National Union Fire Ins. Co. of Pittsburgh, Pa. v. Murray Sheet Metal Co., Inc.

• Decision Date: 19 June 1992
• Docket Number: No. 91-1779,91-1779
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Defendant-Appellant, v. MURRAY SHEET METAL COMPANY, INCORPORATED, Appellee, and Arkwright Mutual Insurance Company, Plaintiff.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 980

967 F.2d 980

22 Fed.R.Serv.3d 1141

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Defendant-Appellant, v. MURRAY SHEET METAL COMPANY, INCORPORATED, Appellee, and Arkwright Mutual Insurance Company, Plaintiff.

No. 91-1779.

United States Court of Appeals,

Fourth Circuit.

Argued March 4, 1992.

Decided June 19, 1992.

Mark J. Seplak, Clausen, Miller, Gorman, Caffrey & Witous, P.C., Chicago, Ill., argued (James T. Ferrini, Stephen J. Schlegel, and Susan J. Condon, Clausen, Miller, Gorman, Caffrey & Witous, P.C., Chicago, Ill., and John Andrew Smith, Kay, Casto, Chaney, Love & Wise, Charleston, W.Va., on brief), for defendant-appellant.

W. Henry Lawrence, IV, argued (Jacqueline A. Wilson, on brief), Steptoe & Johnson, Clarksburg, W.Va., for appellee.

Before ERVIN, Chief Judge, NIEMEYER, Circuit Judge, and RAMSEY, Senior United States District Judge for the District of Maryland, sitting by designation.

OPINION

NIEMEYER, Circuit Judge:

We address in this appeal the extent to which the work product rule of Fed.R.Civ.P. 26(b)(3) provides immunity from discovery of 26 documents withheld from discovery in this case.

In connection with litigation pending in the Southern District of New York between two insurance companies to resolve the proper apportionment of losses occasioned by a fire in West Virginia, National Union Fire Insurance Company, one of the parties, caused a subpoena duces tecum to be issued by the United States District Court for the Southern District of West Virginia to the custodian of records of Murray Sheet Metal Company, Inc., in Parkersburg, West Virginia, who is not a party to the New York proceedings. ¹ Murray, whose employees were present at the time of the fire, was requested to produce documentation relating to the fire and Murray's investigation of it. Murray refused to produce 26 of the requested documents, contending, among other things, that the documents constituted work product as defined by Fed.R.Civ.P. 26(b)(3). On National Union's motion to compel production, the district court, without reviewing the documents, denied the motion on the basis of Murray's description of them. 771 F.Supp. 149. The court concluded that (1) the documents "were prepared after the April 4, 1990, fire and in the investigation of that incident" and were prepared "to preserve and document evidence in contemplation of future litigation," and (2) National Union, having failed "to demonstrate that it [was] unable without undue hardship to obtain the substantial equivalent of the materials by other means," failed to establish a substantial need for the documents. Because the application of the work product rule requires an inquiry more detailed than that conducted by the district court, we remand for further proceedings in accordance with this opinion.

I

On April 4, 1990, a fire broke out in a General Electric Company plastics plant located in Washington, West Virginia. The fire began at a location in the plant which was at the time being renovated by Murray Sheet Metal Company. Although the direct fire damage was relatively minor, extensive polychlorinated biphenyl (PCB) contamination was discovered in the area, causing damage to portions of the building, tools, equipment, and even clothing of persons working there. The cleanup costs are estimated in the millions of dollars. The insurance company providing coverage to General Electric for the plant, Arkwright Mutual Insurance Company, undertook to pay the losses, including cleanup costs, and instituted suit in the Southern District of New York against National Union Fire Insurance Company for reimbursement under a reinsurance agreement. National Union is resisting payment because it believes that the PCB contamination was not caused by the fire but rather was a preexisting condition at the site and therefore not covered by its insurance. It also complains that it was not notified of the fire for over a month and then was not provided access to the plant.

Promptly after the fire, Murray Sheet Metal Company began an investigation into the circumstances of the fire and the PCB contamination. With its own employees, it gathered data concerning the PCBs, including information about their use at the plant, and the source and extent of contamination. Murray conducted medical tests of its employees and analyzed their clothing. Murray personnel also obtained statements from other Murray employees who worked at the plant. Murray's initial investigation was conducted on April 5, 1990, principally by Ruth Morrison, Murray's safety director, along with other employees. Murray also notified its own insurance company, which in turn hired an independent adjusting company, Gay & Taylor, to investigate the fire. Three days after the fire, on April 7, 1990, representatives of Gay & Taylor entered the plant and, together with representatives of General Electric and its insurance company, conducted a further investigation and performed testing for PCB contamination.

