The question is whether an insurance company, by defending a bad-faith claim on the grounds of subjective good faith, waives the attorney-client privilege.

The opinion says almost nothing about the facts but it appears that Everest issued a liability policy and then used up its limits settling some but not all of multiple claims, whereupon the disappointed claimants arranged a bad-faith action. Everest, which had consulted with counsel during the settlement process, defended on the grounds of both objective and subjective good faith. The plaintiffs sought production of the lawyers’ communications, arguing that they were relevant to subjective bad faith (apparently acknowledging that Lee (2000) foreclosed waiver claims on the objective side). The trial court ordered production; Everest took special action; the Court of Appeals accepts it and reverses, though there is a dissent.

The court starts by citing Lee for the proposition that merely consulting with a lawyer doesn’t waive the privilege. But “waiver is implied when . . . a party makes an affirmative assertion that it was acting in good faith because it relied on counsel’s advice to inform its own interpretation and evaluation of the law.” The plaintiffs countered with Mendoza (2009), in which the insurer had substantially relied on lawyers to make decisions about how to handle a workers comp claim; that court, mostly in the context of subjective bad faith, allowed discovery of the lawyers’ advice. The court says that the argument “overreads” Mendoza. “To waive the attorney client privilege, a party must make an affirmative claim that its conduct was based on its understanding of the advice of counsel”; merely getting the advice isn’t enough.

“Everest has not asserted as a defense, at least not yet, that it depended on advice of counsel in forming its subjective beliefs regarding the appropriate course of conduct. Similarly, Everest has not yet seen the need to share the advice of its counsel with its own expert — the expert simply cites the fact of consultation as a procedural indication of good faith. As such, Everest has not yet placed the advice it received from counsel at issue in this litigation.” So the court reverses and remands.

The dissent essentially agrees with the majority’s reading of Mendoza. But it points out that Everest’s lawyers also participated in the negotiations to settle the claims that it resolved. “Counsel’s participation, along with Everest’s assertion of subjective good faith, is an affirmative interjection of counsel’s role in formulating and acting upon Everest’s subjective good faith in this litigation.”

We think we can figure out the intended meaning of that sentence, though as written it doesn’t have any. The dissent argues against a “mechanical” application of Lee by which the privilege isn’t waived until the insurer formally takes a particular position; the judge says it “depends on the facts” and feels that counsel’s participation in settlement raises enough of a question to warrant discovery.

Despite the dissent’s acceptance of the majority’s legal analysis, its hard to reconcile some of the language this case with that in Mendoza. One of them “overreads” Lee.

Otherwise this is not a bad little opinion (though the majority opinion is a bit oddly organized). Which is to say that we’re not complaining when we wonder why the majority, while mentioning almost no relevant facts, chose to point out an obscure and irrelevant one: that the policy was an OCIP.

(link to opinion)

The moral of this one is to avoid whenever possible doctors and lawyers and judges.

Dissatisfied by the result of her nose job, Defendant posted negative comments about her doctors on various websites and established her own website criticizing them. They almost immediately sued her for various defamation torts and moved for a TRO to make her stop posting and take down her website, which she agreed to do. She counterclaimed for battery, arguing that she hadn’t authorized some things the doctors did to her nose. (There was more to the acrimonious relationship between the parties but since it isn’t necessary to understanding the holdings we leave it out.)

The doctors won summary judgment on the battery claim. Defendant won summary judgment on some of the doctors’ claims but two – defamation and false-light invasion of privacy – went to trial. The jury must not have thought that her face looked too bad because it awarded her doctors eleven million dollars and an additional million in punitives. The trial court denied her post-trial motions but entered an amended judgment to correct a mistake in calculating interest.

Defendant appealed. The plaintiffs challenged jurisdiction because her Notice of Appeal listed the original judgment as well as the orders denying her post-trial motions but for some reason didn’t mention the final, amended judgment. The Court of Appeals decides, though, that because the doctors weren’t misled or prejudiced Defendant’s Notice was good enough.

Defendant argued first that the trial court should have granted summary judgment on all claims. That court had concluded that damages were speculative as to some of them; she contended that the same conclusion applied to all. The court explains that it does not review the denial of summary judgment on appeal unless the issue is solely one of law or has been reasserted in a JMOL motion or post-trial motion. The damage argument, the court concludes, was not purely legal since it depended the assessment of facts. Defendant had made a motion for JMOL but hadn’t argued then about damages. But the court mentions in a footnote that Defendant did raise the damages issue in her post-trial motions. The doctors argued that she hadn’t raised it in her summary-judgment motion. What had she raised in that motion? The court doesn’t tell us. And it concludes the analysis by observing in passing that the trial court could have concluded that there were general damages to support the two successful claims. So whether the court decided that it could or couldn’t review the substantive issue, and whether it did or didn’t review it, are also speculative.

Defendant’s basic argument was that her online comments were either true or matters of opinion and that she should have gotten JMOL on that. She also made the damage argument. The court devotes two long paragraphs to explaining defamation law before “analyzing” the issues by saying “legitimate questions of fact existed” (without mentioning what they were) and “it was within the jury’s province to consider any actual damage.”

