The opinion of the court was delivered by: Arpert, U.S.M.J
MEMORANDUM OPINION AND ORDER
This matter having come before the Court on a Motion by Defendant Great American E&S Insurance Company ("Defendant") to compel "non-party Norman Spencer McKernan Agency ("NSM") to produce documents requested in a subpoena issued by Defendant pursuant to Rule 45 of the Federal Rules of Civil Procedure...which NSM has improperly withheld or redacted on the purported grounds of work product...and awarding Defendant...costs and attorney's fees" [dkt. entry. no. 13], returnable June 6, 2011. Plaintiff Westwood Products, Inc. ("Plaintiff" or "Westwood") filed a letter on May 27, 2011 joining Defendant's Motion. NSM filed opposition on May 27, 2011. Defendant filed a reply brief on June 3, 2011. For the reasons stated herein, Defendant's Motion is granted in part and denied in part.
II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On December 12, 2008, "Plaintiff was sued in the Ontario Superior Court of Justice by Raymond and Mary Joanne Wilson ("Wilson") and Carol Fumerton ("Wilson and Fumerton Action") in connection with two incidents of environmental contamination that occurred during a period encompassing October 2006 to January 2007, in which heating oil allegedly leaked from the fill pipes at the neighboring Wilson and Fumerton mobile homes". See Pl.'s Compl., dkt. entry no. 1 at 2. "The resulting oil spill caused substantial soil contamination". Id. "Plaintiff supplied a filter that allegedly failed and allegedly contributed to the cause of the spill" and thus, the "Wilson and Fumerton Action alleges that Plaintiff, among others, is liable for the property damage and costs of cleaning up the contamination" in excess of $2,000,000. Id. at 2-3.
Plaintiff alleges that Defendant issued a policy to Plaintiff covering the period January 24, 2006 to January 24, 2007 which provided liability coverage to Plaintiff with property damage limits of $1,000,000. Id. at 2. Plaintiff maintains that the policy "provides Product/Completed Operations Hazard insurance...for claims of property damage occurring away from Plaintiff's premises and arising out of Plaintiff's products or work". Id. Plaintiff further contends that "before the inception of the policy, Plaintiff's President inquired of Plaintiff's insurance broker, Technical Insurance Company ("TIC"), whether the policy would provide coverage in the event of a claim that a Westwood oil filter were to leak causing a spill and environmental contamination". Id. at 3. At that time, Plaintiff "informed TIC that, if the standard form 'Pollution Exclusion' that appeared in the policy excluded coverage for such claims, then the policy would be unacceptable". Id. Plaintiff alleges that in response, "TIC...inquired of NSM, believed to be the broker that placed the policy with Westwood's broker, TIC, whether the policy would provide coverage in the event of a claim that a Westwood filter failed and caused environmental contamination". Id. Plaintiff alleges that "[o]n January 25, 2005, Bryan Kissinger ("Kissinger") of NSM wrote an email to Florence Liebowitz ("Liebowitz") of TIC as follows":
Per my conversation with the Underwriter, he and I have come to the agreement that the Pollution Exclusion is not apllicable [sic] to the Products Coverage.
For example, if a filter (that the insured sold) were to leak and spill oil, there would be coverage. The claim would be handled. If a tank on the insured's premises were to spill, there would be no coverage.
After receiving a letter on July 9, 2007 from "Wilson's insurance carrier...describing the oil leak at the Wilson residence and advising Plaintiff to place its insurance company on notice of...[the] potential claim against Plaintiff", Plaintiff "notified Defendant...and requested that Defendant protect [its] interests through the liability coverage provided by the policy". Id. at 4. On September 7, 2007, "Defendant denied all responsibility under the policy, citing, among other provisions, the so-called Absolute Pollution Exclusion that appears in the policy". Id. Plaintiff alleges that when it "requested that Defendant reconsider its position...in light of the January 25, 2006 [sic] email correspondence from Kissinger, Defendant retained Rivkin Radler as coverage counsel". Id. In a letter dated July 1, 2008, "Rivkin Radler reiterated Defendant's position that the so-called Absolute Pollution Exclusion in the policy excluded coverage for the contamination of the Wilson and Fumerton properties". Id. Thereafter, Plaintiff "notified Defendant of the...[Wilson and Fumerton Action] in Canada and requested that Defendant defend Plaintiff against the claims in that action". Id. Again, by letter dated April 30, 2009, "Rivkin Radler, on behalf of Defendant, denied all coverage, citing, among other provisions, the so-called Absolute Pollution Exclusion in the policy". Id.
