No, 01 C 1541 Page S

we find the SOOF documents are not admissible as admissions.

Plaintiffs do not even address Allstate’s arguments that the SOOF documents cannot be
considered business records under Rule 803(6). While we find that consultant reports can
qualify as business records (Condos, 986 F. Supp at 917-20), plaintiffs have not met their
burden of proving that the SOOF documents fall under this exception. Rule 803(6) requires
the document at issue to be “made at or near the time by, or from information transmitted by,
a person with knowledge.” It also requires that document to be “kept in the course of a
regularly conducted business activity” by someone whose “regular practice” it is “to make”
the document , “as shown by the testimony of the custodian or other qualified witness.” Id.
In addition, “the source of information or the method or circumstances of preparation [must
not} indicate lack of trustworthiness.” Id.

Plaintiffs do not provide this court with sufficient testimony documenting the physical
creation of the SOOF documents, nor do they provide this court with a custodial witness.
Many of the witnesses testified that they did not know exactly who created any given SOOF
document (let alone the ones specifically objected to here), only that they were a collaboration
of various McKinsey consultants and Allstate employees. Most witnesses cannot remember
much about the SOOF documents at all — when they were made, who made them, or how they
were created. Furthermore, plaintiffs offer no testimony addressing whether the documents
were created at or near the time the information upon which they were based was obtained.

Finally, plaintiffs have offered no evidence confirming the reliability of these documents
as being made in the regular course of McKinsey’s business. McKinsey is a consulting firm
whose business is to consult. Yet, we are unsure what that consists of. The type of consulting
McKinsey performed for Allstate is wholly different, for example, from consultants hired to

perform a financial audit. See e.g. Condos, 986 F. Supp at 918 (“It is their business to analyze



No, 01 C 1541 Page 4

and any issues at trial can be remedied with careful jury instructions.

Other portions of plaintiffs’ additional statement of facts do appear to rely on SOOF
documents for the truth of the matter asserted. For example, in paragraph 54 plaintiffs offer
the SOOF documents as evidence of the proffered fact that 1,600 agents did not have the
licensed support staff required to meet Allstate’s new standards (plf. resp. AUF 754). The use
of these documents in this manner constitutes hearsay, and they will only be admitted if they
satisfy one of the exceptions to hearsay rule.

Plaintiffs argue that these documents are admissions of Allstate, or at least are adoptive
admissions through McKinsey, as Allstate’s agent. Plaintiffs do not persuasively argue either
point. They insist that because Allstate employees participated in SOOF, and worked with
McKinsey, the documents are admissions of Allstate. However, none of the witnesses has been
able to delineate which statements were made by Allstate agents and which were made by
McKinsey consultants, since witnesses testified that both groups worked together on the
project.

Next, plaintiffs discuss a variety of other court cases involving Allstate, where Allstate
allegedly refused to make public the McKinsey documents or submit them to a court.
Plaintiffs offer no citations to these cases or any others to support their argument that
Allstate’s refusal to turn over these documents qualifies them as a party admission under Rule
801(d)(2)(A) or (B).

In the same vein, plaintiffs fail to make a case for classifying McKinsey as an agent of
Allstate, rather than an independent contractor under Rule 801(d)(2)(D). See e.g. Condos v.
Howard Savings Bank, 986 F. Supp. 914 (D.N.J. 1997). Plaintiffs do not even discuss the
difference between the two categories, Finally, plaintiffs lay out numerous portions of

deposition testimony, but fail to coalesce this evidence into a coherent argument. Therefore,


No. OL C 1541 Page 6

banks and issue these types of reports”). That type of consulting is fairly standard and
routine, requiring precision and accuracy, allowing for an inference of reliability. Here,
witness testimony makes clear that McKinsey’s role was as an idea generator rather than an
auditor. While McKinsey engaged in some fact-gathering, it also worked to generate thoughts
and ideas for the future, some of which, all parties concur, was never acted upon or considered
again after initial proposals. This is not the type of consulting that can result in reports of
clear reliability, absent the other indicia not proffered here.

To admit these documents for their truth, this court must find that “the source of the
information or method or circumstances of preparation [does not] indicate lack of
trustworthiness.” Condos, 986 F. Supp. at 919 quoting Fed. R. Evid. 803(6). While we can
glean some trustworthiness from the fact that these documents had an independent business
significance, and are of a type relied upon in making a business decision, in this instance that
is not sufficient. Id. at 919; United States v. Frazier, 53 F.3d 1105, 1110 (10th Cir. 1995). Due
to plaintiffs’ failure to satisfy the other requirements of Rule 803(6), we cannot confirm the
reliability of these documents. Therefore, we find that the SOOF documents do not qualify
as business records under that rule.

CONCLUSION

For the foregoing reasons, we grant, in part, Allstate’s motion to strike and bar plaintiffs’

exhibits.

