Medline Indus. v. Wypetech, LLC
| Decision Date | 12 November 2020 |
| Docket Number | 20 CV 4424 |
| Parties | MEDLINE INDUSTRIES, INC., Plaintiff, v. WYPETECH, LLC, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Pending before the Court is defendant Wypetech, LLC's motion for a determination that plaintiff Medline Industries, Inc.'s non-renewal notice is not privileged and for an expedited briefing schedule (Dckt. #142). For the reasons stated below, Wypetech's motion is granted.
Medline alleges that it and Wypetech are parties to a Requirements Contract ("Contract") that became effective on August 19, 2014. (Dckt. #41 at 7). The Contract had a five-year initial term, which automatically extends in one-year renewal terms absent service of a written notice not to renew or termination in accordance with its provisions. (Dckt. #41 at 7, 10; Dckt. #41-1 at 5). The Contract renewed in August 2019 for a period through August 2020. (Dckt. #41 at 10).
Medline Product Manager Deborah Coligado believed that there "were aspects of the Medline-Wypetech contractual relationship that weren't perfect for Medline." (Dckt. #181 at 3). Through the months of May and June of 2020, Ms. Coligado considered Medline's options with respect to its Wypetech relationship and she had multiple discussions and email exchanges with other Medline personnel on the topic. (Dckt. #181 at 4). On June 10, Ms. Coligado prepared a "draft notice of non-renewal" document ("Notice") regarding the Contract because Medline was considering altering its contractual relationship with Wypetech. (Dckt. #181-1 at 1, 3). The two sentence Notice states that it is Medline's notice of non-renewal under the Contract and that the Contract will expire on August 18, 2020. (Dckt. #141-1). Ms. Coligado drafted the Notice "as part of what [she] understood would be a renegotiation (and not an end) of the contractual relationship between Medline and Wypetech." (Dckt. #180-1 at 3).
After drafting the Notice on June 10, Ms. Coligado sent it to Medline's in-house counsel Daniel Monico seeking legal advice as to whether the Notice would be sufficient to satisfy the Contract's written notice of non-renewal requirement. (Dckt. #180-1 at 3). On June 14, Ms. Coligado exchanged text messages with Wypetech's President Peter Melchior to schedule a call to discuss the status of Wypetech's relationship with Medline. (Dckt. #189-2 at 2-3). Ms. Coligado and Mr. Melchior had a call on June 15 during which Ms. Coligado stated that she had sent (or was going to send)1 Wypetech a letter indicating that Medline was electing a non-renewal of the Contract and that the last day of the term of the Contract would be August 18, 2020. (Dckt. #142-2 at 28, 30; Dckt. #189-2 at 3).
Wypetech asserts that the Notice is not protected by the attorney-client privilege because: (1) it does not reflect legal advice or client confidences; (2) it was disclosed to a third party (Wypetech and Mr. Melchior); and (3) Medline waived any privilege that might have otherwise existed by failing to exercise even minimal diligence to prevent the production of the Notice during the expedited discovery proceedings that occurred in connection with Medline's preliminary injunction motion. Medline asserts that the Notice is privileged because: (1) theNotice was a draft document sent to counsel for the purpose of obtaining legal advice; (2) Ms. Coligado never sent the Notice to Wypetech; (3) Ms. Coligado's June 15 conversation with Mr. Melchior did not leave Wypetech with the understanding that Medline had terminated the Contract and oral notice would be insufficient to terminate the Contract in any case; and (4) Medline's production of the Notice during discovery was inadvertent and did not constitute a waiver under Federal Rule of Evidence 502(b).
Medline, as the party asserting the attorney-client privilege over the Notice, has the burden of establishing all essential elements of the privilege. See, e.g., United States v. Lawless, 709 F.2d 485, 487 (7th Cir. 1983). The attorney-client privilege applies:
(1) Where legal advice of any kind is sought; (2) from a professional legal adviser in his capacity as such; (3) the communications relating to that purpose; (4) made in confidence; (5) by the client; (6) are at [the client's] instance permanently protected; (7) from disclosure by himself or by the legal advisor; (8) except the protection can be waived.
