Waste Management, Inc. v. International Surplus Lines Ins. Co.,

Issue Discussed: Access to Records

Submitted by James D. Scrimgeour

Date Promulgated: May 20, 1991

Waste Management, Inc. v. International Surplus Lines Ins. Co., 144 Ill. 2d 178 (Ill. 1991)

Court: Supreme Court of Illinois

Issue Decided: Whether the attorney-client privilege or the work product doctrine may bar discovery of the attorney’s files in the underlying lawsuits prepared for the mutual benefits of the insurer and insured.

Key Holding:

The insured owned and operated hazardous waste disposal sites which were the subject of several environmental liability lawsuits. The insured retained counsel, defended and settled two lawsuits, and then sought indemnification from the insurer under certain policies. The insurer denied coverage and sought disclosure of documents from the underlying lawsuits and the insured resisted.  The Supreme Court of Illinois held that the attorney- client privilege did not apply to bar discovery of the defense counsel communications in the underlying lawsuits under either equally compelling theory:  1) The cooperation clause contained in the policy requires insured to share such information; and/or 2) Because a common interest existed between insured and insurer at the time documents were created.

Key Takeaways:

Although not a reinsurance case, this case may be cited by reinsurers who attempt to analogize between the claims cooperation clause in an insurance contract and an access to records clause in a reinsurance contract to make the argue that an access to records clause requires access to a cedant’s privileged documents from its underlying coverage case.  This argument was rejected in Gulf v. Transatlantic, a reinsurance case discussed above.  Also, this case may be cited by reinsurers who attempt to analogize the insurer/insured relationship to the reinsurer/cedant relationship and argue that common interest doctrine requires disclosure of cedant’s privileged documents respecting its coverage dispute with its insured.  This analogy was rejected in North River Ins. Co. v. Philadelphia Reins. Corp., a reinsurance case, discussed above.

*James D. Scrimgeour is an Executive Counsel at The Travelers Indemnity Company, where he specializes in reinsurance litigation and arbitration.