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Ravi Rawat and Elliott Lyons v. Navistar International Corporation

September 1, 2011


The opinion of the court was delivered by: Magistrate Judge Martin C. Ashman

Judge John W. Darrah


Plaintiffs Ravi Rawat and Elliott Lyons ("Plaintiffs") have brought suit against Defendant Navistar International Corp. ("Navistar") for breach of contract, breach of the covenant of good faith and fair dealing, and violations of the Illinois and Indiana Wage Payment Collection Acts. Plaintiffs are former employees of Navistar who owned vested stock options which they were unable to exercise due to a "blackout" period allegedly caused by "Navistar's failure to have current financial reporting as required by federal law." (Pltf's. First Amend. Compl. at ¶ 2). The facts surrounding this claim are fully discussed in the District Judge's denial of Plaintiffs' motion for class certification and are not set forth in detail here. See Dckt. No. 169. Currently before the Court is Plaintiffs' motion to compel Navistar to respond in greater detail to their First Requests for Production. The Court rules on this motion under District Judge John W. Darrah's referral for a decision pursuant to N.D. Ill. Rule 72.1. On August 2, 2011, the Court held a hearing on the motion, and after careful consideration of the parties' briefs and arguments, the Court finds that Plaintiffs' motion should be granted.

I. Legal Standard

A party may file a motion to compel under Fed. R. Civ. P. 37 whenever another party fails to respond to a discovery request or when its response is insufficient. Fed. R. Civ. P. 37(a). Courts have broad discretion in resolving such disputes and do so by adopting a liberal interpretation of the discovery rules. Wilstein v. San Tropai Condo. Master Assoc., 189 F.R.D. 371, 375 (N.D. Ill. 1999). Federal Rule of Civil Procedure 26(b)(1) provides that the "[p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense." Fed. R. Civ. P. 26(b)(1). Discoverable information is not limited to evidence admissible at trial. Instead, such information is relevant "if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. However, while the scope of permissible discovery is broad, it is not unlimited. A court can limit discovery if the court believes it is unreasonably cumulative, if the party seeking discovery has already had ample opportunity to do so, or if the burden of the proposed discovery outweighs its likely benefit.

Fed. R. Civ. P. 26(b)(2).

When, as here, a case arises under a court's diversity jurisdiction, the court applies the substantive law of the state in which its sits. Republic Tobacco Co. v. North Atlantic Trading Co., 381 F.3d 717, 731-32 (7th Cir. 2004). The federal rules of procedure and evidence, however, invariably apply to the litigation itself, "whether or not they determine the outcome." Allstate Ins. Co. v. Sunbeam Corp., 53 F.3d 804, 806 (7th Cir. 1995). Most privileges, including the attorney-client privilege, are governed by state law. Fed. R. Evid. 501; Dunn v. Washington County Hosp., 429 F.3d 689, 693 (7th Cir. 2005). The work product doctrine, however, is analyzed solely on the basis of federal law. Abbott Labs. v. Alpha Therapeutic Corp., 200 F.R.D. 401, 405 (N.D. Ill. 2001).

II. Discussion

Plaintiffs' First Requests for Production seeks three sets of documents. The first involves discovery Navistar already produced in an earlier securities class action filed in the Northern District of Illinois against a number of defendants, including Navistar, as Norfolk County Retirement System et al. v. Ustian et al., No. 07 C 7014 ("Ustian"). That case proceeded before District Judge Robert Gettleman and was eventually settled on May 25, 2011. Plaintiffs also ask the Court to order Navistar to turn over documents it has already produced to the Securities and Exchange Commission ("SEC") as part of the SEC's investigation of Navistar. In the Matter of Navistar Int'l Corp., Administrative Proceeding No. 3-13994 ("the SEC proceeding"). The SEC inquired into matters that led to the need for Navistar to issue its 2005 Form 10-K on December 10, 2007 ("the Restatement"), which detailed the results of the restatement of the company's financials for 2003, 2004 and the first three quarters of 2005. As described by Magistrate Judge Nolan in Ustian, "[t]he Restatement disclosed that over that three-year period, Navistar had misstated its financial position and results of operations by billions of dollars." Norfolk County Retirement Sys. v. Ustian, No. 07 C 7014, 2010 WL 1489996, at *2 (N.D. Ill. April 13, 2010). Plaintiffs' final request seeks documents Navistar will rely on to support its affirmative defenses.

