Opinion
DOCKET NO. A-4085-10T4
03-15-2012
TRAVELERS OF NEW JERSEY A/S/O MICHELLE MATSUK, SIMON HANIN, GLENDA HANIN, MELVIN HOLLOWAY, and LIBERTY MUTUAL A/S/O BRADLEY BISK, Plaintiffs-Respondents, v. GIL AND FRANCINE WEISMAN, PRECISION CARS OF ATLANTIC CITY, R&S IMPORTS, and RICH FIRE PROTECTION, Defendants-Respondents, and MERCEDES-BENZ, USA, LLC, Defendant-Appellant.
R. Mark Armbrust (Armbrust & Associates, P.C.) argued the cause for appellant. Deborah A. Crinigan argued the cause for respondents Pacific Insurance Company, Ltd., Allstate Insurance Company, Allstate New Jersey Insurance Co., and Certain Underwriters at Lloyds of London (the Pacific respondents) (White and Williams, LLP, attorneys; Ms. Crinigan and Alan J. Charkey, on the brief). Steven A. Kluxen argued the cause for respondents Travelers of New Jersey and Liberty Mutual Insurance Company as subrogee of Bradley Bisk (Methfessel & Werbel, attorneys, join in the brief of the Pacific respondents). Linton W. Turner, Jr., argued the cause for respondents Gil and Francine Weisman (Mayfield, Turner, O'Mara, Donnelly & McBride, P.C., attorneys, join in the brief of the Pacific respondents). Heidi G. Villari argued the cause for respondent Rich Fire Protection (Mattioni, Ltd., attorneys, join in the brief of the Pacific respondents). Hill Wallack, LLP, attorneys for respondent Federal Insurance Company a/s/o Nancy Zion, join in the brief of the Pacific respondents. Nelson, Levine, de Luca & Horst, LLC, attorneys for respondents State Farm Fire & Casualty Insurance Company a/s/o Harold and Katherine Perlman, Dr. Helga Scheuermann, Gil and Francine Weisman, Mark and Iris Neddleman, Joseph Tuso, Jr., Charles J. Roth, and Lewis and Hilda Savar join in the brief of the Pacific respondents. Nicholas C. Harbist argued the cause for respondents Harold and Kathryn Perlman and Dr. Helga Scheuermann (Blank Rome, LLP, attorneys; Mr. Harbist and James J. Quinlan, on the joint brief). Williams Cuker Berezofsky, attorneys for respondents Mel and Mary Ann Holloway, Gene and Sandra Kolber, Robert and Michele Matsuk, and Nancy Zion (Alan J. Sklarsky, on the joint brief of respondents Harold and Kathryn Perlman and Dr. Helga Scheuermann).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges A. A. Rodríguez, Sabatino, and Fasciale.
On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-16977-06.
R. Mark Armbrust (Armbrust & Associates, P.C.) argued the cause for appellant.
Deborah A. Crinigan argued the cause for respondents Pacific Insurance Company, Ltd., Allstate Insurance Company, Allstate New Jersey Insurance Co., and Certain Underwriters at Lloyds of London (the Pacific respondents) (White and Williams, LLP, attorneys; Ms. Crinigan and Alan J. Charkey, on the brief).
Steven A. Kluxen argued the cause for respondents Travelers of New Jersey and Liberty Mutual Insurance Company as subrogee of Bradley Bisk (Methfessel & Werbel, attorneys, join in the brief of the Pacific respondents).
Linton W. Turner, Jr., argued the cause for respondents Gil and Francine Weisman (Mayfield, Turner, O'Mara, Donnelly & McBride, P.C., attorneys, join in the brief of the Pacific respondents).
Heidi G. Villari argued the cause for respondent Rich Fire Protection (Mattioni, Ltd., attorneys, join in the brief of the Pacific respondents).
Hill Wallack, LLP, attorneys for respondent Federal Insurance Company a/s/o Nancy Zion, join in the brief of the Pacific respondents.
Nelson, Levine, de Luca & Horst, LLC, attorneys for respondents State Farm Fire & Casualty Insurance Company a/s/o Harold and Katherine Perlman, Dr. Helga Scheuermann, Gil and Francine Weisman, Mark and Iris Neddleman, Joseph Tuso, Jr., Charles J. Roth, and Lewis and Hilda Savar join in the brief of the Pacific respondents.
Nicholas C. Harbist argued the cause for respondents Harold and Kathryn Perlman and Dr. Helga Scheuermann (Blank Rome, LLP, attorneys; Mr. Harbist and James J. Quinlan, on the joint brief).
