omitted).* Documents created in the ordinary course of business
are not protected work product. Allendale Mut. Ins. Co. v. Bull
Data Sys., Inc., 145 F.R.D. 84, 86 (N.D. Ill. 1992) (Documents
prepared in the ordinary course of business are not work product
even if litigation is pending.) Similarly,“a document prepared for
both legal and non-legal review is not privileged.” In re General
Instrument Corp., 190 F.R.D. 527, 530 (N.D. Ill. 2000)

Cambridge contends that the May 3, 2001 Summary of Plainfield
Due Diligence and the May 8, 2001 Farmington Village Executive
Summary were created at a time when it reasonably believed that
litigation with Ocean Atlantic was unavoidable, if not imminent.
But Cambridge fails to explain why such documents would not have
been prepared absent the threat of litigation with Ocean Atlantic.
B.F.G. of Ill. v. Ameritech Corp, NO. 99 C 4604, 2001 WL 1414468,
at *3 (N.D. Ill. Nov. 13, 2001) (“There is a ‘causation’ element
insofar as production of the material must be caused by the
anticipation of litigation.”) It seems unlikely that Cambridge
would commit to such a large development project without conducting
due diligence or preparing its Executive Summary.

Similarly, the E-mails sent on May 30, 2001, regarding the

4 It is important to note that the work product doctrine
extends to documents prepared by a party’s representative or
agent and not just the attorney. See, e.g., Ventre v. Datronic
Rental Corp., No. 92 C 3289, 1993 WL 524377, at *3 (N.D. Ill.
Dec. 13, 1993).

13


By July 1, 2001, the Property Owners had secured an easement
agreement on behalf of Cambridge. Cambridge and the Property
Owners agreed to indemnify Willow Tree Farm in the event that it
was sued by Ocean Atlantic.

Ocean Atlantic responded predictably, filing the instant
breach of contract suit against Willow Tree Farms on June 29, 2001
(one day before the deadline for construction of the pipeline) for
allegedly failing to provide written approval of specifications and
by denying Ocean Atlantic access to its property to begin
construction of the pipeline. Ocean Atlantic subsequently amended
its Complaint to add Cambridge as a defendant, alleging tortious
interference with its contract.

In its present Motion, Ocean Atlantic seeks, mostly to compel
communications relating to Cambridge’s bid to secure an easement
from Willow Tree Farm.

DISCUSSION

Ocean Atlantic contends that Cambridge is improperly
withholding documents and communications responsive to its
interrogatories and production requests. Cambridge contends that
these documents are protected by the attorney-client privilege
and/or the work product doctrine.

Because this is a diversity action, Illinois law, and not
federal law, controls the Court’s application of the attorney-client

privilege in this case. Urban Outfitters, Inc. v. DPIC Co., Inc.,


protected by the attorney-client privilege.

However, the Court finds that the following documents consist
of confidential communications, between counsel and members of
Cambridge’s control group, for the purpose of giving or receiving
legal advice: 1) May 17, 2001 Memo from Steve Goodman (Cambridge’s
General Counsel) to Jerry Conrad, Erik Sandstedt, Doug Brown and
Tom Koenig (all top-level Cambridge executives); 2) May 31, 2001
Memo from Tom Koenig to Steve Goodman; 3) May 31, 2001 Memo from
Doug Brown to Jerry Conrad; 4) June 15, 2001 E-mail from Steve
Goodman to Doug Brown and Jerry Conrad; 5) July 10, 2001 E-mail
from Steve Goodman to Doug Brown, Richard Brown, Jerry Conrad, Tom
Koenig, and Erik Sandstedt; 6) July 13, 2001 E-mail from Steve
Goodman to Doug Brown; 7) January 24, 2002 Memo from Steve Goodman
to Doug Brown, Jerry Conrad, and Erik Sandstedt; 8) February 26
2002 letter from Steve Goodman to current counsel Terrence
Campbell, Doug Brown, Jerry Conrad, and Erik Sandstedt; and 9)
March 20, 2002 E-mail from Steve Goodman to Terrence Campbell,
forwarding a Memo analyzing the risk of litigation with Ocean
Atlantic. The attorney-client privilege protects these documents
from disclosure.

