Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Selby v. O'Dea
Citation: 2017 IL App (1st) 151572Docket: 1-15-1572
Court: Appellate Court of Illinois; February 4, 2018; Illinois; State Appellate Court
Original Court Document: View Document
In Selby v. O’Dea, the Illinois Appellate Court addressed whether two co-defendants in a lawsuit waived attorney-client and work-product privileges when they shared information under a 'joint defense agreement.' The court noted that while federal and various state courts recognize a common-interest exception to the waiver rule, Illinois had not previously published a decision on this matter. After evaluating relevant Illinois Supreme Court decisions and case law from other jurisdictions, the court established that co-parties can share information in pursuit of a common interest without waiving their privileges. Although the trial court acknowledged this exception, the appellate court remanded the case for an in camera review of specific communications to determine if any privileged information had been improperly disclosed. The appellate court vacated previous rulings by the trial court, including the dismissal of one count and summary judgment on two others, pending the outcome of this review. Between 2006 and 2009, State Farm Mutual Auto Insurance Company, represented by attorney James M. O’Dea, initiated multiple subrogation lawsuits against individuals including Frank Selby, Martin Young, Adriana Lopez, and Katherine Scheiwe (now Polk). In October 2010, these individuals filed a class-action lawsuit alleging that their cases were part of a scheme to obtain fraudulent default judgments by circumventing Illinois service of process rules. They claimed O’Dea used unlicensed process servers and bypassed the sheriff’s office, resulting in void judgments that led to suspended drivers' licenses and required efforts to vacate those judgments. The plaintiffs further alleged that State Farm financed this scheme by paying O'Dea for non-existent sheriff's fees, allowing him to keep the money. The plaintiffs brought claims against State Farm for abuse of process, civil conspiracy, and malicious prosecution. The trial court dismissed the abuse-of-process claims for lack of merit and granted summary judgment on the civil conspiracy and malicious prosecution claims, leaving the case against O’Dea ongoing. The current appeal involves multiple circuit court orders, including the dismissal of the abuse-of-process claim, summary judgment on the other claims, and a dispute over the application of the "joint legal defense privilege" and various discovery issues. The plaintiffs contend that the trial court's discovery rulings hindered their ability to adequately respond to the summary judgment motion, claiming errors in recognizing the joint legal defense privilege and in managing discovery requests, which were limited to the named plaintiffs rather than the broader class of subrogation defendants. The appellate review will address these issues, starting with the recognition of the joint legal defense privilege in Illinois. Plaintiffs submitted an interrogatory to State Farm regarding whether it informed O’Dea of any irregularities in handling subrogation matters from January 1, 2006, to the present. State Farm asserted several privileges, including the 'joint defense privilege,' to protect communications between itself and O’Dea after the lawsuit was filed in October 2010. It acknowledged that privileged discussions had occurred concerning the plaintiffs' allegations. The circuit court recognized the 'joint legal defense privilege' in Illinois, despite it not being previously acknowledged by Illinois reviewing courts, and noted its recognition in federal court and other jurisdictions. The court concluded that the information sought by plaintiffs regarding post-complaint communications was privileged and thus not discoverable. On appeal, State Farm claimed that the 'joint defense' doctrine is recognized in Illinois as the common-interest doctrine, referencing the Illinois Supreme Court case Waste Management, Inc. v. International Surplus Lines Insurance Co. Plaintiffs contended that the Waste Management doctrine differs from the privilege State Farm sought. The appellate court acknowledged that while the two doctrines share principles, they are distinct. The Waste Management case explained that under the common-interest doctrine, communications between parties with a common interest and their shared attorney are not necessarily protected in future disputes between those parties, particularly when an insured and insurer share a common interest in defending against a lawsuit but may later contend over coverage issues. The Waste Management doctrine has been expanded to encompass scenarios where an insured hires counsel to defend against a tort lawsuit without the insurer's involvement or communication. In subsequent declaratory-judgment actions regarding coverage, the insurer can access communications between the insured and their attorney related to the underlying tort case. This doctrine is rooted in the common-interest principle, which allows for the sharing of information between parties with aligned interests, even if they are represented by different attorneys. In Illinois, while the doctrine is typically applied in insurer-insured contexts, it