Rivera et al v. Greffin et al

Filing 103

MEMORANDUM OPINION Signed by the Honorable John F. Grady on June 14, 2013.Mailed notice(cdh, )

10-1733.131-JCD

June 14, 2013

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DANIEL RIVERA, STEPHEN KENSINGER,
DEBORAH JOY MEACOCK, and REBECCA
SCHEUNEMAN,
Plaintiffs,
v.
ALLSTATE INSURANCE COMPANY,
Defendant.

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No. 10 C 1733

MEMORANDUM OPINION
Before the court is the motion of defendant Allstate Insurance
Company (“Allstate”) for entry of a protective order pursuant to
Federal

Rule

of

Civil

Procedure

26(c)(1).

For

the

reasons

explained below, the motion is denied.
BACKGROUND
This action arises out of plaintiffs’ former employment by
defendant Allstate’s equity division.

After Allstate investigated

the division for ethical violations, it terminated plaintiffs’
employment in late 2009.

Plaintiffs allege that Allstate injured

their reputations by falsely accusing them of improperly timing
trades and manipulating data in order to increase their bonuses.

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Plaintiffs’ remaining claims are for defamation and violation of
the Fair Credit Reporting Act.1
Plaintiffs seek the production of Allstate’s correspondence
with, and documents that it voluntarily provided to, the Securities
and Exchange Commission (“SEC”) and the Department of Labor (“DOL”)
in

response

conjunction

to

those

with

improprieties.

their

agencies’

requests

investigations

of

for
the

information
alleged

in

trading

Allstate has moved for a protective order that

would prohibit this discovery.
DISCUSSION
Federal Rule of Civil Procedure 26(c)(1) provides that a party
or person from whom discovery is sought may move for a protective
order and that the court may, for good cause, issue such an order
“to protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense.” Allstate asserts that the
documents sought by plaintiffs (1) are irrelevant to their claims;
(2) “enjoy an absolute privilege from defamation claims”; and (3)
are protected by the attorney-client privilege and/or the workproduct doctrine, which were not waived by Allstate’s disclosures
to the agencies.

1/

The Fair Credit Reporting Act claim, in which plaintiffs allege that
Allstate failed to disclose to them a summary containing the nature and substance
of the communications upon which their terminations were based, is not relevant
to the instant motion.

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We

can

arguments.

easily

dispose

of

Allstate’s

first

and

second

The discovery plaintiffs seek is undoubtedly relevant

to their defamation claims.

Plaintiffs will have to demonstrate

the falsity of the statements that Allstate allegedly made about
their trading activities, and Allstate has asserted the affirmative
defense of truth.

The documents contain the information that

Allstate learned and the conclusions it drew from its investigation
of the trading activities, which are relevant to the truth or
falsity of the alleged statements.

And Allstate’s contention that

its communications with the SEC and DOL are “absolutely privileged”
because

they

were

made

in

proceeding misses the mark.

the

context

of

a

quasi-judicial

Allstate refers to a privilege that

would shield it from liability for, not discovery of, statements
made in the communications.

Plaintiffs do not seek to use the

statements in the communications as a basis for their defamation
claims; they simply seek discovery of this information that is
relevant to their defamation claims, which are based on different
statements.
Allstate also asserts that it did not waive the attorneyclient privilege or work-product protection by disclosing the
documents to the agencies.

We note as an initial matter that

Allstate gives short shrift to the issue of whether the documents
are privileged in the first place.

Allstate bears the burden of

establishing that the privileges apply to each document, and mere

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conclusory statements do not suffice.

See, e.g., United States v.

White, 950 F.2d 426, 430 (7th Cir. 1991); Allendale Mut. Ins. Co.
v. Bull Data Sys., Inc., 152 F.R.D. 132, 137 (N.D. Ill. 1993).
Plaintiffs correctly point out that Allstate has not made a
sufficient showing that the documents are privileged; in reply,
Allstate calls plaintiffs’ response “disingenuous,” complains that
plaintiffs have “never before” challenged Allstate’s privilege
claims, and attempts to flesh out its conclusory statements.
Allstate’s argument ignores its burden; furthermore, we generally
consider arguments developed for the first time in a reply to be
waived.

But because the parties have focused primarily on the

dispositive issue of whether Allstate waived any claim of privilege
by producing the documents to the SEC and DOL, we will assume,
without deciding, that the documents are protected by one or both
of the privileges.
Allstate

contends

that

“[a]

number

of

Courts

hold

that

disclosure of privileged information to the government as a third
party waives the privilege only with respect to the government.”
(Def.’s Mem. in Supp. of Mot. at 7.)

