South Capitol Bridgebuilders v. Lexington Insurance Company

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SOUTH CAPITOL BRIDGEBUILDERS,

Plaintiff,

v. Case No. 1:21-cv-1436-RCL

LEXINGTON INSURANCE COMPANY,

Defendant.

MEMORANDUM OPINION

This case involves a breach-of-contract dispute between plaintiff South Capitol

Bridgebuilders ("SCB") and defendant Lexington Insurance Company ("Lexington"). SCB moves

to compel the production of several documents that Lexington has withheld during discovery,

citing the attorney-client and work-product privileges. Pl.'s Mot., ECF No. 44. 1 Lexington

opposes, Def. 's Opp'n, ECF No. 47, and SCB filed a reply, Pl. 's Reply, ECF No. 48. Upon an

initial review of the parties' filings, the Court concluded that its determination would be aided by

viewing the documents in camera. ECF No. 49. Lexington delivered the withheld documents to

the undersigned's chambers for review in camera. ECF No. 50. SCB's motion is now ripe for

review.

Upon consideration of the parties' filings, ECF Nos. 44, 47, 48, 50, the documents at

issue, applicable law, and the entire record, the Court will GRANT IN PART and DENY IN

PART SCB's motion to compel.

1 SCB amended its initial motion to compel. See ECF Nos. 43, 44. The amended motion is the operative pleading, so
the Court will DISMISS AS MOOT the initial motion to compel.

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 I. BACKGROUND
SCB is a single-purpose joint venture comprised of Archer Western Construction, LLC and

Granite Construction Company. Compl. 1, ECF No. 1 Its purpose is to build the Fredrick

Douglass Memorial Bridge in the District of Columbia. Id. ff 1, 14, ECF No. 1. Construction

began in the summer of 2017. Id. 1 22. In advance of beginning construction, SCB procured a

builder's risk insurance policy (the "Policy") issued by Lexington. Id. ,r 2.
As part of the construction process, SCB poured concrete into molds for the components

to be used in constructing the bridge. See id. ,r 20. Around September 2019, SCB discovered that

the dried cement contained "honeycombing" and "voiding"-essentially, unwanted pockets of air.

Id. ,r,r 26-29. Honeycombing "results in weakness in the concrete and caused the structures to be

insufficient to meet the load requirements ... of ... the Bridge." Id. ,r 27. Because the structural

integrity of the concrete components had been undermined by honeycombing and voiding, the

components required extensive repairs. Id. ,r 31-32.
On October 24, 2019, SCB filed a claim with Lexington for the repair costs. See Deel. of

John A. Catania ("Catania Deel."), ECF No. 47-1. The claim was assigned to John A. Catania of

AIG Claims. 2 Id. ,r 2. Mr. Catania retained Charles Klehr of Charles Taylor Adjusting to serve

as an outside insurance adjuster and DeSimone Consulting Engineers ("DeSimone") to assist with

investigating the claim. Id. ,r,r 2-3. Mr. Klehr and personnel at DeSimone-including DeSimone

engineers-visited the Bridge's location in the District and conducted a factual investigation of

the damage. See id. ,r,r 3-5. On February 18, 2020, DeSimone issued a report concluding that

2
Lexington Insurance Company is an affiliate of AIG and is a direct, wholly owned subsidiary of AIG Property
Casualty U.S., Inc. See ECF No. 19.

2
SCB's workmanship-specifically, SCB's failure to properly vibrate the molds while concrete

was being poured-was the most likely cause of the defects. Id. 15; ECF No. 1-2 at 12-13.

Mr. Catania stated that after he reviewed the DeSimone report, he believed that SCB's

claim did not appear to be covered by the Policy, that "SCB was likely to dispute a declination of

coverage," and that such a dispute was likely to result in litigation. Id. 16. Accordingly, Mr.

Catania retained Steptoe & Johnson LLP ("Steptoe") "for purposes of having Steptoe provide legal

advice as to whether SCB's claim was within coverage." Id. 17. Steptoe did not conduct any

factual investigation, but reviewed the relevant materials prepared by Charles Taylor and

DeSimone and prepared written advice for Mr. Catania and a draft letter to SCB. Id. 1 8. Mr.

Catania shared these materials with his direct and indirect supervisors, Mark Handy and John

Roberts. Id. 19. Mr. Catania ultimately denied coverage of SCB's claim, which he conveyed in

a letter dated April 9, 2020. Id. 1 10. After receiving a request for reconsideration, Lexington

stood by its initial decision denying coverage. Id.

SCB filed this lawsuit shortly thereafter in the Northern District of Illinois. See Compl.

