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)