IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

WILLIAM H. COULTAS, et al., 

Plaintiffs, 

v. 

LIBERTY MUTUAL FIRE INSURANCE 

COMPANY, 

Defendant. 

P APAK, Magistrate Judge: 

Civil No. 03:15-cv-00237-PK 

OPINION AND ORDER 

Plaintiffs William H. Coultas, Christine Coultas, and Christine Schwanenberg (filing 

individually and as the personal representative of the Estate of Roark Schwanenberg) 

(collectively, "Plaintiffs"); filed the instant action against Defendant Liberty Mutual Fire 

Insurance Company ("Liberty"). This court has jurisdiction over Plaintiffs' claims pursuant to 28 

U.S.C. § 1332. Now before the court is Plaintiffs' "Motion to Compel, or in the Alternative, 

Motion for In Camera Review" (#60) ("Plaintiffs' Motion to Compel"). For the reasons provided 

below, Plaintiffs' Motion to Compel is denied. 

FACTUAL BACKGROUND 

On August 5, 2008, Roark Schwanenberg and William Coultas were involved in a 

helicopter crash that killed Mr. Schwanenberg and seriously injured Mr. Coultas. Shortly 

thereafter, Libetiy began paying workers' compensation benefits to Mr. Coultas and Christine 

Schwanenberg, Mr. Schwanenberg's widow, under the te1ms of a Workers' Compensation and 

OPINION AND ORDER Page j 1 
Employer's Liability Policy. Libe1ty assigned Serena Zywicki, a senior recovery specialist 

employed by Liberty, to oversee Plaintiffs' claims. Zywicki hired Jon Kodani as outside counsel 

to take over Liberty's potential subrogation claims arising from the helicopter crash. 

On October 7, 2008, Kodani sent letters informing Plaintiffs of their option to personally 

sue the third pmties responsible for the helicopter crash or, alternatively, to assign their rights to 

sue to Liberty (the "Election Letters"). The Election Letters instructed Plaintiffs to sign and 

return their election to Libe1ty "within 60 days of receipt" of the Election Letters. Mr. Coultas 

elected to file suit personally and returned his election to Libe1ty within sixty days. Mrs. 

Schwanenberg also elected to file suit personally but failed to return her election to Libe1ty 

within sixty days. 1 

On December 10, 2008, Liberty filed a subrogation action in the United States District 

Court for the Northern District of California on behalf of Roark Schwanenberg and his survivors 

and beneficiaries. Likewise, on January 23, 2009, Libe1ty filed a subrogation action in the 

United States District Comt for the District of Connecticut on behalf of Mr. Coultas. Both 

lawsuits asse1ted claims arising from or related to the helicopter crash. 

Plaintiffs then retained counsel in an effo1t to file their own lawsuit regarding the crash. 

Plaintiffs' counsel asked Liberty to dismiss its subrogation actions on behalf of Plaintiffs. 

Liberty refused and sought to consolidate the subrogation actions before the Panel on MultiDistrict Litigation. 

Thereafter, on February 24, 2010, Plaintiffs filed suit against multiple defendants in the 

Multnomah County Circuit Comt, asse1ting claims arising from the helicopter crash. 

1 The Pmties appear to dispute whether Mrs. Schwanenberg ever returned her election to Liberty, 

but that issue is immaterial to the resolution of Plaintiffs' Motion to Compel. 

OPINION AND ORDER Page I 2 
On April 8, 2011, the Oregon Workers' Compensation Board issued Orders finding 

Liberty's claimed assignments of rights to sue on behalf of Plaintiffs were void due to 

misrepresentations contained in the Election Letters. Liberty then dismissed its subrogation suit 

on behalf of Coultas. Libe1iy appealed the Oregon Workers' Compensation Board Order 

regarding Schwanenberg's purported assignment of rights to Libe1iy. The Oregon Court of 

Appeals affirmed the Order on August 8, 2012. Libe1iy subsequently dismissed its subrogation 

suit on behalf of Schwanenberg. 

Meanwhile, Plaintiffs continued to try their case in Multnomah County Circuit Comi and 

eventually obtained a $70,455,000 jury verdict. 

PROCEDURAL BACKGROUND 

On December 10, 2014, Plaintiffs filed their initial Complaint (#1-1) in this action, 

alleging conversion, wrongful use of civil proceedings, and breach of duty of good faith and fair 

dealing on behalf of all Plaintiffs, as well as one count of fraud on behalf of Schwanenberg. On 

January 12, 2015, Plaintiffs filed an Amended Complaint (#1-1) eliminating all but the fraud and 

conversion claims. On February 11, 2015, Liberty removed Plaintiffs' lawsuit to this comi. On 

March 4, 2015, Plaintiffs filed a Notice of Voluntary Dismissal (#20) of their fraud claim. Thus, 

Plaintiffs' only remaining claims are those alleging conversion in relation to Liberty's pursuit of 

the abovementioned subrogation actions. 

