# UnitedStates Cou rt of App eals For the Seventh Circui t Chic ago, I lli nois 60604 Arg ued Ju ne 10, 2015 Deci ded July 2, 2015 Before DANIEL A. MANIO N, Circ uit Judge ANN CLAIRE WI LLIAMS , Circ uit Judge DAVID F. HAMILTON, Circ uit Judge

No. 14-2945 CHICAGO I MPORT, INC. Plaintiff-Appellee ,

v . AMERI CAN STATES I NSURA NCE CO., Defen dant, APPEAL OF: WOLIN & ROS EN, LTD

. Appeal from the United Stat es Di stric t Court for No rt hern Di stric t of Illinoi s, Eastern Di vis i on. No. 09 CV 02885
Mani sh S. Shah, Judge

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In this interlo cutory appeal, the law fi rm of Wolin & Rosen, Ltd., whi ch f or merly repr esented plainti ff Chi cago Impor t, Inc., challenges the di stric t court ’s order that the fi rm turn o ver case- relat ed fi les to its f or mer cli ent. When Chi cago Impor t had demanded those fi les, Wolin & Rosen asserted a re tain ing li en under Illi noi s comm on law on the gr ound that the company o wed the law fi rm about $60,000. The di stric t court, t hough, di d not abuse i ts di screti on in concl uding that t he cli ent’s need for t he documents outwei ghed Wolin & Rosen’s n eed for imm edi ate payment. Thus, we affi rm. NON PRECEDENTIAL DISPOSITION To be ci ted only in acc or dance w i th Fed. R. App. P. 32.1No. 14-2945 Page 2

I. Chi cago Impor t and Americ an Stat es Insu rance Company are embroiled in i nsu rance cover age liti gation. Chi cago Impor t had tak en out a $5 mi lli on i nsu rance poli cy from AmericanSt ates Insurance for commerci al proper ty it owned in Chi cago. That proper ty burned down i n May 2007, and Chi cago Impor t subm i tte d a clai m for $5 mi lli on i n invento ry losses an d debri s-removal costs. After two ye ars had pass ed wi thout r ecei ving payment from AmericanSt ates Insurance, Chi cago Impor t sued in federal court—under t he court’s di ver si ty j uri sdi cti on—alleging breach of c ontr act. Chi cago Impor t has chan ged lawyer s mu ltip le tim es. At the o utset, i t was repr esented by Gordo n & Rappold, LLC. When that fi rm move d to withdraw ei ght months into t he li tigati on, replacement counsel m ov ed the di stric t courtto compel Gordo n & Rappold to turn ov er t he cas e fi les. In response Gordon & Rappo ld ass ert ed a ret ai ning li en. In Illi noi s, an attor ney may assert a r etaining li en on a cli ent’s legal fi les i f that cli ent has outstanding, unpai d legal bi lls. Johnson v. Cherry, 422 F.3d 540, 554 (7th Ci r. 2005); Twin Sewer & Wat er, Inc. v. Midwest Bank & Tr. Co., 720 N.E.2d 636, 639–40 (Ill. App. Ct. 1999); Upgrade Corp. v. Michigan Carton Co., 410 N.E.2d 159, 160–61 (Ill. App. Ct. 1980). A magis tr ate j udge or dered Chic ago I mportto pay Gordo n & Rappold $63,440 or post securi ty in exchange for the fil es. Ov er t he next four year s, the cas e plodded thro ugh di scovery , and Chi cago Import conti nued to swap c ounsel. It eve ntually ret ai ned the law fi rm of Wolin & Rosen, Ltd., inNove mber 2012. About a ye ar and a half later, a new di stric t j udge was assi gned to the case, and Wolin & Rosen moved t o wi thdraw as couns el, contendi ng that it and Chi cago Impor t were unable to r esolve bil ling di sputes. Chi cago Impor t, repr esented by yetanother fi rm, move d the di stric t courtto o rder Wolin& Rosen to turn ov er its c ase fi les. Th e new fi rm arg ued that Wolin & Rosen had w ro ngly asserted a ret ai ning li en ove r 44 box es of cas e fi les by fals ely alleging that Chic ago Import owed the fi rm $60,000 i n unpai d fees. The new fi rm asked the court to o rder the fi les turned ov er t o it bec ause di scovery was c losed and the parties w ere r eady to fi le di sposi tive motions . The di stric t courtor dered Wo lin & Rosen to turn ov er t he fi les wi thout r equi ring Chi cago Impor t to pay any o utstanding fees or po st secu rity. The court ex plained that it was following Johnson v. Cherry, 422 F.3d 540 (7th Cir. 2005), where this court o utli ned how a di stric t courtshould dec i de whether to or der a lawyer to t urn ov er fil es to a cli ent. Johnson held that a di stric t courtshould f ollow thr ee steps:No. 14-2945 Page 3

