816 F.2d 397 (8th Cir. 1987), 85-5334, Simon v. G.D. Searle & Co.

Docket Nº:85-5334.
Citation:816 F.2d 397
Party Name:Fed. R. Evid. Serv. 1754 Debra A. and George SIMON, et al., Appellees, v. G.D. SEARLE & CO., Appellant.
Case Date:April 13, 1987
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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816 F.2d 397 (8th Cir. 1987)

Fed. R. Evid. Serv. 1754

Debra A. and George SIMON, et al., Appellees,


G.D. SEARLE & CO., Appellant.

No. 85-5334.

United States Court of Appeals, Eighth Circuit

April 13, 1987

Submitted March 13, 1986.

Rehearing and Rehearing En Banc Denied July 7, 1987.

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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.

WOLLMAN, Circuit Judge.

G.D. Searle & Co. appeals the district court's order permitting discovery of certain Searle documents. Pursuant to 28 U.S.C. Sec. 1292(b) (Supp. III 1985), the district court found that its order involved controlling questions of law as to which there was substantial ground for difference of opinion and certified two questions for appeal. The issues in this appeal, reflected in the district court's certified questions, are, first, whether corporate risk management documents prepared by nonlawyer corporate officials, but revealing aggregate information compiled from individual case reserve figures determined by lawyers, are protected from discovery by the work product doctrine or the attorney-client privilege, and, second, whether Rule 26(b)(2) of the Federal Rules of Civil Procedure limits discovery of corporate risk management documents that relate to insurance.

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 district

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court appointed a special master to supervise the discovery process in these cases.

The district court 1 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 appellees 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 28 U.S.C. Sec. 1292(b) in an order issued June 7, 1985. The special master's Report III proposed 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 individual 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?



A preliminary question confronting us is the standard of review applicable to an appeal of discovery orders under 28 U.S.C. Sec. 1292(b). That section allows appeals, at the discretion of the court of appeals, when the district judge believes that his action "involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal * * * may materially advance the ultimate termination of the litigation." 28 U.S.C. Sec. 1292(b) (Supp. III 1985). Appellees argue that we should not

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disturb the district court's discretion in discovery matters absent a "gross abuse of discretion resulting in fundamental unfairness." Voegeli v. Lewis, 568 F.2d 89, 96 (8th Cir.1977); see also Prow v. Medtronic, Inc., 770 F.2d 117, 122 (8th Cir.1985). Searle contends that our role is not so restricted in an appeal under section 1292(b) and cites Sperry Rand Corp. v. Larson, 554 F.2d 868, 871 (8th Cir.1977). In Sperry Rand the court stated that the petitioner's choice of a mandamus action, for which the standard of review is whether the district court exceeded the " 'sphere of its discretionary power,' " id. at 872 (quoting Will v. United States, 389 U.S. 90, 104, 88 S.Ct. 269, 278, 19 L.Ed.2d 305 (1967)), instead of a section 1292(b) appeal, seriously narrowed the scope of appellate review. We agree with Searle that our review in this section 1292(b) appeal is not confined to determining whether the district court abused its discretion. See 9 J. Moore, Moore's Federal Practice p 110.22 (2d ed. 1986) (review for abuse of discretion not suited to section 1292(b) because there is no controlling question of law). Section 1292(b) permits the appeal of orders otherwise unappealable and thus provides an avenue for resolving disputed and controlling questions of law, the resolution of which will materially further the litigation. Therefore, we review de novo the questions of law certified by the district court. Where, as here, the certified questions embody both factual and legal considerations, we should endeavor to give deference to the district court's factual determinations. We note, however, that the nature and scope of our review are not rigidly determined by the certified questions. In re Oil Spill by the Amoco Cadiz, 659 F.2d 789, 793 n. 5 (7th Cir.1981). We remain free to consider " ' "such questions as are basic to and underlie" ' " the questions certified by the district court. Id. (quoting Helene Curtis Indus., Inc. v. Church & Dwight Co., 560 F.2d 1325, 1335 (7th Cir.1977) (quoting 9 J. Moore, Moore's Federal Practice p 110.25, at 270)); Merican, Inc. v. Caterpillar Tractor Co., 713 F.2d 958, 962 n. 7 (3d Cir.1983), cert. denied, 465 U.S. 1024, 104 S.Ct. 1278, 79 L.Ed.2d 682 (1984); United States v. Connolly, 716 F.2d 882, 885 (Fed.Cir.1983), cert. denied, 465 U.S. 1065, 104 S.Ct. 1414, 79 L.Ed.2d 740 (1984).



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 Rule 26(b)(3) of the Federal Rules of Civil Procedure, which provides that "a party may obtain discovery of documents and tangible things * * * prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative * * * only upon a showing that the party seeking discovery has substantial need of the materials." Our application of the work product doctrine to specific documents is guided by the purposes of the doctrine set out in Hickman. See In re Murphy, 560 F.2d 326, 333-34 (8th Cir.1977). The work product doctrine was designed to prevent "unwarranted inquiries into the files and mental impressions of an attorney," Hickman, 329 U.S. at 510, 67 S.Ct. at 393, and recognizes that it is "essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel." Id. at 510-11, 67 S.Ct. at 393.

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

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anticipated legal expenses, settlement value, length of time to resolve the litigation, geographic considerations, and...

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