National Tank Co. v. Brotherton
851 S.W.2d 193, 1993 WL 102121 (1993)
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Rule of Law:
Investigative documents are prepared in 'anticipation of litigation' and are thus privileged if a reasonable person would have concluded from the totality of the circumstances that there was a substantial chance of litigation, and the party resisting discovery subjectively believed litigation was likely and conducted the investigation for that purpose.
Facts:
- On August 23, 1990, an explosion occurred at a manufacturing facility operated by National Tank Company (NATCO).
- The explosion critically injured NATCO employee Rex Willson and two other persons employed by independent contractors.
- Rex Willson subsequently died from his injuries.
- On the day of the explosion, NATCO’s General Counsel, Allen Pease, learned of the incident and dispatched Henry Townsend, a safety coordinator in NATCO's legal department, to investigate.
- Pease also notified NATCO's liability insurer, American International Adjustment Company (AIAC), and recommended that it initiate its own investigation.
- Shortly after the accident, Townsend interviewed four NATCO employees.
- An AIAC employee, Phil Preeht, also interviewed nine NATCO employees and prepared three accident reports which he sent to Pease.
Procedural Posture:
- The wife of Rex Willson, a deceased employee, sued National Tank Company (NATCO) and others in a Texas state trial court.
- During discovery, the plaintiff requested production of reports from NATCO's post-accident investigation.
- NATCO objected to the discovery request, asserting several privileges, including the work-product and party-communication privileges.
- The trial court overruled NATCO's objections for all documents prepared before the date NATCO was first sued by another injured party, and ordered their production.
- NATCO, as relator, sought a writ of mandamus from the Texas Court of Appeals to overturn the trial court's discovery order.
- The Court of Appeals denied mandamus relief without a published opinion.
- NATCO then sought a writ of mandamus from the Supreme Court of Texas.
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Issue:
Do investigative reports and witness statements prepared by a company and its insurer immediately following a fatal industrial explosion qualify for protection from discovery under the investigative privileges (work-product, witness statement, party communication) as materials prepared in 'anticipation of litigation'?
Opinions:
Majority - Chief Justice Phillips
No, the writ of mandamus is denied without prejudice. The court establishes a new standard for determining if materials are prepared in 'anticipation of litigation,' modifying its prior test in Flores. Under this new standard, the privilege applies if: 1) an objective view of the circumstances indicates a 'substantial chance' of litigation (rejecting the stricter 'imminent' litigation standard), and 2) the party subjectively believed litigation was likely and conducted the investigation to prepare for it. Because this alters the controlling law, the case is returned to the trial court to reconsider its ruling under this new framework. The court separately holds that the attorney-client privilege does not apply to the witness statements because Texas's 'control group' test limits the privilege to communications from high-level employees with authority to act on legal advice, and the interviewed employees did not meet this definition.
Dissenting - Justice Hecht
Yes, mandamus should be granted. The majority's legal analysis of the investigative privilege is correct, but it does not represent a substantial change from existing law in Flores and Stringer; it merely clarifies misinterpretations by lower courts. The principle has always been that a party's anticipation of litigation must be real and reasonable based on the totality of the circumstances. Since the majority's standard is not new, there is no reason to deny mandamus and send the case back; the trial court's order was a clear abuse of discretion under the correct interpretation of the law and should be reversed now.
Concurring - Justice Gonzalez
I concur in the judgment to deny the writ but disagree with the reasoning. The two-prong test from Flores is an outlier among jurisdictions and should be completely overruled, not just modified. Texas should adopt the more common standard used in other jurisdictions to determine when an investigation is conducted in anticipation of litigation.
Concurring-in-part-and-dissenting-in-part - Justice Doggett
No, the writ should be denied, but the majority's reasoning is fundamentally wrong and harmful. By replacing the clear 'outward manifestations' test with a vague 'substantial chance' of litigation standard, the majority allows corporations to bury inconvenient facts discovered in immediate post-accident investigations. This new rule defeats the search for truth, disadvantages individual victims who cannot conduct similar immediate investigations, and creates a double standard of justice favoring powerful institutional litigants over individuals.
Concurring-in-part-and-dissenting-in-part - Justice Spector
No, the writ should not issue, but the new standard is a mistake. The plurality's modification of Flores and Stringer effectively creates a presumption that all investigations following serious accidents are privileged. This unfairly shifts the burden of proof to the injured party to establish a need for materials whose contents are unknown, representing a retreat from the principles of fair and open discovery.
Analysis:
This decision significantly reshapes Texas discovery law by broadening the scope of the investigative privilege. By replacing the stricter 'imminent litigation' standard with a more flexible 'substantial chance of litigation' test, the court makes it easier for parties, particularly corporate defendants, to shield post-incident reports from discovery. This ruling creates a precedent that allows a party to anticipate litigation based on the severity of an event alone, without any overt action from the potential plaintiff. It attempts to balance the need for parties to prepare for adversarial proceedings with the policy of open discovery, but critics argue it tilts the scales in favor of secrecy and benefits institutional litigants who can routinely conduct such investigations.
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