Opinion

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF PENNSYLVANIA

MELISSA R. JACKSON, : No. 1:24-CV-1822

Plaintiff (Kane, J.)

Vv. (Caraballo, M.J.)

PROGRESSIVE ADVANCED

INSURANCE COMPANY, :

Defendant

MEMORANDUM

I. Introduction

This action concerns an underinsured motorist insurance dispute

between plaintiff Melissa Jackson and her automobile insurance

company, defendant Progressive Advanced Insurance Company

(“Progressive”). Jackson asserts claims for breach of contract and bad

faith arising out of her efforts to secure underinsured motorist benefits

from Progressive, following an automobile accident. Doc. 1 at 5-12.

The matter was referred to the undersigned to resolve a series of

related discovery disputes that culminated in two motions pending

before the court: J ackson’s motion to compel discovery of information

withheld or redacted by Progressive from its claim file (Doc. 43); and

Progressive’s motion to bifurcate and stay discovery of the bad faith

claim. Doc. 36. The undersigned thus has jurisdiction pursuant to 28

U.S.C. § 636(b)(1)(A).

As set forth below, the motion to compel discovery will be granted

in part and denied in part. The motion to bifurcate and stay discovery

of the bad faith claim will be denied.

II. Background

The parties do not appear to dispute many of the operative facts in

this action. Rather, their divergence arises from interpretive and

valuation differences. As alleged in Jackson’s complaint, on October 238,

2022, she was injured during an automobile accident with an

intoxicated driver, Brandt Evanoff. Doc. 1 at 2-4. Both Jackson and

Evanoff were insured by Progressive, which waived its subrogation

rights against Evanoff and consented to Jackson accepting his policy

limits of $15,000. Jd. at 5; Docs. 1-2 and 1-8. Jackson then sought to

leverage the $100,000 in underinsured motorist benefits through her

own Progressive insurance policy. Doc. 1 at 5—7.

The Progressive claim notes, coupled with correspondence

provided by both parties, set forth the ensuing chronology of events that

gave rise to this litigation and are germane to the pending motions. On

February 17, 2024, Jackson’s counsel sent a formal demand for the

policy limit of $100,000 to Progressive claims department

representative Tyeddie Williams. Doc. 48-2 at 5. For the next

approximate two months, Progressive collected and reviewed additional

information while evaluating Jackson’s claim. Jd. at 5-19. In an April

24, 2024,! letter providing additional information and again demanding

payment of the $100,000 policy limit, Jackson’s counsel stated, “Please

advise me within the next week whether Progressive will be tendering

the UIM limits of $100,000.” Doc. 48-3 at 4. According to Progressive,

that missive prompted a reasonable anticipation of litigation. Doc. 44

at 2. .

Progressive continued to evaluate the information collected, until

Williams completed the assessment and reviewed it with management

1 Several of the letters contained in the record and referenced herein are dated

multiple days prior to the dates they were received, according to Progressive’s claim

notes. None of those temporal dissonances are material to this decision.

on April 29, 2024. Doc. 43-2 at 25. On May 1, 2024, Progressive made

its first offer to settle the claim for $34,218. Doc. 1-6 at 2. During a

phone call that day, Jackson’s counsel expressed disagreement with the

offer amount and notified Progressive of Jackson’s intent to commence

litigation. Doc. 438-2 at 39.

On May 28, 2024, Jackson’s counsel requested that Progressive re-

evaluate Jackson’s medical records and pay the policy limit, and advise

him accordingly within the next five days. Doc. 48-4. On May 28, 2024,

Progressive increased its settlement offer to $40,000, Doc. 43-5, “based

on the information recleive]d.” Doc. 43-2 at 40. During a phone call

that day, Jackson’s counsel again expressed disagreement with the

evaluation and conveyed Jackson’s intent to commence litigation in

federal court. Doc. 43-2 at 40. Williams continued to review updated

medical documents for Jackson. Id.

On June 5, 2024, Jackson’s counsel demanded that Progressive

substantiate its $40,000 offer, suggested that Progressive had acted in

bad faith, and threatened to “move forward accordingly.” Doc. 48-6.

That letter prompted Progressive to retain outside defense counsel,

Jennifer Stauffer, who spoke with Williams on June 6, 2024. Doc. 43-2

at 41-42. On June 19, 2024, Stauffer notified Jackson’s counsel of her

retention and confirmed that the offer remained at $40,000. Stauffer

requested documentation from Jackson substantiating her medical

expenses and treatment, and conveyed an intention to examine Jackson

under oath, in accordance with her policy’s terms. Doc. 21-2 at 2. That

request for documentation was reiterated on August 19, 2024. Id. at 4.

Jackson commenced this litigation on October 22, 2024. Doc. 1.

Although it is not entirely clear, Jackson appears to contend that

litigation was reasonably anticipated by Progressive at some point after

the August 19, 2024, letter from Stauffer, and no later than the filing of

the complaint. Docs. 43 at 3-4, 8; 45 at 1:

On May 28, 2025, following the close of pleadings and

commencement of discovery, Jackson’s counsel requested a discovery

conference to address disputes that had arisen concerning Progressive’s

privilege log and responses to interrogatories and document requests.