Williams Cuker Berezofsky, attorneys for respondents Mel and Mary Ann Holloway, Gene and Sandra Kolber, Robert and Michele Matsuk, and Nancy Zion (Alan J. Sklarsky, on the joint brief of respondents Harold and Kathryn Perlman and Dr. Helga Scheuermann). PER CURIAM
By leave granted, defendant Mercedes-Benz USA, LLC ("MBUSA") appeals from the interlocutory order dated March 23, 2011 requiring MBUSA to produce in discovery in full, without redaction, certain internal materials that MBUSA contends are shielded by attorney-client and work product privileges. The March 23, 2011 order followed a remand by this court of an earlier interlocutory appeal concerning the same allegedly-privileged materials. See Travelers of N.J. v. Weisman, No. A-4040-09 (App. Div. Feb. 16, 2011).
For the reasons set forth in this opinion, we remand this matter to the trial court a second time for further consideration of the privilege issues on an item-by-item basis. To aid the trial court in such additional review, and in recognition of the voluminous nature of the materials and the multiple and overlapping grounds of privilege being asserted by MBUSA, we direct that MBUSA furnish the trial court with an amplified privilege log that more fully explains the basis for the privilege(s) being asserted as to each item at issue, particularly the withheld e-mail communications. We further note the trial court's authority to appoint a special discovery master to undertake a more comprehensive review of the materials, and to suggest appropriate classifications and redactions for the trial court's consideration. We also confirm the trial court's ability, on reasonable terms and conditions within its discretion, to appoint a technical adviser to assist in the additional review of the materials. Finally, we set forth several legal principles to help guide certain discrete aspects of the trial court's additional review.
I.
The dispute over the privileges asserted by MBUSA in this litigation arises from a fire on September 16, 2005. The fire destroyed parts of the Crown Key Yacht Club condominiums in Ventnor. Plaintiffs allege that a defective or negligently-repaired Mercedes-Benz SL500 caused the fire when it spontaneously combusted. The vehicle was owned by Gil and Francine Weisman, who resided in one of the condominium units. Relying on this theory, the owners of the damaged condominiums and their insurers brought suit against the Weismans and MBUSA. The Weismans also sued MBUSA on the same general theory.
Because the various claimants against MBUSA, including the Weismans, essentially rely upon the same arguments for the discovery of the disputed MBUSA documents, we refer to them collectively as "plaintiffs" in this opinion, even though the Weismans are also defendants as to certain subrogation claims.
We incorporate by reference the facts and procedural history set forth in more detail in our February 2011 initial opinion. See Travelers of N.J., supra, slip op. at 5-14. We add the following summary of the most pertinent background, including an update of relevant events that have transpired since February 2011.
The extensive damage to the Weismans' SL500 apparently hindered the development of direct evidence to corroborate plaintiffs' theory that problems with the vehicle had caused the fire. Consequently, plaintiffs have sought to prove liability against MBUSA circumstantially. In particular, plaintiffs contend that the SL500 model owned by the Weismans shared relevant components with other Mercedes-Benz models that have been involved in vehicle fires.
To support such a theory of liability, plaintiffs rely upon the deposition testimony of an MBUSA technical employee, Thomas Brunner ("Brunner"), in which he acknowledged that the SL500 transmission and engine components were used in other Mercedes-Benz models. Accordingly, plaintiffs have attempted to obtain, through discovery from MBUSA, factual information about other vehicle fires that MBUSA has investigated, in the hope of confirming their contention that "the car's Active Body Control [(ABC)] system, brake lines or fuel lines penetrated the fire wall and may have leaked, causing flammable fluids to contact hot surfaces."
In August 2009, plaintiffs obtained an order from the trial court compelling MBUSA to produce documents relating to its internal investigations of vehicle fires. That discovery order required MBUSA to produce "all internal fire investigation files" from 2001 to 2006 with respect to certain designated models. The order further required MBUSA to create a privilege log, and submit copies of the documents that MBUSA withheld on the basis of privilege to the court for in camera review.
MBUSA represents that in response to the August 2009 order, it produced to plaintiffs about "4,000 pages of documents from [its] internal fire investigation[s.]" MBUSA further contends that those pages were "in addition to the 48,000 pages of material it had already produced in discovery." Even so, MBUSA has withheld or redacted hundreds of other materials, claiming that they are privileged on various grounds. Principally, MBUSA invokes the privileges for confidential attorney-client communications and attorney work product. See generally N.J.S.A. 2A:84A-20 and N.J.R.E. 504 (defining the attorney-client privilege to encompass "communications between [a] lawyer and his client in the course of that relationship and in professional confidence"); K.L. v. Evesham Twp. Bd. of Educ, 423 N.J. Super. 337, 354 (App. Div. 2011) (noting that the work product privilege extends to a document "if its use for litigation was the dominant purpose of preparing the document and if the attorney's belief that litigation would ensue was objectively reasonable"); see also R. 4:10-2(c) (similarly recognizing the qualified work product privilege).
We shall generally refer to the confidential attorney-client communications privilege as simply the "attorney-client" privilege. Similarly, we will generally refer to the privilege covering an attorney's work product created in anticipation of litigation as the "work product" privilege.
