## F I L E D United States Court of Appeals Tenth Circuit 

### FEB 13 1998 

### PATRICK FISHER Clerk PUBLISH UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

FRONTIER REFINING INC., a Wyoming corporation; COMMERCIAL UNION ASSURANCE COMPANY, PLC; OCEAN MARINE INSURANCE COMPANY, NORTHERN ASSURANCE COMPANY, LTD., INDEMNITY MARINE ASSURANCE COMPANY, LTD., SIRIUS (UK) INSURANCE PLC, UNI STOREBRAND SKADEFORSIKRING, CODAN INSURANCE, HOUSTON CASUALTY INSURANCE COMPANY, GJENSIDEGE FORSIKRING, HULL AND COMPANY and ALEXANDER HOWDEN ENERGY, INC.,

Plaintiffs-Appellants No. 96-8014-2-

v. GORMAN-RUPP COMPANY, INC., an Ohio corporation,

Defendant-Appellee,

------------------------------- JOE M. TEIG and HOLLAND & HART,
Movants.

Appeal from the United States District Court for the District of Wyoming (D.C. No. 94-CV-172)

Submitted on the briefs: John M. Palmeri, Thomas B. Quinn and Christopher P. Kenney, White and Steele, P.C., Denver, Colorado, for Plaintiffs-Appellants. J. E. Vlastos, Vlastos & Duncan, Casper, Wyoming; J ohn M. Majoras, Jones, Day, Reavis & Pogue, Cleveland, Ohio; and John I. Henleyand John C. Brooks, Brooks, Henley & Drell, P.C., Casper, Wyoming, for Defendant-Appellee.

Before BRORBY, HENRY, and MURPHY, Circuit Judges.

MURPHY , Circuit Judge.-3- I. INTRODUCTION Plaintiff Frontier Refining, Inc. (“Frontier”) brou ght an action for equitable implied indemnity against Gorman-Rupp Co., Inc. (“G orman-Rupp”) in the United States District Court for the District of Wyoming. Frontier sought to recover approximately $19.25 million paid to settle persona l injury claims made against Frontier and its affiliated companies after an expl osion and fire at the Frontier Refinery in Cheyenne, Wyoming. Frontier appeals th e district court’s rulings allowing discovery, and receipt as trial evidence, of materials protected by the attorney-client privilege and work product doctrine . It also appeals the district court’s ruling which allowed joinder of Frontier’s liability insurers as real parties in interest. Exercising jurisdiction pursuant to 2 8 U.S.C. § 1291, we REVERSE and REMAND.

II. FACTS Frontier operates a refinery in Cheyenne, Wyoming. In 1992, the refinery had a "slop system" to recover oil for recycling in to crude tanks for future use. The slop system included two storage tanks, designated as Tank S5 and Tank S6. The slop system also included two centrifugal pumps , designated as Pumps 160-A and 160-B, manufactured by Gorman-Rupp. A fire ori ginated in the refinery's-4-

slop system on June 8, 1992, causing extensive dama ge to the cast iron casing of pump 160-B. The fire severely burned four contractors who were working in the area of the slop system. Three of the victims, Robin Torre s, Merv Vowles, and Kee Elsisie, filed lawsuits against Frontier. Frontierand its liability insurers settled the Torres claim for $8.25 million, the Vowles clai m for $6.75 million, and the Elsisie claim for $3.50 million. Frontier and its liability insurers also settled the claim of the fourth contractor, Sheldon Eike, for t he sum of $750,000. Holland & Hart, and particularly attorney Joe Teig, represent ed Frontier in the defense of these claims. Following settlement of the claims, Frontier filed this lawsuit seeking indemnification from Gorman-Rupp. Frontier obtaine d different counsel to prosecute the indemnity action. During the course of discovery, Gorman-Rupp filed a Motion to Compel Disclosure of the files of Frontier’s counsel for the underlying claims. The district court granted the motion, ordering the production of Holland & Hart’s files and the deposition of att orney Teig. The district court ruled that Frontier had waived the attorney-client privilege by filing a suit for equitable implied indemnity and that the work produ ct doctrine did not apply. Holland & Hart and Mr. Teig subsequently filed a mo tion for a protective order on their own behalf, arguing that the attorne y-client privilege and work1 The magistrate judge based his decision on the foll owing: “[S]aid

documents directly or indirectly relate to the issu e of the plaintiff’s decision to engage in and settle the underlying disputes, and a re reasonably calculated to lead to the discovery of admissible evidence under Feder al Rule of Civil Procedure 26.” The only documents the magistrate withheld fr om production were those which “did not directly or indirectly relate to the settlement in any way, or did not contain any useful information.”

