Cori et al v. Phyllis Schlafly's American Eagles et al

Filing 124

ORDER DENYING 120 APPEAL OF MAGISTRATE JUDGE DECISION to District Court filed by Eagle Trust Fund, Phyllis Schlafly's American Eagles. Signed by Judge David R. Herndon on 3/6/2018. (klh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
EAGLE FORUM, an Illinois Not for Profit
Corporation,
and,
ANNE SCHLAFLY CORI et al.,
Plaintiffs,
v.

No. 16-0946-DRH

PHYLLIS SCHLAFLY’S AMERICAN EAGLES,
a Virginia Not for Profit Corporation,
Defendant.
MEMORANDUM and ORDER
HERNDON, District Judge:
Now before the Court is defendant’s appeal and objections to Magistrate’s
Order of February 1, 2018 pursuant to Fed. R. Civ. P. 72 (Doc. 120).

Defendant

maintains that Magistrate Judge Daly’s Order is clearly erroneous or contrary to
the law because: (1) an identical legal interest is not necessary for the common
interest doctrine to apply, or alternatively, the various parties shared an identical
interest; (2) there is common interest among the various individuals and entities
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asserting the common interest doctrine; and (3) Phyllis Schlafly’s American Eagles
and/or Eagle Trust Fund should be permitted to assert Eagle Forum’s privilege for
it. Plaintiffs oppose the appeal/objections (Doc. 123).

Plaintiffs maintain that an

identical legal interest is necessary for the common interest doctrine to apply; that
Judge Daly made clear that no identical legal interest exists between the various
parties involved in the withheld communications; that defendant’s rooting interest
in the success of others against plaintiffs in other litigation does not establish a
legally-cognizable common legal interest and that defendant’s argument that it
should be able to shield Eagle Forum’s own documents from Eagle Forum and its
directors is bizarre and misplaced.

