United States District Court, W.D. Texas, Austin Division
CHARLES GRIGSON, et al.
FARMERS GROUP, INC.
W. AUSTIN, UNITED STATES MAGISTRATE JUDGE
the Court are Plaintiff's Third Motion to Compel
Discovery (Dkt. No. 105), Defendant's Response (Dkt. No.
107), and Plaintiff's Reply (Dkt. No. 109); and
Plaintiff's Fourth Motion to Compel Discovery (Dkt. No.
140), Defendant's Response (Dkt. No. 151), and
Plaintiff's Reply (Dkt. No. 154). The motions have been
referred to the undersigned for resolution.
Third Motion to Compel (Dkt. No. 105)
case at hand is a putative class action in which Plaintiffs
and other putative class members challenge the insurance
premium rate setting practices of Farmers Group, Inc.
(“FGI”). At issue is the alleged discrepancy
between premiums charged under the Farmers Auto 2.0 and 2.5
policy regimes (“FA2") and the recently adopted
Farmers Smart Plan Auto (“FSPA”) regime.
Plaintiffs allege that coverage under FA2 and FSPA is
identical or virtually identical and that, despite this,
premiums under FSPA are significantly lower. Plaintiffs
further allege that when FGI rolled out FSPA in early 2016,
it instructed its agents to only offer FSPA to new clients
and to restrict access to existing clients who were covered
under the FA2 regime, thereby requiring those customers to
pay significantly more for the same or nearly identical
coverage. Plaintiffs allege this is a discriminatory practice
and illegal under Texas law.
discovery, Plaintiffs have sought production of a number of
rate change models FGI has produced internally. These tools,
known as Auto Off Balance tools (“AOBs”), are
models that take into consideration a wide range of variables
to help insurers set an adequate premium rate. FGI initially
objected to producing certain AOB tools on the ground that
they were created in anticipation of litigation and were
covered by the work product doctrine. Plaintiffs challenged
this assertion. Eventually, Plaintiff and FGI agreed that FGI
would provide access to some of these AOBs. Dkt. 105, Ex. 1
at 9. FGI provided access to two AOBs, and Plaintiff served a
30(b)(6) deposition notice on FGI for a witness to testify
regarding the tools. Prior to the deposition, FGI produced
three more AOBs it had created for litigation purposes
(“the produced AOBs”). Dkt. 105, Ex. 3; Ex. 4. At
the deposition, Plaintiffs discovered the existence of an
additional two AOBs (“the unproduced AOBs”) also
created by FGI at the direction of counsel. Dkt. 105, Ex. 4.
Plaintiffs now seek production of these two unproduced AOBs,
as well as the instructions from counsel and any other
communications regarding the five total AOBs created for
litigation (“the litigation AOBs”).
contend that by disclosing the produced AOBs, FGI waived its
ability to assert work-product protection as to the
unproduced AOBs, as all five AOBs relate to the same subject
matter. Plaintiffs further argue that FGI's disclosure of
the produced AOB tools also waived its attorney-client
privilege as to any communications between defense counsel
and FGI concerning the AOBs. Plaintiffs contend that FGI is
attempting to use its privilege as both a sword and a shield,
which itself is a ground to assert waiver. FGI, on the other
hand, contends that Plaintiffs' argument conflates the
attorney-client privilege and the work-product doctrine. FGI
denies it has waived its attorney-client privilege, and
argues that the production of the AOBs prior to the
deposition did not constitute a subject matter waiver as to
all AOBs, because subject matter waiver is only warranted
when the quality or substance of the attorney's work is
called into question by the party asserting the privilege.
FGI denies that it has called into question the quality or
substance of the work product involved in the produced AOBs.
FGI objects to production of the remaining AOBs and any
communications between attorneys and FGI regarding the same.
Rule of Civil Procedure 26(b) permits “discovery
regarding any nonprivileged matter that is relevant to any
party's claim or defense. . . .” Fed.R.Civ.P.
