expense of plaintiffs) to conduct an in camera review and to handle the 16 discovery issues. Dkt. 109. 17 The parties have fully briefed the issues presented by plaintiffs’ motion; the 18 plaintiffs have filed five briefs (Dkts. 109, 125, 132, 148, 155), evidence and exhibits 19 (Dkt. 110 [including exhibits 1-39]; Dkt. 126 [including exhibits 1-10]) to support the 20 motion (Dkt. 109), and three defendants filed a total of nine briefs (Dkts. 113, 115, 117, 21 128, 131, 149, 152, 153, 154) evidence and exhibits (Dkts. 114, 116, 118, 119, 120, 22 121, 145, 146, 147) and updated privilege logs (Dkts. 145-1, 146-1, 147-1) to support 23 their responses. 24 1 Legal framework 2 The Court is reviewing the issues in a case of diversity jurisdiction (Dkt. 5, 3 Amended Complaint, at 6); the only portion of the discovery issues raised by plaintiff 4 governed by Washington State law is the substantive Cedell argument. MKB 5 Constructors v. Am. Zurich Ins. Co., C13-0611-JLR, 2014 WL 2526901 (W.D. Wash.,
6 May 27, 2014). 7 Applying Washington law, the Court considers attorney-client privilege in first- 8 party bad-faith insurance cases under the holding in Cedell v. Farmers Ins. Co. of 9 Washington, 176 Wn. 2d 686, 699 (2013). 10 Under Cedell, this Court begins with the “presumption that there is no attorney- 11 client privilege relevant between the insured and the insurer in the claims adjusting 12 process,” and that the attorney-client privilege is “generally not relevant.” Id. 13 A defendant insurer may overcome this “presumption of discoverability by 14 showing its attorney was not engaged in the quasi-fiduciary tasks of investigating and
15 evaluating or processing the claim, but instead in providing the insurer with counsel as 16 to its own potential liability; for example, whether or not coverage exists under the law.” 17 Id. But even if the insurer overcomes the presumption of discoverability, an insured may 18 still overcome the assertion of attorney-client privilege by showing “a reasonable person 19 would have a reasonable belief that an act of bad faith tantamount to civil fraud has 20 occurred” and by demonstrating “a foundation to permit a claim of bad faith to proceed.” 21 Id. at 700. 22 The work-product doctrine is a procedural immunity that protects from discovery 23 “documents and tangible things that are prepared in anticipation of litigation or for trial 24 1 by or for another party or its representative.” Fed. R. Civ. P. 26(b)(3)(A). The work- 2 product doctrine is governed by Federal Rule of Civil Procedure 26(b)(3) and applicable 3 federal case law. The work-product doctrine only applies to documents prepared in 4 anticipation of litigation or for trial, by or for another party, or by or for that other party’s 5 representative. United States v. Richey, 632 F.3d 559, 567 (9th Cir. 2011). If a
6 document would have been created in substantially similar form in the normal course of 7 business, work product protection would not apply to such a business document — 8 even if litigation is anticipated. In re Grand Jury Subpoena (Mark Torf), 357 F.3d 900, 9 908 (9th Cir. 2004). 10 When a document serves a dual purpose—the document was not prepared 11 exclusively for litigation—the Ninth Circuit applies the “because of” standard. Id. at 907. 12 Under this standard, dual purpose documents are deemed prepared because of 13 litigation if “in light of the nature of the document and the factual situation in the 14 particular case, the document can be fairly said to have been prepared or obtained
