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Urban 8 Fox Lake Corp. v. Nationwide Affordable Housing Fund 4, LLC

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

November 13, 2019



          Jeffrey Cole Magistrate Judge

         On October 22, 2019, Judge Rowland referred to me [Dkt. # 116] the defendants' contested motion for a protective order. [Dkt. #76]. The motion has a somewhat checkered history, much like this case. See, e g., [Dkt. #106]. It was filed nearly eight months ago and was fully briefed as of April 5, 2019. Shortly thereafter, Judge Durkin - presumably at the parties' request - stayed all discovery pending his resolution of the cross-motions for partial summary judgment. [Dkt. #87]. The defendants' motion apparently came under the umbrella of that stay, as it was, in essence, a discovery motion.

         The parties had fully briefed their cross motions for summary judgment by February 25, 2019 [Dkt. #75], and Judge Durkin held lengthy oral arguments. [Dkt. ## 87;106, at 7]. The issue that formed the basis for the motions was, as the parties told Judge Durkin, the sale preparation fee, which was the key issue in the case. [Dkt. # 106, at 6-7, 8]. Judge Durkin “put a significant amount of time into understanding the complexities of this deal and understanding the contract . . . .” [Dkt. #106, at 8-9]. He had, however, held off on issuing a written decision because the parties were attempting to settle. [Dkt. #106, at 8-9]. But, he did indicate to the parties that he was going to rule in the plaintiff's favor - more on that later. [Dkt. #106, at 7]. As the parties' settlement efforts failed, as of the end of May, Judge Durkin told the parties a written ruling would be coming. [Dkt. #106, at 8-9].

         But, it was not to be. On August 22, 2019, the case was reassigned to Judge Rowland under the court's automatic reassignment system. [Dkt. #109]. In their Initial Joint Status Report to Judge Rowland, the parties forthrightly conceded that on May 10th, Judge Durkin had told “the parties of his ruling in Plaintiffs' favor on the cross-motions for summary judgment and that he would be issuing a written ruling in Plaintiffs' favor on the cross-motions for summary judgment, . . . .” [Dkt. # 114, at 4]. Indeed, in the interest of judicial efficiency, barely a week after the case was sent to Judge Rowland, plaintiff's counsel wrote to the Executive Committee asking that the case remain with Judge Durkin. [Dkt. # 110]. Defendants' counsel wrote to the Executive Committee as well, quoting an email exchange with plaintiffs' counsel in which defendants' counsel suggested that this type of thing is not uncommon, and there were likely a number of cases reassigned to Judge Rowland in which “a particular judge has made a significant time investment . . . .” [Dkt. # 111]. Of course, that's not the same as a case where a judge has told the parties how he would be ruling on summary judgment and was working on the Opinion. But as defendants were the losers-to-be, their take is not surprising. In any event, that was two months ago, and the Executive Committee has not responded to either side. [Dkt. # 114].


         This prologue is by way of explaining why, for a nearly eight-month-old motion, some things that might ordinarily be preliminary housekeeping matters are necessary. Given all that was transpiring, understandably, no one apparently had found it necessary to resolve the defendants' motion until now. First, the defendants state that they “seek a protective order in the form of Exhibit 1 to the Declaration of Marc A. Al, filed herewith, . . . .” [Dkt. #76, at 4]. That document conforms to Local Rule 26.2's Model Form in terms of delineating the category of “confidential information, ” [Exhibit 1, Par. 2], but there is no delineation of what a party may designate as “attorney's eyes only, ” and that is the main sticking point here. Seventh Circuit case law simply does not allow for an open-ended “attorney's eye only” category, the scope of which is to be decided on the whim of counsel. See, e.g., Citizens First Nat. Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 945 (7th Cir. 1999). See also Prater v. Weber Trucking Co., Inc., 2019 WL 2106644, at *2 (S.D. Ind. 2019)(“Discrete closed categories of information must be explicitly delineated to satisfy the Seventh Circuit's requirements for protective orders. (Collecting cases)”).

         Thus, as drafted, the defendants' proposed Order cannot be entered, and their motion is denied. The parties may attempt to hammer out a suitable version, or defendants may go back to the drawing board and provide a category limiting what “attorney's eyes only” documents can be. In so doing, the defendant should, of course, be prepared to support the delineation with relevant case law, as they will be back here being opposed by plaintiff. Arguments unsupported by applicable case law are deemed waived. Blow v. Bijora, 855 F.3d 793, 805 (7th Cir. 2017); Massuda v. Panda Exp., Inc., 759 F.3d 779, 783-784 (7th Cir. 2014). It should be noted that in the only case from this district the defendant has cited upholding an “attorney's eyes only” designation for financial records, the parties were direct competitors in the synthetic turf industry. See Fieldturf Int'l, Inc., Fieldturf, Inc. v. Triexe Mangement Grp., Inc., 2004 WL 866494, at *3 (N.D. Ill. Apr. 16, 2004). They were not, as the defendants tell us here, “parties to partnership agreements.” [Dkt. #76, at 1]. They were not, as the defendant hedges later, “adverse parties in numerous investments” [Dkt. #75, at 5], whatever that means. It is an assertion the defendants neither explain nor try to support.

         Once that is done, in compliance with applicable law, and only then, the issue may become what documents defendants propose to designate as “confidential” or “attorneys' eyes only.” In this regard, plaintiff is mistaken that, categorically, there can be no documents ever designated as “attorney's eyes only” in this case. We just don't know that. Now, the parties are merely arguing in the abstract about nebulous categories of financial information [Dkt. # 76, at 4-5; 83, at 3-5], so no ruling can possibly be made as yet. Nor should one be attempted.