2 The court stated: Gentlemen, the reason I called you to chambers righ t now is that since the hearing after lunch on Monday, I've been convinced that I was wrong in denying Holland & Hart their op portunity to appeal the Magistrate's ruling with regard to theirfiles. Since then disclosures have been made in the course of the evidence in this trial, particularly the exhibit bo ard that was admitted into evidence this morning with the Holland & Hart logo on it, convinces me that I was absolutely wrong because I think that there’s a good basis for the Holland & Hart appeal. And I don't know what our Magistrate was doing, butI never would have allowed discovery of something like that . I don't think it should have been. I think the Magistrate may have gone entirely too far.

. . . . It strikes me that the hearing of an appeal of thi s nature at this point after the disclosure has already been made an d the Holland & -5- product doctrine shielded their files from discovery. The magistrate judge denied the motion and ordered that the files be produced. 1 Holland & Hart attempted to appeal the Magistrate's Order on the first day of t rial, but the district court refused to hear its appeal. The case proceeded to trial before a jury. As some of the allegedly protected and privileged materials began to come in to evidence, the court became concerned that it had erred in its previous rulings

. 2 Accordingly, the districtHart file has been photocopied could be a process i n unringing a bell,

but nonetheless, there also could be some documents that they would not want public. . . .

. . . . And I think that that is making Holland & Hart's wo rk product work against them and I think that's just plain wro ng. So I think that it’s necessary for Holland & Hart t o have this hearing now.

3 The district judge presiding over this case has a r elative who was then an attorney with Holland & Hart. Evidently, he did no t hear the Holland & Hart appeal due to this relationship.

4 Gorman-Rupp was allowed to introduce the following exhibits at trial: 1. BBBI (Letter dated October 9, 1992 from attorney Joe Teig of Holland & Hart to Douglas Beck, Corporate Director of Frontier Refining Inc.'s parent corporation, Wainoco Oil Corporation, regarding investigation, liability analysis, damage analysis, opposing couns el, judge assignment, and litigation strategies); 2. BBB2 (Letter dated December 11, 1992 from attorne y W.T. Womble, co-counsel for Frontier, to attorney C liff Hall, counsel for Frontier's insurers, regarding settlement); 3. BBB9 (Memorandum dated September 29, 1992 of M.E. King of Holland & Hart regarding case investigation );

-6- court scheduled a hearing before another district j udge to hear Holland & Hart's appeal of the magistrate's Order. 3 (Hearing Transcript of December 8, 1995, pp. 1-92). The district court affirmed in part and rev ersed in part the magistrate's Order, limiting waiver to documents existing on andtestimony relating to dates prior to the settlement of the underlying claims. 4 The trial proceeded and4. BBB13 (Summary of findings of a public opinion po ll concerning the fire and explosion, prepared on beha lf of Holland & Hart); 5. BBB16 (Letter dated August 13, 1992 from attorney Brad Cave of Holland & Hart to Lorna Bullene, Front ier Refining Inc., Risk Management Coordinator, regardi ng investigation); 6. CCC Series of Exhibits (two-feet by four-feet enlargements of summaries prepared by Holland & Hart detailing strengths and weaknesses in the underlyin g litigation). -7- Gorman-Rupp continued to use Holland & Hart file materials in its case. It also called attorney Joe Teig as an adverse witness. The case was submitted to the jury on claims of pro duct liability, misrepresentation, and negligence. The jury return ed a verdict for the defense on all claims. The court entered judgment in favor of Gorman-Rupp on the verdict. Frontier filed a Motion for New Trial, which the co urt denied. This appeal followed.

III. ATTORNEY-CLIENT PRIVILEGE AND WORK PRODUCT DOCTRINE 1. Standard of Review Frontier contends the district court erred in concl uding that Frontier waived the protections of the attorney-client privilege an d work product doctrine when it brought an indemnity action against Gorman-Rupp. This court has previously5But see Tennenbaum v. Deloitte & Touche , 77 F.3d 337, 340 (9th Cir.

1996) (noting that whether party has waived attorne y-client privilege is mixed question of law and fact which is reviewed de novo ).

6 Wyoming has codified its attorney-client privilege. Wyo. Stat. Ann. § 1- 12-101(a)(i) provides: The following persons shall not testify in certai n respects: An attorney or a physician concerning a communicati on made to him by his client or patient in that relation, or his a dvice to his client or patient. The attorney or physician may testify by express consent of the client or patient, and if the client or patientvoluntarily testifies -8- held that we will not reverse a trial court’s orderdenying discovery absent an abuse of discretion. See Motley v. Marathon Oil Co. 71 F.3d 1547, 1550 (10th Cir. 1995), cert. denied, 116 S. Ct. 1678 (1996). Although this case invol ves an order compelling discovery rather than denying it, we see no meaningful distinction between the two in articulating a stand ard of review. 5 Thus, we review the district court’s determinations regardin g waiver of attorney-client privilege and work product protection for abuse of discretion. In this context, however, we review the court’s underlying factual d eterminations for clear error and review de novo purely legal questions. See United States v. Anderson (In re Grand Jury Subpoenas) , 906 F.2d 1485, 1488 (10th Cir. 1990). 2. Attorney-Client Privilege Rule 501 of the Federal Rules of Evidence provides that state law supplies the rule of decision on privilege in diversity case s. Wyoming law thus controls this issue. 6 See Wylie v. Marley Co ., 891 F.2d 1463, 1471 (10th Cir. 1989).the attorney or physician may be compelled to testi fy on the same

