Selby v. O'Dea

• Decision Date: 07 December 2017
• Docket Number: No. 1–15–1572,1–15–1572
• Citation: 2017 IL App (1st) 151572,90 N.E.3d 1144
• Parties: Frank SELBY, Martin Young, Adriana Lopez, and Katherine Scheiwe, n/k/a Katherine Polk, Individually and on Behalf of All Others Similarly Situated, Plaintiffs–Appellants, v. James M. O'DEA, Individually and d/b/a James M. O'Dea & Associates, and State Farm Mutual Auto Insurance Company, Defendants, (State Farm Mutual Auto Insurance Company, Defendant–Appellee).
• Court: United States Appellate Court of Illinois

2017 IL App (1st) 151572

90 N.E.3d 1144

Frank SELBY, Martin Young, Adriana Lopez, and Katherine Scheiwe, n/k/a Katherine Polk, Individually and on Behalf of All Others Similarly Situated, Plaintiffs–Appellants,

v. James M. O'DEA, Individually and d/b/a James M. O'Dea & Associates, and State Farm Mutual Auto Insurance Company, Defendants,(State Farm Mutual Auto Insurance Company, Defendant–Appellee).

No. 1–15–1572

Appellate Court of Illinois, First District, FOURTH DIVISION.

December 7, 2017

Grace E. Wein, of Wein & Associates, P.C., of Chicago, for appellants.

James P. Gaughan, of Riley Safer Holmes & Cancila LLP, of Chicago, for appellee.

JUSTICE ELLIS delivered the judgment of the court, with opinion.

¶ 1 When parties on the same side of a lawsuit wish to strategize to defeat their common litigation opponent, they may meet together and share information that would otherwise be privileged under the attorney-client or work-product doctrines. A lawyer may share privileged information from his or her client with the other party's lawyer. One party may speak to the other party's lawyer. One client may speak to the other client, in the presence of the lawyers. When these communications occur, the parties risk waiving privileges because they are disclosing privileged information to third parties—the other client and the other client's lawyer.

¶ 2 This case requires us to decide whether two codefendants to a lawsuit waived these privileges when they met and shared information about that lawsuit as part of a "joint defense agreement" they executed.

¶ 3 Federal courts and many state courts have recognized an exception to the waiver rule in this context, protecting the confidentiality of these joint communications as to third parties. Other states have codified this exception to the waiver rule into statute. Surprisingly, no published decision in Illinois has ever decided whether parties with a common interest in defeating a litigation opponent may share and pool information without waiving their attorney-client and work-product privileges as to third parties.

¶ 4 After considering our supreme court's decisions on related issues and taking into account case law from other jurisdictions, we likewise recognize a common-interest exception to the waiver rule. As in virtually every other jurisdiction, we hold that coparties in a case who agree to share information pursuant to their common interest in defeating their litigation opponent do not waive either the attorney-client or work-product privilege when they do so.

¶ 5 While we agree with the trial court's recognition of this common-interest exception to the waiver rule, we remand this matter to the trial court to conduct an in camera , communication-by-communication review of the challenged conversations involving the codefendants and their attorneys. We vacate the trial court's dispositive rulings—the dismissal of one count, the grant of summary judgment on two others—pending the outcome of the in camera review, given the possibility that additional facts may become discoverable after that review.

¶ 6 I

¶ 7 Between 2006 and 2009, State Farm Mutual Auto Insurance Company (State Farm) filed a series of subrogation lawsuits through its counsel, James M. O'Dea, individually and doing business as James M. O'Dea & Associates, including suits against Frank Selby, Martin Young, Adriana Lopez, and Katherine Scheiwe, now known as Katherine Polk. In October 2010, these four individuals, as named plaintiffs, filed a purported class-action lawsuit in which they claim that their subrogation lawsuits were part of "a large scale scheme perpetrated by defendants in subrogation lawsuits" to obtain "fraudulent default judgments" against subrogation defendants "by circumventing the State of Illinois [r]ules governing service of process."

¶ 8 In sum, plaintiffs claimed that O'Dea, an attorney engaged by State Farm in its subrogation cases, was bypassing the office of the sheriff of Cook County for the purposes of service of summons, using unlicensed process servers, and obtaining default judgments without service of process, resulting in the suspension of their drivers' licenses based on these void judgments and requiring them to take steps to vacate their default judgments. The complaint further alleged an overall scheme involving State Farm and claimed that this scheme was financed by State Farm's payment of invoices from O'Dea for sheriff's fees—fees that were never incurred, permitting O'Dea to retain these funds for his own use.

