St. James Stevedoring Co. v. Femco Machine Co.

Citations: 173 F.R.D. 431; 38 Fed. R. Serv. 3d 1040; 1998 A.M.C. 190; 1997 U.S. Dist. LEXIS 8946; 1997 WL 346728Docket: Civil Action No. 96-3168

Court: District Court, E.D. Louisiana; June 23, 1997; Federal District Court

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A motion to compel has been filed by defendant Femco Machine Company, seeking an order for plaintiffs St. James Stevedoring Co. Inc. and St. Paul Fire and Marine Insurance Company to produce documents listed on their privilege log. This stems from a September 29, 1995, accident involving a crane sold by Femco, which fell and damaged both the crane and an adjacent vessel. Following the incident, St. James engaged Campana Marine Service, Inc. to investigate, resulting in a marine survey report dated December 5, 1995.

Under Rule 26(b)(1), documents are generally discoverable unless created in anticipation of litigation, which requires a party to demonstrate that the documents qualify as work product. Courts have typically ruled that reports prepared by marine surveyors for liability insurers are not considered prepared in anticipation of litigation if the insurers have not yet engaged attorneys and if the surveyors do not report directly to counsel, even if litigation is a possibility. This principle was supported by the reasoning in *M/V Savannah*, which emphasized that insurance companies conducting investigations post-casualty are performing their regular business functions, and thus the documents generated are not protected from discovery.

The court highlighted that the transition from ordinary business to anticipation of litigation is not clearly defined. In previous cases, such as *M/V Savannah* and Spaulding, the courts found that investigations conducted shortly after accidents, under normal business practices, did not indicate an anticipation of litigation, despite the potential for legal claims arising from those accidents.

The individual contacted marine surveyors to investigate the accident's circumstances, noting that such a thorough inquiry was unprecedented for his company. It was established that while the insurer retained legal counsel in late January 1972, that counsel did not engage the marine surveyors or partake in the investigations leading to the relevant reports. The Spaulding court determined that the initial marine surveyor reports, dated January 10 and January 21, 1972, were part of the insurer's effort to gather information post-accident, despite the acknowledgment of a potential claim. The court must establish when litigation was reasonably anticipated, a point of contention between the plaintiffs and defendants. Plaintiffs argue that reasonable anticipation began on September 29, 1995, when a fax indicated that St. James had notified the crane supplier, Femco, regarding possible claims related to the crane's design flaws. Conversely, defendants assert that this anticipation did not arise until March 8, 1996, when St. James received an engineering report from Courtney Busch that clarified the accident's cause. Supporting the defendant’s stance is an October 2, 1995, fax discussing tests for the failed pendant wire, indicating that formal notice to Femco would only occur after replacement parts were secured. Ultimately, the court concluded that the proper date for reasonable anticipation of litigation was March 8, 1996, coinciding with the receipt of Busch’s report.

Parties involved were investigating an incident to determine the cause and potential claims. A fax dated September 29, 1995, indicated uncertainty regarding the design's fault. Although claims were anticipated shortly after the accident, legal action was contingent on further information. Under Rule 26(b)(3) of the Federal Rules of Civil Procedure, documents created in anticipation of litigation are discoverable only if the requesting party demonstrates substantial need and inability to obtain equivalent materials without undue hardship. The court found that certain documents dated after March 8, 1996, listed in the plaintiffs’ privilege log were protected from discovery under this rule. These include multiple correspondences and faxes to W. P. The defendant failed to prove the necessary need to override the plaintiffs’ work product privilege. Consequently, the court ordered the plaintiffs to provide documents dated before March 8, 1996, while protecting those dated after that. Notably, an expert report by Dr. Courtney Busch is included in the privilege log, but plaintiffs agreed to share it as it was used by another expert. Additionally, the defendant sought documents related to cargo operations conducted by the Lima 2400 crane before the incident, but this issue was rendered moot as the plaintiffs indicated responsive documents were being compiled. The court acknowledged that it could also consider Rule 26(b)(4)(B) for discovering expert opinions if necessary, although this was not directly addressed by the parties.

Plaintiffs do not intend to present Captain R.L. Campana, the surveyor of the relevant report, as a trial witness. The court determines that Rule 26(b)(3) applies to the survey report, which does not qualify as an 'expert report' under Rule 26 or the Civil Justice Delay Reduction Plan. This conclusion is supported by precedents, specifically M/V Savannah and Spaulding v. Denton, where courts applied Rule 26(b)(3) to marine survey reports created shortly after incidents. Plaintiffs argue against producing documents based on work product privilege; however, the court finds the August 11, 1972, marine survey report was generated in anticipation of litigation, as the claim was seven months old with both parties legally represented. The insurer's claim of preparing for litigation is credible due to prior investigative work and legal consultations. The timing of the lawsuit's filing in September 1996 does not negate the work product doctrine's applicability to documents created before that date, as the doctrine covers materials prepared 'in anticipation of litigation.' Additionally, a fax dated September 29, 1995, indicating a desire to avoid litigation through a 'Letter of Intent,' does not qualify for work product protection. The court concludes that litigation was not reasonably anticipated until March 8, 1996, rendering documents listed on the plaintiffs' privilege log created prior to that date not protected under Rule 26(b)(3). Documents containing opinions from St. James’ representatives regarding the Busch report may receive heightened protection.