Huntington Chase Condo. Ass'n v. Mid-Century Ins. Co.
| Decision Date | 01 February 2017 |
| Docket Number | No. 16 C 4877,16 C 4877 |
| Parties | HUNTINGTON CHASE CONDOMINIUM ASSOCIATION, Plaintiff, v. MID-CENTURY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER1
Plaintiff Huntington Chase Condominium Association ("HCCA") sued defendant Mid-Century Insurance Co ("Mid-Century") in Illinois state court for breach of an insurance contract arising out of a property damage claim. Defendant removed the case to federal court (doc. # 1: Pet. for Remov. at 1). Before the Court is Mid-Century's Motion to Compel Production of Documents withheld on the grounds of attorney-client privilege (doc. # 28: Mot. to Comp.).
In June and July 2016, Mid-Century served Requests for Production on HCCA, and issued subpoenas to HCCA's property manager, Lieberman Management Services ("LMS"), and a roofing contractor, Barry Roofing, Inc. ("Barry Roofing") (Mot. to Comp. at 1). In response to each of these requests, HCCA, LMS and Barry Roofing produced some documents accompanied by privilege logs identifying email communications HCCA asserts are protected from production by the attorney-client privilege. Mid-Century seeks documents from each of the separate privilege logs.
LMS' Privilege Log contains 35 emails, 33 of which are described as having been sent between Barry Roofing principal John Argento ("Mr. Argento"), and HCCA's property manager at LMS, Jim Beck ("Mr. Beck"). Each is described in the LMS Privilege Log as "Email discussing conversations with attorney" . Mid-Century seeks production of those 33 emails between Mr. Argento and Mr. Beck.
The Barry Roofing Privilege Log ("BR Privilege Log") lists 56 emails, 28 of which are described as having been sent between Mr. Argento and Mr. Beck. Those 28 emails are described as "Email discussing conversations with attorney" or "Email discussing Childress Duffy fee agreement" . Of the remaining 28 emails, 23 are logged as having been sent between Mr. Argento and attorneys or staff of Childress Duffy, the law firm that represents HCCA in this lawsuit. Those emails are described in the BR Privilege Log as "Email conversation with Childress Duffy" (Id.). There are four emails on the BR Privilege Log that are described as having been sent by Mr. Argento to an individual named Spencer Rutenbar ("Mr. Rutenbar"). The last email on this log is from a Childress Duffy attorney to Mr. Rutenbar (Id.). Mid-Century seeks production of all 56 of the emails on the BR Privilege Log.
The last batch of materials at issue in this motion is from Barry Roofing, accompanied by a supplemental privilege log (the "Supplemental Privilege Log"). This Supplemental Privilege Log identifies five letters from Childress Duffy employees to Mr. Argento, with a "Childress Duffy Fee Agreement" enclosed with each of the letters . Mid-Century seeks production of the five letters and the enclosed Childress Duffy Fee Agreements.
In compliance with the Court's order (doc. # 27), plaintiff delivered to this Court for in camera review an agreed sample of 10 emails (or email chains), all of which were listed on the BR Privilege Log.2
As agreed by the parties, because this case is a diversity action arising out of a contractual dispute in which Illinois law governs the rules of decision, this Court must apply Illinois law to determine whether the attorney-client privilege applies to the subject documents. See Favala v. Cumberland Engineering Co., a Division of John Brown Inc., 17 F.3d 987, 989 (7th Cir. 1994); Fed. R. Evid. 302. Under Illinois law, "[w]here legal advice of any kind is sought from a lawyer in his or her capacity as a lawyer, the communications relating to that purpose, made in confidence by the client, are protected from disclosure by the client or lawyer, unless the protection is waived." Center Partners, Ltd. v. Growth Head GP, LLC, 981 N.E.2d 345, 355 (Ill. 2012). But "Illinois [also] adheres 'to a strong policy of encouraging disclosure, with an eye toward ascertaining that truth which is essential to the proper disposition of a lawsuit.'" Center Partners, 981 N.E.2d at 356, quoting Waste Management, Inc. v. International Surplus Lines Ins. Co., 579 N.E.2d 322, 327 (Ill. 1991).
