UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

RONALD LEVIN and MICHELLE

LEVIN,

Plaintiffs,

 v.

MENARD, INC., and FIELD’S FIRE

PROTECTION, INC.,

Defendants.

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 Case No. 12 C 3941

 District Judge Edmond E. Chang

Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER 

Geraldine Soat Brown, United States Magistrate Judge

Before the court is plaintiffs Ronald and Michelle Levin’s motion to compel certain

discovery, including the re-deposition of Travis Hoover, an insurance adjuster for Zurich North

America (“Zurich”). (Pls.’ Mot.) [Dkt 67.] Defendant Menard, Inc. (“Menard”) opposes the motion

(Def.’s Resp.) [dkt 69], and plaintiffs have replied (Pls.’ Reply) [dkt 88]. Forthe following reasons,

plaintiffs’ motion is granted in part and denied in part.

Background

Plaintiffs seek damages from Menard and Fields Fire Protection, Inc. (“Fields”) for injuries

Mr. Levin allegedly sustained when he slipped on water in a Menard’s store in Matteson, Illinois,

on June 28, 2010. (Second Am. Compl. ¶¶ 1, 12.) [Dkt 71.] Plaintiffs maintain that the water

leaked from a spigot being repaired on the day of the incident by Fields employees. (Id. ¶¶ 11-12.) 

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Mr. Levin alleges that he reported the accident to Menard’s customer-service personnel and later

discovered that they had known about the leak for several hours. (Id. ¶ 14.) 

Plaintiffs also allege that, shortly after Mr. Levin reported the accident, Menard’s customerservice personnel photographed the area of the fall and the source of the water, and refused to let

Mr. Levin take his own pictures of the accident site. (Id. ¶ 100-03.) The pictures of the scene are

now missing, and questions about what happened to them are at the heart of plaintiffs’ motion to

compel. During discovery, Menard’s employee Tammie Sarek testified in a deposition that she took

the pictures with a digital camera and that store manager Donovan Burney then uploaded the

photographs to a computer and sent them to Menard’s insurance company, Zurich. (Pls.’ Mot., Ex.

1, Dep. of Tammie Jo Sarek, at 73-74.) In contrast, according to Menard, Mr. Burney said that he

did not send the photographs and thought Ms. Sarek did. (Def.’s Resp. at 3.) 

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In August 2013, plaintiffs’ counsel deposed Travis Hoover, one of two Zurich insurance

adjusters assigned to this matter. (Def.’s Resp., Ex. 2, Dep. of Travis Hoover, at 4-6.) Mr. Hoover

testified that Ms. Sarek told him about the photographs of water on the floor during his investigation

of the accident and that he requested them from Menard’s corporate office on July 13, 2010, but a

corporate representative denied receiving any photographs. (Id. at 19-23.) Mr. Hoover said that he

followed up with Ms. Sarek, who promised to send the photographs to corporate again. (Id. at 21.) 

Mr. Hoover stated that he then sent a follow-up email about the photographs to Menard’s corporate

representative on July 30, 2010, but never received the photographs. (Id. at 21-23.) 

Plaintiffs contest this reading of Mr. Burney’s testimony, but the court cannot confirm either 1

parties’ interpretation because the parties have not included the transcript of Mr. Burney’s

deposition. Plaintiffs say that the transcript is still being prepared. (Pls.’ Reply at 3-4 n. 2.) The

exact content of Mr. Burney’s testimony is not necessary to resolve this motion.

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Throughout Mr. Hoover’s deposition, counsel for Menard objected that communications

between Menard’s employees and the insurance company were privileged. (Id. at 11-21.) Based on

that objection, Menard’s counsel directed Mr. Hoover not to answer a general question about what

he was told by Menard’s employees when he asked about the facts of the claim. (Id. at 11-12.)

Counsel did, however, allow Mr. Hooverto answer questions about his conversations with Menard’s

employees with respect to the disputed photographs, though counsel repeatedly confirmed that he

was not otherwise waiving the insurer-insured privilege. (Id. at 15, 19.) Menard’s counsel claimed

to represent both Zurich and Menard in this litigation. (Id. at 12.) 