On or about May 22, 2015, Plaintiffs served Libe1iy with a request for production, 

seeking documents related to Plaintiffs, the Election Letters, and the subrogation actions 

underlying the present case. Liberty responded to Plaintiffs' requests for production on or about 

July 1, 2015. The responsive documents contained numerous redactions accompanied by 

objections on the grounds of attorney-client privilege. 

OPINION AND ORDER Page I 3 
Plaintiffs filed the cmTent Motion to Compel (#60) on August 3, 2015. Plaintiffs 

challenge Liberty's assertions of privilege with respect to the redactions in two documents 

only-Liberty's electronic claims journals for the Coultas and Schwanenberg workers' 

compensation and subrogation claims (the "Claims Journals"). Liberty filed its Response in 

Opposition to Plaintiffs' Motion (#63) on August 24, 2015. Plaintiffs filed their Reply in Support 

of Plaintiffs' Motion (#69) on September 9, 2015. After hearing oral arguments on Plaintiffs' 

Motion to Compel on September 17, 2015, the court asked the Parties to submit supplemental 

briefing on the privilege issue. Both Patties timely submitted supplemental briefing on 

September 28, 2015. This matter is fully submitted and prepared for decision. 

LEGAL STANDARDS 

I. Attorney-Client Privilege 

Parties may obtain discovery "regarding any nonprivileged matter that is relevant to any 

patty's claim or defense." Fed. R. Civ. Pro. 26(b)(l) (emphasis added). Because the court has 

subject matter jurisdiction over this case by reason of diversity of citizenship only, Oregon law 

governs issues of privilege and waiver. See Fed. R. Evid. 501; lvfalbco Holdings, LLC v. Patel, 

No. 6:14-CV-00947-PK, 2015 WL 2260661, at *1 (D. Or. May 13, 2015). A party asse1ting 

attorney-client privilege bears the burden of establishing that the requested information is 

actually privileged. See, e.g., Relion, Inc. v. Hydra Fuel Cell Corp., No. CV06-607-HU, 2008 

WL 5122828, at *2 (D. Or. Dec. 4, 2008); Goldsborough v. Eagle Crest Partners, Ltd, 805 P.2d 

723, 725 (Or. App. 1991) ajj'd, 838 P.2d 1069 (Or. 1992). 

Oregon's attorney-client privilege is applicable only if the following three elements are 

established: (1) the purpo1tedly privileged information is a "confidential communication," (2) the 

communication was made "for the purpose of facilitating the rendition of professional legal 

OPINION AND ORDER Page I 4 
services to the client," and (3) the communication was between privileged parties. Or. Rev. Stat. 

§ 40.225(2). A client waives its attorney-client privilege by voluntarily disclosing or consenting 

to disclosure of any significant part of a privileged communication. Or. Rev. Stat. § 40.280. 

However, waiver by voluntary disclosure does not occur ifthe disclosure itself is a privileged 

communication. Id. 

II. Motion to Compel 

Federal Rule of Civil Procedure 37(a)(3)(B) pe1mits a propounding party to move for an 

order compelling production or inspection of documents if a request for production is not 

honored. " [A Jn evasive or incomplete disclosure, answer, or response must be treated as a 

failure to disclose, answer, or respond." Fed. R. Civ. P. 37(a)(4). Additionally, Federal Rule of 

Civil Procedure 26(b )( 1) provides: "For good cause, the cou11 may order discovery of any matter 

relevant to the subject matter involved in the action." 

III. In Camera Review 

District comis within the Ninth Circuit perform a two-step analysis in determining 

whether to grant a motion for in camera review. See United States v. Zolin, 491 U.S. 554, 572 

(1989); see also In re Grand Jwy Investigation, 974 F.2d 1068, 1074 (9th Cir. 1992) ("[W]e find 

that the standard established in Zolin for crime-fraud in camera review applies equally well when 

... a party believes that the materials are not privileged for reasons other than the crime-fraud 

. ") exception .. 

At the first step of the analysis, the court must detennine whether the moving paiiy has 

satisfied its burden of showing that the requested information may not be privileged. See In re 

Grand Jwy Investigation, 974 F.2d at 1071. To satisfy its burden, the moving party must show 

OPINION AND ORDER Page I 5 
"a factual basis sufficient to support a reasonable, good faith belief that in camera inspection 

may reveal evidence that information in the materials is not privileged." Id. at 1075. 

