Opinion ID: 148187
Heading Depth: 1
Heading Rank: 9

Heading: The Sword/Shield Doctrine

Text: Finally, INA argues that, even if it is not entitled to a reversal of the District Court's Phase I order, that order should still be vacated, as (according to INA) the District Court based its ruling on evidence that should have been excluded. More specifically, INA contends that it was improper for the District Court to draw inferences in Travelers' favor based on its consultations with outside and in-house counsel. INA's argument is that, because Travelers invoked the attorney-client and work-product privileges to shield the substance of those consultations, it should not have been allowed to defend its conduct with reference to those consultations. See United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir.1991) ([T]he attorney-client privilege cannot at once be used as a shield and a sword.... Thus, the privilege may implicitly be waived when [the party claiming the privilege] asserts a claim that in fairness requires examination of protected communications. (internal citations omitted)). INA is correct that the District Court drew inferences in Travelers' favor based on the bare fact that, in connection with the Acme settlement, it received advice from attorneys experienced with insurance-coverage disputes. In particular, it found Travelers' receipt of such advice to be evidence that it generally handled the settlement in a reasonable and businesslike manner. (J.A. at 61.) But we do not agree that the District Court's Phase I ruling depended on those inferences. The Court's conclusion that INA failed to show bad faith on Travelers' part was sufficiently supported by its findings that: (1) the specific allocation decisions challenged by INA could be accounted for without reference to intentional maximization; and (2) the Travelers employees most responsible for the details of the post-settlement allocation were screened off from the reinsurance implications of their decisions. Accordingly, it is unnecessary for us to determine whether a party that refers generally to having received advice from counsel in order to establish a pattern of businesslike conduct waives any associated privileges. Even were the District Court's consideration of the disputed testimony error, it was harmless. See Hirst v. Inverness Hotel Corp., 544 F.3d 221, 228 (3d Cir.2008) (Discretionary evidentiary rulings will give rise to reversible error only where a substantial right of the party is affected. (internal quotation marks and citation omitted)).