is not explicitly limited to that relationship. Insurers and insured parties share a common goal of defeating tort lawsuits, but they may have differing perspectives on coverage obligations. Consequently, communications about the underlying lawsuit can be discovered by either party in coverage disputes, but discussions regarding insurance coverage remain protected under attorney-client privilege due to opposing interests. State Farm argues that this common-interest doctrine supports its claim for a joint defense privilege with co-defendant O’Dea, asserting that their mutual discussions about defending against a class-action lawsuit should be considered privileged communications. Plaintiffs correctly assert that State Farm's remedy, while related to the Waste Management common-interest doctrine, operates under different circumstances and leads to distinct outcomes. The Waste Management doctrine undermines claims of privilege when one party to a common interest asserts it against another party after becoming adversarial, intending to defeat claims of privilege rather than protect them. In contrast, State Farm seeks to assert attorney-client or work-product privilege, aiming to prevent waiver that would typically occur if it disclosed information to its co-defendant or their counsel during joint conferences. Under Illinois law, sharing privileged information with a third party results in waiver of those privileges. State Farm’s concept of a "joint defense privilege" addresses the ability of parties with a common interest to shield their communications from third parties, including opposing parties in litigation. However, State Farm cannot rely solely on the Waste Management doctrine for relief, as the trial court determined it was inapplicable. Instead, the court acknowledged the need to recognize a "joint legal defense" doctrine, leading to further deliberation on whether such a doctrine should be established as a matter of first impression. Generally, clients risk waiving their attorney-client and work-product privileges when discussing strategies with co-defendants, highlighting the necessity for legal protection in these joint meetings. Lawyers and parties on the same side of a legal matter can share information and work product without waiving attorney-client privilege concerning third parties, as articulated in the Restatement (Third) of the Law Governing Lawyers, section 76, paragraph 1. This privilege applies when clients with a common interest, represented by separate lawyers, agree to exchange communications related to their shared matter. State Farm contends that its joint defense agreement with O’Dea qualifies under this doctrine, asserting that their communications are privileged against third parties, including plaintiffs, due to their common interest in defending a class-action lawsuit. The concept of joint defense privilege was first recognized in 1871 by the Virginia Supreme Court in criminal cases and has since been acknowledged by various courts in civil contexts, affirming that shared communications between co-defendants and their counsel retain privileged status, as demonstrated in cases like Schmitt v. Emery and State v. Emmanuel. Historical references indicate a consistent application of this doctrine, allowing for the pooling of information without waiving attorney-client privilege. Courts have broadened the application of the common-interest doctrine to safeguard the free flow of information between multiple clients sharing a common legal interest. This expansion includes civil codefendants, companies and employees before grand juries, potential coparties in litigation, coplaintiffs, governmental coplaintiffs in multi-state litigation, plaintiffs in separate state actions, and civil defendants in separate lawsuits. The doctrine is recognized under various terms and is often referred to as an exception to the waiver of existing privileges, specifically the attorney-client and work-product privileges, rather than as a privilege itself. It allows for the communication of privileged information between parties with a shared interest without waiving those privileges. Courts, including federal courts in Illinois, affirm this doctrine, allowing attorneys to share privileged communications to prepare a unified defense against a common adversary. Many states have acknowledged that parties with a shared interest in opposing a litigation adversary can exchange privileged information without waiving that privilege for third parties. The New Jersey Supreme Court formally adopted the common interest rule in 2013, joining other states such as South Carolina, Pennsylvania, Texas, and Massachusetts in recognizing this doctrine over the past decade. New York has upheld this exception since 1989, applicable in both civil and criminal contexts, while Tennessee's Supreme Court acknowledged it in 1950, with lower courts affirming its relevance in subsequent cases. Additionally, state appellate courts in Maryland, Arizona, Indiana, and Florida have also recognized the common interest exception, confirming that parties sharing interests in litigation can share privileged information without losing their privilege. No jurisdiction has outright rejected this principle, although some states, like Illinois, have not issued published decisions on the matter, likely due to