At the second step of the analysis, the district court exercises its broad discretion in 

deciding whether to grant in camera review. Id. at 1071. In making that decision, the comi 

should consider the amount of material it has been asked to review, the relevancy of the 

allegedly privileged material, and the likelihood that in camera review may reveal evidence that 

the requested infonnation is not privileged. Id. at 1072 (citing Zolin, 491 U.S. at 572). 

DISCUSSION 

Plaintiffs seek the Claims Journals to suppo1i their conversion claims. Oregon courts 

analyze conversion under the Second Restatement of Torts approach. See, e.g., Fogh v. kfcRill, 

956 P.2d 236, 241 (Or. App. 1998) (citing Restatement (Second) ofT01is § 222A). That 

approach requires comis to consider, inter alia, the alleged to1ifeasor's "good faith, or lack 

thereof." See, e.g., id. (citing Restatement (Second) ofT01is § 222A). The Parties appear to 

agree that the redacted portions of the Claims Journals relate, at least in part, to Libe1iy's 

reasoning for pursuing the subrogation actions on behalf of Plaintiffs. The redacted pmiions of 

the Claims Journals are therefore relevant to Plaintiffs' conversion claims, as they will tend to 

make it more or less likely that Libe1iy acted in good faith in pursuing the subrogation actions. 

See Fed. R. Evid. 401 (defining relevancy). 

The bigger issue before the comi is whether, notwithstanding their relevancy, the 

redacted portions of the Claims Journals are nevertheless exempt from disclosure on the basis of 

attorney-client privilege. The Paiiies do not dispute that the redacted information in the Claims 

Journals consists of confidential legal advice from Libe1iy's outside counsel and, as such, was 

OPINION AND ORDER Page I 6 
initially privileged. 2 However, Plaintiffs argue that Libe1ty waived its attorney-client privilege 

by voluntarily including the privileged communications in the Claims Journals. Plaintiffs further 

argue that even if Libe1ty did not waive its privilege by including the privileged communications 

in the Claims Journals, it waived its privilege by making its counsel's advice an issue in the case. 

Finally, Plaintiffs argue, in the alternative, for in camera review of the Claims Journals. Each of 

these arguments is addressed, in turn, below. 

I. Waiver by Inclusion of the Privileged Communications in the Claims Journals 

As explained above, waiver occurs when a client voluntarily discloses a significant pmt 

of a privileged communication and the disclosure itself is not a privileged communication. Or. 

Rev. Stat. § 40.280; accord State ex rel. Oregon Health Sciences Univ. v. Haas, 942 P.2d 261, 

265 (Or. 1997). It is undisputed that Libe1ty voluntarily disclosed to some of its employees all of 

the privileged communications sought by Plaintiffs when it included those communications in 

the Claims Journals. Therefore, Liberty waived its privilege unless the Claims Journals are 

themselves privileged communications. Resolution of that issue requires the co mt to determine 

whether the Claims Journals are confidential communications between privileged parties for the 

purpose of facilitating the rendition of legal services to Libe1ty. See Or. Rev. Stat.§ 40.225(2); 

accord Haas, 942 P.2d at 265. 

A. Confidentiality and the Purpose of Liberty's Disclosure 

Liberty has established that the Claims Journals are confidential communications made 

for the purpose of facilitating the rendition oflegal services to Liberty. A confidential 

communication is one that is "not intended to be disclosed to third persons other than those to 

2 To be sure, Plaintiffs contended at oral argument that to the extent the redacted portions of the 

Claims Journals contain only Liberty's employees' subjective summaries oflegal advice from 

outside counsel, those portions of the Claims Journals were never protected by the attorney-client 

privilege. The comt rejects that argument for the reasons provided below. See infi'a Pait III. 

OPINION AND ORDER Page 17 
whom disclosure is in furtherance of the rendition of professional legal services to the client or 

those reasonably necessary for the transmission of the communication." Or. Rev. Stat. § 

40.225(1 )(b ). A communication is made for the purpose of facilitating the rendition of legal 

services if the communication "makes it easier for an entity to make use of legal advice or 

services." Porto/ Portlandv. Oregon Ctr.for Envtl. Health, 243 P.3d 102, 107 (Or. App. 2010) 

(citing Haas, 942 P.2d 261). 

The Claims Journals are stored in Libe1iy's online document system, known as ExPRS. 

Munay Deel. if 3 (#72). ExPRS is only accessible to Liberty employees who work in the 

workers' compensation, subrogation, cost-recovery, and legal departments.3 Id. at iii! 3, 12. 

