Dexia Credit Local v. Rogan

231 F.R.D. 287, 2005 U.S. Dist. LEXIS 23315, 2005 WL 2482560
District Court, N.D. Illinois·Decided May 31, 2005·No. No. 02 C 8288·Published·Cited by 8 cases

Opinion

MEMORANDUM OPINION AND ORDER

SCHENKIER, United States Magistrate Judge.

In this opinion concerning discovery disputes, our fourth to date in this case,1 we address Dexia’s motion to compel production [289] of documents from defendants Braddock Management LP, Brainbridge Management LP, Bainbridge Management, Inc. (collectively, “the Management Companies”) and Peter G. Rogan (doc. # 208). The motion raises a number of issues concerning documents in the possession of John Tatooles and his law firm (collectively, “Tatooles”) that defendants have withheld from production based on assertions of privilege. These documents are identified on what the parties label, and what we thus refer to, as the “Tatooles Firm’s Privilege Log.”

Dexia’s motion identifies ten categories of dispute with respect to documents on the Tatooles Firm’s Privilege Log. All or part of seven of those ten categories (i.e., Categories 1-4, 6, 8, and 10) involve the same overarching dispute: whether Tatooles acted solely as the lawyer for the management companies; or, acted solely as the lawyer for Edgewater Medical Center (“EMC”); or, served both EMC and the Management Companies pursuant to a common legal interest.

For the reasons set forth below, the Court concludes that Tatooles acted on behalf of both EMC and the management companies, and that Dexia and the management companies may not assert that privilege against each other in this lawsuit. We first set forth the relevant factual background (Section I), and then explain the basis for our conclusion with respect to the Tatooles representation (Section II). We conclude by addressing the remaining privilege issues raised by the motion (Section III).

I.

Our prior three opinions in this case have set forth of the relevant history leading to this lawsuit, which we repeat here only insofar as necessary to understand the current motion. Between 1994 and 2000, Braddock Management, L.P. entered into three Hospital Management Agreements (“HMAs”) with EMC. The HMAs were dated August 17, 1994, August 1, 1997, and March 1, 2000.2 The other corporate defendants in this case, Bainbridge Management L.P. and Bain-bridge Management, Inc. are related entities to Braddock, and all are alleged to be controlled directly or indirectly by defendant Peter Rogan.

By these HMAs, EMC engaged the Management Companies to be the “sole and exclusive manager of the day-to-day operations” of EMC (HMAs § 2.01).3 The parties agreed that in connection with that engagement, the Management Companies “shall have a fiduciary responsibility” to EMC (Id.). Pursuant to the HMAs, the Management Companies assigned certain employees to work at EMC as “administrative managers” (HMAs, § 3.01(a)). Over time, the administrators assigned by the Management Companies to EMC were Peter Rogan, Roger Ehmen, Henry Zeisel, Judy Lunde, and Joann Skvarek. These individuals, although assigned to EMC, were deemed to be employees of the Management Companies; however, EMC reimbursed the Management Companies for the compensation that the Management Companies paid to these administrative managers (Id.). Except for these assigned employees of the Management Companies, all other employees of EMC were deemed to be employees of EMC (Id.).

In the discharge of its responsibilities, the Management Companies were given broad authority and power. The Management Companies were given the authority to hire, supervise, discipline and counsel non-physician personnel at EMC, and to determine their compensation (HMAs, § 3.01(b)). The Management Companies were given authority to enter into contracts (Id., § 3.05), as well as the “sole discretion, [to] defend, assert, settle, or otherwise dispose of any claims, litigation, judgments or liabilities in connection with” EMC (Id., 3.06). The Manage[290] ment Companies were required to cause periodic safety checks to be performed and insurance requirements be reviewed, with necessary coverage to be obtained (1994 and 2000 HMA, § 3.13; 1997 HMA, § 3.14). The Management Companies also were required to provide certain general corporate services to EMC, including acting as liaison with counsel to EMC (1994 HMA, § 3.17(g); 1997 HMA, § 3.18(g)). The Management Companies were required to “protect the confidentiality of all records” of EMC, and to assist EMC in “complying with all applicable federal, state, and local laws and regulations” pertaining to hospital records (HMAs, § 3.11).

In order to discharge their wide-ranging responsibilities, the Management Companies were authorized to “hire or retain any consultants, accounts, attorneys or other professional personnel ... necessary and appropriate to assist” the Management Companies (HMA, § 3.02). The HMAs provided that the costs of those consultants — including attorneys — would be included in “costs of operation” (Id.), which meant that those costs would be borne by EMC (see Id., § 10.01(i)).

During the period of the HMAs, Tatooles was outside counsel for the Management Companies. EMC had its own outside counsel — various attorneys of the firm of McDer-mott, Will & Emery (“MWE”). Documents submitted in connection with Dexia’s motion show that during the course of the HMAs, Tatooles performed legal work that had a dual purpose: (1) as contemplated by Section 3.02 of the HMAs, Tatooles performed work to assist the Management Companies in carrying out their duties and responsibilities under the management agreements, and (2) in so doing, Tatooles was performing work for the benefit of EMC.4 In performing this work, Tatooles had written communications that fall into three categories: (1) communications with EMC employees; (2) communications with administrative managers assigned by the Management Companies to EMC; and (3) communications with attorneys at MWE, outside counsel for EMC.

In the course of this work, in 1997 and 1998, Tatooles submitted letters to EMC’s auditors, acknowledging that, in the prior year, Tatooles had represented EMC in connection with certain matters (Dexia’s Mot., Ex. D). Tatooles also made recommendations concerning the entry by EMC into contracts; gave EMC advice concerning its rights under certain agreements; drafted documents for EMC to use in responding to complaints and for getting into agreements; and commented on (or directed) legal work done for EMC by MWE (Id.).

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Dexia Credit Local v. Rogan, 231 F.R.D. 287, 2005 U.S. Dist. LEXIS 23315, 2005 WL 2482560 (N.D. Ill. 2005).

231 F.R.D. 287 (Dexia Credit Local v. Rogan) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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