Washington Federal Court Emphasizes Privilege Logs Must Describe Nature Of The Documents Withheld

The issuer of a commercial property insurance policy refused to indemnify its insured for losses resulting from the failure of a methane purification system at a landfill gas processing facility in the State of Washington.  The insured filed suit and then sought to compel production of the insurer’s entire claim file or have the court agree to an in camera review of the relevant portion of the claim file the insurer was attempting to withhold on grounds of privilege.  The U.S. District Court for the Western District of Washington determined that neither party’s request for a state’s choice of law was accurate.  The insurer wanted to apply Virginia law (where the insured was located) and the insured wanted to apply Washington law.  The court concluded that neither Virginia nor Washington law should apply given that the insurer was located in Pennsylvania, communicated with an agent located in New York, New Jersey, or British Columbia, and with an attorney located in Illinois.  To the extent Washington courts apply the communicative privilege law of a state other than Washington, they follow Section 139 of the Restatement (Second) of Conflict of Laws and apply the law of the state with the “most significant relationship” with a communication.  Even though the court could not ascertain which state had the “most significant relationship” to the communications at issue (other than to know it was not Washington or Virginia), the court determined that the right state’s law would conflict with Washington’s given that Washington was the only state to its knowledge that declared the attorney-client privilege presumptively inapplicable in a bad faith claim from a first-party insured.  Under Washington state law, an insurer can overcome that presumption if it can show that its attorney was not engaged in the quasi-fiduciary tasks of investigating and evaluating or processing the claim but instead was providing the insurer counsel as to its own potential liability.  The Washington state court is mandated to conduct an in camera review in this situation.  The U.S. District Court for the Western District of Washington, however, concluded that federal courts exercise discretion in deciding whether in camera review is appropriate.

Here, the court ultimately determined that the insurer must re-submit its privilege log after bolstering it to describe the nature of the documents it was withholding, pursuant to Federal Rule of Civil Procedure 26(b)(5).  That rule provides that a party asserting privilege must “describe the nature of the documents, communications, or tangible things not produced or disclosed — and to do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.”  Merely listing the number of pages in the document, the date of the document, who sent and received the document, and noting whether the document is an email, letter, or some other type of document is not enough.