Doc. 14. The matter was referred to the undersigned, and the parties

collaboratively resolved several of the discovery disputes during a series

.

of court conferences and attorney meet and confers. Docs. 22-23, 26—

29. Jackson was thereafter authorized to file a motion to compel

addressing the remaining disputes, including a request that the Court

conduct an in camera review of certain documents withheld by

Progressive as privileged. Doc. 30.

Jackson’s motion to compel (Doc. 43), and an associated motion by

Progressive to bifurcate and stay discovery associated with the bad

faith claim (Doc. 36) are fully briefed and ripe for decision. The Court

has also received, via sealed ex parte submission, certain documents

listed on Progressive’s privilege log for in camera review. Docs. 35, 38.

III. Standard of Review

“The conduct of discovery is a matter for the discretion of the

district court and its decisions will be disturbed only upon a showing of

an abuse of this discretion.” Wisniewski v. Johns-Manville Corp., 812

F.2d 81, 90 (8d Cir. 1987) (citing Marroquin-Manriquez v. I.N.S., 699

F.2d 129, 184 (8d Cir. 1983)). That “broad discretion to manage

discovery,” Sempier v. Johnson & Higgins, 45 F.3d 724, 734 (3d Cir.

1995), extends to discovery dispute rulings entered by United States

Magistrate Judges:

District courts provide magistrate judges with particularly

broad discretion in resolving discovery disputes. See Farmers

& Merchs. Natl Bank v. San Clemente Fin. Group Sec., Inc.,

174 F.R.D. 572, 585 (D.N.J. 1997). When a magistrate judge’s

decision involves a discretionary [discovery] matter ..., “courts

in this district have determined that the clearly erroneous

standard implicitly becomes an abuse of discretion standard.”

Saldi v. Paul Revere Life Ins. Co., 224 F.R.D. 169, 174 (E.D.

Pa. 2004) (citing Scott Paper Co. v. United States, 948 F. Supp.

501, 502 (E.D. Pa. 1996)). Under that standard, a magistrate

judge’s discovery ruling “is entitled to great deference and is

reversible only for abuse of discretion.” Kresefky v. Panasonic

Commce'ns and Sys. Co., 169 F.R.D. 54, 64 (D.N.J. 1996); see

also Hasbrouck v. BankAmerica Hous. Servs., 190 F.R.D. 42,

44-45 (N.D.N.Y. 1999) (holding that discovery rulings are

reviewed under abuse of discretion standard rather than de

novo standard); EEOC v. Mr. Gold, Inc., 223 F.R.D. 100, 102

(E.D.N.Y. 2004) (holding that a magistrate judge’s resolution

of discovery disputes deserves substantial deference and

should be reversed only if there is an abuse of discretion).

Halsey v. Pfeiffer, 2010 WL 3735702, at *1 (D.N.J. 2010).

In exercising that discretion, the Court is guided by the principles

set forth in Federal Rule of Civil Procedure 26(b), which permits

discovery regarding “any nonprivileged matter that is relevant to any

party’s claim or defense and proportional to the needs of the case....

Information within this scope of discovery need not be admissible in

evidence to be discoverable.” Fed. R. Civ. P. 26(b)(1). That liberal

discovery policy recognizes that the “[m]utual knowledge of all the

relevant facts gathered by both parties is essential to proper litigation.”

Hickman. v. Taylor, 329 U.S. 495, 507 (1947). Thus, discovery is

generally permitted of any items that are relevant or may lead to the

discovery of relevant information. Josephs v. Harris Corp., 677 F.2d

985, 991 (8d Cir. 1982).

“When the Court is presented with a motion to compel discovery,

‘[t]he burden is on the objecting party to demonstrate in specific terms

why a discovery request is improper. The party objecting to discovery

must show that the requested materials do not fall within the broad

scope of relevance or else are of such marginal relevance that the

potential harm occasioned by discovery would outweigh the ordinary

presumption in favor of broad disclosure.” Mazer v. Frederick Mut.

Ins. Co., 2021 WL 850984, at *1 (M.D. Pa. 2021) (citing Clemens v.

Cent. Mut. Fire Ins. Co., 300 F.R.D. 225, 227 (M.D. Pa. 2014)).

It is against this backdrop that the Court evaluates the parties’

dueling motions.

IV. Discussion

A. Jackson’s Motion to Compel

1. Production of the April 29, 2024, Claim Notes

Jackson seeks discovery of two redacted claim notes authored by

Williams on April 29, 2024, and identified in Progressive’s privilege log

as entry Nos. 2 and 3.2 According to Jackson, those notes were not

prepared in anticipation of litigation, as Progressive was still in the

midst of performing its regular business function of evaluating her

claim. Doc. 43 at 7. Although Jackson does not specify her position on

precisely when that business function shifted to activities performed in

anticipation of litigation, she appears to contend that Progressive

continued its business function through at least late August 2024, and

did not necessarily anticipate litigation before she filed suit in October

2024. Doc. 48 at 3-4, 8.

Progressive, by contrast, avers that it reasonably anticipated

litigation on April 26, 2024, when Jackson’s counsel demanded the

2 According to the privilege log and as corroborated by the Court’s in camera review,

those documents bear Bates numbers JACKSON_002704 — 2718. Doc. 48-1 at 2.

policy limit and set a deadline for Progressive to respond. Doc. 44 at 2—

6. Thus, Progressive contends, the April 29, 2024, claim notes are

protected by the work product privilege.

