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Naqvi v. Illinois Health and Science

United States District Court, C.D. Illinois

February 28, 2018

ALI NAQVI, Plaintiff,
ILLINOIS HEALTH and SCIENCE, et al., Defendants.



         This matter comes before the Court on Plaintiff Ali Naqvi's Motion to Disqualify Defense Counsel (d/e 36) (Naqvi Motion), and Defendants Illinois Health and Science (IHS); Decatur Memorial Hospital (DMH); Zevacor Molecular; Zevacor Pharma, Inc., n/k/a/ Global Isotopes, LLC; Board of Directors of IHS; Board of Directors of DMH; Timothy D. Stone, Jr.; Roy Mosser, Ron Drane; and Robin King's Motion for Protective Order (d/e 45) (Defense Motion) (collectively Motions). The Court held an evidentiary hearing on the Motions on January 22, 2018. Naqvi appeared in person with his counsel Dawn Wall. Defendants appeared by attorneys Daniel Delaney, Imam Boundaoui. Defendant IHS's General Counsel Katie Anderson appeared as the representative of Defendant IHS. For the reasons set forth below, the Court DENIES the Naqvi Motion and ALLOWS in part the Defense Motion.

         Naqvi asks the court to disqualify the law firm representing Defendants in this case, Drinker Biddle & Reath LLP (Drinker Biddle or the Firm). Naqvi asserts that he is a former client of Drinker Biddle, and so, the Firm has a conflict of interest and cannot now represent Defendants in this case. In the alternative, Naqvi argues that he was a prospective client who communicated confidential adverse information to Drinker Biddle, and thus, Drinker Biddle has a conflict of interest because it has confidential information from a prospective client. Naqvi asks the Court to disqualify Drinker Biddle from representing the Defendants in this case.

         Defendants assert that Drinker Biddle never represented Naqvi. Rather, the Defendants assert that Naqvi, the former Executive Vice President and Chief Financial Officer (CFO) of IHS and DMH, communicated with attorneys of Drinker Biddle in his role as CFO. Defendants assert that those communications are subject to IHS and DMH's attorney client privilege. Defendants assert that Naqvi improperly relayed privileged information from those conversations to his counsel and she improperly disclosed privileged information in filings submitted in support of the Naqvi Motion. Defendants ask the Court to disqualify Naqvi's counsel for her improper breach of IHS and DMH's attorney-client privilege and bar Naqvi from using privileged communications in this case.

         Naqvi's Amended Complaint (d/e 32) alleges that Defendants discriminated against him and retaliated against him during his employment as CFO of IHS and DMH. The discrimination and retaliation ultimately resulted in the termination of his employment on November 5, 2015. IHS and DMH are related not-for-profit corporations. Amended Complaint, ¶¶ 6-7. IHS is the parent corporation of DMH. DMH operates Decatur Memorial Hospital in Decatur, Illinois. See Transcript of January 22, 2018 Hearing (d/e 53) (Transcript), at 99. Naqvi alleges that Zevacor Pharma, Inc. n/k/a Zevacor and Zevacor Molecular n/k/a Global Isotopes LLC (collectively Zevacor) are subsidiaries of IHS. Naqvi alleges that he was also the CFO of Zevacor.[1] He alleges that Zevacor is a holding company for various “for-profit” assets of IHS. Amended Complaint, Parties ¶¶ 8-9, Count II and 27-28.

