____________________________________ ORDER ON PROCEEDINGS: June 15, 1994 ____________________________________ GSBCA 12596 ED A. WILSON, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Bonnie Lee Goldstein of Vial, Hamilton, Koch & Knox, Dallas, TX, counsel for Appellant. Kevin M. Myles, Office of Regional Counsel, General Services Administration, Fort Worth, TX, counsel for Respondent. DeGRAFF, Board Judge. ORDER ON PROCEEDINGS Pending before the Board are appellant's objections to respondent's discovery requests. Appellant asserts that several documents sought by respondent are protected from disclosure, and appellant objects to producing these documents. Appellant's objections are overruled, for the reasons set forth below. Background On December 23, 1992, while Ed A. Wilson, Inc. (Wilson) was performing demolition work in the federal building in Dallas, Texas, a sprinkler line broke. At the direction of the General Services Administration (GSA), Wilson repaired the damage caused by the break. Appeal File, Exhibit 10. Wilson notified its insurer, Bituminous Casualty Corporation (Bituminous), of the sprinkler line break, and a claims representative from Bituminous visited the federal building on December 29, 1992, and interviewed two Wilson employees on January 7, 1993. Appeal File, Exhibits 65, 67; Privileged Document 3.[foot #] 1 On March 19, 1993, Wilson submitted a claim to GSA requesting payment for the cost of the repair work. Appeal File, Exhibit 27. The Bituminous claims representative prepared a report of investigation dated April 26, 1993. Privileged Document 3. GSA's contracting officer issued a decision denying Wilson's claim on June 29, 1993. Appeal File, Exhibit 39. The Bituminous claims representative prepared another report on July 13, 1993, to which his supervisor responded in a note also dated July 13, 1993. Privileged Document 4. Wilson engaged R and D Morris Company (Morris), a construction consulting services company, to review the facts concerning the sprinkler line break and to develop a position regarding responsibility for the damage. Appeal File, Exhibit 78. Morris drafted a letter to the contracting officer rebutting the June 29, 1993 decision denying Wilson's claim. It is not clear when the draft letter was prepared, although it appears to have been prepared in early August 1993. Morris also prepared an assessment of the facts and the parties' positions. The record does not establish when this assessment was prepared, although it was after June 29, 1993. In early July 1993, Morris prepared a memorandum concerning a potential claim against GSA. Privileged Document 1. In letters dated July 30, 1993, and August 24, 1993, GSA demanded that Wilson pay an additional amount for costs associated with the sprinkler line break. Appeal File, Exhibits 42, 46. The contracting officer did not issue a decision concerning this government claim. On August 26, 1993, Wilson wrote a letter to Bituminous, commenting upon GSA's August 24, 1993 letter. Privileged Document 5. On September 27, 1993, Wilson filed this appeal from the contracting officer's June 29, 1993 decision. By letter dated September 28, 1993, Bituminous engaged the law firm of Vial, Hamilton, Koch & Knox to pursue this appeal. Privileged Document 2. The parties began discovery, and on March 8, 1994, Wilson filed objections to some of GSA's requests for production of documents. Wilson asserts that several documents requested by GSA are protected from disclosure by the attorney-client privilege, the work product doctrine, the insured-insurer privilege, and the investigative privilege. The documents at issue are the April 26, 1993 report prepared by the Bituminous claims representative, the July 13, 1993 report and note prepared by the Bituminous claims representative and his supervisor, the August 26, 1993 letter from Wilson to Bituminous, the September 28, 1993 letter from Bituminous to Vial, Hamilton, Koch & Knox, ----------- FOOTNOTE BEGINS --------- [foot #] 1 "Privileged Document ___" refers to the documents provided to the Board by Wilson on April 1, 1994. ----------- FOOTNOTE ENDS ----------- and the documents prepared by Morris. The Board asked Wilson to provide these documents to the Board for review in camera. Wilson's attorney's office mistakenly sent the documents to counsel for GSA, and counsel for GSA read the documents. Counsel for GSA returned the documents at the request of Wilson's counsel, and Wilson's counsel forwarded them to the Board. Wilson's objections to GSA's discovery requests are overruled and Wilson is ordered to produce the documents to GSA. The documents do not contain either attorney-client material or work product. If the documents were entitled to any protection, that protection was waived when Wilson's counsel's office inadvertently sent the documents to counsel for GSA. Discussion General Legal Principles Wilson claims that its documents are protected from disclosure by the attorney-client privilege. The attorney-client privilege is a common law concept that protects a confidential communication between a client and an attorney or an attorney's agent, if the purpose of the communication is to obtain legal services or advice. Upjohn Co. v. United States, 449 U.S. 383 (1981). The privilege is held by the client and can be asserted or waived by the client. The burden is upon the proponent of the privilege to establish that the communication was meant to be confidential, was with an attorney or an agent of an attorney, and was made for the purpose of obtaining legal counseling. A client's voluntary disclosure of a confidential communication waives the privilege. American Standard Inc. v. Pfizer Inc., 828 F.2d 734 (Fed. Cir. 1987); Hamed v. General Accident Insurance