A. The Affirmative Defense Documents

In its initial answer to Plaintiffs' complaint, Navistar asserted thirty-two affirmative defenses. These included a substantial number of defenses aimed at the potential class proposed by Plaintiffs, theories such as estoppel, res judicata, and various constitutional provisions, and the defenses of illegality and impossibility. Plaintiffs asked Navistar to identify documents in its possession that were relevant to these defenses, but Navistar declined to do so based on the grounds that such production would be unduly burdensome and would involve items protected by the work product doctrine. The company makes the same claims in its response to the motion to compel.

The work product doctrine protects documents that an attorney or a representative of a party prepares in anticipation of litigation in order to prepare or analyze a client's case.

Fed. R. Civ. P. 26(b)(3); Sandra T.E. v. South Berwyn Sch Dist. 100, 600 F.3d 612, 618 (7th Cir. 2010). Its protection is "distinct from and broader than the attorney-client privilege." United States v. Nobles, 422 U.S. 225, 238 n.11 (1975) (citation omitted). A lawsuit need not be underway for the doctrine to apply "provided the prospect of litigation [is] not remote." Mattenson v. Baxter Healthcare Corp., 438 F.3d 763, 768 (7th Cir. 2006). This protection only prevents the disclosure of protected documents or communications, however, not the underlying facts. See Upjohn Co. v. United States, 449 U.S. 383, 395-96 (1981). As with the attorney-client privilege, the party asserting the work product doctrine has the burden of showing all of its elements. United States v. BDO Seidman, 337 F.3d 802, 811 (7th Cir. 2003). "A claim of privilege cannot be a blanket claim, but must be made and established on a document-by-document basis." Allendale Mut. Ins. Co. v. Bull Data Systems, Inc., 145 F.R.D. 64, 86 (N.D. Ill. 1992) (citing United States v. White, 950 F.2d 426, 430 (7th Cir. 1991)).

Navistar's reliance on the work product doctrine fails to meet this well-established standard on several grounds. The company does not identify any specific document that it claims is protected by the privilege, relying instead on the kind of generalized claim that has been rejected by courts in this District as insufficient to show that a privilege applies. See Coltec Inds., Inc. v. Am. Motorists Ins. Co., 197 F.R.D. 368, 371 (N.D. Ill. 2000) ("A claim of privilege cannot be a blanket claim, but must be made and established on a document-by-document basis."); Schachar v. Am. Acad. of Ophthalomology, Inc., 106 F.R.D. 187, 191 (N.D. Ill. 1985) ("The party claiming the privilege has the burden of showing the specific facts giving rise to the privilege; blanket claims of privilege are improper."); Allendale Mut. Ins. Co., 145 F.R.D. at 86; MSTG, Inc. v. AT&T Mobility LLC, No. 08 C 7411, 2011 WL 221771, at *10 (N.D. Ill. Jan. 20, 2011). Navistar bears the burden of showing, for example, what documents are at issue, when they were created, and that the principal motive behind the creation of the documents was to aid in possible future litigation. See Binks Mfg. Co. v. Nat'l Presto Indus., Inc., 709 F.2d 1109, 1119 (7th Cir. 1983). By not addressing these issues, Navistar has not shown why the privilege it relies on applies. Indeed, if the Court were to agree with Navistar, it would have no idea what it was ordering to be protected from discovery.

The last fact underscores that Navistar has not provided a privilege log either in response to Plaintiffs' discovery requests or as part of its response to the motion to compel. Once litigation begins, Fed. R. Civ. P. 26(b)(5) requires a party served with discovery to provide a privilege log concerning relevant documents it believes are responsive but protected by a privilege. The Rule states:

When a party withholds information otherwise discoverable by claiming that the information is privileged or subject to protection as ...

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