the rarity of discovery issues reaching appellate review. While courts agree on the existence of the common interest exception, there are disagreements concerning its scope, including the degree of alignment required between parties, its application to anticipated litigation, and the types of communications it protects. Nevertheless, no court has denied the ability of parties with a common interest to collaborate without the risk of waiving privilege. Moreover, it is noteworthy that the U.S. Supreme Court, in its 1972 recommendations for the Federal Rules of Evidence, included the common interest exception in its proposed language for attorney-client privilege, indicating its recognition as a significant legal principle. Congress decided against adopting a specific common-interest exception to the waiver rule, maintaining the general framework of Federal Rule of Evidence 501. This decision suggests that while the Supreme Court was open to codifying such an exception, it ultimately favored broader regulatory principles. The Uniform Law Commission subsequently drafted Uniform Rules of Evidence, specifically section 502(b)(3), which safeguards attorney-client communications exchanged among parties with a common interest in pending litigation. Several states have enacted similar provisions into law. The discussion emphasizes the necessity for Illinois to recognize the common-interest exception. Such recognition would enhance legal representation by facilitating open communication among parties sharing a common interest, thereby improving decision-making and strategic coordination. Without this protection, the risk of mandatory disclosure could hinder the free exchange of privileged information, negatively impacting legal strategy preparation. Additionally, fostering cooperation among defendants not only serves their individual interests but also streamlines trial processes and reduces redundancy in trial presentations and discovery efforts. The attorney-client privilege in Illinois encompasses communications made by clients to essential agents of the attorney, including certain nontestifying experts and investigators, as established in cases like *People v. Knuckles* and *People v. Knippenberg*. This privilege is rooted in the necessity for lawyers to conduct thorough investigations of their clients' cases. Furthermore, it is suggested that confidential communications between a client and a co-party’s attorney should similarly receive protection due to the analogous rationale behind the common-interest exception to waiver, which aims to facilitate open communication between clients and their legal representatives. Anecdotal evidence indicates that some Illinois practitioners and judges believe that "common-interest agreements" and "joint defense agreements" are recognized and enforceable under state law, as demonstrated in cases such as *BorgWarner, Inc. v. Kuhlman Electric Corp.* and *Brandon Apparel Group v. Kirkland, Ellis*. Additionally, federal district courts in Illinois, when addressing state-law claims, have asserted that Illinois acknowledges the same common-interest exception as that found in federal law. However, the conclusion drawn in *Grochocinski v. Mayer Brown Rowe, Maw LLP* suggesting uniformity between Illinois and federal law on this doctrine is challenged. The *Grochocinski* court did not cite relevant Illinois case law but relied on federal precedents, leading to a misinterpretation of the common-interest exception as discussed in *Dexia Credit Local v. Rogan*, which conflated different legal principles. Co-plaintiffs are deemed to fall under the common interest doctrine, meaning that sharing documents between them does not waive attorney-client privilege. Although federal decisions on this issue may be contested, it appears that Illinois courts have adopted a common-interest exception to the waiver doctrine. Legal practitioners in Illinois reference this common-interest rule, also known as the joint-defense or common-defense doctrine, in their materials, notably citing federal case law. However, the court is not bound by practitioner opinions or federal interpretations of Illinois law. While many believe that Illinois has implicitly recognized this exception, there are compelling reasons against its acknowledgment. Illinois law generally favors disclosure, with privileges seen as exceptions to the rule, leading to a narrow interpretation of such privileges. The attorney-client privilege itself limits the discovery of relevant facts, and extending it could further obstruct the truth-seeking function of the legal system. Critics argue that while the common-interest exception facilitates information sharing among co-litigants, it simultaneously reduces the information available to the court, potentially undermining the legal process. Ultimately, after considering the prevailing authority and reasoning, the conclusion is that Illinois should recognize the common-interest exception to the waiver rule. Recognition of the common-interest exception to the waiver rule is justified as a logical extension of the Waste Management common-interest doctrine, which acknowledges the special relationship between parties sharing a common interest in a matter's outcome. This doctrine encompasses both parties and their legal counsel under the umbrella of attorney-client