Diamond v. Stratton
35 Fed. R. Serv. 2d 1329, 12 Fed. R. Serv. 585, 95 F.R.D. 503 (1982)
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Rule of Law:
The attorney-client privilege and work product rule do not protect communications made in furtherance of an intentional tort, particularly when those communications form the basis of the alleged tort itself, as the underlying policy to promote justice outweighs the privilege in such circumstances.
Facts:
- Leo A. Diamond (the "insured") was involved in a bus accident in December 1979.
- Diamond subsequently died in May 1980.
- Plaintiffs, as beneficiaries of Diamond's travel insurance policy, made a claim with the defendant insurer for policy coverage related to his death.
- In late March 1980, Mr. Diamond's family reportedly advised the medical staff at Georgetown University Hospital that they wished to "stop all life support measures."
- On April 14, 1981, Hogan & Hartson, counsel for the defendant insurer, sent a letter to plaintiffs' counsel.
- The letter stated that medical records suggested the family's request to stop life support and raised "profound issues" regarding the predominant or proximate cause of Diamond's death and the insurer's obligations, inquiring if the beneficiaries wished to withdraw their claim.
- Plaintiffs alleged that the defendant's statement in the letter and the willful refusal to pay intentionally and recklessly inflicted extreme emotional suffering upon them, and sought damages.
Procedural Posture:
- Plaintiffs sued defendant insurer in the U.S. District Court for the Southern District of New York, asserting a first cause of action for policy coverage and a second for intentional infliction of emotional suffering and punitive damages.
- Defendant moved to dismiss the second cause of action.
- Plaintiffs moved to compel production of certain documents in the defendant’s claim file.
- Defendant resisted discovery, asserting attorney-client privilege and the work product rule.
- The District Court ruled that the motion to compel should be considered prior to the motion to dismiss.
- The parties acceded to the court's suggestion for an in camera (private) inspection of the withheld documents.
- The in camera inspection of the documents took place.
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Issue:
Does the attorney-client privilege or the work product rule protect from discovery communications made by an attorney on behalf of a client when those communications are alleged to constitute an intentional tort?
Opinions:
Majority - Sand, District Judge
No, the attorney-client privilege and work product rule do not protect communications made by an attorney on behalf of a client when those communications are alleged to constitute an intentional tort. The court found that New York law, which governs privilege questions in this diversity case, includes exceptions to the attorney-client privilege. While traditionally applied to crime or fraud, the court extended this exception to include intentional torts. The rationale is that the fundamental policy of the privilege, to promote the administration of justice, would be undermined if it could be used to shield communications made in furtherance of intentional wrongdoing. Drawing a "crude boundary" between fraud and other intentional torts in this context would be illogical. Here, the documents at issue directly bear on the question of whether there was intentional infliction of emotional distress, making them discoverable. Furthermore, concerning the work product rule, the court determined that plaintiffs demonstrated a "substantial need" for the materials under Fed. R. Civ. P. 26(b)(3). The communications were not merely corroborative but were themselves crucial to resolving the central issues of motive and knowledge surrounding the plaintiffs' second cause of action, which was predicated on the contents of the attorney's letter.
Analysis:
This decision significantly expands the 'crime-fraud' exception to the attorney-client privilege, extending it to encompass intentional torts, not just crimes or fraud. It clarifies that the privilege cannot be used as a shield when attorneys' communications are themselves the instrument or evidence of alleged intentional wrongdoing, such as intentional infliction of emotional distress. This ruling facilitates discovery in bad faith insurance claims or similar actions where a party alleges that an adversary, through its counsel, engaged in tortious conduct, potentially impacting how legal counsel advises clients regarding contentious claims to avoid having their communications become discoverable.
