. confidence, 5) by the client, 6) are at his instance permanently protected 7) from disclosure
by himself or the legal advisor, 8) except the protection may be waived. See United States
v. White, 950 F.2d 426, 430 (7" Cir. 1991). Further, communications from an attorney to
his or her client may also be privileged, but only if such communications contain confidential
information provided by the client. See United States v. DeFazi, 899 F.2d 626, 635 (7" Cir.
1990); Ziemack v. Centel Corp., 92 C 3551, 1995 WL 314526 (N.D.IIl. May 19, 1995).

A document may be protected by the work-product privilege if it is created by an
attorney “in anticipation of litigation.” See Fed.R.Civ.P. 26(b)(3); Logan v. Commercial Union
Ins. Co., 96 F.3d 971, 976 (7" Cir. 1996). Although an opponent may overcome an
assertion of privilege upon a showing of substantial need, id., courts are cautioned by Rule
26 to give even greater protection to attorney opinions which include mental impressions,
conclusions, or legal theories conceming the prospective litigation. Id, at 976, n.4, Finally,
in evaluating whether a particular document was really prepared in anticipation of litigation,
courts are to “look to 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.” /d. at 976-77.

Fiatallis has provided us with copies of the allegedly privileged documents divided
into four groupings:

Group A, Exhibit 3 to Bland’s deposition. Memo from Fiatallis’ Vice Chairman to

senior members of Fiatallis’ administration discussing legal advice received from

outside counsel regarding, inter alia, the possible liabilities to Fiatallis should it close
part of its operations and/or terminate it pension plan.

This document is protected by the attorney-client privilege because it specifically
discusses advice received from an attorney regarding confidential client communications

and was disseminated only to those individuals who were responsible for making decisions


‘asa penalty for his attorneys’ unauthorized retention of the documents. Fiatallis cites to
several ABA opinions and the Restatement of the Law Governing Lawyers for the
proposition that disqualification may be appropriate in situations where an attorney
wrongfully reviews documents he or she knows to be privileged. We do not believe that
such sanctions are appropriate in this case. Upon receiving the documents from Bland, his
attorneys immediately notified Fiatallis that they might be subject to some assertion of
privilege; the parties then engaged in discussions and eventual briefing of the issue as to
whether the documents actually were privileged. Bland’s attorneys consistently argued that
they were not, and although we now hold that a majority of the documents are in fact
privileged, we did find that some of the documents must be produced. Additionally, we
cannot say that Bland’s attorneys have used the documents improperly since this dispute
began. Now that we have ruled regarding the documents, Bland’s attomeys are of course
under the ethical obligation to return all privileged materials to Fiatallis, inform Fiatallis what
other entities, if any, might have been given the documents, and refrain from using them for
any purpose whatsoever in the litigation.

For the above reasons, Fiatallis' motion for protective order is granted in part and

denied in part. It is so ordered.

ENTER:

MICHAEL T. MASON’
United States Magistrate Judge

Dated: November 21, 2002



. proposes various alternatives to deal with that risk. Thus, the memo and privileged
attachments also fall under the protection of the work-product privilege.

However, there are other documents over which Fiatallis’ asserts the privilege merely
because they were in some way “attached” to the memo. All of these documents either set
forth communications between a non-attorney outside benefits consultant and internal
Fiatallis managers, or do not reveal either the author or recipient of the document. Although
Fiatallis contends that the documents were “attached” to the original memo, nothing about
them demonstrates that they were created for a legal, as opposed to a business, purpose;
the documents are not specifically referenced in the memo. Thus, the remaining
documents in this group must be produced.

We additionally find that document 000065 - 000068 is not privileged. Fiatallis
contends that it is subject to the “accountant - client privilege” because it is an “opinion letter
regarding disclosure requirements and financial-statement related issues regarding Fiatallis
pension plans.” However, there is no such thing as an “accountant - client privilege.” See
In the Matter of Grand Jury Proceedings, 220 F.3d 568, 571 (7" Cir. 2000). Material
transmitted to an accountant may only take on the protection of privilege if the accountant
is acting as an agent of an attorney for the purpose of providing legal advice. /d., citing
United States v. Brown, 478 F.2d 1038, 1040 (7" Cir. 1973). In this case, the purpose of
the letter appears to be the provision of accounting or financial advice, not legal advice.
Thus, no privilege applies and Fiatallis must produce this document.

Group D, Supplemental documents produced by Bland. Various letters between

Fiatallis’ outside counsel and upper level Fiatallis management (including Bland) and/or
Fiatallis' outside benefits consultants regarding plan termination.



: regarding the actions discussed therein.’ Although this letter also discusses the general
risk of litigation arising from the termination of Fiatallis’ pension plan, it is not specific
enough to say that the document was prepared “in anticipation of litigation.” Instead, the
letter was merely setting forth a possible course of action for the company that could, if
implemented, result in litigation.

Group B, Exhibit 5 to Bland’s deposition. Letter from outside counsel regarding
potential reorganization of Fiatallis.