SCB filed a motion to compel production of several withheld documents, ECF No. 32, which

Judge Mary M. Rowland in the Northern District of Illinois denied upon granting Lexington's

motion to transfer the case to this District, ECF Nos. 39, 40.

After the case was assigned to the undersigned, SCB again moved to compel production of

several documents. Pl.' s Mot. Almost all these documents-emails and attachments that

Lexington claims are protected from disclosure by the attorney-client privilege and work-product

doctrine-were created after Mr. Catania retained Steptoe but before Lexington issued its coverage

decision. Lexington filed an opposition, Def.'s Opp'n, and SCB replied, Pl.'s Reply. Upon an

3
initial review of the parties' filings, the Court ordered defendant to produce the withheld

documents for in camera review. ECF No. 49. SCB's motion to compel is ripe for consideration.

II. LEGAL STANDARD

"When a party objects to a request for production of documents under Federal Rule of Civil

Procedure 34(a)(l), the requesting party may move for an order compelling disclosure of the

withheld material." Felder v. Wash. Metro. Area Transit Auth., 153 F. Supp. 3d 221,224 (D.D.C.

2015) (citing Fed. R. Civ. P. 37(a)). The movant "bears the initial burden of explaining how the

requested information is relevant." Jewish War Veterans ofthe United States ofAm., Inc. v. Gates,

506 F. Supp. 2d 30, 42 (D.D.C. 2007). "The burden then shifts to the non-moving party to explain

why discovery should not be permitted." Long v. Motion Picture Ass 'n ofAm., No. 19-cv-2088

(CRC), 2021 WL 5446278, at *2 (D.D.C. Nov. 22, 2021) (quoting Felder, 153 F. Supp. 3d at224).

"If a party has withheld documents on the grounds that they are privileged, the withholding party

'bears the burden of proving the communications are protected."' Id. (quoting Felder,

153 F. Supp. 3d at 224).

III. DISCUSSION

For the reasons set forth below, the Court will GRANT IN PART and DENY IN PART

SCB 's motion to compel. SCB argues that the withheld materials are relevant because they go to

"Lexington's handling of SCB's claim-i.e., the nature and substance of the investigation,

assessment and analysis that led to Lexington's decision that led to deny the claim." Pl.'s Mot. 3.

SCB has met its burden to explain the relevance of the withheld materials. Thus, the burden shifts

to Lexington to explain why discovery should not be permitted. The Court will address

Lexington's attorney-client privilege and work-product privilege claims in turn. The Court's

holdings and analysis will cite to the relevant documents by their privilege log numbers. See ECF

No. 44-6.

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 A. Attorney Client Privilege

1. The Court Will Apply Illinois Law to Attorney-Client Privilege Issues

The parties agree that the attorney-client privilege disputes in this case implicate matters

of state law. See Pl.'s Mot. 9; Def.'s Opp'n 5-6; see also Fed. R. Evid. 501. Accordingly, the

Court begins its analysis by determining the applicable state's choice-of-law rules. The Supreme

Court has held that where defendants seek transfer under 28 U.S.C. § 1404(a), "the transferee

district court must be obligated to apply the state law that would have been applied if there had

been no change of venue." Van Dusen v. Barrack, 376 U.S. 612, 639 (1964). In this case,

defendants moved for-and were granted-transfer from the Northern District of Illinois pursuant

to § 1404(a). See ECF Nos. 16 & 39. Thus, the Court must apply the choice-of-law rules that

would be applied by the Northern District of Illinois. A federal court applies the choice-of-law

rules applied by the courts of the state in which it sits. See, e.g., Klaxon Co. v. Stentor Elec. Mfg.

Co., 313 U.S. 487, 496 (1941). Because the Northern District of Illinois would have applied

Illinois choice-of-law rules, this Court will also apply Illinois choice-of-law rules.

Illinois courts engage in choice-of-law analysis only "if there is a conflict between Illinois

law and the law of another state such that a difference in law will make a difference in the

outcome." Bd. of Forensic Document Examiners, Inc. v. Am. Bar Ass 'n, 922 F.3d 827, 831

(7th Cir. 2019) (internal quotation marks and citation omitted); accord Townsend v. Sears,

Roebuck & Co., 879 N.E.2d 893, 898 (Ill. 2007). Otherwise, the court applies the law of the forum

state. See Bd. ofForensic Document Examiners, 922 F.3d at 831. The party seeking a choice of

law determination bears the burden of "establish[ing] the existence of an outcome-determinative

conflict." Id. (quoting W. Side Salvage, Inc. v. RSUI Indem. Co., 878 F.3d 219, 223 (7th Cir.

