United States District Court, S.D. California
ORDER SUSTAINING IN PART AND OVERRULING IN PART OBJECTIONS AND REVERSING IN PART ORDER ON REMAND
BARRY TED MOSKOWITZ, Chief District Judge.
Defendant State National Insurance Company, Inc. ("State National") and Third Party Arnold & Arnold, Inc. ("A&A") (collectively "Objectors") have filed objections [Doc. 1321 to the Order on Remand re: Plaintiffs Motion to Compel ("Order on Remand") [Doc. 125]. For the reasons set forth herein, the Court SUSTAINS IN PART and OVERRULES IN PART the objections and REVERSES IN PART the Order on Remand.
On March 21, 2014, the Court remanded a discovery order with instructions to make findings as to the applicability of the attorney-client privilege to various documents sought by Plaintiff. [Doc. 79.1 On July 21, 2014, the Magistrate Judge issued the Order on Remand. Although the Magistrate Judge identified a number of documents that are privileged, he found that the privilege does not extend to any of the other disputed documents. [Doc. 125.] The Magistrate Judge found that documents shared with A&A are not confidential because disclosure was not reasonably necessary to further Defendant's interests in the litigation.
Objectors filed timely objections to the Order on Remand. [Doc. 132.] The Court held a hearing on those objections on September 3, 2014. Defendant thereafter supplemented the record as to certain documents disclosed to or held by A&A. [Doc. 166.] At the September 3 hearing, the Court made tentative rulings. The Court has reconsidered all the arguments and issues this Order, which supercedes any tentative rulings made orally on September 3, 2014.
II. STANDARD OF REVIEW
When considering objections to a magistrate judge's non-dispositive discovery order under Fed.R.Civ.P. 72(a), the district judge must modify or set aside any part of the order "that is clearly erroneous or is contrary to law." The "contrary to law" standard applies to a magistrate judge's purely legal determinations. Computer Economics, Inc. v. Gartner Group, Inc., 50 F.Supp.2d 980, 983 (S.D. Cal. 1999). The "clearly erroneous" standard applies to factual determinations and discretionary decisions. Id . See also Concrete Pipe & Prods. v. Constr. Laborers Pension Trust, 508 U.S. 602, 623 (1993) (the review is "significantly deferential, requiring a definite and firm conviction that a mistake has been committed.'"). The question of whether an attorney-client relationship existed between two persons at a particular time is a question of fact. See Larsen v. Coldwell Banker Real Estate Corp., No. 10-0401, 2012 WL 359466, *5 (C.D. Cal. Feb. 2, 2012).
A. Failure to Apply the Dominant Purpose Test
Objectors object that the Magistrate Judge failed to apply the dominant purpose test, but instead conducted an in camera review of individual documents exchanged between State National Insurance Company ("SNIC") and Gordon & Rees to determine if they "clearly contain attorney-client information."
Technically, Objectors are correct. The proper procedure would have been to first determine the dominant purpose of the relationship between SNIC/Optimum and Gordon & Rees. Costco v. Superior Court, 47 Cal.4th 725, 740 (2009). If it was determined that the communications in question were made during the course of an attorney-client relationship, the communications would be privileged. Id.
Upon review of the evidence in the record, the Court finds that the dominant purpose of the relationship between SNIC/Optimum and Gordon & Rees was legal in nature. Optimum, the claims agent for SNIC, retained Gordon & Rees to provide coverage advice and general legal advice regarding Plaintiff's claims. (Didier Decl. [Doc. 104-1] ¶ 8.) Both Optimum and SNIC were clients of Gordon & Rees. (Id.) The Court finds it significant that Optimum retained Gordon & Rees shortly after being contacted by Annette Clark, counsel for Plaintiff, regarding the claims. (Id.) As explained by Ms. Didier, former president of Optimum, it was out of the norm for the insured to have retained an attorney so early in the claims process: "[W]e wanted guidance because that was a very unusual step on the part of the insured. So we felt it would be reasonable to have someone that would be speaking the same language as his attorney to ensure that things ran smoothly and were handled properly." (Didier Dep. [Doc. 104-5] 204:3-9.)
Accordingly, communications between SNIC and/or Optimum and Gordon & Rees are privileged. However, upon review of the limited number of documents that are still in dispute, there are very few communications that are solely between SNIC and/or Optimum and Gordon & Rees. The bulk of the communications were also shared with A&A, implicating the issue of waiver. Therefore, the ...