This document is also protected by the attorney-client privilege because it contains
an attorney's analysis of confidential Fiatallis information. Further, it was only given to one
high-level individual at Fiatallis. Although Fiatallis contends that this document is also
protected by the work-product privilege, it does not discuss a specific anticipation of
litigation, so this privilege does not apply.

Group C, Exhibit 5 to Bland’s deposition. Internal Fiatallis memorandum
regarding Fiatallis’ potential legal liability should it terminate its pension plan, and various
attachments from outside counsel and consultants regarding financial alternatives for
terminating the plan.

We agree that the original Fiatallis memorandum (bates numbered 00001 - 00004),
is privileged, as are several of the other attachments that were either created by Fiatallis’
outside counsel regarding confidential legal issues or consist of internal Fiatallis
communication discussing legal advice (bates numbers 000030 - 000039, 000040 - 000042,
000072 - 000078, 00005, 00006 - 000022, 000095 - 000098). Further, the original memo

discusses a more specific risk of litigation than the documents in groups A and B, and

4 Bland argues that Fiatallis has not carried its burden of proving that the documents were actually
disseminated only to the limited individuals named on the memo. However, absent any evidence to the
contrary, we assume that the distribution was limited to the high-level management individuals listed on the
memo.



Fiatallis argues that the documents all concern non-fiduciary aspects of the benefits
plan. After reviewing the documents, we agree that those we found covered by the
attorney-client and/or work-product privilege are not subject to the fiduciary exception
because they all concern plan termination and/or amendment, not its management.
Specifically, management of an ERISA plan, which carries with it fiduciary responsibilities,
encompasses such activities as investment of pension funds and communications to
employees about plan administration, such as pension options. See King v. National Human
Resource Committee, 218 F.3d 719, 724 (7" Cir. 2000) (spin-off of plan assets to new plan
did not implicate fiduciary responsibilities); Lenz v. Milwaukee County, 961 F.Supp. 1268,
1275 (E.D.Wise. 1997) citing Peoria Union Stock Yards Co, Retirement Plan v.
Pennsylvania Mutual Life Ins, Co., 698 F.2d 320, 326 (7" Cir. 1983).

In his sur-reply, Bland does not dispute Fiatallis' contention that it was acting in a
non-fiduciary capacity when it entered into privileged communications with its attorneys.
Instead, he contends that the mere fact that he was a plan fiduciary and also received
copies of the documents in order to perform his job duties was enough to waive any
assertion of privilege as to the plan beneficiaries. Bland cites no authority for this
proposition and we find none. Indeed, the case law is clear that an employer (or for that
matter, employee), may act in both a fiduciary and non-fiduciary manner. See King, 218
F.3d at 724. Thus, the fact that Bland may have had fiduciary responsibilities with regards
to the plan does not convert all of his communications regarding the plan into a non-
privileged fiduciary matter.

Finally, Fiatallis asks that we disqualify Bland’s counsel and/or dismiss his complaint


Minute Order Farm (0697)

United States District Court, Northern District of Illinois

Name of Assigned Judge 7 Sitting Judge if Other i
or Maxistrate Judge James B. Zagel than Assigned Judge Michacl T. Mason
CASE NUMBER 02 C 69 DATE 11/21/2002
CASE Bland vs. Fiatallis North America Inc
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (bh) state bricfly the nature
MOTION: of the mation being presented.)
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) Oo Answer briefto motion due. Reply to answer brief duc.
(4) o Ruling/Hearing on set for at
(5) C) Status hearing[held/continued to] [set for/re-set for] on set for at
(6) O Pretrial conference[held/continued to] [set for/re-set for]on_ set for at
(7) oOo Trial[set for/re-set for] on at
(3) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) QO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCpP4(m) OC Local Rule 41.1 OFRCP41(a\(1) OO FRCP41(a)(2).
(0) +4 {Other docket entry] Enter Memorandum Opinion and Order.
al) [For further detail see order attached to the original minute order. |
No notices required, advised in open court.
‘No notices required,
Nolives mailed hy judge's staff. Nov 2 2 2002
Notified counsel by telephone. ce dnekerpd
Y¥ | Docketing to mail notices. al
V | Copy to judge/magistrate judge. Wy tay Sig on
SE: 7
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MF deputy’s Ar AON 20
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We find that all of these documents are covered by the attorney-client privilege
because they consist of confidential client communications regarding legal issues, similar
to the documents discussed in Groups A and B, above. However, because they only
discuss the general tisk of litigation associated with various courses of action, they do not
fall under the protection of the work-product privilege.

