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ISSUES AND TECHNIQUES IN EARLY CASE PREPARATION:

DEFENSE PERSPECTIVE

October 6, 2010Donald Patrick Eckler

Pretzel & Stouffer Chtd.

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A. General Principles

In pre-suit investigation it is imperative that the communications stay confidential or else they are subject to disclosure. After incidents potential defendants often conduct investigations that are required to be disclosed because they were conducted without the cloak of privilege.

Illinois courts narrowly construe the assertions of

attorney-client privilege and the work-product doctrine. Archer Daniels Midland Company v. Koppers Company, Inc., 138 Ill.App.3d 276, 278 (1st Dist. 1985).

Issues of Privilege in Pre-Suit Investigation

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To be entitled to the protection of the attorney-client privilege, a claimant must show that the statement originated in confidence that it would not be disclosed, was made to an attorney acting in his legal capacity for the purpose of securing legal advice or services, and remained confidential. Rounds v. Jackson Park Hosp., 319 Ill.App.3d 280, 285-86 (1st Dist. 2001).

Not every disclosure from client to attorney is entitled to protection from discovery. The attorney-client privilege protects only those disclosures necessary to obtain informed legal advice which might not have been made absent the privilege. Cangelosi v. Capasso, 366 Ill.App.3d 225, 228-29 (2nd Dist. 2006).

B. General Principles of Attorney-client privilege under Illinois law

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With respect to corporate entities, Illinois employs a version of the control group test. Consolidation Coal Company v. Bucyrus-Erie Company, 89 Ill.2d 103, 118-19 (1982). Under the Illinois formulation of the control group test, the following analysis applies:

As a practical matter, the only communications that are ordinarily held privileged under this test are those made by top management who have the ability to make a final decision rather than those made by employees whose positions are merely advisory. We believe that an employee whose advisory role to top management in a particular area is such that a decision would not normally be made without his advice or opinion, and whose opinion in fact forms the basis of any final decision by those with actual authority, is properly within the control group. However, the individuals upon whom he may rely for supplying information are not members of the control group.

C. Attorney-client privilege in corporate context

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The control group test adopted by the Illinois courts stands in stark contrast to the United States Supreme Court’s ruling in Upjohn Co. v. United States, 449 U.S. 383 (1981).

In Upjohn, the United States Supreme Court rejected the control group test holding that the test “frustrates the very purpose of the privilege by discouraging communication of relevant information.” Id. at 392.

Specifically, the Court concluded that the privilege can extend to any employee who communicates with counsel at the direction of her superiors, regarding matters within the scope of her duties. Id. at 394.

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The Illinois Supreme Court has refused to follow Upjohn and continues to adhere to the more limited control group test because it believes that the control group test “strike[s] a reasonable balance by protecting consultations with counsel by those who are the decision makers or those who substantially influence corporate decisions and by minimizing the amount of relevant factual material which is immune from discovery.” Consolidation Coal, 89 Ill.2d at 118-119.

The Illinois Supreme Court’s emphasis on the disclosure of relevant information was paramount to its decision, while the United States Supreme Court’s ruling rested on its desire for communication. This difference in approach is telling and instructive for the analysis to follow.

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The threshold consideration is to determine whether an individual is a member of the control group.

Under Consolidation Coal, a person is deemed within the control group if: (1) the agent served as an advisor to top management of the corporate client; (2) this advisory role was such that the corporate principal would not normally have made a decision without the agent's advice; and (3) the agent's opinion or advice in fact formed the basis of the final decision made by those with actual authority within the corporate principal. Archer Daniels Midland Company, 138 Ill.App.3d at 279-280.

D. Members of the control group

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In addition, merely because an employee supplies information or facts to top management, that does not place that individual in the control group. Id. The rule under Illinois law is such that with respect to some issues an individual may be a member of the control group, but with respect to others that same individual may not be in the control group.

In order to determine who is and who is not a member of the control group Illinois courts have looked at the role the individual played in the organization and not that individual’s title. In Knief v. Sotos, 181 Ill.App.3d 959, 964 (2nd Dist. 1989) the court held that a head waitress and a bar manager were not in the control group with respect to litigation decisions, and therefore, those individuals’ communications with counsel representing the restaurant/bar were not protected from disclosure.

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In order meet the burden of establishing that an individual is in the control group the proponent of the privilege must supply facts to establish the basis for the assertion. In Midwesco-Paschen Joint Venture for Viking Projects v. Imo Industries, 265 Ill.App.3d 654 (1st Dist. 1994), the court considered the claim that a field service manager in charge of an allegedly defective product sold to plaintiff was in the control group.

