CAROLINE PALADINO v. AULETTO ENTERPRISES, INC.

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(NOTE: The status of this decision is Published.)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0232-18T1

CAROLINE PALADINO and
ROBERT PALADINO,
APPROVED FOR PUBLICATION
Plaintiffs-Respondents,
June 6, 2019

v. APPELLATE DIVISION

AULETTO ENTERPRISES, INC.
t/a AULETTO CATERERS,

Defendant-Appellant.
___________________________

Submitted January 15, 2019 – Decided June 6, 2019

Before Judges Rothstadt, Gilson, and Natali.

On appeal from Superior Court of New Jersey, Law
Division, Camden County, Docket No. L-2574-17.

Landman Corsi Ballaine & Ford PC, attorneys for
appellant (Gerald T. Ford, JonCarlo E. Villegas, and
Kristina M. Rogan, on the briefs).

Law Office of Andrew A. Ballerini, attorneys for
respondent (Richard J. Talbot, on the brief).

The opinion of the court was delivered by

GILSON, J.A.D.
In this appeal we clarify the standard for evaluating a claim of the work-

product privilege. Consistent with the language of Rule 4:10-2(c), we hold that

there is no per se or presumptive rule that materials prepared or collected before

litigation are not prepared in anticipation of litigation. Instead, as set forth in

Rule 4:10-2(c), there is a multi-part, fact-specific test. The first inquiry is

whether the materials were prepared or collected in anticipation of litigation or

trial by another party or that party's representative. If so, to obtain the materials,

a party must satisfy a two-part standard. The party seeking the materials must

(1) show a substantial need for the discovery, and (2) demonstrate that he or she

is unable, without undue hardship, to obtain the substantial equivalent of the

materials.

On leave granted, defendant appeals from an April 13, 2018 order that

compelled it to produce photographs and recorded witness statements taken and

obtained by an investigator for defendant's insurance carrier before a complaint

had been filed and before defense counsel was retained. The trial court ordered

the production of those materials, essentially reasoning that because there was

no pending litigation, the insurance carrier was not acting in anticipation of

litigation. We reject that analysis as inconsistent with Rule 4:10-2(c).

Accordingly, we reverse the order compelling discovery and remand for an

analysis under the standard set forth in this opinion.

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I.

We discern the facts and procedural history from the record developed on

the motion to compel discovery. On October 9, 2015, plaintiff Caroline Paladino

was a guest at a wedding reception at defendant's catering facility. As she was

walking down a staircase, she fell and injured her left knee, lower back, and

right ankle.

Plaintiff immediately reported her accident to defendant, and that same

day, defendant prepared an accident incident report. Defendant had general

liability insurance, and shortly after the accident, gave notice to its insurer. The

insurer then retained an investigator.

Two weeks after the accident, on October 22, 2015, a senior claims

examiner for defendant's insurer spoke with plaintiff about the accident. That

same day, the claims examiner sent plaintiff a letter advising her that an

investigator was looking into the accident. The claims examiner then requested

the investigator to photograph the accident scene and obtain statements from

plaintiff and representatives of defendant.

The claims examiner later certified that her purpose in retaining the

investigator was to "prepare a defense for [defendant] in the event that [plaintiff]

filed a lawsuit." The claims examiner also certified that the insurer was not

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disputing coverage and did not hire the investigator to look into whether the

insurer owed coverage to defendant.

The investigator arranged to meet with and take a recorded statement from

plaintiff on October 26, 2015. On the day of the appointment, the investigator

was contacted by an attorney who informed him that he had been retained by

plaintiff and the appointment with plaintiff was cancelled. The next day,

plaintiff's counsel sent a letter informing the insurance carrier that he was

representing plaintiff in connection with the fall.

On October 26, 2015, the investigator inspected defendant's catering

facility, took photographs of the staircase, and prepared a diagram of the

accident scene. The investigator also obtained recorded oral statements from

two of defendant's employees. Approximately one week later, on November 1,

2015, the investigator obtained a recorded oral statement from a third employee

of defendant.

