Opposition Brief — Certain Underwriters v. International Insurance

No. 92-1556 | SEED

eee taser ' fea ee we

IN THE QFEIOE OF THE GLERK

Supreme Court of the United States

OCTOBER TERM, 1992

CERTAIN UNDERWRITERS AT LLOYD’S, LONDON;

KEITH WILLIAM KERR, as representative of Certain Underwriters,

YASUDA FIRE AND MARINE INSURANCE COMPANY (U.K.),

INSURANCE CORPORATION OF IRELAND, P.L.C., ANCON

INSURANCE COMPANY (U.K.), LTD., SCAN RE INSURANCE,

Petitioners,

INTERNATIONAL INSURANCE COMPANY, CLARKSON

PUCKLE GROUP, LTD., ERAS (INT’L), LTD., CLARKSON

PUCKLE INT’L REINSURANCES, LTD., BAIN CLARKSON, LTD.

and SOCIETE COMMERCIALE DE REASSURANCE, S.A.,

Respondents.

Petition for Writ of Certiorari to the United

States Court of Appeals for the Seventh Circuit

RESPONDENT INTERNATIONAL INSURANCE

COMPANY’S BRIEF IN OPPOSITION

FRANCIS D. MORRISSEY

Counsel of Record

JOHN W. DONDANVILLE

PAUL B. O’FLAHERTY, JR.

WILLIAM M. SNEED

BARRIE L. BREJCHA

BAKER & McKENZIE

130 East Randolph Drive

Chicago, Illinois 60601

(312) 861-8000

Attorneys for Respondent,

International Insurance Company

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

LPS Ms

Se oe foe

+ x j ; al

| : :

| ;

[] be ae

ek :

,

. = 4 * : : Pha

~ : his : 3

: sd as | ;. :

hi

— ; * ~ ° : * .

| ; 4 oe

| : y

3 erates : ‘ | | :

} * |

‘ ‘ 1 ; |

j : :

+ f . |

. , ’ %

e ‘ ‘

oa ae met ‘

= : ? :

:

; :

— 4 ire : :

* ) Pi) : ig bs

> ; ¢ . 4

' ; ; .

dit | ) 4 & Sg. es

: / ‘ | |

/ f :

- a ; . a ¢

Ee yi

f ® Oe ne

é uA } i Y ;

, | . ; : : - > ,

- St : : : :

f : 4

Pi ; 7 f f

u“

. : , » " |

2 » Hed ?. « £ 3 ,

a i Ps 4 yp. - ’ ” ;

ae . +4 a

PPX k . y i 2 , y

| | : 2 | , < “~ - ,

QUESTION PRESENTED FOR REVIEW

Whether this Court should exercise its discretion under

Supreme Court Rule 10 and issue a writ of certiorari

where the Court of Appeals’ one-line unpublished order

denying a writ of mandamus was manifestly correct,

where the underlying orders involve discretionary, case

specific rulings on waiver of privilege in discovery, and

where the petition fails to present special and important

reasons for review.

SUPREME COURT RULE 29.1 LISTING

The parent companies of International Insurance Com-

pany are Crum and Forster, Inc., Xerox Financial Ser-

vices, Inc., and Xerox Corp. There are no subsidiaries or

affiliates of International Insurance Company that are not

wholly owned.

Ok RET,

ill

TABLE OF CONTENTS

PAGE

QUESTION PRESENTED FOR REVIEW .... i

SUPREME COURT RULE 29.1 LISTING .... ii

ee OE ey 4 yy iil

TABLE OF AUTHORITIES ................. iv

SUPPLEMENTAL STATEMENT

nn eee eee nbbccenscececes J

SUMMARY OF ARGUMENT ................ 4

REASONS FOR DENYING THE WRIT ..... 5

I.

RULINGS ON PRIVILEGE ISSUES AND DOCU-

MENT PRODUCTION ARE MATTERS FOR THE

DISTRICT COURT’S DISCRETION, NOT RE-

VIEWABLE BY MEANS OF CERTIORARI .. 5

II.

