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United States ex. rel. McGee v. IBM Corp.

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

April 4, 2017

UNITED STATES OF AMERICA, ex. rel. MICHAEL McGEE, AND PEOPLE OF THE STATE OF ILLINOIS ex rel. MICHAEL McGEE, Plaintiffs,
v.
IBM CORPORATION, Defendants.

          Jeffrey Cole Magistrate Judge.

          MEMORANDUM OPINION AND ORDER

          THOMAS M. DURKIN JUDGE.

         The parties in this qui tam case are at odds over the defendant's wide-ranging claims of attorney-client privilege and work product as to thousands of documents defendant is withholding from discovery. Of course, step one in asserting the claim of privilege or work product as to documents is the compilation of a privilege log. Under Fed.R.Civ.P 26(b)(5), such a log must be sufficiently detailed in its description of the documents that an assessment of the claim can be made. The privilege log the defendant has submitted, woefully inadequate in more than one aspect, does not begin to approach that basic requirement.

         We begin with a reminder of what the attorney-client privilege and the work product doctrine are all about. The attorney-client privilege “‘is the oldest of the privileges for confidential communications known to the common law.'” United States v. Jicarilla Apache Nation, 564 U.S. 162, 169 (2011) (quoting Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)). Its purpose is “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” Upjohn, 449 U.S. at 389. See also generally the extensive discussion in Pampered Chef v. Alexanian, 737 F.Supp.2d 958 (N.D.Ill. 2010). While the goal is laudable, it is, after all, a derogation in the search for the truth and so, the privilege must be narrowly construed. The privilege ultimately obstructs the search for truth and to the long recognized obligation of all citizens to give evidence-an obligation expressed in the fundamental maxim that “‘the public...has a right to every man's evidence....'” United States v. Nixon, 418 U.S. 683, 709 (1974). “[E]xceptions . . . are not lightly created nor expansively construed, for they are in derogation of the search for truth.” Id. at 710. Accord United States v. Jacarilla Apache Nation, 564 U.S. 162, 189 (2011); University of Pennsylvania v. E.E.O.C., 493 U.S. 182, 189 (1990).

         The party seeking to invoke the privilege bears the burden of proving all of its essential elements:

1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.

United States v. Evans, 113 F.3d 1457, 1461 (7th Cir. 1997)(quoting 8 John Henry Wigmore, Evidence in Trials at Common Law § 2292 (John T. McNaughton rev.1961)); Shaffer v. Am. Med. Ass'n, 662 F.3d 439, 446 (7th Cir. 2011).

         The work-product doctrine is distinct from the attorney-client privilege. Codified at Fed.R.Civ.P. 26(b)(3), the work-product doctrine is designed to serve dual purposes: (1) to protect an attorney's thought processes and mental impressions against disclosure; and (2) to limit the circumstances in which attorneys may piggyback on the fact-finding investigation of their more diligent counterparts. Sandra T.E. v. S. Berwyn Sch. Dist. 100, 600 F.3d 612, 621-22 (7th Cir. 2010); See also Hickman v. Taylor, 329 U.S. 495 (1947); Miller UK Ltd. v. Caterpillar, Inc., 17 F.Supp.3d 711 (N.D.Ill. 2014). As such, the doctrine protects from discovery documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its ... agent.” Fed.R.Civ.P. 26(b)(3)(A); Appleton Papers, Inc. v. E.P.A., 702 F.3d 1018, 1022 (7th Cir. 2012). As with the attorney-client privilege, the burden is on the party asserting work-product protection to show that a document was prepared in anticipation of litigation. “There is a distinction between precautionary documents ‘developed in the ordinary course of business' for the ‘remote prospect of litigation' and documents prepared because ‘some articulable claim, likely to lead to litigation, [has] arisen.'” Sandra T.E., 600 F.3d at 622 (quoting Binks Mfg. Co. v. Nat'l Presto Indus., Inc., 709 F.2d 1109, 1120 (7th Cir.1983) (emphasis added) (alteration in original) (internal quotation marks omitted). Only documents prepared in the latter circumstances receive work-product protection. Sandra T.E., 600 F.3d at 622.