On December 3, 2015, plaintiff's counsel and a photographer visited

defendant's facility. They measured, inspected, and photographed the staircase

where plaintiff had fallen. The following month, in January 2016, defendant's

insurance carrier provided plaintiff's counsel with a copy of video surveillance

that had captured plaintiff falling on the staircase. Plaintiff's counsel was also

provided with a copy of the incident report prepared on the day of the accident.

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On June 26, 2017, plaintiff and her husband filed suit against defendant.

Plaintiff alleged that defendant was liable for the injuries she suffered because

defendant had been negligent. Plaintiff also alleged that defendant had breached

its express and implied warranties and had not properly maintained its property.

Her husband alleged loss of consortium.

In August 2017, defendant filed an answer. Thereafter, in response to

interrogatories, defendant disclosed that the investigator had taken photographs

of the staircase where plaintiff fell, had prepared a diagram, and had obtained

recorded statements from three of defendant's employees. Defendant

represented that none of those employees witnessed plaintiff's fall. Defendant

did not produce the photographs, diagram, or statements, asserting that they

were protected by the work-product privilege.

In March 2018, plaintiff filed a motion to compel the production of the

photographs and the recorded statements by defendant's three employees.

Plaintiff had initially also sought the diagram prepared by the investigator, but

later withdrew that request.

Without hearing oral argument, the trial court granted plaintiff's motion

in an order entered on April 13, 2018. That same day, the court placed its

reasons for that order on the record. In its oral decision, the trial court relied on

Pfender v. Torres, 336 N.J. Super. 379 (App. Div. 2001), and reasoned that

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because the photographs and statements were obtained before litigation, the

insurer "may have" had interests apart from protecting its insured's rights. Thus,

the trial court ordered the photographs and statements produced.

Defendant sought leave to appeal the order compelling the production.

We denied leave, but the Supreme Court granted leave to appeal and re manded

the appeal to us "to consider [it] on the merits." Paladino v. Auletto Enters.,

Inc., 234 N.J. 576 (2018).

II.

On this appeal, defendant makes two arguments. First, it contends that

we should reject the rationale of Pfender and, instead, adopt the reasoning set

forth in Medford v. Duggan, 323 N.J. Super. 127 (App. Div. 1999). Second,

defendant argues that, applying the standard set forth in Medford, we should

reverse the trial court because plaintiff did not satisfy the requirements of Rule

4:10-2(c).

We begin with an overview of the work-product doctrine and Rule 4:10-

2(c). Initially, the doctrine and rule should be understood as exceptions to New

Jersey's general policy of encouraging full and open discovery of all relevant

information. In most situations, parties to litigation have the right to discovery

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of all relevant information concerning the action. See Rule 4:10-2(a); Capital

Health Sys., Inc. v. Horizon Healthcare Servs., Inc., 230 N.J. 73, 80 (2017).

There are, however, exceptions to that general rule. Under one exception,

a party may withhold "privileged" information. In that regard, Rule 4:10-2(a)

states in relevant part:

Parties may obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter
involved in the pending action, whether it relates to the
claim or defense of the party seeking discovery or to
the claim or defense of any other party, including the
existence, description, nature, custody, condition and
location of any books, documents, electronically stored
information, or other tangible things and the identity
and location of persons having knowledge of any
discoverable matter.

One of the recognized privileges is the work-product doctrine. See

O'Boyle v. Borough of Longport, 218 N.J. 168, 188 (2014). That doctrine was

first recognized by the United States Supreme Court in Hickman v. Taylor, 329 U.S. 495 (1947). "In Hickman, the owners and underwriters of a tug boat hired

a law firm to defend against potential litigation after the boat sank and five

crewmembers drowned." O'Boyle, 218 N.J. at 188 (citing Hickman, 329 U.S.

at 498). One of the lawyers who had been hired "interviewed survivors and

prepared a report based on his notes of the interviews." Ibid. (citing Hickman,

329 U.S. at 498-99). "The Court protected those documents from discovery,

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concluding that such materials 'fall[] outside the arena of discovery and

contravene[] the public policy underlying the orderly prosecution and defense

of legal claims.'" Ibid. (alterations in original) (quoting Hickman, 329 U.S. at
510).

