The opinion of the court was delivered by: David R. Herndon Chief Judge United States District Court
This Document Relates to: ALL CASES
This matter is before the Court for the purpose of resolving choice of law considerations pertaining to the issues of attorney-client privilege and the work-product doctrine. To date, Bayer has produced just under 3 million documents (approximately 65 million pages), and has withheld 12,857 unique documents (18,808 documents counting duplicates) as shielded by attorney-client privilege. Of those unique documents, the Bayer defendants assert that 6,282 are also protected under the work-product doctrine. The plaintiffs have currently asserted a representative challenge with regard to 330 of the allegedly privileged documents. The Bayer defendants report that this challenge affects 243 unique documents, 52 of which are also allegedly protected under the work-product doctrine.
The parties have attempted to independently resolve the dispute over the 330 challenged documents but are at an impasse with regard to the standard that should be applied when assessing whether the documents are protected under either the attorney-client privilege or the work-product doctrine. The first step in resolving this resolving this matter includes assessing both vertical and horizontal choice of law questions. The parties have asked the Court to resolve these choice of law questions and to provide direction with respect to procedure for addressing the remainder of the disputed issues.
This multidistrict litigation ("MDL") concerns the prescription drugs Yaz, Yasmin, and Ocella and involves cases originating in nearly every state in the country as well as the District of Columbia and the territory of Puerto Rico. The basis for the Court's jurisdiction in these coordinated proceedings is diversity. The claims brought by the plaintiffs are state based claims for which state law supplies the rule of decision. The Bayer defendants, however, have asserted several federally based defenses. As of the last status conference, the Bayer defendants report that 5,998 MDL cases have been served.
The MDL cases originate from three sources: (1) cases filed directly in this MDL that originated in this Court's judicial district ("local cases"); (2) cases that have been transferred from another district court pursuant to 28 U.S.C. § 1407 ("transfer cases"); and (3) cases that originated outside of this Court's judicial district and that were filed directly into the MDL ("foreign direct filed cases") pursuant to the Court's direct filing Order (MDL 2100 Docs 669 (original direct filing order), 1137(amended direct filing order), & 1462 (second amended direct filing order)).
The Bayer defendants contend that a portion of the documents are protected from discovery by the work-product doctrine. The work-product doctrine, established in Hickman v. Taylor, 329 U.S. 495, 67 S. Ct. 385, 91 L. Ed. 451 (1947), is now codified in the Fed. R. Civ. P. 26(b)(3): "[A] party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative." The work-product doctrine is governed by federal law -- even where the basis of federal jurisdiction is diversity. See e.g., Pyramid Controls, Inc. v. Siemens Indus. Automations, Inc., 176 F.R.D. 269, 276 (N.D. Ill. 1997) (Alesia, J.).
Accordingly, with regard to documents allegedly protected under the work-product doctrine, federal law controls.
B. Attorney-Client Privilege
a. Federal Rule of Evidence 501
Federal Rule of Evidence 501 provides the rule for determining which body of law governs matters of privilege. Thus, the Court's analysis begins with the text of Rule 501, which provides:
Except as otherwise required by the Constitution of the United States or provided by Act of Congress or in rules prescribed by the Supreme Court pursuant to statutory authority, the privilege of a witness, person, government, State, or political subdivision thereof shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness, person, government, State, or political subdivision thereof shall be determined in accordance with State law.
b. Rule 501: Legislative History, State Law Proviso, and Reliance on Advisory Committee Notes
i. Legislative History and the State Law Proviso
Originally, Article V of the Preliminary Draft of the Evidence Rules as proposed by the Advisory Committee consisted of thirteen rules recognizing specific privileges. 23 Charles Alan Wright & Kenneth Graham, Jr., Federal Practice And Procedure: Evidence § 5421. The proposed rule also made no provision for the application of state privilege law in diversity actions and clearly indicated that state privilege law should be disregarded. Id. This attempt to federalize the law of privilege was highly controversial and Congress consequently became actively involved in the rulemaking process. See Id. Congress "completely rejected" the Advisory Committee's privilege scheme, id., and adopted the current version of Rule 501. Id.
The current version of Rule 501 was drafted by the House Judiciary Committee and includes a state law proviso designed to require the application of state privilege law in proceedings governed by Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L.Ed. 1188 (1938). 23 Charles Alan Wright & Kenneth Graham, Jr., Federal Practice And Procedure: Evidence § 5421; Fed. R. Evid. 501 Advisory Committee Notes, H.R. Rep. No.93-650. In rendering its decision, the Court is mindful of the rationale underlying Rule 501's state law proviso:
[The] rationale underlying the proviso is that federal law should not supersede that of the States in substantive areas such as privilege absent a compelling reason. The Committee believes that in civil cases in the federal courts where an element of a clam or defense is not grounded upon a federal question, there is no federal interest strong enough to justify departure from State policy.
Fed. R. Evid. 501, Advisory Committee Notes, H.R. Rep. No. 93-650.
The Court also finds the review of the congressional history of Rule 501, provided by the Third Circuit Court of Appeals in an opinion authored by then Chief Judge Seitz in Samuelson v. Susen, 576 F.2d 546 (3rd Cir. 1978) to be instructive on the matter. In Samuelson, the Third Circuit Court of Appeals explained that the congressional intent in enacting Rule 501 was to effectuate "state substantive rights, laws and policies in controversies where there is no substantial federal interest" and to preserve "the domain of state privilege law." Id. at 550. The court also noted that the decision to apply state privilege law in diversity actions was supported by the following contentions:
(1) privilege rules are and should continue to be considered substantive for Erie purposes;
(2) privilege rules are outcome determinative;
(3) where state law supplies the rule of decision, state rules of privilege should be applied because there is no federal interest substantial enough to justify departure from state policy; and
(4) state policy regarding privilege should not be thwarted merely because of diversity jurisdiction, a situation which, if allowed, would encourage forum shopping.
