been made public. Those are simply not circumstance consistent with the maintenance of
the secrecy of those documents.

Western also cites Trans Pacific Ins. Co. v. Transpacific Inc. Co., 1991 WL 15203
(E.D.Pa. July 31, 1991) for the proposition that “the law encourages litigants with
‘common interests’ to share the fruits of their trial preparation efforts.” (Western’s Motion
for Protective Order, at 5; Supplement to Western’s Motion for Protective Order, at 3;
Western’s Reply in Support of its Motion for Protective Order, at 5). In so doing, it is
unclear whether Western is arguing, albeit offhandedly, that there was no waiver in this
case due to its “common interests” with the government. If so, it has failed to establish
such a theory is applicable. The common interest rule covers communications between
parties with a common interest, but only if (1) one party is seeking confidential information
from the other on behalf of an attorney; (2) one party is relaying confidential information
to the other on behalf of an attorney; and (3) the parties are communicating work-product
that is related to the litigation. Beneficial Franchise Co., Inc. v. Bank One, N.A., 205
F.R.D. 212, 220 (N.D. Ill. 2001). Western has not argued as to the existence of any of
these elements, and the record as it stands indicates that Parpolia was not acting on behalf
of an attorney when she produced the documents at issue. In addition, it is questionable
whether the F.B.I. agent to whom she volunteered the documents was seeking them on
behalf of an attorney. Moreover, the existence of common interests between transferor

and transferee is just one consideration relevant to deciding whether the disclosure is

13



25, 2002. (Western’s Motion for Protective Order, at 3; Supplement to Western’s Motion
for Protective Order, Ex. 1). The subpoena targeted documents pertaining to Scott
Serfling and Serfin Trust, and requested production by July 18, 2002. (Supplement to
Western’s Motion for Protective Order; Ex. 1). Western was unable to find any record of
the subpoena at the time it filed the instant motion (Western’s Motion for Protective Order,
at 3), but eventually discovered it along with records of document productions on June 26,
June 28, and July 12, 2002. (Supplement to Western's Motion for Protective Order, Ex.
1). Western also found correspondence that indicated that Parpolia transmitted the
documents at issue here to F.B.I. agent Jim Reilly on August 7, 2002. (Supplement to
Western’s Motion for Protective Order, at 2; Ex. 2).

The parties agree that the documents at issue were not provided to the government
pursuant to the subpoena, or disclosed inadvertently, but were produced voluntarily. (Fifth
Third’s Response to Western’s Motion for Protective Order, at 2-3; Western's sor in
Support of Its Motion for Protective Order, at 2 n.3, 3). Western argues Guiroman()_f
cooperation with the government, as part of a criminal investigation of an individual that
had victimized Western, should not result in the waiver of its work product protection.
Fifth Third questions whether the documents at issue qualify as work product, but also
argues that Western’s production of those documents, especially given the manner and
circumstances in which they were produced, constitutes a waiver of the work product

protection.


Western points to no facts surrounding its production of the documents to counter
the impression that it was disinterested in them. Instead, it submits that it should not be
punished for its cooperation with the government. (Western’s Reply in Support of Its
Motion for Protective Order, at 6). The court’s finding of a waiver as to these documents
is not a “punishment,” but merely an inevitable conclusion drawn from the assessment of
the circumstances surrounding their disclosure. Those circumstance fail to indicate that
Western treated the documents as confidential work product, or even paused to consider
whether they were. Western’s attitude - whether it was inattentive or unconcerned - led,
foreseeably, to the documents coming into the possession of one of the defendants in this
case. It is not punishment to refuse Western’s request to put the genie back in the bottle
and treat these documents in a manner Western could not be bothered to treat them when
it counted. Furthermore, to do so would bring about the undesirable result of one
defendant in this case having the materials and the other not having them.

In support of its position, Western relies almost entirely on a single unreported case
from the District of New Jersey: Shulton, Inc. v. Optel Corp., 1987 WL 19491 (D.N.J.
Nov. 4, 1987). (Western’s Motion for Protective Order, at 4-5; Supplement to Western’s
Motion for Protective Order, at 2-3; Western’s Reply in Support of its Motion for
Protective Order, at 4-5), Review of that decision, however, does not dissuade the court
from its conclusion. In Shulton, the plaintiff conducted an in-house investigation of a

customer who had defaulted on a $300,000 letter of credit payment. The investigation

9



because “some articulable claim, likely to lead to litigation ... ha[s] arisen.” Logan, 96
F.3d at 976 (quoting Binks, 709 F.2d at 1120).