The Court reasoned that lawyers need to "work with a certain degree of

privacy, free from unnecessary intrusion by opposing parties and their counsel."

Id. at 189 (quoting Hickman, 329 U.S. at 510). The Court also reasoned that

without adequate protection of an attorney's work product, a client's best

interests would be undermined. Ibid. (citing Hickman, 329 U.S. at 511).

Consequently, the Court held that "'the general policy against invading the

privacy of an attorney's course of preparation' is so important 'that a burden rests

on the one who would invade that privacy to establish adequate reasons to justify

production.'" Ibid. (quoting Hickman, 329 U.S. at 512).

"New Jersey first codified the work-product doctrine in 1948." Ibid. The

rule was broader than the rule recognized by the Court in Hickman. Ibid. (first

citing Crisafulli v. Pub. Serv. Coordinated Transp., 7 N.J. Super. 521, 523 (Cty.

Ct. 1950); then citing Note, Discovery: New Jersey Work Product Doctrine,
1

Rutgers L.J. 346, 348-49 (1969)).

Currently, the work-product doctrine is memorialized in Rule 4:10-2(c).

That rule provides:

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[A] party may obtain discovery of documents,
electronically stored information, and tangible things
otherwise discoverable under R[ule] 4:10-2(a) and
prepared in anticipation of litigation or for trial by or
for another party or by or for that other party's
representative (including an attorney, consultant,
surety, indemnitor, insurer or agent) only upon a
showing that the party seeking discovery has
substantial need of the materials in the preparation of
the case and 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 impressions,
conclusions, opinions, or legal theories of an attorney
or other representative of a party concerning the
litigation.

Defendant argues that a conflict exists in our case law concerning the

scope of the work-product doctrine as discussed in Pfender compared to

Medford. Specifically, defendant contends that Pfender essentially establishes

a bright-line rule that material prepared by an insurer or an agent of the insurer

before litigation is not protected by the work-product doctrine. In contrast,

according to defendant, Medford establishes a case-by-case test, under which

material prepared by or for an insurer can be protected under the work-product

doctrine if it was prepared in anticipation of litigation and the parties seeking

the material cannot establish a substantial need for the material.

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We do not agree with defendant's reading of Pfender and Medford.

Instead, we believe that the rationales and holdings of Pfender and Medford can

be reconciled. We, however, agree that the rationale and holding of Pfender

needs to be clarified and properly understood as consistent with a case-by-case

analysis.

In Pfender, the plaintiff "was injured at a gas station when defendant

Joseph A. Torres drove his employer's car over her foot." 336 N.J. Super. at
383. Following the accident, Torres gave two tape-recorded statements to an

insurance investigator who was acting as an agent for the insurer of Torres's

employer. Id. at 384-85. Plaintiff filed a pre-trial motion for discovery of

Torres's statements to his employer's insurer. Id. at 383. The trial court denied

the motion on the grounds that those statements were protected from discovery

by the attorney-client privilege and the work-product doctrine. Ibid.

The case proceeded to trial and Torres testified that he entered the gas

station at a speed of approximately five miles per hour and that as he was coming

to a stop "something or someone" who he had not previously observed, "stepped

out and right into [his] right fender." Id. at 383-84. We directed defense counsel

to produce for in camera review the transcripts of the two tape-recorded

statements given by Torres. Id. at 384. That review revealed that Torres's

statements were inconsistent with his trial testimony. Id. at 385.

