Johnson v. Norfolk Southern Railway Company et al

Filing 112

ORDER regarding certain discovery disputes of the parties. Signed by Magistrate Judge Stephen C. Williams on 1/28/2016. (jcp)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ROY JOHNSON,
Plaintiff,
vs.
ZURICH AMERICAN INS. CO. and
TRIPLE CROWN SERVICES CO.

)
)
)
)
)
)
)
)
)

Case No. 14−cv−1095−MJR−SCW

Defendants.

ORDER
WILLIAMS, Magistrate Judge:
On January 26th this Court held a discovery dispute hearing regarding Triple Crown’s
objection, on the basis of attorney client privilege, to the production of certain documents in its
possession, as well as those in the possession of its insurance broker, Hylant. The documents
included two emails between in house counsel for Triple Crown and Hylant, as well as a power
point presentation jointly prepared by counsel for Triple Crown and Hylant for presentation to
Triple Crown’s management. Prior to the hearing the Court conducted and in camera review of all of
the documents at issue. At the hearing the Court overruled the objections in part and ordered the
production of a power point presentation with redactions of attorney-client privileged material. The
following summarizes the Court’s rulings which were made on the record at the hearing:
The dispute centers on communications between Hylant and Triple Crown leading up to a
decision by Triple Crown to convert from workers compensation policies for Triple Crown’s drivers
to occupational accident policies. The conversion occurred in April of 2008. Triple Crown
maintained before the conversion, and maintains to this day, that its drivers are independent
contractors. The drivers’ status as employees or independent contractors is the primary bone of
contention in this lawsuit. The occupational accident (occ/acc) policy arrangement that was
1

ultimately adopted by Triple Crown in 2008 required Triple Crown drivers to purchase an occ/acc
policy in lieu of workers compensation insurance. Although they were not required to, the occ/acc
policy purchased by the majority of the drivers was the one suggested by Triple Crown and provided
by codefendant Zurich. This arrangement was facilitated by Triple Crown’s broker, Hylant. Plaintiff
argues that the documents in question cannot be attorney client privileged, because the
communications involved policies that were ultimately purchased by Triple Crown’s drivers, not
Triple Crown. Triple Crown, on the other hand, maintains that Hylant was acting as its agent – and
specifically as the agent for its in house counsel, Jerry Burns.
I. Waiver Based on Defense of Advice of Counsel
The Court first took up the issue of Plaintiff’s assertion that Triple Crown signaled that it
intends to put forward a defense it was relying in good faith on the advice of counsel and/or Hylant.
If that were the case then the Court would likely agree that Triple Crown would have to waive its
claim of attorney client privilege for the communications at issue. But at the hearing, counsel for
Triple Crown unequivocally stated on the record that it would not rely on such a defense. Given
that representation the Court determined it need not further consider Plaintiff’s arguments on this
point.
II. Was Hylant an Agent of Triple Crown’s Counsel
The dispositive question was whether the broker, Hylant an agent of Triple Crown – and
specifically Triple Crown’s counsel - for the purpose of providing legal advice. The Court agreed
with Plaintiff’s counsel that policies in question were ultimately purchased by Triple Crown drivers,
who were the insured. Thus there could be no argument that the privilege attached due to an
insured/insurer arrangement. Nevertheless the Court concluded that Hylant was Triple Crown’s
agent, and agent for Triple Crown’s counsel Burns. The parties agreed as to the legal requirements
for an agency relationship under Indiana: 1) consent by the principle: 2) acceptance of authority by
2

the agent, 3) exertion of control by the principle. Bunger v. Demming, 40 N.E.3d 887, 893 (Ind. Ct.
App. 2015). The Court determined that Hylant was acting at the behest of Triple Crown for the
purpose of providing advice on the conversion from a workers compensation to an occ/acc model.
As Triple Crown’s broker Hylant provided advice to Triple Crown but ultimate decision making was
in the hands of Triple Crown. Additionally, while not dispositive of the issue, evidence that Hylant
was paid a retainer as an agent for Triple Crown, supports the conclusion that there was an agency
relationship.
Plaintiff also challenged whether the communications at issue were intended to be
confidential. Having reviewed the communications in camera, the court determined that they were.
Having determined that Hylant was acting as an agent for Burns, the Court turned to the
question of whether the communications were for the purpose of rendering legal advice, or some
other purpose. See Hayworth v. Schilli Leasing, 669 N.E.2d 165, 169, n. 8 (Ind.1996); see also In Re Grand
Jury Proceedings, 220 F.3d 568, 571 (7th Cir. 2000); BPI Energy v. IEC (Montgomery), LLC, Civil No. 07186-DRH, 2008 WL 4450301 (S.D. Ill. Sept. 30, 2008). Based on its in camera review, the Court
determined that the communications, to the extent privileged, are not covered by the crime fraud
exception. See United States v. BDO Seidman, LLP, 492 F.3d 806, 818 (7th Cir. 2007). The Court found
that the communications do not evidence a fraud, or conspiracy to commit a fraud. The fact the
communications may be about an issue that ultimately inures to the benefit of a client and the
detriment of some other party does not, on its own, evidence a fraud, even if the advice later turns
out to be wrong.
Ultimately the Court concluded that the email communications were made for the purpose
of giving or obtaining legal advice. The power point, on the other hand, contains a mixture of legal
advice/analysis and business advice concerning the pros and cons of converting to an occ/acc
insurance model:
3

The first page of the power point is not privileged. Page two has bullet points; the first one
should be redacted, but the remainder should be produced. Pages 3-4 should be redacted in their
entirety. On page 5 the third bullet point should be redacted, but the remainder of the page is
business advice. The handouts referenced on page 5 should be produced in their entirety (Handouts
A-B). On the 6th page,1 lines 3-6 should be redacted, but the remainder of that page is business
advice. On page 7, lines 4 and 9-12 should be redacted as legal advice. On page 8, lines 1-6, and 813 are business advice; lines 7, 14-15 are legal advice and should be redacted. On Page 9, lines 1-6
are business advice; lines 7-8 are legal advice and must be redacted. As to page 10, the second bullet
point should be redacted as legal advice. Handout C should also be withheld as legal advice. Page
11 is entirely business advice, to include the attachments that are referenced. Page 12 references a
handout, which is legal advice and shall be redacted and not produced. On page 13, the Court
concludes that the first three bullet points should be redacted as legal advice, but not the last bullet
point. Documents to be produced in 14 days, or on or before February 9, 2016. Objections
will likewise be due February 9, 2016.

IT IS SO ORDERED
/s/ Stephen C. Williams
Stephen C. Williams
United States Magistrate Judge

Date: January 28, 2016

1

The Court counts a heading and subheading as lines 1-2

4