Miller UK Ltd. v. Caterpillar, Inc., Case No. 10 C 3770

CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
Writing for the CourtJeffrey Cole, United States Magistrate Judge
Citation17 F.Supp.3d 711
PartiesMiller UK Ltd. and Miller International Ltd., Plaintiffs, v. Caterpillar, Inc., Defendant.
Docket NumberCase No. 10 C 3770
Decision Date06 January 2014

17 F.Supp.3d 711

Miller UK Ltd. and Miller International Ltd., Plaintiffs
Caterpillar, Inc., Defendant.

Case No. 10 C 3770

United States District Court, N.D. Illinois, Eastern Division.

Filed January 06, 2014

17 F.Supp.3d 717

Eric Lansing White, Inbal Hasbani, Justin A. Barker, Reed S. Oslan, William Edward Arnault, IV, Kirkland & Ellis LLP, Chicago, IL, for Plaintiffs.

Bridget S. Merritt, Carey S. Busen, Gregory L. Baker, Robert G. Abrams, Terry L. Sullivan, Baker & Hostetler LLP, Washington, DC, Edward H. Williams, John Michael Touhy, Baker & Hostetler LLP, Chicago, IL, Kurt J. Keller, Caterpillar Inc., Peoria, IL, for Defendant.


Jeffrey Cole, United States Magistrate Judge


Caterpillar and Miller had a decades-long, mutually beneficial business relationship, during which Miller shared confidential information and trade secrets with Caterpillar. In 2008, Caterpillar suddenly severed that relationship and began manufacturing a product that previously had utilized and allegedly depended on the confidential information supplied by Miller. Miller sued, claiming that Caterpillar misappropriated its trade secrets. Caterpillar has fiercely denied the charges, and the case has been bitterly contested at every turn. The overwhelming majority of the disputes have been over discovery, “the bane of modern litigation.” Ross etto v. Pabst Brewing Co., Inc., 217 F.3d 539, 542 (7th Cir.2000).

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Protracted discovery is expensive and is a drain on the parties' resources. Where a defendant enjoys substantial economic superiority, it can, if it chooses, embark on a scorched earth policy and overwhelm its opponent. See Liesa L. Richter, Making Horses Drink, 81 Fordham L.Rev. 1669, 1695 (2013) ; Matthew Jarvey, Boilerplate Discovery Objections: How They Are Used, Why They Are Wrong, And What We Can Do About Them, 61 Drake L.Rev. 913, 915–916 (2013) ; William Griesbach, The Joy Of Law, 92 Marq. L.Rev. 889, 907 (Summer 2009). That is what Miller insists has occurred here, (Miller Memorandum at 2)—a charge denied by Caterpillar. But even where a case is not conducted with an ulterior purpose, the costs inherent in major litigation can be crippling, and a plaintiff, lacking the resources to sustain a long fight, may be forced to abandon the case or settle on distinctly disadvantageous terms.

Creative businessmen, ever alert to new opportunities for profit, perceived in this economic inequality a chance to make money and devised what has come to be known as third party litigation funding, where money is advanced to a plaintiff, and the funder takes an agreed upon cut of the winnings. If the plaintiff loses the case, the funder may get nothing. Third party litigation funding is a relatively new phenomenon in the United States. The business model has generated a good deal of commentary about and controversy over its intrinsic value to society (or lack thereof depending on one's perspective) and the discoverability of the actual funding contract and information turned over to prospective funders by a party's lawyer during negotiations to secure financing.1

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In the instant case, apparently faced with financial difficulties, Miller sought financing from several third-party litigation funding sources. Miller was ultimately successful and entered into a contract with a third-party funder. Caterpillar has cried foul, invoking the hoary doctrines of maintenance and champerty and arguing that Miller's agreement with its funding source is illegal under the Illinois statute criminalizing “maintenance.” See infra at 724. Caterpillar is seeking to discover the actual contract with Miller's funder and those documents provided by Miller to it and any other third party lender from which Miller sought funding for this case. The ostensible basis for this discovery is to enable Caterpillar to raise the supposed illegality of the funding contract as a defense to Miller's tort and breach of contract claims. Caterpillar also says those documents are relevant to the question of who is the real party in interest under Rule 17(a), Federal Rules of Civil Procedure.