In addition to directing Mr. Hoover not to answer certain questions, Menard refused to

produce claim notes, photographs, and electronic communications exchanged between Zurich and

Menard on the basis that they are privileged and that plaintiffs’ requests for production were vague

and overbroad. (Pls.’ Mot., Ex. 7 ¶¶ 7, 15; Ex. 9 ¶ 6.) Menard’s response to plaintiffs’ request for

records asserts privilege as to four specific documents: (1) a one-page “Notice of Occurrence/Claim”

that a Zurich employee drafted on June 28, 2010, based on information from Ms. Sarek; (2) a threepage document of “Care Center Notes” that a Zurich employee drafted on June 28, 2010, based on

information from Ms. Sarek; (3) a two-page “Claim ReportingGuide” that Ms. Sarek drafted on June

28, 2010, and submitted to Zurich; and (4) claim notes based on communications with Menard’s

managers and defense counsel that were entered into an electronic database that Zurich maintains. 

(Pls.’ Mot., Ex. 7 ¶ 15.)2

In its response to plaintiffs’ production requests, Menard stated that these documents are 2

also covered by work-product protection in addition to insurer-insured privilege. But Menard did

not argue on behalf of its assertion of work-product protection in its response to plaintiffs’ motion

to compel, so the court will not address it.

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Around the same time, on August 12, 2013, plaintiffs’ attorney issued a Notice of Deposition

under Fed. R. Civ. P. 30(b)(6) for a Menard’s representative who could testify about the company’s

document retention policies and computer and data systems. (Pls.’ Mot., Ex. 6.) On September 3,

2013, two days before the deposition was set to occur, Menard offered Bryan Araque, who had been

the general manager of the Matteson store since July 2011, as a representative to discuss general

policies at his store. (Pls.’ Mot., Ex. 10.) Menard objected, however, to producing a representative

to address Menard’s overall computer and data systems, challenging that topic area as vague and

overbroad. (Id.) Mr. Araque was deposed on September 5, 2013, and testified that the information

on the hard drives of the computers at the Matteson store had been put on disks and sent to Menard’s

corporate office in April and May of 2013, where they were erased. (Pls.’ Reply, Ex. 12, Dep. of

Bryan Araque.) Mr. Araque also stated, however, that he did not have specific knowledge about how

Menard’s computer and data systems operate or the corporate office’s retention policy for electronic

information. (Id. at 45, 49, 51-52.) Plaintiffs’ attorney says that he tried to confer with Menard’s

counsel about its objections after Mr. Araque’s deposition, but Menard’s attorney refused to discuss

the matter. (Pls.’ Mot. ¶ 24.) 

On September 10, 2013, plaintiffs moved to compel the production of all field notes and

insurances files relating to their claims, and the re-deposition of Mr. Hoover with instructions that

Menard’s counsel not claim to represent or assert attorney-client privilege regarding Zurich. (Pls.’

Mot. ¶ 9.) Plaintiffs also argued Menard had unreasonably delayed the litigation by (1) not

producing a reasonablyknowledgeable person to discuss the matters described in the 30(b)(6) notice,

(2) erroneously asserting attorney-client privilege, and (3) improperly refusing plaintiffs’ requests

for production. (Id. ¶ 27.) Plaintiffs challenged Menard’s counsel’s assertion of the insurer-insured

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privilege, an offshoot of the attorney-client privilege under Illinois law, on the basis an attorney

representing both Menard and Zurich has a conflict of interest. (Id. ¶ 9.) (The parties agree that state

law governs the assertion of privilege. Fed. R. Evid. 501.) Even if the privilege applied, plaintiffs

contended, it was waived when Menard put the communications at issue by destroying the

photographs. (Id. ¶¶ 13-19.)

Menard responded, defending its actions during discovery. First, it argued that it had

properly asserted, and did not waive, the insurer-insured privilege under Illinois law. (Def.’s Resp.