Here, Western’s attorneys requested the production of the documents at issue. At
that time, Western had not only learned that Serfling defaulted on the $12 million loan, but
that he had secured the loan through a package of misrepresentations, and the apparent
forgery of a Ford leasing agreement. It threatened Serfling with litigation in a letter dated
June 13, 2002. (Fifth Third’s Response to Western's Motion for Protective Order: Ex. E).
The documents at issue were created in the wake of these revelations, in late July of 2002.
Certainly, given the circumstances, Western had an “articulable claim, likely to lead to
litigation.” The documents at issue, then, qualify as work product created in anticipation
of litigation.

The more engaging issue in this dispute is whether Western waived work product
protection by voluntarily giving the documents at issue to the United States Attorney.
Work product protection is waived when the protected communications are disclosed “in
a manner which ‘substantially increases the opportunity for potential adversaries to obtain
the information.’” Vardon Golf Co., Inc. v. Karsten Mfg. Corp., 213 F.R.D. 528, 534
(N.D.II. 2003) (quoting Blanchard v. EdgeMark Financial Corp., 192 F.R.D. 233, 237
(N.D.Iil. 2000). The question is whether the particular disclosure was of such a nature
as to enable an adversary to gain access to the information. Blanchard, 192 F.R.D. at

237. In determining whether a waiver has occurred, courts consider whether the

6


Ii. ANALYSIS

The work product doctrine, initially set out in Hickman v. Taylor, 329 U.S. 495,
67 S.Ct. 385 (1947), is codified as Rule 26(b)(3) of the Federal Rules of Civil Procedure:

a party may obtain discovery of documents and tangible things otherwise

discoverable ... and prepared in anticipation of litigation or for trial by or for

another party or by or for another party's representative (including the other

party's attorney, consultant, surety, indemnitor, insurer, or agent) only upon

a showing that the party seeking discovery has substantial need of the

materials in the preparation of the party's case and that the party is unable

without undue hardship to obtain the substantial equivalent of the materials

by other means.
Fed.R.Civ.P. 26(b)(3). Thus, if a party demonstrates that the materials at issue were
prepared in anticipation of litigation, the materials are considered work product and
become subject to a qualified privilege from discovery. Logan v. Commercial Union Ins.
Co., 96 F.3d 971, 976 (7" Cir. 1996). The Seventh Circuit has cautioned that “[t]he mere
fact that litigation does eventually ensue does not, by itself, cloak materials ... with the
work product privilege; the privilege is not that broad.” Binks Mfg. Co. v. National
Presto Indus., Inc., 709 F.2d 1109, 1118 (7" Cir.1983). Rather, the court must consider
the context and determine whether “the document can fairly be said to have been prepared
or obtained because of the prospect of litigation.” Jd. at 1119. In so doing, it is important

to distinguish between “an investigative report developed in the ordinary course of

business” as a precaution for the “remote prospect of litigation” and materials prepared



discussion, and apparently not a concern. Instead, Western produced the documents at
issue, without taking any steps to safeguard their contents, apparently without considering
that the government was embarking on a prosecution of Serfling that would likely result
in the government’s eventual production of those documents to Serfling through discovery.
That likely result occurred, in the case of all three documents. Western obviously gave
no thought to whether the production of those documents substantially increased the
opportunity for Serfling to obtain them.

The manner in which Western treated the documents and their production was far
too cavalier to suggest that it was concerned about maintaining their secrecy. Western was
unaware it had received a subpoena, let alone that it had produced the documents at issue,
until nearly two years after it provided them to the government. It only learned these facts
because Fifth Third bank came across one of the documents as it monitored the Serfling
criminal proceedings - proceedings which, one might imagine, should have also garnered
the interest of Western. Even then, Western was unable to confirm it had produced the
documents in the month that ensued before it filed its motion for a protective order. It was
not until the passing of yet another month that Western finally got a handle on its record-
keeping and was able to inform the court, in a supplement to its motion for a protective
order, as to the manner in which it had released the documents two years ago; documents
it now so jealously claims are secret. Such claims ring hollow given the steps it took, or

more accurately, failed to take, to keep them secret.

8


Mintle Oakes umn 4.97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Blanche Manning Sitting Judge if Other Nan R. Nolan
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 7315 DATE 11/10/2004
CASE Western United Life Assurance Co. vs. Fifth Third Bank, et al.
TITLE

of the motion being presented.)