privilege, preventing one party from asserting privilege against the other. The common-interest exception similarly expands this privilege to include communications between parties with a shared interest and their lawyers, distinguishing it by the requirement that each party has separate counsel and that disputes over disclosure arise with third parties, not among coparties. The rationale for broadening the privilege to protect coparty communications from third-party intrusion aligns with Illinois Supreme Court decisions that extend attorney-client privilege to communications with nontestifying mental-health experts and investigators. This principle aims to facilitate comprehensive case preparation by allowing clients to collaborate with coparties and their lawyers. No courts have rejected the recognition of the common-interest exception, and several states have established it by statute. The U.S. Supreme Court has also suggested its inclusion in the Federal Rules of Evidence. Additionally, many legal practitioners and judges are unaware that Illinois has not yet recognized this exception. The argument against allowing coparties to strategize, based on concerns over withholding evidence from the justice system, is countered by the assertion that the extent of privileged information would not exceed what is already protected under existing attorney-client and work-product privileges. The case in question involves allegations of conspiracy between State Farm and O’Dea against plaintiffs. State Farm's communication of tortious conduct to its lawyers would be protected under attorney-client privilege, preventing disclosure of those communications. However, the underlying tortious conduct remains discoverable through standard legal procedures such as interrogatories, document requests, and depositions. The privilege protects communications but not the facts discussed. Therefore, if State Farm and O’Dea engaged in actions indicative of a tort, those actions would be discoverable, but their discussions with counsel would not. The common-interest exception to the waiver rule allows for joint communication between clients and lawyers on shared topics, maintaining that the underlying facts remain discoverable. Concerns that this exception would lead to excessive withholding of information are deemed unfounded. Recognizing the common-interest exception aligns with the recognition of attorney-client privilege itself. The trial court correctly recognized this exception in Illinois law, although its scope remains debated. Questions about whether the exception applies to potential litigation, other interests, or requires a written agreement are acknowledged but not definitively resolved in this context. The case involves an actual lawsuit, with the exception being asserted regarding post-lawsuit communications after a confidentiality agreement was executed. A key unresolved question is the extent to which co-parties must share a common interest. Determining the scope of the common-interest exception to the waiver rule involves understanding whether parties sharing a "common interest" must be fully aligned on all issues or merely need to have some shared interest in opposing a litigation adversary. The Waste Management common-interest doctrine clarifies that parties can share a common interest on one matter (such as defending against a lawsuit) while having divergent views on other matters (like insurance coverage). Courts have established that communications about the common interest are protected, while discussions concerning divergent interests, such as insurance coverage, are not included under this doctrine. Case law supports that parties need not have entirely compatible positions to invoke the common-interest exception. For example, the Seventh Circuit in McPartlin ruled that differing defenses do not preclude a shared interest in discrediting a witness, thus protecting their joint communications from disclosure. The principle is consistent across various cases, affirming that a current shared interest is sufficient, regardless of potential future disagreements. Therefore, the requirement is for parties to have a common interest in litigation rather than complete alignment on every issue. The legal principles outlined indicate that the alignment of interests between a corporation and its individual officers does not negate the viability of a joint defense in SEC actions, even if future adversities may arise. The common-interest doctrine allows for shared communications among parties pursuing a joint defense as long as those communications further a mutual interest, regardless of any misalignments in their positions. Previous cases highlight that not all interests need to be perfectly aligned for the doctrine to apply; the critical factor is that communications must be relevant to the shared interest. In the specific case involving State Farm and O’Dea, their interests are deemed sufficiently aligned because many liability theories against State Farm are vicarious, hinging on O’Dea's actions. If the plaintiff's case against O’Dea fails, the case against State Farm would similarly fail, creating a strong incentive for both parties to support each other's defense against the class-action lawsuit. While potential future conflicts could arise, such as State Farm blaming O’Dea, the