In February 2010, MBUSA submitted copies of the withheld documents and a privilege log to the trial court for in camera review. The privilege log noted that MBUSA had withheld several general categories of documents, for which it claimed either (or both) attorney-client and work product privileges: investigation reports prepared by a technical employee, addressed to the MBUSA Legal Department; attached questionnaires that each such technical employee completed; photographs taken by the technical employee that contained his or her notations; and various e-mails between the MBUSA Legal Department and the MBUSA employees. MBUSA also redacted two other categories of allegedly-confidential material: certain customer "personal information"; and allegedly-proprietary "business information."
According to MBUSA, claims arising out of vehicle fires inherently have a substantial likelihood of resulting in litigation, and therefore its Legal Department has been involved in internally investigating all such fire claims. In particular, MBUSA represents that its Legal Department directed a product analysis engineer, technical specialist, or service parts operation manager to investigate each vehicle fire, and to prepare an investigation report, which MBUSA asserts was always done "in anticipation of litigation." Such investigation reports typically included a questionnaire that the technical employee was required to complete, as well as any photographs upon which the employee may have made notes. The reports sometimes contain an employee's "observations," and according to MBUSA, "may also contain his [or her] findings and opinions as to the cause of the fire as well as an explanation for the bases for such findings and opinions." The reports were labeled "Privileged and Confidential Attorney Work Product," and were typically addressed to a member of the MBUSA Legal Department.
To support its contentions of privilege, MBUSA submitted to the trial court a certification of Mark H. Kelly, a member of the company's Legal Department. Kelly asserted in his certification that "[a]ll of the activities undertaken by MBUSA's technical employees . . . are done at the direction of MBUSA's Legal Department in anticipation of litigation, or where litigation has been commenced, as part of the litigation." According to Kelly, the MBUSA Legal Department also communicates with the technical employee about an investigation "in furtherance of the . . . investigation and in anticipation of litigation[.]"
Specifically, Kelly described the Legal Department's role in the vehicle fire investigations as follows:
8. Initial notice of a fire incident is typically first received at MBUSA by either the Legal Department or the Customer Assistance Center ("CAC"), from one of the following four sources: (1) a customer reporting a fire incident; (2) an insurance carrier making a subrogation claim; (3) an attorney making a claim either pre-litigation or by way of a Complaint or Summons; or (4) an authorized Mercedes-Benz dealer.Kelly explained that the Legal Department had developed the questionnaire forms the technical employees must complete and attach to their investigation reports. Kelly also stated that MBUSA produced to plaintiffs the "complete master set" of the photographs relative to the vehicle fires, but refrained from identifying to plaintiffs those photographs that a technical employee selected to include in his or her report.
9. Matters received by the Legal Department are assigned to the Products Analysis Department for a vehicle inspection on behalf of the Legal Department and for other engineering and technical assistance as required.
10. At the standing direction of the Legal Department, matters received by the CAC are immediately forwarded to the Legal Department, usually in the form of a
"Customer Assistance Summary" or other e-mail.
11. In addition, the CAC is directed by the Legal Department to provide the initial intake information to the Product Analysis Department to facilitate the assignment of an investigator as part of the longstanding directive from the Legal Department to the Product Analysis Department to inspect fire involved vehicles and to provide technical assistance to the Legal Department in its investigation of fire incidents.
Following an initial in camera review, the trial court entered an order on March 25, 2010, requiring MBUSA to produce all of the disputed documents without redaction. We granted MBUSA leave to appeal that initial determination. After oral argument, we remanded the privilege issues to the trial court for further consideration. Travelers of N.J., supra, slip op. at 20-24. In particular, we instructed the trial court to denote whether each of the documents respectively fell within the attorney-client privilege and, if so, to make particularized findings as to each document found to be so privileged. Id. at 22-24. We also instructed that if the trial court found certain documents to be privileged, it should then determine whether such privilege should be overcome under the multi-part standards of In re Kozlov, 79 N.J. 232 (1979). See Travelers of N.J., supra, slip op. at 23.
Kozlov instructs that in order to pierce the privilege, a party must show (1) there is a legitimate need of the party to reach the evidence to be shielded; (2) the evidence sought is relevant and material to the issue before the court; and (3) the information or evidence cannot be secured from a less intrusive source. Kozlov, supra, 79 N.J. at 243-44.
Following our remand order, the trial court performed a second in camera review of the documents. As a result of that second review, the trial court again concluded that the withheld MBUSA documents should be produced in their entirety. In its accompanying letter opinion dated March 23, 2011, the trial court did not specify which, if any, documents were privileged and, if so, why they were privileged. In essence, the trial court impliedly treated all of the documents withheld by MBUSA as subject to a privilege and, then based upon that generic premise, undertook a Kozlov analysis in which it ultimately concluded that plaintiffs were entitled to pierce defendant's privilege as to all of the withheld materials.
