Commercial Litigation and Arbitration

Attorney-Client Privilege — At Issue Waiver — Filing Fraud Claim Does Not Put Advice of Plaintiff’s Counsel at Issue, But Factual Information Conveyed Is Discoverable

From Ill. Central R.R. v. Harried, 2010 U.S. Dist. LEXIS 20938 (N.D. Ill. Feb . 11, 2010):

In their Motion to Compel and in their Motion for Ruling regarding the documents for in camera review, the defendants argue that IC implicitly waived the attorney/client privilege by filing this fraud claim and making the question of "reliance" a central issue in this case. More specifically, the defendants argue that because reliance is an element of fraud, the defendants are entitled to discover all information that the plaintiff relied upon in making its decision to settle. As support for their position, the defendants rely on Conkling v. Turner, 883 F.2d 431 (5th Cir. 1989). In Conkling, the court held:

When confidential communications are made a material issue in a judicial proceeding, fairness demands treating the defense as a waiver of the privilege. . . . The great weight of authority holds that the attorney-client privilege is waived when a litigant places[s] information protected by it in issue through some affirmative act for his own benefit, and to allow the privilege to protect against disclosure of such information would be manifestly unfair to the opposing party.

Id. at 434 (citations omitted). The defendants argue that IC placed the information they relied upon when deciding to settle at issue when it filed the instant fraud suit.

Courts have held that "a party can waive the attorney client privilege by asserting claims or defenses that put his or her attorney's advice in issue in the litigation." Rhone-Poulenc Rorer Inc. v. The Home Indemnity Co., 32 F.3d 851, 864 (3rd Cir. 1994); Conklin, 883 F.2d at 434. However, in the instant suit, IC has not done so. On the contrary, IC has put at issue its reliance on the information provided to it by the defendants, i.e. the pulmonary questionnaires submitted by the defendants to IC as a prerequisite to settlement. IC has not put at issue the advice or information provided by its own attorneys. As a result, IC has not implicitly waived the attorney client privilege. Although the attorney/client privilege is meant to protect confidential communications "between a client and his attorney, . . . the privilege does not protect against the disclosure of underlying facts." Nevada Partners Fund, LLC v. United States, 2008 WL 2484198 at *6 (S.D. Miss. 2008)(citations omitted)(unpublished). Further, "because the privilege 'has the effect of withholding relevant information from the fact-finder, it applies only where necessary to achieve its purpose.'" U.S. v. Robinson, 121 F.3d 971, 974 (5th Cir. 1997)(citations omitted). In its Amended Complaint, IC asserts claims of fraud against the defendants. To succeed on a claim of fraud, the plaintiff must show that there was "(a) a material false representation, (b) the representation is known by the speaker to be false, (c) the representation is made with an intent to induce the unwitting hearer to act in reliance thereon, (d) the hearer does, in fact, act to his detriment in reasonable reliance on the false representation, and (e) the hearer suffers a consequent injury based on such reliance." *** Hence, whether or not IC relied on factual information provided by the defendants during the settlement of prior claims is a material issue in this case. Therefore, documents that show factual information IC relied upon in deciding to settle the Willie Harried and Warren Turner claims are discoverable. See Rhone-Poulenc, 32 F.3d at 862 (holding that the attorney client privilege extends to communications but may be inapplicable to facts incorporated into the privileged communication)(citing Upjohn Co. v. U.S., 449 U.S. 383, 395-96 (1981)).After a careful review of the documents, this Court finds that the attorney client privilege applies only in part to the documents at issue.

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