The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge
MEMORANDUM OPINION AND ORDER
Before the Court is the remainder of Plaintiff LG Electronics U.S.A., Inc.'s motion to compel production of documents listed on Defendant Whirlpool Corporation's privilege log. The remaining issue is whether the attorney-client and work product privileges extend to protect corporate communications with third party advertising agencies. Whirlpool takes the position that these third party advertising agencies act as the functional equivalent of Whirlpool employees, or alternatively, share a common legal interest with Whirlpool sufficient to justify an exception to the general rule that disclosure to a third party outside the scope of the privilege waives the protection of the attorney-client privilege. See Beneficial Franchise Co., Inc. v. Bank One, N.A., 205 F.R.D. 212, 215 (N.D. Ill. 2001) (citing In re Air Crash Disaster at Sioux City, Iowa, 133 F.R.D. 515, 518 (N.D. Ill. 1990)). LG argues that the "de facto" employees test has not been adopted by the Seventh Circuit and that Whirlpool's common interest with its outside agencies is nothing more than a routine business interest in avoiding a lawsuit.
Given the unique and fact-specific nature of this issue, the Court has twice ordered additional briefing from the parties because the parties failed to address certain relevant issues.
Most recently, the Court ordered the parties "to brief: (1) whether the common legal interest exception, as articulated in United States v. BDO Seidman, LLP, 492 F.3d 806 (7th Cir. 2007), extends to communications between Whirlpool and its advertising agencies; and (2) whether the Court may recognize the 'de facto employees' test articulated by other courts." (R. 284-1, 8/24/09 Minute Order.) The attorney-client privilege is a bedrock principle of our legal system, and the Court does not take lightly the issue of whether the privilege has been waived. Nonetheless, under the facts of this case, Whirlpool has not justified that the documents are privileged or an extension of the privilege, and thus the Court grants the remainder of LG's motion.
The purpose of the attorney-client privilege "is to encourage full and frank communication between attorneys and their clients... [because] sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer's being fully informed by the client." Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 682, 66 L.Ed. 2d 584 (1981). "Open communication assists lawyers in rendering legal advice, not only to represent their clients in ongoing litigation, but also to prevent litigation by advising clients to conform their conduct to the law and by addressing legal concerns that may inhibit clients from engaging in otherwise lawful and socially beneficial activities." United States v. BDO Seidman, LLP, 492 F.3d 806, 815 (7th Cir. 2007) (citing United States v. Frederick, 182 F.3d 496, 500 (7th Cir. 1999)). Because "[t]he cost of these benefits is the withholding of relevant information from the courts," BDO, 492 F.3dat 815,the Seventh Circuit has stressed that "the privilege is in derogation of the search for the truth and, therefore, must be strictly confined." In re Grand Jury Proceedings, 220 F.3d 568, 571 (7th Cir. 2000); see also Univ. of Pa. v. EEOC, 493 U.S. 182, 189, 110 S.Ct. 577, 582, 107 L.Ed.2d 571 (1990) (expressing reluctance, because testimonial and evidentiary privileges impede the search for truth, to recognize a testimonial or evidentiary privilege "unless it 'promotes sufficiently important interests to outweigh the need for probative evidence...'") (quoting Trammel v. United States, 445 U.S. 40, 51, 100 S.Ct. 906, 912, 63 L.Ed. 2d 186 (1980)). As recognized by the Supreme Court's functional approach in Upjohn, any application of the attorney-client privilege must be "consistent with the underlying purposes" of the privilege. Upjohn, 449 U.S. at 395, 101 S.Ct. 677.
