Schlicksup v. Caterpillar, Inc. et al
OPINION by U.S. Magistrate Judge Byron Cudmore: Defendants' Motion to Quash Plaintiff's Subpoena to Howrey, LLP 64 ALLOWED IN PART. See written order. Original documents reviewed in camera are directed to be filed in hard copy format under SEAL "Courts eyes only" with the Clerk. (LB, ilcd)
Wednesday, 13 July, 2011 09:54:16 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS, PEORIA DIVISION
Daniel J. Schlicksup,
Caterpillar, Inc., et al.,
BYRON G. CUDMORE, U.S. MAGISTRATE JUDGE:
On May 24, 2011, this Court entered an order deferring a ruling on
the pending motions to quash subpoenas and directed Caterpillar to
provide a privilege log and to file documents for an in camera review.
Now before the Court is Caterpillar’s privilege log and documents
relating to the motion to quash the subpoena to Howrey, LLP (“Howrey”),
a law firm which provided legal services to Caterpillar, Inc. (“Caterpillar”)
over the years.1 This order concerns only the Howrey documents. A
separate order will enter regarding the subpoenas to Ernst & Young, LLP,
and to PricewaterhouseCoopers, LLP.
Howrey’s website reports that its partners voted to dissolve the firm on March
15, 2011. www.howrey.com. (last visited 7/11/11).
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Based on a thorough review of the privilege log and documents, the
Court concludes that the Howrey documents are protected by the attorneyclient privilege and, in the alternative, are also protected by the workproduct doctrine, with the exception of a few documents listed below.
The Court assumes familiarity with its May 24, 2011 order. In short,
Plaintiff’s subpoena to Howrey seeks documents prepared by Howrey for
Caterpillar regarding the tape recording of meetings by or at the direction of
Defendant Dave Burritt, allegedly without the knowledge and consent of all
the participants. Howrey moved to quash the subpoena, asserting the
attorney-client privilege and the work-product doctrine. The Court
concluded that it did not have enough information to resolve the motion and
directed Caterpillar to file:
a) a separate, detailed privilege log setting forth the documents
withheld or redacted . . . ; b) the documents identified on each
privilege log for the court’s in camera inspection; and, c) any
engagement letter between Caterpillar, Inc., and Howrey. . . . .
(d/e 93, p. 20). Caterpillar has complied with that directive.2
Caterpillar’s notice of compliance states that there is no engagement letter in
Howrey's files. (d/e 96, p. 1).
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Before turning to the documents submitted by Caterpillar, the Court
notes that Caterpillar has apparently not included documents numbered
1-70. Caterpillar maintains that these were summarized in an original
privilege log provided to Plaintiff last January, but that original log is not
part of the court record. Since neither party has submitted a privilege log
for documents 1-70, the Court does not know if documents 1-70 are
different from the documents before the Court, which are numbered from
71 and up. If documents 1-70 are different than those identified in the
privilege log provided to the Court, Plaintiff may file a motion to compel an
in camera inspection of 1-70, attaching the privilege log he purportedly
received last January.
As for the documents that have been submitted, the Court has
reviewed all of them, many of which are duplicates or drafts of the final
versions. The privilege log provided to the Court, which has also been
provided to Plaintiff, is an accurate description of these documents.
As this Court stated in its prior order, the attorney-client privilege
protects communications made in confidence by a client and a client’s
employees to an attorney, acting as an attorney, for the purpose of
obtaining legal advice. Sandra T.E. v. South Berwyn School Dist. 100,
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600 F.3d 612, 618 (7th Cir. 2010). The analysis is “(1) whether ‘legal advice
of any kind [was sought . . . from a professional legal adviser in his capacity
as such’; and (2) whether the communication was ‘relat[ed] to that purpose’
and ‘made in confidence . . . by the client.’” Id., quoting United States v.