B. Work Product Doctrine

The work product doctrine protects from disclosure documents
and tangible things otherwise discoverable that were “prepared in

anticipation of litigation or for trial by or for another party or


professional legal advisor in his capacity as such 3) the
communications relating to that purpose 4) made in
confidence 5) by the client 6) are at his instance
permanently protected 7) from disclosure by himself or

the legal advisor 8) except the protections be waived.
In the corporate context, the attorney-client privilege
protects only discussions between an attorney and members of the
corporation’s control group, which typically includes those in top
management positions. See Abbott Labs. v. Airco, Imc., No. 82 C
3292, 1985 WL 3596, at *3 (N.D. Ill. Nov. 4, 1985). The Illinois
Supreme Court acknowledged that limiting the control group to top
management employees was too narrow, and adopted the following
test: “if the employee . . . is in a position to control or even to
take a substantial part in a decision about any action which the
corporation may take upon the advice of the attorney, or if he is
an authorized member of a body or group which has that authority,”
he will be considered a part of the control group. Consolidation
Coal, 89 I1l.2d at 114, 120, 432 N.E.2d 250 (explaining that “[aJn
employee whose advisory role to top management in a particular area
is such that a decision would not normally be made without his

advice or opinion . . . is properly within the control group.”)

In this case, Defendant has failed to submit any evidence
tending to show that the following individuals should be considered
members of its control group: Russ Schlatter, who holds an
unidentified position in Cambridge’s finance department, Jeff

Thompson, who holds an unidentified position in Cambridge’s land

6


203 F.R.D. 376, 378 (N.D. T1ll. 2001) (citing Fed. R. Evid. 501).
While state law applies to the rules governing the attorney-client
privilege, “the source of law in work-product terms is federal
rather than state.” A.O. Smith Corp. v. Lewis, Overbeck & Furman,
No. 90 C 5160, 1991 WL 192200, at *4 (N.D. Ill. Sept. 23, 1991).
The party seeking to invoke either the attorney-client privilege or
the work product doctrine bears the burden of demonstrating that
the privilege should apply. See FMC Corp. v. Trimac Bulk Trans.
Serv., No. 98 C 5894, 2000 WL 1745179, at * 1 (N.D. Ill. Nov. 27,
2000).

A. The Attorney-Client Privilege

The attorney-client privilege seeks to encourage full and
frank communications between a client and its attorney, by removing
the threat that the communications would be exposed in litigation.
See 134 I11.2d R. 201(b) (2). Illinois courts interpret the
privilege narrowly; it is the privilege itself, and not the duty to
disclose such communications, that is the exception to Illinois’
policy of encouraging full disclosure. Consolidation Coal Co. v.
Bucyrus-Erie Co., 89 I11.2d 103, 117- 19, 432 N.E.2d 250 (11.
1982).

The Illinois Supreme Court set forth the elements of the
attorney-client privilege in People v. Adam, 51 I11.2d 46, 48, 280
N.E.,2d 205 (1972):

1)Where legal advice of any kind is sought 2) from a


disclosed to these individuals waives any claim of confiden-
tiality. Therefore, the attorney-client privilege does not protect
from disclosure the following documents: 1) Steve Goodman’s May 3,
2001 E-mail to the “Proposed Projects Team’”; 2) Steve Goodman’s
May 8, 2001 Memo to Doug Brown and the Proposed Projects Team; 3)
Erik Sandstedt’s May 30, 2001 E-mail and Response to Steve Goodman,
Tammy Coutre, Beverly Rodriguez, Carol Hoskins, Doug Brown, Jerry
Conrad, Mara Ehrhardt, Pam Pantle, and Tom Koenig; 4) Steve
Goodman’s July 13, 2001 Memo regarding the Plainfield Storm Sewer
Update; and 5) the E-mails exchanged between Doug Brown and Steve
Goodman, and “cc’d” to Erik Sandstedt, Jerry Conrad, Mara Ehrardt,
and Pam Pantle on July 27, 29, and 30, 2001.

The Court further finds that Cambridge has failed to present
any evidence whatsoever as to whether George Seagraves, the
Northeast Regional President for DR Horton, Cambridge’s parent
company, was a member of Cambridge’s control group*. Therefore,
Doug Brown’s June 5, 2001 letter to Mr. Seagraves and Mr. Goodman’s

June 11 and 12, 2001 E-mails with Mr. Seagraves and others are not

2 The Proposed Projects Team apparently included, among
others, Russ Schlatter, Jeff Thompson, Tammy Coutre, Beverly
Rodriguez, Carol Hoskins, Mara Ehrhardt, and Pam Pantle.

3 Some of the communications with Mr. Seagraves were also
distributed to other employees of DR Horton; once again,
Cambridge presents no evidence demonstrating that James Peebles
(V.P. and legal counsel for the Northeast region of DR Horton),
Herb Haertner (DR Horton accounting manager) and Debbie Acree
(Sr. accounting assistant to Mr. Haertner) are members of
Cambridge’s control group.