¶¶ 19-42.) Menard also contended that there is no conflict of interest in its attorneyrepresenting both

Menard and Zurich because Illinois law allows an attorney to represent an insured and its primary

insurer if hired to represent the insured in litigation. (Id. ¶¶ 43-53.) Additionally, Menard defended

its refusal to produce a Rule 30(b)(6) representative regarding computer and data systems by arguing

that plaintiffs’ request was overbroad, asserting that “there is no evidence that the photographs taken

byTammie Sarek everleft the digital camera in the Matteson Menard store.” (Id. ¶¶ 56-58.) Finally,

Menard argued that sanctions would be inappropriate because it was substantially justified in

asserting privilege and plaintiffs’ attorney did not properly confer before moving to compel. (Id.

¶¶ 62-65.)

On September 12, 2013, plaintiffs filed a second amended complaint adding a count of

spoliation of evidence. (Second Am. Compl. ¶¶ 96-114.) In the added claim, plaintiffs allege that

Menard breached its duty to preserve the pictures its employee took of the scene of the accident. (Id.

¶¶ 113-14.) Plaintiffs contend that the loss of these pictures, combined with Menard’s employees’

refusal to let Mr. Levin take his own pictures, has prevented them from proving the size and source

of the water. (Id. ¶ 108.)

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On September 13, 2013, at the parties’ request, the court deferred further briefing on the

motion to compel and struck the fact discovery cutoff so that the parties could focus on gathering

evidence related to medical expenses and lost wages for the purpose of potentially settling this case. 

[Dkt 72.] On May 9, 2014, the court reinstated briefing after the parties were not able to reach a

settlement. [Dkt 85, 86.] Plaintiffs then filed their reply on May 28, 2014. 

Discussion

I. The Insurer-Insured Privilege

Application of the Privilege

The primary issue raised in plaintiffs’ motion to compel is whether Menard waived the

insurer-insured privilege as to its employees’ communications with Zurich. (Pls.’ Mot. at 5.) 

Plaintiffs’ reply revealed, however, an underlying factual dispute regarding what plaintiffs’ contend

is a threshold issue to Menard’s assertion of privilege: whether Zurich is a primary or excess insurer

for Menard. 

Menard asserts in its response that Zurich has a duty to defend Menard as its primary insurer. 

(Def.’s Resp. ¶¶ 28, 48.) Indeed, under Illinoislaw, a primaryinsurer—one providing coverages that

“attaches immediately upon the happening of the occurrence or accident that exposes the insured to

potential liability”—must “defend an action against an insured when the complaint in that action sets

forth allegations which bring the claim potentially within the coverage of the insurance policy.” 

Nat’l Union Ins. Co. v. Dowd & Dowd, P.C., 2 F. Supp. 2d 1013, 1017-18 (N.D. Ill. 1998)

(quotations omitted). Illinois law extends the attorney-client privilege to communications by the

insured to the insurer where the communication is made for the dominant purpose of transmitting

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it to an attorney for the protection of the interests of the insured. Holland v. Schwan’s Home Serv.,

Inc., 992 N.E.2d 43, 85 (Ill. App. 2013). Plaintiffs argue, however, that Menard did not provide

evidentiary support for its assertion that Zurich was its primary insurer. (Pls.’ Reply at 7-8.) 

Without that support, the court could not rule out that Zurich might be an excess insurer, i.e., its

coverage did not attach “until a predetermined amount of primary insurance is exhausted.” Nat’l

Union, 2 F. Supp. 2d at 1018. Plaintiffs argue that because an excess insurer does not have an

obligation to defend, the insurer-insured privilege cannot apply. Additionally, plaintiffs contend, 

if Zurich is an excess carrier, Menard’s attorney could not represent both Menard and Zurich, citing