Id.; United States v. White, 970 F.2d 328, 334 (7th Cir. 1992); Sullivan v. Alcatel-Lucent USA, Inc., No. 12 C 7528, 2013 WL 2637936, at *2 (N.D.Ill. June 12, 2013) (). "While a violation of the attorney-client-privilege is a serious matter, the privilege is in derogation of the search for truth, . . . and th[e] [Seventh] [C]ircuit has repeatedly held that it must be strictly confined." White, 970 F.2d at 334 (internal citations omitted); Sullivan, 2013 WL 2637936, at *2 () (internal quotation marks omitted).
It is undisputed that the Notice itself does not reflect any legal advice or any request for legal advice on its face. It is also clear from its very nature and Ms. Coligado's declaration thatthe Notice was not intended to remain confidential but was instead intended to be used as part of Medline's effort to alter - either through renegotiation or nonrenewal - its contractual relationship with Wypetech. Documents prepared for a business purpose such as this are not protected by the attorney-client privilege particularly where they do not reflect or request legal advice. See, e.g., Miller UK Ltd. v. Caterpillar, Inc., 17 F.Supp.3d 711, 730 (N.D.Ill. 2014) (citing cases); Miller UK Ltd. v. Caterpillar, Inc., No 10 C 3770, 2015 WL 13652752, at *2 (N.D.Ill. Feb. 11, 2015); Dudley v. Ski World, Inc., 1989 WL 73208, at *2 (S.D.Ind. Feb. 20, 1989).
Furthermore, Ms. Coligado told Mr. Melchior about the Notice. "The attorney-client privilege does not apply to communications that are intended to be disclosed to third parties or that in fact are so disclosed." United States v. Rockwell Int'l, 897 F.2d 1255, 1265 (3d Cir. 1990); United States v. Int'l Bhd. of Teamsters, 961 F.Supp. 665, 673 (S.D.N.Y.), aff'd, 119 F.3d 210 (2d Cir. 1997) (same); White, 970 F.2d at 334 (); Sec. Inv'r Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 319 F.R.D. 100, 105 (S.D.N.Y. 2017) (); United States v. Willis, 565 F.Supp. 1186, 1207 (S.D.Iowa 1983) (). Consequently, the Notice is not protected by the attorney-client privilege.
Although Ms. Coligado submitted the Notice to Medline's counsel for legal advice regarding whether it satisfied the Contract's written notice requirement, her action in this regard does not establish that the attorney-client privilege applies to the Notice itself. "Not all information transmitted to an attorney becomes cloaked with the attorney-client privilege." White, 970 F.2d at 334. Where a party submits a non-privileged business document to an attorney, the document does not become privileged even though the attorney's legal advice regarding the document may be protected. See, e.g., Miller, 2015 WL 13652752, at *1-2; Madoff, 319 F.R.D. at 105; Stafford Trading, Inc. v. Lovely, No. 05-C-4868, 2007 WL 611252, at *3 (N.D.Ill. Feb. 22, 2007); Hurt v. Philadelphia Hous. Auth., No. CIV. A. 91-4746, 1994 WL 263714, at *1-2 (E.D.Pa. June 8, 1994). Thus, while whatever legal advice Mr. Monico gave Ms. Coligado regarding the legal efficacy of the Notice is privileged, the Notice itself is not.
It is undisputed that Ms. Coligado told Mr. Melchior about the existence of the Notice during their June 15, 2020 call and she - at a minimum - told him that she was going to send the Notice to Wypetech. Wypetech asserts that Ms. Coligado waived any attorney-client privilege otherwise enjoyed by the Notice during the June 15 call. The Court agrees. Whether a party has waived the attorney-client privilege is a question of fact, see Teamsters, 961 F.Supp. at 673, and courts have found that parties have waived...
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