Evans, 113 F.3d 1457, 1461 (7th Cir. 1997). “[T]he attorney-client privilege
protects not only the attorney-client relationship in imminent or ongoing
litigation but also the broader attorney-client relationship outside the
litigation context.” Sandra T.E., 600 F.3d at 620.
From the court’s review, it is clear that the withheld documents were
generated in response to Caterpillar’s request to Howrey for legal advice
regarding two internal complaints filed by Plaintiff: one in 2007 about
alleged illegal recordings of Caterpillar meetings and fears of retaliation by
Caterpillar superiors; and the second in 2008 about retaliation, harassment,
and past improper or illegal conduct by Caterpillar employees.
With regard to the 2007 complaint, Howrey was retained to conduct
an investigation into the allegations about the illegal recordings, to
determine the legal viability of any claims based on those allegations, and
to render legal advice to Caterpillar on its actions going forward. Many
Caterpillar employees were interviewed during the investigation, which
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culminated in a July 30, 2007 report by Howrey to Caterpillar. The report
summarizes the facts found in the investigation, provides legal analysis and
advice on the Illinois eavesdropping statute and possible claims
thereunder, discusses concerns of retaliation and the law governing
retaliation, and gives recommendations to protect against future problems.
In the Court’s opinion, it is plain from these documents and from the factual
context that Howrey was retained to provide legal advice to Caterpillar
regarding Plaintiff’s 2007 complaint.
Plaintiff contends that Howrey was not retained to provide legal
services, but instead to conduct an in-house, routine investigation that
Caterpillar would have conducted itself but for a purported conflict of
interest. However, “factual investigations performed by attorneys as
attorneys fall comfortably within the protection of the attorney-client
privilege.” Sandra T.E., 600 F.3d at 619 (emphasis in original), relying on
Upjohn v. U.S., 449 U.S. 383, 401 (1981). The investigation conducted by
Howrey was performed by attorneys, as attorneys.
In Sandra T.E., facing a civil suit against the school district and
criminal charges against a teacher, the school board retained a law firm to
conduct an internal investigation into the school administrators’ response to
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allegations of a teacher’s sexual abuse of students, in order to “examine
whether any district employees had failed to comply with district policies or
federal or state law, and [to] analyze the effectiveness of the District’s
existing compliance procedures.” Id. at 616. The Seventh Circuit
concluded that the law firm had been hired to provide legal services,
which encompassed the factual investigation necessary to provide those
services. Id. at 620; see also Lerman v. Turner, 2011 WL 62124 *6
(N.D. Ill., Magistrate Judge Soat Brown )(not reported in F.Supp.2d)(report
summarizing attorney’s investigation into allegations that employee had
misused grant money, and interviews garnered in that investigation, were
protected by attorney-client privilege). The Court held that “[b]ecause the
Sidley lawyers were hired in their capacity as lawyers to provide legal
services—including a factual investigation—the attorney-client privilege
applies to the communications made and documents generated during that
investigation.” 600 F.3d at 620. The Seventh Circuit relied on Upjohn Co.
v. U.S., 449 U.S. 383 (1981), in which the Supreme Court held that the
attorney-client privilege protected documents generated during an
investigation conducted by in-house and outside counsel into reports that
foreign subsidiaries had bribed foreign officials for business. Upjohn held
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that the questionnaires and interviews conducted as part of that
investigation were protected by the attorney-client privilege. Similarly, the
Seventh Circuit in Sandra T.E. concluded that the attorneys’ notes and
memoranda related to the investigation were protected by the attorneyclient privilege.3
As far as the attorney-client analysis, the factual context here is
similar to that in Sandra T.E.. Here, Caterpillar was seeking legal advice
about Plaintiff’s 2007 complaint and how to respond. The communications
made by Caterpillar employees to Howrey attorneys in the interviews were
made in order for Caterpillar to secure that legal advice.4 As in Sandra
T.E., the Howrey attorneys emphasized the confidential nature of those
communications: “Upjohn warnings” were provided to the interviewees,
meaning the interviewees were warned that Howrey represented
Caterpillar, not individual employees, and that the communications were
confidential and privileged. See Sandra T.E., 600 F.3d at 612.
