Attomey-Client Privilege That Smalley Seeks to Waiv:

Smalley seeks a blanket waiver of the attorney-client privileged communications between
her and Scariano attomeys in order to advance an advice of counsel defense, but the Board
wishes to assert privilege. A threshold matter is whether Smalley is authorized to waive this
privilege. Scariano has been employed as labor counsel to the Board at all times relevant to the
defense of this matter, and a lawyer employed or retained by an organization represents the
organization acting through its duly authorized constituents. Smalley asserts that she is a “joint
client” of Scariano. However, Smalley was employed as Superintendent of the School District,
and a corporate officer, such as a Superintendent, is an agent of the Board. As a rule, a corporate
officer may only assert a personal attorney-client privilege for communications she made to her
own counsel concerning personal liability unrelated to the corporation or unrelated to her role as
a corporate officer. In re National Trade Corp., 76 B.R. 646, 647 (N.D. Il. 1987). However, all
communications that were made to Scariano were related to the District and Smalley’s role as
Superintendent. Her communications were thus on behalf of the organization, not on her
personal behalf. Accordingly, the attorney-client privilege at issue here is exclusively vested in
the Board, and Smalley is not authorized to waive the privilege without the Board’s consent. See
Commodity Futures Trading Com’n v. Weintraub, 471 USS. 343, 348 (1985); United States v.
International Broth. of Teamsters, 119 F.3d 210, 215 (2d Cir. 1997).

Even if she had authority, a further problem with Smalley’s request for a blanket waiver
to advance the advice of counsel defense is that the communications for which she seeks waiver
do not support the defense. Smalley articulates two areas in which she currently seeks to invoke

the defense — Union membership exclusion and plaintiff's RIF, but these two areas do not qualify



privilege does not apply where several executives of administrators are present at a meeting with
the entity’s attomey. The meeting in Reed was not for the purpose of information sharing
concerning potential litigation; it was a meeting between a group investigating executive
behavior and some of those being investigated. Accordingly, I hold that privilege is preserved as

to the March 4 meeting.

For the reasons above, Dr. Smalley’s Amended Motion for Ruling on Privilege and

Disqualification of District Attorneys is DENIED.

ENTER:

fames Ga
United States Distridg Judge

DATE: _/ Dignh 3



counsel defense.' As will be shown below, however, Smalley is not authorized to waive the
privilege. Accordingly, no conflict exists between her and the non-Smalley defendants on this
basis. But even if Smalley was able to obtain a general waiver of privilege, disqualification is
nonetheless unnecessary. Smalley claims that the testimony of Scariano lawyers as to the content
of her conversations with them — over which the Board wishes to assert its attorney-client
privilege — may be necessary to advance her defense, thus necessitating disqualification,
However, the non-Smalley defendants do not deny the existence of the attorneys’ advice to
Smalley in her role as Superintendent, and were they to testify, the lawyers’ testimony would be
identical to Smalley’s, thus rendering disqualification on this basis inappropriate. Interactive
Coupon Marketing Group, Inc. v. H.O.T.t Coupons, LLC, No. 98 C 7408, 1999 WL 409990, at
*3 (N.D. Ill. June 7, 1999). Smalley has not shown that the lawyers would testify
antagonistically at trial, which she must do in order to demonstrate the necessary showing of
prejudice that is required for disqualification. Bogosian v. Board of Educ. of Community Unit
School Dist. 200, 95 F.Supp.2d 874, 876 (N.D. Ill. 2000). In light of Rule 83.51.7’s provision
that an attorney may continue representation on behalf of a client until the attomey knows that
his testimony would be prejudicial to a former or current client, I see no reason to disqualify at

this point.