2017)). Defendant acknowledges that "there is no apparent outcome-determinative difference

between Illinois law and District of Columbia law with respect to attorney-client privilege." Def.'s

5
Opp’n 6. Both parties apply Illinois law in their filings. Accordingly, the Court will apply Illinois

law regarding attorney–client privilege. See W. Side Salvage, 878 F.3d at 223 (citing Bridgeview

Health Care Ctr., Ltd. v. State Farm Fire & Cas. Co., 10 N.E.3d 902, 905 (Ill. 2014)) (“If the party

fails to establish the existence of such a conflict, the court applies the law of the forum state.”).

2. Existence of an Attorney–Client Relationship

For the attorney–client privilege to apply, there must be an attorney–client relationship. In

the corporate setting, Illinois courts apply the “control group” test to determine which employees

qualify as the “client,” so communications between an attorney and those employees will qualify

for the privilege’s protection. See, e.g., Favala v. Cumberland Eng’g Co., 17 F.3d 987, 989 (7th

Cir. 1994); Gibson v. Chubb Nat’l Ins. Co., No. 20-CV-1069, 2021 WL 4401434, at *5 (N.D. Ill.

Sept. 27, 2021). At its core, this test focuses on the status of the employee within the corporate

hierarchy and asks whether she is in a position to control or play a substantial role in a decision

for which the corporation might rely upon an attorney’s advice. See Consolidation Coal Co. v.

Bucyrus-Erie Co., 432 N.E.2d 250, 255 (Ill. 1982). Because the underlying relationship between

a corporate client and its employee is one of principal and agent, the control-group analysis may

sometimes accommodate non-employee agents working within the scope of their authority. See

Caremark, Inc. v. Affiliated Comp. Servs., Inc., 192 F.R.D. 263, 267 (N.D. Ill. 2000).

Under Illinois law, two categories of individuals fall within the control group. The first

category includes the decisionmakers and top management with authority to control the relevant

action. See Consolidation Coal Co., 432 N.E.2d at 257. The second category includes

“employee[s] whose advisory role to top management in a particular area is such that a decision

would not normally be made without [their] advice or opinion, and whose opinion in fact forms

the basis of any final decision by those with actual authority.” Id. at 258. But individuals who

6
merely play a role in supplying information to others in these categories do not fall within the

control group. Id. For example, an individual "is not in the control group if his 'role was one of

supplying the factual bases upon which were predicated the opinions and recommendations of

those who advised the decisionmakers."' Favala, 17 F .3d at 990 (quoting Consolidation Coal,

432 N .E.2d at 258). The party asserting the privilege bears the burden of proving that an individual

falls within the control group. Id. (citing Consolidation Coal, 432 N .E.2d at 257).

"It is well-settled that distribution of otherwise privileged materials to individuals outside

the corporation's control group destroys the privilege." Gibson, 2021 WL 4401434, at *5 (cleaned

up); see Midwesco-Paschen Joint Venture for Viking Projects v. Imo Indus., Inc., 638 N.E.2d 322,

329 (Ill. App. Ct. 1994). That is because each communication protected by the attorney-client

privilege must "originate[] in a confidence that it would not be disclosed . . . and remain[]

confidential." Favala, 17 F.3d at 990 (quoting Consolidation Coal, 432 N.E.2d at 257).

Disclosure outside of the control group terminates this required confidentiality.

Several persons identified by Mr. Catania in his declaration are "decisionmakers" that

clearly fall within the control group. These are Mr. Catania himself, Mr. Handy, and Mr. Roberts.

Mr. Catania explains that "[a]s the claims professional assigned to the SCB claim, [he] had

authority to deny coverage on behalf of Lexington with [his] manager's approval." Catania Deel.

,I 10. His direct and indirect supervisors were Messrs. Roberts and Handy. Id. ,I 9. In its reply,

SCB acknowledges as much. Pl.'s Reply 8. All three are members of the control group.

Mr. Klehr and personnel from DeSimone are not members of the control group. Lexington

argues that these individuals ''were the personnel on which Mr. Catania relied for the factual

materials that informed his decision to deny SCB's claim." Def. 's Opp'n 12. That is true. But

merely supplying information or the factual bases upon which control group members relied for

7
their decision does not bring the supplying individual within the control group. See Consolidation

Coal, 432 N.E.2d at 258. The Court agrees with SCB that Lexington has provided no information

that Mr. K.lehr or DeSimone personnel played any role in assessing coverage for SCB's claim by

evaluating the information they gathered. See Pl. 's Reply 9. Accordingly, the Court concludes

that these individuals are not members of the control group and disclosure to them waives any

claim of privilege.