         Additionally, Local Rule 37.2 applies to disputes over document designations, and Paragraph 9 of the Model Order will have to be a part of the eventual Protective Order, and the parties will have to adhere to it and follow Local Rule 37.2 in good faith. The requirement is not without significant meaning, although that meaning is often diluted as attorneys tend to pay it no more than lip service. But to do so constitutes a significant omission and one that will not be overlooked. Indeed, that kind of omission is contrary to the very purpose of the discovery rules, which envision a high degree of attorney cooperation resulting in hopefully a minimum of necessary judicial involvement. See, generally, Motorola Sols., Inc. v. Hytera Commc'ns Corp., 365 F.Supp.3d 916, 921 (N.D. Ill. 2019)(“While they ‘conferred telephonically, all this consisted of was [plaintiff] asking [defendant] if it still opposed forensic inspection and [defendant] saying it did.”); Chicago Reg'l Council of Carpenters Pension Fund v. Celtic Floor Covering, Inc., 316 F.Supp.3d 1044, 1046 (N.D. Ill. 2018)(“An ultimatum on one side, met with steadfast defiance on the other, is not a good faith discussion.”); Gunn v. Stevens Sec. & Training Servs., Inc., 2018 WL 1737518, at *3 (N.D. Ill. 2018)(“A party that steadfastly maintains a position without support is not engaging in a good faith discussion.”); Infowhyse GmbH v. Fleetwood Grp., 2016 WL 4063168, at *1 (N.D. Ill. 2016)(“A single phone call in three months regarding a dispute that has engendered nearly 500 pages of briefs and exhibits doesn't come close to sufficing.”).


         Second, defendants want to “clawback” two documents which they indicate are “Exhibits 3A and 4A to the Declaration of Marc A. Al (AMTX-Urban 0000206-0000209 and AMTX-Urban 0001495=0001499).” According to defendants, they want to clawback, or redact, “comments made by Ms. Holtz, an employee and Vice President-Asset Manager of Wentwood Capital Advisor's in-house counsel, Brian Brandstetter . . . .” Defendants argue that “Ms. Holtz's thoughts . . . are attorney-client privileged when addressed to Mr. Brandstetter as part of a dialogue about Plaintiff's position . . . .” [Dkt. # 76]. The document defendants have provided as Exhibit 3A - the one inadvertently produced - is four pages, the text of which is nearly completely redacted. As to the page or so without redactions, it is an email from Plaintiff's President, Andrew Delman, to Ms. Holtz. According to defendants, Ms. Holtz added comments to Mr. Delman's email, and sent it along to in-house counsel. Those comments were inadvertently not redacted. After review of the email and inserted comments, without more from defendants and due to the wholesale redactions regarding the context of the annotated email, these comments might as easily have been made for business purposes as to gain legal advice. The former is not privileged. See Rehling v. City of Chicago, 207 F.3d 1009, 1019 (7th Cir. 2000)(“. . . attorney-client privilege is limited to situations in which the attorney is acting as a legal advisor . . . .”). Indeed, Mr. Brandstetter tells us that, in this context, he was determining “the financial implications of various scenarios.” [Dkt. # 77, ¶ 6].

         Moreover, comments like “such a nice guy to decide to follow the documents now” or “his way of saying, “ha ha! Look at what all of your diligence gets ya this time” cannot seriously be argued as necessary to the provision of any legal advice. See United States v. Bey, 772 F.3d 1099, 1101 (7th Cir. 2014)(“Confidential communications between a client and her lawyer for the purpose of receiving legal advice are protected by the attorney-client privilege. (emphasis added)”). Communication must be for the purpose of obtaining legal advice. Sandra T.E. v. S. Berwyn Sch. Dist. 100, 600 F.3d 612, 618 (7th Cir. 2010). Defendants' claims of privilege here are clearly an overreach. Indeed, inappropriate privilege claims are, unfortunately, commonplace in modern litigation, and are often indiscriminately and improperly used “on documents that do not truly qualify for protection.” Towne Place Condo. Ass'n v. Philadelphia Indem. Ins. Co., 284 F.Supp.3d 889 (N.D. Ill. 2018). See also Dietz & Watson, Inc. v. Liberty Mut. Ins. Co., 2015 WL 2069280, at *6 (E.D. Pa. 2015); Falin v. Condo. Ass'n of La Mer Estates, Inc., 2012 WL 760831, at *1 (S.D. Fla. 2012); Employer's Reinsurance Corp. v. Clarendon Nat. Ins. Co., 213 F.R.D. 422, 430 (D. Kan. 2003).

         Exhibit 4A appears to be Ms. Holtz's comments annotating an email from Jeffrey Wagner - plaintiff's counsel - to Mr. Brandstetter. But, based on the exhibit defendants have provided, Ms. Holtz's comments were sent to Mr. Wagner. So these could not have been intended as either confidential or to obtain legal advice from Mr. Brandstetter. Whatever opening comments might have been made by Ms. Holtz were redacted in what defendant identifies in the inadvertently produced version. Accordingly, defendant's motion for a clawback of these documents is denied. Defendants' motion to strike a portion of plaintiff's motion for summary judgment involving these two documents - the motion Judge Durkin apparently decided a ...

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