subject. -9- Courts generally employ some version of one of the three following general approaches to determine whether a litigant has waiv ed the attorney-client privilege. The first of these general approaches i s the “automatic waiver” rule, which provides that a litigant automatically waives the privilege upon assertion of a claim, counterclaim, or affirmative defense that raises as an issue a matter to which otherwise privileged material is relevant. See Independent Prods. Corp. v.
Loew’s Inc. , 22 F.R.D. 266, 276-77 (S.D.N.Y. 1958) (originatin g “automatic waiver” rule); see also FDIC v. Wise , 139 F.R.D. 168, 170-71 (D. Colo. 1991) (discussing Independent Productions and “automatic waiver” rule). The second set of generalized approaches provides that the pri vilege is waived only when the material to be discovered is both relevant to the i ssues raised in the case and either vital or necessary to the opposing party’s d efense of the case. See Black Panther Party v. Smith , 661 F.2d 1243, 1266-68 (D.C. Cir. 1981) (balancin g need for discovery with importance of privilege), vacated without opinion , 458 U.S. 1118 (1982); Hearn v. Rhay , 68 F.R.D. 574, 581 (E.D. Wash. 1975) (setting forth three-factor test, which includes relevance and vit ality prongs). Finally, several courts have recently concluded that a litigant waiv es the attorney-client privilege if, and only if, the litigant directly puts the att orney’s advice at issue in the-10-

litigation. See, e.g. , Rhone-Poulenc Rorer Inc. v. Home Indem. Co , 32 F.3d 851, 863-64 (3d Cir. 1994) (adopting restrictive test an d criticizing more liberal views of waiver). The district court here adopted the intermediate te st set out in Hearn to analyze whether Frontier had waived its attorney-cl ient privilege in bringing this indemnity action against Gorman-Rupp. This court r eviews de novo the district court’s determination of state law. See Salve Regina College v. Russell , 499 U.S. 225, 231 (1991). Frontier contends that the Wyoming Supreme Court ha s adopted the most restrictive view of waiver: the bringing of an inde mnity suit does not impliedly waive the attorney-client privilege unless the plai ntiff asserts reliance on the advice of counsel to prove the reasonableness of th e underlying settlement. Frontier cites Oil, Chemical & Atomic Workers International Union (OCAW) v. Sinclair Oil Corp. , 748 P.2d 283 (Wyo. 1987), in support of its argum ent. Sinclairinvolved a union decertification election in which a letter critical of the union and its officers was circulated among Sinclair employees. The union lost the election and thereafter brought an action for libel and civil conspiracy against officers and representatives of Sinclair. See id . at 287. During the course of discovery, Sinclair asserted attorney-client pri vilege in response to nearly all questions eliciting communications made in the pres ence of Sinclair’s attorney.7Although Sinclair pleaded lack of malice as one of its affirmative

defenses, the plaintiff had already raised the issu e in its complaint; therefore, malice did not become an issue as a result of Sincl air’s “affirmative acts.” Oil, Chem. & Atomic Workers Int’l Union (OCAW) v. Sincla ir , 748 P.2d 283, 290 (Wyo. 1987). -11- See id . at 289. The union argued that Sinclair had waive d the attorney-client privilege by pleading the absence of malice as an a ffirmative defense and by asserting that the decision to circulate the letterhad been made with the advice of counsel. See id. at 290. The Wyoming Supreme Court concluded that malice was an element of the plaintiff’s case and thus “became an issue when [plaintiff’s] filed their complaint.” Id

. 7Directing its attention to reliance on the advice of counsel, the court noted: We recognize that reliance upon a defense of advice of counsel has, in some circumstances, been held to constitute a wa iver of the attorney-client privilege. In this case, however, appellees did not rely on advice of counsel as a defense. They merel y stated, in response to questions posed by appellants’ counsel, that [their counsel] participated in the decision to publish th e . . . letter and helped prepare a cover letter for it. Id. (citations omitted). The court concluded that und er those facts, no waiver had occurred. See id. Frontier argues Sinclairstands for the proposition that a party must alleg e reliance on the advice of counsel before a court may find an implied waiver of the attorney-client privilege. The Sinclaircourt, however, did not so hold. Instead, it merely noted that an allegation of such reliance was one way in which waiver-12-