Nat’l Union, 2 F. Supp. 2d at 1018 (stating that “unlike a primary insurer, an excess insurer has no

direct relationship with the attorney retained to defend an action against the insured”). (Pls.’ Reply

at 7-8.)3

None of the cases cited by plaintiffs expressly hold that the insurer-insured privilege does not

extend to an insured’s communications with an excess carrier, nor do they say that the same attorney

cannot represent an excess carrier and the insured in responding to the underlying claim. It is not,

however, necessaryto reach those questions here because the facts as ultimatelydeveloped show that

Zurich is Menard’s primary insurer. Because Menard is the party asserting the insurer-insured

privilege, it bears the burden of presenting evidence to establish the privilege. See Consolidation

Coal Co. v. Bucyrus-Erie Co., 432 N.E.2d 250, 257 (Ill. 1982). Thus, in response to the concerns

raised by plaintiffs, the court ordered Menard to file a copy of the Declaration of Insurance that it

In Nat’l Union, the district court predicted that the Illinois Supreme Court would not permit 3

an excess insurer to assert a malpractice action on its own behalf against the insured’s attorney, but

would permit the excess insurer to be subrogated to the insured’s malpractice claim. Nat’l Union,

2 F. Supp.2d at 1027.

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had produced during discovery and a copy of its insurance policy with Zurich. (Order, May 30,

2014.) [Dkt 90.] 

On June 3, 2014, Menard provided copies of the requested documents. [Dkt 91.] The

submitted insurance policy includes a provision outlining Zurich’s duty to defend Menard in the

event of a civil lawsuit seeking damages for personal injury. (Id., Ex. 1, at 22.) The policy also

describes the insurance as primary insurance, unless the loss incurred falls under certain exclusions

that do not appear to be applicable here. (Id. at 28.) Based on these documents, Menard has met its

burden of demonstrating that Zurich has a duty to defend it as its primary insurer in regard to this

litigation. Thus, Menard’s attorneymay properly represent Zurich and Menard as part of a tripartite

relationship, and the insurer-insured privilege attaches to communications between Zurich and

Menard’s employees.

Waiver of the Privilege

Plaintiffs also argue that, if the privilege applies, Menard has waived it. (Pls.’ Reply at 6-7.) 

As plaintiffs explain, Illinois courts recognize express and implied waivers of privilege. Ctr.

Partners, Ltd. v. Growth Head GP, LLC, 981 N.E.2d 345, 365 (Ill. 2012). Express waiver occurs

when a client voluntarily testifies about privileged communications, expressly agrees to waive the

privilege, or fails to assert the privilege when privileged information is requested. Id. Waiver is

implied when a party asserts claims or defenses that put the privileged communications at issue in

the litigation. Id. In interpreting privilege, Illinois courts “adhere to a strong policy of encouraging

disclosure, with an eye toward ascertaining that truth which is essential to the proper disposition of

a lawsuit.” Waste Mgmt., Inc. v. Int’l Surplus Lines Ins. Co., 579 N.E.2d 322, 327 (Ill. 1991).

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The court agrees with the plaintiffs that Menard waived the privilege in regard to

communications between Menard’s employees andZurich about themissing photographs. Menard’s

employee, Ms. Sarek, testified that the missing photographs had been sent to Zurich, placing

communications surrounding the transmission of those photographs at issue in this litigation. 

Moreover, counsel forMenard allowed Mr. Hooverto answer whether he asked Menard’s employees

if there were photographs taken and to describe his conversations with Ms. Sarek about the pictures. 

(Hoover Dep. at 15 (“[W]ith respect to the photographs, I’ll allow him to answer that. I’m not

waiving any other privilege with respect to Zurich.”); id. at 19 (“I’ll allow him to answer those

questions with respect to conversations between Zurich and Menard’s strictly limited to the issue of

the photographs which is the subject in dispute.”). By allowing a representative of Zurich to

voluntarily testify about his conversations with Menard’s employees about the pictures, Menard

waived the privilege in regard to those communications.4

A waiver as to some insurer-insured communications, however, is not a waiver as to all

communications. When a disclosure made in a federal proceeding waives privilege, the waiver

extends to undisclosed communications or information only if “(1) the waiver is intentional; (2) the

disclosed and undisclosed communications or information concern the same subject matter; and