The trial court did, however, make several pointed comments in its opinion criticizing MBUSA for engaging, in essence, in an overbroad approach in asserting privileges. The comments suggest that the court had substantial doubts about whether all of the documents withheld by MBUSA are, in fact, privileged.
During the course of its Kozlov analysis, the trial court made the following observations:
A. There is a legitimate need for the Plaintiffs to receive the evidence which MBUSA seeks to shield. It is beyond dispute that the entirety of the damages claimed by the Plaintiffs originated with the fire of the Mercedes on September 16, 2005. Eleven condominium homes and common elements of the Crown Key Yacht Club were destroyed with losses totaling in excess [of] $3.5 million. Neither arson, nor faulty building wiring, nor storage of flammables have been cited. The sole cause of the fire was the Weismans' Mercedes. If there were similar automobile fires of Mercedes owners, Plaintiffs are entitled to know about them and MB-USA ought not be permitted to conceal such information.
B. For the reasons stated above, the Court is satisfied that the evidence sought is relevant and material to the issue before the Court. During its in camera review, the Court did not attempt to count the number of 2003 Model 500 SL models [that] were involved in a fire, but it wasn't a small number. How many of those fires are comparable to the . . . Weismans' vehicle, the Court does not know. Nor does the Court have the ability to know, absent examination of the materials with the benefit of expert advice. Is such material relevant and material to a fair handling of this case? In the opinion of the Court, YES.
C. The Court is satisfied that as required by both [Kozlov] and Rule 4:10-2c, the information sought cannot be secured from a less intrusive source nor can the
substantial equivalent be secured by other means without undue hardship. It's impractical to think that Plaintiffs' counsel could secure valuable information regarding fires of Mercedes vehicles by simply combing the public record and the marketplace. That's not realistic. Mercedes' claims files is the only practical source.
Consistent with these rulings, the trial court's post-remand order of March 23, 2011 directed MBUSA to produce the withheld documents to plaintiffs, upon certain conditions. In particular, by the terms of that order, the trial court restricted the scope of such compelled disclosure to "those attorneys who previously wrote to the [trial] [c]ourt in a timely fashion explaining their need for the documents[.]" (Emphasis omitted). The order also permitted the attorneys in the case to disclose the documents to any expert witnesses, and further directed that the parties obtain expert reports.
These particular facets of the court's March 23, 2011 order regarding the mechanics of disclosure apparently are not contested on appeal by MBUSA.
We granted leave to appeal the trial court's March 23, 2011 order. In connection with this second appeal, MBUSA has now submitted the disputed materials under seal to this court, in two CDs containing electronic folders relative to a first production of documents on October 26, 2009 and a second production on November 19, 2009. In addition to the CDs, MBUSA has submitted an explanatory statement about the organization of the files on the CDs. Collectively, the CDs contain 101 files of allegedly-privileged materials, nearly all of which contain multiple documents.
The privilege log included in plaintiff's appendix for the Second Production is missing entries for file names Martin, Milo, Progressive, Reitmeyer and Rowan. The entries would have been contained on page 8 of the log, which, although it was not reproduced in plaintiffs' appendix, appears to have been provided to the trial court. The omission of these particular entries in the privilege log from the submissions on appeal does not affect our analysis of the issues before us.
We have reviewed a sampling of the voluminous files contained on the CDs. As a result of that limited review, we make the following general observations about the contents of the files, mindful that those observations may not be true with respect to every file.
The files reflect that a customer's complaint about a vehicle fire is typically documented by an MBUSA customer service representative. The substance of the customer's complaint is then generally forwarded by e-mail to an attorney in the Legal Department and also to Gary Bowne, the manager of MBUSA's Product Compliance Department. Bowne then typically arranges for a technical employee in the region of the vehicle to inspect the damage. Following that inspection, the technical employee prepares what is termed an "investigation report." The investigation report includes form language drafted by the Legal Department asserting that the report was prepared at the Legal Department's request. The report is then forwarded to the Legal Department. It appears that the Legal Department may use the information in the report not only to help defend MBUSA in future litigation but also to determine whether to settle claims. At least some of the investigation reports we examined were returned to the Product Compliance Department to maintain "custody" of them.
Although MBUSA contends that the Legal Department made the overarching request for company personnel to conduct investigations of vehicle fires, it appears from our limited review that Bowne, who was not an attorney and who was not a member of the Legal Department, almost always was the person who made the specific request for company personnel to inspect a particular vehicle. The files that we have examined suggest that Bowne himself generally directed the technical employees who undertook such inspections.
We amplify our description by noting several generic observations that the trial court made after the second in camera review. The court listed the following non-exhaustive categories of the information appearing in the withheld documents:
1. Initial claims containing facts regarding the incident, e.g.'s: there was a fire in the console — actual flames shooting up; the vehicle began to smoke and the fire department was called; the vehicle began to overheat on the way to work, causing a fire under the hood; customer visited dealership today to advise that vehicle caught fire.The trial court then applied the Kozlov factors to these materials, and concluded that, under Kozlov, plaintiffs were entitled to disclosure of the materials in their entirety. This renewed appeal by MBUSA followed.