         Even the most cursory perusal of the defendant's privilege log shows that it fails to meet the defendants' burden of establishing the applicability of either the attorney-client privilege or the work-product doctrine. Indeed, the defendants' seeming indifference to the requirement of the Federal Rules of Civil Procedure is striking. It is all the more striking, coming as it does, for a company no doubt experienced in federal litigation. First of all, none of the authors or recipients of the documents are identified. The lawyers at the defendant's disposal - seven are currently on appearance in this case - may have a familiarity with the jobs of the many people listed as authors and recipients of the documents at issue; but the court obviously does not and it is the court which must rule on privilege claims. Presumably, the plaintiff finds itself in the same position as does the court. It would appear that for nearly all the documents at issue, an attorney was not the author or among the recipients. That doesn't necessarily scotch a claim of privilege or work product, but it does raise red flags.

         Moreover, in the corporate context, the attorney-client privilege extends only to an employee who communicates with counsel at the direction of corporate superiors regarding matters within the scope of the employee's duties for the purpose of securing legal advice. See Upjohn Co. v. United States, 449 U.S. 383, 394 (1981). Communications going outside that boundary can waive the privilege. See Acosta v. Target Corp., 281 F.R.D. 314, 323 (N.D. Ill. 2012). Accordingly, defendant must produce a privilege log that identifies the capacities of each author and recipient at the time the document was composed and distributed. See, e.g., Huntington Chase Condo. Ass'n v. Mid Century Ins. Co., 2017 WL 440730, at *7 (N.D. Ill. Feb. 1, 2017); In re: Fluidmaster, Inc., 2016 WL 6599947, at *8 (N.D. Ill. Nov. 8, 2016); Yahnke v. Cty. of Kane, 2013 WL 4537865, at *6 (N.D. Ill. Aug. 27, 2013); Pactiv Corp. v. Multisorb Techs., Inc., 2012 WL 1831517, at *2 (N.D. Ill. May 18, 2012)

         Some entries have no date. The defendant must also provide a date for each document in the privilege log. It would appear that some documents may have been prepared or received by individuals who were not longer in the defendant's employ at the time. Distribution of materials to third parties outside the company would obviously, with rare exceptions, result in a waiver, see Kirsch v. Brightstar Corp., 68 F.Supp.3d 846, 853-54 (N.D. Ill. 2014), while documents authored by employees no longer working for defendant would be unlikely to meet the requirement that communication be at the direction of corporate superiors regarding matters within the scope of the employee's duties for the purpose of securing legal advice. See Upjohn, 449 U.S. at 394. And undated entries for which a claim of work product is asserted face an uphill battle, for obvious reasons.

         That brings us to the defendant's descriptions of withheld documents. Staying in the work product category, a number of documents are said to be created in 2007 or 2008. This case was filed in 2011 so, without more, the claim that litigation was anticipated based on an articulable claim three or four years earlier must be viewed with a jaundiced eye. See Binks Mfg., 709 F.2d at 1118 (“The mere fact that litigation does eventually ensue does not, by itself, cloak materials prepared by an attorney with the protection of the work product privilege; the privilege is not that broad.”). Some of these entries appear to be nothing more than a retention of documents at the request of an attorney; sort of a hang-on-to-these-just-in-case request. That's not an articulable claim; it's a routine precaution.

         Document descriptions like “reflecting request for legal advice” do not make out a claim of attorney-client privilege. “Communications from attorney to client are privileged only if they constitute legal advice, or tend directly or indirectly to reveal the substance of a client confidence.” Judson Atkinson Candies, Inc. v. Latini Hohberger Dhimantec, 529 F.3d 371, 388 (7th Cir. 2008). The question is whether legal advice or a client confidence is revealed.

         Descriptions of documents entailing contract negotiations and invoices are similarly suspect. A large part of attorney input in contract negotiations can be business, as opposed to legal advice. Sandra T.E., 600 F.3d at 620 (counsel must be acting in their capacity as legal advisor to cloak communication with the privilege); Burden-Meeks v. Welch, 319 F.3d 897, 899 (7th Cir. 2003)(business advice cannot be considered legal services). Documents dealing with invoices seem even farther removed from the realm of client confidences and legal advice. Significantly, the defendant's executive on the project at issue stated in one of his emails that ...


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