Defendant argued that statements she made to the Arizona Medical Board were privileged. The court agrees that there is a qualified privilege but says there was evidence she acted in bad faith and in any event since she did not ask for special interrogatories it can’t tell whether the jury awarded damages based on statements subject to a privilege.

Defendant also sought new trial on damages or remittitur; the trial court denied both but here the Court of Appeals remands for new trial. The doctors’ damages were based entirely on their own, subjective testimony. The court concludes that this was not adequate to support the amount awarded, which shocks the conscience and indicates passion or prejudice. The court spends more long paragraphs on this as it has to walk the fine line of saying that the trial court was right that there could be damages but the plaintiffs didn’t really prove that there were.

On the issue of punitive damages, as it had before the opinion states uncontested law at length but then announces a summary conclusion: there was evidence to support a finding of “evil mind.”

As to the battery claim the Court of Appeals reverses. After – predictably by now – explaining the law of medical battery it comes to a brief, evidence-based conclusion: there was evidence that Defendant hadn’t consented to everything done to her.

We’re not sure what the publishable part of these 26 pages (including 22 footnotes) was intended to be. In the old, old days there were appellate judges (particularly one or two on Division Two) who would have dealt with this in two pages and a half. Back then we thought those opinions thoughtless and slapdash (especially when we lost them). That was back then.

(link to opinion)

We think we can figure out why the court did this. What we can’t figure out is why it didn’t say so.

The plaintiff’s decedent died after falling in a nursing home. She sought discovery of documents from the home’s quality assurance committee. The home resisted this based on a federal statute requiring that it have such a committee but protecting committee records from discovery. The trial court ordered production; on special action Division One rules that some of the documents were protected committee records, though emails with and reports from other people were not.

If you’re an elder-law-litigation type, or if you’ll love reading about 42 U.S.C. §1396r(b)(1)(B), then click the link below and dive in. We’re not and didn’t and that’s not what this blog is about; what interests us is that the Court of Appeals considered the case at all.

The problem is that the nursing home didn’t cite the right statute to the trial court. The Court of Appeals specifically finds that it “did not sufficiently argue §1396r before the trial court.” Yet the court accepts the special action, reverses the trial court in part, and grants relief, all on the basis of a statute purportedly not argued below.

Why? The court spends a long paragraph trying to explain this.

It cites a case for the proposition that appellate courts “may address waived issues to uphold a trial court’s ruling.” But this opinion reverses, in part; not addressing the waived issue would have upheld the trial court’s ruling.

The court cites a case for the proposition that it can apply “a legal principal . . . not raised before the trial court” if that “would dispose of an action on appeal and correctly explain the law.” But this is not an appeal; the matter need not be heard to be disposed of. An opinion based on the wrong law is not required. And even if it were an appeal calling for an opinion, a memorandum opinion could base the result on what was argued below while doing no damage to the law.

The court cites a case for the proposition that “[W]hen . . .  considering the interpretation . . . of statutes, we [cannot] be limited to the arguments made by the parties if that would cause us to reach an incorrect result.” “Because we view the §1396r argument as . . . correct . . .  we exercise our discretion to address it.” Sounds noble, doesn’t it? But since when is the “correct” result in an adversary system independent of the adversarial process? Why do we bother to file memoranda and briefs if the courts can use issues the parties chose not to or didn’t properly present? How have courts lost the ability to point out when necessary, even in a published opinion, that the result in a particular case resulted from the issues and arguments raised in it and would not necessarily obtain in other cases? But even that is beside the point; in this case the parties didn’t cite the wrong law to the court. The nursing home cited the right law – in what plaintiff argued, and the court agreed, was a patently defective way.  And nothing that either party did would require an incorrect result – even if you think of “correct” in a sort of Cartesian sense, removed from the earthly reality of the parties’ case – since the court was not required to reach any result.

The court has by this opinion established the principle that there are some cases in which not making an argument below will justify denying relief and some cases in which it will justify granting relief. The court can, it its “discretion,” consider that a waived argument was not waived if it deems the argument “correct.”

This of course does more damage to the law than any other disposition would have.

The pity is that the court could have avoided this almost completely just by explaining itself properly. The two statutes – the one the nursing home argued to the trial court and the one it argued to the Court of Appeals – are identical. They appear in different sub-sub-subsections of the statute (at one or two points the court itself gets confused about where the parentheses should go when citing them, though by the time you read the opinion this may have been corrected by one of those unannounced amendments that the Court of Appeals favors nowadays). Both protect the records of the quality assurance committee; one applies to “nursing facilities,” the other to “skilled nursing facilities.” But there is no suggestion that Congress intended to give them different levels of discovery protection; that it used identical language for both obviously suggests the opposite. To say that the home “did not sufficiently argue §1396r” may be correct in a hyper-technical sense but is entirely misleading. The trial court had before it the same issue that the Court of Appeals did, applying the same statutory language in essentially the same context. That the statutes have different numbers made no difference to the analysis.

That’s why the nursing home didn’t really waive the argument, that’s why considering it was appropriate, and that’s what the court should have said.

Thus endeth this year’s rants. We’re on vacation. Happy Holidays.

(link to opinion)