The parties agree on the standard used to judge whether or not a document is subject to the attorney/client privilege. The Seventh Circuit applies the attorney/client privilege as outlined by Wigmore: (1) Where legal advice of any kind is sought, (2) from a professional legal adviser in a capacity as such, (3) the communications relating to that purpose, (4) made in confidence, (5) by the client, (6) are at the client's instance permanently protected (7) from disclosure by the client or by the legal adviser (8) unless the protection is waived. U.S. v. White, 950 F.2d 426, 430 (7th Cir.1991). The burden is on the party asserting the privilege to prove its existence.
Where, as here, the client is a corporation, a slightly different formation of the basic Wigmore statement applies. The privilege applies if:
*2 (1) the communication was made for the purpose of securing legal advice; (2) the employee making the communication did so at the direction of his corporate superior; (3) the superior made the request so that the corporation could secure legal advice; (4) the subject matter of the communication is within the scope of the employee's corporate duties; and (5) the communication is not disseminated beyond those persons who, because of the corporate structure, need to know its contents.
Diversified Industries, Inc. v. Meredith, 572 F.2d 596, 609 (8th Cir.1978).
Two significant limitations, over and above the obvious requirement that all of the criteria in the Wigmore and Diversified
formulations be present, concern the concepts of communication and waiver. The attorney/client privilege protects communications not underlying facts. Facts otherwise available to the requesting party are not shielded by the attorney/client privilege merely because they may have been communicated to legal counsel. It is the communication itself that is protected. Put another way, as we will see, in the case of one of these documents: No communication, no privilege.
The concept of waiver derives from the essence of the privilege, the protection of confidential communications. Just as the absence of a communication is fatal to the privilege; similarly, should the communication cease to be confidential, that is by dispersal beyond the attorney/client relationship, the privilege is lost.
Codification of the principles of the work product doctrine, first recognized in Hickman v. Taylor, 329 U.S. 495 (1947), can be found in Fed.R.Civ.P. 26(b)(3). That rule provides a qualified protection from discovery in a civil action when materials are (1) documents and tangible things otherwise discoverable, (2) prepared in anticipation of litigation or for trial, and (3) by or for another party or by or for that other party's representative. Fed.R .Civ.P. 26(b)(3). To overcome the qualified protection, the party seeking discovery needs to show that it has a substantial need for the materials and an inability to obtain the equivalent without undue hardship. Fed.R.Civ.P. 26(b)(3).
In the case of the work product immunity, the purpose of the creation of a document is often critical to the availability of immunity. To secure the doctrine's protection, documents must be prepared primarily because of the prospect of litigation. The converse proposition is that documents prepared in the ordinary course of the business of a corporation do not receive work product protection, even if in a certain number of cases, litigation may well be likely. See
Logan v. Commercial Union Ins. Co., 94 F.3d 971, 977 (7th Cir.1996). As is often the case, the proposition is easier to state than to apply. Courts look at the nature of the business. For instance, documents generated in the claims department of an insurer are usually deemed not protected. The nearness in time to litigation is relevant. Also, the involvement of attorneys in the direction and creation of the document is often, but not always, conclusive on the question of litigation related purpose. See
Thomas Organ Co. v. Jadranska Slobodna Plovidba, 54 F.R.D. 367, 372 (N.D.Ill.1972). What is clear is that a determination of litigation purpose is to be made after a review of the nature of the document in relation to the business of the entity that created it in the light of all the factors set forth above.
*3 With this background in mind we turn to the nature of the work of Plaintiff's Quality Assurance Department and the nature of the four documents which derived from that work.
Although all the documents here at issue have their origin in the Access database, two types are directly derived from that database without any additional input or analysis. These are the QA Master Spreadsheet and the 2-Page Reports are individual loans. To understand the application of the asserted privileges and immunities, a further exploration of the Access database is required.
At the risk of resort to a perhaps over-used metaphor, one can consider the database of this sort as a file cabinet. The Investigations Department headed by Ms. Miller was provided a file cabinet with a drawer for each investigation. In the drawer are empty file folders to be filled as the investigation proceeds. The file folders are named by Mr. Smillie according to the materials he needs to analyze to determine the existence of a fraud loss and plaintiff's likely ability to recover for that loss in litigation. As the investigation proceeds, the investigators file materials into the “Promised Land” file drawer in the appropriate file folders. From time to time, the contents of the file drawer are reviewed by Ms. Miller and Mr. Smillie. At the conclusion of the investigation the entire contents of the file drawer are delivered to Mr. Smillie for his use in determining whether to recommend the initiation of litigation.