THE COURT OF APPEAL’S ORDER DENY-

ING THE PETITION FOR WRIT OF MANDA-

MUS WAS MANIFESTLY CORRECT ....... g

A. Discretionary Rulings On Privilege Issues

And Document Production Are Not Re-

viewable Through Mandamus......... 9

B. The District Court Exercised Sound Dis-

cretion In Ruling That Petitioners Had

Waived Their Right To Assert Additional

Privileges After Their Original Privilege

Claims Were Rejected ............... 11

ee | re reer err 15

Te Ce Ue esas sea ses nase csarescces la

iV

TABLE OF AUTHORITIES

Cases

Barclays-American Corporation v. Kane, 746 F.2d

ee Ge Cs Ce now eee ben aka ameuwasuens

Braxton v. United States,

C2 Be CE oc BASRA GAA Ce UeR aes ke

Carey-Canada, Inc. v. California Union Ins. Co.,

135 Fa. DOS UREA... TOR sek ccacscccas

Commodity Futures Trading Comm’n. v. Wein-

fraud, €71 U.S. DEB CER) cick accevdccvecs

Hickman v. Taylor, 329 U.S. 495 (1947) .......

Identiseal Corp. v. Positive Identification Systems,

Inc., 560 F.2d 298 (7th Cir. 1977) ..........

In Re Consolidated Litigation Concerning Int'l

Harvester’s Disposition of Wisconsin Steel, 666

Fr. Supp. 1146 (6.D. TM. IBBT) .......05005:

Jones v. Ada S. McKinley Community Services,

No. 89 C 0319, 1989 U.S. Dist. LEXIS 14312

(IV.SA. Bix BOOR.: Tey MROE 04064 sc cctenweenes

Kerr v. United States Dist. Court, 426 U.S. 394

CREE 0. ci cc ae decease baaeetee lee

Krewson v. City of Quincy, 120 F.R.D. 6 (D. Mass.

BEE 3s chnnveducdatacncsseeesapenseeeaes

Mallard v. United States District Court, 490 U.S.

See CRM n dnvaxkc cate ee

Mare v. Kelly, Hart & Hallman, P.C., 929 F.2d

S Came Ge Ble ckku dan ceveshacesecees

Naartex Consulting Corp. v. Watt, 722 F.2d 779

(D.C. Cir. 1983), cert. denied, 467 U.S. 1210

CRUE vuncdhcuth vues Gu kaeeueunetieeaneeans

PAGE

10

or

1]

~] ~*~)

10

12

8,9

11

V

Pate v. Robinson, 383 U.S. 381 (1966) .........

Peat, Marwick, Mitchell & Co. v. West, 748 F.2d

540 (10th Cir. 1984), pet. for cert. dismissed, 469

See SR EE oe oa vcs oe eke ek o's

Pennsylvania v. Bruder, 488 U.S. 9 (1988) ....

Perry v. Golub, 74 F.R.D. 360 (N.D. Ala. 1976) ..

Poulos v. Naas Foods, Inc., 959 F.2d 69 (7th Cir.

DP ear ee Cane oot te cla ee

Rice v. Sioux City Memorial Park Cemetery, 349

a iw pe ma Ce CRE eee ka eK ekeeiss

Societe Nationale Industrielle Aerospatiale v.

United States District Court, 482 U.S. 522

ey eek ae ea eae ee ee A Ae

Sporck v. Peil, 759 F.2d 312 (3d Cir. 1985), cert.

denied, 474 U.S. 903 (1985) ................

Tolliver v. Northrop Corp., 786 F.2d 316 (7th Cir.

an nee

United States v. Darfman, 690 F.2d 1217 (7th Cir.

i, REET ERA ECE PPO LEL POEL EET ETT TTT e Ee

United States v. Jones, 696 F.2d 1069 (4th Cir.

RS Re ae ey eo eee ner a

United States v. Nobles, 422 U.S. 225 (1974) .....

United States v. Salerno, ___ US. , 112 8.

ie I he i a ede andes

United States v. Zolin, 491 U.S. 554 (1988) ....

Upjohn Co. v. United States, 449 U.S. 383 (1980) .

Watt v. Alaska, 451 U.S. 274 (1981) ...........

Will v. Calvert Fire Ins. Co., 437 U.S. 655 (1978) .

