Pearlshire Capital Grp., LLC v. Zaid

• Decision Date: 29 September 2020
• Docket Number: No. 18 C 4787,18 C 4787
• Citation: 490 F.Supp.3d 1299
• Parties: PEARLSHIRE CAPITAL GROUP, LLC, Plaintiff, v. Ana Rehan ZAID and RRZ Real Estate LLC, an Illinois Limited Liability Co., Defendants.
• Court: U.S. District Court — Northern District of Illinois

490 F.Supp.3d 1299

PEARLSHIRE CAPITAL GROUP, LLC, Plaintiff,

v.Ana Rehan ZAID and RRZ Real Estate LLC, an Illinois Limited Liability Co., Defendants.

No. 18 C 4787

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

Signed September 29, 2020

Patrick D. Lamb, John F. Sullivan, Matthew L. Hendricksen, Plunkett Cooney, P.C., Chicago, IL, for Plaintiffs.

Eric E. Walker, Keith G. Klein, Perkins Coie LLP, Chicago, IL, for Defendant Rana Rehan Zaid.

Keith G. Klein, Perkins Coie LLP, Chicago, IL, for Defendant RRZ REAL ESTATE LLC.

MEMORANDUM OPINION AND ORDER

Jeffrey Cole, UNITED STATES MAGISTRATE JUDGE The Plaintiff has filed "Objections to Defendants’ Privilege Assertions and Motion to Compel Discovery Compliance" [Dkt. #109], which seeks production of about 800 documents over which the defendants have asserted the privilege. For the reasons in the accompanying Memorandum Opinion, the Motion [Dkt. #109] is granted, and the Defendant is ordered to produce the documents in the privilege log in seven days.

ARGUMENT

This case is two years old. It's not entirely clear what has been going on in that time, other than the fact that the Plaintiff has filed four versions of his Complaint. They say they have exchanged about a quarter million documents in discovery. [Dkt. #93]. But, despite the parties’ representations to the contrary, massive discovery issues have been left to the eleventh hour and beyond.

The case was reassigned to Judge Kness on February 28, 2020 [Dkt. #77], and he indicated that the deadlines his predecessor, Judge Shah, had set remained in effect as of March 9, 2020. [Dkt. #79]. Just a week later, however, the first of Chief Judge Pallmyer's Coronavirus Orders was entered, the amalgam of which extended deadlines by 77 days. [Dkt. #80]. As per Judge Shah's Order, the Covid-19 Orders extended the March 31^st deadline to June 16^th. [Dkt. ##71, 85, at 4]. The parties told the court that, as of March 9, 2020, they were nearly finished with written discovery and would be done with it in three weeks, by the March 31, 2020 deadline. [Dkt. #85, at 4].

But, even with so much extra time, the parties didn't make the new June 16^th deadline. The parties’ representations that they had been just three weeks from completing discovery at the beginning of March were not close to reality. In fact, they sought what they termed a six-week "extension" of the June 16th deadline on June 24^th which, of course, was actually a motion to reopen fact discovery. [Dkt. #88]. Judge Kness generously granted the motion, and set another new deadline: July 27, 2020. [Dkt. #90]. And he stressed: "No further extensions of these deadlines will be granted absent extraordinary circumstances." [Dkt. #90].

But then, on the day of the expiration of the deadline, the Plaintiff filed another Motion for an extension – this one to allow the filing of a motion to compel fact discovery after the close of fact discovery. [Dkt. #93]. Plaintiff's counsel said the parties had made "good progress," although he anticipated needing to file a motion to compel regarding the defendants’ assertion of the privilege as to certain documents. [Dkt. #93]. This was misleading, to say the least. Left unsaid was the fact that this remaining dispute involved a motion to compel covering almost 900 pages with exhibits, a 90-page privilege log, 800 at-issue documents, allegations of crime/fraud, and suggestions that an in camera review of those documents if not a mini-trial¹ might be necessary to resolve the one little thing left to take care of. Not to mention a response and reply brief which, with exhibits, ave turned out to cover an additional 380 pages. That's not "good progress" by any stretch of the imagination and to have told Judge Kness what was said was misleading to say the least. Generally speaking, representations made in support of motions for extensions of deadlines – easily the most common motions in any courthouse – are taken with the proverbial grain of salt. But what was said to Judge Kness did not begin to convey the true state of things. Lawyers have an obligation to be candid with the court. Cleveland Hair Clinic v. Puig , 200 F.3d 1063, 1067-68 (7th Cir. 2000).