26(b). Discoverable information is not limited to admissible
evidence, but includes anything “reasonably calculated
to lead to the discovery of admissible evidence.”
Id.; see also Coughlin v. Lee, 946 F.2d
1152, 1159 (5th Cir. 1991). Courts traditionally construed
“relevance” broadly: information was considered
relevant if it encompassed any matter that bore on, or that
reasonably could lead to other matter that could bear on, any
issue in the case. Coughlin, 946 F.2d at 1159. The
amendment to Rule 26(b) to allow discovery only of matter
relevant to a party's “claim or defense” was
intended to narrow the scope of discovery. And it is well
established that “matters relating to discovery are
committed to the discretion of the trial court.”
Freudensprung v. Offshore Technical Servs., Inc.,
379 F.3d 327, 347 (5th Cir. 2004).
is no question that FGI waived its right to assert work
product protection as to the three AOBs produced prior to the
corporate representative deposition. The issue is whether by
its purposeful disclosure of these AOBs produced for
litigation purposes, FGI also waived work product or
attorney-client protection as to other matters that are
related to the produced AOBs. Unlike the attorney client
privilege, the work product doctrine is governed, even in
diversity cases, by the uniform federal standard embodied in
Federal Rule of Civil Procedure 26(b)(3). Dunn v. State
Farm, 927 F.2d 869, 875 (5th Cir. 1991) (applying state
law to claims of attorney-client privilege but federal common
law to work-product); Davis v. United States, 2006
WL 2883042 at n.1 (W.D. La. Oct. 4, 2006) (noting that
federal law of work product doctrine applies in a diversity
case). Work-product and attorney-client privileges are also
distinct with respect to waiver, and waiver of one does not
necessarily mean waiver of the other. United States v.
Nobles, 422 U.S. 225, 239 (1975); Shields v. Sturm,
Ruger & Co., 864 F.2d 379, 382 (5th Cir. 1989)
(“The work product privilege is very different from the
attorney-client privilege.”); Doe 1 v. Baylor
Univ., 320 F.R.D. 430, 435 (W.D. Tex. 2017). The
attorney-client privilege promotes full and frank discussion
between counsel and client. Upjohn v. United States,
449 U.S. 383, 389 (1981). Generally, “disclosure of any
significant portion of a confidential communication waives
the privilege as to the whole.” Nguyen v. Excel
Corp., 197 F.3d 200, 208 (5th Cir. 1999). Work-product
privilege, on the other hand, protects the attorney's
research, analysis, thought processes, and trial strategy
from discovery prior to trial, thus supporting the
adversarial judicial system. Dunn, 927 F.2d at 875.
Work product typically constitutes “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.” Fed.R.Civ.P. 26(b)(3).
in the work product context typically only applies to the
document actually disclosed. S.E.C. v. Brady, 238
F.R.D. 429, 444 (N.D. Tex. 2006). A more general subject
matter waiver is usually reserved for instances in which the
quality or substance of the attorney's work product has
been directly placed at issue in the litigation.
Baylor, 320 F.R.D at 442; Feld v. Fireman's
Fund Ins. Co., 991 F.Supp.2d 242, 255 (D.D.C. 2013). In
order to constitute subject matter waiver, work product must
directly place at issue in litigation the quality or
substance of an attorney's work. Baylor, 320
F.R.D. at 442. It is only when work product is the direct
subject of litigation that disclosure of the product may
constitute a subject matter waiver. Id.;
Feld, 991 F.Supp.2d at 253.
FGI has used the three produced AOBs to suggest that certain
percentages of the proposed Class are undamaged. Dkt. No.