         Naqvi alleges that he alerted Defendants that IHS and DMH's investment in the for-profit Zevacor enterprises violated the Illinois version of the Uniform Prudent Management of Institutional Funds Act (Institutional Funds Act or UPMIFA), 760 ILCS 51/3. Naqvi also alleges that he refused to engage in activities that violated the Institutional Funds Act. Naqvi asserts that Defendants retaliated against him for alerting the Defendants of the illegal conduct and for refusing to participate in the illegal conduct. Naqvi contends that Defendants' retaliation culminated in termination of his employment in violation of the Illinois Whistle Blower Protection Act, 740 ILCS 174/15. Amended Complaint, Count II. Naqvi also asserts a claim for wrongful discharge because of Defendants' alleged retaliation against him for speaking up about the alleged violation of the Institutional Funds Act. Amended Complaint, Count III.[2]

         In late August and early September 2015, Naqvi communicated with Drinker Biddle attorneys Michael Rosenbaum, Quin Frazer, and T.J. Sullivan about the IHS and MDH's compliance with the Institutional Funds Act. Both parties rely on these communications to support each side's respective Motion now before the Court. Naqvi and attorneys Rosenbaum and Frazer submitted conflicting affidavits regarding these communications.

         Memorandum of Law in Support of Plaintiff's Motion to Disqualify Counsel (d/e 37), Exhibit 1, Affidavit of Ali Naqvi; Defendants' Memorandum in Opposition to Plaintiff's Motion to Disqualify Defense Counsel (d/e 41), Exhibits 1, Affidavit of Michael D. Rosenbaum, and Exhibit 2, Affidavit of Quin Frazer. The Court set an evidentiary hearing to resolve the conflict in the evidence. See Opinion entered November 30, 2017 (d/e 49). Upon careful review and consideration of the parties' submissions and the evidence presented at the hearing, the Court finds the following facts.

         Drinker Biddle, or its predecessor law firm, has represented DMH for more than twenty years on various legal matters. See Transcript, at 99-102, 150. Naqvi, as CFO, approved payment of Drinker Biddle's invoices for services rendered. See Defendant's Exhibit 1, Drinker Biddle invoice to IHS (f/k/a MDH Health Systems) dated June 30 2014, and approved for payment by Naqvi; Transcript, at 48, 105 (Naqvi approved payment of Drinker Biddle legal services in connection with clinical patient billing system called EPIC).

         Drinker Biddle attorney Rosenbaum represented DMH and IHS on matters related to employee benefits and executive compensation. In his capacity as attorney for DMH and IHS, Rosenbaum attended the meetings of the Plan Administration Committee (sometimes called the PAC). The Plan Administration Committee worked with and monitored employee benefit plans for IHS, DMH, and related companies. Transcript, at 103. As CFO, Naqvi was a member of The Plan Administration Committee. Transcript, at 9, 105. In addition, Naqvi also contacted Rosenbaum for legal advice from time to time on issues related to DMH and IHS employee benefits plans. Transcript, at 45.

         Naqvi alleges in his complaint that he expressed concerns to individuals within MDH and IHS management that the investments in Zevacor violated the Institutional Funds Act. Naqvi testified that he was concerned about both corporate liability and his personal liability under the Institutional Funds Act. Naqvi testified that he began seeking personal representation to protect himself from personal liability.

         On July 21, 2015, Naqvi sent an email to an attorney named Neville M. Bilimoria of the law firm of Duane Morris LLP. Plaintiff's Exhibit 5, Email thread between Naqvi and Bilimoria dated July 21-22, 2015 (Bilimoria Email Thread).[3] Bilimoria previously represented another IHS corporate committee called the Special Committee. The Special Committee was conducting a special investigation of Naqvi's reports of improper conduct within MDH and IHS, including violations of the Institutional Funds Act. Transcript, at 10; see Amended Complaint, Count I ¶ 27, and Count II ¶ 29. Naqvi testified that MDH and IHS designated him as a “whistleblower” because he reported this information. Transcript, at 19. Naqvi testified that he decided to ask Bilimoria to review his employment contract. Naqvi asked Bilimoria because he knew him from his representation of the Special Committee, and because Duane Morris was no longer involved in the special investigation. Transcript, at 13-14, 86.

         Naqvi sent the email to Bilimoria on Naqvi's personal email account Naqvi stated the following in the email:

Neville- If I ask you the following question: would you be able to represent me if I need help in reviewing my employment contract or ensuring I am protected - are you obligated to inform your client (Special Committee of IHS) that this questions ...

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