This theory, known as

“selective waiver,” has in fact been accepted by only one Court of
Appeals--the Eighth Circuit, in Diversified Industries, Inc. v.
Meredith, 572 F.2d 596 (8th Cir. 1978)--and has since been rejected
by every other Court of Appeals that has addressed the issue, see

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In re Pacific Pictures Corp., 679 F.3d 1121, 1127 (9th Cir. 2012)
(rejecting the theory of selective waiver and citing similar
decisions of the First, Second, Third, Fourth, Sixth, Seventh,
Tenth, D.C., and Federal Circuits, which variously dealt with one
or both types of privilege).
Plaintiffs state that the Seventh Circuit “has not yet ruled
on selective waiver,” Resp. at 9, and Allstate cites a decision,
Dellwood Farms, Inc. v. Cargill, Inc., 128 F.3d 1122 (7th Cir.
1997) that it argues “left the door open” to the application of
selective waiver, Reply at 6, but neither party cites Burden-Meeks
v. Welch, 319 F.3d 897 (7th Cir. 2003).

In Burden-Meeks, the

Seventh Circuit affirmed a district court order directing a third
party, the Intergovernmental Risk Management Agency (“IRMA”), to
produce to plaintiffs a report, relevant to their claims, that had
been written by IRMA’s lawyers.

IRMA invoked the attorney-client

privilege, but it had shown the report to defendant Welch, the
mayor of the defendant City of Country Club Hills, so the district
court held that IRMA had waived any claim of privilege by sharing
the report with Welch.

The Seventh Circuit remarked:

Knowing disclosure to a third party almost invariably
surrenders the privilege with respect to the world at
large; selective disclosure is not an option. See, e.g.,
Dellwood Farms, Inc. v. Cargill, Inc., 128 F.3d 1122,
1126-27 (7th Cir. 1997); United States v. Hamilton, 19
F.3d 350, 353 (7th Cir. 1994). (One court of appeals
thinks that disclosure to a regulatory body does not
surrender the privilege with respect to other private
persons, see Diversified Industries, Inc. v. Meredith,

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572 F.2d 596 (8th Cir. 1977) (en banc); see also In re
Columbia/HCA
Healthcare
Corp.
Billing
Practices
Litigation, 293 F.3d 289, 307-14 (6th Cir. 2002) (Boggs,
J., dissenting); but the majority view is otherwise, and
at all events the Mayor of Country Club Hills was not
acting as IRMA’s regulator.)
319 F.3d at 899.
In our view, Burden-Meeks indicates that in a case involving
disclosure to a regulatory body, the Seventh Circuit would likely
adopt the majority view.

We adopt the majority view as well, for

the reasons discussed in In re Columbia/HCA Healthcare Corp.
Billing Practices Litigation, 293 F.3d 289, 302-307 (6th Cir.
2002); see also Hobley v. Burge, No. 03 C 3678, 2004 WL 856439, at
*5-8 (N.D. Ill. Apr. 21, 2004).

In Columbia/HCA Healthcare, as in

this case, the party seeking the application of selective waiver
had entered into a confidentiality agreement with the governmental
agency to which it had produced the subject documents for an
investigation.

See 293 F.3d at 292.

In rejecting the concept of

selective waiver with regard to the attorney-client privilege, the
Sixth Circuit explained that the Eighth Circuit’s approach in
Diversified was created out of whole cloth and “has little, if any,
relation to fostering frank communication between a client and his
or her attorney.”

Id. at 302.

The Court also stated: “[A]ny form

of selective waiver, even that which stems from a confidentiality
agreement, transforms the attorney-client privilege into ‘merely
another brush on an attorney’s palette, utilized and manipulated to

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gain tactical or strategic advantage.’”

Id. at 302 (quoting In re

Steinhardt Partners, L.P., 9 F.3d 230, 235 (2d Cir. 1993)).

The

Court agreed with the First Circuit that the “‘general principle
that disclosure normally negates the privilege is worth maintaining
. . . [because it] makes the law more predictable and certainly
eases its administration.’” 293 F.3d at 304 (quoting United States
v. Mass. Inst. of Tech., 129 F.3d 681, 685 (1st Cir. 1997)).

As

for work-product protection, the Court found “no compelling reason
for differentiating waiver of work product from waiver of attorneyclient privilege,” observing that “[m]any of the reasons for
disallowing selective waiver in the attorney-client privilege
context also apply to the work product doctrine”; that the “ability
to prepare one’s case in confidence, which is the chief reason
articulated

[by

the

Supreme

Court]

for

the

work

product

protections, has little to do with talking to the Government”; and
that “[a]ttorney and client both know the material in question was
prepared in anticipation of litigation; the subsequent decision on
whether or not to ‘show your hand’ is quintessential litigation
strategy.”
We

293 F.3d at 306-07.

adopt

the

Sixth

Circuit’s

reasoning

in

Columbia/HCA

Healthcare here and reject the application of selective waiver.
Allstate waived any privilege or protection associated with the
documents at issue by producing them to the SEC and DOL; therefore,
they must be produced to plaintiffs.

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CONCLUSION
For the foregoing reasons, the motion of defendant Allstate
Insurance Company for entry of a protective order [93] is denied.
Allstate shall produce to plaintiffs by June 21, 2013 the documents
that it produced to, as well as its correspondence with, the SEC
and DOL.

A status hearing is set for June 26, 2013 at 11:00 a.m.

to discuss what discovery remains to be done.

DATE:

June 14, 2013

ENTER:

_______________________________________________
John F. Grady, United States District Judge