AIG's in-house counsel Ann O'Connor presents a more difficult issue. While SCB is

correct that Ms. O'Connor's title does not, without more, establish that she was part of the control

group, her title as in-house counsel is relevant evidence that she may be the type of individual

''whose advisory role to top management in a particular area is such that a decision would not

normally be made without h[er] advice or opinion." Consolidation Coal Co., 432 N.E.2d at 258;

see Dawson v. N.Y. Life Ins. Co., 901 F. Supp. 1362, 1367 (N.D. Ill. 1995) (concluding that

corporation's general counsel falls within the control group); ECF No. 44-6 at 5 (listing Ms.

O'Connor's position). Mr. Catania's declaration does not mention Ms. O'Connor by name. But

after receiving legal advice with a recommendation about how to proceed, Mr. Catania explains

that he "shared Steptoe' s coverage opinion with . . . [his] direct and indirect supervisors . . . to

ensure that there was consensus support for [his] decision." Catania Deel. ,r 9. Ms. O'Connor is

copied on these specific communications and the responses from Steptoe. ECF No. 44-6 at 4. And

as the privilege log reflects, Mr. Catania "comment[ed] on [Steptoe's] legal advice" and

"request[ed] additional legal analysis." Id. The Court's in camera review confirms that these are

exactly the type of communications on which a corporate actor may rely on the opinions of in-

house counsel. Based on Ms. O'Connor's job title and the circumstances of these

communications-as detailed in Mr. Catania's declaration and confirmed by the Court's in camera

8
review-it is plausible to infer that Ms. O'Connor falls within the control group, that is, as

someone ''upon whose opinions and advice the decision-makers rely." Dawson,

901 F. Supp. At 1367 (citing Consolidation Coal, 432 N.E.2d at 257-58).

The remaining issues are whether the lack of detail in Mr. Catania's declaration about Ms.

O'Connor's specific role in the SCB coverage determination and the absence of any

communications from Ms. O'Connor herself are fatal to Lexington's privilege claim. See Pl.'s

Reply 8. They are not. There appears to be some divergence in the caselaw on whether a party

asserting privilege must show that the recipient actually participated in the decision-making

process. Compare Mlynarsld v. Rush Presbyterian-St. Luke's Med. Ctr., 572 N.E.2d 1025, 1028-

29 (Ill. App. 1991) ("The extent to which Goldsberry participated in the decision-making process,

the nature of her opinions, ... and the weight given her opinions should themselves be subject to

inquiry."), with Claxton v. Thackston, 559 N.E.2d 82, 86 (Ill. App. 1990) (framing inquiry as

whether individual's "opinion would in fact form the basis for any decision by others with authority

in the company" (emphasis added)). But in the absence of additional binding authority by the

Illinois Supreme Court, the Court is not persuaded that the narrower reading of Consolidation Coal

is the correct one. As another court has explained:

The [Illinois Supreme] Court was not advocating an ex post analysis,
under which the application of the privilege is determined by
whether "top management" actually relied in the particular situation
on the advice of those whose function it is to give it. Rather, the
proper inquiry is whether the views ofa particular advisor or group
of advisors are usually factored into management's decisions. The
Court stressed that this approach is in accord with modem corporate
realities and recognizes that decision-making within a corporation is
a process rather than a final act.

Goswami v. DePaul Univ., 8 F. Supp. 3d 1004, 1011 (N.D. Ill. 2014) (emphasis added). Indeed,

the Illinois Supreme Court focused its inquiry on the "status" of the particular employee to

9
determine whether the communication is protected from disclosure. See Consolidation Coal,

432 N.E.2d at 258. Here, the Court concludes, based on Ms. 0 'Connor's title and the

circumstances of the communications at issue, that Ms. 0' Connor is one whose opinions would

"usually factor" into top-management's decisions. Ms. O'Connor is a member of the control

group.

Mr. Catania' s declaration is silent about Eric Zimmerman's role in the decision-making

process. All that appears in the privilege log is Mr. Zimmerman's title--"Builders Risk &

Construction Property Head (US)." ECF No. 44-4 at 5. But unlike Ms. O'Connor's title as in-

house counsel, Mr. Zimmerman's title tells the Court nothing about the role he played in the

decision-making process. Nor did the Court find any evidence during its review in camera from

which it may draw an inference that Mr. Zimmerman was one of the decision-makers or an

individual who directly advises top management. The absence of any information about Mr.

Zimmerman's role in the decision-making process is fatal to Lexington's claim of privilege.

