United States District Court, N.D. Illinois
April 7, 2004.
STEW TIONG GOH, Plaintiff;
CRE ACQUISITION, INC., CLARK RETAIL ENTERPRISES, INC., and CNC CNC ELECTRONICS, INC., Defendants
The opinion of the court was delivered by: JAMES MORAN, Senior District Judge
MEMORANDUM OPINION AND ORDER
On October 1, 2003, the court viewed three documents an e
mail from March 29, 2002, a series of e mails from April
1, 2002, and a report dated April 3, 2002 and agreed that
defendant Clark Retail Enterprises, Inc. (Clark) could withhold
production of those documents. Plaintiff has moved for reconsideration
(which is not the usual such motion, because he has not been previously
heard on the matter).
The various communicators and recipients have not been specifically
identified except by assertions of counsel. Those assertions, however,
are consistent with the nature of the communications, and we accept them
for now, subject to verification through discovery. Those communications
are, in general, communications between persons at the defendant
responsible for risk analysis, and between those persons and the
defendant's insurer, Liberty Mutual. The e mails are actually
seven in number and were sent over four days, but only the e
mails from two days are contested. They began on March 28, 2002, when
Smith Pfeiffer, Claim Risk Coordinator at defendant, advised
Noreen Klink, Manager, Risk and insurance with copies to two
others of prior incidents. That e mail is not claimed to
be privileged, and clearly its factual content is not: there had been six incidents where customers had fallen down the stairs since
April 2000, and five were forwarded to the insurance company.
On March 29, 2002, Klink responded to Jeff Smith and Ken Ruona, both in
Clark management, with copies to Smith Pfiffer and Joseph
Sullivan, attorney and director of legal services for Clark. The e
mail was noted as "Confidential Attorney Work Product." Defendant
claims privileges. The following day Jeff Smith responded to Klink that
the "insurance companies [sic] suggestion would be appreciated."
Defendant does not claim privileges. On April 1, 2002, Klink twice sent e
mails to Liberty Mutual personnel, including Richard Taylor, and,
in between, Taylor responded. Defendant claims privileges. In addition to
the e mails, defendants claim privileges for a report Taylor sent
to Klink on April 3, 2002, relating to a modification of the stairway.
In this diversity case the parties agree that Illinois privilege law
controls, but Illinois privilege law is not a model of clarity. We begin
by observing that Illinois does not have a self critical analysis
privilege, or at least the parties have not directed us to any cases
upholding such a privilege, and we have found none. Even there the
privilege protects only subjective evaluations, not objective data.
Indeed, we begin with the notion that a party cannot protect factual
evidence from discovery by sending the evidence to an attorney or having
the attorney do the investigating.
The Illinois cases seek to thread their way among competing interests,
with an eye upon the real world. Business enterprises are generally
covered by insurance. When an injury occurs, those responsible in the
business, mindful that litigation may follow, notify the insurance
carrier. The insurance carrier, having an obligation to defend,
investigates. That may include taking statements of witnesses and, if
litigation results, those statements are turned over to the attorney
selected by the carrier to defend. Those statements are generally
protected by the attorney client privilege, People v. Ryan, 30 Ill.2d 456, 197 N.E.2d 15 (1964); Lower
v. Rucker, 217 Ill. App.3d 1,576 N.E.2d 422, 159 Ill. Dec. 753
(Ill.App.2d Dist. 1991), or, in the case of third party witnesses, by
the work product privilege. The carrier, in short, is treated as the
agent of the attorney, acting on behalf of the insured,
But what if the issue relates to a report providing information to the
insured about some problem? If the report is about potential liability
for some claim made to the decision makers the control
group, who will be coordinating the defense with the company's attorney
it is privileged (although the objective facts are not), just as
summaries of interviews furnished to a decision maker for
transmission to an attorney is privileged, see Mlynarski v.
Rush Presbyterian St. Luke's Medical Center, 213 Ill. App.3d 427,
572 N.E, 2d 1025, 157 Ill. Dec. 561 (Ill.App. 1 Dist. 1991),
but see Chicago Trust Co. v. Cook County Hospital,
298 Ill. App.3d 396, 698 N.E.2d 641, 232 Ill. Dec. 550 (Ill.App. 1 Dist.
1998). The control group includes individuals who advise the decision
makers of a company, but it extends no further. An evaluation
from an employee who reports to an advisor to a decision maker is
not privileged because that employee falls outside the control group.