2. Exchanges between in-house counsel and lawyers in adverse proceedings, whether lawyers for claimants or lawyers for subrogees under insurance policies.
3. Investigative reports from adverse parties, particularly, insurance companies pursuing a subrogation claim and investigative reports prepared at the request of MB-USA.
. . . .
4. Customer history, along with warranty information, including records of recurring problems involving customers' vehicles.
5. Invoices for repairs to vehicles damaged by fire revealing work performed.
6. Communications between middle management employees attempting to coordinate the scheduling of a date for vehicle inspection or other examinations, including the taking of photographs.
7. Memoranda, the contents of which are potentially embarrassing to the individual who prepared it, but whether or not they rise to the level of evidence at trial seems unlikely.
8. Photos, many hundreds of photos. To the untrained eye of the Court, these photos reveal merely the charred remains of automobiles. To the eye of an expert, they may reveal much more. This category causes the Court the most concern, because they may, or may not, be quite valuable in understanding the origin(s) of the type of fire in question.
[Emphasis omitted.]
II.
A.
We now turn to the parties' competing arguments, and the sufficiency of the trial court's analysis. MBUSA argues on appeal that the trial court erred in its Kozlov analysis in granting plaintiffs access to all of the withheld materials. Before delving into those Kozlov issues, however, we must, by logical necessity, consider whether the materials withheld by MBUSA are privileged in the first place. Even if, hypothetically, MBUSA is correct that the trial court erred in finding plaintiffs have met their burden under Kozlov as to the documents, plaintiffs still may be entitled to access some or all of them if, in fact, the documents are not truly privileged. We thus first re-examine the parties' contentions concerning the asserted privileges.
Plaintiffs contend that the privileges insulating confidential attorney-client communications and attorney work product ought not cover the withheld materials. They maintain that the limited involvement of MBUSA's in-house Legal Department in fire investigations — where much of the review is being performed by or under the supervision of the Product Compliance Department — takes these internal materials outside of the ambit of the asserted privileges.
Plaintiffs rely mainly in this regard upon Payton v. New Jersey Turnpike Authority, 148 N.J. 524, 550-51 (1997). In Payton, the Supreme Court held that where in-house counsel conducted or participated in an internal investigation, the attorney-client privilege is inapplicable if the attorney's role in the investigation was "not for the purpose of preparing for litigation or providing legal advice, but rather for some other purpose[.]" Id. at 551. This is the case "even where litigation may eventually arise from the subject of the attorney's activities." Ibid. As a consequence, judicial scrutiny must focus on "the exact role that an attorney played regarding each particular document for which the privilege is asserted." Id. at 550 (emphasis added). The sampling of files that we have examined in this case reflects varying levels of attorney involvement in each particular file. This leads us to believe that a qualitative assessment of the in-house attorneys' role must, as Payton instructs, be examined on a document-by-document basis.
MBUSA contends that no further document-by-document review is required with respect to the existence of a privilege. It maintains that its generic description of the manner in which fire investigations were typically conducted suffices to support its contention that its attorneys and their agents were, as Payton describes, "truly or primarily acting in their legal capacities" and not instead acting to enforce the company's policies, or in some other role beyond the usual functions of an attorney. Id. at 551.
MBUSA principally relies upon our opinion in Macey v. Rollins Environmental Services (N.J.), Inc., 179 N.J. Super. 535 (App. Div. 1981). In Macey, the plaintiffs sought discovery of a statement prepared by the defendant company's project engineer at the request of general counsel. Id. at 536-38. The statement concerned a fire at the company's chemical waste disposal plant that killed and injured numerous people. Ibid. The trial court held that the statement was privileged, but on policy grounds ordered it to be produced, so long as the engineer's impressions, conclusions and analysis were redacted. Id. at 538. We reversed that ruling, instead concluding that the engineer's statement fell within the attorney-client privilege. Id. at 540. This court noted that it was "prepared at the behest of and for his employer's general counsel," and cited the "necessity for full and open disclosure between corporate employees and in-house counsel[.]" Ibid.
The circumstances in Macey are somewhat different from the present matter. The project engineer's statement in Macey concerned his investigation into a non-routine, accidental event. Id. at 536-37, 540-41. Additionally, the company's counsel had solicited the statement for the purpose of giving legal advice in the face of potential personal injury and death actions. Ibid.