On July 16, 2010, Plaintiff filed a Complaint seeking a declaratory judgment against Defendant alleging breach of contract related to the insurance policy at issue. Id. at 1-6. Plaintiff alleges that "Defendant's denial of coverage under the circumstances does not comport with New Jersey law" because "New Jersey courts interpreting the so-called Absolute Pollution Exclusion that appears in the policy have ruled that the exclusion applies only to traditional environmental pollution events, such as contamination resulting from waste disposal, and not to the kinds of releases alleged in the Wilson and Fumerton Action". Id. at 5. Further, Plaintiff alleges that "Defendant is also estopped from denying coverage in this case...because of the statements Defendant's underwriter made to NSM in connection with the application of the so-called Absolute Pollution Exclusion to the circumstances of this case". Id.
On February 17, 2011, "Defendant served a subpoena....on NSM....as the broker involved in the procurement of the...policy at issue in the subject action". See Def.'s Affirmation ("Aff.") of Michael A. Kotula ("Kotula"), dkt. entry no. 13-2 at 1-2. "The subpoena called for the production of documents, including, without limitation, communications and correspondence concerning the negotiation and procurement of the...[insurance policy at issue]" in addition to "all documents related to any communications NSM has had with its Errors and Omissions insurer relating to Plaintiff". Id. at 2. Defendant states that in response, "[o]n March 24, 2011, NSM produced certain documents" but also "withheld, or redacted material from, twenty-three documents on the grounds that they constituted attorney work product". Id. Defendant maintains that the "documents withheld or redacted include emails and letters spanning the time period from 2007 to 2010 and containing both internal communications among NSM employees and external communications between NSM and persons employed by unrelated companies". Id. Defendant contends that the "documents withheld or redacted are clearly communications between business people who are not attorneys" and "there is nothing on the...[privilege] log indicating that the documents contain any thoughts or mental impressions of counsel, or were prepared by or at the direction of counsel". Id. Further, Defendant contends that "some of the communications being withheld are external communications with persons outside of NSM" such as employees of TIC, "a totally separate entity that is neither controlled by...nor affiliated with...NSM...[and an entity which] has taken an adversarial position to NSM with respect to the negotiations involving the [insurance policy at issue]". Id. at 3. Other communications are with employees of Swiss Re, the company "which appears to have been the insurance carrier that provided Errors & Omissions coverage for NSM during the relevant period of time". Id. In addition to production "of the documents listed on NSM's privilege log", Defendant "requests...costs and attorney's fees incurred in making the present motion". Id. at 4.
NSM maintains that it "redacted certain portions of responsive documents on the basis that they were protected by the work-product privilege". See NSM's Opp'n Br., dkt. entry no. 16 at 1. "These redactions fall into three different categories: (1) email communications between NSM and TIC, Plaintiff's retail broker, regarding a potential E&O claim by Plaintiff against NSM; (2) email communications between NSM and Brian Butcher, Esquire ("Butcher") of Swiss Re Insurance ("SRe"), NSM's E&O carrier, regarding a potential E&O claim by Plaintiff against NSM; and (3) email communications between NSM representatives regarding a potential E&O claim by Plaintiff against NSM". Id. at 1-2.
Based upon the fact that the parties were unable to reach an agreement with respect to the disputed materials, Defendant filed the present Motion on May 13, 2011. See dkt. entry no. 13.
A. Defendant's Arguments in Support of the Motion
1. NSM has failed to meet its burden of proving internal and external communications among various business people are protected from disclosure under the attorney work product doctrine.
Defendant notes that "NSM has not argued that the documents are irrelevant or not likely to lead to the discovery of admissible evidence" but rather, "has withheld the documents...or redacted material from the documents...solely on the basis that the documents are protected by the work product doctrine". See Def.'s Br., dkt. entry no. 13-1 at 3. Further, Defendant notes that "NSM's privilege log lists as the basis for its withholding or redaction as work product rather than attorney work product". Id. Defendant maintains that "NSM's claims of work product protection are entirely unfounded". Id.
Citing Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124 (3d Cir. 2000) and Conoco, Inc. v. United States Dep't of Justice, 687 F.2d 724, 730 (3d Cir. 1982), Defendant contends that "NSM, as the party asserting the work product protection, bears the burden to show the doctrine applies". Id. However, "[g]iven the vague description of the documents and the nature of the persons involved in the relevant communications and correspondence being withheld or redacted, NSM has...not met its burden". Id. at 3-4. Noting that the "attorney work product doctrine is codified in FED. R. CIV. P. 26(b)(3)(A)" and citing In re Gabapentin Litigation, 214 F.R.D. 178, 183-84 (D.N.J. 2003), Defendant maintains that "[c]courts in the Third Circuit have applied a two-part test for determining whether the documents at issue should be protected under the attorney work product doctrine". Id. at 4. Pursuant to Louisiana Mun. Police Employees Ret. Sys. v. Sealed Air Corp., 253 F.R.D. 300, 306 (D.N.J. 2008), the "work-product doctrine requires that the materials at issue be prepared or obtained: (1) in anticipation of litigation; and (2) primarily for the purpose of litigation". Id. More specifically, the "anticipation of litigation element requires more than the inchoate possibility or likely chance of litigation" and "is satisfied only if the withholding party can establish an identifiable specific claim of pending litigation". Id. The "purpose of the litigation prong requires that the specific facts and circumstances of a given case establish that the document was prepared or obtained because of litigation and not for business or other reasons". Id. According to United States v. Rockwell Int'l, 897 F.2d 1255, 1266 (3d Cir. 1990), Defendant maintains that "[d]ocuments created in the ordinary course of business, even if they prove useful in subsequent litigation, are not protected by the work product doctrine". Id.