could occur. Because the Wyoming Supreme Court has not directly announced a definitive test for waiver of attorney-client privi lege, we must predict how that court would resolve this issue. In doing so, we may look to “other state-court decisions, well-reasoned decisions from other juris dictions, and any other available authority to determine the applicable state law.” Burns v. International
Ins. Co. , 929 F.2d 1422, 1424 (9th Cir. 1991). In ruling on Gorman-Rupp’s Motion to Compel Disclos ure, the district court declined to adopt the “automatic waiver” rule because, according to the court, it has been roundly criticized in the circui ts, does not adequately account for the importance of the attorney-client privilege to the adversary system, and is more applicable to constitutional, rather than atto rney-client, privileges. We find the district court’s analysis convincing and agree that Wyoming would not adopt the “automatic waiver” rule. Cf. Greater Newburyport Clamshell Alliance v. Public Serv. Co. , 838 F.2d 13, 20 (1st Cir. 1988) (criticizing “aut omatic waiver” rule); Afro-Lecon, Inc. v. United States , 820 F.2d 1198, 1205 (Fed. Cir. 1987) (same); see also Arnold v. Mountain W. Farm Bureau Mut. Ins. Co. , 707 P.2d 161, 165 (Wyo. 1985) (“[T]he preservation of the attorney-client privilege is essential to the operation of our judicial process. ”). Having concluded that Wyoming would not adopt the “ automatic waiver” rule, this court need not choose between the remain ing two general approaches-13-

because Gorman-Rupp failed to demonstrate its entit lement to the privileged materials under the more liberal of the two approac hes to waiver. In its analysis of this issue, the district court adopted the inter mediate approach and applied the widely cited case Hearn v. Rhay , 68 F.R.D. 574 (E.D. Wash. 1975). Under the
Hearn test, each of the following three conditions must exist to find waiver: (1) assertion of the privilege was the result of so me affirmative act, such as filing suit, by the asserting party; (2) th rough this affirmative act, the asserting party put the protected informat ion at issue by making it relevant to the case; and (3) application of the privilege would have denied the opposing party access to info rmation vital to [its] defense. Id. at 581 (emphasis added). An analysis of the natur e of the claims in this case in light of the availability of other sources for e vidence establish that the third condition for waiver of the privilege was not and c ould not be established. In an action for equitable implied indemnity under Wyoming law, the party seeking indemnity must prove that the settlement wa s reasonable and “made in good faith to discharge a potential or actual liabi lity.” Schneider Nat’l, Inc. v. Holland Hitch Co. , 843 P.2d 561, 579 (Wyo. 1992); see also Pan Am. Petroleum Corp. v. Maddux Well Serv. , 586 P.2d 1220, 1225 (Wyo. 1978). If the indemnit or was not adjudged liable in the underlying action, t he party seeking indemnity must prove that the wrongful conduct of the indemni tor created the claim against the indemnitee. See Schnieder , 843 P.2d at 580. To recover on its indemnity claim, Frontier therefore had to prove that Gorman- Rupp’s pump caused the fire8 Specifically, Gorman-Rupp requested the “claims fil es, underwriting files,

and all other files pertaining to the underlying ca ses.” Appellant App. at 49. Gorman-Rupp also requested that Frontier’s former attorney, Joe Teig, be compelled to answer deposition questions relating t o the settlement of the underlying cases. Id. Gorman-Rupp argued that the Holland & Hart files “may be at issue in this case.” Id. at 57. -14- and explosion which created claims against Frontierand that the settlements were reasonable and made in good faith to discharge its actual or potential liability to the burn victims. Gorman-Rupp contends that it is entitled to “inform ation and communications relating to the settlement agreement s and relating to the rationale” for the decision by Frontier and its ins urers to settle the underlying claims. 8 Appellee’s Brief at 20. The district court agree d, ruling that “information and communications relating to the settlement agreements are relevant to this case. Advice given by Frontier Re fining’s counsel in the underlying suits is relevant to determine whether t he settlement agreements were reasonable.” Order Granting Motion to Compel Disco very at 6. Without conducting any analysis of whether the information was accessible elsewhere, the court opined that “applying the privilege here woul d deny Gorman-Rupp access to information that is necessary to its defense. Gorm an-Rupp is entitled to production of information relating to the settlemen t agreements so that it may challenge their reasonableness.” Id.-15-

The court hinged its conclusion that the informatio n was “necessary” to its conclusion that the information was “relevant.” Me re relevance, however, is not the standard articulated in Hearn . Instead, the information must also be “vital,” which necessarily implies the information is availa ble from no other source.
Hearn , 68 F.R.D. at 581; see Greater Newburyport Clamshell Alliance , 838 F.2d
at 20. In this case, Gorman-Rupp had access to informationregarding the reasonableness of the settlement and Frontier’s mot ivations for settling through witnesses other than Frontier’s attorneys. For example, Richard Barrett, an attorney for two of the burn victims, testified that his clients’ claims were based solely on Frontier’s negligence and human error andthat neither the victims nor Mr. Teig had made any allegations against Gorman-Rupp in the underlying suits. Mr. Barrett further disclosed Mr. Teig’s admission that Frontier had no defense to the negligence claims. Other expert witnesses test ified about the likely reasons for settlement and risks of exposure. In addition, Gorman-Rupp was free to inquire of other Frontier employees or representati ves to discern Frontier’s reasons for settling. Such information was not within the exclusive possession of Frontier’s attorneys and was not necessarily protec ted by the privilege. See Remington Arms Co. v. Liberty Mut. Ins. Co ., 142 F.R.D. 408, 415-16 (D. Del. 1992) (noting company officials’ knowledge of facts and their decision to seek9 We further note that Gorman-Rupp has candidly admitted on appeal that