Id. citing H.R. Rep. No. 650, 93rd Cong., 1st Sess. 9 (1973).
ii. Reliance on the Advisory Committee Notes
The Advisory Committee Notes that accompany Rule 501 consist of three reports: (1) House Report Number 93-650; (2) Senate Report Number 93-1277; and (3) Conference Report Number 93-1597. House Report Number 93-650 was drafted by the House Judiciary Committee and accompanied the House's version of Rule 501 when it was first sent to the House floor for consideration. 23 Charles Alan Wright & Kenneth Graham, Jr., Federal Practice And Procedure: Evidence § 5421. After approval by the House, the Senate Judiciary Committee considered the House's version of Rule 501. Id. The Senate Judiciary Committee, in Senate Report Number 93-1277, criticized certain provisions of the House's version of Rule 501 and proposed an amendment to the state law proviso contained therein. Id. The proposed amendment was approved in the Senate without any debate. Id.
The Senate's version of Rule 501 was then considered by the Conference Committee. Id. The Conference Committee ultimately rejected the Senate's version of Rule 501 opting instead to adopt Rule 501 as originally proposed by the House. Id. The Conference Committee's commentary explaining its reasoning and addressing some of the concerns that had been expressed in Senate Report Number 93-1277 is contained in Conference Report Number 93-1597. The House's version of Rule 501 was then adopted without further debate. Id.
Any reliance this Court places on the Advisory Committee Notes that accompany Rule 501 is done in light of the legislative history discussed above. Of particular note, is the fact that the commentary in Senate Report Number 93-1277 was made in reference to the Senate's version of Rule 501 which was rejected by the Conference Committee and therefore may not be an accurate indicator of Congressional intent with regard to Rule 501 as it was ultimately enacted. See 23 Charles Alan Wright & Kenneth Graham, Jr., Federal Practice And Procedure: Evidence § 5434 n.15 & n.17 (criticizing courts for relying on the Senate Report as evidence of congressional intent).
c. Rule 501 and Diversity Cases
Pursuant to Rule 501, "with respect to an element of a claim or defense as to which State law supplies the rule of decision," matters of privilege are to "be determined in accordance with State law." Fed. R. Evid. 501. This proviso has consistently been interpreted as requiring application of state privilege law in diversity based actions. See 2 Paul R. Rice & John B. Corr, Attorney-Client Privilege in the U.S. § 12:16 (2010). See also Dunn v. Washington County Hosp., 429 F.3d 689, 693 (7th Cir. 2005) (in a federal question case the Appellate Court noted that Illinois "peer review" privilege would not apply because state privilege only applies in diversity based actions); Fed. R. Evid. 501, Advisory Committee Notes ("The proviso is designed to require the application of State privilege law in civil actions and proceedings governed by Erie R. Co. v. Tompkins, 304 U.S. 64 (1938)").
When Rule 501 requires application of state privilege law and there are factual connections to more than one state, federal courts apply state choice of law rules to determine which state's privilege law controls.*fn1 Generally, a federal court sitting in diversity applies the choice of law rules emanating from the state in which it sits. Tanner v. Jupiter Realty Corp., 433 F.3d 913, 915 (7th Cir. 2006). When a case is transferred, however, the transferee court applies the choice of law rules of the state in which the transferor court sits. Chang v. Baxter Healthcare Corp., 599 F.3d 728, 732 (7th Cir. 2010). There is no controlling authority addressing this matter with regard to cases that (1) are directly filed in an MDL pursuant to a direct filing order and (2) originated outside of the MDL court's judicial district.*fn2
d. Rule 501 and Cases Involving Federal and State Claims or Defenses
i. Federal question cases and pendent state law claims
The Seventh Circuit has held that in federal question cases federal privilege law applies even when the information sought would also be relevant to a pendent state claim. Memorial Hospital for McHenry County v. Shadur, 664 F.2d 1058, 1061 n.3 (7th Cir. 1981). In so holding, the Appellate Court reasoned that "it would be meaningless to hold the communication privileged for one set of claims and not the other." Id.*fn3
ii. Diversity cases with state based claims and one or more federally based defenses
The Court's research reveals no Seventh Circuit authority addressing the controlling privilege law in diversity actions based on state causes of action that also involve federally based defenses.
The Advisory Committee Notes to Rule 501, however, provide some guidance in this matter. Pursuant to the Conference Committee's Report, "If an item of proof tends to support or defeat a claim or defense, or an element of a claim or defense, and if state law supplies the rule of decision for that claim or defense, then state privilege law applies to that item of proof." Fed. R. Evid. 501, Advisory Committee Notes, Conf. Rep. No. 93-1597. Conversely, in diversity cases "where a claim or defense is based upon federal law...federal privilege law will apply to evidence relevant to the federal claim or defense." Id.*fn4
There is no clear congressional intent with regard to whether federal or state privilege law should govern when, in a diversity action, an item of proof is relevant to both federal and state elements. See 23 Charles Alan Wright & Kenneth Graham, Jr., Federal Practice And Procedure: Evidence § 5434 (although the Senate Judiciary Report proposes application of the law favoring reception of the evidence, the Conference Committee Report is silent on the issue).
a. Illinois choice of law principles do not ...