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Mediation Statements in Federal Courts May or May Not be Privileged and Can Be Waived

The Bankruptcy Court for the Western District of Missouri declined to recognize a mediation privilege in In re Lake Lotawana Community Improvement District, 2016 WL 7984347 (Bankr. W.D. Mo. Sept. 19, 2016), despite the fact that it conceded that other circuits have done so. Lake Lotawana did not involve a mediation with a plaintiff and an insured; however, the cases presented by the parties drew heavily from the case law in the bad faith context. More specifically, in a Chapter 9 bankruptcy proceeding, the debtor must allege that it negotiated in good faith at a pre-petition mediation. In Lake Lotawana, the mediation failed and the debtor alleged as a prerequisite to filing a Chapter 9 proceeding that it had negotiated

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Are Attorneys’ Bills Privileged Once Litigation Ends – California Supreme Court Says No in ACLU Litigation?

The California Supreme Court recently held, in Los Angeles Board of Supervisors v. Superior Court (2016) that attorneys’ invoices may not be protected by the attorney-client privilege after litigation ends. The issue arose out of a lawsuit brought by the ACLU to obtain billing records by law firms representing the City of Los Angeles to defend litigation brought by jail inmates. The ACLU’s position was that these law firms engaged in “scorched earth” tactics. The Court affirmed some limitations on production of these bills. The Court conceded that information could be protected if it tells the client “of the nature or amount of work occurring in connection with a pending legal event” or even an uptick in amounts spent “could

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Production of Insurance Company Claim Files In Bad Faith Litigation: Three Years After Cedell, Where Are We?

Bad faith litigation is complex and costly. In these types of cases, the discovery process often sets the initial tone of the lawsuit and the request for production of the insurer’s claim file is automatic. Typically, the insurer’s response is to produce a heavily redacted copy of its claim file, including a privilege log that cites the attorney-client privilege and work product doctrine as the bases for the redactions and withholdings. In response, the insured files a motion to compel, claiming that the attorney-client and work product privileges do not apply in bad faith litigation. The courts are left to decide if the insurer is required to produce a full and un-redacted copy of its claim files. Under Federal Rule

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Insurers’ Beware: Defending Bad Faith Claim May Lead to Waiver of Privileged Communications

On July 27, 2016, the United States District Court for South Carolina ordered an insurer to turn over its privileged communications. The Court explained that the insurer waived the protections afforded under the attorney-client privilege and work product doctrine by asserting it acted in good faith in the defense of its insured. See State Farm Fire & Casualty Co., et al. v. Admiral Ins. Co., 2016 WL 4051271 (D. S.C. July 25, 2016). While this is a district court opinion and may be subject to appeal, insurers should still be cognizant of the issue. James McElveen filed suit after he was seriously injured during a fraternity hazing event hosted by Maurice Robinson and Phi Beta Sigma Fraternity. Robinson tendered the

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Will Discovery Unlock Your Claim File? Federal or State Court Jurisdiction Could Make The Difference

Differences between federal court and state court procedure can be important for insurers that find themselves involved in “bad faith” litigation.  If a lawsuit alleging extracontractual claims is filed in federal court, or if it is removable to the federal court’s jurisdiction, the parties’ discovery approach and procedural strategies could significantly change from those of a similar case that is litigated in state court. For example, discovery into the contents of an insurer’s claim file in bad faith litigation may be more restricted in federal court than in state court.  As a general suggestion to all insurers, the editors of “Avoiding Bad Faith” believe that claims representatives can improve the substance of their claim files by always assuming that everything

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Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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