In Alabama, Attorney Evaluation Still Privileged Even if Reasonableness of Third Party Settlement is at Issue

04
Dec
2019

In Alabama, Attorney Evaluation Still Privileged Even if Reasonableness of Third Party Settlement is at Issue

On November 27, 2019 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 Company, Inc. The injury occurred at Dow Corning Corporation. Dow Corning sought to enforce an indemnification agreement that it alleged it had with the employer, Alabama Electric Company, Inc. Also involved in this matter was Alabama Electric Company’s insurance carrier, National Trust Insurance Company, 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 counter claim 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 in the deposition notice 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 defendant’s asserted that said 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 or not the settlement was reasonable and made in good faith was to be determined. The Alabama Supreme Court held that American Electric had access to the facts and evidence, and other non-privileged information, that could be used in determining whether or not the evaluation and settlement was reasonable. This would include experts which both parties had intended to use to review this 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 which 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.

About the Author

The article was written by Joshua G. Holden, Esq. a Member of Fish, Nelson & Holden, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation and related liability matters. Mr. Holden is AV rated by Martindale-Hubbell, which is the highest rating an attorney can receive. Holden and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields.

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