Woodard et al v. Victory Records, Inc. et al
Filing
263
MEMORANDUM Opinion and Order Signed by the Honorable Young B. Kim on 11/7/2013. (ma,)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JOSHUA WOODARD, NEIL
WESTFALL, ALEX SHELNUTT, and
JEREMY MCKINNON, all
professionally known as A DAY TO
REMEMBER,
Plaintiffs,
v.
VICTORY RECORDS, INC. and
ANOTHER VICTORY, INC.,
Defendants.
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No. 11 CV 7594
Magistrate Judge Young B. Kim
November 7, 2013
MEMORANDUM OPINION and ORDER
Before the court is Defendants’ motion for an order declaring certain emails
unprotected by the attorney-client privilege.
Although Defendants bring their
motion, titled “Defendants’ Motion for Order of Waiver of Privilege,” pursuant to
Federal Rule of Evidence 502(b), this rule is not applicable to the emails in dispute.
Rule 502(b) would require an analysis of whether Plaintiffs waived their attorneyclient privilege by their inadvertent disclosure of the emails in question, not
whether they are entitled to assert the privilege in the first place.
However,
Defendants’ argument here is that the emails in question are not protected by the
attorney-client privilege because they were not confidential communications. With
this clarification, and for the reasons that follow, Defendants’ motion is granted in
part and denied in:
Background
Plaintiffs Joshua Woodard, Neil Westfall, Alex Shelnutt, and Jeremy
McKinnon are four members of a musical band called “A Day to Remember” (the
“Band”). A fifth member of the Band, Kevin Skaff, is not part of this lawsuit. The
Band has two managers, Mark Mercado and John Youngman, who are principals of
Fly South Music Group, LLC, a management company. Also currently involved
with the Band, or involved with the Band during relevant time periods, are
financial advisor Jason Childress, business manager Noel Hartough, and several
attorneys, including Nick Ferrara, Mike McKoy, Jay Bowen, Will Parsons, Danny
Hayes, Jeff Leven, and Brian McClain.
Defendant Another Victory, Inc. is a music publisher.
Defendant Victory
Records, Inc. (“Victory”) is a record company with whom the Band has signed a
“Deal Memo,” the terms of which are at the core of this litigation. The president of
Victory is Tony Brummel.
In July 2012, Plaintiffs produced a large number of documents to Defendants
in discovery. (R. 189, Aug. 22, 2013 Mem. Op. and Ord. at 1.) Not included in the
original production were emails bearing the Bates stamp numbers ADTR 1433
through ADTR 1475 (the “emails”).1 (Id. at 1-2.) According to Plaintiffs, the emails
were segregated and withheld from their document production on the basis that the
Plaintiffs omitted documents ADTR 1388 through ADTR 1475 from their
production, but only ADTR 1433-75 are in dispute.
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work-product doctrine2 and attorney-client privilege protected them from disclosure.
(Id. at 2.) The gap in sequencing caught the eye of counsel for Defendants, Robert
Meloni, who asked counsel for Plaintiffs, Will Parsons, about the missing
documents.
(Id.)
Parsons was out of town on that date, so he asked his legal
assistant to email him the documents sought by Meloni. (Id.) The legal assistant
did so, but she erroneously emailed the documents to both Parsons and Meloni.
(Id.)
Parsons discovered this inadvertent disclosure a few days later, (id.), and
accordingly sent Meloni a letter asking him to destroy all copies of the emails
pursuant to Federal Rule of Civil Procedure 26(b)(5)(B). (Id.)
Nothing happened with the emails until the July 2013 deposition of Manager
Mercado, at which time Meloni asked Mercado questions based on these disputed
emails. (Id.) Parsons objected to the use of the emails pursuant to Rule 26(b)(5)(B).
(Id.) Thereafter, the parties began in earnest to dispute the asserted privilege and
Defendants’ right to use the emails in depositions and for other purposes related to
the litigation. (Id.) Plaintiffs filed a motion seeking to prohibit Defendants from
using the emails. (R. 170.) This court granted the motion to the extent that it
ordered Defendants to: (1) sequester or destroy the emails; (2) refrain from using
the emails until they are deemed not privileged or no longer privileged; (3) treat
those portions of Mercado’s deposition testimony pertaining to the emails as
confidential and privileged information until further order of the court or agreement
of the parties; (4) refrain from using or referring to the emails during John Janick’s
Plaintiffs do not assert that the emails in question fall within the protection of the
work-product doctrine.