' Smalley’s declaration that her interests and those of the other defendants are now
adverse on the sole basis of her desire to waive privilege is absurd. A legal principle as such
would essentially give Smalley the power to disqualify the attorneys for the remaining defendants
on the basis of any professional disagreement which they might have. This is clearly not the
standard for disqualification.



as communications subject to disclosure under an advice of counsel theory. First, the decision
concerning the exclusion of plaintiff's position from the education support personnel Union
bargaining unit was not an action taken by Smalley, but instead was implemented by agreement
between attomeys for the Union and attorneys for the Board. Therefore, the advice of counsel
defense does not apply. With respect to Rojicek’s RIF, the legal advice afforded to Smalley in
her role as Superintendent was followed by her submission of two options to the Board.
Accordingly, the ultimate actor in the decision to RIF was the Board, not Smalley.

Finally, the most important factor to my decision on this matter is that Smalley is not
precluded from seeking waiver of privilege for the duration of the case. It is only a blanket
waiver that I reject here. To the extent that a limited advice of counsel defense may be available
and to the extent that a situation necessitating a waiver of privilege to advance the defense arises,
Smalley is free to so move. Furthermore, Scariano — regardless of any alleged past
representations to the contrary — has now expressed its willingness to work with her in advancing
this defense in a streamlined fashion. Privileged communication should not be waived unless
absolutely essential to the defense of the case and then such waiver must be carved out with

specificity.

Attorney-Client Privile; it Smal aii

Finally, along with her request for a blanket privilege waiver, Smalley alternatively and/or
additionally claims that several, if not all, communications have already been waived. Smalley
first contends that privilege was waived in its entirety at her deposition when the Scariano

attorney representing her at that time invoked the advice of counsel doctrine. However, although



Miouce Order Form (06/97)

United States District Court, Northern District of Illinois

Ni of Assign ing Judge er
ide Magistrate Judge James B. Zagel “nae haigned use
CASE NUMBER 010723 DATE 4/16/2003
CASE RONICEK vs. RIVER TRAILS SCHOOL DIST, 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.]

@))

disqualification of District Attorneys is denied.

| [For further detail see order attached to the original minute order. ]

MOTION:

DOCKET ENTRY:

qd) Oo Filed motion of [ use listing in “Motion” box above.]

(2) Qa Brief in support of motion due

(3) Oo Answer brief to motion due__. Reply to answer briefdue___—-

(4) Oo Ruling/Hearingon___setfor____—sat

(5) oO Status hearing[held/continued to] [set for/re-set for] on setfor_ at

(6) oO Pretrial conference[held/continued to] [set for/re-set for]on___—setfor_ at

(7) o Trial[set for/re-set for]on__—_at

(8) ao (Bench/Jury trial] [Hearing] held/continuedto_ ss at__

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) C)LocatRule 41.1 COFRCP41(a)(1) [1 FRCP41(a)(2).

ao [Other docket entry] Motion (49-1) for ruling on privileged communications and

No notices required, advised in open court.

No notices required.

umber of notices

Document
Number

Notices mailed by judge’s staff.

Notified counsel by telephone.

APR 17 7003

dite dockets

Docketing to mail notices.

Mail AO 450 form. iunoa 4

Copy to judge/magistrate judge.

IIMLSIO “s'7

id

7g sone ate mailed nice
sourroorn é1s3 hd Ob vey bu —

DW deputy’s
initials om

UT Dateltione-recoived in
central Clerk's Office mailing deputy inicials

S|



the attorney raised the doctrine, she did so in a limited capacity in direct response to opposing
counsel’s line of questioning. Specifically, it was invoked in response to whether Smalley
received an opinion from counsel regarding whether Rojicek had a right to pressure another
employee to join a union. Privilege was expressly preserved for everything outside the scope of
that line of questioning. But even if it had not, any waiver implied by an advice of counsel
defense is limited to communications and documents on the same subject matter relating to the
legal advice relied upon. See Abbott Laboratories v. Baxter Travenol Laboratories, Inc., 676
F.Supp. 831, 832 (N.D. Ill. 1987). Finally, even though asked, Smalley revealed no attorney-
client communications, and absent disclosure, there is no waiver of privilege. In re Consolidated
Litigation Concerning Intern. Harvester’s Disposition of Wisconsin Steel, 666 F.Supp. 1148,
1157 (N.D. Ill. 1987); United States v. Pipkins, 528 F.2d 559, 562 (Sth Cir. 1976).