[t]here is nothing contained in [the privileged] m aterial which could allow the jury to engage in any meaningful analysis of whether or not the Gorman-Rupp pump was negligently manufactured, designed or distributed, or whether the pump was defective. Fu rthermore, the jury could not in any way determine whether there w as any misrepresentation made by Gorman-Rupp regarding the pumps in that evidence. Appellee Br. at 33. This court has reviewed the materials in question and agrees that, without regard to whether the admission of th e evidence was prejudicial, no jury could legitimately rely on the privileged evidence to conclude that G ormanRupp’s pump was or was not the cause of the explosi on. Cf. infra Part IV of this opinion (concluding that the admission into evidenc e of the improperly discovered materials adversely affected Frontier’s substantial rights). In light of GormanRupp’s admission and our review, we conclude that the district court need not reconsider the privilege and discovery issues on re mand for a new trial. -16- coverage are subject to discovery but also noting acourt cannot justify compelling production of privileged documents solel y as means of checking indemnitee's statements). As a consequence, the pr ivileged and protected information at issue was not truly “vital” to Gorma n-Rupp’s defense. The trial court’s ruling to the contrary, being based on an e rror of law regarding the meaning of “vital,” was therefore an abuse of discr etion. 9
3. Work Product Doctrine The district court concluded that the work product doctrine did not apply to this case. Citing Waste Management, Inc. v. International Surplus Lin es Insurance Co. , 579 N.E.2d 322, 331 (Ill. 1991), the court found that Frontier-17-

prepared the material Gorman-Rupp sought “in antici pation of the underlying litigation, not in anticipation of the present liti gation.” Order Granting Motion to Compel Discovery at 7. It therefore concluded the work product protection had ended. The district court further ruled that Front ier could not claim work product protection because it had placed the material at is sue by filing suit for indemnity. The district court stated that the protection of Fe deral Rule of Civil Procedure 26(b)(3) does not apply when the information soughtis “directly at issue and it would be unfair to deny the discovering party acces s to the information.” Id. at 7- 8. According to the district court, “[t]he work pr oduct doctrine serves as a shield, not as a sword.” Id. at 8 (citing Waste Management , 579 N.E.2d at 331). That part of the district court ruling which failed to extend work product protection merely because the relevant materials we re prepared in anticipation of other, albeit related litigation, is against the gr eat weight of well-reasoned authority. A consideration of the Rule 26(b)(3) re quirements of substantial need and undue hardship do not support that part of the district court ruling which denied protection on the grounds that the filing of this lawsuit placed the materials at issue. Consequently, the district cou rt abused its discretion in failing to extend the work product protection of Rule 26(b) (3) to the Teig and Holland & Hart materials.10 “Unlike the attorney client privilege, the work pro duct privilege is

governed, even in diversity cases, by a uniform fed eral standard embodied in Fed. R. Civ. P. 26(b)(3) . . . .” United Coal Cos. v. Powell Constr. Co. , 839 F.2d 958, 966 (3d Cir. 1988).

11 In Grolier , the Supreme Court held that under the work produc t doctrine contained in Exemption 5 of the Freedom of Informat ion Act, “attorney work product is exempt from mandatory disclosure withoutregard to the status of the litigation for which it was prepared.” FTC v. Grolier Inc. , 462 U.S. 19, 28 (1983); See also 5 U.S.C. § 552(b)(5) (exempting from mandatory pub lic disclosure “inter-agency or intra-agency memorandum s or letters which would not be available by law to a party . . . in litigation with the agency”). In reaching this decision, the Court stated that it was “not rely[in g] exclusively on any particular construction of Rule 26(b)(3),” but was instead ind ependently relying on the statutory language of exemption 5. Grolier , 462 U.S. at 26. -18- The appropriate starting point is obviously Rule 26 (b)(3) 10 which provides: [A] party may obtain discovery of documents and tan gible things . . . prepared in anticipation of litigation or for trial by or for another party or by or for that other party’s representativ e . . . only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party’s case an d that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means. In ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impression s, conclusions, opinions, or legal theories of an attorney or otherrepresentative of a party concerning the litigation. Fed. R. Civ. P. 26(b)(3). The Supreme Court has recognized in dicta 11 that "the literal language of [Rule 26(b)(3)] protects materials prepared for anylitigation or trial as long as they were prepared by or for a party to the subsequ ent litigation." FTC v. Grolier
Inc ., 462 U.S. 19, 25 (1983). According to the Suprem e Court’s dicta, Rule 26's-19-