Based on the following, the Court agrees with

plaintiffs, denies defendant’s appeal/objections and affirms Magistrate Judge Daly’s
February 1, 2018 Order.
Local Rule 73.1(a) of the Southern District of Illinois provides:
(a)
Appeal of Non-Dispostive Matters – 28 U.S.C. §
636(b)(1)(A)
Any party may appeal a Magistrate Judge’s order
determining a motion or matter within 14 days after issuance of a
Magistrate Judge’s order, unless a different time is prescribed by the
Magistrate Judge or a District Judge. The party shall file with the
Clerk of the Court and serve on all parties a written request for an
appeal which shall specifically designate the order or part of the order
that the parties wish the Court to reconsider. A District Judge shall
reconsider the matter and shall set aside any portion of the Magistrate
Judge’s order found to be clearly erroneous or contrary to the law. A
District Judge may also reconsider sua sponte any matter determined
by a Magistrate Judge under this rule.
Also, under Federal Rule of Civil Procedure 72(a), the Court may modify or reverse
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a magistrate judge on a non-dispostive issue upon a showing that the magistrate
judge’s decision is “clearly erroneous or contrary to the law.” Specifically, Federal
Rule of Civil Procedure 72(a) provides:
Nondispositive Matters. When a pretrial matter not dispositive
of a party’s claim or defense is referred to a magistrate judge to hear
and decide, the magistrate judge must promptly conduct the required
proceedings, and when appropriate, issue a written order stating the
decision. A party may serve and file objections to the order within 14
days after being served with a copy. A party may not assign as error a
defect in the order not timely objected to. The district judge in the case
must consider timely objections and modify or set aside any part of the
order that is clearly erroneous or is contrary to the law.
A finding is clearly erroneous when “the reviewing court on the entire evidence is
left with the definite and firm conviction that a mistake has been committed.”
Anderson v. City of Bessemer, 470 U.S. 564, 573 (1985)(quoting United States v.
United States Gypsum Co., 333 U.S. 364, 395 (1948); See also Weeks v.
Samsung Heavy Industries Co. Ltd., 126 F.3d 926, 943 (7th Cir. 1997)(“The clear
error standard means that the district court can overturn the magistrate judge’s
ruling only if the district court is left with the definite and firm conviction that a
mistake has been made.”).
In a very thorough analysis, Judge Daly found:
“Defendant’s conclusory argument misses the mark. First,
Defendant has failed to articulate the precise legal interest that binds
the parties in ‘Group 2’ (aside from ‘defeating’ the Cori Plaintiffs).
Indeed, what Defendant describes appears to be a mere ‘rooting
interest’ among these individuals and entities against the Individual
Plaintiffs. While it is apparent that there are disputes concerning the
Phyllis Schlafly Family of Marks and the corporate governance of
Eagle Forum, the Court is not convinced that the interests of PSAE are
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clearly aligned with ETF, EFELDF, or PSRT, or any trustee or
member of the Board of the same. If they are, Defendant has failed to
meet its burden on this point.
In particular, with regard to
ownership of the Family of Marks, it appears these entities have taken
differing opinions. Similarly, there has been no showing of a
common legal interest between PSAE or members of its Board of
Directors (Kathleen Sullivan, Ed Martin, John Schlafly, Andrew
Schlafly, and Phyllis Schlafly at the time this lawsuit was filed) and
other individuals identified by Defendant in ‘Group 2’ (Bruce Schlafly,
Liza Forshaw, or Ned Pfeifer). While communications between
Kathleen Sullivan, Ed Martin, John Schlafly, Andrew Schlafly, and
counsel for PSAE concerning legal advice and strategy for this case are
certainly protected, see Wilson v. San Tropai Condominium Mater
Ass’n, 189 F.R.D. 371, 379 (N.D. Ill. 1999), the Court finds no basis to
extend his privilege to communications with individuals not within the
PSAE ‘control group.’
In other words, those communications
identified on the privilege log that were not solely confined to
controlling members of PSAE and PSAE’s counsel are not protected by
the common interest doctrine. Insofar as there are communications
solely between controlling members of PSAE, the Court would need to
address claims of privilege on a case-by-case basis.
With regard to Roger Schlafly in particular, the Court finds no
basis to apply the common interest doctrine to communications in
which he was a part. Defendant indicates that although Roger
Schlafly is not a party to any of the ongoing litigation, he was very
much involved in advising his mother, including setting up and
maintaining databases, web sites, mailing lists, accounting programs,
and other computer programs. Defendant also explains that he
‘advised lawyers concerning these matters during the course of
litigation.’
While the Court recognizes that the common interest doctrine
can cover communications between non-lawyers of multiple parties
with a common interest, Defendant’s reliance on this point with regard
to Roger Schlafly is misplaced. … Defendant has not addressed why
Roger Schlafly’s familiarity with the litigation and knowledge of the
data bases, web sites, and other intellectual property at issue in this
case and others entitles him to receive otherwise privileged
communications in this litigation. Moreover, Defendant as failed to
show how Roger Schlafly shares a common legal interest with
Defendant. That Roger Schlafly made inquiries related to and
concerning the litigation against the Individual Plaintiffs is certainly
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not sufficient to except his communications from the general waiver
rule.
Defendant further asserts that communications with
Runnymede Law Group and Smith Amundsen prior to October 20,
2016 are privileged and need not be disclosed. In setting forth this
argument, Defendant asks the Court to treat the asserted privilege
here like a derivative suit where the company is divided between the
shareholders and directors.
…
As mentioned by Plaintiffs, Garner holds that shareholders can
only obtain otherwise privileged documents from a corporation in a
derivative suit upon a showing of good cause. 430 F.3d at 1103.
The Garner holding indicates that the privilege lies with the
corporation. See id. (‘The attorney-client privilege still has viability
for the corporate client. The corporation is not barred from asserting
it merely because those demanding information enjoy the status of
stockholders.’). Accordingly, its application is dubious, as PSAE and
ETF are seeking to enforce the privilege, not Eagle Forum. That there
is ongoing litigation between the directors of Eagle Forum in other
venues does not allow one group of those directors to invoke privilege
on behalf of the corporation in this litigation. Further, the Court does
not find that PSAE and Eagle Forum shared a common legal interest
before October 20, 2016.”
(Doc. 117; ps. 7-10; footnotes omitted).
Here, the Court finds that defendant’s appeal and objections fall short.
Defendant has not established that Magistrate Judge Daly’s Order is clearly
erroneous or contrary to the law. Defendant merely takes umbrage with Judge
Daly’s Order and rehashes arguments that it previously raised and that were
rejected. Magistrate Judge Daly’s February 1, 2018 Order is well written and
clearly sets out the reasons for her ruling.

Moreover, Magistrate Judge Daly

certainly had the discretion to find as she did and accordingly her ruling is not

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subject to a finding that it is contrary to the law. Thus, there is no reason for this
Court to vacate Magistrate Judge Daly’s Order.
Accordingly, the Court AFFIRMS Magistrate Judge Daly’s February 1, 2018
Memorandum and Order (Doc. 117) and DENIES Defendant’s appeal and
objections to Magistrate’s Order of February 1, 2018 pursuant to Fed. R. Civ. P. 72
(Doc. 120).

Judge Herndon
2018.03.06
14:29:16 -06'00'

IT IS SO ORDERED.

United States District Judge

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