Co., 112 F.R.D. 213 (N.D. Ind. 1986); Hartford Fire Insurance Co. v. Garvey, 109 F.R.D. 323 (N.D. Cal. 1985). Wilson also claims that its documents are protected from disclosure by the work product doctrine. The common law work product doctrine is codified in Federal Rule of Civil Procedure 26(b)(3), which provides that documents prepared in anticipation of litigation or for trial by a party or its representative (including an attorney, consultant, surety, indemnitor, insurer, or agent) are discoverable only if the party seeking the documents has a substantial need for them and is unable without undue hardship to obtain the substantial equivalent of the documents by other means. Hickman v. Taylor, 329 U.S. 495 (1947); Fed. R. Civ. Pro. 26(b)(3). The work product doctrine creates a qualified immunity, not an absolute privilege, and its purpose is different from the purpose of the attorney-client privilege. The work product doctrine is meant to protect the adversary system by guarding against the disclosure of mental impressions and thought processes. The qualified immunity provided by the doctrine can be asserted and waived either by the party or by the party's representative. The burden is upon the party opposing disclosure to establish that it or its agent prepared a document either for trial or because there was a likelihood of litigation. Carter v. Gibbs, 909 F.2d 1450 (Fed. Cir. 1990); Harper v. Auto-Owners Insurance Co., 138 F.R.D. 655 (S.D. Ind. 1991); Sham v. Hyannis Heritage House Hotel, Inc., 118 F.R.D. 24 (D. Mass. 1987). A document created in the regular course of business, and not in anticipation of litigation, is not entitled to the qualified immunity provided by the work product doctrine. In order to decide whether a document is discoverable, courts look to see whether litigation was reasonably anticipated when the document was prepared; whether the document was prepared due to the prospect of litigation; whether there is a sufficiently concrete connection between the document and possible litigation; whether the document was generated in anticipation of probable litigation; whether the document was created when litigation was fairly foreseeable; whether the document was prepared before counsel was retained; and whether the document was created when the probability of litigation was substantial and imminent. Documents created by an insurance company when it is deciding whether to pay, whether to pay and to seek subrogation, or whether to pay and to take no further action, are not prepared in anticipation of litigation. Schmidt v. California State Automobile Assn, 127 F.R.D. 182 (D. Nev. 1989); Pasteris v. Robillard, 121 F.R.D. 18 (D. Mass. 1988); Sham v. Hyannis Heritage House Hotel, Inc., 118 F.R.D. 24 (D. Mass. 1987); Fann v. Giant Food, Inc., 115 F.R.D. 593 (D.D.C. 1987); State Farm Fire & Casualty Co. v. Perrigan, 102 F.R.D. 235 (W.D. Va. 1984); Carver v. Allstate Insurance Co., 94 F.R.D. 131 (S.D. Ga. 1981). Wilson claims that there is an "investigative privilege" that protects its documents from discovery. Wilson asserts that this privilege applies if an "investigation is made subsequent to the occurrence or transaction upon which the suit is based and is made in connection with or in anticipation of litigation." March 15, 1994 Privilege Log at 4-5. The "investigative privilege" claimed by Wilson is nothing more than the qualified immunity provided by the work product doctrine. Finally, Wilson claims that its documents are protected from discovery by an insured-insurer privilege that is afforded to litigants in Texas courts by a Texas statute. Tex. R. Civ. P. 166b. The Texas statute is a codification of both the common law attorney-client privilege and the work product doctrine. Metroflight, Inc. v. Argonaut Insurance Co., 403 F. Supp. 1195 (N.D. Tex. 1975); Wiley v. Williams, 769 S.W.2d 715 (1989); Cupples Products Co. v. Marshall, 690 S.W.2d 623 (1985); Menton v. Lattimore, 667 S.W.2d 335 (1984); Hiebert v. Weiss, 622 S.W.2d 150 (1981). Generally, this Board bases its evidentiary rulings upon the Federal Rules of Evidence. According to Federal Rule of Evidence 501, privilege issues are determined in accordance with state law if state law supplies the rule of decision in a case. In this appeal, Texas law does not supply the rule of decision. Therefore, according to Federal Rule of Evidence 501, the protection to be afforded Wilson's documents does not depend upon a privilege created by state statute. As briefly mentioned above, the protections afforded by the attorney-client privilege and the work product doctrine can be waived. The attorney-client privilege protects a confidential communication between a client and an attorney, and the privilege can be waived by the client. Any voluntary disclosure of confidential information by the client to a third party waives the privilege. By contrast, the immunity afforded by the work product doctrine protects the adversary system by guarding against the disclosure of documents containing mental impressions and thought processes, and the immunity can be waived by either a party or the party's representative. Although disclosure of work product to a third party does not always constitute a waiver of the immunity afforded by the work product doctrine, disclosure to an opponent in litigation is inconsistent with protecting the adversary system and such a disclosure constitutes a waiver. When deciding whether a waiver of work product immunity has occurred, it is irrelevant whether a protected document has been disclosed inadvertently. Carter v. Gibbs, 909 F.2d 1450 (Fed. Cir. 1990); United States v. American Telephone and Telegraph Co., 642 F.2d 1285 (D.C. Cir. 1980); Wichita Land & Cattle Co. v. American Federal Bank, F.S.B., 148 F.R.D. 456 (D.D.C. 1992); Data General Corp. v. Grumman Systems Support Corp., 139 F.R.D. 556 (D. Mass. 1991); Liggett Group v. Brown & Williamson Tobacco Corp., 116 F.R.D. 205 (M.D.N.C. 1986). Wilson asserts that the Board, when presented with a waiver question, should consider the client's expectation of confidentiality and the amount of care taken by the client to prevent an inadvertent disclosure of protected documents. These considerations are important when deciding whether the attorney- client privilege has been waived. Typically, counsel's disclosure of a document containing attorney-client material does not result in a waiver of the client's privilege if the client expected that the document would be kept confidential, if the client took appropriate steps to protect the document from disclosure, and if counsel was required to produce a large number of documents in a short period of time and mistakenly produced a privileged document. National Helium Corp. v. United States, 219 Ct. Cl. 612 (1979), Cities Service Helex, Inc. v. United States, 214 Ct. Cl. 765 (1977). It is debatable whether the client's expectations of confidentiality and the care taken by the client to prevent an inadvertent disclosure of protected documents are important considerations when deciding whether there has been a waiver of the protection afforded by the work product doctrine.[foot #] 2 In Carter v. Gibbs, the Court of Appeals held that the immunity provided by the work product doctrine was waived when an attorney inadvertently disclosed to opposing counsel one document containing attorney work product. The disclosure was not made during the rush of discovery and the document was not hidden among a large number of other documents. The Court's opinion does not discuss either the client's expectations of confidentiality or the client's efforts to safeguard documents containing work product. Fortunately, the Court's opinion provides sufficient guidance to rule upon Wilson's pending objections. April 26, 1993 Report Wilson asserts that the April 26, 1993 report prepared by a Bituminous claims representative is protected by the attorney- client privilege and the investigative privilege. The report is not protected by the attorney-client privilege because it contains no confidential communications between an attorney and a client. The investigative privilege is no different than the immunity afforded by the work product doctrine. The report states that Wilson had submitted a claim to GSA and was confident that GSA would pay the claim. This statement does not indicate that Wilson or Bituminous anticipated litigation when the report was prepared. Wilson provided no facts to establish that this report was prepared in anticipation of litigation. The report appears to have been prepared in the course of a routine investigation by Bituminous. The report is not entitled to immunity from production because it was not prepared in anticipation of litigation. Wilson is required to produce the April 26, 1993 report to GSA in response to GSA's discovery request. July 13, 1993 Report and Note Wilson asserts that the July 13, 1993 report and note prepared by a Bituminous claims representative and his supervisor are protected by the attorney-client privilege and the investigative privilege. The report and note are not protected by the attorney-client privilege because they contain no confidential communications between an attorney and a client. ----------- FOOTNOTE BEGINS --------- [foot #] 2 It is entirely possible that these considerations are not important, given the difference between the purpose of the work product and attorney-client doctrines, and given the difference between who may waive the protection afforded by each doctrine. The parties have not cited the Board to any controlling or persuasive authority addressing this subject, and the Board's independent research failed to uncover any helpful precedent. ----------- FOOTNOTE ENDS ----------- The investigative privilege is the same as the qualified immunity provided by the work product doctrine. It appears from the text of the report and the note that Bituminous prepared these documents when it was in the process of deciding whether it would make a payment pursuant to the insurance policy and before it decided whether it would be worthwhile to take any legal action. Wilson provided no facts to establish that this report was prepared in anticipation of litigation. The report and note appear to have been created in the regular course of business, while Bituminous was deciding whether to pay Wilson and as Bituminous began to consider whether to engage in litigation. Because Wilson has not established that the report and note were prepared in anticipation of litigation, these documents are not entitled to the protection of the work product doctrine and Wilson is required to produce them in response to GSA's discovery request. August 26, 1993 Letter Wilson argues that the August 26, 1993 letter that it wrote to Bituminous is protected by the attorney-client privilege, the investigative privilege, and the insured-insurer privilege. The letter is not protected by the attorney-client privilege because it contains no confidential communications between an attorney and a client. The investigative privilege and the insured-insurer privilege are no different than the qualified immunity provided by the work product doctrine. The letter contains Wilson's response to the contracting officer's request for payment for water damage that occurred when the sprinkler line broke. The letter states that Wilson intended to write to the contracting officer concerning the request for payment and then wait for the contracting officer's response. The letter