All that is maddening but, sadly, all too common. The most remarkable revelation was that, at that very late date, with fact discovery closed, the defendant had not yet produced complete privilege logs for the documents it had been withholding from discovery throughout this case. [Dkt. #93, Par. 12]. Such tardiness and failure to comply with Fed.R.Civ.P. 26(b)(5) can, in many circumstances, be found to constitute a waiver of the privilege as to the unlogged documents. See, e.g., Blackard v. Hercules, Inc. , 2014 WL 2515197 at *5 (S.D. Miss. 2014) ; S.E.C. v. Yorkville Advisors LLC , 300 F.R.D. 152, 167 (S.D.N.Y. 2014) ; Rahman v. Smith & Wollensky Restaurant Group, Inc. , 2007 WL 1521117 (S.D.N.Y. 2007). See also Urban 8 Fox Lake Corp. v. Nationwide Affordable Hous. Fund 4, LLC , 334 F.R.D. 149, 160 (N.D. Ill. 2020) ("So, the privilege log was not only late, it didn't claim Exhibit 5 was privileged. The claims regarding Exhibit 5 being protected by both the attorney client privilege and the work product doctrine, then, are brand new and, given the foregoing history, have been waived."); Surgery Ctr. at 900 N. Michigan Ave., LLC v. Am. Physicians Assurance Corp., Inc. , 317 F.R.D. 620, 631 (N.D. Ill. 2016) ("Arguably, they waived their claim of privilege as to these unidentified documents then and there."); Baxter International, Inc. v. Becton, Dickinson and Company , 2019 WL 6258490, at *12 n. 13 (N.D. Ill. 2019) (forfeiture of work product protection where protection was not asserted in privilege log); Smith v. Bd. of Education of City of Chicago , 2019 WL 2525890, at *4 (N.D. Ill. 2019) (waiver of work product protection where claim not asserted in privilege log); Rao v. Bd. of Trustees of the Univ. of Illinois , 2016 WL 6124436, at *7 (N.D. Ill. 2016) ("A timely and adequate privilege log is required by the federal rules, and the failure to serve an adequate and timely privilege log may result in a waiver of any protection from discovery."). But, the Plaintiff did not press the argument, and, finding that the defendant's tardiness qualified as an "extraordinary circumstance," Judge Kness granted Plaintiff's motion. [Dkt. #95]. He then referred the Plaintiff's discovery motion here. [Dkt. #104].

And, so, here we are. Distilled to its essence, the present controversy is about a person doing a family friend a favor and living to regret it. Two years into this case, however, all we have are allegations and accusations on both sides. Nothing has been addressed or resolved with a dispositive motion, so the only view of the case is an amalgam of those allegations and accusations on both sides. What we have said should not be interpreted as suggesting that we have an impression that either side is right or wrong or that one side is wearing a white hat and the other is not. Long experience teaches two things: tentative impressions are often as wrong as they are right and that white hats, like haloes, rarely fit through the courthouse doors.

Bagasrawala Sponsors Zaid

The Plaintiff, Pearlshire Capital Group ("PCG"), is, essentially, Farrukh Bagasrawala. He formed PCG in 2013 in order to invest in the hospitality industry. In 2013, PCG successfully negotiated the purchases of hotels in Itasca, Roselle, and Countryside, Illinois, and closed those purchases in the names of single purpose entities which, in turn, were controlled by Bagasra Real Estate LLC ("BRE"), another SPE that Bagasrawala solely owned. This was going to be the general idea going forward.

The Bagasrawala family went back some time with the defendant's family, the Zaids. The two families invested together for years. The defendant, Rehan Zaid, came here from Pakistan and went to college at DePaul University, earning a degree in Hospitality Leadership & Lodging Management. After a brief stint as a consultant with a hospitality firm, Zaid joined PCG. He had to get an H-1B work visa to remain in the United States, and needed PCG as a sponsor. As a family friend and an associate, Bagasrawala sponsored Zaid to work for PCG as a financial analyst. Among other duties, he was to analyze existing hotel properties and potential sites for PCG and future joint ventures. [Dkt. ##1-1, 114-1]. He began this work in October 2014, at twenty-seven years of age. [Dkt. #1-1].

H–1B visas allow U.S. companies to hire noncitizen workers in "specialty occupations," defined as those that typically require at least a bachelor's degree in a specific field of study. See 8 U.S.C. § 1184(i) ; Rubman v. U.S. Citizenship & Immigration Servs. , 800 F.3d 381, 384 (7th Cir. 2015). H-1B Visa holders are able to work in the U.S. for three years (extendable to six), after which they must apply for a different visa or return to their home country (there's no path to citizenship). The employer sponsors the visa applicant, and has to submit an application, meet certain requirements, and make certain assurances. Rubman , 800 F.3d at 384 ; Edwards v. Geisinger Clinic , 459 F. App'x 125, 131 (3d Cir. 2012) ; 8 U.S.C. § 1101(a)(15)(H)(i)(b). Once issued, the visa permits the alien to remain in the United States only as long as he or she is working for the sponsoring employer. United States v. Ramirez , 420 F.3d 134, 137 (2d Cir. 2005). Regulations confirm an employer, by definition, must have an employer-employee relationship with the prospective employee, "as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee." 8 C.F.R. § 214.2(h)(4)(ii) ; Stellar IT Sols., Inc. v. United States Citizenship & Immigration Servs. , 2020 WL 3129019, at *2 (D.D.C. 2020). After that time, extensions in three-year increments may be obtained. The visa, although issued in the name of a particular individual, really "travels" with the job and the...