presence of possible future discord does not invalidate their current aligned interests. The common-interest exception to the waiver doctrine permits parties with a shared interest, such as State Farm and O’Dea in a class-action lawsuit, to protect certain communications from waiver of attorney-client privilege, despite the potential for future adversarial positions. Both parties benefit from defeating the plaintiffs’ claims, establishing a mutual interest. The determination of which communications are protected under this exception is necessary, particularly regarding any notifications from State Farm to O’Dea about irregularities post-filing. State Farm claims that such communications, which are oral and involve privileged discussions, are covered by various privileges, including attorney-client and work-product. The Restatement and proposed federal rules support the idea that communications made by a client or their lawyer to another lawyer representing a party with a common interest are privileged. There is consensus that the common-interest exception protects lawyer-to-lawyer communications, meaning disclosures made by one party's lawyer to another, with consent, do not result in a waiver of the attorney-client privilege. This broad understanding of the doctrine includes such exchanges as an essential application of the privilege. The common-interest exception allows for protected communications between attorneys representing different parties, specifically when both parties are represented by their own attorneys, and the communication is made in furtherance of a common-interest agreement. This includes direct communications from one party to the other party's lawyer, as long as these communications serve the common interest. While the common-interest doctrine does not create new privileges, it prevents the waiver of existing attorney-client privileges. Notably, the attorney-client privilege traditionally does not cover communications between a party and the opposing party's lawyer; however, prevailing legal authority supports the protection of such communications under the common-interest exception. This aligns with cases such as Waste Management, which emphasizes that within a common-interest relationship, both clients and attorneys are covered by privilege. Additionally, Illinois law recognizes that communications made to individuals assisting an attorney, such as investigators or consultants, are also protected, suggesting that communications with a co-party's lawyer under a common-interest agreement are similarly protected. Therefore, the consensus is that direct statements from one party to the other party's lawyer, aimed at furthering their shared interests, are protected under the common-interest exception to the waiver rule. Weak justification exists for protecting one party's statements made to another party's lawyer; however, the common-interest exception is supported by allowing information exchange between parties. Communications from a party to its own attorney, witnessed by the co-party's lawyer, fall within the common-interest exception, maintaining privilege if they occur during a joint meeting. This aligns with the legal principle that a party can communicate confidentially with its lawyer, who may share that information with the co-party's lawyer without waiving privilege. The issue of whether direct communications between parties without counsel are protected remains undecided, as it is understood that State Farm's response to interrogatories only pertains to communications involving counsel. Nonetheless, if conversations occur with counsel present, they are generally covered by the common-interest exception, provided legal advice is sought. The prevailing view supports the protection of communications between clients during joint exchanges with their respective counsel present, emphasizing the practicality of such protection in maintaining confidentiality during collaborative discussions. In live joint conferences, whether in-person or via audio/video, communication can become complex as it blurs the lines between who is speaking to whom. Parties often interrupt or elaborate on each other's points, making it challenging to categorize statements as strictly client-to-client or in response to a lawyer’s question. For example, if two parties discuss differing recollections of a past event, their statements could simultaneously be viewed as client-to-client interactions and responses to the lawyer’s inquiry. Outside formal settings like courtrooms or moderated discussions, such interactions are rarely linear. In less formal settings, where attorneys and clients convene to facilitate open communication, protecting direct communications between clients is essential. Courts generally agree that client-to-client communications are safeguarded under the common-interest exception to the waiver rule when such communications are made under a common-interest agreement, in the presence of counsel, and serve the purpose of advancing that common interest. The exception encompasses statements made: 1) from the attorney for one party to the attorney for another party; 2) from one party to the attorney of another party; 3) from one party to its own attorney in the presence of the other party's attorney; and 4) between parties in the presence of respective