Here, our partial review of the files suggests that some of the materials withheld from discovery by MBUSA may have been generated as the result of routine product compliance investigations rather than in response to an attorney's specific request to gather information about a discrete event that could, among other things, precipitate litigation. In this respect, we note the trial court's general observation that MBUSA's labeling of all of the withheld materials as "privileged" appears to have been overbroad. Furthermore, the record shows that from 2001- 2006, MBUSA internally investigated over 100 vehicle fires, which may distinguish this case from the single, non-routine event involved in Macey. There also may be legal significance to the fact that in at least some of the cases, the Legal Department returned the investigation reports it received to the Product Compliance Department with directions to "maintain custody."
These arguments implicating Payton, Macey, and other pertinent case law were not specifically analyzed by the trial court in its remand decision. Instead, the trial court seemingly presumed that all of the withheld material was subject to a privilege and then performed a Kozlov analysis concerning that material.
Further assessment of the Legal Department's actual role with respect to each of the withheld files is best undertaken in the first instance by the trial court, on a document-by-document basis. It may well be that with respect to some of the files, the activities of the Legal Department are more akin to what was deemed undeserving of protection in Payton and, for others, the activities are more akin to the protected activities in Macey. At least some of the files that we have reviewed suggest that MBUSA had multiple purposes for investigating the vehicle fires, including to determine: (1) whether to purchase a vehicle from the claimant, (2) whether a defective part in the vehicle had caused the fire, or (3) whether the repairable fire damage was under warranty. Some of the investigation reports may have been prepared primarily for these three purposes, and not primarily for use by in-house counsel to provide legal services or advice to MBUSA.
The trial court must analyze these matters more fully, as it is conceivable that some of the withheld documents are not privileged at all, some are privileged in part, and some are completely privileged. A determination needs to be made for each document as to whether it is privileged under the attorney-client privilege, the work product privilege, some other asserted privilege, a combination of privileges, or no privilege at all. Although that unfortunately is no doubt a tedious exercise, it is necessary because the presence and identity of the privilege(s) for each document may prove to be decisive if, for example, the court's Kozlov analysis is incorrect with respect to any of those items. More specifically, if plaintiffs fail to meet their burden under Kozlov as to any of the documents, they still might be entitled to access them if they are not privileged at all.
B.
In connection with their discussion of Payton's application to this case, plaintiffs argue, for the first time on appeal, that MBUSA had a legal duty to investigate fire claims, and to report them to the National Highway Traffic Safety Administration ("NHTSA"). The duty, they claim, is derived from 49 C.F.R. § 579.21, found in Subpart C, "Reporting of Early Warning Information," in the NHTSA regulations promulgated under 49 U.S.C.A. § 30166. If, therefore, the internal documents at issue were generated to carry out such a legal duty, then Payton instructs that the involvement of MBUSA's in-house counsel in that process is not privileged. See Payton, supra, 148 N.J. at 550-51.
Pursuant to 49 C.F.R. § 579.21, a manufacturer of 5000 or more light vehicles must report specified information to the NHTSA on a quarterly basis. Although acknowledging that it must comply with the regulation and "report vehicle fires," MBUSA has argued that the regulation requires it to report the "number" of fire claims, but not a "cause or origin of the fire." By reporting "initial intake information [that it] receives" of fire claims, MBUSA claims that it satisfies its reporting duty.
Subsection (c) of 49 C.F.R. § 579.21 instructs that a vehicle manufacturer is only required to report "the number of such property damage claims, consumer complaints, warranty claims, or field reports" that it receives involving a fire. However, a vehicle manufacturer must further provide the NHTSA with "[c]opies of field reports" under 49 C.F.R. § 579.21(d). That regulation states, in relevant part, that a vehicle manufacturer must submit the following:
For all light vehicles manufactured during a model year covered by the reporting period and the nine model years prior to the earliest model year in the reporting period, a copy of each field report (other than a dealer report or a product evaluation report) involving one or more of the systems or components identified in paragraph (b)(2) of this section, or fire, or rollover, containing any assessment of an alleged failure, malfunction, lack of durability, or other performance problem of a motor vehicle or item of motor vehicle equipment (including any part thereof) that is originated by an employee or representative of the manufacturer and that the manufacturer received during a reporting period.However, the regulations further state that a "field report" does not include "any document covered by the attorney-client privilege or the work product exclusion." 49 C.F.R. § 579.4.
[49 C.F.R. § 579.21(d).]
The parties differ regarding the significance of these federal provisions with respect to the discovery dispute before us. Plaintiffs contend that the "investigation reports" and associated items generated internally by MBUSA in the vehicle fire cases are akin to the "field reports" that MBUSA is obligated to generate under federal law. Plaintiffs argue that the subject documents are not covered by attorney-client or work product privilege because Payton excludes them from protection due to the fact that they involve the performance of a legal duty, not preparation for anticipated litigation. See Payton, supra, 148 N.J. at 550-51. MBUSA, on the other hand, argues that the federal statute and regulation do not cover the documents at issue. Because it does not appear these competing contentions were presented to or decided by the trial court, we refer them to the trial court for its initial consideration. Nieder v. Royal Indemn. Ins. Co., 62 N.J. 229, 234 (1973); see also Ins. Co. of N. Am. v. Gov't Emps. Ins. Co., 162 N.J. Super. 528, 537 (App. Div. 1978) (noting that the appellate court need not consider an issue that was not decided by the trial court).