The documents in Sandra T.E. were also protected by the work-product
doctrine, but litigation had already begun in that case. 600 F.3d at 618.
The parties do not address whether the interviews of Kevin and Noah
Giovanetto (the persons who recorded the meetings) should be subject to the
attorney-client privilege. It does not appear that these two persons were Caterpillar
employees. However, Plaintiff’s entire argument rests on his premise that Howrey was
conducting what amounted to a routine, internal investigation, not giving legal advice.
As discussed above, the Court has rejected that argument.
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Even if Howrey’s investigation could have been conducted by inhouse counsel, that does not, by itself, render unavailable the protections
of the attorney-client privilege. See Upjohn, 449 U.S. at 386 (attorneyclient privilege applied to internal investigation conducted by in-house
General Counsel and outside counsel); Gingerich v. City of Elkhart
Probation Dept., 273 F.R.D. 532, 543-44 (2011)(notes taken by in-house
city counsel regarding investigation into alleged sexual harassment and
hostile work environment were protected by work-product doctrine). The
focus is on the purpose and confidentiality of the communications, not on
whether the attorney was in-house or out. Here, the purpose of the
communications was to obtain legal advice.
As an initial finding, the Court accordingly concludes that the
attorney-client privilege applies to nearly all of the Howrey documents
generated in response to Plaintiff’s 2007 complaint. (priv log 71-663; 8891254). There are a few documents in this group that are not protected.
Exhibits A and C-I of the July 30, 2007 report are not work-product, nor do
they reflect privileged communications. Additionally, the disclosures to the
complainants drafted by Howrey do not appear to be protected (privilege
log 431-436), since they were not intended to be confidential
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communications from Howrey to Caterpillar. Some of these documents
were authored by Plaintiff, and he likely already has a copy of most of the
others, but their production will be ordered nonetheless.
The other group of documents submitted for in camera review were
generated in response to Plaintiff’s May 1, 2008 complaint to Caterpillar
executives. (priv log 437-438; 664-888). This complaint apparently dealt
with alleged retaliation and harassment Plaintiff had suffered and
recounted illegal conduct Plaintiff had already reported, including the
alleged illegal recordings. (See Complaint, d/e 1, p. 18, ¶ m).
Like the first group of Howrey documents, it is clear from the context
and from the Court’s in camera review that Howrey was retained to provide
confidential legal analysis and advice on the issues raised by Plaintiff in his
May 1, 2008 complaint. The documents analyze the legal viability of claims
under the Illinois eavesdropping statutes, the possibility of claims under the
Sarbanes-Oxley Act, and other legal analysis into Plaintiff’s charges of
illegal and improper actions at Caterpillar. The Court accordingly
concludes that the attorney-client privilege applies to these documents as
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In addition, the Court alternatively finds that both groups of
documents are also protected by the work-product doctrine. As the Court
set forth in its May 24th order:
“The work-product doctrine protects documents prepared by
attorneys in anticipation of litigation for the purpose of analyzing
and preparing a client's case.” In re Special September 1978
Grand Jury (II), 640 F.2d at 62. “[W]e look to whether in light of
the factual context ‘the document can fairly be said to have
been prepared or obtained because of the prospect of
litigation.’” Logan v. Commercial Union Insurance Co., 96 F.3d
971, 976-77 (7th Cir. 1996)(quoting Binks Mfg. Co. v. National
Presto Indus., Inc., 709 F.2d 1109, 1118 (7th Cir.
1983)(emphasis in Binks, quoting 8 Wright & Miller, Fed.
Practice and Procedure § 2024). Documents prepared in the
ordinary course of business addressing matters which present
a remote prospect of litigation are not work-product. In
contrast, documents prepared “‘because of the prospect of
litigation’” or prepared because of “‘some articulable claim,
likely to lead to litigation’ . . . ha[s] arisen” are work-product.