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deposition if they wish to proceed with his deposition prior to a resolution of the
privilege issue; (5) take reasonable steps to retrieve the emails if they disclosed any
of the pages to others; and (6) verify in writing to Plaintiffs that they have complied
with the court’s order.
Defendants now seek a ruling that the emails in dispute are not protected by
the attorney-client privilege because they were circulated to a third party—John
Janick. Plaintiffs counter that the emails are privileged communications among the
members of the Band, its agents (a group that, according to them, includes Janick),
and their attorneys and that they “specifically discuss the legal obligations of the
Band under its agreement with Victory Records, and various legal options based on
that agreement, and directly and indirectly reveal client confidences concerning [the
Band’s] relationship with and contractual obligations to Victory Records.” (R. 249,
Pls.’ Resp. at 4.)
Analysis
A.
Applicable Federal Rules
As discussed in this court’s earlier ruling, (R. 189), Rule 26(b)(5)(B) governs
how parties shall behave in the aftermath of an unintended disclosure of materials
claimed to be privileged.
Rule 26 permits parties to “clawback” inadvertently
disclosed documents they believe are subject to a claim of privilege and to prevent
the receiving party from using them until the privilege claim is resolved. See Fed.
R. Civ. P. 26(b)(5)(B). In contrast, Federal Rule of Evidence 502(b) addresses the
issue of whether inadvertent disclosure of privileged documents—meaning
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documents not subject to a privilege dispute—operates as a waiver of privilege.
Sandwiched in between these two rules is the threshold question of whether the
inadvertently disclosed emails in this case are in fact privileged. If no privilege is
found, then Rule 502(b) is simply inapplicable. See Heriot v. Byrne, 257 F.R.D. 645,
655 (N.D. Ill. 2009) (finding that “[p]rior to addressing any of the elements stated in
FRE 502(b) . . . the court must determine whether the documents are privileged”).
Conversely, if the emails are deemed privileged, then Rule 502(b) requires the court
to analyze whether Plaintiffs took adequate steps to cure the disclosure so as to
stave off a waiver of that privilege. For this reason, Defendants’ contention that
they are moving pursuant to Rule 502(b) for a ruling that the emails are not
privileged is incorrect. However, the court is not bound by the title of their motion
and will address the substance of the parties’ dispute, which is whether the emails
are in fact privileged.
Furthermore, although Defendants assert that Janick’s presence in the email
chain acted as a waiver of the attorney-client privilege, the court finds that Janick’s
presence is relevant to the question of confidentiality, not waiver. The distinction is
important: “waiver” in this context assumes the existence of a privilege that was
then allowed, perhaps inadvertently, to be relinquished. See, e.g., Hahn v. County
of Kane, 2013 IL App 120660, 991 N.E.2d 373, 378-79 (2d Dist. 2013) (defining
waiver and implied waiver); Center Partners, Ltd. v. Growth Head GP, LLC, 2012 IL
113107, 981 N.E.2d 345, 356 (Ill. 2012) (noting that one of the exceptions to the
attorney-client privilege is the concept of waiver, which can occur, for instance,
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when a party voluntarily testifies about a privileged matter or otherwise discloses
privileged information).
By way of contrast, “confidentiality” in this context
involves the question of whether, during a legal communication between a client
and attorney, a third party’s involvement prevents the privilege from attaching in
the first place. See Consolidation Coal Co. v. Bucyrus-Erie Co., 89 Ill.2d 103, 113
(1982) (holding that to avail itself of the attorney-client privilege, a claimant must
show, among other things, that the communication remained confidential).
B.
The Attorney-Client Privilege
The attorney-client privilege extends to confidential communications between
a client and attorney made “in order to obtain legal assistance.” Fisher v. United
States, 425 U.S. 391, 403 (1976). Because this court is sitting in diversity as to the
parties’ claims, state law applies to the question of whether the emails at issue are
protected by the attorney-client privilege. See Favala v. Cumberland Eng’g Co., a
Div. of John Brown Inc., 17 F.3d 987, 989 (7th Cir. 1994). This point is not in
dispute.
