F.A. GOSSETT, Magistrate Judge.
This matter is before the court on the Motion to Compel (
In 2005, Union Pacific hired Deangelo Brothers Inc., ("DBI") to provide vegetation control at Union Pacific's public railroad crossings. The agreement ("2005 Agreement") between Union Pacific and DBI required DBI to indemnify Union Pacific for liability and loss arising out of any injury or death associated with DBI's work under the agreement. The 2005 Agreement specified DBI "shall not indemnify [Union Pacific] for any portion of the loss caused by [Union Pacific]." (
In May 2006, while the 2005 Agreement and the above insurance policies were in effect, a Union Pacific train collided with an automobile at a railroad crossing in Oklahoma, injuring two and killing three occupants of the automobile. In May 2008, the personal representative of the one of the occupants of the automobile sued Union Pacific in Oklahoma state court ("the "Oklahoma Action"). The complaint alleged eleven negligent acts or omissions by Union Pacific, including one allegation that Union Pacific failed to clear vegetation from the railroad crossing. (
In January 2013, after several years of litigation, and shortly before the scheduled trial, Union Pacific settled the Oklahoma Action for a confidential amount that exceeded the coverage provided by the insurance policies with AHA and Colony. (
Union Pacific filed the present action asserting causes of action against DBI for contractual indemnity and/or contribution; against AHA and Colony seeking a declaration of rights and obligations under the insurance policies; and against both AHA and Colony for breach of contract, breach of fiduciary duty, breach of statutory duty, and bad faith failure to indemnify Union Pacific. (
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Colony filed the instant motion seeking an order compelling Union Pacific to fully respond to interrogatories and produce documents it withheld as privileged attorney-client communications or as work-product. (
"In [a] diversity case, [federal courts] apply federal law to resolve work product claims and state law to resolve attorney-client privilege claims." Baker v. General Motors Corp., 209 F.3d 1051, 1053 (8th Cir. 2000). The parties do not dispute that Colony requests disclosure of discovery that is ordinarily protected by the attorney-client privilege. However, under Nebraska law, a party may waive the attorney-client privilege by placing communications between lawyer and client into issue. See Nebraska v. Roeder, 636 N.W.2d 870, 876 (Neb. 2001). The party asserting the attorney-client privilege impliedly waives it through his own affirmative conduct when: "(1) assertion of the privilege was a result of some affirmative act, such as filing suit, by the asserting party; (2) through this affirmative act, the asserting party put the protected information at issue by making it relevant to the case; and (3) application of the privilege would have denied the opposing party access to information vital to his defense." Id. "`Fairness is an important and fundamental consideration in assessing the issue of whether there has been a waiver of the lawyer-client privilege.'" Id. (quoting League v. Vanice, 374 N.W.2d 849, 856 (Neb. 1985)).
Colony also seeks production of documents that Union Pacific withheld as work-product. "Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative[.]" Fed. R. Civ. P. 26(b)(3)(A). However, such materials, if "otherwise discoverable under Rule 26(b)(1)," may be discoverable if "the party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means." Fed. R. Civ. P. 26(b)(3)(A). The court "must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation." Fed. R. Civ. P. 26(b)(3)(B). Nevertheless, "[t]he work product privilege is not absolute and may be waived." Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726, 731-32 (8th Cir. 2002). "[T]he privilege should be `applied in a commonsense manner in light of reason and experience as determined on a case-by-case basis.'" Id. (quoting Pittman v. Frazer, 129 F.3d 983, 988 (8th Cir. 1997)). "The privilege is designed to balance the needs of the adversary system to promote an attorney's preparation in representing a client against society's interest in revealing all true and material facts relevant to the resolution of a dispute." Pamida, 281 F.3d at 731-32. "When a party seeks a greater advantage from its control over work product than the law must provide to maintain a healthy adversary system, the privilege should give way." Id. at 732 (quoting In re Sealed Case, 676 F.2d 793, 818 (D.C. Cir. 1982)).
Colony argues Union Pacific waived the attorney-client and work product privileges by designating its counsel from the Oklahoma Action as potential expert witnesses and by stating Union Pacific decided to settle the case in reliance on its counsels' advice that Union Pacific faced liability at trial primarily because of the one allegation of negligence relating to DBI's vegetation work. (
It is clear to the court from Union Pacific's initial disclosures and answers to interrogatories that Union Pacific intends to rely on the opinions, knowledge, and advice of its trial counsel to establish why Union Pacific settled the underlying action, directly placing those communications at issue in this action. Union Pacific appears prepared to disclose the subjective opinions of its trial counsel regarding Union Pacific's liability in the Oklahoma Action related to DBI's vegetation work, while simultaneously seeking to maintain privilege as to other opinions and evaluations, including Union Pacific's perceived liability for any of the other ten allegations of negligence raised in the Oklahoma Action. Nevertheless, the court is not inclined to compel Union Pacific to disclose privileged communications or documents at this time because Union Pacific designated its counsel as potential witnesses who may offer the above opinions. (
However, if Union Pacific continues to invoke privilege in response to Colony's discovery requests, Union Pacific will be barred from introducing any evidence of how its attorneys evaluated the underlying claims at the time of settlement or how its attorneys perceived Union Pacific's liability at the time of the settlement. See, e.g., UnitedHealth Grp. Inc. v. Columbia Cas. Co., 47 F.Supp.3d 863, 874 (D. Minn. 2014) (concluding that the insured could not introduce evidence of how the insured or its attorneys evaluated the claims at the time of settlement due to the insured's repeated invocation of the attorney-client privilege and work-product doctrine to prevent the insurers from inquiring into the insured or its counsels' subjective evaluations of the settlement). "[P]rivilege[s] cannot at once be used as a shield and a sword." United States v. Workman, 138 F.3d 1261, 1264 (8th Cir. 1998) (citing United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991)); see also, Seneca Ins. Co., Inc. v. Western Claims, Inc., 774 F.3d 1272 (10th Cir. 2014) (concluding an insurer waived attorney-client privilege by affirmatively putting at issue its attorney's advice in stating it settled on advice of counsel; allowing the insurer to rely on advice of counsel to establish the reasonableness of the settlement while excluding the contents of that advice would violate the principle that attorney-client communications could not be used both as a sword and a shield). Union Pacific will not be permitted to selectively disclose opinions and evaluations of its trial counsel without waiving privilege as to all of its counsels' opinions and evaluations of the underlying claims. See Bilzerian, 926 F.2d at 1292 ("A [party] may not use the privilege to prejudice his opponent's case or to disclose some selected communications for self-serving purposes."). The court will leave the determination to Union Pacific whether to disclose the requested information and documents, or be barred from introducing testimony and evidence from Union Pacific's counsel concerning the bases of Union Pacific's liability and decision to settle in the underlying case. Accordingly,