The court found that the manager was a member of the control group based on testimony which established that the manager had direct managerial responsibility over the subject product, and that advice from that manager was obtained with respect to liability for the subject product. Midwesco-Paschen, 265 Ill.App. at 663; see also, Mlynarski, 213 Ill.App.3d at 431-432.

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The work product doctrine protects “material prepared by or for a party in preparation for trial” that contains “theories, mental impressions, or litigation plans of the party's attorney.” See, Ill. Sup. Ct. Rule 201(b)(2).

Materials are protected if they are prepared for any litigation or trial as long as they were prepared by or for a party to the subsequent litigation. Fischel & Kahn, Ltd v. van Straaten Gallery, Inc., 189 Ill.2d 579, 591 (2000).

E. Work product doctrine under Illinois law

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What constitutes “work product” under Illinois Rules is narrower than what is protected from discovery in the federal system. Milynarski v. Rush-Presbyterian St. Lukes Med. Center, 213 Ill.App.3d 427, 432 (1st Dist. 1991).

Illinois only protects “opinion work product,” i.e., matter which discloses the theories, mental impressions or litigation plans of a party’s attorney. Id. Examples of documents prepared “in preparation for trial” include:

Memoranda made by counsel of his impression of a prospective witness, as distinguished from verbatim statements of such witness, trial briefs, documents revealing a particular marshaling of the evidentiary facts for presentment at the trial, and similar documents which reveal the attorney's ‘mental processes' in shaping his theory of his client's cause. Monier v. Chamberlain, 35 Ill.2d 351, 359-60 (1966).

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Investigations conducted by insurers may be protected from disclosure. People v. Ryan, 30 Ill.2d 456 (1964).

Restrictions on insurer-insured privilege exist to limit the privilege to a communication where the duty to defend has arisen.

F. Insurer-insured privilege

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In view of the narrow construction of privileges under Illinois law, investigations must be undertaken carefully and should be done with counsel involved.

If counsel is not involved either in the conduct of the investigation or in the drafting of any report, it may be subject to disclosure and even if counsel is involved, depending on who counsel spoke to, it may be subject to disclosure.

G. Manner to Proceed in Conducting Investigations

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A. Can the case be transferred to another court?

1. Is there diversity?

Corporate defendants have two places of residence 1) where their principle place of business is and 2) where they were incorporated

Under the recent United States Supreme Court decision of Hertz v. Friend, 559 U.S. _____ (2010), the court’s now apply the “nerve center” test.

II. Investigation upon receipt of suit

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Confirm the place of the defendant’s place of incorporation by using Secretary of States’ websites

Issue a request to admit to the plaintiff to confirm amount in controversy

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In order to establish venue the plaintiff must show one of the factors under 735 ILCS 5/2-104

Check where each defendant was served

Check where any corporate defendant has a registered agent. You should advise clients not to have their registered agent in counties in which they do not want to litigate.

Analyze where the corporate defendants “do business”

2. Is venue proper?

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The Supreme Court in The Baltimore & Ohio Railroad Company v. Mosele, 67 Ill.2d 321, 329-330 (1977) has held that in order to lay venue based on doing business it must be established that:

quantitatively more business activity within the county must be demonstrated than where the defendant gas transacted business within the State of purposes of service of process. The defendant must, in short, be conducting its usual and customary business within the county within which venue is sought. In the words of one Federal court faced with a similar problem of construction ‘the activity must be of such a nature so as to localize the business and make it an operation within the district.’ (emphasis added)

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Only sales establishes “doing business.” soliciting business in a county does not establish doing business in that county for purposes of venue. Gardner v. International Harvester Company, 113 Ill.2d 535, 541 (1986).

Further, the purchase of materials from suppliers in a county does not establish venue in that county because those purchases are merely incidental to the business activities. Id.

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Contact witnesses indicated on the police report to determine where they reside and whether it would be convenient for them to travel to the place where the trial is to occur. Get an affidavit of these individuals.

It is important to be mindful of Rule 4.3:

In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.

3. Is forum proper?

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Issue discovery to the plaintiff, including interrogatories, requests for production, and requests to admit. See Supreme Court Rule 187.

Look at the Annual Report of the Administrative Office of the Illinois Courts to determine if the forum you want to move the case to is moving cases along faster than the forum you want to move the case from.

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1. Freedom of Information Act requests

Allows you to seek documents without the other side not knowing what you are looking for or why

B. Techniques to Investigate Outside of Formal Discovery

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2. Obtain information about the plaintiff’s 2- 622 expert

Conduct an IDEX and Jury Verdict search for the expert

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3. Speak with witnesses

4. Obtain police reports

5. Obtain a jury verdict report on similar cases to assist in reserve setting

6. Begin the process of finding experts that may be of assistance by performing a jury verdict search or looking online