¶ 9 Relevant to this appeal, plaintiffs sued State Farm for abuse of process, civil conspiracy, and malicious prosecution. The trial court dismissed the abuse-of-process claims for failure to state a claim. The court later entered summary judgment on the claims of civil conspiracy and malicious prosecution. The action is still pending in the trial court against O'Dea. This appeal only concerns the judgments as to State Farm.

¶ 10 Plaintiffs appeal from several of the circuit court's orders, including the court's application of the "joint legal defense privilege," other discovery orders, the dismissal of plaintiffs' abuse-of-process action against State Farm for failure to state a claim, and grant of summary judgment on plaintiffs' claims of civil conspiracy and malicious prosecution.

¶ 11 Plaintiffs argue that "to understand the issues related to the dismissal of State Farm from the litigation, it is important to review the seminal problem related to discovery that overshadowed the trial court's subsequent rulings." Plaintiffs argue that the trial court's ruling on certain discovery matters prevented them from fully responding to the motion for summary judgment, one of many reasons, they claim, that the trial court erred in entering summary judgment on the civil-conspiracy and malicious-prosecution counts.

¶ 12 Within the discovery matters alone, there are sub-issues. One is the trial court's recognition of the "joint legal defense privilege." Another is the trial court's refusal to require a privilege log for information it deemed covered by that privilege. Third, plaintiffs complain of a protective order entered in this case to protect confidential and sensitive information disclosed in discovery. Finally, plaintiffs claim that the trial court erred in sequencing discovery such that they were permitted to issue discovery requests only regarding the four named plaintiffs and not concerning other members of the purported class of subrogation defendants sued by State Farm and O'Dea during the relevant time period. We will take up these issues in turn.

¶ 13 II

¶ 14 We begin with the trial court's recognition of the "joint legal defense privilege" in Illinois. Our review is de novo . See Center Partners, Ltd. v. Growth Head GP, LLC , 2012 IL 113107, ¶ 65, 367 Ill.Dec. 20, 981 N.E.2d 345 (existence of privilege, or exception thereto, is question of law subject to de novo review).

¶ 15 Several years into this lawsuit, plaintiffs submitted this interrogatory to State Farm:

"Did State Farm ever notify, or advise, from January 1, 2006 to the present , either in writing or orally, [O'Dea] that there were any irregularities discovered in the handling of the State Farm subrogation matters? If so, state the date upon which the notification occurred, whether it was orally or in writing, the person from State Farm that issued the notification and the individual to whom the notification was addressed." (Emphasis added.)

¶ 16 Because the scope of that interrogatory included conversations between codefendants State Farm and O'Dea and their lawyers that occurred after the filing of this purported class-action lawsuit in October 2010, State Farm asserted (besides attorney-client and work-product privileges) a "joint defense privilege," arguing that anything that codefendants State Farm and O'Dea, as well as their respective lawyers, said to each other after the filing of the lawsuit, about the lawsuit, was privileged as part of communications concerning a common or joint defense. State Farm did acknowledge that postcomplaint conversations between State Farm and O'Dea responsive to this interrogatory had occurred: "Subject to these objections, and without waiving them, State Farm and O'Dea, with the involvement of counsel, have had privileged discussions relating to [p]laintiff's allegations during the pendency of this lawsuit."

¶ 17 The circuit court, after briefing and argument, recognized the "joint legal defense privilege" in Illinois. The court acknowledged that no Illinois reviewing court had recognized the privilege. But the court noted that the privilege had been recognized in federal court and other jurisdictions and reasoned that Illinois should recognize it, too, finding "nothing in Illinois case law that would preclude its application in an Illinois cause of action." The trial court thus ruled that, to the extent that plaintiffs sought postcomplaint communications between State Farm and O'Dea in their interrogatory, that information was privileged from discovery.

¶ 18 On appeal, State Farm tells us that the "joint defense" doctrine has already been recognized in Illinois as the common-interest doctrine, pursuant to our supreme court's opinion in Waste Management, Inc. v. International Surplus Lines Insurance Co. , 144 Ill. 2d 178, 193, 161 Ill.Dec. 774, 579 N.E.2d 322 (1991). Plaintiffs disagree; they argue that the Waste Management common-interest doctrine is different than the protection State Farm seeks. As we will explain below, plaintiffs are correct that the Waste Management common-interest doctrine is different than the remedy State Farm seeks. But State Farm is not altogether wrong, either, because the Waste Management common-interest doctrine is rooted in many of the same principles as the remedy State Farm seeks, whether we call it the "joint defense" doctrine or by another name.

¶ 19 We will begin by examining Waste Management common-interest doctrine as it currently exists in...