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Dulcich, Inc. v. USI Insurance Services National, Inc.

United States District Court, D. Oregon, Portland Division

April 5, 2019

DULCICH, INC., an Oregon corporation, d/b/a Pacific Seafood Group, Plaintiff,
v.
USI INSURANCE SERVICES NATIONAL, INC., a North Carolina corporation, f/k/a Wells Fargo Insurance Services USA, Inc., Defendant.

          OPINION AND ORDER

          YOULEE YIM YOU UNITED STATES MAGISTRATE JUDGE

         Before the court is defendant USI Insurance Services National, Inc.'s motion to compel the production of unredacted attorney's fee invoices that plaintiff Dulcich, Inc. incurred in a separate action. Defendant brought the motion informally under this court's pretrial order. See Minutes of Proceedings, ECF #16. This court resolved several other discovery disputes but requested additional briefing on the issue of whether plaintiff must produce unredacted attorney's fee invoices from the underlying litigation. Minutes of Proceedings, ECF #21; Official Transcript 38, ECF #26. The court has reviewed the parties' written submissions and, for the reasons set forth below, defendant's motion is granted.[1]

         I. Procedural History

         In 2016, plaintiff brought an action for breach of insurance contract in this district against its primary and umbrella insurers. See Dulcich, Inc. v. Alterra Excess & Surplus Insurance Co., No. 16-cv-00305 (D. Or.) (“underlying litigation”). Plaintiff incurred approximately $1 million in attorney's fees litigating that action, which ultimately settled. Id., Stipulation for Dismissal 1-2 (ECF #92) (dismissing all claims with prejudice and without attorney's fees or costs under FRCP 41(a)(1)).

         Now, plaintiff seeks to recover those attorney's fees as damages in this action. Compl. ¶ 30, ECF #1. In Request No. 10, defendant seeks “[a]ll invoices for the attorney fees you allege you incurred in paragraph 30 of the complaint.” Defendant's First Set of Interrogs. and Request for Production, Decl. of Reed Morgan, Ex. 9, at 8, ECF #19-9. Plaintiff objected on the grounds of work-product doctrine and attorney-client privilege, [2] but nonetheless produced redacted billing invoices that it received from its prior counsel in the underlying litigation. Pl.'s Letter at 2-3 (February 6, 2019), Decl. of Reed Morgan, Ex. 1, ECF #23-1; Pl.'s Objs. and Resps. to Def.'s First Set of Interrogs. 8, Decl. of Timothy Snider, Ex. 1, ECF #25.

         Plaintiff represents that it did not redact nonprivileged information, that is, “the identity of the client, the amount of the fee, the identification of payment by case file name, and the general purpose of the work performed.” United States v. Amlani, 169 F.3d 1189, 1195 (9th Cir. 1999) (quoting Clarke v. American Commerce Nat'l Bank, 974 F.2d 127, 129 (9th Cir. 1992)). However, it redacted privileged information, that is, information that would “reveal the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided, such as researching particular areas of law.” Id. (quoting Clarke, 974 F.2d at 129).

         II. Discussion

         Because this is a diversity action, the court applies the substantive law of the forum state, Oregon. Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1326 (9th Cir. 1995). In Oregon, “[a] client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client. . . .” ORS 40.225(2) (alternatively known as Rule 503).

The attorney-client privilege is one of the oldest and most widely recognized evidentiary privileges. The purpose of the privilege is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.

Longo v. Premo, 355 Or. 525, 533 (2014) (internal citations, quotations, and alterations omitted). “[T]he burden of proving that the attorney-client privilege applies rests . . . with the party asserting it.” Weil v. Inv./Indicators, Research & Mgmt., Inc., 647 F.2d 18, 25 (9th Cir. 1981); see also Goldsborough v. Eagle Crest Partners, Ltd., 105 Or.App. 499, 503 (1991), aff'd, 314 Or. 336 (1992) (citing Weil); Groff v. State Indus. Acc. Comm'n, 246 Or. 557, 565 (1967) (“The burden is on him who seeks its invocation to show that both the one asserting a privilege and the nature of the testimony offered are within the ambit of the statute according the privilege.”).

         “However, the attorney-client privilege is not absolute.” Longo, 355 Or. at 533. The Oregon Supreme Court has not addressed the exact issue presented in this case. “Where the state supreme court has not ruled on a question in issue, [the court] look[s] to other state-court decisions, well-reasoned decisions from other jurisdictions, and any other available authority to determine the applicable state law.” Home Indem., 43 F.3d at 1326 (citation and quotation marks omitted). “Substantial authority holds the attorney-client privilege to be impliedly waived where the client asserts a claim or defense that places at issue the nature of the privileged material.” Laird C. Kirkpatrick, Oregon Evidence § 503.13 (6th ed. 2018) (emphasis added) (citing Hearn v. Rhay, 68 F.R.D. 574, 582-83 (E.D. Wash. 1975)).

         The Ninth Circuit applies a three-pronged test for determining whether there has been an implied waiver of the attorney-client privilege. Home Indem., 43 F.3d at 1326 (citing Hearn, 68 F.R.D. at 581).

First, the court considers whether the party is asserting the ‘privilege as the result of some affirmative act, such as filing suit.' Second, the court examines whether ‘through this affirmative act, the asserting party puts the privileged information at issue.' Finally, the court evaluates whether ‘allowing the privilege ...

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