The Court finds that Progressive reasonably anticipated litigation,

thus triggering the shield of work product protection, following the

communications between J ackson’s counsel and Progressive on May 28,

2024. That date marked the milestone at which Progressive

substantively completed its evaluation of Jackson’s claim, conveyed a

revised settlement offer accordingly, and reasonably anticipated

litigation given Jackson’s continued demand for the policy limit and

reiterated threat of litigation. Accordingly, Progressive will be required

to produce the redacted information contained in entry Nos. 2 and 3 of

its privilege log, dated April 29, 2024, that was withheld on the basis of

work product privilege.

The work-product doctrine is a principle of federal law governed

by Federal Rule of Civil Procedure 26(b)(3)._ United Coal v. Powell

Constr. Co., 839 F.2d 958, 966 (8d Cir. 1988). Rule 26(b)(8) provides

that “[o]rdinarily, a party may not discover documents and tangible

10

things that are prepared in anticipation of litigation or for trial by or for

another party or its representative (including the other party’s attorney,

consultant, surety, indemnitor, insurer, or agent).” Fed. R. Civ. P.

26(b)(3)(A). The doctrine thus “shelters the mental processes of the

attorney, providing a privileged area within which he can analyze and

prepare his client’s case.” In re Cendant Corp. Sec. Litig., 343 F.3d 658,

661-62 (8d Cir. 2008) Gnternal quotations omitted).

In comparing the work product doctrine to the attorney-client

privilege, the Court of Appeals explained:

The purpose of the work-product doctrine differs from that of

the attorney-client privilege.... [T]he attorney-client privilege

promotes the attorney-client relationship, and, indirectly the

functioning of our legal system, by protecting the

confidentiality of communications between clients and their

attorneys. In contrast, the work-product doctrine promotes

the adversary system directly by protecting’ the

confidentiality of papers prepared by or on behalf of attorneys

in anticipation of litigation. Protecting attorneys’ work

product promotes the adversary system by enabling attorneys

to prepare cases without fear that their work product will be

used again their clients.

Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414,

1427-28 (3d Cir. 1991).

11

Critically, and as set forth in the plain language of Rule 26(b)(3),

the work product doctrine is not limited to protecting materials

prepared by attorneys alone. Rather,

[T]he doctrine is an intensely practical one, grounded in the

realities of litigation in our adversary system. One of those

realities is that attorneys often must rely on the assistance of

investigators and other agents in the compilation of materials

in preparation for trial. It is therefore necessary that the

doctrine protect material prepared by agents for the attorney

as well as those prepared by the attorney himself.

United States v. Nobles, 422 U.S. 225, 238-89 (1975) (footnote omitted).

“Mental impressions and opinions of the party and its agents,

however, are not protected by the work product doctrine, unless they

are prepared for an attorney in preparation for possible litigation.”

Safeguard Lighting Sys., Inc. v. N. Am. Specialty Ins. Co., 2004 WL

3037947, at *2 (E.D. Pa. 2004). Thus, in the context of evaluating an

insurer’s claim files, as here, “[aJn insurance company cannot

reasonably argue that the entirety of its claims files are accumulated in

anticipation of litigation when it has a duty to investigate, evaluate,

and make a decision with respect to claims made on it by its insureds.”

Lyvan D.D.S. v. Harleysville Ins. Co., et al., 1994 WL 533907, at *3

12

(E.D. Pa. 1994). Rather, “[w]ork product prepared in the ordinary

course of business is not immune from discovery.” Holmes v. Pension

Plan of Bethlehem Steel Corp., 213 F.8d 124, 138 (3d Cir. 2000).

The Court’s determination thus hinges on the inquiry of when

Progressive’s evaluation of Jackson’s underinsured motorist claim

shifted from ordinary business operations to activities undertaken in

anticipation of litigation. Shaffer v. State Farm Mut. Auto Ins. Co.,

2014 WL 981101, at *8 (M.D. Pa. 2014). “The burden of demonstrating

that a document is protected as work-product rests with the party

asserting the doctrine.” Conoco Inc. v. U.S. Dep't. of Just., 687 F.2d 724,

730 (8d Cir. 1982). Moreover, “[t]he party asserting work product

protection must demonstrate that it subjectively anticipated litigation,

and that the anticipation was objectively reasonable.” Solano-Sanchez

v. State Farm Mut. Auto Ins. Co., 2021 WL 2156367, at *5 (E.D. Pa.

2021). As aptly summarized by the Honorable Joseph F. Saporito, Jr.:

[T]he gravamen of a claim of work product protection

necessarily requires an assessment of when litigation was

anticipated, which is a determination not subject to a bright-

line rule. Our court has long adopted a case-by-case approach.

Basinger v. Glacier Carriers, Inc., 107 F.R.D. 771, 774 (M.D.

Pa. 1985). As recognized by the Third Circuit, “[p]rudent

18

parties anticipate litigation and begin preparation prior to the

time suit is formally commenced.” Martin v. Bally’s Park

Place Hotel & Casino, 983 F.2d 1252, 1260 (8d Cir. 1993)

(citing In re Grand Jury Proceedings, 604 F.2d 798, 803 (3d

Cir. 1979)). Thus, whether litigation was reasonably

anticipated is a fact-dependent inquiry.

