INTEGRA BANK CORPORATION et al v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND
ORDER granting in part and denying in part 148 Motion for Protective Order. A party seeking the deposition of opposing counsel bears a heavy burdento show that it is necessary. F&D has failed to satisfy any of the required Shelton elements and falls well short of demonstrating good cause for deposing Rifken. Signed by Magistrate Judge William G. Hussmann, Jr., on 6/3/2013. (NRN)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
FEDERAL DEPOSIT INSURANCE
CORPORATION as Receiver for Integra
FIDELITY AND DEPOSIT COMPANY
ENTRY ON MOTION FOR PROTECTIVE ORDER
Plaintiff, Federal Deposit Insurance Corporation, as receiver for Integra
Bank, N.A. (“FDIC”), seeks to recover on a financial institution bond issued to
Integra by Defendant, Fidelity and Deposit Company of Maryland (“F&D”).
FDIC now seeks a protective order to prevent F&D from deposing Integra’s
former litigation counsel, Lawrence Rifken. (Docket No. 148).1 For the reasons
set forth below, FDIC’s motion is GRANTED.
F&D filed a reply (Docket No. 162) and a Motion to Seal (Docket No. 164) an
additional portion of their response filed separately from the response. (Docket No.
163). The Magistrate Judge has declined to review Docket No. 163 in resolving this
Motion for Protective Order. While certain materials developed during discovery may
be subject to protection from discovery by the opposing party, once a party has
provided them to the court to consider in a litigated motion, the party tendering them
waives that protection. The court cannot render a public record opinion on a
discovery dispute while also shielding those materials from the other party and the
public. See Bond v. Utreras, 585 F.3d 1061, 1075 (7th Cir. 2009); Baxter Int’l, Inc. v.
Abbott Labs., 297 F.3d 544 (7th Cir. 2002). Since courts are not allowed to consider
Factual Background and Procedural History2
After Pearlman defaulted on two of his loans from Integra in late 2006,
Integra retained Rifken to explore and pursue litigation against Pearlman in
connection with those and other loans. (See, e.g., Plaintiff’s Ex. B). Rifken
represented Integra in the following matters: (1) its direct lawsuit against
Pearlman and his corporate entity, Trans Continental Airlines (“TCA”) (id.); (2)
forcing Pearlman and TCA into involuntary bankruptcy (Plaintiff’s Ex. C); (3)
defending Integra in a lawsuit filed by victims of Pearlman’s Ponzi scheme
(Plaintiff’s Ex. D); (4) defending Integra in an adversary proceeding by
Pearlman’s Bankruptcy Trustee (Plaintiff’s Ex. E); and (5) this current action.
(Docket No. 1). On October 26, 2011, FDIC was substituted for Integra as
plaintiff, and FDIC’s attorneys became counsel of record on January 12, 2012.
(Docket No. 56, 71-74).
On December 17, 2012, F&D’s counsel notified FDIC’s counsel that it
intended to depose Rifken. (Docket No. 142, Ex. K at 2). On March 29, 2013,
F&D filed an emergency motion to take an additional ten depositions. (Docket
No. 149). On April 9, 2013, Magistrate Judge William G. Hussmann, Jr.,
granted in part and denied in part F&D’s motion, requiring F&D to show good
ex parte briefs, see generally S.D.I ND.L.R. 7.1, F&D’s Motion to Seal (Docket No. 164)
2 The court has addressed much of the background in its companion Entry on F&D’s
Motion to Compel (Docket No. 189) and incorporates that section by reference. The
court’s discussion in this entry is limited to those facts related to Rifken’s
representation of Integra.
cause for deposing anyone not listed in the order, which Rifken was not.
(Docket No. 153 ¶ 3).
Federal Rule of Civil Procedure 26 requires parties to engage in broad,
open discovery, as “[p]arties may obtain discovery regarding any nonprivileged
matter that is relevant to any party’s claim or defense.” FED. R. CIV. P. 26(b)(1).
This broad discovery can, in some instances, include deposing the opposing
party’s trial counsel. See FED. R. CIV. P. 30(a), 31(a); Am. Cas. Co. of Reading,
Pa. v. Krieger, et al., 160 F.R.D 582, 585 (S.D. Cal. 1995). However, Rule 26
also authorizes protective orders to limit or preclude discovery when there are
less burdensome, inconvenient, or expensive sources, or when the burden and
expense for the movant outweigh the likely benefit for the non-movant. FED. R.