Liberty has numerous protocols in place to ensure access to ExPRS is restricted to that limited 

group of Liberty employees. For example, no Liberty employee can access ExPRS without first 

being added to a restricted group on Liberty's computer network, which requires authorization 

from Libe1iy's information technology depaiiment. Murray Deel. if 6. Even after obtaining 

authorization from Liberty's info1mation technology department, authorized employees still must 

install the ExPRS software on their computers before being able to access ExPRS. Id. at if 8. 

Logon credentials must then be entered at two different points prior to actually using the ExPRS 

software. Id at if 9. Additionally, all Libe1iy employees are trained on and required to follow 

Liberty's Code of Conduct, which instructs employees to never access company information 

without a work-related reason and to avoid reviewing confidential information where an 

unauthorized person might see it. Weiner Deel. iii! 4, 6, 7 (#73). These protocols show Libe1iy 

did not intend to disclose the Claims Journals to third persons beyond a select group ofLibe1iy 

employees. 

3 Employees outside those depaiiments can only access ExPRS by obtaining manager approval 

on an as-needed basis. Id at if 12. · 

OPINION AND ORDER Page I 8 
Furthe1more, storing the Claims Journals in ExPRS makes it easier for Libe1iy to use its 

legal advice by making that advice readily available to Libe1iy employees potentially responsible 

for acting on, or in accordance with, the advice. Thus, the Claims Journals were disclosed for 

the purpose of facilitating and furthering the rendition oflegal services to Libe1iy. See Port of 

Portland, 243 P.3d at 107 (holding, that a communication is made for the purpose of facilitating 

the rendition of legal services if the communication "makes it easier for an entity to make use of 

legal advice or services" (citation omitted)); see also Haas, 942 P.2d at 266 (finding that a 

communication was confidential and thus protected by the attorney-client privilege where it was 

disclosed to only a select group of employees). 

In sum, Libe1iy utilizes numerous protocols to prevent the Claims Journals from being 

disclosed to anyone other than a select group of employees whose jobs require them to have 

access to that information. Libe1iy's limited disclosure also makes it easier for Libe1iy to act on 

the legal advice and services it receives. Consequently, the Claims Journals are confidential 

communications made for the purpose of facilitating the rendition oflegal services to Liberty. 

See Or. Stat. Rev.§ 40.225(l)(b). 

B. Privileged Parties 

Liberty has established that the Claims Journals are communications between privileged 

pmiies. Oregon's attorney-client privilege rule sets fo1ih five categories of communications 

between privileged parties. See id. (2). Four of those categories require a lawyer to be a party to 

the communication. See id. (2)(1)(a)-(c), (e). Zywicki admitted during her deposition that 

Kodani did not have access to the Claims Journals. See Pl.'s Mem. in Supp. of Mot. to Compel 

Ex. C, 91 (#61-7). Thus, the only potentially applicable category of privileged communications 

is that which encompasses communications between "representatives of the client or between the 

OPINION AND ORDER Page I 9 
client and a representative of the client." Or. Rev. Stat.§ 40.225(2)(1)(d); accord Haas, 942 

P .2d at 267. A representative of a client includes a person who, "for the purpose of effectuating 

legal representation for the client, makes or receives a confidential communication while acting 

in the person's scope of employment for the client." Or. Rev. Stat. § 40.225(l)(e). 

Liberty's workers' compensation, subrogation, cost-recovery, and legal depaiiment 

employees received confidential communications via the Claims Journals for the purpose of 

effectuating legal representation for Libe1ty. See id Libe1ty is an entity, and as such, it must act 

through its agents. The legal advice in the Claims Journals related to Liberty's pursuit of 

subrogation claims on behalf of Plaintiffs pursuant to the terms of a Workers' Compensation and 

Employer's Liability Policy between Liberty and Plaintiffs' employer. Thus, Libe1iy required its 

workers' compensation, subrogation, cost-recovery, and legal department employees to receive 

and act on, or pursuant to, the confidential communications in the Claims Journals while acting 

in the scope of their employment. See id 

Similarly, Libe1iy's workers' compensation, subrogation, cost-recovery, and legal 

department employees made confidential communications via the Claims Journals for the 

purpose of effectuating legal representation for Liberty. See id. For example, some of those 

employees made entries in the Claims Journals pertaining to Coultas's medical conditions, 

requests for authorization to allow billing for medication, benefits calculations, and vocational 

rehabilitation. All of that information would factor into Libe1iy's damages in a subrogation 

action. Thus, Liberty required its workers' compensation, subrogation, cost-recovery, and legal 

department employees to make confidential communications in the Claims Journals while acting 

in the scope of their employment. See id. 

