United States District Court, N.D. Illinois, Eastern Division
URBAN 8 FOX LAKE CORPORATION, URBAN 8 ZION CORPORATION, Plaintiffs,
NATIONWIDE AFFORDABLE HOUSING FUND 4, LLC, SCDC, LLC, WENTWOOD CAPITAL ADVISORS, LP, Defendants.
MEMORANDUM OPINION AND ORDER
Jeffrey Cole Magistrate Judge
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
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].
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. #
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)”).
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.
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.
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.”).
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].
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.
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 ...