As the party claiming the privilege, plaintiff "carries the burden of presenting facts that give rise to the privilege." Janousek v. Slotky, 980 N.E.2d 641, 650 (Ill. App. Ct. 2012); Favala, 17 F.3d at 990. To establish that a document is protected by the attorney-client privilege, "the claimant must show ... that the communication originated in a confidence that it would not be disclosed, was made to an attorney acting in his legal capacity for the purpose of securing legal advice or services, and remained confidential." Consolidation Coal Co. v. Bucyrus-Erie Co., 432N.E.2d 250, 257 (Ill. 1982) (citation omitted); Sullivan v. Alcatel-Lucent USA, Inc., No. 12 C 7528, 2013 WL 2637936, at *2 (N.D. Ill. June 12, 2013) (citations omitted) (a party claiming attorney-client privilege must show "'threshold requirements,' including: '(1) that the communication originated in a confidence that it would not be disclosed'; '[that] it was made to an attorney acting in his legal capacity for the purpose of securing legal advice or services,'; and (3) 'that [it] remained confidential'").
The Illinois Supreme Court has adopted the "control group" test to "determine which communications between employees and agents of a corporation and their legal counsel are privileged." McChristian v. Brink, 65 N.E.3d 428, 433 (Ill. App. Ct. 2016) citing Consolidation Coal, 432 N.E.2d 250. Under the control group test, "'an employee whose advisory role to top management in a particular area is such that a decision would not normally be made without his advice or opinion, and whose opinion in fact forms the basis of any final decision by those with actual authority, is properly within the control group.'" McChristian, 65 N.E.3d at 433 quoting Consolidation Coal, 432 N.E.2d at 258. "Thus, if an employee of the status described is consulted for the purpose of determining what legal action the corporation will pursue, his communication is protected from disclosure." Consolidation Coal, 432 N.E.2d at 258. The Consolidation Coal control group analysis "accommodates a principal/agent relationship which involves a non-employee agent working within the scope of his authority." Caremark, Inc. v. Affiliated Computer Services, Inc., 192 F.R.D. 263, 267 (N.D. Ill. 2000).
However, if a control group member communicates with someone outside of the control group, the privilege is lost. Midwesco-Paschen Joint Venture for Viking Projects v. Imo Industries, Inc., 638 N.E.2d 322, 329 (Ill. App. Ct. 1994) (). If a non-control group member "communicates with someone in the control group that communication is not protected: the employee cannot shield his communication or communications to him and the control group member cannot claim the privilege because it was destroyed when it leaves the group, similar to an individual who has protected communication with counsel but loses the protection once he publishes the communication to another." Pensler v. Fox Television Stations, Inc., No. 1-14-2694, 2016 WL 3350788, at *5 (Ill. App. Ct. 2016). "This is so even if the communication is with the corporate attorney." Id. citing Midwesco-Paschen, 638 N.E.2d at 332 ().
The Court groups the emails submitted for review into three categories (with some overlap, as some emails fall into multiple categories) when considering application of the attorney-client privilege. The first category includes emails identified as running to and from Mr. Argento, Mr. Beck and/or Childress Duffy law firm employees, and described as "discussing conversations with attorney" or "conversation with Childress Duffy." The second category embraces emails sent or received by Mr. Rutenbar or other unidentified persons. The third category contains the five letters on the Supplemental Privilege Log (for which we have been given no samples) with the enclosed Childress Duffy Fee Agreements, and emails between Mr. Argento, Mr. Beck and/or Childress Duffy employees described as "discussing Childress Duffy fee agreement." We address each of these categories in turn.
Defendant argues that emails falling into the first category of documents (Bates Nos. 005800, 005805-005806, 005808-005809, 005912-005913, 005924-005925, 005967-005968, 005977-005978, and 006247-006248) are not covered by the attorney client privilege because, at the threshold, Mr. Argento is not an attorney or member of plaintiff's control group. Plaintiff responds that its relationship with Mr. Argento was formalized through a written consulting agreement that provided Mr. Argento acted as plaintiff's representative during communications with defendant and that Mr. Argento thus is within plaintiff's control group.
"To prove that a non-employee agent is a member of the corporate principal's control-group, the party claiming privilege must show: 1. the non-employee agent served as an advisor to top management of the corporate client; 2. this advisory role was such that the corporate principal would not normally have made a decision without the agent's opinion or advice; and 3. the agent's opinion or advice in fact formed the basis of the final decision made by those with actual authority within the corporate principal." Caremark, 192...
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