See Consolidation Coal CO. v. Bucyrus Erie
Co., 89 Ill.2d 103, 120, 432 N.E.2d 250, 50 Ill, Dec. 666 (1982);
Mlynarski 213 Ill. App, 3d at 431. Exactly why that is so is not readily
apparent. If the evaluation was made for the ultimate guidance of
counsel, the reasons are consistent with protection. It may well be that
the Illinois Supreme Court was concerned that any widening of the zone of
protection would introduce too large an opportunity to shield
information. Our function is not to agree with what the Illinois courts
would do but to follow what we believe they would do in the circumstances
And then there is Archer Daniels Midland Co. v. Koppers
Co., Inc., 138 Ill. App.3d 276, 485 N.E.2d 1301, 93 Ill. Dec. 91
(Ill.App. 1 Dist. 1985), where the report was made to in house
counsel and marked confidential, but it was deemed not privileged.
Perhaps that was so because the report was, apparently, primarily an account of objective facts. Perhaps
it was because it was primarily for internal purposes, to determine
whether other owners shall be notified so as to reduce potential risks,
There are echoes of the latter in Rapps v. Keldermans, 257 Ill. App.3d 205,
628 N.E.2d 818, 195 Ill. Dec. 354 (Ill.App. 1 Dist. 1993).
The communications here seem to fall somewhere between information
deemed by Illinois courts to be protected and information not protected.
We find that the attorney client privilege does apply to the e
mail of March 29, 2002, The e mail was sent by Klink to
counsel and members of defendant's control group. Though the e-mail
is not Confidential Attorney Work Product (as marked) because it
docs not contain the mental impression of an attorney, it does express
typical concerns a client would address to a lawyer. The e mails
of April 1, however, are not protected by attorney client
privilege. Defendant's attorney is not a recipient of these e
mails, and even though they are an exchange between an insurer and
insured, their content discloses no more than an objective fact, a
meeting between individuals at defendant's gas station. This leaves the
report from April 3.
Though the report is not a clear cut example of a document that
Illinois courts seek to protect, we find that it is protected under the
attorney client privilege which extends to insureds and insurers.
To assert a privilege for a communication between an insured and an
insurer, one must establish: "(1) the insured's identity; (2) the
insurance carrier's identity; (3) the insurance carrier's duty to defend
the insured; and (4) that a communication was made between insured and an
agent of the insurance carrier." Exline v. Exline. 277 Ill. App.3d 10,
13, 659 N.E.2d 407, 410, 213 Ill. Dec. 491, 494 (Ill.App. 2 Dist.
1995) (citing Rapps, 257 Ill. App.3d at 212), The report prepared by
Taylor and sent to Klink was a communication between an insured and an
agent of the insurance carrier, which had a duty to defend Clark.
Plaintiff contends that this report does not fall under the insured
insurer privilege because it was prepared before the injury that
led to this lawsuit. The report is, in one sense, for internal use
what modifications are feasible and does not relate to
the potential defense against claims or any evaluation of those claims.
However, at the time the report was made there was the possibility that
Clark would be made the defendant in a lawsuit involving the stairs. In
fact, there were claims pending against Clark arising out of injuries on
the stairs, and apparently one or more had ripened into litigation.
In Lower v. Rucker, the Illinois Appellate Court held that a
third party's statement to her insured was privileged even though she was
not a defendant subject to suit because "the possibility existed that she
would be made a defendant in lawsuits that might arise as a result of the
accident, and she could reasonably assume the statements made to her
insurer would be transmitted to an attorney for the protection of her own
interest." 217 Ill. App.3d at 3. When Liberty Mutual prepared its report
regarding the stairs at the Clark gas station, Clark was aware of the
possibility of lawsuits (as well as the reality of them) due to the
condition of the stairs, and it could reasonably assume that this report
would be given to an attorney charged with protecting its interests.
Upon reconsideration, the court affirms its ruling finding the e
mail from March 29, 2002 and the report from April 3, 2002 to be
privileged. The court reverses its decision regarding the e-mails
from April 1, 2002 they are not privileged.
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