language does not indicate that the work product pr otection is confined to materials specifically prepared for the litigation in which it is sought. Work product remains protected even after the terminatio n of the litigation for which it was prepared. See id . The language from Grolierset out above, although dicta, provides a particularly strong indication that Rule 26(b)(3) applies to subsequent litigation. See Gaylor v. United States , 74 F.3d 214, 217 (10th Cir.) (stating that “this court considers itself bound by Supreme Courtdicta almost as firmly as by the Court’s outright holdings, particularly when th e dicta is recent and not enfeebled by later statements”), cert. denied, 116 S. Ct. 1830 (1996). In addition to the compelling Supreme Court dicta, it appears every circuit to address the issue has concluded that, at least t o some degree, the work product doctrine does extend to subsequent litigation. At least one circuit, the Third, has suggested that the doctrine should only apply to cl osely related subsequent litigation, although it has declined to expressly s o hold. See In re Grand Jury Proceedings , 604 F.2d 798, 803-04 (3d Cir. 1979). At least tw o additional circuits, the Fourth and Eighth, extend the privile ge to all subsequent litigation, related or not. See United States v. Pfizer, Inc. (In re Murphy) , 560 F.2d 326, 335 (8th Cir. 1977); Duplan Corp. v. Moulinage et Retorderie de Chavanoz , 487 F.2d 480, 484-85 & n.15 (4th Cir. 1973). Finally, at le ast three circuits, the Second, Fifth, and Sixth, have recognized that the work pro duct doctrine extends to-20-

subsequent litigation, but have either declined to decide or have failed to discuss whether the doctrine extends only to subsequent lit igation which is “closely related” to the underlying proceedings. See In re Grand Jury Proceedings , 43 F.3d 966, 971 (5th Cir. 1994) (explicitly recognizi ng two approaches and refusing to choose between the two); United States v. Leggett & Platt, Inc. , 542 F.2d 655, 660 (6th Cir. 1976) (no discussion of issue in appe al where subsequent litigation is closely related to underlying litigation); Republic Gear Co. v. Borg-Warner Corp. , 381 F.2d 551, 557 (2d Cir. 1967) (same). Based on the compelling dicta in Grolierand the reasoning set out in the circuit court opinions cited above, we conclude that the work product doctrine extends to subsequent litigation. This court need not, however, determine whether the subsequent litigation must be closely r elated because this indemnity action is unquestionably “closely related” to the u nderlying suit between Frontier and the injured contractors. See In re Grand Jury Proceedings , 43 F.3d at 971 (refusing to choose between two approaches where mo re rigorous “closely related” test was met). Because the work product d octrine does indeed extend to subsequent litigation, we must move on to consider the alternative grounds of the district court’s discovery order. Rule 26(b)(3) prevents discovery of an attorney’s w ork product unless (1) the discovering party can demonstrate substantial n eed for the material and (2) the12 The courts have generally recognized a difference b etween fact work

product and opinion work product. See generally6 Moore’s Federal Practice § 26.70[5][b], [e] (Daniel R. Coquillette et al. eds. , 3d ed. 1997). The substantial need/undue burden test applies only to fact work pr oduct. Id. § 26.70[5][b]. The circuits are divided on whether there is absolute p rotection for opinion work product. Some courts have held that opinion work p roduct is absolutely protected; others have concluded it may be discover ed under compelling circumstances. Compare Holmgren v. State Farm Mut. Auto. Ins. Co. , 976 F.2d 573, 577 (9th Cir. 1992) (holding opinion work prod uct may be discovered when mental impressions are at issue and need for materi al is compelling), and In re Sealed Case , 676 F.2d 793, 809-10 (D.C. Cir. 1982) (requiring showing of extraordinary justification to overcome protection of opinion work product), with Duplan Corp. v. Moulinage de Retorderie et Chavanoz , 509 F.2d 730, 735 (4th Cir. 1974) (holding opinion work product to be abso lutely protected). The Supreme Court has not yet decided whether opinion w ork product is absolutely immune from discovery. Cf. Upjohn Co. v. United States , 449 U.S. 383, 401-02 (1981) (declining to decide whether any showing of necessity can overcome opinion work product protection but stating that sh owing of substantial need and inability to obtain information without undue hards hip is insufficient to compel disclosure). As set out more fully in the text abo ve, we conclude that the district court erred in ordering production of the fact workproduct without applying the substantial need/undue burden test. If the less ri gorous standard for fact work product was not met, neither of the possible opinio n work product standards could be met. -21- discovering party is unable to obtain the substanti al equivalent of the material by other means without undue hardship. 12 See Fed. R. Civ. P. 26(b)(3) (codifying work product doctrine first recognized by Supreme C ourt in Hickman v. Taylor , 329 U.S. 495, 511-12 (1947)); see also Moore’s Federal Practice § 26.70[5][b] (Daniel R. Coquillette et al. eds., 3d ed. 1997). This doctrine encourages attorneys to prepare thoroughly for trial without f ear that their thoughts and-22-