Disclosure to Mr. Zimmerman thus breaks confidentiality and such communications must be

produced in discovery.

In summary, members of the control group include Mssrs. Catania, Handy, Roberts, and

Ms. O'Connor. Mssrs. Klehr and Zimmerman, as well as DeSimone personnel, are not members

of the control group. Communications between control group members and Steptoe attorneys may

be protected by the attorney-client privilege, provided the remaining attorney-client privilege

requirements are satisfied. Accordingly, privilege log item numbers 1, 6, 7, 8, 10, and 20 are not

protected by the attorney-client privilege because they involve disclosures to persons outside of

the control group.
 3. Existence ofPrivileged Information

Having determined which individuals constitute the "client" for purposes of the attorney-

client privilege, the Court must next determine what information is protected by the privilege. In

Illinois, ''where legal advice of any kind is sought from a professional legal advisor in his capacity

as such, the communications relating to that purpose, made in confidence by the client, are

protected from disclosure by himself or the legal adviser, [unless] the protection [is] waived."

Fischel & Kahn, Ltd. v. van Straaten Gallery, Inc., 727 N.E.2d 240, 243 (Ill. 2000) (citing In re

Himmel, 533 N.E.2d 790 (Ill. 1988)). "Attorney-client privilege extends to both communication

from client to attorney, as well as from attorney to client." Equity Residential v. Kendall Risk

Mgmt., Inc., 246 F.R.D. 557, 563 (N.D. Ill. 2007) (citing Midwesco-Paschen Joint Venture for

Viking Projects, 638 N.E.2d at 327). Nevertheless, Illinois also maintains a "strong policy of

encouraging disclosure," so the privilege is construed "within its narrowest possible limits." Ill.

Emcasco Ins. Co. v. Nationwide Mut. Ins. Co., 913 N.E.2d 1102, 1105 (Ill. App. 2009) (quoting

Waste Mgmt., Inc. v. Int'/ Surplus Lines Ins. Co., 579 N.E.2d 322, 327 (Ill. 1991))). The Court

finds that the remaining documents at issue-those that do not involve a waiver by disclosure

outside of the control group-are protected by the attorney-client privilege. Similarly, almost all

the entries in the redaction log are protected by the privilege.

In Illinois, the privilege applies only to "legal advice" or communications related to that

purpose. Fischel & Kahn, 727 N.E.2d at 243. Generally speaking, "legal advice, as contrasted

with business advice, 'involves the interpretation and application oflegal principles to guide future

conduct or to assess past conduct."' BankDirect Cap. Fin., LLC v. Cap. Premium Fin., Inc.,

326 F.R.D. 176, 181 (N.D. Ill. 2018) (quoting In re County of Erie, 473 F.3d 413, 419

(2d Cir. 2007)). SCB argues that Steptoe did not "render[] legal advice" to defendant, but instead

11
"engaged in the business function of investigating and analyzing SCB's claim for the purpose of

making a coverage determination." Pl.'s Mot. 8-9. In response, Lexington argues that Steptoe's

role was "to provide legal advice to Lexington regarding whether the facts, as developed in an

investigation in which Steptoe had no role, gave rise to a covered claim." Def.'s Opp'n 9-10.

Several federal courts have applied Illinois attorney-client privilege law in the insurance

context. The "general rule is that communications between an insurer and its outside coverage

counsel" may also be protected by attorney-client privilege provided that the other requirements

applied by Illinois courts are satisfied. Slaven v. Great Am. Ins. Co., 83 F. Supp. 3d 789, 794 (N.D.

Ill. 2015) (citing Ill. Emcasco Ins. Co., 913 N .E.2d at 1106). This means that the attorney must be

acting in his capacity as a lawyer; "to the extent that an attorney acts as a claims adjuster, claims

process supervisor, or claims investigation monitor, and not as a legal advisor, the attorney/client

privilege does not apply." Id. (citation omitted); Chicago Meat Processors, Inc. v. Mid-Century

Ins. Co., No. 95 C 4277, 1996 WL 172148, at *3 (N.D. Ill. Apr. 10, 1996).

SCB's submissions do not illuminate Steptoe's role. Lexington's privilege log, which

repeatedly describes the need for "legal advice regarding coverage issues presented by SCB' s

claim," see ECF No. 44-6 at 1-4, is largely conclusory. John Catania's declaration is more helpful.

Mr. Catania describes how, after factual investigation of plaintiffs claim was complete, "Steptoe

provided written legal advice to [him] regarding whether the SCB claim was within the coverage

of the Policy, as well as a draft letter to SCB." Catania Deel. ,r 8. These additional details support

Lexington's argument that Steptoe was not involved in the factual investigation of the claim or the

adjusting process. And interpreting contracts-like the Policy-is a quintessential instance of

legal work.