15 because of the prospect of litigation.” Id. (citation omitted). In applying the “because of” 16 standard, courts do not consider “whether litigation was a primary or secondary motive 17 behind the creation of a document.” Id. at 908. Instead, courts consider the totality of the 18 circumstances to determine whether the “document was created because of anticipated 19 litigation and would not have been created in substantially similar form but for the 20 prospect of litigation.” Id. (citation omitted). 21 Even if documents are prepared in anticipation of litigation, they still may be 22 subject to discovery if the requesting party shows “substantial need” for the materials 23 and the inability to obtain their equivalent by other means. Fed. R. Civ. P. 26(b)(3)(A)(ii). 24 1 When a court orders disclosure of work product under this standard, however, “it must 2 protect against disclosure of the mental impressions, conclusions, opinions, or legal 3 theories of a party's attorney or other representative concerning the litigation.” Fed. R. 4 Civ. P. 26(b)(3)(B). Such materials, known as “opinion” work product, represent the 5 “core types of work product” the doctrine was designed to protect. Republic of Ecuador
6 v. Mackay, 742 F.3d 860, 869 n.3 (9th Cir. 2014). 7 In a first-party bad-faith insurance action, the insured may still obtain “opinion” 8 work product; but, doing so requires a “showing beyond the substantial need/undue 9 hardship test required for non-opinion work product.” Barge v. State Farm Mut. Auto. 10 Ins. Co., No. C16-0249-JLR, 2016 WL 6601643, at *5 (W.D. Wash. Nov. 8, 2016) 11 (cleaned up). The insured must demonstrate that the “mental impressions are at issue 12 and their need for the material is compelling.” Id. (cleaned up). “At a minimum, 13 compelling need requires that the information sought is not available elsewhere or 14 through the testimony of another witness.” Id.
15 To make the requisite showing that would justify in camera review of allegedly 16 privileged information, the party seeking to compel production must state “a factual 17 basis sufficient to support a reasonable, good faith belief that in camera inspection may 18 reveal evidence that information in the materials is not privileged.” In re Grand Jury 19 Investigation, 974 F.2d 1068, 1075 (9th Cir. 1992). Unfounded suspicion is not enough 20 to trigger in camera review. Rock River Communications, Inc. v. Universal Music Grp., 21 Inc., 745 F.3d 343, 353 (9th Cir. 2014); Cedar Grove Composting, Inc. v. Ironshore 22 Spec. Ins. Co., C14-1443-RAJ, 2015 WL 9315539, at *7 (W.D. Wash. December 23, 23 2015). 24 1 2 3 Analysis: attorney-client privilege 4 There is ongoing litigation in state court concerning the acts and 5 omissions that allegedly happened at the Kiwanis Vocational Home, and in this federal
6 court litigation, plaintiffs name as defendants several insurance companies. Dkt. 5, 7 Amended Complaint at 3-6; Dkt. 76 (transcript of hearing on defendants’ motion for 8 stay). At an earlier point in this case, objecting to the defendants’ motion for stay (Dkt. 9 56), the plaintiffs confirmed they were not seeking documents from the defendants’ 10 claims files. See Dkt. 62 at 14-15; Dkt. 76 at 24-36. Plaintiffs have not provided reasons 11 for their changed position on this point. The record shows they have not provided a 12 factual basis sufficient for the Court to find a reasonable, good-faith belief that in camera 13 inspection may reveal evidence would meet the Cedell criteria for compelling the 14 defendants to reveal the information for which attorney-client privilege has been
15 asserted. Plaintiffs have not made a showing “a reasonable person would have a 16 reasonable belief that an act of bad faith tantamount to civil fraud has occurred” nor 17 have they demonstrated “a foundation to permit a claim of bad faith to proceed.” Cedell 18 v. Farmers Ins. Co. of Washington, 176 Wn. 2d 686, 700 (2013). The bad faith, 19 tantamount to civil fraud, would require that plaintiffs show: (1) defendants engaged in 20 or planned a fraud at the time of the allegedly privileged communication; and (2) the 21 allegedly privileged communication was made in furtherance of the fraudulent activity. 22 MKB Constructors v. Am. Zurich Ins. Co., C13-0611-JLR, 2014 WL 2526901, at *5 23 (W.D. Wash., May 27, 2014) (discussing Barry v. USAA, 98 Wn. App. 199 (1999)). 24 1 2 Here, the privilege logs have been updated and are in compliance with Fed. R. 3 Civ. P. 26(b)(5)(A). Dkt. 145-1 (Chubb); Dkt. 146-1 (U.S.F.G.); Dkt. 147-1 (Granite 4 State); see In re Grand Jury Investigation, 974 F.2d 1068, 1071 (9th Cir. 1992). As 5 Judge Robart discussed in MKB Constructors v. Am. Zurich Ins. Co., C13-0611-JLR,