MOTION:

[In the following box (a) indicate the party filing the motion, c.g. plaintitY, defendant, 3rd party plaintitY, and (b) state brielly the nature

DOCKET ENTRY:

(y Q Filed motion of ( use listing in “Motion” box above.]

Q) Q Brief in support of motion due

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

(4) o Ruling/Hearing on ___ set for___at

(3) a Staius hearing[held/continued to] [set for/re-set for]on__— set for at
(6) ia Pretrial conference{held/continued to] [set for/re-set for]on set for_ at |

(7) ia} Trialfset for/re-set for] on at

(8) o [BenclvJury trial] [Hearing] held/continued to_at___

(9) Q This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) O Local Rule 41.1 OO FRCP41(a)(1) OO FRCP41(a)(2).

to defendant $" 3" Bank.

(ii) ff [For further detail see order attached to the original minute order.]

(10) « [Other docket entry] For the reasons stated in the attached Memorandum Opinion and Order,
plaintiff's motion for a protective order is denied. Plaintiff is ordered to produce the documents at issue

No notices required, advised in open court
4

No notices required nive, of notes

Document

Number

Y | Notices mailed by judge's stal?.

NOV..1.2.2004

Hvor2004

Notified counsel by telephone.

Docketing to mail notices

Mail AQ 450 form,

Copy 10 judge’magistrate judge

dave mailed notice

couraom Caan

hb deputy’s bab,

initials ———
) Date/time received itt .
‘Sentral Clarkes Olfice nating deputy initials

O



Only if the case proceeded to trial could any disclosure possibly be

obligatory, and even if this were to occur, defendants’ access to Shulton's

documents would be strictly limited. Defendants would have access only to

information discoverable under F.R.Crim.P. 16, under the Jencks Act, 28

U.S.C. § 3500(b), and under Brady v. Maryland, 373 U.S. 83 (1963).

Defendants have not argued that the entire file would come into their hands

through any of these discovery options. Moreover, it is uncertain, although

likely, that the criminal matter would proceed to trial before this civil action.
1991 WL 15203, *4-5. Asa result, the court found that “the chances that [the plaintiff’s]
sharing of its investigative file with the government would lead to defendants’ discovery
of the file’s content were exceedingly remote.” 1991 WL 15203, *5. It concluded that
there was no waiver of work product protection.

With respect to the Shulton court, this court finds the formulaic assessment of
probabilities that informed its holding less than helpful for two reasons. First, accepting
the premise that the government here, like the government in Shulton, would have three
uses for the disclosed documents does not necessarily mean that eventual disclosure of the
documents to Serfling was “exceedingly remote.” It is unclear how the Shulton court
weighed these probabilities ~ perhaps it felt there was a 33 % chance that the criminal case
would go to trial- but that court’s speculation as to eventual use of the documents at issue
before it has no bearing on the probabilities at work here. The court is not prepared to
accept as a fact that when Western disclosed the documents at issue here it did not

“substantially increase the possibility that an opposing party could obtain the information

disclosed.” Even under the Shulton analysis, the possibility went from none at all to

11


uncovered evidence that the customer had been involved in a scheme whereby the
plaintiff’s products intended for sale abroad were diverted for domestic sale. The plaintiff
filed suit, and also turned over its investigative files to the United States Attorney. That
office had already convened a grand jury investigation into the scheme, although it is
unclear whether the plaintiff was aware of it and no indictment was ever brought. 1991
WL 15203, *1. The defendants in the civil suit learned of the plaintiff’s disclosure of the
files to the government, and moved to compel their production, arguing that the plaintiff
had waived work product protection. Considering the question, the court indicated that:

disclosure of the privileged information by the party asserting the attorney

work product privilege to a third-party does not constitute waiver unless such

disclosure, under the circumstances, is inconsistent with the maintenance of

secrecy from the disclosing party's adversary. Whether disclosure is

inconsistent with the maintenance of secrecy depends on whether the

disclosure substantially increases the possibility that an opposing party could

obtain the information disclosed.
1991 WL 15203, *4 (citations omitted). Focusing on whether the disclosure substantially
increased the possibility that the defendants could obtain the information, the court stated
that the government had only three uses for the information the plaintiff disclosed:

It could have chosen not to seek an indictment at all. It could have presented

the information to a grand jury and obtained no true bill. It could have

presented the information to a grand jury, obtained an indictment, and gone

to trial. Only the last of the three posed a minor risk that some of the
information would be disclosed to defendants.

ca *

10



disclosure to a third party was “inconsistent with the maintenance of secrecy from the
disclosing party’s adversary.” Minnesota School Boards Ass'n Ins. Trust v. Employers
Ins. Co. of Wausau, 183 F.R.D. 627, 631 (N.D.Il. 1999). The circumstances
surrounding the disclosure in this case suggest that secrecy was not one of Western’s
concerns, and that its production of the documents at issue substantially increased
Serfling’s opportunity to obtain them.

