Government attorneys want to know what The Hartford Insurance Company knew about the Peanut Corporation of America’s distribution of peanut products that were contaminated with deadly Salmonella.
Hartford wrote general liability and property insurance for the now defunct PCA, and Food Safety News has learned that the same Grand Jury that indicted four former executives of the company on 76 federal criminal courts also issued a broad subpoena to Hartford.
Now U.S. District Judge W. Louis Sands has ordered the transfer of that Jan. 19, 2012 subpoena of Hartford and consideration of pleadings surrounding it transferred to his court where he is presiding over the criminal proceedings against the former peanut executives.
And government attorneys are picking up where they left off before the Grand Jury in demanding an order to compel Hartford to comply with the subpoena and produce recorded conversations and other related documents. Attorneys for Hartford insist that what they’ve withheld from the government is protected by attorney-client privilege.
To be sure, Hartford attorneys have turned over numerous documents to the government. But while the Grand Jury met in secret, the company found itself in a bit of a bind.
“We believe that the claim file documents contain privileged information,” wrote Hartford attorney Kristen S. Burns. “Hartford is unable to waive the privilege on behalf of the insured, PCA, and we have an obligation to our insured to not release documents for which PCA may be entitled to assert a privilege.”
“You have requested that we not disclose the existence of the subpoena to anyone, and we have complied with this request, “ Burns added. “If you would like us to forward the claim file documents to PCA for privilege review we would be happy to do so. Without PCA’s consent we cannot produce these documents and must preserve the privilege on our insured’s behalf.”
Thus began an exchange of letters between the government’s and Hartford’s attorneys that continue throughout 2011 and into 2012.
In November 2011, attorney Roy V. Creasy, the trustee in the bankruptcy case that would bring an end to PCA, signed a letter for all of the company’s corporate entities waiving attorney-client and work product protections.
But Creasy had no authority to waive privileges for officers, directors, or employees, according to James E. Rocap, III, another Hartford attorney. His Feb. 27, 2012 letter to K. Alan Dasher, the assistant U.S. Attorney in Albany, GA, discloses that Hartford is in possession of a recorded telephone conversation involving former PCA executive Stewart Parnell, employee Daniel Kilgore, and a Hartford employee taking claim information.
In the letter, Rocap told Dasher he would not provide the tape recordings because they are covered by attorney-client privilege and work product protection. He and Justice Department attorneys continued to exchange letters into mid-2012, including such mundane discussions as to how privilege logs should be kept.
The Grand Jury moved on with the indictments in early 2013. In addition, Kilgore pleaded guilty and is likely to become a government witness when the criminal case goes to a jury in October.
Dasher’s team of government attorneys including the U.S. Justice Department’s Consumer Protection Branch has come roaring back in a 22-page motion on the Hartford subpoena now that it has been transferred to Sands’ court.
“Based upon information available to it, the government does not believe that attorney-client privilege or work product exists for many of the communications redacted or withheld by Hartford, particularly the recorded conversations,” says the motion. “To the government’s knowledge, there were no attorneys involved with many of these conversations, including recorded conversations.”
The motion says the conversations “were not made in confidence and for the purposes of seeking legal advice, nor were they created in anticipation of litigation.”
Furthermore, Hartford asserts these privileges on behalf of its clients, a now-bankrupt corporation, despite the fact that the corporation has waived all privileges over pre-bankruptcy communications through its bankruptcy trustee.”
Among the other arguments it makes, Dasher’s team says the courts have never recognized an insured-insurer privilege, Hartford hasn’t met the burden of proving he communications are privileged, and attorney-clients privileges are not suppose to extend to others.© Food Safety News