Binks, 709 F.2d at 1120 (emphasis in Binks)(internal quoted
It is true that Plaintiff did not file his complaint with the Occupational
Safety and Health Administration until November 2008, nearly 16 months
after Howrey’s 2007 report. “The mere fact that litigation does eventually
ensue does not, by itself, cloak materials . . . with the work product
privilege.” Binks Mfg. Co. v. National Presto Indus., Inc.,, 709 F.2d 1109,
1118 (7th Cir. 1983); see also Musa-Mauremi v. Florists’ Transworld
Delivery, Inc., 270 F.R.D. 312 (N.D. Ill. 2010)(no work-product protection
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for documents drafted after filing of internal harassment complaint by
employee where no EEOC charge yet filed, and where documents were
generated as routine response to employee complaint).
However, the Court believes that Howrey’s work “can fairly be said to
have been prepared or obtained because of the prospect of litigation.”
Howrey’s work went above and beyond a routine internal investigation. It
was an in-depth legal analysis of Caterpillar’s legal exposure to claims of
illegal eavesdropping, retaliation and other alleged illegal action raised by
Plaintiff in his internal complaints. The interviews, research, memoranda
and reports focus on determining the existence and viability of those
potential legal claims and defenses.
Plaintiff cites Binks Mfg. Co. v. National Presto Indust., Inc., 709 F.2d
1109 (7th Cir. 1983), a case in which in-house counsel prepared summaries
from his investigation of allegedly defective equipment purchased from
another company. The documents at issue included a letter to the
company’s General Counsel summarizing the attorney’s conversations with
corporate officers and detailing the equipment’s problems, and a document
to the company’s production manager opining on the allocation of
responsibility for the equipment failures. 709 F.2d at 1113, 1118. The
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seller of the equipment ultimately sued the company for the balance due
under the contract.
The Seventh Circuit in Binks upheld the ordered production of the
in-house documents, agreeing that they were not protected by the workproduct doctrine because of the factual context in which they were created.
Specifically, though there had been a volley of letters between the
companies, none of the letters had suggested that litigation was imminent,
and the in-house attorney had been focusing at that time on gathering facts
to correct the problem, not on “prepar[ing] for litigation.” 709 F.2d at 1120.
The Seventh Circuit also noted that, in any event, admission of the letters
was not reversible error.
In contrast to Binks, here the factual context and documents
prepared by Howrey demonstrate that Howrey’s work was done in
anticipation of litigation. Both matters were referred to Howrey because of
the prospect of litigation by Plaintiff, as is clear from Plaintiff’s internal
complaints and from the documents themselves. Howrey’s work was
conducted with an eye toward determining the factual merit and legal
viability of those claims, and toward protecting Caterpillar from those
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claims.5 The Court therefore concludes that, as an additional and
alternative ground, the documents submitted for in camera review are
protected by the work-product doctrine.
IT IS THEREFORE ORDERED THAT Defendant Caterpillar’s motion
to quash Plaintiff’s subpoena to Howrey, LLP, is granted (d/e 64) except for
the following documents: 1) Exhibits A and C-I of the July 30, 2007 report
to Caterpillar (priv 477); and 2) documents marked as priv 431-436.
Caterpillar is directed to produce said documents to Plaintiff by July 22,
Original documents reviewed in camera are directed to be filed in
hard copy format under SEAL “Court’s eyes only” with the Clerk.
July 13, 2011
______s/ Byron G. Cudmore________
BYRON G. CUDMORE
UNITED STATES MAGISTRATE JUDGE
Work-product protection may yield if a party demonstrates a substantial need for
the materials and cannot obtain them by other means without undue hardship. Fed. R.
Civ. P. 26(b)(3)(A)(ii). Plaintiff makes no argument that this exception applies.
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