The opinion of the court was delivered by: Magistrate Judge P. Michael Mahoney
MEMORANDUM OPINION AND ORDER
Before the court are two motions: Defendant's motion to join General Casualty Company as a party-plaintiff and Defendant's motion for a protective order regarding a document inadvertently produced by Plaintiffs titled, "Litigation Agreement." A hearing on the motions occurred on April 29, 2009. Both parties have fully briefed the motions.
On February 24, 2005, a fire allegedly occurred in the dashboard of a 1997 Ford Escort owned by Linda Farther. (Comal. ¶ 8, 10.) At the time of the fire, the car was parked inside a building owned by Plaintiffs. (Id. ¶ 10.) Plaintiffs allege that the fire occurred because Defendant negligently designed, manufactured, and sold the car. (Id. ¶ 11.) Plaintiffs brought this diversity action against Defendant on December 12, 2008, alleging that the fire caused damage to Plaintiffs' real, personal, and business property. (Id. ¶ 12.)
General Casualty Company ("General Casualty") is an insurer that provided a policy of insurance covering Plaintiffs' property at the time of the fire. (Def.'s Mot. to Join 2.) During discovery, Plaintiffs produced two documents, each titled, "Sworn Statement in Proof of Loss." (Id. at Ex. B, C.) Both documents appear to assign subrogation rights to General Casualty regarding claims that Plaintiffs may have against a third party for the losses stated. (Id.)
Plaintiffs still retain an interest in at least a deductible that they paid, which makes General Casualty a partial subrogee. Because General Casualty is a partial subrogee to Plaintiffs' claims, Defendant argues that General Casualty is a real party in interest. Defendants Motion to Join seeks to join General Casualty as a real party in interest pursuant to the Federal Rules of Civil Procedure 17(a) and 19(a). (Id. at 1.)
Plaintiffs argue that Illinois law governs whether joinder of a partial subrogee is compulsory in a diversity action. (Pls.' Resp. to Mot. to Join 1.) According to Plaintiffs, joinder of a partial subrogee is not required in Illinois. (Id. at 2.) Plaintiffs further argue that joinder is not required in this case because General Casualty has agreed to submit an affidavit "approving of, ratifying, and agreeing to submit to and be bound by the judgment of this Court in this case." (Id.) Such an affidavit would eliminate any danger that Defendant might be subjected to two judgments. (Id. at 7--8.)
Plaintiffs also produced during discovery a document titled, "Litigation Agreement." (Def.'s Mot. for Protective Order Ex. A.) Plaintiffs argue that the document is subject to the attorney-client privilege and the work product doctrine. (Pls.' Resp. to Mot. for Prot. Order 2.) They claim that the disclosure was inadvertent and requested that Defendant return the document. (Id.)
Defendant refused to return the Litigation Agreement, and instead filed this Motion for a Protective Order. (Id.) Instead of submitting the document to the court for an in camera review, Defendant attached it as an exhibit to its Motion for a Protective Order and filed it in the court file. (See id. Ex. A.) This publication of the document violated Federal Rule of Civil Procedure 26(b)(5)(B).*fn1 Defendant's counsel are experienced litigators and know better than to proceed in this manner. Under appropriate circumstances, the court could disqualify counsel for this type of conduct.
III. Defendant's Motion to Join General Casualty as a Party-Plaintiff
Rule 17(a) provides, "An action must be prosecuted in the name of the real party in interest." Fed. R. Civ. P. 17(a)(1). Rule 17(a) is an independent authority for compulsory joinder. Carpetland, U.S.A. v. J.L. Alder Roofing, Inc., 107 F.R.D. 357, 359 (N.D. Ill. 1985). Whether a party is a "real party in interest" in a diversity action is determined by state substantive law. Id. at 359. In Illinois, an insurer with subrogation rights to an insured's claim "owns" a claim and is a real party in interest. Brook Inns, Inc. et al. v. S & R Hi-Fi and TV, 249 Ill. App. 3d 1064, 618 N.E.2d 734, 743 (Ill. App. Ct. 1993); Blatz et al. v. Rock Falls, 105 Ill. App. 3d 732, 434 N.E.2d 807, 808 (Ill. App. Ct. 1982); Warner/Elektra/Atlantic Corp. et al. v. Village of Bensenville, Illinois et al., 1989 WL 91773, 1989 U.S. Dist. LEXIS 9504, *5--6 (N.D. Ill. Aug. 3, 1989). If an insured-subrogor retains "a pecuniary interest, even for only a nominal sum over and above the subrogation claim[,]" both the subrogor and the subrogee are real parties in interest. Brook Inns, 618 N.E.2d at 742; Warner, 1989 U.S. Dist. LEXIS 9504, at *6.
Joinder of a party is a procedural matter decided under federal law. See Carpetland, U.S.A., 107 F.R.D. at 360. If the subrogee is a real party in interest, the Seventh Circuit requires that it be joined upon a timely motion by a defendant. Wadsworth et al. v. U.S. Postal Service et al., 511 F.2d 64, 65--66 (7th Cir. 1975); Warner, 1989 U.S. Dist. LEXIS 9504, at *6--7 (holding in a diversity case arising under Illinois law that an insurer-subrogee was a real party in interest and its compulsory joinder was appropriate under Wadsworth); see United States v. Aetna Cas. & Sur. Co., 338 U.S. 366, 381--82 (1949) (holding that a partial subrogee in a case arising under federal question jurisdiction must be joined because "both insured and insurer 'own' portions of the substantive right and should appear in the litigation in their own names"); Sikora v. AFD Indus., Inc. et al., 18 F. Supp. 2d 841, 846 (N.D. Ill. 1998).
In this case, General Casualty is a partial subrogee to Plaintiffs' claims. (See Def. Mot. to Join Ex. B, C.) As a partial subrogee with the right to pursue a claim, General Casualty is a real party in interest in this case and may be joined under Rule 17(a). Defendant made ...