Under Illinois law, the party asserting the attorney-client privilege bears the
burden of showing its applicability. Stopka v. American Family Mut. Ins. Co., Inc.,
816 F.Supp.2d 516, 523 (N.D. Ill. 2011). To meet this burden, the party must prove
that “the statement originated in a 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.” Equity Residential v. Kendall Risk
Mgt., Inc., 246 F.R.D. 557, 563 (N.D. Ill. 2007) (citations omitted). The Illinois
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Supreme Court has established the following test to be demonstrated by the party
asserting the privilege: “(1) where legal advice of any kind is sought, (2) from a
professional legal advisor in his capacity as such, (3) the communications relating to
that purpose, (4) made in confidence, (5) by the client, (6) are permanently
protected, (7) from disclosure by himself or the legal advisor, (8) except the
protection be waived.” Illinois Educ. Ass’n v. Illinois State Bd. of Educ., 204 Ill.2d
456, 467 (2003). The protection extends to communications flowing from the client
to the attorney, as well as to advice flowing from the attorney to the client.
Midwesco-Paschen Joint Venture for Viking Projects v. Imo Indus., Inc., 265
Ill.App.3d 654, 661 (1st Dist. 1994). However, the Illinois Supreme Court has made
clear that the privilege is to be construed as narrowly as possible, with “a strong
policy of encouraging disclosure.” Waste Mgt., Inc. v. International Surplus Lines
Ins. Co., 144 Ill.2d 178, 190 (1991). Accordingly, “[t]he mere passing of information
between client and attorney is not sufficient to invoke the privilege.” People v.
Harris, 211 Ill.App.3d 670, 675 (1st Dist. 1991). Furthermore, the attorney-client
privilege does not apply to communications involving business advice instead of
legal advice.
CNR Invs., Inc. v. Jefferson Trust and Sav. Bank of Peoria, 115
Ill.App.3d 1071, 1076 (3d Dist. 1983).
As a consequence of Plaintiffs’ invocation of Rule 26(b)(5)(B), it became
Defendants’ obligation to challenge Plaintiffs’ claim of privilege.
Now that
Defendants have finally done so, the burden shifts to Plaintiffs to demonstrate the
elements of the privilege they claim applies to each of the emails at issue. See Cox
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v. Yellow Cab Co., 61 Ill.2d 416, 417 (1975). Both parties chose not to address the
issue of whether the emails involve communications of a legal nature. Defendants
do lay out the elements of the attorney-client privilege, but they assert, without
adequate development or elaboration, that the emails involve a discussion of
financial matters and that Plaintiffs bear the burden of proving otherwise. (R. 207,
Defs.’ Mot. at 12.) Defendants then turn their focus, more or less exclusively, to
whether
Janick’s
presence
destroyed
the
confidential
nature
of
the
communications─step four of the eight-part test. Plaintiffs interpret Defendants’
focus as a concession regarding all but step four of the attorney-client privilege test,
(R. 249, Pls.’ Resp. at 4), and, content in this belief, likewise focus their analysis on
explaining why Janick’s presence did not destroy the confidential nature of their
communications with their attorneys. (Id. at 5-9.) Accordingly, the court likewise
focuses its attention on whether Janick’s inclusion and access to the emails
destroyed the requisite confidentiality. There are two notable exceptions, however:
ADTR 1449 and 1450. Neither of these emails involves Janick and thus do not
implicate confidentiality concerns. ADTR 1449 is an email from Manager Mercado
to Attorney Ferrara, while ADTR 1450 is an email from Mercado to Ferrara,
Manager Youngman, Business Manager Hartough, Financial Advisor Childress and
Attorney McCoy. Based on this court’s review, these two emails reflect inquiries
from Mercado to the Band’s attorneys and uncontested agents seeking legal advice.
As such, these emails, ADTR 1449-1450, are protected by the attorney-client
privilege.
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C.