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 But any lingering ambiguity stems from a line-drawing issue: is applying the Policy's

provisions to SCB's claim the job of a lawyer, or claims adjuster? To the extent that this question

might pose challenges in the abstract, the Court's in camera review confirms that Steptoe served

as a legal advisor with no authority to make a final decision in connection with SCB's claim.

Indeed, many of the emails and documents are like those in Slaven, so the Court is instructed by

the analysis there. The clearest examples of Steptoe's role as a legal advisor are its memoranda.

(Privilege Log Nos. 15, 17, 19, 20.) Steptoe conducted no factual investigation of its own.

Instead, Steptoe relied on the materials created during DeSimone's investigation or other

documents provided to plaintiff in discovery (or to which plaintiff already has access, like the

Policy itself). Steptoe's memoranda contain "purely legal assessment[s]" ofSCB's claim, Slaven,

83 F. Supp. 3d at 802, and discuss governing law, analogize to caselaw, and interpret the Policy's

provisions. Finally, the memoranda provide recommendations to defendant. Crucially, they do

not purport to adjust SCB's claim, but instead provide Steptoe's "opinion[s]" about the Policy's

terms. Id. Such memoranda are prototypical examples of a lawyer's work for a client.

Drafts of the letter ultimately sent from Mr. Catania to SCB also implicate Steptoe's role

as a legal advisor. (Privilege Log Nos. 15, 17, 19, 20.) These drafts-sent before Mr. Catania had

reached a final decision to convey the denial-accompanied the memoranda and thus were part

and parcel of Steptoe' s legal advice. Such letters "were prepared by the lawyers for their client in

the pursuit of their providing legal services and are thus protected from disclosure." Slaven,

83 F. Supp. 3d at 802; cf BankDirect, 326 F.R.D. at 183-84 (analyzing under federal privilege).

The factual investigation materials generated by Charles Taylor and DeSimone-which

are attached to several email communications sent to Steptoe-are not protected by the attorney-

client privilege because they were generated in the ordinary course of investigating SCB' s claim.

13
See Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 152 F.R.D. 132, 138 (N.D. Ill. 1993); Chicago

Meat Processors, 1996 WL 172148, at *3 (“[T]he factual results of such an investigation are

discoverable in cases challenging the denial of the claim, to the same extent as if such factual

investigation were conducted by its own adjusters or claims department.”). But Lexington does

not dispute this and has represented that these materials have already been disclosed during the

discovery process. Lexington has only withheld them in conjunction with the communications

sent to Steptoe.

So the Court turns next to the withheld emails. The Court’s in camera review confirms

that the emails sharing or discussing the memoranda and draft letters fall within the ambit of the

privilege because they either convey legal advice or are related to this purpose. And while the

attachments themselves are not privileged, the emails to Steptoe conveying factual information,

like the DeSimone reports, also satisfy this particular requirement. This is because “[a]

communication disclosing non-privileged information to an attorney might be privileged on the

grounds that the fact of disclosure has its own, independent significance. The goal is to protect not

the underlying information, but the significance implicit in the fact that the client chose to

communicate that information to his attorney.” Jentz v. ConAgra Foods, No. 10-CV-0474-MJR-

PMF, 2011 WL 5325669, at *4 (S.D. Ill. Nov. 3, 2011). These communications were integral to

the Steptoe’s role as an attorney-advisor and thus are protected by the privilege.

Finally, the Court turns to Lexington’s redaction log.3 It is true that Lexington’s

explanations for its redactions are barebones, stating only that these notes “reflect[] legal advice

3
In its opposition, Lexington expresses its understanding that SCB is not seeking the unredaction of Lexington’s
reserves (liabilities) information and argues that, in any event, such information is protected from discovery and not
relevant to the dispute. Def.’s Opp’n 15. Neither SCB’s motion nor its reply mention this reserves information or
argue that the information is relevant as required to compel disclosure. See Felder, 153 F. Supp. 3d at 224 (citing Fed.
R. Civ. P. 37(a)). This argument is forfeited.

14
of outside counsel detailed in [Lexington’s] privilege log.” ECF No. 44-6 at 5. And as SCB

argues, Lexington makes no effort to match the entries in its redaction log to the communications

or withheld documents listed in its privilege log. Pl.’s Mot. 7. Additionally, several redacted

entries are categorized only as “General,” rather than “Litigation.” See ECF No. 44-2. But despite

Lexington’s shortcomings here, the Court’s in camera review confirms that almost all these entries

reflect quintessential attorney–client communications. For example, and without divulging

details, several entries reflect discussions between Mr. Catania and Steptoe regarding actions taken

during in this litigation. Other entries have no corresponding document in the privilege log—or

apparently correspond to several communications, both privileged and unprivileged.