Minute Ordes Form (06/97)

United States District Court, Northern District of Illinois

Ni f Assigned Jud; Sitti judge ii er
roe Magistrateduage | _ 7082 Humphrey Lefkow than Assigned Judge Arlander Keys
CASE NUMBER 01C 5014 DATE 8/22/2002
CASE Ocean Atlantic Development Corp. vs. Willow Tree Farm et al.
TITLE

[in the following box (a) indicate the party filing the motion, e.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.)

qu)

MOTION:

DOCKET ENTRY:

eb) oO Filed motion of { use listing in “Motion” box above.]

(2) 0 Brief in support of motion due

(3) Oo Answer brief to motion due___. Reply to answer briefdue___

(4) oO Ruling/Hearing on___set for____at

(5) oO Status hearingfheld/continued to] {set for/re-set for]on__———set for___—_—at

(6) Oo Pretrial conference[held/continued to] {set for/re-set for]on__—setfor__—at_.

(a) a Trial[set for/re-set for]on___sat

(8) o [Bench/Jury trial] [Hearing] held/continuedto_—sat__

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) OLocal Rule 41.1 OO FRCP41(a)(1) OM FRCP41(a)(2).

a0) of [Other docket entry] | Memorandum Opinion and Order entered. Plaintiff’s Motion to Compel

Production of Documents [#72] is granted in part and denied in part. At.

a {For further detail see order attached to the original minute order.]

No notices required, advised in open court,
3

No notices required. nuraber of notices

, AUG 25 cuu2

Notified counsel by telephone. i
mon initials

8222002

Notices mailed by judge’s staff.

Docketing to mail notices.
Mail AO 450 form.

Copy to judge/magistrate judge.

<date mailed notice

courtroom NO TA pte ar

FT, deputy's POE es : ft
initials
, Date/time received in.*
ailing deputy initials

“central Clerk's Office”



substantial need for the document and that it cannot otherwise
obtain the material absent undue hardship. E.E.0.C. v.
International Profit Assocs., Inc., 206 F.R.D. 215, 221 (N.D. Ill.
2002).

In addition, there are different standards applied for waiver
of work product protected communications as compared to attorney-
client communications. Unlike the attorney-client privilege, which
is based on protecting the confidentiality of communications
between lawyers and clients, the work product doctrine is based on
promoting the adversary system, by protecting the confidentiality
of materials prepared by an attorney in anticipation of litigation.
Wsol, 1999 WL 1129100, at * 6 (citation omitted). Waiver of the
work product doctrine only occurs if the disclosure to a third
party is “inconsistent with the maintenance of secrecy for the
disclosing party’s adversary.” Minnesota School Boards, 183 F.R.D.
at 631 (citation omitted); see also Bramlette v. Hyundai Motor Co.,
No. 91 C 3635, 1993 WL 338980, at *3 (N.D. Ill. Sept. 1,
1993) (“While any voluntary disclosure by the holder of the
attorney-client privilege is inconsistent with the confidential
relationship and thus waives the privilege, it is not inconsistent
with work product protection to disclose information in the pursuit
of trial preparation, so long as the information is maintained in
secrecy against the opponent.”)

The Court finds that Cambridge was concerned about Ocean

11


by or for that other party’s representative.” Fed. R. Civ.P.
26(b) (3). “It exists so that one party does not gain an unfair
advantage over another party by learning the other party’s
counsel’s strategies and legal theories.” Minnesota School Boards
Ass’n Ins. Trust v. Employers Ins. Co. of Wausau, 183 F.R.D. 627,
630 (N.D. Ill. 1999) (citation omitted).

For documents prepared prior to the filing of a lawsuit, as in
the case at bar, the “prospect of litigation” must be identifiable
because of specific claims that have already arisen. Panter v.
Marshall Field & Co., 80 F.R.D. 718, 725, fn 6 (N.D. Ill.
1978) (citation omitted). The test is “whether in light of the
factual context the document can fairly be said to have been
prepared or obtained because of the prospect of litigation.” Wsol
v. Fiduciary Management Associates, Inc., No. 99 C 1719, 1999 WL
1129100, at *2 (N.D. Ill. Dec. 7, 1999) (citation omitted).
Although the prospect of litigation need not be imminent, it must,
nevertheless, appear that the primary motivating purpose behind the
creation of a document must be to aid in possible future
litigation. Dometic Sales Corp. v. Intertherm, Inc., Civ. No. S87-
81, 1988 WL 492342, at * 11 (N.D. Ind. March 28, 1988) (quotation
and citation omitted).