By June 13, 2002, Western had already learned that Serfling had secured his loan
based on misrepresentations, and had notified him he was in default and threatened legal
action. (Fifth Third’s Response to Western’s Motion for Protective Order; Ex. E). On
June 25, 2002, Western was informed by subpoena that Serfling was the target of a
criminal investigation. After producing documents pursuant to the subpoena, Western
volunteered the three documents at issue here on August 7, 2002. In considering whether
a disclosure of documents constituted a waiver, it is appropriate to examine the steps
Western might have taken to maintain the documents’ confidentiality. Blanchard, 192
F.R.D. at 237. There is nothing in the record to suggest that Western asserted the work
product protection in connection with either its production of documents pursuant to the
subpoena or the subsequent voluntary production of the documents at issue here. Western
does not even claim that it did so, nor does it claim that it sought any type of
confidentiality agreement from the government, or even any assurances that the purported

work product would not be disclosed to Serfling. Such matters were simply not a topic of

7


documents are at issue here. One is dated July 22-24, 2002, and authored by Dan
Geittman and Sheila Parpolia, and one is dated July 26, 2002, and authored by John Byers.
Byers was the initial Western employee contacted regarding the transaction, Geittman was
involved in underwriting the loan, and Parpolia was a closer for the loan. (Western’s
Motion for Protective Order, at 2). Western’s privileged log indicates that these
memoranda reference non-privileged documents that have already been produced in
discovery, and they are protected from disclosure by the work product doctrine.
(Western’s Motion for Protective Order, Ex. 1).

The status of these documents recently became an issue when Fifth Third came into
possession of the Parpolia-authored portion (“Parpolia memo”) of the July 22-24 memo.
The Parpolia memo was attached to a pleading Serfling filed in the government’s criminal
proceeding against him, and Fifth Third discovered it on June 30, 2004, as a result of
monitoring the Serfling criminal case. (Fifth Third’s Response to Western’s Motion for
Protective Order, at 5; Ex. G). Serfling had obtained the memo from the United States
Attorney’s office during the course of discovery. (Fifth Third’s Response to Western’s
Motion for Protective Order, Ex. G, at 4), When Fifth Third informed Western of this,
Western indicated the memo was privileged, but had no idea how the United States
Attorney might have obtained it. (Western’s Motion for Protective Order, at 3). In
response to Western’s inquiries, the United States Attorney’s office informed Western that

the document had been produced pursuant to a subpoena served on Western, dated June

3


consistent with the nature of the work product privilege. U.S. v. American Tel. and Tel.
Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980). Here, as already discussed, the circumstances
surrounding the disclosure weigh heavily against a finding that Western was interested in
maintaining the documents’ confidentiality or was concerned with the possibility that
Serfling might obtained them. Indeed, when the factors underlying the common interest
rule are examined, it becomes all the more clear that it is inapplicable in this case:
with common interests on a particular issue against a common adversary, the
transferee is not at all likely to disclose the work product material to the
adversary. When the transfer to a party with such common interests is
conducted under a guarantee of confidentiality, the case against waiver is
even stronger.
Id. at 1299-1300. Given the manner in which Western disclosed the documents at issue,
without any attempt to secure their secrecy or determine the likelihood that they would

later be available through discovery, the factors underlying the common interest tule are

not at work here.

14



I. BACKGROUND

This litigation stems from a failed plan to develop a Ford dealership in Gurnee,
Illinois.? According to Western’s allegations, Fifth Third was the original source of
financing on the project in 2000, and loaned Scott Serfling - a co-defendant - and others
over $10 million. Serfling allegedly diverted the proceeds of that loan, however, and Ford
disavowed any interest in the project. Fifth Third learned of this trouble in the summer
of 2001 and, in order to avoid losing a substantial portion of the value of the loan, Fifth
Third purportedly devised an exit strategy involving Western. According to Western, in
early 2002, Fifth Third and Serfling induced it to lend the Serfin Trust - another co-
defendant - nearly $12 million, on the strength of a lease agreement from Ford -
apparently bogus - which propped up a $15 million appraisal of the property. Western
filed suit in October of 2002, charging both Fifth Third and Serfling with various
fraudulent misrepresentations in connection with the loan. Serfling is currently the target
of federal criminal prosecution in United States v. Capri, No. 03-CR-300 (N.D.IIL.).