Confidentiality Requirement
The attorney-client privilege only shields communications between a lawyer
and a client that were intended to be confidential. A breach of this confidentiality
through disclosure to a third party can prevent the privilege from attaching. See
People v. Doss, 161 Ill.App.3d 258, 261 (4th Dist. 1987) (“Ordinarily the presence of
a third person indicates a lack of intention that the communications of a client to
his attorney are meant to be confidential and the privilege does not apply.”). An
exception to this general rule, however, is when the third party is an agent of the
client. Id.; see also Stopka, 816 F.Supp.2d at 529; Ill. Sup. Ct. R. 201(b)(2).3 “An
agent is one who, acting under authority from another, transacts business for him,
and a true agency requires that the agent’s function be the carrying out of the
principal’s affairs.” Lang v. Consumers Ins. Serv., Inc., 222 Ill.App.3d 226, 232 (2d
Dist. 1991). Another aspect of this relationship is that the principal has the right to
control how the agent performs his work, and the agent has the ability to expose the
principal to liability. Lang v. Silva, 306 Ill.App.3d 960, 972 (1st Dist. 1999). The
scope and extent of an agency relationship is a function of the agreement or intent
between the agent and principal.
Lang, 222 Ill.App.3d at 232.
Agency can be
expressed directly, as per an agreement, Lang, 306 Ill.App.3d at 972, or it can be
implied indirectly by referring to the parties’ actions, intent, and situation, Lang,
222 Ill.App.3d at 232. In the case of implied authority, “[i]t arises when the conduct
This rule states that “[a]ll matters that are privileged against disclosure on the
trial, including privileged communications between a party or his agent and the
attorney for the party, are privileged against disclosure through any discovery
procedure.”
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of the principal, reasonably interpreted, causes the agent to believe that the
principal desires him to act on the principal’s behalf.” Curto v. Illini Manors, Inc.,
405 Ill.App.3d 888, 892 (3d Dist. 2010). Generally, the issue of whether an agency
relationship exists and the scope of the purported agent’s authority are questions of
fact. Progress Printing Corp. v. Jane Byrne Political Comm., 235 Ill.App.3d 292,
306 (1st Dist. 1992). The party claiming agency must prove such a relationship by a
preponderance of the evidence. Curto, 405 Ill.App.3d at 892.
Defendants challenge Plaintiffs’ assertion of privilege as to each email where
Janick was a sender or recipient on grounds that dissemination of the
communications to and from him—a third party but not an agent—prevented the
privilege from attaching. Defendants rely on the deposition testimony of the Band
members to show that while they considered Mercado and Youngman to be their
personal managers and agents, they simply viewed Janick as a “consultant,” or
perhaps just some guy who bought them dinner.
(R. 207, Defs.’ Mot. at 6.)
Defendants also point out that Plaintiffs did not disclose Janick or even mention his
name in their response to Defendants’ interrogatories when asked to identify
persons with knowledge or information concerning the issues raised in this lawsuit.
(R. 207, Defs.’ Mot. at 7-8.) Nor, Defendants assert, did Plaintiffs disclose Janick in
their Rule 26(a)(1) disclosures. (Id. at 8.) Finally, they argue that payments to
Janick totaling more than $450,000 do not reflect payments made in a managerial
capacity. (Id.)
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Plaintiffs, on the other hand, maintain that Janick served as the Band’s
personal manager from late 2009 until mid-2012. (R. 249, Pls.’ Resp. at 6.) In
support of this position, Plaintiffs claim that Janick worked with Managers
Mercado and Youngman “to guide the professional career of [the Band] in the music
entertainment industry, which included assessment and strategy regarding the
legal issues affecting the Band.” (Id.) Plaintiffs further contend that Janick worked
with the Band’s lawyers “concerning professional strategy, long-term plans and
personal decisions that might affect the Band’s career.”
(Id.)
They claim that
Janick was sometimes “the Band’s voice to its attorneys,” and that his company,
Fueled by Ramen, was paid commissions in the amount of approximately $450,000
for his services as a manager. (Id.) These commissions, they assert, are evidence of
a significant relationship between Janick and the Band.
(Id. at 8.)