C.
The proper classification of the contents of the withheld or redacted e-mail communications particularly requires closer scrutiny. Our Supreme Court recently held that internal e-mail exchanges may be covered by an enforceable privilege "like any other form of communication." Stengart v. Loving Care Agency, Inc., 201 N.J. 300, 315 (2010). Hence, e-mails to an MBUSA attorney from an MBUSA employee on the subject of a specific issue would likely be covered by the attorney-client privilege. However, e-mails between employees that are not related to giving or seeking legal advice, and which are merely copied to an MBUSA attorney, might not necessarily be insulated. See, e.g., Isom v. Bank of Am., N.A., 628 S.E.2d 458, 462 (N.C. Ct. App. 2006) (concluding that the attorney-client privilege did not apply to e-mails which a bank's employees internally had exchanged on business matters and also had copied to the bank's attorneys, because the e-mails "do not seem to have been sent or received for the purpose of giving or seeking legal advice").
Our limited review of a sampling of the e-mails withheld or redacted by MBUSA suggests that MBUSA attorneys at times were copied on e-mails between MBUSA employees on the subject of (1) assigning a technical employee to investigate a vehicle fire, (2) the investigation's progress, and (3) what otherwise appear to be administrative matters, such as forwarding vehicle fire complaints to the Product Compliance Department for review by Bowne. From our sampling of the file, it appears that MBUSA's in-house attorneys rarely responded to these e-mails, if at all. These subjects might not sufficiently relate to giving or seeking legal advice, insofar as they involved a purely business matter where the attorneys were copied on the e-mails merely for information purposes only. In addition, we have noticed a few documents as to which it is unclear whether either the author or recipient is an MBUSA attorney. This is also problematic.
The privilege logs supplied by MBUSA, although they are admittedly lengthy, fail to explain the nature of the e-mails for which the privilege is claimed. The logs also do not identify the author or the recipient of each of the e-mails or specify whether he or she is an attorney. MBUSA has instead made blanket assertions in the log that all of the e-mails were sent between employees and attorneys in the Legal Department. However, for the reasons that we have already noted, that assertion may not be entirely accurate.
A litigant cannot meet its burden of overcoming a strong presumption of access to materials in discovery with cursory descriptions in a privilege log, and with blanket assertions of privilege. See Seacoast Builders Corp. v Rutgers, State Univ., 358 N.J. Super. 524, 547-48 (App. Div. 2003) (explaining that party asserting that documents are privileged must describe them in a non-conclusory fashion); see also R. 4:10-2(e)(1) (requiring a privilege log to include a description of "the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection"). MBUSA must prepare a more comprehensive and detailed privilege log so that the court can perform its document-by-document review as to the e-mails with greater precision and contextual understanding.
D.
A remand for further examination of the documents is also warranted so that the trial court can determine on a document-by-document basis whether the attorney-client privilege applies, the work product privilege applies, both privileges apply, or neither privilege applies. This distinction between the two categories of privilege is important, because as we noted in our first opinion, see Travelers Ins. Co., supra, slip op. at 20 n.3, in some respects the attorney-client privilege under N.J.S.A. 2A:84A-20 may be stronger than the work product privilege. See, e.g., Seacoast Builders Corp., supra, 358 N.J. Super. at 554 (noting that the "protection of the attorney-client privilege is more important than protection of work product").
Where internal redactions are involved for a particular document, the trial court should make a determination on a segment-by-segment basis.
We recognize that our initial opinion did not require the trial court to address the work product privilege unless it found the attorney-client privilege inapplicable. It is now apparent to us that at least some of the documents, or portions of them, may not be protected by the attorney-client privilege. Thus, express alternative consideration of the work product doctrine is warranted as to each document. Because the trial court did not make such particularized findings about the nature of the privilege(s) at stake, a remand is necessary to create such findings.
Similar individualized assessments should be made with respect to the few documents as to which MBUSA asserts privileges based upon "customer information" and "proprietary business information."
E.
The trial court's generic conclusions within its Kozlov analysis also need amplification in order to fairly evaluate MBUSA's claim on appeal that the court erred in ordering a turnover of the disputed documents in their entirety. Among other things, the trial court did not explicitly address in its Kozlov analysis whether the documents produced by MBUSA included information that was also contained within documents for which MBUSA has claimed a privilege. The trial court found that a less intrusive source did not exist because the information was presumably unavailable in the marketplace or the public domain. However, if the information that plaintiffs sought from the withheld materials could indeed be obtained from the documents that MBUSA had already produced to plaintiffs (which were admittedly not privileged) then the information could have been secured from a less intrusive source. This logical possibility is not explored in the trial court's opinion, and needs to be addressed.