*4 Although admittedly stylized, the foregoing represents the “Access” Database and the product of its output, the 171 Page Master Spreadsheet. Applying the principles of the attorney/client privilege, it would appear that the Master Spreadsheet is a communication made to legal counsel from an employee of Plaintiff for the purpose of obtaining legal advice, that is, the availability of a legal recovery for fraud and the desirability of pursuit of that remedy.
What is more problematical is the application of waiver, or as set forth in the Diversified Industries
formulation, whether the communication was confined within the corporate structure to those with a need to know. In her deposition, Ms. Miller noted that others within the Plaintiff's organization have access to some but not all of the contents of the database. Who these persons might be and for what purposes they might be able to access the database were questions Ms. Miller was unable to answer. (Miller Deposition as 46-47). Thus, it is not possible at this time to state with certainty that the Promised Land Spreadsheet is a protected communication by operation of the attorney/client privilege.
Fortunately, the analysis under work product immunity is much more clear. As noted above, the data in the Spreadsheet have been arranged into categories at the direction of legal counsel to facilitate his provision of legal advice on whether to initiate litigation. (Smillie Deposition at 61-62). Upon these facts, the Spreadsheet is a document prepared in anticipation of, that is because of, litigation and not in the ordinary course of business.
However, the foregoing does not conclude the analysis under the work product doctrine. Work product immunity is a qualified immunity. It can be overcome upon a showing of substantial need. In this case, a primary defense is the statute of limitations. In particular, there will be a major issue as to when this cause of action accrued from the standpoint of the discovery rules, that is, when a reasonable party in the position of Plaintiff should have known it had sustained an injury at the hands of a particular Defendant. In such an inquiry, the information available to Plaintiff during April, May and June of 2002 about possible fraud by Promised Land and negligence on the part of closing agents is critical to the defense. Of course, this information is uniquely within the knowledge of the QA Department and its Investigation Department. The contents of the Access database, at the relevant time, could be critical to this determination, if such information can be derived.
The spreadsheet provided to the Court is one which appears to be generated during the summer of 2006. Despite this, the format and arrangement of information will be useful to Defendants, as well as the information itself, though much of this has apparently already been provided to Defendants through Plaintiff's loan files. Thus, the Court concludes that Defendant has shown substantial need for the production of the Access Spreadsheet.
*5 However, a final exception regarding so-called attorney opinion work product comes into play. The Rule directs Courts to “protect against disclosure of the mental impressions, conclusions or legal theories of an attorney or other representative.” Several of the categories and the information contained therein clearly fall within this protection based on the Court's inspection. Accordingly, the last four categories of the Spreadsheet may be redacted in the production ordered herein.
The foregoing determination to order production of a redacted version of the Spreadsheet also clarifies the availability of the attorney/client privilege. The document ordered produced is not the document communicated to counsel. What remains is merely a collection of facts, most already disclosed to Defendants. As such, it does not qualify as an attorney/client protected document.
The foregoing also resolves the applicability of the privilege and immunity to the two-page reports. This item is simply a slice as it were by individual borrowers of the “Access” database. The same information available in the individual two page reports is being provided with the production of the redacted spreadsheet. Further, these reports are also not protected by the attorney/client privilege as it is clear that the reports were never communicated in that format to counsel. (Miller Deposition at 58).
Ms. Miller testified in deposition that at the conclusion of her investigation, she provides for Mr. Smillie in addition to the Master Spreadsheet, a broker investigation summary. (Miller Deposition at 59). See also
Smillie Deposition at 30-38. The broker investigation summary is prepared for legal counsel to provide a final summary of the investigation. As such, it is clearly attorney/client material. (Miller Deposition at 63). As before there is some indication of possible waiver as Ms. Miller testified that others can receive the broker information summary. (Miller Deposition at 64). What remains unclear is whether the broker summary on Promised Land was dispersed outside those with need to know as it relates to attorney/client matters.
Again, the work product doctrine provides a clearer outcome. This document was prepared at counsel's instance and at counsel's direction as to information and format. The summary is provided to facilitate a decision on the initiation of litigation. (Smillie Deposition at 30-31). As such it is protected work product. However, while the same issues of substantial need are present with the broker summary, it is not possible to redact out the opinion work product. Accordingly, the document is protected as opinion work product and need not be disclosed. The Court will disclose that those portions of this document that relate to title companies and closing agents carry an “Effective Date” of April 28, 2004.
The final document at issue is the item denominated as the executive summary. This document is actually prepared by counsel and directed to management and provides the advice on whether to initiate litigation. (Miller Deposition at 61, 68). As such it is clearly protected by both the attorney/client privilege and the work product immunity for opinion work product. As such it need not be produced.