6 2014 WL 2526901, at *10 (W.D. Wash., May 27, 2014), the privilege log must state the 7 nature of the document or communication being withheld, the privilege or other legal 8 basis for withholding, identify the senders and receivers of the document or information, 9 and date the document or information was generated, prepared, or dated, sufficient to 10 allow the other party to determine whether the invocation of privilege or other legal 11 protection is warranted. 12 The Court has reviewed the defendants’ privilege logs (updated as directed 13 under the Court’s previous order, Dkt. 134 at 9-12), the evidence presented by all 14 parties, including excerpts from depositions, and declarations, and finds that defendants
15 have shown the information being redacted or completely withheld from production 16 would not support an inference that the lawyers were involved in claims investigation or 17 claims adjusting. 18 This is the threshold question – were the attorneys involved in the quasi-fiduciary 19 tasks of investigating and evaluating or processing the claim; and only if the Court 20 answers this in the affirmative would any of the information be subject to the 21 Washington Supreme Court’s holding in Cedell. 22 In this case, plaintiffs point to evidentiary citations in the record. Dkt. 148 at 2- 23 7.Yet these citations do not establish any of the attorneys (Wadley, Toren, Baker, or 24 1 Meyers) investigated, controlled, or managed the claims adjusting; the privilege logs 2 and other evidence show the assertion of attorney-client privilege is warranted; the 3 privilege log entries state these attorneys were providing legal advice about potential 4 risks, assessments of liability concerning litigation or settlement, and applying law to 5 facts relating to coverage. The additional evidence provided by the parties corroborates
6 the privilege log entries. And there is no showing that (1) defendants engaged in or 7 planned a fraud at the time of the allegedly privileged communication; or (2) the 8 allegedly privileged communication was made in furtherance of the fraudulent activity. 9 Therefore, plaintiff’s motion to compel under Cedell is denied. 10 Analysis: work product 11 The Court also finds, in the portions of the privilege logs that defendants have 12 specified would be subject to protection based on work product, they have shown that 13 the information being withheld on the bases discussed in Republic of Ecuador v. 14 Mackay, 742 F.3d 860, 869 n.3 (9th Cir. 2014).
15 The documents are described in the privilege logs as strategic discussion or legal 16 opinion, all of which was litigation-driven. Litigation has been ongoing for years and 17 continues in Washington State Courts while this federal litigation proceeds. The 18 documents and communications identified as work product relate to that underlying 19 litigation, and have been identified as containing the strategies and opinions of counsel, 20 rather than information being relayed between attorney and client that is solely factual. 21 See Shaterian v. Mapfire Ins. Co., 24-cv-01509-TL, 2025 WL 1592259 (June 5, 2025) 22 (noting that work product protection is reviewed only under federal law, and the Court 23 24 1 does not apply the Cedell analysis). Plaintiffs have not established a substantial need 2 for the attorney work product, or inability to obtain the equivalent by other means. 3 Plaintiffs’ arguments for in camera inspection raise only unfounded suspicion, not 4 a reasonable good-faith belief of an erroneous assertion of attorney-client privilege and 5 demand for access to the entire set of claims files under Cedell, or work product
6 protection. 7 Therefore, the Court denies plaintiffs’ motion to compel, denies the request for in 8 camera review, and denies the request for a special master. 9 10 Dated this 23rd day of February, 2026. 11 12 A 13 Theresa L. Fricke 14 United States Magistrate Judge
15 16 17 18 19 20 21 22 23 24