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Lislewood Corporation v. AT&T Corporation

United States District Court, N.D. Illinois, Eastern Division

March 31, 2015

LISLEWOOD CORPORATION, Plaintiff,
v.
AT&T CORPORATION, Defendant. AT&T CORPORATION, Third-Party Plaintiff,
v.
MARRIOTT INTERNATIONAL, INC., Third-Party Defendant.

MEMORANDUM OPINION and ORDER

YOUNG B. KIM, Magistrate Judge.

Before the Court is the motion of Lislewood Corporation ("Lislewood") to compel Defendant AT&T Corporation ("AT&T") and Third-Party Defendant Marriott International, Inc. ("Marriott") to produce documents withheld under a claim of joint-defense or common-interest privilege. For the following reasons, Lislewood's motion is denied:

Background

In July 1982, predecessors-in-interest to both Lislewood and AT&T entered into a 30-year commercial lease ("Lease") for a conference center in Lisle, Illinois ("Premises"). (R. 130, Def.'s Resp. at 3.) During the term of the Lease, AT&T agreed to maintain the Premises "in good repair and condition, except for ordinary wear and tear." (Id.) In December 1996, AT&T entered into a sublease ("Sublease") of the Premises with Marriott. As part of the Sublease, Marriott agreed to "fully indemnify, defend and save harmless [AT&T] from and against any and all claims, costs, losses, damages and expenses (including reasonable legal fees and court costs)" arising out of Marriott's use of the Premises or breach of the Sublease. (R. 41-2, Third-Party Compl., Ex. 2, Sublease § 35.) The Sublease terminated on July 30, 2012, and the Lease expired the following day.

In anticipation of and following the termination of the Lease and Sublease, AT&T and Marriott attorneys corresponded with one another regarding communications from Lislewood about the state of the Premises and potential liability issues. (R. 130, Def.'s Resp. at 5.) AT&T and Marriott executed a "Common Interest Privilege/Joint Defense Agreement" on September 19, 2012. (Id. at 6.) Lislewood filed a complaint against AT&T on February 22, 2013, alleging that AT&T breached the Lease by failing to properly maintain the Premises. (R. 1, Pl.'s Compl.) On January 8, 2014, AT&T filed a third-party complaint against Marriott for indemnification and breach of the Sublease. (R. 41, Third-Party Compl.)

Lislewood issued a discovery request, dated June 20, 2013, to AT&T and Marriott seeking information relating to the maintenance and repair efforts at the Premises. (R. 126-1, Ex. A, Pl.'s Doc. Req. to AT&T; R. 126-1, Ex. C, Pl.'s Doc. Req. to Marriott.) AT&T and Marriott withheld and redacted some of the requested documents, objecting to portions of the discovery requests under claims of attorney-client privilege, work-product privilege, and the joint-defense or common-interest doctrine. (R. 126-1, Ex. D, AT&T Resp. to Disc. ¶ 1; R. 126-1, Ex. E, Marriott Resp. to Disc. ¶ 2.) Both parties provided privilege logs describing the communications withheld. (R. 126-1, Ex. F, AT&T Priv. Log; R. 126-1, Ex. G, Marriott Priv. Log.) Pursuant to Federal Rule of Civil Procedure 37, Lislewood now seeks to compel the production of documents withheld and redacted by AT&T and Marriott, arguing that the parties do not share a common interest and that, even if they do, the adverse-interest exception neutralizes any protection it may afford.

Analysis

Under Rule 26, "[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense" or that "appears reasonably calculated to lead to the discovery of admissible evidence." Fed.R.Civ.P. 26(b)(1). This court has broad discretion in resolving disputes related to discovery. See Spiegla v. Hull, 371 F.3d 928, 944 (7th Cir. 2004). The current motion requires this court to resolve three points of contention: (1) whether the communications at issue are privileged; (2) whether AT&T and Marriott share a common legal interest sufficiently strong to invoke the common-interest doctrine; and (3) whether an adverse interest exists between AT&T and Marriott that precludes the assertion of the common-interest doctrine. See McCullough v. Fraternal Order of Police, No. 12 CV 9359, 2014 WL 2514623, at *5 (N.D. Ill. June 4, 2014); Waste Mgmt., Inc. v. Int'l Surplus Lines Ins. Co., 579 N.E.2d 322 (Ill. 1991).