Although it says it has produced any all documents that contain admissions or statements regarding the merits of the claims or defenses in the case (Miller Memorandum at 2), Miller has resisted any further production on the grounds that the actual funding contract (and related documents) are irrelevant, and that whatever information about the case it provided to any funder in connection with any funding request is privileged under the attorney-client and work-product privileges, and that those privileges were not waived by disclosure to the potential funders. Caterpillar has a divergent view, denying the documents are privileged and that any privileges that might have existed were waived by disclosure of the documents to prospective funders.2


Caterpillar claims it learned from one of the third party funders that Miller had contacted it to obtain funding for the case, but that it had rejected the overture. Caterpillar has not disclosed who tattled or when. (Defendant's Memorandum In Support Of Its Motion To Compel, at 13)(Dkt.# 365)(“Defendant's Memoran

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dum ”). Caterpillar served document requests seeking:

1. All documents created by Miller, Miller's counsel, or any third party entity for the purpose of considering, investigating, pursuing, arranging, or obtaining litigation funding.
2. All documents transmitted, shared, or discussed between Miller and Miller's counsel, between Miller's counsel and any third party entity, or between Miller and any third party entity for the purpose of considering, investigating, pursuing, arranging, or obtaining litigation funding.
3. All communications between Miller and Miller's counsel, between Miller's counsel and any third party entity, or between Miller and any third party entity relating to litigation funding.

Miller produced a number of documents responsive to Caterpillar's requests, including:

—a draft letter to third party funders summarizing the case, acknowledging that plaintiffs thought a cause of action might exist in 2003, and stating that plaintiffs made substantial investments to expand their operations even though it “felt compromised by the situation”;
—an email exchange discussing between plaintiffs and a public relations firm strategy to sell their story by portraying a “David and Goliath scenario” in an attempt to “influence potential funders,” a plan to lobby defendant's board of directors by sending materials to board members, assess the legal status of the case “[t]o see what can be done to stall matters whilst funding is being sought,” and asking to see “ASAP” plaintiffs' lawyer's written evaluation of the case;
—email from plaintiffs to the public relations firm warning “you might not like what Jodi [Rosen Wine] said!”; email from public relations firm asking plaintiffs to get “constructive advice” from Nixon Peabody for inclusion in a letter distributed to third party funders;
—email exchange between plaintiffs and third party funders reflecting Nixon Peabody attorney's “thoughts on the claim” and concerns from the funder that the case is more complicated than originally believed and asking for correspondence between plaintiffs and their attorneys.

(Defendant's Memorandum, Exs. B, C, D).

Miller withheld documents showing the structure and terms of its financing deal on the grounds of relevance. Also withheld were agreements Miller has with Kirkland and Ellis, an English bank, and agreements with Dig Ventures LLC, the managing member of which is Arena Consulting.3 Miller redacted portions of its production on the basis of attorney-client

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privilege, attorney work product, and the “common interest” doctrine. For example, on an application for funding form, Miller redacted its response to a question that asked Miller to provide an estimate of the prospect of success of its lawsuit, and to give the amount of its attorneys fees. (Defendant's Memorandum, Ex. D). Miller also withheld a number of documents on these same bases that had been identified in its privilege log.

There are two broad categories of documents at issue. One is referred to as the “deal documents” and encompasses documents evidencing the structure and terms of the funding transaction. Caterpillar contends that the funding agreement and related documents are discoverable as they obviously relate to the case, and in one sense that is true. But the inquiry under Rule 26 is whether the funding contract (and related documents) relate to the claims or defenses, and that requires a more exacting analysis than Caterpillar has made.

The second category of documents is comprised of those submitted to potential third party funders that Miller had contacted....

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