127-28. By doing so, FGI has waived the work product
protection as to the subject matter of the Litigation AOBs as
a whole. FGI has directly placed at issue in this current
suit the quality and substance of the Litigation AOBs. By
only producing some of the AOBs it has created in connection
with this litigation, it appears to that FGI has
“cherry picked” its claim of privilege as to the
remaining AOBs, something courts do not permit.. U.S. ex
rel. Figueroa v. Covan World-Wide Moving, Inc., 2014 WL
5461995, at *3 (D.S.C. Oct. 27, 2014). For example, as
Plaintiffs rightly note, in its briefing on the class action
certification question FGI on more than one occasion
underscores the results of the January 2016 Litigation AOB to
argue that it is “undisputed” that one third of
the putative class would have had higher premiums upon
rewriting to FSPA and that this high number of undamaged
class members should doom the Plaintiffs' request for
class certification. Dkt. 127 at 2, 31; Dkt. 127-30 at
¶¶ 31-37. FGI has also used the results of the
specific AOB iterations to argue that the AOB tools are not
reliable enough to measure damages. Dkt. No. 127-28, at
¶ 72, Dkt. 127-30, at ¶ 34. Given this use of the
Litigation AOBs, the Court finds that FGI has waived work
product protection as to the other two AOBs, and therefore
GRANTS Plaintiffs' Motion as it relates
to the previously unproduced Litigation AOBs.
also seek to compel FGI to produce instructions from counsel
and internal correspondence regarding all five of the
Litigation AOBs. Plaintiffs argue in part that they have not
been able to learn the assumptions and/or directions that
came from FGI's outside counsel relating to the
Litigation AOBs that have already been produced and that they
have no idea what assumptions are in the two unproduced
Litigation AOBs. In addition, they argue that they are
“entitled to understand the instructions that FGI
received from its outside counsel in building these tools,
because they are critical to understanding the tools
themselves and to analyzing and comparing the different
tools.” Dkt. No. 105, at 9. FGI, on the other hand,
argues Plaintiffs are not entitled to attorney-client
communications regarding the Litigation AOBs. The Court
agrees with FGI.
a party waives attorney-client privilege when it voluntarily
discloses privileged communications to a third party,
including an adversary in litigation. Reedhycalog UK,
Ltd. v. Baker Hughes Oilfield Operations, Inc., 251
F.R.D. 238, 244 (E.D. Tex. 2008); Aspex Eyewear, Inc. v.
E'Lite Optik, Inc., 2002 WL 1592606, at *3 (N.D.
Tex. July 17, 2002); United States v. El Paso Co.,
682 F.2d 530, 539 (5th Cir. 1982) (“To retain the
attorney-client privilege, the confidentiality surrounding
the communications made in that relationship must be
preserved.”). The Fifth Circuit has held that
“[a] client waives the attorney-client privilege . . .
by failing to assert it when confidential information is
sought in legal proceedings.” Nguyen, 197 F.3d
at 206. Subject matter waiver generally occurs only where the
party holding the privilege seeks to gain some strategic
advantage by disclosing favorable, privileged information,
while holding back that which is unfavorable. In re
Sealed Case, 676 F.2d 793, 809 & n.54 (D.C. Cir.
1982); Graco Children's Products, Inc. v. Dressler,
Goldsmith, Shore & Milnamow, Ltd., No. 95 C 1303,
1995 WL 360590, at *8 (N. D. Ill. 1995).
there is no evidence to suggest that FGI waived the
attorney-client privilege. While it is certainly true that
FGI allowed its employee to be deposed about the nature of
the AOB tool, there is nothing in the parties' briefs to
suggest that FGI did not assert its privilege. In fact,
FGI's outside counsel during Ms. Tai's deposition
So I'm going to object. Let me tell you the line
we're drawing here. As far as our communications about
what scenarios are possible, what could be done, those
discussions we're claiming privilege over of course. But
as far as what does the tool do, what are the changes, how is
it different, what scenario is it looking at, you can ask all
those questions without saying, “Is that-well, is that
something that Adam told you to do, or is that something
someone else told you to do?” As far as what does the
tool do, how it works, how it runs, any ...