Custer v. Cerro Flow Prods., Inc.

• Decision Date: 06 September 2019
• Docket Number: 5-19-0288 (cons.),5-19-0287,NOS. 5-19-0285,5-19-0286,S. 5-19-0285
• Citation: 2019 IL App (5th) 190285,136 N.E.3d 1108,434 Ill.Dec. 583
• Parties: Martha CUSTER, et al., Plaintiffs-Appellees, v. CERRO FLOW PRODUCTS, INC., et al., Defendants-Appellants.
• Court: United States Appellate Court of Illinois

2019 IL App (5th) 190285

136 N.E.3d 1108

434 Ill.Dec. 583

Martha CUSTER, et al., Plaintiffs-Appellees,

v.CERRO FLOW PRODUCTS, INC., et al., Defendants-Appellants.

NOS. 5-19-0285

5-19-0286

5-19-0287

5-19-0288 (cons.)

Appellate Court of Illinois, Fifth District.

Opinion Filed: September 6, 2019

Thomas R. Ysursa, of Becker, Hoerner & Ysursa, P.C., of Belleville, E. King Poor and Anthony P. Steinike, of Quarles & Brady LLP, of Chicago, and Mark A. Kircher, of Quarles & Brady LLP, of Milwaukee, Wisconsin, for appellantCerro Flow Products, Inc.

Clyde L. Kuehn, of Mathis, Marifian & Richter, of Belleville, for appellees.

JUSTICE CATESdelivered the judgment of the court, with opinion.

¶ 1 This expedited appeal arises from an eleventh-hour dispute between the parties that erupted after the jury had been selected, but prior to it being sworn.Plaintiffs' motion for sanctions culminated in an order by the trial court striking the pleadings of Cerro Flow Products, Inc.(Cerro), after Cerro informed the court that it could not comply with the court's order requiring disclosure of thousands of documents that Cerro claimed were protected by the attorney-client privilege and other privacy laws.Thereafter, Cerro filed a motion to stay the trial proceedings, which the trial court denied.Cerro then filed an emergency motion to stay the trial proceedings in this court, which was granted.For reasons that follow, we vacate the trial court's order denying Cerro's motion to stay the proceedings, the order requiring Cerro to produce all ESI material directly to plaintiffs, and the order striking the pleadings of Cerro; we lift our stay order; and we remand the case with directions.The court further directs the clerk of the court to issue the mandate forthwith.

¶ 2 PROCEDURAL HISTORY

¶ 3 The following procedural history has been gleaned from the limited record before us.On July 10, 2019, one day before the scheduled jury trial of this case, plaintiffs filed a motion for sanctions based on alleged discovery violations by Cerro.Plaintiffs alleged that in the days before trial, Cerro sought to "claw back" several documents it claimed were protected by attorney-client privilege, but which had been inadvertently produced to plaintiffs.Plaintiffs also alleged that Cerro had withheld thousands of pages of documents containing electronically stored information (ESI) on grounds of privilege and had failed to provide an accompanying privilege log, as required under Illinois Supreme Court Rule 201(n)(eff. July 30, 2014).Plaintiffs asserted that in lieu of a privilege log, Cerro had produced only a "rudimentary search term list" used by Cerro to identify individuals and terms that were allegedly found in this unknown quantity of ESI that Cerro claimed was privileged.Plaintiffs claimed that Cerro's conduct constituted a deliberate and blatant disregard of Illinois discovery rules and moved for sanctions pursuant to Illinois Supreme Court Rule 219(c)(eff. July 1, 2002) in the form of a default judgment or an order to strike Cerro's affirmative defenses.In the alternative, plaintiffs requested that the court disallow Cerro from claiming any sort of privilege for documents that were produced without a privilege log and order Cerro to immediately produce any other documents that may have been withheld pursuant to a claim of privilege directly to plaintiffs for their review.

¶ 4Plaintiffs did not identify or attach the original interrogatories or requests for production that were the basis for their motion for sanctions, and there is nothing in the record to indicate the nature or relevancy of the specific ESI materials in dispute.Plaintiffs did attach the eight-page search term list, along with four email messages.The first email, dated March 8, 2019, was from Cerro's counsel to plaintiff's counsel, with a subject line referencing ESI, and stated as follows:

"We expect to start producing documents on a rolling basis in batches of around 20,000 documents.I'm not sure how large the total production will be as we are still reviewing it.We can produce the documents in either a load file with images or as PDFs.Please let us know your preference.

We do not have a privilege log.The search terms on the attached list were run across the entire set of data to identify any document involving Cerro's lawyers or law firms.Any document with a hit on one of these terms was put into the ‘privileged’ pile.The ‘privileged’ pile was then checked to verify that the search terms were appropriately identifying privileged documents, which they were."