OPINION AND ORDER Page I 10 
In sum, Liberty disclosed the Claims Journals to only Liberty employees who, for the 

purpose of effectuating legal representation for Libe1ty, made or received confidential 

communications while acting in the scope of their employment. See id The Claims Journals are 

therefore communications between representatives of a client. Because, as discussed above, the 

Claims Journals are also confidential communications made for the purpose of facilitating the 

rendition of legal services to Libe1ty, Liberty did not waive its attorney-client privilege by 

including privileged communications in the Claims Journals. 

II. Waiver by Making Counsel's Advice an Issue in the Case 

Libe1ty has also established that it did not waive its privilege by making its counsel's 

advice an issue in the case. A client waives the attorney-client privilege by asserting the advice 

of counsel defense, which requires the client or its attorney, acting at the client's request, to 

testify to privileged communications. See Roberts v. Legacy 1vferidian Park Hosp., Inc., No. 

3:13-CV-01136-SI, 2015 WL 1608088, at *8 (D. Or. Apr. 10, 2015); Columbia Cascade Co. v. 

Interplay Design, Ltd., No. CIV. 90-148-FR, 1990 WL 200099, at *2 (D. Or. Dec. 6, 1990); see 

also Goldsborough, 805 P .2d at726 (" [W]aiver does not require a subjectively intended act. It 

may be recognized by implication."). 

It is Libe1ty's choice whether to assert the advice of counsel defense. At oral argument 

on Plaintiffs' Motion to Compel, Libe1ty stipulated it will not rely on the advice of counsel 

defense at trial. Libe1ty therefore has not waived its privilege by making its counsel's advice an 

issue in the case. Pursuant Libe1ty's stipulation and its ongoing asse1tion of attorney-client 

privilege, Libe1ty is precluded from introducing evidence at trial of its counsel's advice regarding 

the subrogation actions to prove that it acted in good faith in pursuing those actions on behalf of 

Plaintiffs. 

OPINION AND ORDER Page I 11 
III. In Camera Review 

Libe1ty voluntarily provided the court with the Claims Journals for in camera review. 

Plaintiffs contend that in camera review is warranted because it may reveal that some of the 

redacted entries in the Claims Journals are Liberty's employees' subjective summaries of legal 

advice from outside counsel. Plaintiffs argue those pmiions of the Claims Journals are not 

protected by the attorney-client privilege. The Supreme Comi of Oregon has clearly established 

that a client does not waive its privilege when one of its employees discusses privileged 

communications with other employees on a need-to-know basis. See Haas, 942 P .2d at 266, 271. 

Fmihermore, Plaintiffs have not presented any evidence that the redacted portions of the 

Claims Journals actually contain Liberty's employees' subjective views of the legal advice 

Liberty received. At oral argument, Plaintiffs' counsel acknowledged that Libe1iy does not 

purpmi to have redacted its employees' subjective views oflegal advice and then stated: "But it 

strikes me as strange that these people never expressed their own views, period." Even 

assuming, arguendo, that Haas is distinguishable from the present case, Plaintiffs' speculation is 

insufficient to satisfy their burden of showing a "factual basis sufficient to support a reasonable, 

good faith belief that in camera inspection may reveal evidence that infmmation in the materials 

is not privileged." In re Grand Jwy Investigation, 974 F.2d at 1075. Consequently, in camera 

review of the Claims Jomnals is not wananted.4 See, e.g., id. at 1071-75; Zolin, 491 U.S. at 572. 

CONCLUSION 

For the reasons provided above, the court finds that Liberty has not waived its attorneyclient privilege as to the redacted p01iions of the Claims Journals. Plaintiffs' Motion to Compel 

4 The court fmiher recognizes that it has broad discretion in deciding whether to conduct in 

camera review. See id. at 1071. The length of the Claims Journals (over 300 pages) and the 

limited likelihood that in camera review will reveal that the Claims Journals are not privileged 

fmiher suppmi the court's decision to decline in camera review. See id. at 1072. 

OPINION AND ORDER Page I 12 
· (#60) is therefore DENIED. Plaintiffs' alternative request for in camera review is also DENIED. 

Additionally, pursuant to Liberty's stipulation at oral argument, Liberty is precluded from 

introducing evidence of its counsel's advice regarding the subrogation actions to prove that it 

acted in good faith in pursuing those actions on behalf of Plaintiffs. 

Dated thislJJth day of October, 2015 

(/~) J_~J~ \/' (211/(·\ &-'t-)11 

Honorable Paul Papak 

United States Magistrate Judge 

OPINION AND ORDER Page 113