Nevertheless, these entries reflect the information that was exchanged between Mr. Catania and

Steptoe as part of the representation. Because these communications implicate legal advice or are

related to that purpose, they are protected by the privilege. Fischel & Kahn, 727 N.E.2d at 243.

And an entry by Ms. Wiltz—an AIG claims assistant—reflects billing information between AIG

and Steptoe. Even if Ms. Wiltz falls outside of the control group for purposes of this specific

communication, this information cannot lead to the discovery of relevant information for SCB’s

claims or defenses.

The only communication that does not appear to be “legal advice” or strictly related to this

purpose under Illinois law is the redaction for February 26, 2020. ECF No. 44-2 at 5. This

redaction instead reflects a communication between Mr. Catania and Mr. Roberts authorizing Mr.

Catania to engage Steptoe. While this communication does reflect the scope of Steptoe’s role, the

Court is not convinced that Lexington has satisfied its burden as to this communication in light of

the Illinois Supreme Court’s instruction that the privilege should be construed within its narrowest

possible limits. Waste Mgmt., 579 N.E.2d at 327.

15
 The Court holds that the remaining documents-those that do not involve a waiver due to

disclosure outside of the control group-are properly withheld under the attorney-client privilege.

The Court also holds that Lexington's redactions may be properly withheld under the privilege,

with the exception of the entry on February 26, 2020.

B. Work-Product Doctrine

Lexington also claims that most of the withheld documents at issue here are shielded by

the work-product doctrine. The work-product doctrine is a principle of federal law. See, e.g.,

Hickman v. Taylor, 329 U.S. 495 (1947); FTC v. Boehringer Ingelheim Phann., Inc.,

778 F.3d 142, 148 (D.C. Cir. 2015); Fed. R. Civ. P. 26(b). Accordingly, the Van Dusen rule does

not apply and the Court's determination is governed by federal law as developed in this Circuit.

See, e.g., In re Korean Air Lines Disaster of Sept. 1, 1983, 829 F.2d 1171, 1175-76 (D.C. Cir.

1987); 15 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure§ 3846 (4th

ed.).

The work-product doctrine protects parties from divulging information used to prepare for

litigation. As the Federal Rules of Civil Procedure state:

Ordinarily, a party may not discover documents and tangible things
that are prepared in anticipation of litigation or for trial by or for
another party or its representative (including the other party's
attorney, consultant, surety, indemnitor, insurer, or agent).

Fed. R. Civ. P. 26(b)(3}(A). Rule 26(b)(3) allows a court to order disclosure when the requesting

party can show a "substantial need" for the material and an inability to procure equivalent

information ''without undue hardship." Fed. R. Civ. P. 26(b)(3)(A)(ii). But a court ordering

disclosure under this provision must nevertheless "protect against disclosure of the mental

,·impressions, conclusions, opinions, or legal theories of a party's attorney or other representative

16
concerning the litigation." United States v. Deloitte LLP, 610 F.3d 129, 135 (D.C. Cir. 2010)

(quoting Fed. R. Civ. P. 26(b)(3)(B)).

Because the Court has already held that several documents may be properly withheld under

the attorney-client privilege, the Court will focus its analysis on the remaining documents that are

not protected by the attorney-client privilege. Here, SCB does not dispute that many of the

withheld documents contain the mental impressions, conclusions, opinions, and legal theories of

Steptoe attorneys. Instead, SCB disputes whether the withheld documents were prepared in

anticipation of litigation. Pl.'s Mot. 13-14.

To determine whether a document was prepared in anticipation of litigation, the D.C.

Circuit, like most circuits, asks whether a particular document was created "because of' the

anticipated litigation. See Deloitte, 610 F.3d. at 136. First, the attorney who created the document

must have "had a subjective belief that litigation was a real possibility," and that belief must have

been "objectively reasonable." Nat 'l Ass 'n of Crim. Def Laws. v. Dep 't of Just. Exec. Off for

United States Att'ys, 844 F.3d 246,251 (D.C. Cir. 2016) (quoting In re Sealed Case, 146 F.3d 881,

884 (D.C. Cir. 1998)). Next, the Court must ask ''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." Deloitte, 610 F.3d at 137 (quoting In

re Sealed Case, 146 F.3d at 884). Notably, "material generated in anticipation of litigation may

also be used for ordinary business purposes without losing its protected status." Id. at 138. But if

a document would have been created "in substantially similar form" regardless of the litigation,

work product protection is not available. Boehringer lngelheim Pharms., 778 F .3d at 149 (quoting

Deloitte, 610 F.3d at 138). The D.C. Circuit does not require a showing that the "primary

motivating purpose" behind the document was to aid in litigation. Deloitte, 610 F.3d at 138.