First, determine the vali di ty o f the cli ent’s debt and the law fi rm’s li en; second, as sess the cli ent’s need for t he documen ts and i ts abi li ty t o pay its debt; and thi rd, balance the fi rm’s need for payment ag ainst the cli ent’s need for access . 422 F.3d at 555. In applyi ng Johnson , the courtfi rst not ed that it was“content t o assum e wi thout deci ding that t he fi rm i s owed money and that thatamount i s approximately $60,000.” But i t also found that a $60,000 debt t o the firm w as not part i cularly si gni fi cant for the fi rm when vi ewed against “the gr and scheme of thi s cas e,” whi ch the parties had been li tigati ng for five year s and whi ch generated “mor e than 40 boxes” of fi les. Second, the court o bserved, the cli ent furni shed li ttle informati on about its inabi li ty t o pay, so t hat counted “a li ttle bit” agai nst the cli ent. But, the court added, Woli n & Rosen “at least twi ce” conc eded that t he cli ent needs the fi le. Thi s conc essi on, the court explain ed, was “pret ty o bvi ous and reasonable” bec ause, u nli ke t he si tuation during earlier changes in couns el, di scovery i n thi s “very old case” i s now—and needs to re main—closed s o the court can finally resolv e i t. Thi rd, the cour t balanced the fi rm’s i ntere st in compens ation again st the cli ent’s need to hav e the fi les to pro ceed at once wi th “di sposi tive motions .” It concluded that the need for the fi les outwei ghed the fi rm’s i ntere st and order ed the fi rm to turn ov er t he cli ent fi les i mmedi ately, without payment or secu rity.
Consi stent wi th i ts plan to r esolve t he cas e, the courtor dered t he parties to fi le di sposi tive motions wi thi n about three months of the turno ver or der. Bot h parties d i d so. They bri efed thei r mot i ons over the nexttwo months, and just fi ve weeks ago the court g ranted and deni ed the motions in part. And atthe last status hearin g wi th the di stric t j udge, the part i es agreed t o part i ci pate ina settlement conference. II. Wolin& Rosen’s appeal contests the di stric t court ’s order that t he fi rm turn o ver Chi cago Impor t’s case fi les wi thout r equi ring the company to pay up or post securi ty. We beginby observ i ng that t he di stric t courthad juris di cti on to address the fee di spute between Chi cago Impor t and non-party Wolin& Rosen. Lawyer-cli ent fee di sputes that can affect the cli ent’s recov ery i n the underlyin g liti gation proper ly fall wi thi n the court’s supplemen tal j uri sdi cti on. See Hu mphrey v. Un ited States , 2015 WL 2447724, Nos. 14-3087, 14-3489 & 15-1065, at * 2 (7th Ci r. M ay 22, 2015); Goya l v. Gas Tech. Inst., 718 F.3d 713, 717 (7th Cir. 2013); Elusta v. City of Chicago, 696 F.3d 690, 694 (7th Cir. 2012). The order is al so i mmedi ately appealable. See Habitat Educ. Ctr. v. U.S. F orest Serv., 607 F.3d 453, 455 (7th Cir. 2010). So we proceed t o the mer i ts.No. 14-2945 Page 4

Thi s appeal turns on the corr ect i nterpr etat i on of Johnson. In Wolin& Rosen’s view, Johnson holds that, before o rder ing a turno ver of fi les, a di stric t court mustrequire the cli ent to pay (or post securi ty fo r) unpai d legal bi lls, u nless the cli ent pro ves that it cannot pay, whi ch Chi cago Impor t did not do . The fi rm ci tes to a pass age in Johnson i nstructi ng that “until” the cli ent suppli es evid ence of both i ts need for t he documen ts and i ts inabi li ty t o pay, “t he di stric t courtmay not sim ply di sregar d the ret ai ning li en.” 422 F.3d at 556. But the di stric t courtdi d not “si mply di sregar d” the li en. It carefully appli ed all three of Johnson ’s steps. Fi rst, it ass umed that Wolin& Rosen was owed $60,000, bu t its need for im medi ate payment was mi tigated by the long hi stor y of t he li tigati on, in whi ch Wolin & Rosen had i tself been c ounsel for ov er eighteen months. Second, i t observe d that Chic ago I mport“obvious[ ly]” needed the fi les for the upcoming di sposi tive motions, but the company had prov i ded no evidenc e of an i nabi li ty t o pay . In applyi ng the t hi rd Johnson step, the courtacted wi thi n the bounds of i ts di screti on by wei ghi ng these competin g factor s and c oncluding that C hi cago Impor t’s i mmedi ate need for t he fi les, desp i te its poss ible abi li ty t o pay for them, outwei ghed the law fi rm’s i mmedi ate need for the $60,000. Johnson, 422 F.3d at 554; First Wis. Mortg. Tr. v. First Wis. Corp., 571 F.2d 390, 396 (7th Cir.), rev’d in part o n other grounds on reh’ g, 584 F.2d 201 (7th Ci r. 1978) (en banc ). The court’s deci si on to or der t he turnov er wi thout pay ment or secu rity was reasonable. It was understandably conc erned wi th the need to bring this “ver y old case” to a conclusi on. Reo pening di scovery to allo w Chi cago Impor t to recreat e the fi les, or or dering the company to post security or to pay Wolin& Rosen for the fi les bef or e the case c ould proceed, would have creat ed further delay s that the court could reasonably refuse to t oler ate. F urther more, t he court demonstr ated its c ommi tment to a speedy resolution of the case b y holdin g the par ties to its post-turnov er scheduling or der t hat called f or prompt, disp osi tive motions and by qui ckly deci ding those mot i ons, bri ngi ng the case cl ose to final resolution. G i ven the cour t’s broad dis cretion to manage its docket, s ee Keeton v. Morningstar, Inc., 667 F.3d 877, 884 (7th Cir. 2012), i ts deci si on to or der the fi les turned ov er imm edi ately, befor e payment, was therefor e reasonable. Lastly, at o ral ar gument the part i es told us that Wolin & Rosen has i ni tiated collecti on pro ceedings in state courtconcerning the same atto rney’ s fees that ar e the subject o f the ret ai ning li en. The fi rm ther efore has the o pport uni ty t o be made wholeNo. 14-2945 Page 5

wi thout us di sturbi ng the dis tr i ct court’s careful balanc i ng of the equiti es and di screti onary docket management. III

. For the for ego i ng reasons, the j udgment of the dis tr i ct court is AFF IRM ED.