United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Jeffrey T. Gilbert United States Magistrate Judge
AXA Versichemng ("AXA") has filed a motion to
compel Plaintiff Baxter International, Inc.
("Baxter") to produce certain documents. Motion to
Compel Baxter to Produce All Communications with Dechert
("AXA's Opening Brief), [ECF Nos. 344, 345].
Although AXA initially sought more than eighty documents,
Baxter's subsequent production of the vast majority of
the communications AXA was seeking narrowed substantially the
scope of the parties' present discovery dispute. The only
issue now before the Court is whether Baxter must produce the
redacted portions of several memoranda written by one of its
insurance coverage attorneys and a few emails to which the
memoranda were attached when they were sent to Baxter and
attorneys representing Baxter in underlying tort litigation.
For the reasons stated below, AXA's motion [ECF Nos. 344,
345] is denied.
lawsuit stems from the settlement of a multi-district
litigation ("MDL") involving product liability
lawsuits brought against Baxter and other drug companies
seeking damages for allegedly contaminated blood products.
See Baxter Int'l, Inc. v. AXA Versichemng, 2014
WL 3583929 (N.D. Ill. July 18, 2014) for a thorough
discussion of the facts underlying both the MDL and this
case. Throughout the MDL, which the parties refer to as
"the Second Generation Litigation, " Dechert LLP
("Dechert") served as Baxter's defense counsel.
At the same time, Baxter employed Shapiro & Dupont LLP
(now Shapiro Rodarte & Forman LLP) (collectively,
"the Shapiro firm") as its insurance coverage
counsel. In this role, one of the Shapiro firm's
attorneys, Carl Shapiro, wrote a memorandum titled
"Settlement Options re 'Second Generation'
Claims." During the drafting process, Mr. Shapiro
produced several versions of the memorandum (collectively,
"the Shapiro Memos" or "the Memos") that
he emailed to Baxter and Dechert.
discovery in this case, AXA issued requests for production
that encompass both the Shapiro Memos and what Baxter refers
to as "the cover emails" to which the Memos were
attached. Baxter initially withheld these documents in their
entirety. Later, Baxter produced all of them but with
redactions. According to Baxter, it only redacted portions of
these documents that constitute its insurance coverage
counsel's privileged coverage analysis. The Court now
must decide whether Baxter must produce the redacted portions
of the Shapiro Memos and the cover emails.
Federal Rule of Civil Procedure 37(a), when a party does not
respond properly to a discovery request, the party that
issued the request may file a motion to compel a proper
response. Fed.R.Civ.P. 37(a); Vukadinovich v. Hanover
Cmty. Sch. Corp., 2014 WL 667830, at *4 (N.D. Ind. Feb.
20, 2014). The court then must independently determine the
proper course of discovery. John Wiley & Sons, Ltd.
v. McDonnell Boehnen Hulbert & Berghoff LLP, 2013 WL
505252, at *2 (N.D. III. Feb. 12, 2013). When doing so, the
court has significant discretion. Gile v. United
Airlines, Inc., 95 F.3d 492, 496 (7th Cir. 1996).
Ultimately, the party objecting to discovery bears the burden
to show that the requested discovery is improper. JAB
Distributors, LLC v. London Luxury, LLC, 2010 WL
4008193, at *1 (N.D. Ill. Oct. 13, 2010).
argues that the attorney-client privilege and the work
product doctrine protect the redacted portions of the Shapiro
Memos and the cover emails, AXA contends that neither applies
and that, in any event, Baxter has waived any protection that
might have existed.
The Illinois Attorney-Client Privilege
parties' dispute with respect to the Illinois
attorney-client privilege is narrow. Baxter asserts that it
redacted from the Shapiro Memos and emails only material that
is protected by the Illinois attorney-client privilege. AXA
responds by arguing that the attorney-client privilege does
not cover Baxter's communications with Dechert, its
defense counsel in the underlying Second Generation
Litigation, under settled Illinois law, and the fact that
Baxter's insurance coverage counsel was involved in those
communications for the purpose of providing insurance
coverage analysis related to the underlying claims in the
lawsuit Dechert was defending does not change the analysis.
AXA relies on the Illinois Supreme Court's decision in
Waste Management, Incorporated v. International Surplus
Lines Insurance Company, 579 N.E.2d 322 (Ill. 1991), in
support of its argument that the Shapiro Memos and related
emails must be produced without redaction. Baxter reads
Waste Management more narrowly than AXA does in this
context and argues that decision supports its production of
the redacted Memos and emails.
Waste Management, the eponymous defendant and a
related corporate entity ("the insureds") owned and
operated five hazardous waste disposal sites. Id. at
324-25. The insureds were sued for personal injuries and
property damage caused by their improper mitigation of toxic
wastes at one facility. Id. The insureds defended
against and then settled those claims. Id. at 325.
After that, the insureds sought indemnification from their
insurers, which already had denied coverage, leading to more
litigation, Id. During the insurance coverage
action, the insurers sought the insureds' litigation
files from the underlying lawsuit. Id. The insureds
refused to produce certain documents, claiming in part that
the Illinois attorney-client privilege protected them from
Illinois Supreme Court held that, in this situation, the
attorney-client privilege had no application to the withheld
portions of the underlying litigation file. Id. at
329. The Illinois Supreme Court's decision rested on two
rationales, both of which were independently sufficient to
justify the ruling. Id. at 327. The first was that
the insureds' contractual duty to cooperate with their
insurers, contained in their insurance policies, rendered any
expectation of privilege unreasonable with respect to the
communications. Id. at 327-28. The second was that
the insureds and the insurers had a common interest in
defeating or settling the underlying litigation and the
communications were "of a kind reasonably calculated to
protect or to further those common interests."
Id. at 328-29.
discussion illustrates, the holding and logic of Waste
Management only extend to communications concerning
matters with respect to which an insured has a duty to
cooperate or a common interest with its insurer. In Waste
Management, the court "recognize[d] [an]
insured's need to have confidential communication with
counsel regarding insurance coverage." LaSalle Nat.
Trust, N.A. v. Schaffner, 1993 WL 105422, at *6 (N.D.
Ill. Apr. 6, 1993). That is why the court distinguished
"between nonprivileged communications regarding the
underlying litigation, and privileged communications
regarding the coverage issues that could arise in a
subsequent declaratory judgment action." Illinois
Emcasco Ins. Co. v. Nationwide Mut. Ins. Co., 913 N.E.2d
1102, 1108 (Ill.App.Ct. 2009). When interpreting Waste
Management, courts consistently acknowledge this
distinction and find that the attorney-client privilege
protects communications about coverage issues with respect to
which the insured and insurer have neither a duty to
cooperate nor a common interest. See, e.g., Abbott Labs.
v. Alpha Therapeutic Corp.,200 F.R.D. 401, 408 (N.D.
Ill. 2001) (holding that the Illinois attorney-client
privilege protects an indemnitee's communications with
its attorneys "to the extent that such communications
deal with issues of indemnification"); LaSalle,
1993 WL 105422, at *6 ("Communications made for the
purpose of pursuing defense and indemnity against the
Insurers is, however, subject to the attorney-client
privilege."); Emcasco, 913 N.E.2d at 1108
("In sum, we conclude that Waste Management
preserves the attorney-client privilege for communications
between Emcasco and its attorneys regarding the coverage