efforts will be disclosed to an opponent. See Hickman , 329 U.S. at 516 (Jackson, J., concurring). Although the district court recognized the substant ial need/undue burden test as controlling the issue of waiver of work pro duct protection, it declined to apply that test because it concluded Frontier had o therwise waived the protection when it “placed this material at issue by filing su it for indemnity.” Order Granting Motion to Compel Discovery at 7. This conclusion i s faulty as a matter of law and thus constitutes an abuse of discretion. See Whitney v. New Mexico , 113 F.3d 1170, 1173 (10th Cir. 1997) (holding abuse of discr etion is established if district court decision was based on an error of law). As the district court correctly suggested, a litiga nt cannot use the work product doctrine as both a sword and shield by sele ctively using the privileged documents to prove a point but then invoking the pr ivilege to prevent an opponent from challenging the assertion. See Moore’s, supra , § 26.70[6][c]; Niagara Mohawk Power Corp. v. Stone & Webster Eng’g Corp. , 125 F.R.D. 578, 587 (N.D.N.Y. 1989). Frontier, however, did not use any work product as a sword merely by filing a suit for equitable indemnificati on; nor did it thereby automatically waive work product protection or plac e work product in issue. The record on appeal reveals Frontier did not rely on t he work product in any manner to justify its right to recovery or to respond to G orman-Rupp’s defense that the13 For the same reasons set out earlier in this opinio n, we conclude that the

district court need not revisit this issue on reman d for a new trial. See supra , footnote 9 (discussing Gorman-Rupp’s admission thatnone of the discovered material could be legitimately used by the jury to decide the issues in this case). -23- initial settlements were not reasonable. Contrary to the conclusion of the district court, Frontier did not use the work product as a s word and is not, therefore, prohibited from shielding the material from discove ry. Furthermore, for many of the same reasons that pres erved the attorneyclient privilege, namely that information regarding the reasons for and reasonableness of the settlement was available else where, Gorman-Rupp failed to establish a substantial need for the work product a nd undue burden if the protected materials were not disclosed. Accordingl y, the district court erred in allowing discovery of the Holland & Hart materials and ordering that Teig submit to deposition. 13 Gorman-Rupp argues for the first time on appeal that the work product doctrine does not apply because the materials at is sue were prepared for the mutual benefit of Frontier and Gorman-Rupp against the contractors, the plaintiffs in the underlying litigation. In support of this a rgument, Gorman-Rupp relies on a novel twist to the “common interest” doctrine. T hat doctrine normally operates as a shield to preclude waiver of the attorney-clie nt privilege when a disclosure of confidential information is made to a third party w ho shares a community of-24-

interest with the represented party. See NL Indus., Inc. v. Commercial Union Ins. Co. v. Certain Underwriters at Lloyd’s , 144 F.R.D. 225, 230-31 (D. N.J. 1992). Citing a case from Illinois, Gorman-Rupp argues that the “common interest” doctrine can also act as a sword to overcome the wo rk product doctrine. See Waste Management , 579 N.E.2d at 327-29. Even assuming that the “common interest” doctrine applies in the work product context, the doctrine does not apply to the instant case. A growing majority of courts appear to reject the applicabili ty of the doctrine unless the current adversaries were actually represented by th e same attorney in the prior litigation. Remington Arms Co. v. Liberty Mut. Ins. Co. , 142 F.R.D. 408, 417-18 (D. Del. 1992) (collecting cases). This court, how ever, need not decide the issue. Even absent the requirement of actual joint represe ntation, Gorman-Rupp and Frontier did not share a community of interest. Al though Gorman-Rupp and Frontier may have shared an interest in minimizing the amount of the settlement in the underlying lawsuits, they did not at any tim e share an interest in identifying the cause of the fire or Frontier's response to the accident. NL Indus., Inc. v. Commercial Union Ins. Co. , 144 F.R.D. 225, 230-31 (D.N.J. 1992) (“A community of interest exists where “different perso ns or entities ‘have an identical legal interest with respect to the subjec t matter of a communication between an attorney and a client concerning legal a dvice . . . . The key-25-

consideration is that the nature of the interest be identical, not similar.” (quoting Duplan Corp. v. Deering Milliken, Inc. , 397 F. Supp. 1146, 1172 (D.S.C. 1974)). Under these circumstances, this court cannot conclu de that Frontier and GormanRupp shared a community of interest or that Frontie r ever intended to share protected materials with Gorman-Rupp.