Finally,
Plaintiffs maintain that there is no real distinction between a “manager” and a
“consultant” and that both can be agents under the right circumstances. (Id. at 89.) 4
The court regards the term “manager” as synonymous with “agent” but rejects
Plaintiffs’ attempt to equate the term “consultant” with “agent” within the context
of this case. (See R. 249, Pls.’ Resp. at 8-9.) Although a consultant can be deemed
an agent under certain circumstances—a point discussed more fully later in this
opinion—the court will hold Plaintiffs to their principle position that Janick served
as a manager/agent and will reserve use of the term “consultant” to mean a person
“who gives professional advice or services to companies for a fee,” see MerriamWebster’s Collegiate Dictionary (Frederick C. Mish, et al. 11th ed. 2004), but whose
involvement does not rise to the level of an agent. These designations do not change
the analysis but help provide clarity. That being said, the court will carefully
evaluate the Band’s use of the word “consultant” in order to ascertain the meaning
the Band ascribed to it, recognizing that the Band may be using the term differently
than the court. It should also be noted that in resolving the agency question, the
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1.
Testimony of the Band Members
As Plaintiffs point out, it is Janick’s relationship with the Band—not with
Mercado and Youngman or Fly South Musical Group—that is central to the
determination of whether Janick served as an agent for the Band. (R. 249, Pls.’
Resp. at 7); see also Lang, 222 Ill.App.3d at 232 (“[T]he authority of an agent may
only come from the principal, and the authority, therefore, must be traced to some
word or act of the alleged principal, not the acts or words of the agent.”). As there is
no operative agreement creating an express agency relationship, the question of fact
for the court is whether the Band’s conduct caused Janick to believe he was
authorized to act on its behalf. See Lang, 222 Ill.App.3d at 232.
Accordingly, the
court turns to the testimony of the Band members to assess the nature of this
relationship.
Band member Woodard testified at his deposition that he believes he met
Janick at a concert in New York and that they kept in touch “[j]ust to see how we
were doing with each other, with each other’s lives and careers and what we were
doing.” (R. 209, Meloni Decl., Ex. F, Woodard Dep. at 303.) When asked whether
Janick had an interest in the Band, Woodard answered that he is “a fan for sure.”
(Id.) When asked what kind of things Janick did for the Band, Woodard answered,
“[c]onsulting just like overall, just kind of just making sure things were happening.
And I don’t know. Just, I think, ideas.” (Id. at 316.) Woodard described Mercado
court will not rely on any information gained through an improper use of the emails,
most notably certain portions of Manager Mercado’s deposition testimony.
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and Youngman as the Band’s “main” managers. (Id. at 317.) He explained that
“[a]ny communication between management for A Day To Remember and the label
would have gone through [Mercado], anyway, never through [Janick] anyway.” (Id.
at 323.) When asked why Janick was not given “credit” on a particular musical
release by the Band, whereas Mercado was, Woodard replied, “[b]ecause Mark
Mercado is our main guy.” (Id. at 355.) He added that “[Mercado] and [Youngman]
are the people we talked to. I never talked on the phone with Janick about plans or
anything like that.
Those two are the ones who handled everything. . . . Our
management is Mark Mercado and John Youngman.
John Janick is more of a
consultant.” (Id. at 366.) Finally, when asked how often he speaks with Janick,
Woodard answered, “not often,” and when asked how often he meets with Janick, he
said, “less than not often.” (Id. at 374.)
Band member McKinnon also remembers first meeting Janick at a show and
felt that he “was just another person” he met “along the way.” (R. 209, Meloni Decl.,
Ex. G, McKinnon Dep. at 10.) He stated that Janick was part of his management
team as a “consultant.” (Id. at 14.) When asked whether he had ever authorized
the Band’s financial manager Hartough to make payments to Janick, McKinnon
answered “[n]o. We never spoke about stuff like that.” (Id. at 15.) He explained
that it was Manager Hartough’s job to handle such things. (Id.) And when asked
what Managers Mercado and Youngman did for the Band, McKinnon responded,
“[t]hey’re legitimate managers and they’re completely watching over everything we
do and making sure we’re making the right moves at the right time.” (Id. at 32.) As
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for Janick, McKinnon stated that he could run ideas past him and that “[h]e was
just a consultant in everything that we did.” (Id. at 34.)
Band member Skaff testified at his deposition that his manager is Mercado.