We caution, however, that MBUSA cannot reasonably assert that the documents it has produced contain the same information as the documents that may be privileged, without providing the trial court with a more specific basis for that contention. Absent such specification, the court would be unfairly required to review 48,000 pages of documents based on MBUSA's blanket assertion that some of those pages may be duplicative of information in the documents MBUSA withheld.
On remand, the trial court should consider whether any documents for which a privilege is claimed contain the same information found in documents that MBUSA has already disclosed. In doing so, the court should instruct MBUSA that it has the burden of explicitly identifying any such duplicative documents or information to the court, on an in camera basis.
III.
Having identified the open issues that warrant further detailed examination on a second remand, we turn to several practical considerations. We have reviewed a sampling of the disputed materials — which we stress were not furnished to us on the first interlocutory appeal — and we now recognize the volume, length, and frequent complexity of the documents. That review has provided this court with a greater appreciation of the formidable task of reviewing them on an individualized basis. We also recognize that the trial court was hampered, to some degree, by the shortcomings of MBUSA's privilege log, and the apparent variations at times from the general internal procedures outlined in the Kelly certification. We also are mindful of the multiple and overlapping legal principles of privilege that are implicated.
That said, we encourage the trial court to consider utilizing a special master to assist in the additional review of the documents, on reasonable terms and conditions at the parties' shared expense. See, e.g., Rosenberg v. State Dep't of Law & Pub. Safety, 396 N.J. Super. 565, 580-81 & n.3 (App. Div. 2007) (citing the trial court's authority to appoint a special master to assist in reviewing allegedly-privileged documents); see also Hammock by Hammock v. Hoffmann-LaRoche, Inc., 142 N.J. 356, 381-82 (1995); R. 4:41-1 to -5.
In its March 23, 2011 remand opinion, the trial court expressed concern that it was reviewing complex and technical documents without the aid of an automotive expert. We appreciate the court's concerns in that regard, as our own examination of a portion of the documents likewise reveals the technical and jargon-laden contents of much of the withheld material. Consequently, we note that the trial court is authorized, on terms that are fair and reasonable, to appoint a neutral technical adviser or expert if it sees the need to do so in order to assist the trial court directly, or to assist a special master that may be appointed. See Alk Assocs., Inc. v. Multimodal Applied Sys., 2 76 N.J. Super. 310, 318 (App. Div. 1994) (noting the court's power to appoint an independent expert in certain circumstances); see also N.J.R.E. 614; Nat'l Wildlife Fed'n v. Nat'l Marine Fisheries Serv., 422 F.3d 782, 797 n.10 (9th Cir. 2005) (wherein a technical adviser assisted the court in understanding environmental reports); A&M Records, Inc. v. Napster, Inc., 284 F.3d 1091, 1096 (9th Cir. 2002) (wherein a technical adviser assisted the court in evaluating Napster's compliance with a preliminary injunction to remove particular user files from its file sharing service); Ass'n of Mexican-Am. Educators v. California, 231 F.3d 572, 590-91 (9th Cir. 2000) (wherein a technical adviser assisted the court); Data Gen. Corp. v. IBM Corp., 93 F. Supp. 2d 89, 91 (D. Mass. 2000) (where, in a patent infringement case, the district court appointed a technical adviser to explain underlying technology of the patents at issue); Hal v. Baxter Healthcare Corp. 947 F. Supp. 1387, 1392-93 (D. Or. 1996) (wherein the court appointed advisers in the areas of epidemiology, immunology/toxicology, rheumatology and chemistry).
At oral argument before us, counsel all acknowledged the court's legal authority to appoint a technical adviser, although they expressed some disagreement about whether such an adviser was necessary in this case and to what extent, if any, their respective clients should bear a portion of the adviser's costs.
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IV.
By way of summary, we are constrained to remand this matter for (1) a further examination and analysis of the privilege(s) asserted as to each particular document or portion thereof; (2) consideration of the parties' arguments concerning the federal statutory reporting requirements and the associated regulations and their relevance, if any, to the disclosure and privilege issues; (3) a more detailed examination of the e-mail communications and their alleged privileged nature; (4) identification of the attorney-client, work product and other applicable privileges on a document-by-document basis; and (5) a renewed document-specific application of the Kozlov analysis in light of these amplified determinations, including further consideration of whether the information withheld by MBUSA is otherwise available in the records that it has turned over.
To aid in this further endeavor, MBUSA shall furnish the trial court with an amplified privilege log, consistent with this opinion, within sixty days, unless that deadline is otherwise extended by the trial court in its discretion. In addition, we direct the trial court to convene a case management conference within thirty days at which the court and the parties may explore whether the appointment of a special master and/or a technical adviser is appropriate in the court's discretion and, if so, the terms of such appointment.
The trial court's March 23, 2011 order is consequently vacated and the matter is again remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION