Recent Case Highlights the Risk of Aggressive Privilege Positions

March 8, 2006

Litigants frequently take aggressive (although they often call them “cautious”) positions on the attorney-client privilege and the work product doctrine — figuring that there could be a benefit in winning, and not much of a downside in losing. But in some situations, winning the privilege battle might cost a litigant the lawsuit war.

In Gallatin Fuels, Inc. v. Westchester Fire Insurance Co., Civ. A. No. 02-2116, 2006 U.S. Dist. LEXIS 1327 (W.D. Pa. Jan 13, 2006), Gallatin claimed that its insurance company had improperly failed to pay a claim. The court granted Gallatin’s motion to “exclude as evidence any documents or other information” that the insurance company had withheld as privileged. Id. at *3. The court also held that the insurance company “cannot argue or present any evidence that advice of counsel influenced the matter in which it handled Gallatin’s claim.” Id. at *3-4.

Litigants must always look ahead to determine whether they might want to rely on privileged communications — asserting a protection in discovery might preclude a litigant from using important evidence at the trial.