A. Attorney-Client and Work-Product Privileges

The court first addresses whether the disputed documents are privileged because the common-interest doctrine only protects communications that are already otherwise privileged. McCullough, 2014 WL 2514623, at *5. The attorney-client privilege protects verbal and written communications exchanged in confidence between a client and an attorney for the purpose of obtaining legal advice. See Upjohn Co. v. United States, 449 U.S. 383, 394-99 (1981). In a diversity action such as this one, the applicability and scope of attorney-client privilege is governed by the law of the forum state. Urban Outfitters, Inc. v. DPIC Cos., Inc., 203 F.R.D. 376, 378 (N.D. Ill. 2001); see also Fed.R.Evid. 501. Illinois law regarding attorney-client privilege is identical to federal law in that they both require the court to determine whether legal advice of any kind was sought from an attorney in his or her capacity as an attorney, whether the material sought in discovery contains communication related to the purpose of seeking such legal advice, and whether such communication was made in confidence. See id.; Sandra T.E. v. South Berwyn Sch. Dist. 100, 600 F.3d 612, 618 (7th Cir. 2010).

While the attorney-client privilege is governed by state law, the work-product doctrine is determined by federal law even in diversity cases. See Dawson v. New York Life Ins. Co., 901 F.Supp. 1362, 1367 (N.D. Ill. 1995); Fed.R.Civ.P. 26(b)(3). Unlike the attorney-client privilege, work-product privilege protects documents prepared by attorneys in anticipation of litigation for the purpose of analyzing, evaluating and preparing a client's case. See Fed.R.Civ.P. 26(b)(3); United States v. Smith, 502 F.3d 680, 689 (7th Cir. 2007). The work-product doctrine creates a "zone of privacy" for lawyers to "analyze and prepare their client's case free from scrutiny or interference by an adversary." Miller UK Ltd. v. Caterpillar, Inc., 17 F.Supp. 3d 711, 734 (N.D. Ill. 2014). The court must determine whether the documents sought in discovery contain an attorney's thought processes and mental impressions. See Sandra T.E., 600 F.3d at 621-22. But even where the work-product privilege would normally apply, it may be waived where protected communications are disclosed in a manner that "enable[s] an adversary to gain access to the information." See Behnia v. Shapiro, 176 F.R.D. 277, 279 (N.D. Ill. 1997). Nonetheless, "[w]hat constitutes a waiver with respect to work-product materials depends, of course, upon the circumstances." United States v. Nobles, 422 U.S. 225, 239 n.14 (2000).

In this case, the documents over which AT&T and Marriott assert the common-interest doctrine are covered by the attorney-client and work-product privileges. For each of the disputed documents, AT&T's privilege log provides a description of the parties to the communication, a general description of the communication's substance, and the privilege claimed. (See R. 126-1, Ex. F, AT&T Priv. Log, Nos. 396, 408, 451-454, 459-61, 496, 498, 515, 517-19, 563, 565, 568-69 610-11, 613-14, 683-86, 733-38, 742-44.) Marriott's privilege log includes similar information. (See R. 126-1, Ex. G, Marriott Priv. Log, Nos. 1-4, 6-7, 17-18, 21-23, 29-31, 33-34, 42, 47, 50-51, 57, 59-61.) According to the privilege logs, these documents include communications within the parties' legal teams, communications between members of the legal teams and AT&T and Marriott employees, and employee communications reflecting the legal advice given by counsel. (Id.) They also include documents and communications dated between August 2012 and February 2013, reflecting the time period during which AT&T anticipated possible litigation over the property turnover and related repairs.[1] (Id.) Although Lislewood asserts that Marriott could not have anticipated litigation because it had no contractual relationship with Lislewood and was not engaged in communications with Lislewood, each of the documents over which Marriott asserts the common-interest privilege appears to be otherwise protected by attorney-client privilege anyway. Finally, as Lislewood acknowledges, some of the communications are related to the joint-defense agreement itself, which was clearly prepared in anticipation of litigation. (R. 126-1, Ex. F, AT&T Priv. Log, Nos. 408, 459, 460, 613; R. 126-1, Ex. G, Marriott Priv. Log, Nos. 6-7); see McNally Tunneling Corp. v. City of Evanston, No. 00 CV 6979, 2001 WL 1246630, at *4 (N.D. Ill. Oct. 18, 2001).

The burden of showing that a particular document is privileged is on the party claiming the privilege, and any party claiming privilege must present for each document an explanation sufficient for the court to determine whether the party has discharged its burden. See Allendale Mut. Ins. Co. v. Bull Data Sys., 152 F.R.D. 132, 137 (N.D. Ill. 1993) (citations omitted). Given the above, the court concludes that AT&T and Marriott have met their burden of explaining why the disputed documents are otherwise ...


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