IV. PREJUDICIAL ERROR Although the district court erred in allowing disco very and use at trial of materials and testimony protected by the attorney-c lient privilege and work product doctrine, such error requires reversal onlyif it affected the substantial rights of the parties. See U.S. Indus. v. Touche Ross & Co. , 854 F.2d 1223, 1252- 53 (10th Cir. 1988); 28 U.S.C. § 2111 (“On the hear ing of any appeal or writ of certiorari in any case, the court shall give judgme nt after an examination of the record without regard to errors or defects which do not affect the substantial rights of the parties.”); Fed. R. Evid. 103 (“Errormay not be predicated upon a ruling which admits or excludes evidence unless a s ubstantial right of the party is affected.”). Gorman-Rupp argues that admission of the Teig testi mony and Holland & Hart evidence was harmless because “[t]here is noth ing contained in that material which could allow the jury to engage in any meaning ful analysis of whether or not-26-

the Gorman-Rupp pump was negligently manufactured, designed or distributed, or whether the pump was defective.” Appellee Br. at 3 3. It also argues that any error was harmless because virtually the same evide nce was admitted through other witnesses. Gorman-Rupp’s first argument highlights precisely w hy the district court’s error adversely affected Frontier’s substantial rig hts. Although the Teig testimony and the Holland & Hart evidence may not h ave contained any admissible or truly meaningful evidence as to the m anufacture, design, or distribution of the Gorman-Rupp pump, our close rev iew of the record indicates there is a significant probability that the evidenc e may have unduly influenced the jury to conclude the cause of the accident was Fron tier’s negligence rather than the Gorman-Rupp pump. There is a significant risk that the jury resolved the causation issue on the basis of the Holland & Hart and Teig evidence rather than on the substantive evidence regarding the manufactu re, design or distribution of the Gorman-Rupp pump. Cf. Green v. Denver & Rio Grande W. R.R. Co. , 59 F.3d 1029, 1033-34 (10th Cir. 1995). Although similar evidence may have been admitted th rough other witnesses, there is a qualitative difference betwee n evidence received from Frontier’s own attorneys and evidence received fromother witnesses. There is too great a risk that a jury would accord significa nt or undue weight to the-27-

testimony and admissions of a party’s own lawyers. The district court itself recognized the harm in using the Holland & Hart fil es at trial:

[D]isclosures that have been made in the course of the evidence in this trial, particularly the exhibit bo ard that was admitted in evidence this morning with the Holland & Hart lo go on it, convinces me I was absolutely wrong.

. . . . I don’t know what our Magistrate was doing, but I n ever would have allowed discovery of something like that. I d on’t think it should have been. I think the Magistrate may have gone entirely too far . . . . It strikes me that the hearing of an appeal of this nature at this point after the disclosure has already been made an d the Holland & Hart file has been photocopied could be a process i n unringing a bell . . . . And I think that that is making Holland & Hart’s wo rk product work against them and I think that’s just plain wro ng. Although this court cannot describe the substance o f the subject evidence without further compromising the privilege, our careful rev iew of the record convinces us that the error in admitting the Teig testimony and Holland & Hart material was significant, harmful, and affected Frontier’s subst antial rights.

V. JOINDER OF INSURANCE COMPANIES In the proceedings below, Gorman-Rupp filed a Motio n for Joinder of Real Parties in Interest. It requested joinder as real parties in interest of eleven insurance companies, which had underwritten liabili ty insurance for Frontier. The motion was referred to a magistrate judge who grant ed Gorman-Rupp’s motion.-28-

Frontier did not appeal that ruling to the districtcourt. Instead, it proceeded to trial and first raised the issue as error in its Mo tion for New Trial. Frontier’s failure to appeal the magistrate’s rulin g to the district court precludes it from raising the issue on appeal to th is court. Rule 72(a) of the Federal Rules of Civil Procedure provides in relevant part: Within 10 days after being served with a copy of th e magistrate judge’s order, a party may serve and file objection s to the order; a party may not thereafter assign as error a defect in the magistrate judge’s order to which objection was not timely made . (Emphasis added.)
InNiehaus v. Kansas Bar Ass’n , 793 F.2d 1159, 1165 (10th Cir. 1986), this court held that a party waives its right to appeal a magistrate’s order when it has not filed objections with the district court. In Niehaus we noted that by failing to file timely objections with the district court, the party “stripped the district court of its function of effectively reviewing the magist rate’s order” and “frustrated the policy behind the Magistrate’s Act, i.e., to reliev e courts of unnecessary work.” Id. These policies are particularly relevant in the i nstant case. Frontier proceeded through trial without objecting to the ma gistrate’s order, thereby allowing significant judicial resources to be expen ded on a trial in which Frontier contends inappropriate parties were joined. The te xt of Rule 72 and precedent preclude Frontier from now raising an objection to the magistrate’s ruling14 We express no opinion as to whether Frontier can ra ise the issue of

joinder upon remand for a new trial. -29- allowing joinder. 14 See Ayala v. United States , 980 F.2d 1342, 1352 (10th Cir. 1992); Video Views, Inc. v. Studio 21 Ltd. , 797 F.2d 538, 539 (7th Cir. 1986); United States v. Schronce , 727 F.2d 91, 94 (4th Cir. 1984); McCarthy v. Manson , 714 F.2d 234, 237 (2d Cir. 1983); United States v. Renfro , 620 F.2d 497, 500 (5th Cir. 1980).
VI. CONCLUSION
We REVERSE the judgment and REMAND for a new trial consistent with this opinion.