(R. 209, Meloni Decl., Ex. H, Skaff Dep. at 15.) When asked if he knew Janick he
responded affirmatively and added that “[h]e just – he brings us to dinner every
now and then.” (Id.) Skaff also added that he met Janick a few times in New York
and went out to dinner with him but that they did not talk about the music
business. (Id. at 17.) He cannot recall the last time he saw Janick and does not
know whether or not Janick ever represented the Band. (Id. at 19.)
Band member Shelnutt testified at his deposition that the Band’s current
managers are Mercado and Youngman. (R. 209, Meloni Decl., Ex. I, Shelnutt Dep.
at 10.) When asked whether he knew of any other managers, Plaintiff Shelnutt
said, “[n]ot that I know of.” (Id.) Band member Westfall testified similarly at his
deposition that the Band’s managers are Mercado and Youngman. (R. 209, Meloni
Decl., Ex. J, Westfall Dep. at 37.) He also is not aware of anyone else serving as a
personal manager for the Band. (Id. at 38.) He testified that he had dinner with
Janick a few times in New York but does not remember why the dinners took place.
(Id. at 62.)
The uncontested and uncontradicted testimony of the Band members
significantly undermines Plaintiffs’ contention that Janick acted as a manager for
the Band. All of the Band members unequivocally represented that Mercado and
Youngman were their “main” guys who “handled everything” for them. Woodward
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and McKinnon had the most formed impressions of Janick and they both testified
that Janick was some sort of “consultant” to whom they would go with “ideas.”
Skaff and Westfall had almost no involvement with Janick and viewed him as
someone who bought dinners for the Band. Shelnutt testified that he was aware of
only Mercado as his personal manager. None of the testimonial evidence from the
Band members suggests that Janick occupied a role within the Band’s inner circle.
Janick was available to provide creative guidance, advice, and support but there is
no evidence of an agency relationship whereby the Band had the power to direct
Janick’s actions and Janick, for his part, had the power to act on behalf of the Band.
2.
Other Evidence Suggestive of an Agency Relationship
The court turns next to whether there is other evidence supporting the
creation of an agency relationship. Looking first to the emails in dispute, the court
notes that Janick’s involvement with respect to these communications was
extremely minor and hardly suggestive of an integral role. Janick is copied on these
emails but only once did he personally initiate an email (ADTR 1454), and this
email served only to comment positively on Mercado’s effort on a particular topic.
(R. 157, Meloni Decl., Ex. A, ADTR 1454.) Otherwise, Janick made only one other
comment, thanking the author in response to an email thread. (Id. at ADTR 1447.)
Next, although Plaintiffs argue that Mercado “had authority to and
occasionally did engage additional managers such as Janick to assist the Band in all
aspects of their business, including the analysis of legal issues,” (R. 249, Pls.’ Resp.
at 8), there is no independent evidence substantiating this claim. Plaintiffs have
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not provided the court with a management agreement between Mercado and the
Band, or between Janick and the Band.
And although Mercado submitted a
Declaration setting forth his duties, the Declaration simply states that his job, along
with Youngman and Curo Financial Management, was, in part, to “facilitate
communication between the band members and their attorneys, relay advice and
legal strategy to the band, and communicate with its attorneys on their behalf to
determine such legal strategies.” (R. 172, Mercado Decl. at ¶ 1.) No mention is
made of any grant of authority to hire other managers.
In fact, Mercado’s
Declaration does not even mention Janick in any capacity. (Id.) As for Plaintiffs’
contention that Mercado could and did “engage” additional managers such as
Janick, (R. 249, Pls.’ Resp. at 8), this argument conflicts directly with Mercado’s
own deposition testimony that Janick “was not involved with Fly South” and that
Janick was the Band’s manager “from day one”—the same day the Band hired Fly
South. (R. 209, Meloni Decl., Ex. D, Mercado Dep. at 19.)
Setting aside for the moment the conflict noted between Mercado’s testimony
and Plaintiffs’ suggestion that Mercado exercised his authority to hire Janick, the
court also finds telling the lack of testimonial or other evidence establishing that
the Band knew anything about Mercado’s purported exercise of authority. While
Plaintiffs proffer the Declaration of Janick (R. 173), in an effort to establish that he
did act in a managerial capacity, the court turns again to the perspectives and
actions of the Band members as most instructive on this point. See Kaporovskiy v.