Mazer, 2021 WL 850984, at *8.

Here, Progressive has not met its burden of showing that it

reasonably anticipated litigation upon receipt of the April 24, 2024,

letter from Jackson’s defense counsel, which demanded payment of the

policy limit and a response within a week. Notably, the letter

demanding the policy limit neither referenced, nor threatened

litigation. Rather, Jackson’s counsel simply requested, “Please advise

me within the next week whether Progressive will be tendering the

UIM limits of $100,000.” Doc. 43-3 at 4. Although a reasonable person

could interpret that request to contain an implied threat of litigation,

such a person could equally view the communication as one designed by

an attorney, representing his client’s interests, to expedite Progressive’s

evaluation of a claim that was then pending for over two months. See

Neidich v. Progressive Advanced Ins. Co., 2018 WL 40063897, at *2 (E.D.

Pa. 2018) (‘[A] lawyer’s mere suggestion of a lawsuit is not enough to

14

make an insurer reasonably anticipate litigation when the insurer’s

evaluation of the claim is ongoing.”).

Progressive relies on authority finding a reasonable anticipation of

litigation when a claimant’s counsel “demands an amount far in excess

of the insurer’s evaluation and/or mentions litigation in a demand

letter.” Doc. 44 at 4 (collecting cases). Yet here, Jackson’s counsel did

not expressly mention litigation in the April 24, 2024, letter, and

Progressive had not yet completed the very evaluation necessary to

gauge whether the demand was excessive. Thus, the April 24, 2024,

letter cannot be deemed one that objectively and reasonably created an

anticipation of litigation, particularly when Progressive remained in the

midst of evaluating Jackson’s claim and formulating an offer. See Long

v. Progressive Advanced Ins. Co., 2024 WL 5082328, at *2 (E.D. Pa.

2024) (finding no anticipation of litigation because “while the litigation

demand that Ms. Long’s counsel sent Progressive might have prompted

it to conduct the evaluation (or conduct it faster), it had a separate,

business-related obligation to conduct that evaluation.”).

15

Progressive also fails to meet its burden to demonstrate a

subjective anticipation of litigation resulting from the April 24, 2024,

demand letter. Critically, neither Progressive’s claim notes, nor its

actions following receipt of the letter, reflect a shift from ordinary

business activities to an anticipation of litigation. Rather, the record

reveals an ongoing review of Jackson’s medical information,

culminating in a “completed assessment based on the information

rec[eive|d” by Williams, her review with management, and Progressive’s

initial offer of $34,218 on May 1, 2024. Docs. 43-2 at 19-39; 1-6 at 2. In

other words, activities flowing from Progressive’s obligation to

investigate, evaluate, and decide Jackson’s claim; not from an

anticipation of litigation.

Moreover, Progressive does not explain what it would have done

differently after receiving the April 24, 2024, demand letter, had it only

conducted its ordinary business, instead of purportedly preparing for

litigation. See Long, 2024 WL 5082323, at *2 (“Progressive has not _

suggested that the evaluation that it conducted differed in scope or

character from the evaluation that it would have conducted if it

16

received a claim from Ms. Long but no demand letter.”). Indeed,

although not determinative, Progressive did not even commence the

process of retaining defense counsel until over a month later. Doc. 48-2

at 41-42.

The claim review process continued after Progressive’s initial

offer, as Williams received and reviewed updated medical records,

including in response to Jackson’s request that Progressive re-evaluate

its position. Docs. 48-2 at 40; 43-4. Ultimately, Progressive’s ongoing

evaluation yielded a revised offer of $40,000 on May 28, 2024, “based on

the information recleive]d.” Doc. 48-2 at 40. And although Jackson’s

counsel had, in the interim, unequivocally threatened litigation twice,

Doc. 48-2 at 39-40, Progressive’s actions did not reflect a subjective

anticipation of litigation until after the exchanges of May 28, 2024. See

Wagner v. Allstate Ins. Co., 2016 WL 233790, at *6 (E.D. Pa. 2016)

(finding that demand letter threatening lawsuit did not cause insurance

company to reasonably anticipate litigation, when it was still in the

process of receiving and evaluating the insured’s medical records, to

extend a settlement offer).

17

The shift from ordinary business activities occurred once, on May

28, 2024, Progressive extended its revised offer, Jackson maintained

her policy limits demand and reiterated a threat of litigation, and

Progressive ceased substantive claims evaluation. Having at that point

completed its evaluation, and determined that Jackson nonetheless

demanded a significantly greater settlement, Progressive both

objectively and subjectively anticipated litigation. See Solano-Sanchez,

2021 WL 2156367, at *6 (finding a reasonable anticipation of litigation

when claim review completed and valued far below the policy limit

demanded). The retention of outside defense counsel approximately one

week later, after Jackson accused Progressive of acting in bad faith,

Doc. 43-6, confirms that determination, see Hydrojet Serus., Inc. v.

Sentry Ins. Co., 2022 WL 2168655, at *3 (E.D. Pa. 2022); a conclusion

corroborated by the Court’s in camera review of the redacted claims

notes on June 6, 2024, and thereafter.

Accordingly, the Court finds that Progressive’s records created

after the May 28, 2024, exchange with Jackson’s counsel are eligible for

work product protection. The claim notes created on April 29, 2024, at

18

entry Nos. 2 and 3 of Progressive’s privilege log, fall prior to that

anticipation of litigation and the motion to compel their production will

be granted.