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 Mr. Catania's subjective belief that litigation could result from the denial of coverage is

undisputed on the present record. His declaration states that upon receiving DeSimone' s report,

he concluded that SCB 's claim did not appear to be covered and that SCB would likely dispute the

declination in coverage. Catania Deel. ,I 6. He believed that "the dispute would likely result in

litigation." Id. 4

Whether that belief was objectively reasonable is more a difficult question-but more

importantly, one that the Court need not answer to resolve Lexington's privilege claims.

Lexington relies solely on the monetary value of SCB's formal claim as evidence that a coverage

dispute would likely result in litigation. See Def.'s Opp'n 14. The Court agrees that the value of

SCB's claim is relevant evidence that SCB might file a lawsuit if its claim was denied. But even

expensive disputes may be resolved outside of the federal courts. Lexington's evidence of likely

litigation is a far cry from other cases with ''the hallmarks of a pre-litigation dispute," such as

evidence of "an adverse and antagonistic relationship" between the parties. Feld v. Fireman 's

Fund Ins. Co., 991 F. Supp. 2d 242,249 (D.D.C. 2013). 5

Ultimately, these problems focus the Court's analysis on the dispositive issue for

Lexington's work-product privilege claims. Here, Lexington has failed to meet its burden to show

that the remaining withheld documents "can fairly be said to have been prepared or obtained

because of the prospect of litigation." Deloitte, 610 F.3d at 137. Indeed, despite Mr. Catania's

statement that he believed SCB' s claim might not be covered, it is undisputed that Lexington was

continuing to evaluate that position, which is why it engaged Steptoe. Thus, as far as the Court

4
Notably, Lexington provides no information about the Steptoe attorneys' beliefs. For the reasons explained below,
this does not affect the outcome here.
5
It is possible that Mr. Catania's tentative decision to deny coverage, in light of Steptoe's early advice, increased the
probability that the case would ultimately result in litigation. But as noted, the Court need not resolve whether
Lexington's beliefs were objectively reasonable to adjudicate the present motion.

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can tell from the privilege log and in camera review, the coverage memoranda would have been

created "in substantially similar form" regardless of the prospect of litigation, because Lexington

nevertheless needed to determine whether the Policy covered SCB 's claim. Boehringer Ingelheim

Pharms., 778 F.3d at 149 (quoting Deloitte, 610 F.3d at 138). 6 The emails transmitting factual
. . .· •.
~.
.... ·, ..
•, '•

information also likely would have existed in substantially similar form;~regatdless··of the prospect

of litigation, because they served the same goal of determining coverage. The lack of additional

facts about the likelihood of litigation reinforces the Court's conclusion. If Lexington could

identify additional facts suggesting an objectively reasonable likelihood of litigation, perhaps the

Court could have tied the contents of the withheld materials to those facts. Lexington did not do

so. In fact, Lexington failed to address this requirement at all in its briefing, and thus forfeited any

potential arguments that the withheld documents were "prepared or obtained because of the

prospect of litigation." Deloitte, 610 F.3d at 137.

Accordingly, the Court finds that the remaining documents not protected by the attorney-

client privilege-Privilege Log Nos. 1, 6, 7, 8, 10, and 20, and the Redaction Log entry for

February 26, 2020-are also not protected by the work-product privilege.

IV. CONCLUSION

Based on the foregoing, the Court will GRANT IN PART and DENY IN PART the

motion to compel by separate order. Privilege Log Nos. 1, 6, 7, 8, 10, and 20, and the Redaction

Log entry for February 26, 2020, must be disclosed to SCB because Lexington has failed to meet

its burden to withhold the documents under the attorney-client or work-product privileges. The

6 While Lexington does not make the argument, the governing law sections of the memoranda ask what law a court
would apply if the coverage denial ultimately resulted in a lawsuit. The Court is not convinced that this section
indicates the memoranda were prepared in anticipation of litigation. A memorandum interpreting the Policy's
provisions would need to engage in this same analysis in order to interpret the Policy.

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 . ' .

remaining privilege log items and redactions may properly be withheld under the attorney- client

privilege.

~ c. ~
Royce C. Lamberth
United States District Judge

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