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On appeal, we reversed. Id. at 394. Initially, we held that the statements

to the insurer's investigator were not protected by the attorney-client privilege

because no attorney was involved in taking the statements. See id. at 388-89.

Moreover, we held that defendant's statements were not privileged because the

insurance adjuster's primary motive was to determine whether to provide a

defense and the statements were not secured because of the potential for

litigation. Id. at 388. Turning to the work-product privilege, we held that

defendant Torres's recorded statements were not privileged because the

statements described details of the accident that were inconsistent with

defendant's trial testimony and plaintiff had no equivalent access to those

inconsistent statements. Id. at 391-92.

In Medford, a dog startled a horse, causing the horse to rear up and throw

off its rider, plaintiff Nancy Medford. 323 N.J. Super. at 130. Nearly two years

later, the plaintiff sued defendant Doreen Duggan, who owned the dog. Ibid.

Shortly thereafter, the defendant's insurance carrier obtained statements from an

eyewitness to the accident and the defendant. See ibid. Over a year after those

statements were taken, the plaintiff deposed the defendant and the eyewitness.

See id. at 131.

The plaintiff thereafter filed a pre-trial motion to compel production of

the statements given by the defendant and the eyewitness to the defendant's

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insurance carrier. Id. at 132. The trial court granted the motion, finding the

statements were "the result of a routine investigation and were not prepared in

anticipation of litigation." Ibid. The trial court also found the plaintiff had a

substantial need for the eyewitness's statement because that witness could no

longer recall the accident. Ibid.

The defendant appealed that discovery order, and we affirmed in part and

reversed in part. Id. at 132, 139. We concluded that resolution of the issues

required "a case-by-case, fact-sensitive analysis" to determine whether the

statements given to the defendant's insurance carrier were taken in anticipation

of litigation. Id. at 135. On that point, we found the statements at issue were

obtained in anticipation of litigation as they were taken almost immediately after

the defendant was served with the plaintiff's complaint. Ibid.

We then considered whether the plaintiff had shown substantial need for

the requested documents and whether she was unable, without undue hardship,

to obtain the substantial equivalent of the statements by other means. Id. at 136-

37. We concluded that because the defendant had been deposed, and had a clear

memory of the events, the plaintiff was not entitled to discovery of the

defendant's statement. Id. at 137. In contrast, we allowed discovery of the

witness's statement because at her deposition she lacked a memory of the events.

Id. at 137-38. Thus, the plaintiff had met her burden of substantial need and an

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inability to obtain the substantial equivalent of the statement given by the

witness. Id. at 138.

As already noted, we do not read Pfender and Medford to establish

inconsistent rules. Instead, both Pfender and Medford should be understood to

require a case-by-case, fact-specific analysis. See Carbis Sales, Inc. v.

Eisenberg, 397 N.J. Super. 64, 81-82 (App. Div. 2007) (treating Medford and

Pfender as applying the same standard in determining whether a document

prepared by an insurance investigator was discoverable). Accordingly, we

clarify that there is no per se or presumptive rule that materials prepared or

collected before litigation are not prepared in anticipation of litigation. Instead,

as set forth in Rule 4:10-2(c), there is a multi-part, fact-specific test. The first

inquiry is whether the materials were prepared or collected in anticipation of

litigation or trial by another party or that party's representative. See R. 4:10-

2(c). The representative can be an "insurer or agent" of the party. Ibid.

If the materials were prepared in anticipation of litigation or trial, to obtain

the materials, there is a two-part standard that must then be satisfied. See ibid.

The party seeking the materials must (1) show a substantial need for the

discovery; and (2) demonstrate that he or she is unable, without undue hardship,

to obtain the substantial equivalent of the materials. Ibid. See also Carbis Sales,

Inc., 397 N.J. Super. at 82 (first citing Medford, 323 N.J. Super. at 133; then

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citing Pfender, 336 N.J. Super. at 391). Moreover, if such work-product

materials are compelled to be produced, "the court shall protect against

disclosure of the mental impressions, conclusions, opinions, or legal theories of

an attorney or other representative of a party concerning the litigation." R. 4:10-

2(c).

