Holmgren v. State Farm Mutual Insurance Co.
976 F2d 573 (9th Cir. 1992)

  • Holmgren was injured in a car accident with Cannon, who was insured by State Farm.
    • Cannon was drunk at the time.
    • The accident left Holmgren unable to work.
  • State Farm made several payments to Holmgren and offered to completely settle for $12.5k. Holmgren rejected the offer and sued.
  • Eventually, Holmgren did agree to a settlement of $40k. However, the settlement expressly reserved Holmgren’s rights to sue State Farm for bad faith in adjusting and settling the claim.
    • The next day, Holmgren sued State Farm for bad faith in adjusting and settling the claim.
  • The Trial Court awarded Holmgren an extra $149k plus attorney’s fees.
    • Holmgren motioned for extra $$$ for attorney’s fees under Rule 37(c) since State Farm denied certain requests during the discovery process.
      • Rule 37(c) allows you to recover extra attorneys fees incurred when the other party doesn’t give you information they are required to give you.
      • The information that Holmgren was requesting was the worksheets created by the State Farm insurance adjuster to estimate how much damage she had incurred.
    • The Trial Court awarded Holmgren an extra $11k in attorney’s fees. State Farm appealed.
  • The Appellate Court affirmed.
    • State Farm unsuccessfully argued that the information was protected under Rule 26(b)(3) as being privileged because it was an opinion work product.
    • The Appellate Court found that opinion work products are discoverable when mental impressions are at issue in a case and the need for the material is compelling.
      • In this case, the issue was whether State Farm had acted in bad faith, so their mental reasoning was relevant.
  • If the litigation had been about the accident (who ran the stoplight, etc.), and the insurance adjuster gave opinions about the accident, the ruling would be different. This lawsuit was about whether or not the insurance company was operating in good faith. That made the insurance adjuster’s notes discoverable.