Although the work product doctrine is broader than the
attorney-client privilege, it is not absolute. The privilege may

be overcome if the party seeking the discovery can demonstrate a

10


acquisition department, and Cambridge “assistants” Tammy Coutre,
Beverly Rodriguez, Carol Hoskins, Mara Ehrhardt, and Pam Pantle.
See generally, Mlynarski v. Rush Presbyterian-St. Luke’s Med.
Center, 213 Ill. App.3d 427, 431-32, 572 N.E.2d 1025, 1028 (1%
Dist. 1991) (unrebutted affidavit explaining that an employee’s
advice and opinions were central to any decision to settle or
litigate the matter was sufficient evidence that the employee was
a member of the control group.)

With regard to Messrs. Schlatter and Thompson, there is no
evidence that these individuals occupied an advisory role, such
that a decision would not normally be made without their advice or
opinion, or that they otherwise contributed to decision- making on
legal (as opposed to business) issues. Similarly, with regard to
Ms. Coutre, Ms. Rodriguez, Ms. Hoskins, Ms. Ehrhardt, and Ms.
Pantle, Defendant has failed to establish that these assistants
were acting as “ministerial agents” for the purpose of facilitating
legal advice, Abbott Labs, 1985 WL 3596, at *3 (holding that notes

w

taken by a secretary were privileged because the secretary “was
acting. as a ministerial agent of either counsel imparting legal
advice . . or top management requesting legal advice.” ), or whose
input was otherwise required prior to making decisions on legal
issues.

Because Cambridge has not submitted evidence demonstrating

that these individuals are in its control group, communications


however, Cambridge sought to obtain an easement from Willow Tree
Farm.

Between May and July of 2001, Cambridge studied the
feasibility of obtaining an easement from Willow Tree Farm, and
possible alternative sources. In the meantime, Willow Tree Farm
informed Ocean Atlantic that, pursuant to the terms of their
contract, the Easement would be null and void, unless Ocean
Atlantic constructed its pipeline by June 30, 2001. Ocean Atlantic
apparently reassured Willow Tree Farm that the pipeline
construction would proceed as scheduled, despite all evidence to
the contrary, and even though Ocean Atlantic had lost the right to
develop the adjacent Property. After an allegedly stormy
relationship with Ocean Atlantic, the owners of Willow Tree Farm
were purportedly apprehensive about negotiating a second easement
agreement with yet another large development company. As such,
Willow Tree Farm refused to negotiate with Cambridge.

Cambridge enlisted the assistance of the Property Owners to
secure an Easement from Willow Tree Farm. During the late spring
and summer of 2001, the Property Owners contacted Willow Tree Farm
in an effort to secure an easement on behalf of Cambridge.
Cambridge correctly guessed that Willow Tree Farm’s owners would be
more receptive to an offer coming from their neighbors - the

Property Owners - than from Cambridge.


Plainfield conversations with John Argoudelis, concern primarily
business issues that would have arisen even absent the threat of
litigation, and are, therefore, not work product. However, the E-
mails sent on July 13, 2001, regarding the Plainfield Storm Sewer
Update, and on July 29 and 30, 2001, regarding Mr. Ferraguto,
consist primarily of legal advice, and are, therefore, protected.

The June 5, 2001 letter to Mr. Seagraves, regarding the
Financial Projection for Farmington Village, as well as the June 11
and 12, 2001 E-mails to Mr. Seagraves and others from Mr. Goodman,
appear to be simply project updates from Cambridge to its parent
company. These documents discuss legal as well as business issues
that would have arisen even absent the threat of litigation.
Therefore, the Court finds that the documents were more likely
than not created in the ordinary course of business and are not
protected by the work product doctrine.

Finally, the Court finds that Mr. Goodman’s handwritten notes
on a July 12, 2001 letter from John Argoudelis® are entitled to
work product protection. Because Ocean Atlantic makes no argument
that undue hardship nevertheless compels the production of these
documents, the Court denies Ocean Atlantic’s Motion with regard to
the July 13, 2001 E-mail regarding the Plainfield Storm Sewer

Update, the July 27 and 30, 2001 E-mails regarding Mr. Ferraguto,

5 Cambridge represents that the underlying letter from Mr.
Argoudelis has been produced to Ocean Atlantic.

14


that are relevant to this Motion to Compel.

