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Federal judges should never look to state law when analyzing a claim of privilege under the work-product doctrine because — unlike the attorney-client privilege — work product is governed by a uniform federal standard, the 3rd U.S. Circuit Court of Appeals has ruled. The ruling in Coregis Insurance Co. v. Law Offices of Carole F. Kafrissen reverses a decision by U.S. District Judge Eduardo C. Robreno of the Eastern District of Pennsylvania that ordered a legal malpractice insurer to produce six documents as part of discovery in a lawyer’s bad-faith counterclaim. In her counterclaim, Kafrissen alleges that Coregis acted in bad faith by settling a malpractice suit against her for $800,000 without her knowledge or consent and in a way that harmed her reputation. In discovery, Kafrissen requested that Coregis provide the entire claims file it held on the underlying malpractice claim. Coregis produced nearly all of the documents but refused to provide a November 1998 memo prepared by a claims representative and five other documents referred to in that memo, arguing that they were protected under both the work-product doctrine and the attorney-client privilege. Robreno found that the work-product privilege “is not absolute,” and that a lawyer’s documents “may be discoverable in situations where the legal opinion of an attorney is relevant in a civil action.” Applying the Pennsylvania work-product doctrine, Robreno found that “the information need only be ‘relevant,’ and the party seeking the materials need not show substantial hardship.” Robreno also found that the documents were not protected by the attorney-client privilege since, under Pennsylvania law, the privilege cloaks all communications from a client to a lawyer, but doesn’t necessarily protect the lawyer’s communications with the client unless disclosure would risk exposing the client’s communication. In doing so, Robreno rejected Coregis’ argument that the 3rd Circuit has already effectively extended the privilege to cover all communications from lawyer to client, citing a footnote in the 3rd Circuit’s 1997 decision in In re Ford Motor Co. The Ford footnote was merely dicta, Robreno said, and not worthy of following. “To follow the 3rd Circuit’s dictum in footnote nine would place the court on a collision course with a well developed and consistently applied Pennsylvania rule on attorney-client privilege,” Robreno wrote. “Under these circumstances, and with the greatest respect, the court declines to take Pennsylvania law on attorney-client privilege to where neither the Pennsylvania legislature nor the Pennsylvania Supreme Court authorizes this court to go.” Now the 3rd Circuit has reversed Robreno’s order with an unpublished decision that focuses entirely on the work-product doctrine. After finding that all six documents are privileged work product, the unanimous three-judge panel found it did not need to decide the attorney-client privilege claims. Writing for the court, 3rd Circuit Judge Richard L. Nygaard found that state law is irrelevant when a claim of privilege under the work-product doctrine is raised in federal court since the privilege is directly addressed in Rule 26(b)(3) of the Federal Rules of Civil Procedure. Under the federal rule, Nygaard found, the party seeking discovery of documents “created in the anticipation of litigation” must show a “substantial need” for the materials in the preparation of its case. The demanding party must also show it would be “unable without undue hardship to obtain the substantial equivalent of the materials by other means,” Nygaard wrote. And even if those two requirements are met, Nygaard said, the federal courts will still withhold documents that would disclose “mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the lawsuit.” Applying the federal rule to Kafrissen’s discovery request, Nygaard found that all six documents were created by Coregis or its representatives in anticipation of the coverage litigation. “Here, disclosure is inappropriate because the documents anticipate coverage litigation and relate primarily to the mental impressions and legal opinions on how to proceed with the coverage litigation,” Nygaard wrote. “Because these documents relate to the current litigation and not the underlying claim, Kafrissen cannot demonstrate substantial need and the documents should be protected,” Nygaard wrote in an opinion joined by 3rd Circuit Senior Judge Joseph F. Weis and visiting U.S. District Judge Joseph E. Irenas of the District of New Jersey. ORIGIN OF THE DISPUTE The dispute between Coregis and Kafrissen began when Cynthia Clark, one of Kafrissen’s former clients, accused her of malpractice in her handling of a medical malpractice suit. During a 1994 trial of Clark’s suit, Kafrissen struck a settlement with one of the doctors for $600,000 — $200,000 from the doctor’s primary carrier and $400,000 from the CAT Fund. The settlement also provided that Clark agreed to limit her recovery from the non-settling defendants to $200,000 each. In a separate settlement, the Philadelphia College of Osteopathic Medicine agreed to be held vicariously liable for the negligence of the remaining, non-settling defendants and, in exchange, was removed from the verdict form. The jury ultimately found in Clark’s favor and awarded her $4.1 million, finding the two doctors equally responsible. But the doctor who had taken the case through trial argued that Clark’s settlement with the other doctor had effectively limited her recovery to an additional $200,000. Kafrissen argued that the settlement with the first doctor was designed only to protect the CAT Fund and therefore did not affect her right to collect half of the verdict, or $2.05 million, from the non-settling doctor. The trial judge agreed, but said Clark was entitled to just $1.05 million because the joint tortfeasor release with the first doctor was intended to cap the CAT Fund’s contribution and that she was therefore not entitled to receive the $1 million in CAT Fund coverage for the second doctor. But the Pennsylvania Superior Court reversed and held that the joint tortfeasor release was “clear and unambiguous” in limiting Clark’s recovery from the non-settling defendants to $200,000 each. In her legal malpractice suit, Clark complained that Kafrissen had “failed to understand” the scope of the joint tortfeasor release and “did not fully explain” it to Clark. Coregis provided Kafrissen a defense to the suit but reserved its right to deny coverage. In 1998, Coregis filed the federal declaratory judgment suit, seeking a ruling that it owed no coverage because Kafrissen had failed to notify the insurer of Clark’s potential claim when she had first obtained the policy. Clark had demanded $3 million to settle the legal malpractice suit — the limit of Kafrissen’s policy. Coregis claims that when it refused to pay the demand, Kafrissen’s lawyer threatened to enter a consent judgment in Clark’s favor unless Coregis dropped the federal suit. Ultimately, Coregis settled with Clark for $800,000, but continued the federal suit to seek reimbursement from Kafrissen. Robreno found that the insurer’s decision to settle with Clark had effectively mooted its claim for a declaratory judgment. He also ruled that Coregis had no right to seek reimbursement of its voluntary payment to Clark. Granting summary judgment in Kafrissen’s favor on Coregis’ claim for reimbursement, Robreno said “it is elementary that one who voluntarily pays money with full knowledge of the facts, without any fraud having been practiced upon him, cannot recover it back.” Coregis has not yet appealed the summary judgment decision. The appeal decided last week was limited to the discovery issues and was taken immediately after Robreno ordered that the documents be turned over. Kafrissen was represented in the appeal by attorneys Ronald F. Kidd and Thomas D. Schneider. Coregis was represented by attorney Steven J. Polansky of Marshall, Dennehey, Warner, Coleman & Goggin’s office in Cherry Hill, N.J., along with Jeffrey A. Goldwater, Bryan G. Schumann and Edward F. Ruberry of Bollinger, Ruberry & Garvey in Chicago.

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