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Industry Insights

Holden: Attorney Evaluation Remains Privileged

  • State: Alabama

On Nov. 27, the Alabama Supreme Court released its opinion in Ex parte Dow Corning Alabama Inc., et al. In this case an employee was injured while working for Alabama Electric Co. Inc. The injury occurred at Dow Corning Corp., which sought to enforce an indemnification agreement that it alleged it had with the employer, Alabama Electric Co. Inc.

Joshua G. Holden

Joshua G. Holden

Also involved in the matter was Alabama Electric Co.'s insurance carrier, National Trust Insurance Co. Inc. Prior to the settlement, the Dow defendants demanded a defense and indemnification from Alabama Electric and National Trust. Alabama Electric ultimately refused the demand.

The Dow defendants then settled the case with the employee and, approximately one month after the settlement, Alabama Electric and National Trust filed a declaratory judgment seeking a ruling that they were not responsible for the defense cost incurred by the Dow defendants in the personal injury settlement, nor were they responsible for the settlement proceeds.

The Dow insurers later filed a counterclaim seeking reimbursement for defense costs and settlement funds that were paid to the Alabama Electric employee in the personal injury action. During the declaratory judgment action, Alabama Electric sought to depose a Dow representative and requested documents related to the decision to settle, which would include the Dow attorney’s evaluation and recommendations for the defense and settlement of the claim.

The Dow defendants asserted that the information was privileged and protected by the attorney-client privilege and/or the work product doctrine. American Electric asserted that the Dow defendants waived the protection by seeking indemnity and made the reasonableness of the settlement an issue.

The Alabama Supreme Court ultimately determined that the Dow attorney evaluation and recommendations were still privileged and did not have to be produced despite the fact that the issue of whether the settlement was reasonable and made in good faith was to be determined.

The court held that American Electric had access to the facts and evidence, and other non-privileged information, that could be used in determining whether the evaluation and settlement was reasonable. This would include experts whom both parties had intended to use to review the information and determine the reasonableness of the settlement.

Therefore, the court held that the Dow attorney evaluation and recommendations were to remain privileged and did not have to be turned over. As a result, the court granted Dow’s petition for writ of mandamus and directed the trial court to vacate its discovery order that was going to require the Dow defendants to produce their attorney evaluations and recommendations.

The court further held that an appropriate protective order was to be entered.

Joshua G. Holden is a partner of Fish Nelson & Holden LLC, headquartered in Birmingham, Alabama. This entry is republished, with permission, from the firm's Alabama Workers' Comp Blawg.

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