Root Cause Analysis Must Be Produced Where Not Substantively Different from Analyses Prepared in Ordinary Course of Business

An Arizona federal court granted a motion to compel production of a Root Cause Analysis Report (“Report”) prepared by a third party at the request of the owner of an electric power station generator that failed.  Following the generator’s failure, the owner’s general counsel emailed two senior managers in the company instructing them to retain a third-party investigator to conduct a root cause analysis of the failure “in anticipation of litigation.”  When the owner hired the third-party investigator, it informed the third-party investigator that the root-cause analysis was for purposes of litigation.  Based on the third-party’s Report’s findings, the owner brought a lawsuit against the generator’s manufacturers (the “Defendants”) for negligence, product liability, and breach of implied warranty.

The Defendants, in discovery, requested that the owner produce all “documents relating or pertaining to any investigation of” the generator’s failure.  The owner claimed that it did not have to produce the root cause analysis because it was protected work product and that it was not prepared in the ordinary course of business because root cause analyses of generator failures were typically handled internally and not by third parties operating at the direction of the owner’s general counsel.  The Defendants brought a motion to compel, which the court granted..

Defendants, in arguing that the Report was one of many such documents prepared in the owner’s ordinary course of business, cited another root cause analysis prepared two months after an unrelated generator failure, regardless of litigation prospects. The court concluded it was “a close question” whether the Report should be considered protected work product but ultimately found it should not be protected.  The court explained:  “The Report is a dual purpose document.  On one hand, it was prepared with the possibility of litigation in mind:  It was commissioned by [owner’s] general counsel expressly for litigation, and each page was marked ‘Prepared at the Direction of Counsel.’  On the other hand, the Report serves non-litigation purposes as well.  ‘Following any industrial accident, it can be expected that designated personnel will conduct investigations, not only out of a concern for future litigation, but to prevent reoccurrences [and] to improve safety and efficiency in the facility.’  In analyzing the root cause of the generator’s failure, the Report helps prevent similar failures.”

In weighing the balance, the court reasoned that the Report was not prepared “because of” the prospect of litigation for two reasons.  First, the court found no substantive difference between the Report and any other root cause analysis the owner had conducted following different generator failures.  Second, the length of time between the Report and the filing of the lawsuit—nearly two years—indicated that the Report was not prepared “because of” litigation, especially in this case where the party seeking work-product protection was also the party bringing the lawsuit:  “If Plaintiffs truly anticipated litigation at the time of the Report, it is not clear why they waited so long after receiving the Report to sue.”

Ultimately, the Court found that the Plaintiffs had not shown that the Report “would have been created in substantially similar form but for the prospect of litigation,” and therefore failed to demonstrate that the report was prepared “in anticipation of litigation.”

The case is number 14-cv-8155 in the U.S. District Court for the District of Arizona.

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