A decision from this district suggests that Fed. R. Evid. 502(b), rather than state law, 4

governs whether a disclosure in a federal proceeding waives the attorney-client privilege in diversity

cases. See Sidney I. v. Focused Retail Property I, LLC, 274 F.R.D. 212, 215 (N.D. Ill. 2011);

but see Sullivan v. Alcatel-Lucent USA, Inc., No. 12 C 7528, 2013 WL 2637936 at *8 (N.D. Ill. June

12, 2013) (applying Illinoislaw regarding waiver); Stopka v. Am. Family Mut. Ins. Co., 816 F. Supp.

2d 516, 529 (N.D. Ill. 2011) (same). Under Rule 502(b), inadvertent disclosure of privileged

information in a federal proceeding does not waive privilege if the privilege holder took reasonable

steps to prevent disclosure and to rectify the error. Neither side contends that this rule applies to

Menard’s disclosures in this case. To the extent that Rule 502(b) governs, it does not protect the

communications about the pictures because, as discussed, Menard’s disclosure of the content of

those communications was not inadvertent. 

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(3) they ought in fairness to be considered together.” Fed. R. Evid. 502(a). Rule 502 “applies even

if state law provides the rule of decision.” Fed. R. Evid. 502(f). Here, Menard’s counsel repeatedly

invoked the privilege in regard to communications that do not relate to the missing pictures, and

disclosure of further communications between Zurich and Menard’s staff is not necessary to

understand the communications about the pictures. (See Hoover Dep. at 11-12, 15, 19, 21.) 

Moreover, requiring disclosure of communications regarding Menard’s potential liability in this

circumstance would undermine the privilege’s purpose of encouraging full and frank consultation

between insurers and insured. Waste Management, 579 N.E.2d at 326-27. Accordingly,

communications unrelated to the photographs are privileged.

Based on that understanding, plaintiffs are not entitled to re-depose Mr. Hoover. Mr. Hoover

already answered plaintiffs’ questions about his communications with Ms. Sarek and Menard’s

corporate office about the missing pictures. (Hoover Dep. 21-23.) Further, Mr. Hoover confirmed

during his deposition that he did not do any other follow up investigations to locate the pictures. (Id.

at 23.) For those reasons, the court denies plaintiffs’ request to re-depose Mr. Hoover. 

As for the documents that Menard has refused to produce, it is impossible for the court to

determine whether they are related to the missing photographs without reviewing them in camera. 

Three of the documents were drafted based on information from Ms. Sarek, so there may be

discussion about the photographs in those documents, and that information would fall under the

scope of Menard’s waiver of privilege. Thus, Menard is instructed to submit copies of the

documents listed in paragraphs 4 and 15 of exhibit 7 to plaintiffs’ motion to compel—including the

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Notice of Occurrence, Care Center Notes, and the Claim Notes—for the court’s in camera review.5

II. Rule 30(b)(6) Representative

Plaintiffs also argue that Menard violated Rule 30(b)(6) by producing a witness, Mr. Araque,

who could not testify about matters listed in the deposition notice. (Pls.’ Reply at 8-10.) In contrast,

Menard argues that “discovery relating to the computer and data systems of Menard, Inc. is neither

relevant nor likely to lead to admissible evidence” because “there is no evidence that the photographs

taken by Tammie Sarek ever left the digital camera in the Matteson Menard store.” (Def.’s Resp. ¶¶

57-58.) 

Plaintiffs dispute Menard’s statement (Pls.’ Reply at 9), and there is deposition testimony to

support the contention that the photographs were, or should have been, sent to Menard’s corporate

office. Ms. Sarek stated that Mr. Burney, the store manager, uploaded the pictures onto a local

computer and then sent them to the insurance company. (Sarek Dep. at 73-74.) Mr. Hoovertestified

that Ms. Sarek told him that the pictures would be sent to Menard’s corporate office. (Hoover Dep.

at 21.) Mr. Araque testified that the information on hard drives of the computers at the Matteson

store was put on disks and given to the corporate office to be erased. (Araque Dep. at 54.)