2. Production of Reserve Information

Jackson seeks discovery of two redacted claim notes containing

reserve information, identified in Progressive’s privilege log as entry

Nos. 1 and 8.3 Jackson avers that the reserve information is relevant to

her bad faith claim, and that when, as here, the parties dispute claim

valuation instead of a coverage determination, reserve information is

discoverable. Doc. 43 at 5-6. Progressive contends that reserves

generally are not discoverable, particularly those prepared in

anticipation of litigation. Doc. 44 at 7. The Court will order production

of the reserve information, for the reasons set forth below.

To recover under the bad faith statute, Jackson must establish, by

clear and convincing evidence: “(1) that the insurer lacked a reasonable ©

basis for denying benefits; and (2) that the insurer knew or recklessly

3 According to the privilege log and as corroborated by the Court’s in camera review,

those documents bear Bates numbers JACKSON_002694 and 002718. Doc. 48-1 at

2-3. 19

disregarded its lack of reasonable basis.” Klinger v. State Farm Mut.

Auto. Ins. Co., 115 F.3d 230, 233 (8d Cir. 1997) (citing Terletsky v.

Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct.

1994)). “Actionable bad faith encompasses behavior beyond the denial

of a claim without a reasonable basis, including an insurer’s

investigation of a claim.” Keefer v. Erie Ins. Exch., 2014 WL 901128, at

*3 (M.D. Pa. 2014). “[T]he broad language of [S]ection 8371 was

designed to remedy all instances of bad faith conduct by an insurer....

Therefore, .. . [a]n action for bad faith may also extend to the insurer’s

investigative practices.” Hollock v. Erie Ins. Exch., 842 A.2d 409, 415

(Pa. Super. Ct. 2004) Gnternal quotation marks and citations omitted).

“Implicit in the statute is ‘the requirement that the insurer properly

investigate claims prior to refusing to pay the proceeds of the policy to

its insured.’” Keefer, 2014 WL 901128, at *3 (quoting Bombar v. West

Am. Ins. Co., 982 A.2d 78, 92 (Pa. Super. Ct. 2007).

Parties litigating bad faith claims regularly contest the

discoverability of an insurer’s reserve information. “An insurance

reserve is a pool of funds allocated to satisfy obligations that may arise

20

under a claim.” Peco Energy Co. v. Ins. Co. of North America, 852 A.2d

1230, 1232 n.3 (Pa. Super. Ct. 2004). Pennsylvania law “requires

insurance companies to set aside reserves upon notice of potential losses

under their policies.” Fidelity and Deposit Co. of Maryland v.

McColloch, 168 F.R.D. 516, 525 (E.D. Pa. 1996). Reserve information

often, as here, appears in an insurer’s claim file.

The potential relevance of an insurance company’s reserve

information to a bad faith claim is apparent. As an initial matter,

reserves “must have some relationship to the insurer’s estimation of the

insured’s potential liability. Otherwise, the setting aside of reserves

would serve little, if any, purpose.” N. River Ins. Co. v. Greater New

York Mut. Ins. Co., 872 F. Supp. 1411, 1412 (E.D. Pa. 1995). Thus, “[t]o

the extent an insurer’s reserve for a case is much larger than the

amounts offered its insured in settlement, a jury might reasonably

infer, in the absence of some plausible explanation by the insurer, that

the insurer was disregarding its obligation to deal reasonably with its

insured.” Cicon v. State Farm Mut. Auto. Ins. Co., 2015 WL 5021736, at

*4 (M.D. Pa. 2015); see also Consugar v. Nationwide Ins. Co. of America,

21

2011 WL 2860208, at *5 (M.D. Pa. 2011) (“The amount set aside for

reserves provides some evidence of the value assigned by defendant to

plaintiffs claim. Since plaintiff here claims that defendant acted in bad

faith, a comparison between the reserve value of the claim and

defendant’s actions in processing plaintiff's claim could shed light on

defendant’s potential liability.”).

As “the amount set aside for reserves ‘is certainly germane to any

analysis [defendant] made of the claim’s value, and of whether

defendant acted in bad faith in processing the claim,” Consugar, 2011

WL 2360208, at *5 (quoting N. River Ins. Co., 872 F. Supp. at 1412),

Pennsylvania federal courts have permitted the discovery of reserve

information “in a bad faith action when the claim relates to the

insurer’s failure to settle or where there is a discrepancy regarding the

value of the claim. ... However, when the bad faith claim is based on a

denial of coverage and ‘does not involve the value of the claim or [the

plaintiffs] estimation of liability ... the reserve information requested

is neither relevant nor reasonably calculated to lead to the discovery of

admissible evidence.’” Barnard v. Liberty Mut. Ins. Corp., 2019 WL

22

461510, at *5-6 (M.D. Pa. 2019) (collecting cases); see also Ockford v.

Encompass Ins. Co., 2024 WL 4437820, at *8—4 (E.D. Pa. 2024) (same).