CIV. P. 26(b)(2)(C)(i),(iii), (c)(1)(A). Protecting lawyers from having to convey what
their clients told them or their mental impressions while representing clients
helps to maintain the standards of the legal impression. Hickman v. Taylor,
329 U.S. 495, 512-13, 67 S. Ct. 385, 91 L. Ed. 451 (1947). Therefore,
protective orders are often appropriate when a party seeks to depose the
opposing party’s counsel, which courts view with a “jaundiced eye.” M&R
Amusements Corp. v. Blair, 142 F.R.D. 304, 305 (N.D. Ill. 1992).
Normally, the party seeking to prevent discovery bears the burden of
proof as to why privilege should apply. See, e.g. Mullins v. Dep’t of Labor of
Puerto Rico, 269 F.R.D. 172, 175-76 (D. P.R. 2010); Rockies Express Pipeline
LLC v. 58.6 Acres, 2009 WL 5219025, at *3 (S.D. Ind. Dec. 31, 2009). However,
due to the court’s mandate that F&D show good cause for additional
depositions, F&D must show that: “(1) no other means exist[s] to obtain the
information than to depose opposing counsel, . . .; (2) the information sought is
relevant and nonprivileged; and (3) the information is crucial to the preparation
of the case.” Sherman v. Am. Motors Corp., 805 F.2d 1323, 1327 (8th Cir.
A. Other Means to Obtain the Information
F&D claims that Rifken’s extensive communications with F&D, Integra
personnel (that were not privileged), federal government agents, and the
Pearlman/TCA Bankruptcy Trustee gave him unique knowledge about facts
essential to F&D’s defenses of Integra’s compliance with the discovery and
notice provisions in the bond. (Defendant’s Response at 7). Since Rifken alone
has non-privileged knowledge relevant to F&D’s defenses, F&D should be able
to depose him. (Defendant’s Response at 7-8 (citing Specht, et al. v. Google,
Inc., 268 F.R.D. 596, 602 (N.D. Ill. 2010); Am. Cas. Co., 160 F.R.D. at 690)).
FDIC counters that F&D’s argument is meritless on its face—F&D’s focus on
F&D argues that the Seventh Circuit has not adopted Shelton, Miyano Machinery,
USA v. Miyano Hitec Machinery, Inc., et. al., 257 F.R.D. 456, 464 (N.D. Ill. 2008), and
Shelton is inapposite, since F&D seeks to question Rifken only about his actions prior
to the present litigation. Therefore, Rifken’s communications are not protected under
the work-product doctrine. Cascone v. The Niles Home for Children, 897 F. Supp.
1263, 1267 (W.D. Mo. 1995); Kaiser v. Mut. Life Ins. Co., et. al., 161 F.R.D. 378, 381,
382 (S.D. Ind. 1994). However, courts in the Seventh Circuit have used a Shelton
analysis, including the Miyano court itself. 257 F.R.D. at 464-65. Also, since courts
analyze the “propriety and need” for an attorney’s deposition, regardless of whether
they cite Shelton or not, see, e.g., Howard v. Securitas Sec. Servs., USA Inc., 630 F.
Supp. 2d 905, 910-11 (N.D. Ill. 2009), the court analyzes FDIC’s motion under
Rifken’s communications with others shows that Rifken is not the sole source
of the information. (Plaintiff’s Reply at 13 (citing Defendant’s Response at 2,
The court agrees with FDIC. As FDIC notes, F&D has already deposed
several Integra officials and has noticed the deposition of the Pearlman
Bankruptcy Trustee. (Id.). Even assuming the information sought is not
privileged, F&D has offered no proof that Rifken possesses unique knowledge of
these communications. The court therefore finds F&D has failed to meet the
B. Information sought is privileged
1. Legal Standards
Materials protected by either attorney-client or work-product privilege are
shielded from discovery. The attorney-client privilege “protects
communications made in confidence by a client and client’s employees to an
attorney, acting as an attorney, for the purpose of obtaining legal advice.”
Sandra T.E. v. S. Berwyn Sch. Dist. 100, 600 F.3d 612, 618 (7th Cir. 2010)
(citations omitted). The privilege belongs to the client, although an attorney
may raise it on a client’s behalf. Id.
For materials to be covered by attorney-client privilege, the court must
determine: (1) whether legal advice was sought from an attorney in her
capacity as an attorney; and (2) whether any communications between the
client and her attorney or attorney’s agent were germane to that purpose and
made confidentially. Id. (citing U.S. v. Evans, 113 F.3d 1457, 1461 (7th Cir.
1997). The party invoking attorney-client privilege must make a prima facie
showing of these elements. Rockies Express, 2009 WL 5219025, at *3.