does not indicate that Wilson or Bituminous anticipated litigation when the letter was written. Wilson provided no facts to establish that this letter was prepared in anticipation of litigation. The letter is not entitled to immunity from production because it was not prepared in anticipation of litigation. Wilson is required to produce the August 26, 1993 letter to GSA in response to GSA's discovery request. Retention Letter Wilson argues that the September 28, 1993 letter from Bituminous to Vial, Hamilton, Koch & Knox is protected by the attorney-client privilege. It is not clear that any privilege attaches to this letter, because it is not clear if Bituminous considered itself to be the client of Vial, Hamilton, Koch & Knox when the letter was written. Assuming that the attorney-client privilege attaches to the letter, the privilege belongs to Bituminous and can be asserted and waived only by Bituminous. But Bituminous has made no claim of privilege. If Bituminous were to make such a claim, the claim would fail because Bituminous waived any attorney-client privilege when it sent a copy of the letter to Wilson. Wilson must produce the retention letter in response to GSA's discovery request. Morris Documents Wilson claims that several documents generated by Morris are protected from disclosure. These documents consist of three versions of the draft letter rebutting the contracting officer's decision, two versions of the assessment of the facts and the parties' positions, and the memorandum concerning a potential claim that Wilson was apparently considering submitting to GSA. Wilson does not state what rule of law it believes protects these documents from disclosure. The documents do not contain confidential communications between an attorney and a client and so the attorney-client privilege provides no protection. Wilson contends that the Morris employee who prepared the documents is an expert who will not be called to testify. But, Morris's employee's status as a non-testifying expert does not mean that the documents created by Morris are protected from disclosure. Federal Rule of Civil Procedure 26 provides protection for these documents only if they were created in anticipation of litigation. Fed. R. Civ. Pro. 26(b)(3), (b)(4)(B). The stated purpose of the three versions of the draft letter to the contracting officer was to persuade him to withdraw his decision or to meet with Wilson and discuss the decision. The draft letter states that, many times, a discussion between parties enables them to avoid litigation. The draft letter also states that Wilson recognized that it would have a right to appeal if GSA were to withhold any of Wilson's payments, if Wilson were to request a contracting officer's decision regarding the withholding, and if the contracting officer's decision were adverse. At the time the draft letter was prepared, GSA had not withheld any payments and Wilson had not requested a contracting officer's decision. There is no indication in the text that Wilson was contemplating litigation when the draft letter was prepared. Because Wilson has not established that the three versions of the draft letter rebutting the contracting officer's decision were prepared in anticipation of litigation, these draft letters are not entitled to the protection of the work product doctrine and Wilson is required to produce them in response to GSA's discovery request. The stated purpose of the two versions of the assessment of the facts and the parties' positions was to state the facts related to the sprinkler line break, state Wilson's position, state GSA's position, and present Wilson's rebuttal to GSA's position. The text of the assessment does not suggest that it was prepared in anticipation of litigation. Wilson has not provided any facts to establish when the assessment was prepared and has not suggested that it anticipated litigation at that time. Because Wilson has not established that the two versions of the assessment of the facts and the parties' positions were prepared in anticipation of litigation, they are not entitled to the protection of the work product doctrine and Wilson is required to produce them in response to GSA's discovery request. The memorandum concerning a potential claim by Wilson does not indicate that Wilson anticipated litigation when the memorandum was prepared. Because Wilson has not provided any facts to establish that it anticipated litigation when this memorandum was prepared, the memorandum is not entitled to the protection of the work product doctrine and Wilson is required to produce the memorandum in response to GSA's discovery request. Waiver Finally, even if Wilson's documents were protected from disclosure by attorney-client privilege or by work product immunity, the protection was waived when its counsel's office sent the documents to counsel for GSA. As did counsel in Carter v. Gibbs, counsel for Wilson inadvertently disclosed to opposing counsel a small number of documents. The documents were not produced as part of a large number of documents or during the rush of discovery. In these circumstances, if the documents are entitled to any protection, a waiver has occurred. Order Wilson's objections to GSA's requests for production of documents are OVERRULED. Within fourteen days from the date of this order, Wilson will produce to GSA the April 26, 1993 report prepared by the Bituminous claims representative; the July 13, 1993 report and note prepared by the Bituminous claims representative and his supervisor; the August 26, 1993 letter from Wilson to Bituminous; the September 28, 1993 letter from Bituminous to Vial, Hamilton, Koch & Knox; and the documents prepared by Morris. ______________________________ MARTHA H. DeGRAFF Board Judge