Here, the bad faith litigation concerns a dispute over the parties’

differing valuations of Jackson’s claim, not coverage. Accordingly, the

Court finds the reserve information relevant to Jackson’s bad faith

claim for discovery purposes, and will join the prevailing view of

Pennsylvania federal courts that have ordered production of reserve

information in bad faith litigations. See, e.g., Ockford, 2024 WL

4437820, at *38—-4; Hydrojet, 2022 WL 2168655, at *7-8; Mazer, 2021 WL

850984, at *8; Neidich, 2018 WL 4006397, at *2-8; Smith v. Progressive

Specialty Ins. Co., 2015 WL 6738067, at 2 (W.D. Pa. 2015); Cicon, 2015

WL 5021736, at *4; Borgia v. State Farm Mut. Auto. Ins. Co., 2014 WL

4375643, at *4 n.5 (E.D. Pa. 2014); Shaffer, 2014 WL 931101, at *8;

Keefer, 2014 WL 901128, at *38; Consugar, 2011 WL 2360208, at *5.

Although the Court appreciates Progressive’s concern that the

discoverability of reserves could encourage the filing of bad faith claims

solely to obtain that information, the position neither alters the Court’s

reasoning, nor impacts the reserve information’s relevance. Other

23

mechanisms exist for addressing claims advanced in the absence of a

good faith basis. See Fed. R. Civ. P. 11; 28 U.S.C. § 1927. Moreover, as

the reserve information withheld from production is contained in

documents dated February 17, 2024, and April 29, 2024, Doc. 43-1 at 2—

3, Progressive’s assertion of work product protection does not apply, as

both documents fall before the date on which it reasonably anticipated

litigation, per the Court’s analysis above.

Accordingly, Jackson’s motion to compel the production of

unredacted reserve information in Progressive’s privilege log entry Nos.

1 and 3 will be granted.

3. Production of Redacted Claim Notes

Jackson requests in camera review of documents withheld from

production on the basis of the attorney-client privilege. Doc. 48 at 9—

10.4 According to Jackson, the privilege log entries lack sufficient

description for her to gauge whether the communications are of a

privileged or ordinary business nature subject to production. Id.

documents are listed on Progressive’s privilege log at entry Nos. 4-15 and 18—

24, bearing Bates numbers JACKSON_002721—2728. Doc. 48-1 at 3-7. Jackson

does not challenge the privilege designations for entry Nos. 16, 17 or 25, bearing

Bates number JACKSON_002725 and 002728.

24

Progressive avers that its communications with outside defense counsel

were limited to an attorney-client capacity, Doc. 44 at 7-10, and

provided the challenged documents ex parte for in camera review. Docs.

35, 38. The Court finds that all challenged documents reflect attorney-

client privileged material, and were withheld from production

appropriately.

As this is a diversity action involving a state bad faith claim,

Pennsylvania law governs whether the attorney-client privilege applies

to the challenged documents. See Fed. R. Evid. 501; Montgomery

County v. MicroVote Corp., 175 F.3d 296, 301 (8d Cir. 1999). Under

Pennsylvania law, the attorney-client privilege protects “confidential

client-to-attorney or attorney-to-client communications made for the

purpose of obtaining or providing professional legal advice.” Gillard v.

AIG Ins. Co., 15 A.38d 44, 59 (Pa. 2011); see also 42 Pa. Cons. Stat. Ann.

§ 5928 (“In a civil matter counsel shall not be competent or permitted to

testify to confidential communications made to him by his client, nor

shall the client be compelled to disclose the same, unless in either case

this privilege is waived upon the trial by the client.”).

25 □

The privilege thus “applies to any communication that satisfies

the following elements: it must be ‘(1) a communication (2) made

between [the client and the attorney or his agents] (8) in confidence (4)

for the purpose of obtaining or providing legal assistance for the client.”

In re Teleglobe Communications Corp., 498 F.3d 345, 359 (8d Cir. 2007)

- (quoting the Restatement (Third) of the Law Governing Lawyers § 68

(2000)). The attorney-client privilege facilitates “[f]ull and frank

communication between attorneys and their clients.” Wachiel v. Health

Net, Inc., 482 F.3d 225, 231 (8d Cir. 2007). The privilege “recognizes

that sound legal advice or advocacy serves public ends and that such

advice or advocacy depends upon the lawyer’s being fully informed by

the client.” Upjohn v. United States, 449 U.S. 383, 389 (1981).

Although the privilege protects from disclosure attorney-client

communications, it does not extend to the underlying facts conveyed in

those communications. Jd. at 385. Thus, while recognizing its value,

“[b]ecause the attorney-client privilege has this effect of withholding

relevant information from fact-finders, federal courts must apply it only

where necessary to achieve its purpose.” Wachiel, 482 F.3d at 231.

26

Accordingly, “because the purpose of the privilege is to promote the

dissemination of sound legal advice, the privilege will extend only to

advice which is legal in nature. Where a lawyer provides non-legal

business advice, the communication is not privileged.” Id.

“Federal courts are further required to assess the application of

the privilege on a case-by-case basis.” Foy v. Encompass Home and

Auto Ins. Co., 2023 WL 6609016, at *5 (M.D. Pa. 2028); see also

Wachtel, 482 F.3d at 230 (“Rule 501 requires the federal courts, in

determining the nature and scope of an evidentiary privilege, to engage

the sort of case-by-case analysis that is central to common-law

adjudication.”). “The burden of proving that the (attorney-client)

privilege applies is placed upon the party asserting the privilege.”