Because Gay & Taylor is located in Alabama, National Union initiated discovery proceedings in the Northern District of Alabama to obtain the product of Gay & Taylor's investigation. Following a dispute about whether the work product rule immunized the information from discovery, the Alabama court granted National Union's motion to compel discovery and ordered that Gay & Taylor produce documents related to PCB contamination, but not related to the causes or origins of the fire or to Murray's culpability for the fire. That order is on appeal in the Eleventh Circuit. See Arkwright Mut. Ins. Co. v. National Union Fire Ins. Co., No. CV91-Y-0826-S (N.D.Ala. May 31, 1991), appeal docketed, No. 91-2117 (11th Cir. July 1, 1991).

Similarly, to discover the investigatory documentation developed by Murray's employees, who are located in West Virginia, National Union filed a notice of deposition in the Southern District of West Virginia directed to the custodian of records at Murray to appear at deposition and produce Murray's documents "regarding the existence origin, source, concentration, spread, or location of PCB's, et al. at the premises" and relating to "any cause and origin investigation." In connection with the notice of deposition, National Union caused a subpoena duces tecum to be served on Murray requiring it to produce the documents. In response, Murray produced a substantial amount of material but withheld certain documents which it described in a "Privileged Documents Log of Murray Sheet Metal Co., Inc. to Subpoena Duces Tecum Dated March 1, 1991." In the log, Murray listed the 26 documents, giving for each a general description, its author, date, recipient, and custodian. Murray also stated the reason that each was being withheld. The documents withheld include witness statements taken by Murray's personnel immediately after the fire and later; memoranda authored by Murray's personnel relating to PCB findings, contents of a "gang box," clothes worn by employees, estimated costs of repair, and meetings; bills for medical treatment of employees; and PCB data and test results.

National Union filed a motion to compel the production of the 26 documents and offered "to limit disclosure to this litigation." From the court's order denying production of the documents, this appeal followed.

II

Proper application of the work product rule requires recognition and accommodation of two competing policies. On the one hand, fairness in the disposition of civil litigation is achieved when the parties to the litigation have knowledge of the relevant facts, and therefore the discovery rules are given "a broad and liberal treatment." Hickman v. Taylor, 329 U.S. 495, 507, 67 S.Ct. 385, 392, 91 L.Ed. 451 (1947). On the other hand, our adversary system depends on the effective assistance of lawyers, fostered by the privacy of communications between lawyer and client and the privacy in development of legal theories, opinions, and strategies for the client. The court in Hickman elaborated:

In performing his various duties, however, it is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel. Proper preparation of a client's case demands that he assemble information, sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference. That is the historical and necessary way in which lawyers act within the framework of our system of jurisprudence to promote justice and to protect their clients' interests.

Id. at 510-11, 67 S.Ct. at 393. ² See also Duplan Corp. v. Moulinage et Retorderie, 509 F.2d 730, 735-36 (4th Cir.1974), cert. denied, 420 U.S. 997, 95 S.Ct. 1438, 43 L.Ed.2d 680 (1975). The policies of protecting work product and permitting liberal discovery are accommodated in the Federal Rules of Civil Procedure by protecting absolutely the "mental impressions, conclusions, opinions, [and] legal theories ... concerning the litigation" but permitting discovery of other work product upon a showing of "substantial need." Fed.R.Civ.P. 26(b)(3).

Thus, the jurisprudence of Rule 26(b)(3), ³ which is a codification of the holding of Hickman and its progeny, see Doe v. United States (In re Doe), 662 F.2d 1073, 1078 (4th Cir.1981), cert. denied, 455 U.S. 1000, 102 S.Ct. 1632, 71 L.Ed.2d 867 (1982), divides work product into two parts, one of which is "absolutely" immune from discovery and the other only qualifiedly immune. As a philosophical extension of the attorney-client privilege, which itself is not here involved, ⁴ the pure work product of an attorney insofar as it involves "mental impressions, conclusions, opinions, or legal theories ... concerning the litigation" is immune to the same extent as an attorney-client communication. Cf. Duplan, 509 F.2d at 735-36. This is so whether the material was actually prepared by the attorney or by...