Thus, contrary to Menard’s assertions, there is some evidence to support plaintiffs’ position

that the pictures were uploaded to the store computer and sent to either the insurance company or

Menard’s corporate office. For that reason, testimony about the corporate office’s retention policies

and systems for storing electronic information are relevant, particularly to plaintiffs’ allegation of

It appears that the two-page Claim Reporting Guide submitted by Ms. Sarek on June 28, 5

2010, has already been produced to plaintiffs as it was submitted to the court as an attachment to

their reply. (Pls.’ Reply, Ex. 11.)

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spoilation. Accordingly, plaintiffs’ request that Menard produce a corporate representative who can

testify about those matters is granted.

III. Sanctions and Other Relief

Plaintiffs request sanctions for Menard’s failure to produce discoverable information. (Pls.’

Mot. at 1; Pls.’ Reply at 10.) Generally, when a motion to compel is granted, “the court must, after

giving an opportunity to be heard, require the party or deponent whose conduct necessitated the

motion, the party or attorney advising that conduct, or both to pay the movant’s reasonable expenses

incurred in making the motion, including attorney’s fees.” Fed. R. Civ. P. 37(a)(5)(A). Expenses

will not be awarded, however, if the movant did not first try to resolve the dispute without court

action, the opposing party’s actions were “substantially justified,” or the award would be unjust. Id.

The court declines to recommend sanctions at this time. Although the court concludes that 6

Menard waived the insurer-insured privilege as to communications about the missing photographs,

the company’s assertion of that privilege was not baseless because the privilege continues to protect

communications unrelated to the pictures. See Babych v. Psychiatric Solutions, Inc., 271 F. R. D.

603, 611 (N.D. Ill. 2010) (refusing to impose sanctions when unsuccessful objections to privilege

were substantially justified). As for Menard’s failure to produce a suitable representative, the court

is not convinced that plaintiffs’ counsel did all that it could to resolve that dispute before bringing

its motion. Granted, Menard did not notify plaintiffs’ counsel of its objections to the scope of the

deposition until two days before it occurred, but plaintiffs’ counsel then attempted to discuss

As this court has noted before, the Seventh Circuit has yet to address squarely whether a

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magistrate judge has authority to impose expenses under Rule 37(a)(5). Cardenas v. Grozdic, No.

12 C 292, 2013 WL 4080652 at *3 n. 2 (N.D. Ill. Aug. 13, 2013). 

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Menard’s objections in the middle of Mr. Araque’s deposition and at the end of the deposition while

Mr. Araque was waiting. (Araque Dep. at 50-52; Pls.’ Reply, Ex. 14.) This tactic was not conducive

to resolving the parties’ differences. Menard’s counsel offered to discuss the matter further by

telephone, but there is no record of that discussion taking place before plaintiffs filed their motion

five days later. Because each party appears to have had a hand to play in failing to resolve the Rule

30(b)(6) issue without court action, plaintiffs’ request for sanctions is denied.

Finally, plaintiffs mention in their reply that there is a remaining question about whether

Menard “should be barred from using any subsequently discovered photographic evidence of the site

of the incident, barred from offering testimony regarding a description of the site of the incident, and

permitting the Plaintiff to offer Illinois Pattern Jury Instruction 1.5.” (Pls.’ Reply at 2.) That

question, however, is not discussed further in plaintiffs’ motion or reply and would be premature to

address as part of the motion to compel, so the court will not rule on it at this time.

Conclusion

Accordingly, plaintiffs’ motion to compel is granted in part and denied in part as set forth

in this order. Menard shall submit the documents for the court’s in camera review, as discussed

in this order, by June 17, 2014.

________________________________

Geraldine Soat Brown

United States Magistrate Judge

DATE: June 10, 2014

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