Matter of Grand Jury Empanelled Feb. 14, 1978, 603 F.2d 469, 474 (8d

Cir. 1979) (quoting United States v. Landof, 591 F.2d 36, 38 (9th Cir.

1978)).

Here, the privilege log furnished by Progressive references the

Bates number of each redacted document, its date and document-type,

the author and recipient, a summary description of the document, and

27

the privilege asserted. See generally Doc. 43-1. The summaries include

descriptions such as: “Summary of email with defense counsel regarding

strategy for defense of lawsuit,” and “Summary of phone call with

defense counsel mental impressions, opinions, and conclusions of

Plaintiffs claim and strategy for defense of lawsuit.” Jd. Moreover, all

of the challenged entries concern communications in which outside

counsel was either the author or recipient. Id.

Jackson does not specify what additional details she deems

necessary to evaluate the claimed privilege, above and beyond those

relatively robust descriptions. Rather, she seeks in camera review on

the premise that defense counsel “was consulted in early June to assist

with the business function of evaluating the UIM claim,” not necessarily

for legal advice. Doc. 48 at 9. In other words, despite the privilege log

stating that the communications concerned litigation defense, Jackson

posits that they actually reflect claim evaluations. Id. at 10.

All of the documents challenged by Jackson fall between the dates

of June 6, 2024, and October 17, 2024. Thus, and as set forth above, □

they were created after Progressive reasonably anticipated litigation

28

and hired outside defense counsel. Doc. 48-1 at 3-7. Although the

documents occurred prior to the filing of this action on October 22, 2024,

the attorney-client privilege is not contingent on the existence of an

active litigation. Rather, the key inquiry is whether the client is

seeking or receiving the attorney’s legal advice. In re Teleglobe

Communications Corp., 493 F.3d at 359; see also Cicon, 2015 WL

50217836, at *8 (rejecting contention that communications prior to the

commencement of litigation, but after plaintiff threatened litigation,

were not shielded by the attorney-client privilege).

Having conducted an in camera review, the Court finds that

Progressive met its burden of establishing that the redacted material

reflects communications made for the purpose of obtaining or providing

legal advice. The Court is satisfied that Progressive’s retained defense

counsel were acting as legal advisors, not as claims investigators. The

communications with those attorneys are thus subject to the protections

of the attorney-client privilege, and were properly withheld from

discovery. The Court will deny Jackson’s motion to compel the |

production of privilege log entry Nos. 4-15 and 18—24, accordingly.

29

B. Progressive’s Motion to Sever and Stay

In a related motion, Progressive seeks to bifurcate and stay

discovery on the bad faith claim. Doc. 36. Although the motion is titled

as one seeking severance, Progressive uses that term interchangeably

with bifurcation, Doc. 37 at 6; a related but distinct procedural concept.

The severance of claims, governed by Federal Rule of Civil Procedure

21, creates separate and independent actions. White v. ABCO Eng’g

Corp., 199 F.3d 140, 145 n.6 (8d Cir. 1999). Bifurcation, governed by

Federal Rule of Civil Procedure 42(b), “separates elements of the

complaint for trial.” Id. As a review of Progressive’s motion determines

that it seeks bifurcation, the Court’s analysis will proceed under Rule

42(b).5

5 Progressive also does not clarify whether it seeks bifurcation of the claims for

judgment purposes, or only bifurcation of the pre-trial discovery phase, as it

references both concepts interchangeably. Compare, e.g., Doc. 36 at 1—2

(referencing only discovery) with Does. 37 at 7; 41 at 2 (referencing production of

bad faith discovery after the breach of contract claim is resolved or tried). Jackson

appears to interpret the motion as one seeking both forms of relief. See generally

Doc. 40. Indeed, it is not readily apparent what purpose delayed discovery of the

bad faith claim would serve absent a corresponding bifurcation of the two claims for

judgment purposes, whether by dispositive motion or by trial. In any event, the

Court’s Rule 42(b) analysis here does not prejudice Progressive’s future ability to

seek bifurcation of the claims at trial from the presiding judge.

30

Progressive’s motion appears to be rooted in its concern over

producing alleged privileged documentation that the Court addressed

above when adjudicating the motion to compel: the April 29, 2024, claim

notes withheld as work product; reserve information; and documents

withheld as protected by the attorney-client privilege. Docs. 37 at 3; 41

at 2-3. To the extent that concern does not extend to other discovery—

and Progressive does not identify any—the Court’s decision on the

motion to compel may well have rendered the motion to bifurcate and

stay moot, as Progressive will not be required to disclose any documents

deemed privileged. Nonetheless, having evaluated the merits of the

parties’ respective positions, the Court will deny the motion to bifurcate

and stay discovery on the bad faith claim.

Rule 42(b) permit the Court to bifurcate “[flor convenience, to

avoid prejudice, or to expedite and economize.” Fed. R. Civ. P. 42(b).

“The moving party bears the burden of establishing the need to

bifurcate.” Consugar, 2011 WL 2360208, at *7. “[B]ifurcation is wholly

within the court’s discretion.” Newhouse v. GEICO Cas. Co., 2017 WL

4122405, at *2 (M.D. Pa. 2017). The Court also has the discretion to

31

stay discovery. See In re Orthopedic Bone Screw Prod. Liab. Litig., 264

F.3d 344, 365 (8d Cir. 2001).