In preparation for a large residential development, Ocean
Atlantic negotiated an easement agreement (“Easement”) with the
owners of Willow Tree Farm. Willow Tree Farm is adjacent to the
development site (the “Property”), and the easement was considered
to be critical to the ultimate success of the development project.!
On December 31, 1998, Ocean Atlantic and Willow Tree Farm recorded
the Easement, granting Ocean Atlantic the right to construct a
storm drainage water pipeline (“pipeline”) across Willow Tree Farm
to service the proposed residential development. The Easement
Agreement called for construction of the pipeline to be completed
by June 30, 2001.

Before construction of that pipeline began, however, Ocean
Atlantic became embroiled, yet again, in litigation with the owners
of the Property (the “Property Owners”). On February 28, 2001,
this Court ruled that Ocean Atlantic had materially breached its
contract with the Property Owners, and that, therefore, the
Property Owners were under no contractual obligation to sell the
Property to Ocean Atlantic. Following this ruling, and perhaps
even before it, the Property Owners entered into negotiations with

Cambridge to sell the Property. In addition to the Property,

' Although it was Ocean Atlantic Woodland Corporation that
entered into the contract to purchase the Property, it was Ocean
Atlantic Development Corp. that negotiated the Easement Grant
with Willow Tree.


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

OCEAN ATLANTIC DEVELOPMENT
CORPORATION, NO. 01 € 5014
Plaintiff,

Judge Joan H. Lefkow

Arlander Keys

WILLOW TREE FARM, L.L.C.,
DRH CAMBRIDGE HOMES, INC.,
ELDA ARNHOLD, and BYZANTIO,
L.L.c.

)
)
)
)
)
)
)
) Magistrate Judge
)
)
)
)
)
)
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Currently before the Court is Plaintiff Ocean Atlantic
Development Corporation’s (“Ocean Atlantic”) Motion to Compel the
production of allegedly privileged documents from Defendant DRH
Cambridge Homes (“Cambridge”). For the reasons set forth below,
Plaintiff’s Motion is granted in part and denied in part.

BACKGROUND FACTS

Ocean Atlantic’s current Motion does not warrant a recitation
of the long and tortuous history that led to the filing of this
lawsuit; those facts have been fully set forth in this Court’s
Ocean Atlantic Development Corp. v. Willow Tree Farm, L.L.C., No.
01 C 5014, 2002 WL 649043 (N.D.I11. April 19, 2002), and the Court

will not repeat them here. The Court will discuss only those facts

A)


Atlantic filing suit against it since at least 2001. Cambridge’s
communications frequently reference its fear that Ocean Atlantic
would file suit against it for proceeding with its proposed
development, and remark on Ocean Atlantic’s litigious nature.
Therefore, the Court finds that the prospect of litigation was
identifiable at the time these documents were created.

In addition, the Court finds that Cambridge expected that its
communications with executive assistants and certain other members
of Cambridge’s “Projects Team’ would remain confidential and
protected from adversaries such as Ocean Atlantic, even though many
of the Projects Team Members were not demonstrated to be members of
Cambridge’s control group. While the disclosure of such
communications waives the attorney-client privilege, the disclosure
does not waive application of the work product doctrine.
Therefore, the Court must determine whether any of the
communications with non-control group team members are,
nevertheless, protected under the work product doctrine.

Upon review, the Court finds that most of the communications
with the non-control group Project Team Members were most likely
produced in the ordinary course of business, and not primarily for
the purpose of obtaining legal advice. A document is only
considered work-product if it is primarily concerned with legal
assistance. In re Stern Walters Partners, Inc., No. 94 C 5705,

1996 WL 115290, at * 4 (N.D. Ill. March 13, 1996) (citation

12


and Mr. Goodman’s notes on the July 12, 2001 letter from Mr.
Argoudelis.
CONCLUSION

Cambridge bears the burden of establishing that the attorney-
client privilege and the work product doctrine permit it to
withhold certain relevant information. With the exception of
communications that were limited to presumptive members of its
control group or that consisted exclusively of legal advice,
Cambridge has failed to shoulder its burden.

IT IS HEREBY ORDERED that Plaintiff’s Motion To Compel the
Production of Documents be, and the same hereby is, GRANTED in
part, and DENIED in part, as set forth above. The documents for
which the Court has not found the existence of a privilege are to

be produced within seven days of this decision.

Dated: August 22, 2002 ENTER:

QQand, toys

ARLANDER KEYS i
United States Magistrate Judge

15