counsel. The trial court acknowledged this common-interest exception and deemed further proceedings, such as an in camera hearing or a privilege log, unnecessary. The court determined that any communications identified by State Farm in response to an interrogatory may fall under the common-interest exception to the waiver rule. When a discovery request clearly seeks information protected by absolute privilege, compliance with certain procedural rules is unnecessary. However, the interrogatory did not specify attorneys, focusing solely on communications from State Farm to O’Dea, leaving ambiguity regarding the involvement of counsel. Questions remain about the context of these communications, including whether they were made in the presence of lawyers or involved any non-clients. State Farm's counsel indicated that joint conferences included O’Dea, his attorney, State Farm’s outside counsel, and in-house counsel, but the record lacks clarity on the substance of these discussions. Only communications that support the common interest in opposing the lawsuit would be privileged; discussions beyond this scope may not be protected. Furthermore, the status of the in-house counsel as a client or attorney complicates the privilege issue. The court recommended remanding the case to the trial court for an in-camera review of each communication to determine its applicability under the common-interest exception. Federal and Illinois courts have previously conducted similar analyses on a case-by-case basis, emphasizing the need for a detailed examination of the relevant communications. The outcome is contingent upon the nature of the statements, their context, and the participants' status during the discussions. The burden of proving the privileged nature of communications lies with the party claiming the privilege, as established in Cox v. Yellow Cab Co. and Thomas v. State Farm. State Farm has objected to the disclosure of information from joint conferences with O’Dea post-lawsuit but retains the right to assert additional objections alongside its common-interest exception claim. Plaintiffs contend that the trial court erred in granting a protective order that designated certain information as confidential, arguing that State Farm failed to justify the need for secrecy. The protective order allowed for limited use of the information solely for litigation and required confidentiality regarding proprietary and private details, with plaintiffs agreeing to redact Social Security numbers. The court holds that the discretion of a trial court is paramount in determining the parameters of protective orders, as reiterated in Skolnick v. Altheimer and Hall v. Sprint Spectrum L.P. The court found no error in the protective order, noting that it did not affect the plaintiffs' ability to use information in litigation and that plaintiffs had not formally objected to the confidentiality designations. The court concluded that the protective order did not influence the case's outcome and upheld the trial court's ruling. Additionally, plaintiffs argue that the trial court incorrectly limited their discovery by staying all discovery unrelated to named plaintiffs until further notice. The court clarified that a class action cannot proceed against State Farm unless the named plaintiffs have valid claims, as supported by Avery v. State Farm Mutual Automobile Insurance Co. The order did not restrict discovery related to claims of the named plaintiffs but only to potential class claims. The Illinois Supreme Court Rule 201, pertaining to the sequence of discovery, governs these proceedings. Discovery methods in legal proceedings may be utilized in any sequence unless the court orders otherwise for the convenience of parties and witnesses or in the interest of justice. The trial court holds significant discretion in determining the scope of discovery, but it must balance the truth-seeking needs against any excessive burden on litigants. Discovery orders will not be disturbed unless there's an abuse of discretion. Previous cases have shown that trial courts can implement a sequenced approach to discovery without abusing discretion. In the current case, the court found no abuse of discretion in permitting discovery focused first on named plaintiffs to verify their claims against State Farm before extending to potential class members. Several issues remain unresolved, including the plaintiffs' claims about the dismissal of abuse-of-process counts against State Farm and the granting of summary judgment on civil conspiracy and malicious prosecution counts. However, due to ongoing proceedings regarding the common-interest exception to the waiver rule, the court refrains from ruling on these issues at this time. The court vacated both the dismissal of the abuse-of-process claims and the summary judgment for State Farm, emphasizing the potential for new factual information to emerge that could impact these claims. A motion by plaintiffs for judicial notice of previous proceedings was deemed moot. The ruling affirming the common-interest exception to the waiver rule is upheld, and the case is remanded for further proceedings concerning communications that may be protected under this doctrine. The trial court's other discovery rulings are affirmed, while specific claims are vacated and remanded for further examination.