Citing In re Cendant Corp. Sec. Litig., 343 F.3d 658, 661-62 (3d Cir. 2003), Defendant contends that "the purpose of the attorney work product protection is to promote the adversary system by sheltering an attorney's mental process so as to provide a safe area to analyze and prepare a case". Id. at 5. Citing Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1428 (3d Cir. 1991) and Hickman v. Taylor, 329 U.S. 495, 510-11 (1946), Defendant further contends that "the attorney work product doctrine protects the confidentiality of materials prepared by or on behalf of attorneys in anticipation of litigation and thereby advances the adversary system by enabling attorneys to prepare cases without fear that those materials will be used against their clients". Id. Pursuant to In re Grand Jury (Impounded), 138 F.3d 978, 981 (3d Cir. 1998), United States v. Nobles, 422 U.S. 225, 238-39 (1975), and Cooper Health Sys. v. Virtua Health, Inc., 259 F.R.D. 208 (D.N.J. 2009), Defendant states that "courts have clearly held that where...documents were neither prepared by or for attorneys, attorney work product protection will be denied". Id. "Where the author of the document is not an attorney, the Third Circuit has limited work-product protection to materials prepared by an attorney's agent, but only if that agent acts at the attorney's direction in creating such documents". Id. Defendant compares the present dispute to that which existed in Cooper Health, where "the court found that email communications between representatives of non-parties to that case regarding the lawsuit at issue were not work product because they were neither prepared by or for attorneys, and no evidence was presented that those who had prepared the emails were acting as agents or consultants for attorneys". Id.
"As was the case with the subpoenaed non-party in Cooper Health, NSM has...failed to support its claim that the documents on its privilege log fall within the protection of attorney work product". Id. Noting that "the emails and other correspondence on NSM's privilege log consist solely of communications among various business people...with no attorneys copied on any of the documents", Defendant argues that "NSM has not provided any evidence that any of the documents were prepared at the direction of or for the benefit of counsel, or that any of the authors of those documents were acting as the agents of counsel". Id. at 5-6. Under these circumstances, Defendant maintains that the Court should grants its Motion. Id. at 6.
2. Pursuant to FED.R.CIV.P. 37(a)(5)(A),Defendant is entitled to attorneys' fees and costs related to filing this Motion. Pursuant to FED. R. CIV. P. 37(a)(5)(A) and as set forth above, Defendant maintains that "NSM's claim of work product protection is completely unjustified". Id. Defendant notes that it "tried in good faith on several occasions to obtain from NSM discovery of the documents prior to making this Motion, but NSM refused" production. Id. "Accordingly, Defendant respectfully submits that it is entitled to an Order requiring NSM to reimburse Defendant for its...[attorneys' fees and costs] incurred in making the present Motion...". Id.
B. NSM's Arguments in Opposition to the Motion
Initially, NSM notes that Defendant "argues that the work-product privilege is inapplicable to the documents withheld by NSM" based upon the fact "that the documents at issue were not prepared by or for attorneys, or at an attorney's direction". See NSM's Opp'n Br., dkt. entry no. 16 at 2. NSM asserts that Defendant's argument "fails for two reasons: (1) it is contrary to the plain language of FED. R. CIV. P. 26(b)(3); and (2) it is unsupported by federal precedent". Id. In addition, NSM maintains that Defendant "is not entitled to costs and fees because NSM's objection is substantially justified". Id.
1. NSM's objection is valid because the work-product privilege protects documents prepared in anticipation of litigation by and for a party, and by and for a party's non-attorney representative.
Citing FED. R. CIV. P. 26(b)(3), NSM contends that "a party can withhold documents that were (1) prepared by or for it or its representative, (2) in anticipation of litigation". Id. at 2-3. Citing In re Cendant Corp. Securities Litig., 343 F.3d 658, 663-65 (3d Cir. 2003), NSM maintains that the "requesting party can overcome this privilege only if it demonstrates the requisite showing of need" based upon the two tier protection provided by Rule 26(b)(3). Id. at
3. "First, work prepared in anticipation of litigation is discoverable only upon a showing of need and hardship". Id. "Second, core or opinion work product that encompasses the mental impressions, conclusions, opinion, or legal theories of an attorney or other representative of a party concerning the litigation is generally afforded near absolute protection from discovery". Id. Thus, NSM argues that "core or opinion work product receives greater ...