MI Fed. Ct. / Privilege

Travelers Waives Privilege and Ordered to Produce In-House Counsel for Deposition 

Special Master Paula Manderfield of the United States District Court for the Western District of Michigan granted a policyholder’s motion to compel the deposition testimony of the Travelers Indemnity Company’s (“Travelers”) in-house counsel, Michael Ungaro, after concluding that the attorney was acting in the ordinary course of business as a claims handler. The Special Master further ruled that, as a sanction, Travelers has waived privilege due to its continued failure to comply with the court’s orders.  

Wolverine World Wide Inc. (“Wolverine”) noticed Mr. Ungaro for a deposition in a declaratory judgment action concerning coverage for underlying PFAS related claims. Travelers objected to the deposition because he is in-house counsel and “has been intimately involved in Travelers defense of [the] declaratory judgment action.” Travelers contended that Mr. Ungaro is, and has at all times, been acting as Travelers’ in-house counsel, providing legal advice, and overseeing the anticipated and actual coverage litigation with Wolverine. Travelers asserted that it has not hidden any information from Wolverine and that it had “produced all unredacted reinsurance policies; all claim notes, claim web notes, internal claim correspondence, and internal emails maintained by any and all Travelers’ claim handlers who were involved with Wolverine’s claims; all of claim handler Jane Kelly’s claim notes, internal claim correspondence, and internal emails; and all internal claim handling correspondence.”  

Wolverine argued that it is entitled to depose Mr. Ungaro for three reasons: (1) he engaged in the ordinary course of business of claims handling by overseeing the investigation, handling, analysis, and evaluation of Wolverine’s claim; (2) Travelers waived its privilege due its continued failure to comply with the Court’s orders; and (3) the Eighth Circuit’s test in Shelton v. American Motors Corp. does not apply, and even if it did, all three prongs would be satisfied. Wolverine claimed that Travelers intentionally used its in-house counsel as a claims handler in an attempt to cloak its evaluation and handling in privilege.  

The Special Master determined Mr. Ungaro had been overseeing the investigation, handling, analysis and evaluation of Wolverine’s claim in the ordinary course of Travelers’ insurance business, and because Mr. Ungaro was performing a business function and acting as a claims handler, she concluded Wolverine is entitled to depose Mr. Ungaro, regardless of his title.  The Special Master further noted that “[a]ttorneys assisting with a policyholder’s request for coverage are performing a business function and cannot avail themselves of the protection associated with the attorney-client privilege or the work product doctrine.”  

The Special Master sanctioned Travelers with waiver of privilege for its failure to produce its claim notes, files, and related documents and communications it was compelled to produce per a previous order. Lastly, the Shelton test did not apply because Mr. Ungaro is not an opposing counsel.  

The Special Master granted Wolverine’s motion to compel the deposition testimony of Travelers’ in-house counsel and ordered him to “testify in full, and without assertion of privilege, about the handling of Wolverine’s claims, coverage analysis, Travelers process for and guidelines concerning the handling of claims, how Travelers takes and maintains claim notes, and other relevant topics.” Wolverine World Wide, Inc. v. The American Ins. Co., Case No. 1:19-cv-00010 (Dec. 1, 2023) (Special Master Report to the Court No. 10 (Dec. 8, 2023)).