The scope of the work-product doctrine has other limitations. It has long

been established that the doctrine only protects documents or prepared

materials; accordingly, it does not protect facts. See Hickman, 329 U.S. at 513;

R. 4:10-2(c); O'Boyle, 218 N.J. at 188-89. Moreover, in considering statements,

the doctrine does not protect statements that are prepared in the normal course

of business. See Miller v. J.B. Hunt Transp., Inc., 339 N.J. Super. 144, 148

(App. Div. 2001) (quoting Payton v. N.J. Tpk. Auth., 148 N.J. 524, 554 (1997)).

Finally, we have previously clarified that the protection of a statement will

usually be lost if the person who gave the statement is later called to testify at

trial. See Dinter v. Sears, Roebuck & Co., 252 N.J. Super. 84, 100 (App. Div.

1991). In Dinter, we held that "where a fact witness testifies for an adverse

party, the factual statement of that witness must be produced on demand for use

in cross-examination as a potential tool for impeachment of credibility." Ibid.

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C.

Here, we hold that the trial court failed to apply the appropriate fact-

specific analysis required by the work-product doctrine and Rule 4:10-2(c). The

trial court here simply reasoned that Pfender stood for the proposition that

statements given to investigators hired by an insurer before the commencement

of litigation were not protected. The issue called for a more detailed analysis.

In that regard, the court needed an appropriate record to allow it to determine

whether the photographs and statements were prepared in anticipation of

litigation or trial. The court did not need to accept the certification submitted

by the insurance claims examiner, but the court did need to evaluate that

certification. Furthermore, to reject the certification, the court needed an

evidentiary record that would allow it to make such a factual or credibility

finding.

Here, the current record does not allow an analysis of the second part of

the test. The information in the current record is insufficient for us to determine

whether plaintiff showed a substantial need for the discovery and whether she

was unable, without undue hardship, to obtain the substantial equivalent of the

photographs or statements.

With regard to the photographs, the insurance investigator took

photographs of the stairs on October 26, 2015. Plaintiff's counsel and a

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photographer took photographs of the stairs on December 3, 2015. There is also

a video recording, which shows plaintiff's fall. On remand, the court will need

to consider that evidence and make a determination whether there is any showing

that there was a change to the staircase that plaintiff was not able to capture in

the photographs that her counsel took in December 2015.

The trial court will also need to analyze the witness statements. We have

previously held that statements of a party or witness always satisfy the first part

of the standard; that is, there is a substantial need for the discovery of such

statements. Medford, 323 N.J. Super. at 137. Here, plaintiff acknowledges in

her brief that the three witnesses who gave statements to the insured's

investigator have not been deposed. Plaintiff therefore should be given the

opportunity to conduct those depositions. See ibid. (explaining a deposition

"may often constitute the substantial equivalent of [a] prior statement"); Carbis

Sales, Inc., 397 N.J. Super. at 82. If the witnesses can recall the facts given in

their statements to the insurer's investigator, then plaintiff may not be able to

demonstrate that she is unable to obtain the substantial equivalent of the

statements. See Medford, 323 N.J. Super. at 137. If, in contrast, any of the

witnesses cannot recall the circumstances of the accident, then plaintiff may be

able to demonstrate that she is unable to obtain the substantial equivalent of the

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statements. See id. at 137-38. In that situation, the statement or statements

would need to be produced. See ibid.

In summary, we reverse the April 13, 2018 order compelling defendant to

produce photographs and recorded witness statements. We remand with the

direction to conduct further proceedings and apply the appropriate case-by-case,

fact-specific analysis to determine whether the photographs and witness

statements are within the ambit of the work-product doctrine.

Reversed and remanded. We do not retain jurisdiction.

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