In addition to the argument regarding blanket waiver, Smalley argues that privilege has
been specifically waived regarding a meeting between several board members and administrators
and Scariano attorney Justino Petrarca that took place on March 4, 2000. Each of the attendees
were employees or agents of the Board that Scariano represents, and thus privilege is presumably
preserved. Upjohn Co. v. United States, 449 U.S. 383, 384 (1981). Smalley contends that
privilege was waived due to a violation of the Open Meetings Act. Even ifit is true that a
violation of the Open Meetings Act results in a waiver of attorney-client privilege (a principle for
which I see no support), any such violations of the Open Meetings Act are now untimely and
barred. 5 ILCS 120/3(a). Finally, Smalley’s reliance on Reed v. Baxter, 134 F.3d 351 (6th Cir.
1998), to support her contention that discussion with the Board’s attorney under such

circumstances are not privileged is misplaced. Reed does not stand for the proposition that



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
MARLENE ROJICEK,
Plaintiff,
v. No. 01 C 0723
RIVER TRAILS SCHOOL DIST. 26, et al., Tudge James B. Zagel DOCKETED
APR I 7 2003

Defendants.
MEMORANDUM OPINION AND ORDER

Dr. Shirley Smalley served as Superintendent at River Trails School District No. 26 from
1994 to 2002. As Superintendent, Smalley was occasionally advised by District counsel,
Scariano, Himes and Petrarca, Chtd. (“Scariano”), Plaintiff Marlene Rojicek has now sued
Smalley, the District, and several other individuals for alleged retaliation for the former’s
exercise of her First Amendment rights to speech and association arising from a unionization
drive of support staff in the District. Scariano represents all defendants in this lawsuit except
Smalley, who has moved to disqualify it from representing the other defendants on the basis of
its rendering advice to her concerning Rojicek. Smalley also moves for a ruling on privileged

communications which she seeks to reveal in her defense.

Disqualification

“Disqualification of an attorney is a drastic measure that should only be imposed when
absolutely necessary.” Stopka v. Alliance of American Insurers, No. 95 C 7487, 1996 WL
204324, at *2 (N.D. Ill. April 25, 1996). The threshold requirements for disqualification under

Local Rule 83.51.7, which governs conflicts of interest, include the presence of direct adversity

D



between clients or a material limitation in an attorney’s ability to represent a client. When
neither threshold requirement is present, disqualification should be denied. Stopka, 1996 WL
204323, at *4-5. Here, the non-Smalley defendants have never been directly adverse to Smalley,
and Scariano’s representation of them has not materially limited Scariano’s responsibilities to
Smalley in any way. The non-Smalley defendants maintain that Rojicek’s position was
eliminated by way of reduction in force (“RIF”) after payroll operations at River Trails were
outsourced. They further maintain that prior to the RIF, Smalley presented the Board with two
options to solve a payroll accuracy problem — hire a second person to provide an internal check,
or outsource. Smalley allegedly recommended outsourcing after consulting with School District
counsel. The non-Smalley defendants have consistently maintained that all of their actions,
including Smalley’s, resulted from a good-faith decision-making process, thus supporting a
reliance on the business judgment rule. The Board is not blaming any alleged wrongdoing on
Smalley to exculpate itself from liability. Additionally, the Board is statutorily bound to
indemnify and hold harmless all its officers and employees for liability for acts committed within
their official capacity within the scope of their employment, see 105 ILCS 5/10-20.20, and the
Board has always maintained that Smalley was operating within the scope of her authority and
will thus argue that punitive damages are not applicable as a matter of law, see 745 ILCS 10/2-
102; Reese v. May, 955 F.Supp. 869, 875 (N.D. Hl. 1996). As such, there is no direct adversity
among any of the defendants — at least, as of yet — nor are any defendants prejudiced by such a
defense strategy.

The alleged conflict expressed by Smalley involves her interest in getting a blanket

waiver of the attorney-client privilege between her and Scariano in order to advance an advice of