According to Western, prior to filing suit, its attorneys requested certain Western
employees involved in the ill-advised transaction to draw up documents describing the

events culminating in the loan. (Western’s Motion for Protective Order, at 2). Those

The court draws its narrative of the background of this motion from the allegations in
Western’s Third Amended Complaint. The court accepts these allegations only for the
limited purposes of ruling on this motion, and does so advisedly insofar as Western’s three
previous complaints have been dismissed, in whole or in part, due to various defects.

2


POCKETED

IN THE UNITED STATES DISTRICT COURT Novie 2004
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
WESTERN UNITED LIFE ASSURANCE )
COMPANY, )
)
Plaintiff, y
>.
vs. ) No. 02 C 7315
)
FIFTH THIRD BANK; SERFIN TRUST, LLC; ) Nan R. Nolan,
and SCOTT SERFLING, ) Magistrate Judge
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiff Western United Life Assurance Company (“Western”) moves this court
for a protective order precluding defendant Fifth Third Bank (“Fifth Third”) from
obtaining and/or using certain documents disclosed to the United States Attorney’s Office

which Western claims are protected by the work product doctrine.!

' While Western originally argued that the documents at issue were protected by both the
attorney-client privilege and the work product doctrine (Western’s Motion for Protective
Order, at 1, 2, 5-6; Ex. 1; Supplement to Western’s Motion for Protective Order, at 2 n.2).
This was apparently done in error as, in its reply memorandum, Western indicates that it is
only arguing that the documents at issue were protected by the work product doctrine and
that Western has not waived that protection. (Western’s Reply in Support of Its Motion, at
1 n.1). As such, it does not respond to Fifth Third’s arguments that the documents at issue
were not authored by “control groups personnel” and therefore, cannot be protected by the
attorney-client privilege. See Consolidation Coal Co. v. Bucyrus-Erie Co., 89 [l.2d 103, 59
Ill. Dec. 666, 670-75, 432 N.E.2d 250, 254-59 (1982); Favala v. Cumberland Eng’g Co., 17
F.3d 987, 989 (7" Cir.1994). Accordingly, the court finds that Western has waived or
abandoned any claims it might have that the documents at issue are protected by the attorney-
client privilege.

B


perhaps one in three. That is arguably a substantial increase, and Western does not
contend otherwise. Perhaps because, unlike the defendants in Shulton, Serfling did,
indeed, obtain the documents at issue here.

Second, this court is concerned with the circumstances under which Western
disclosed the documents at issue. While the Shulton court indicated that disclosure would
constitute a waiver where those circumstances were inconsistent with the maintenance of
secrecy from the disclosing party’s adversary, it did not engage in an analysis of the
circumstances of disclosure in that case.? Here, however, the court is comfortable finding
that the manner in which Western made its disclosure is inconsistent with a desire to
maintain the secrecy of the documents at issue. Western certainly engaged in no weighing
of the possibility the documents would be obtained by Serfling. In fact, Western was first
unaware - for a two-year period - that it had disclosed the documents at all. Then, it was

unaware there had been a subpoena. Finally, it was unaware one of the documents had

The Shulton court’s analysis calls into question its value to our deliberations here. In
Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1421 3" Cir:
1991), the Third Circuit overturned a lower court’s ruling that had followed Shulton to
find no waiver of work product protection because “[dJisclosing information to any ally
may strengthen, rather than destroy, the adversary process, as allies who fortify their cases
against their mutual adversary have a greater chance of defeating that adversary.” 951
F.2d at 391. In so doing, the appellate court focused on whether the circumstances
surrounding the disclosure evidenced conscious disregard of the possibility that an
adversary might obtain the protected materials. 951 F.2d at 1431. The circumstances
here, certainly, evidenced just such a disregard on Western’s part.

12



III. CONCLUSION
For the foregoing reasons, the plaintiff’s motion for a protective order is denied,

and plaintiff is ordered to produce the documents at issue to defendant Fifth Third Bank.

ENTERED: New i 1 ton

NAN R. NOLAN
U.S. MAGISTRATE JUDGE

15