Four factors are routinely considered when determining whether

to bifurcate: “(1) whether the issues are significantly different from each

other; (2) whether they require separate witnesses and documents; (8)

whether the non-moving party would be prejudiced by bifurcation; and

(4) whether the non-moving party would be prejudiced if bifurcation is

not granted.” Craker v. State Farm Mut. Auto. Ins. Co., 2012 WL

3204214, at *1 (W.D. Pa. 2012) (citing Official Comm. of Unsecured

Creditors v. Shapiro, 190 F.R.D. 352, 355 (E.D. Pa. 2000)).

Here, an analysis of those factors militates against bifurcation and

the requested stay. First, although breach of contract and bad faith

claims may engender distinct legal issues, their associated facts share

considerable overlap here. As the Honorable Malachy E. Mannion

observed in a similar scenario:

In the breach of contract claim, the question for the jury will

be whether the plaintiff suffered injuries from the accident

that were covered under her UIM policy and she was not

otherwise properly compensated. Similarly, the bad faith

claim will require the jury to determine whether the

defendant’s investigation into those same injuries was

32

reasonable and, if so, whether there was a reasonable basis

supporting the defendant’s offer of settlement. The pivoting

point for both cases will be the plaintiffs injuries, represented

through relevant medical evidence and the defendant’s claim

file. The jury will be able to properly evaluate the entire case

including the accident, the plaintiffs injuries, the defendant’s

investigation, and, finally, the attempts to settle the matter.

Griffith v. Allstate Ins. Co., 90 F. Supp. 3d 344, 346-47 (M.D. Pa. 2014).

Here, too, both claims involve consideration of the nature of Jackson’s

injuries, both historical and recent, and Progressive’s efforts to

investigate those injuries.

Although Progressive avers that the “bad faith claim is contingent

on the trial of her UIM claim,” Doc. 41 at 2, a bad faith claim can

survive independent of the associated breach of contract claim.

Ferguson v. USAA General Indemnity Co., 334 F.R.D. 407, 410-11

(M.D. Pa. 2019) (collecting cases). Progressive refutes that authority by

contending that the bad faith claim is dependent in this particular

action, because Jackson’s complaint is premised on only Progressive’s

evaluation of her claim. Doc. 41 at 1-2. But “[b]ad faith is a frivolous

or unfounded refusal to pay, lack of investigation into the facts, or a

failure to communicate with the insured.” Frog, Switch & Mfg. Co. v.

33

Travelers Ins. Co., 193 F.3d 742, 751 n.9 (8d Cir. 1999). And here, a

core theme running through Jackson’s complaint lies in her umbrage

with Progressive’s alleged refusal to justify through medical records its

determination that the settlement offer should be tempered by

Jackson’s pre-existing injuries, Including after her counsel raised that

specific protest. Doc. 1 at {4 387-46, 49-51, 55-61. In other words, an

alleged failure to properly evaluate and conduct a reasonable

investigation that serves as a basis for the bad faith claim potentially

independent of the breach of contract claim.

Turning to the second inquiry, although the bad faith claim may

require some additional testimony and evidence specific to the

investigation and evaluation of Jackson’s claim, her injuries, the

underlying accident, and the $15,000 settlement Progressive paid

through Evanoffs own policy are common to both claims and involve

many of the same documents and witnesses. Indeed, it would be

difficult to surmise how either claim could be tried without significant

testimony from both Jackson and Tyeddie Williams, the Progressive

claims representative. And Progressive’s claim file, Jackson’s medical

34

evidence, and the parties’ settlement communications may prove critical

documents in adjudicating both claims.

Third, the prejudice to Jackson in bifurcating the claims is clear.

“Bifurcation would essentially double the life of this action requiring a

second discovery period, more dispositive motions, more pre-trial

motions, and a completely separate second trial.” Griffith, 90 F. Supp.

3d at 347. That approach, which embodies the antithesis of judicial

efficiency, also entails significant costs and burden on Jackson. Indeed,

the prospects of attempting to separate discovery based on the two

respective claims, as a practical matter, are not promising and likely to

generate confusion, mistake, and further disputes.

Conversely, the resulting prejudice for Progressive is not evident.

Although Progressive claims that bifurcation and stay “will avoid

burdensome and complicated discovery issues... [and] will simplify

discovery,” Doc. 37 at 6, its motivation for seeking bifurcation appears

rooted in its concern over producing the documents sought in Jackson’s

motion to compel. As the Court has already resolved those specific

challenges, and Progressive otherwise retains the protections of the

35

work product and attorney-client privileges, it has not identified any

alternate prejudice resulting from the denial of bifurcation.

The Court finds that bifurcation in this action is likely to waste

judicial resources and cause more inconvenience than convenience.

Progressive has not met its burden to establish otherwise. Absent

bifurcation, and considering the Court’s decision on the motion to

compel, there remains no justification for staying discovery.

Accordingly, Progressive’s motion to bifurcate and stay discovery on the

bad faith claim will be denied.

V. Conclusion

For the reasons set forth above, the motion to compel discovery

will be granted in part and denied in part. The motion to bifurcate and

stay discovery of the bad faith claim will be denied. An appropriate

order shall follow.

Date: December 11, 2025 □□ Phillip J. Caraballo

Phillip J. Caraballo

United States Magistrate Judge

36°