Work-product privilege protects “(1) documents and tangible things that
are (2) prepared in anticipation of litigation or for trial (3) by or for another
party or its representative.” FED. R. CIV. P. 26(b)(3)(A) (emphasis and
numbering added). The purpose is to protect an attorney’s thought processes
and mental processes and to avoid allowing a less diligent attorney to
piggyback on the adverse attorney’s trial preparation. Sandra T.E., 600 F.3d at
622. Nonetheless, these materials may be discovered if they fall within Rule
26(b)(1)’s scope, the party has substantial need for the documents, and the
party cannot otherwise obtain their substantial equivalents without undue
hardship. FED. R. CIV. P. 26(b)(3)(A)(i-ii). If disclosure is mandated, any
attorney mental impressions must be redacted from the materials before they
are given to the adverse party. Id. at 26(b)(3)(B).
F&D claims that Rifken’s communications are not covered by either
attorney-client or work-product privilege. It argues Rifken’s communications
were either with third parties or based upon communications that Integra
produced, and thus Integra waived any attorney-client privilege that may have
existed in them. (Defendant’s Response at 8 (citing Am. Cas. Co., 160 F.R.D. at
590)). Since Rifken was working in a business, rather than legal capacity,
when he was making these communications, and the communications
happened before this litigation commenced, they cannot be considered work
product. (Id. (citing Stout v. Ill. Farmers Ins. Co., 150 F.R.D. 594 (S.D. Ind.
1993); Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655 (S.D. Ind. 1991)). FDIC
briefly rejoins that Integra had anticipated litigation involving Pearlman long
before the commencement of the action, before the FBI even issued a subpoena
to Integra. Therefore, the communications should be protected under both
work-product and attorney-client privilege. (Plaintiff’s Reply at 9 (citing Martin
v. Monfort, Inc., 150 F.R.D. 172, 173 (D. Colo. 1993)).
F&D is correct that business communications are not privileged and
would not be subject to a protective order. Upjohn Co. v. United States, 449
U.S. 383, 389-90, 101 S. Ct. 677, 67 L. Ed. 2d 584 (1981) (citations omitted);
Burden-Meeks v. Welch, 319 F.3d 897, 899 (7th Cir. 2003). However, F&D
offers no proof that Rifken ever worked in a business advisor capacity. To the
contrary, Rifken’s communications with Integra officials all appear to be related
to Integra’s overall litigation against and involving Pearlman. Given Rifken’s
status as outside counsel, and that he was never employed by Integra,
conclusory statements that he was acting in a business capacity are
insufficient for F&D to meet its burden.
Moreover, even if the communications were not made in connection with
this litigation, the attorney-client privilege would still apply, assuming that
Integra had not waived the privilege otherwise.4 Any communications between
Rifken, the Pearlman Bankruptcy Trustee, and other members of the Pearlman
Bankruptcy Creditors Committee are protected by the common interest
Even if Integra had waived privilege to some communications, that would beg the
question of whether Rifken is indeed the only available source of information.
doctrine, so long as the communications and work-product relate to a common
legal interest, e.g., maximizing the bankruptcy estate value. U.S. v. BDO
Seidman LLP, 492 F.3d 806, 815-16 (7th Cir. 2007); In re Mortgage & Realty
Trust, 212 B.R. 649, 653-54 (Bankr. C.D. Cal. 1997). Rifken was working as
Integra’s litigation counsel during the bankruptcy proceedings, and F&D has
offered no evidence that the communications with the Trustee and Creditors
Committee members were not made as a legal analyst. Therefore, Rifken’s
communications are all protected by either attorney-client or work-product
privilege or the common interest doctrine.
C. F&D does not show how the information is critical to its case
As discussed supra, F&D claims that Rifken’s information is essential to
its affirmative defenses that Integra did not notice or discover the fraud by
Integra Vice President Stuart Harrington during the bond coverage period.
F&D’s argument, like its argument that Rifken was the only source of
information, is based entirely on conclusory statements. Evaluated against the
good cause standard set out by this court (Docket No. 153 ¶ 3), the argument
A party seeking the deposition of opposing counsel bears a heavy burden
to show that it is necessary. F&D has failed to satisfy any of the required
Shelton elements and falls well short of demonstrating good cause for deposing
Rifken. FDIC’s Motion for Protective Order (Docket No. 148) is hereby
IT IS SO ORDERED the 3rd day of June.
William G. Hussmann, Jr.
United States Magistrate Judge
Southern District of Indiana
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