The second pair of emails were dated June 25, 2019, and consisted of an email exchange between plaintiffs' counsel and Cerro's counsel, with a subject line referencing ESI.The email from plaintiffs' counsel to Cerro's counsel at 11:32 a.m. made the following inquiry:

"Were any documents withheld from the recent document productions?If so, please provide a privilege log.If not, please confirm in writing."

At 3:33 p.m. that same date, Cerro's counsel replied:

"See below our response on this issue from early March."¹

The fourth email, dated July 8, 2019, from Cerro to plaintiff's counsel, had a subject line "Cerro – claw back of document" and stated:

"Document bates labeled CCU 121798-121799(which appears on your exhibit list) is a privileged letter dated 5/5/87 from Dick Kissel, outside counsel to Cerro, to Cerro's employee Sandy Silverstein.This document was inadvertently produced by Cerro.I write to advise you that Cerro is asserting the attorney-client privilege as to this document, and hereby claws it back from its document production."

Plaintiffs acknowledged in their motion for sanctions that they had not previously filed a motion to compel compliance with the discovery request.

¶ 5 On July 11, 2019, the parties appeared for trial in the circuit court and proceeded with jury selection.There is no indication in the record that plaintiffs presented their motion for sanctions to the trial court for a ruling prior to the commencement of voir dire .Instead, the parties proceeded with jury selection, and, apparently, a panel of jurors was selected, but they were not sworn and impaneled that afternoon.

¶ 6 The next morning, July 12, 2019, prior to impaneling the jury, plaintiffs asked the trial court to consider two motions.The first motion is not relevant to this appeal.In their second motion, plaintiffs asked the court to sanction Cerro for its failure to abide by the rules of discovery.Cerro had filed its response to plaintiffs' motion prior to the court hearing argument from counsel.The trial court allowed each side to address the allegations in plaintiffs' motion for sanctions.

¶ 7Plaintiffs' counsel advised the court that the motion for sanctions was instigated in response to a July 8, 2019, email from Cerro advising that it had inadvertently produced a letter, dated May 4, 1987(5/4/87 letter), which Cerro claimed was subject to the attorney-client privilege.Cerro's counsel had informed plaintiffs that Cerro was asserting its right to "claw back" that document, preventing its use at trial.Plaintiffs' counsel stated that the "5/4/87 letter" indicated that the EPA had a study related to an investigation regarding the concentration of dioxin in the Dead Creek Cahokia area.²Plaintiffs' counsel argued that Cerro's claim of attorney-client privilege was not proper because three other people, who were neither employees nor attorneys for Cerro, had been copied on the letter.Plaintiffs' counsel stated that they believed the defense had withheld "who knows how many documents under the auspice that they are privileged," and asserted that this letter was the "tip of the iceberg."

¶ 8The trial court then asked Cerro's counsel whether the "5/4/87 letter" was privileged.Cerro's counsel replied that the letter was privileged, as it was written by Cerro's outside counsel and was directed to an employee of Cerro.Cerro further identified the persons copied on the letter as a second employee of Cerro, outside counsel for Cerro, and an internal consultant.Cerro's counsel stated that the consultant was housed at Cerro and consulted on these environmental issues in anticipation of litigation.Cerro's counsel also explained that the "5/4/87 letter" had been marked as an exhibit during the deposition of a Cerro corporate representative in October 2017.When plaintiffs' counsel began to question the deponent about that exhibit, Cerro objected and asserted that the document may be privileged and was inadvertently produced.Cerro reserved the right to retrieve the document pursuant to a "claw back" agreement agreed to between the parties, and plaintiffs' counsel acknowledged same.Attached to Cerro's response were excerpts from an October 19, 2017, deposition transcript wherein there was a discussion regarding the potential "claw back" of the "5/4/87 letter."

¶ 9The court did not make any findings with respect to whether the "5/4/87 letter" was or was not privileged.Noting that "we are here at trial,"the court asked Cerro's counsel how it was that there was no privilege log.Cerro's counsel responded by alleging that plaintiffs were misrepresenting what had occurred over the past several years as it related to discovery and privilege logs.Cerro's counsel explained that there were two different types of discovery at issue—paper documents and ESI materials.Cerro's counsel stated that Cerro had provided an item-by-item privilege log for its paper discovery, and that this dispute arose because Cerro had exercised its rights under the "claw back" agreement related to the inadvertently produced "5/4/87 letter" which Cerro claimed was privileged.In its responsive pleading, Cerro had attached the 63-page privilege log it had given to plaintiffs' counsel regarding the production of paper discovery and indicated to the court that this privilege log had been available to plaintiffs for years.

¶ 10 Cerro's counsel next addressed plain...