The next question is whether there is some reason to obviate the privilege in this
case, such as waiver by Fiatallis or an exception to the privilege. Bland argues that many,
if not all of the documents should be produced because, even if privileged on their face,
they fall under the so-called fiduciary exception to ERISA. This exception recognizes that
in cases where beneficiaries of an ERISA plan allege a fiduciary's breach of its duty, the
attorney-client privilege should not be used as a shield to prevent disclosure of information
relevant to that breach. See Harper-Wyman Co. v. Conn. General Life Ins. Co., No. 86 C
9595, 1991 WL 62510 (N.D.IIL, April 17, 1991) (citations omitted). Thus, a fiduciary of an
ERISA plan “must make available to the beneficiary, upon request, any communications
with an attorney that are intended to assist in the administration of the plan.” In re Long
island Lighting Co., 129 F.3d 268, 272 (2TM Cir. 1997). However, the mere fact that an
employer provides its employees with a benefit plan does not convert the employer into an
ERISA fiduciary for all actions it takes with regard to the benefit plan. See, id. (“Under
ERISA, an employer may perform both fiduciary and non-fiduciary functions.”) An employer
acts as a fiduciary only when it undertakes plan management or administration; decisions
conceming the plan's design, amendmentor termination do not comprise fiduciary activities,

id.


. applied to protect the documents, and that in any event, the documents were either not
privileged on their face or should be produced pursuant to the fiduciary exception for ERISA
matters.?

Legal Analysis

As an initial matter, we note that we are not concerned with testimony Bland gave
during his deposition about his opinion regarding the privileged nature of the documents.
Both parties recognized that Bland testified merely that he agreed the documents
represented attorney-client communications, but he had “no idea” if such communications
were privileged. As the privilege belongs to Fiatallis to assert, and not to Bland, his opinions
are not relevant to our analysis. Similarly, we will not concern ourselves with Fiatallis’
contention that Bland breached the confidentiality provisions of his termination agreement
by retaining copies of the documents. Such allegations, even if true, do not impact our
determination here.

In our previous opinion, we agreed with Bland that it was Fiatallis’ burden to establish
that the documents were privileged and further held that we would conduct an in camera
review of them after obtaining Fiatallis’ privilege log containing its explanations of privilege.
As we explained, the rule for finding that a document is protected by the attorney client-
privilege is when: 1) legal advice of any kind is sought 2) from a professional legal advisor

in his capacity as such, 3) the communications relating to that purpose, 4) made in

5 During the original round of briefing on the issue of whether the documents are privileged, Bland
produced a second set of document (the “Supplemental documents”) and Fiatallis promptly asserted a
privilege over them as well. However, in its reply brief, Fiatallis clarified that it actually only believed that some
of the Supplemental documents were privileged. It included these in its in camera submission to the Court
and described them in its privilege log.



. Fiatallis’ assertion of privilege with regard to a number of the documents, but order the
production of others.
Background

Because our first opinion only touched on some of the background of this case, we
will set forth the applicable facts here as well. Bland is a former employee of Fiatallis. He
previously held the positions of Vice President of Employee Relations, and later, General
Counsel. Fiatallis terminated him in 1988, and Bland subsequently retained counsel to
bring suit against his former employer on behalf of a putative class of retired Fiatallis
employees, alleging violations of the Employer Retirement Income Security Act of 1974
("ERISA") 29 U.S.C. § 1001 ef. seg. Specifically, the complaint alleged that, upon the
closing of several of Fiatallis’ plants, the company induced the plaintiffs to retire with the
promise that their medical insurance benefits and costs under their retirement and pension
plan would remain constant for their lifetimes. Subsequently, Fiatallis informed the retirees
that their medical insurance benefits would be modified and that they would be required to
contribute more to receive benefits.

During the course of discovery, Fiatallis served document requests on Bland, wha
subsequently turned over to his attorneys a number of documents he had retained after
being terminated from defendant. After reviewing the documents, Bland's attorneys
contacted Fiatallis to inform it that some of the documents they had received from Bland
may implicate the attorney-client or work-product privilege. Upon reviewing the documents,
Fiatallis did indeed assert a privilege over them and Bland objected to the assertion of

privilege, arguing that Fiatallis had not carried its burden of demonstrating that any privilege



IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

LOU BLAND, ET AL.,

Plaintiffs,
No. 02 C 69
Vv.
Hon. James B. Zagel
FIATALLIS NORTH AMERICA, INC., y

an Illinois corporation, Mag. Judge Mason

Defendant.
MEMORANDUM OPINION AND ORDER

Michael T. Mason, United States Magistrate Judge:

This opinion is a follow-up to an earlier one we issued on October 22, 2002,
regarding defendant Fiatallis North America, Inc.’s (“Fiatallis”) motion for protective order
against plaintiff and former employee, Lou Bland. At issue are a group of Fiatallis
documents in Bland’s possession, which Fiatallis contends are protected by the attorney-
client and/or work-product privileges. Bland retained these documents after he was
terminated from defendant and later provided them to his attorneys in response to
document requests from Fiatallis. In our previous opinion, we ordered Fiatallis to provide
us with a privilege log describing the reasons it asserted a privilege over each document;
it also provided copies of the documents to us for an in camera review.' After reviewing the

documents and considering the parties’ arguments in their original briefs,? we uphold

"In this case, the term in camera is something of a misnomer, since Bland’s attorneys have already
seen all of the document at issue, and indeed, still retain them in their possession, The question for us to
decide is whether the documents should be returned to Fiatallis and Bland barred from using them for any
purpose.

2We dispensed with several side-issues in our first opinion and indicated that we would address the
bulk of the parties" legal arguments after obtaining the privilege log.