Aone B® Mae

JAMES B. MORAN
Senior Judge, U. S. District Court

al, 2008.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JAY F. FLANAGAN, JAMES W. CARSON,
JOHN M. CHANEY, and DONALD W. JONES,
individually and on behalf of all others
similarly situated,
Plaintiffs

vs. No. 01 C 1541

ALLSTATE INSURANCE COMPANY, an

Illinois corporation, and the AGENT
TRANSITION SEVERANCE PLAN,

)
)
)
)
)
)
)
)
)
)
)
)
)
Defendants. )
MEMORANDUM OPINION AND ORDER

Plaintiffs Jay Flanagan, James Carson, John Chaney, Robert Cushatt and Donald Jones,
representing two classes of former employee-agents of defendant Allstate, brought this suit
against defendants Allstate and the Agent Transition Severance Plan (collectively, “Allstate”)
for violation of ERISA and breach of contract. Allstate has moved for summary judgment.
Prior to the completion of briefing, Allstate moved to strike and bar several exhibits upon
which plaintiffs’ response relies. Allstate argues that those exhibits are inadmissible hearsay
and therefore cannot be relied upon to oppose summary judgment. For the following reasons
we grant, in part, Allstate’s motion.

The documents in question are a collection of materials developed, in whole or in part, by
McKinsey, a consulting group hired by Allstate to work with the Sales Organization of the
Future initiative (“(SOOF”). The purpose of the SOOF committee was to brainstorm ways to
make Allstate more competitive in the market. Allstate makes numerous arguments as to why

these documents are inadmissible hearsay, asserting mainly that they are neither admissions


No, 01 C 1541 Page 2

of Allstate nor business records. All of Allstate’s arguments rest on one assumption, that
plaintiffs are seeking to offer these documents for the truth of the matter asserted.

Hearsay is defined as a “statement, other than one made by the declarant while testifying
at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” Fed. R.
Evid. 801(c). Allstate assumes that plaintiffs intend to offer the SOOF documents to prove the
truth of the information they contain. For the most part, we find that is not the case. In many
instances the documents are not being offered for their truth, but to demonstrate Allstate’s
motive for instituting the new work requirements at issue in this case. The documents are
being offered to show that Allstate was affected by this specific information, and considered
it (accurate or not) when determining how to restructure its workforce. Since the truth of the
SOOF documents has no bearing on Allstate’s alleged reliance on them, to that extent they are
not barred by the hearsay rule.

There may be a question as to whether Allstate decision-makers actually did consider
these documents — an issue both parties argue vigorously. “[A]n oral statement relied upon
as notice cannot have been effective as such unless made in the presence of the person sought
to be charged with notice.” 30B Michael H. Graham, Federal Practice and Procedure § 7008
(4 ed. 2006). We find that plaintiffs have provided sufficient evidence to permit a foundation
to be laid for introduction of the SOOF documents. See Holman y. Revere Electric Supply Co.,
2005 U.S. Dist. LEXIS 43402 *11 (N.D. Ill. March 15, 2005), citing A.L Credit Corp. v. Legion
Ins. Co., 265 F.3d 630, 637-38 (7" Cir. 2001)(court “may consider documents on summary
judgment even if a foundation has not been laid, so long as one could be laid at trial”). The
testimony of Dwight Hammack, the vice-president in charge of SOOF, makes clear that senior
management, including Phil Lawson, was apprised of the work of SOOF by way of, among

other things, presentation of SOOF documents themselves (Hammack dep. 53-54), Hammack


No, 01 C 1541 Page 3

further testified that “99 percent of the communication was done ¢ither on a face-to-face basis
or discussion of stuff that was in one of these documents.” (Jd. at 54). Allstate offers the
testimony of Phil Lawson, vice-president of sales and in charge of the agent distribution
system, to rebut plaintiffs’ proffered testimony. Lawson testified that he did not have much
contact with the SOOF committee and that the Allstate Agency Standards (“AAS”) were not
the results of that committee’s work. He also testified that another decision-maker, Bob Gary,
was the person who approved the AAS (Lawson, dep. at 24-25). Hammack testified that Bob
Gary was directly involved with SOOF - there were Monday morning meetings with the senior
management team (which included Bob Gary), where SOOF documents would often be
presented (Hammack dep. at 39-40, 160). Hammack also testified that he frequently spoke
with Phil Lawson, because “much of what I was doing impacted his area, of course.” (Id. at
41). He further testified that the SOOF committee work was shared with Lawson: “Most of
it he saw or had an input on or he may come by to see me on an occasional basis and said he
didn’t like this or didn’t like that.” (Id. at 43.) While Allstate offers testimony of Lawson,
stating that the SOOF work had no impact on the implementation of the AAS, it has not
offered clear evidence that these documents never reached senior decision-makers — Lawson
and/or Gary.' The fact that the parties offer conflicting testimony on this point does not mean
that plaintiffs’ proffered testimony is not a sufficient foundation for the documents. Whether
the documents were actually used by senior management is a question that goes to weight of
the evidence rather than admissibility. Finally, any prejudice that might result from the

admission of these documents will have no effect on this court’s summary judgment decision,

‘Hammack’s testimony that he could not attest to whether Exhibit F ever reached Lawson is not clear
evidence that it did not ~ it is simply that he could not attest to that specific document (Hammack dep. at 211).
Further, it does not demonstrate that Exhibit F never reached Bob Gary, who was much more intimately
involved in SOOF.