Grecian Delight Foods, Inc., 338 Ill.App.3d 206, 210 (1st Dist. 2003) (finding that
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“[o]nly the alleged principal’s words and conduct, not those of the alleged agent,
establish the agent’s authority”); Rasgaitis v. Waterstone Fin. Grp., Inc., 2013 IL
App (2d) 111112, 985 N.E.2d 621, 635 (2d Dist. 2013) (stating that implied
authority “arises when the conduct of the principal, reasonably interpreted, causes
the agent to believe that the principal desires him to act on the principal’s behalf”).
Again, the court finds highly persuasive the fact that the Band members
consistently identified only Mercado and Youngman as their managers. Janick’s
Declaration to the contrary carries little weight.
Finally, the court observes that Plaintiffs failed to disclose Janick during
written discovery as a person with information about the case. If Janick were such
an integral member of the Band’s management team, then Plaintiffs would have
been obligated to disclose his name earlier in the discovery process.
3.
Evidence Pertaining to Janick’s Relationship with the Band’s
Attorneys
The court turns next to Plaintiffs’ assertion that even if Janick were deemed
a consultant, consultants can also serve as agents under certain circumstances. The
court agrees with Plaintiffs that consultants can serve as agents under certain
circumstances and thus fall within the ambit of the attorney-client privilege.
However, Plaintiffs have not shown that the circumstances here elevate Janick to
the status of an agent. Most applicable are those cases in which third parties such
as accountants and investment banking firms have qualified as agents based upon a
showing that they “assist[ed] a lawyer in giving legal advice,” and that their
“participation was required to enable the attorney to render legal advice.” Heriot,
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257 F.R.D. at 666. For instance, in Lawrence E. Jaffe Pension Plan v. Household
Int’l, 244 F.R.D. 412 (N.D. Ill. 2006), the attorney-client privilege applied to the
defendants’ communications with accountants retained to “conduct complex
quantitative analysis and extensive information-gathering” that was beyond “[the
defendants’] counsel’s resources and abilities.” Id. at 420. In so holding, the court
recognized that “the complexities of modern existence prevent attorneys from
effectively handling clients’ affairs without the help of others and must include all
the persons who act as the attorney’s agents.” Id. (quoting Cavallaro v. United
States, 284 F.3d at 247 (1st Cir. 2002)).
In this case, while Plaintiffs maintain that Janick acted as the Band’s
personal manager between late 2009 and mid-2012 and that his job “included
working with the attorneys representing the band on strategy and to facilitate
communication and understanding in the relationship between the band and its
attorneys,” (R. 173, Janick Decl. at ¶ 4), there is no evidence other than this
conclusory assertion to show that Janick truly functioned in this role. There is
nothing in writing showing why the Band retained Janick or that otherwise sets
forth the exact nature of his employment. Nor is there any evidence demonstrating
that Janick provided the Band’s counsel with expertise necessary to assist counsel
in the rendering legal advice.
In other words, there is nothing to suggest that
Janick’s involvement was critical to the Band’s attorneys’ ability to advise the Band.
Accordingly, the court declines to find that Janick—as a consultant—otherwise
qualifies as an agent of the Band’s attorneys.
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Based on the information provided by both parties, the court finds that
Janick acted as a third-party consultant to the Band and provided his opinions,
ideas, and overall guidance but did not serve as the Band’s agent or the Band’s
attorneys’ agent.
The Band was entitled to pay Janick handsomely for his
consultative services, but there remains a lack of conduct or understanding by the
Band, and a corresponding lack of action by Janick, evidencing an agency
relationship whereby the Band had the power to direct Janick’s actions and Janick,
for his part, had the power to act on behalf of the Band. Because Janick did not
serve as the Band’s agent, emails marked ADTR 1433-48 and 1451-75 are not
confidential or privileged and may be used by Defendants for any purpose related to
this litigation.
However, emails marked ADTR 1449-50, which do not involve
Janick, are protected by the attorney-client privilege and may not be used by
Defendants for any purpose related to this litigation.
Conclusion
For the foregoing reasons, Defendants’ motion for an order seeking a
declaration that ADTR 1433-75 are not protected by the attorney-client privilege is
granted in part and denied in part.
ENTER:
____________________________________
Young B. Kim
United States Magistrate Judge
19
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