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In Aerojet Rocketdyne, Inc. v. Global Aerospace, Inc., et al., No. 2:17-cv-01515-KJM-AC, United States District Court, E.D. California (October 25, 2023) an insurance coverage dispute wastes the time of the court and the litigators are admonished by the court.
FACTUAL BACKGROUND
In a long-running insurance coverage dispute that was prolonged for several years by defendant Global Aerospace Inc.’s refusals to produce evidence in response to requests from plaintiff Aerojet Rocketdyne, Inc. The root of the disagreement was Global’s assertion of attorney-client privilege and work-product protections.
The Magistrate Judge determined the disputed evidence was not protected by the attorney-client privilege or work product doctrine, and the court denied Global’s repeated requests to revisit that decision. In short, although attorneys were involved in the disputed investigation, communications with them were not privileged, and their work product was not protected; the investigation was part of the company’s routine business. It was not conducted in anticipation of litigation.
Several defendants, including Global, have now moved for summary judgment. Briefing is ongoing. The exhibits are excerpts of transcripts from two depositions marked “confidential” under the terms of a discovery protective order. The witnesses were Katherine Posner and Wendy Grossman, two attorneys at the center of the dispute about privilege and work product. The defendants argued the transcripts are “sensitive” and must be sealed because they “would ordinarily be protected by the attorney-client privilege and work product doctrine.”
The courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents. Although that right is not absolute, a strong presumption in favor of access is the starting point. This presumption is based on the need for federal courts, although independent-indeed, particularly because they are independent-to have a measure of accountability and for the public to have confidence in the administration of justice.
When documents are filed with motions more than tangentially related to the merits of a case, such as alongside a motion for summary judgment, a party who asks to keep them secret must meet the high threshold of showing that compelling reasons that support that request. This standard applies even if the documents have previously been filed under seal or are covered by a generalized protective order, including a discovery-phase only protective order.
To decide whether the party requesting sealing has carried its burden, the court balances the requesting party’s reasons for secrecy with the public’s interests in disclosure. If a court decides to grant a request to seal, it must explain its reasons and may not rely on hypothesis or conjecture.
The District Court concluded that the defendants have not justified their request to seal the deposition transcript excerpts in question. They cannot rely on the confidentiality designation now. Once confidential discovery documents are made part of a dispositive motion, such as a motion for summary judgment, they lose their status of being raw fruits of discovery. They no longer enjoy protected status without some overriding interest in favor of keeping the discovery documents under seal.
DOCUMENTS UNDER SEAL
The District Court concluded that the defendants have no overriding interest in secrecy. They do not claim the testimony was privileged. They do not contend it discloses protected work product. They argue only that the testimony would “ordinarily” be privileged or protected, except that the court had decided they waived the attorney-client privilege with their outside counsel.
The argument suffers from two primary faults:
1. The court did not find the defendants waived the protections of any privilege or protection. The Magistrate Judge found the documents were not privileged and not protected, and this court upheld that decision. There was nothing to waive.
2. The defendants’ argument proves too much. If an unsuccessful privilege claim could support a motion to seal, then any defendant could keep any document from the public view simply by asserting a meritless privilege claim, waiting for that claim to be rejected, and asking to seal the document because it would “ordinarily” have been privileged. Any evidence could be kept from the public arbitrarily.
The deposition testimony may not be kept secret solely because it is specific to the particular claim at issue in the litigation. The argument undermines the motion. If the court were to grant summary judgment, and if the testimony were sealed, then the public could not read and understand the evidence behind the court’s decision why there was no genuine dispute as to any material fact.
Therefore, the motion to file under seal was denied. In addition, the court ordered that within seven days, defendants must either (1) file a notice withdrawing their reliance on Exhibits AAAA and BBBB in connection with their pending motion for summary judgment, or (2) file copies of Exhibits AAAA and BBBB on the public docket.
THE WARNING
The court and the parties have already devoted too much time, too much money, and too much effort to arguments about privilege and work product protections. As before, the court warns defendants that “dilatory or evasive tactics may result in an order to show cause why sanctions should not issue.”
ZALMA OPINION
There is nothing that annoys a trial judge more than repeated motions asserting privileges that do not exist yet wish to use the documents to support a dispositive motion. Insurance disputes should be relatively straightforward based upon clear and unambiguous wording of an insurance policy as applied to the facts supporting the dispute. Years of disputes over discovery of facts that the court repeatedly ruled were not privileged is contumacious and if continued the warning from the court should result in the sanctions predicted.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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