In its August 24, 2009 Minute Order, the Court reviewed the evidence submitted by Whirlpool in support of its position. Whirlpool has not submitted additional information in support of this briefing, but it did file, under seal, the declaration previously provided to the Court. For ease of reference, the Court reiterates those facts here. Specifically, Whirlpool submitted a supplemental declaration of Joel Van Winkle, an in-house Whirlpool attorney. Mr. Van Winkle's declaration describes a close relationship between Whirlpool and a number of outside agencies. Because Whirlpool employs "relatively few" marketing and advertising employees, it maintains "long-term relationships with third-party agencies, including advertising, marketing, public relations, printing, and production consultants, and relies heavily on these agencies in executing its marketing and advertising campaigns." (R. 302-1, Van Winkle Decl. ¶ 4.) Whirlpool owns the work product of these agencies, requires confidentiality of agency employees, and exercises final approval over all agency work. (Id. ¶¶ 5, 11, 12, 17.) In some instances, employees of these agencies work out of Whirlpool offices or receive Whirlpool security clearances. (Id.) To ensure compliance with the Lanham Act, Copyright Act, and other applicable law, Whirlpool requires that its in-house counsel review and approve all marketing materials before dissemination and publication. (Id. ¶ 7.) As part of this review process, "[a]gency employees, just like regular Whirlpool employees, periodically seek the advice of the Whirlpool Law Department regarding the content of advertisements prior to publication." (Id. ¶ 8.) Based on these close relationships, Mr. Van Winkle maintains that "[i]t would be effectively impossible for Whirlpool employees to communicate critical information to their agency counterparts, if they could not discuss legal issues or the Law Department's input." (Id. ¶ 10.) Mr. Van Winkle admits, however, that "[a]lthough Whirlpool's agencies rely on Whirlpool's research and legal directives in creating advertisements and promotional materials, the agencies retain independent liability for the truth of the materials they author." (Id. ¶ 13.)
I. De Facto Employee Exception
Whirlpool first claims that outside agencies act as the functional equivalent of Whirlpool employees. Specifically, Whirlpool argues that its "outside advertising agencies work closely with Whirlpool's employees, and many are frequently on-site at Whirlpool," and that because "Whirlpool has a very small internal marketing department, and primary responsibility for developing Whirlpool's consumer messaging, crafting its print, television and internet advertising, and disseminating those advertisements in the media thus falls on these agencies."
(R. 301-1, Whirlpool's Sur-Reply at 2.) As noted in the Court's August 24, 2009 Order, the Seventh Circuit has not directly addressed this de facto employees exception. Other courts, however, have applied the attorney-client privilege to communications disseminated to outside consultants and independent contractors who act as de facto employees of the party asserting the privilege.
A. Precedent from Other Circuits
Courts considering the issue of privilege as to communications with independent contractors and outside agencies have closely examined the relevant facts of each respective case in an effort to determine whether protecting the communication furthers the purpose and policy behind the attorney-client privilege. The Second Circuit, for example, has refused to extend the privilege to communications between corporate in-house counsel and an outside tax advisor even though the attorney claimed that the communications were necessary to better advise his client. United States v. Ackert, 169 F.3d 136, 139 (2d Cir. 1999). "The purpose of the privilege is 'to encourage clients to make full disclosure to their attorneys.' To that end, the privilege protects communications between a client and an attorney, not communications that prove important to an attorney's legal advice to a client." Id. (citing Fisher v. United States, 425 U.S. 391, 403, 96 S.Ct. 1569, 48 L.Ed. 2d 39 (1976)). "[A] communication between an attorney and a third party does not become shielded by the attorney-client privilege solely because the communication proves important to the attorney's ability to represent the client." Id.
In Calvin Klein Trademark Trust v. Wachner, the Southern District of New Yorkapplied the rationale of Ackert to a case involving communications between the plaintiff's counsel and an outside public relations ("PR") firm. 198 F.R.D. 53, 54 (S.D.N.Y. 2000). In Calvin Klein, the plaintiff's counsel retained the outside PR firm to act as a consultant in connection with counsel's representation of the plaintiff. The Calvin Klein court focused on the fact that the outside PR agency performed no duties outside of those normally performed by any PR agency: "[t]he possibility that such activity may also have been helpful to [counsel] in formulating legal strategy is neither here nor there if [the PR firm's] work and advice simply serves to assist counsel in assessing the probable public reaction to various strategic ...