On

1]

a |

v1

Other Authorities

4A Moore’s Federal Practice ¢ 34.05[2] ........ 11

aE | a 5

Federal Rule of Civil Procedure 26 ........... 1,10

Federal Rule of Civil Procedure 34 ........... 11

No. 92-1556

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

CERTAIN UNDERWRITERS AT LLOYD’S, LONDON;

KEITH WILLIAM KERR, as representative of Certain Underwriters,

YASUDA FIRE AND MARINE INSURANCE COMPANY (U.K.),

INSURANCE CORPORATION OF IRELAND, P.L.C., ANCON

INSURANCE COMPANY (U.K.), LTD., SCAN RE INSURANCE,

Petitioners,

INTERNATIONAL INSURANCE COMPANY, CLARKSON

PUCKLE GROUP, LTD., ERAS (INT’L), LTD., CLARKSON

PUCKLE INT’L REINSURANCES, LTD., BAIN CLARKSON, LTD.

and SOCIETE COMMERCIALE DE REASSURANCE, S.A.,

Respondents.

Petition for Writ of Certiorari to the United

States Court of Appeals for the Seventh Circuit

RESPONDENT INTERNATIONAL INSURANCE

COMPANY’S BRIEF IN OPPOSITION

a

=

SUPPLEMENTAL STATEMENT OF THE CASE

Respondent, International Insurance Company (“IIC’’),

is an Illinois insurance company that acted as a nominal

“fronting” insurer for an international pool of reinsurers

on a series of environmental impairment liability (“EIL’’)

insurance policies issued from 1981 through 1983. Peti-

tioners, Underwriters at Lloyd’s, London et al., are cer-

tain of the insurance syndicates and companies that were

members of the pool that reinsured IIC on these EIL poli-

cies. The EIL policies IIC issued were 100% reinsured

by the reinsurance pool in 1981 and 1982, and over 98%

reinsured by the pool in 1983.

In 1988, IIC paid $19 million to settle a claim brought

under an EIL policy it had issued to SmithKline Beekman

Corporation (“SKB’’). IIC then sought reimbursement

from the excess reinsurers. Some of the excess reinsurers

paid, but others did not. IIC filed the underlying proceed-

ings in November 1988 against those excess reinsurers

who did not pay (“‘petitioners,” herein).

IIC issued its first document request upon petitioners in

early 1989. Before petitioners had responded to the request,

the magistrate judge issued a ruling defining the scope of

the attorney-client and work product privileges in this ac-

tion, in connection with a document subpoena issued to a

third party. Specifically, the magistrate judge found that

May 5, 1988, was the earliest date on which the parties an-

ticipated litigation within the meaning of Fed. R. Civ. P. 26.

Documents created after this date qualified as work prod-

uct; documents created before the date did not. In Feb-

ruary 1990, approximately one year after IIC issued its

document request, petitioners first provided IIC with a

log of documents withheld from production on the basis

of privilege. Specific privileges were asserted in connec-

tion with each document withheld. Numerous documents

iin

were withheld on the grounds of both attorney-client and

work product privileges jointly. Other documents were

claimed to be withheld on the grounds of either the attor-

ney-client or work product privilege singularly. Notwith-

standing the magistrate judge’s ruling six months earlier,

petitioners withheld numerous documents that were either

dated prior to May 5, 1988, or undated under the sole

privilege of work product immunity.

Petitioners had filed written objections to the magistrate

judge’s ruling establishing May 5, 1988 as the first date

on which a work product privilege could be asserted. On

November 30, 1990, the district judge affirmed the magis-

trate judge’s findings with respect to application of the

work product privilege. IIC was, therefore, entitled to

production of documents withheld under grounds of work

product which either were undated or dated prior to May

5, 1988.

On January 2, 1991—almost one year after its privilege

log was produced and almost two years after IIC’s request

for production—petitioners first asserted a new claim of

attorney-client privilege with regard to those documents

not protected by the work product privilege under the

district judge’s November 30, 1990 ruling. On January 10,

1991, IIC moved to compel production of those documents,

contending that petitioners’ assertion of the attorney-client

privilege with respect to the documents at issue was un-

timely, and that their failure to assert that privilege in

their privilege log for a year had effected a waiver. Peti-

tioners suggested that their failure to raise the attorney-

client privilege earlier was inadvertent.

The magistrate judge granted IIC’s motion to compel

and ordered petitioners to produce the documents previ-

ously designated “work product only” (about 440 docu-

ments) within ten days. The magistrate judge ruled that

aio

petitioners had waived the right to assert the attorney-

client privilege by not raising it in their privilege log. The

magistrate judge found that petitioners had offered no

facts in support of their claim of inadvertence, and con-

cluded that such a claim was not viable in light of the

number of documents involved. Although there was con-

siderable dispute in the proceedings below as to how

many documents were involved, petitioners now claim that

46 documents are at issue. (Pet. at 10 n.3.) On previous

occasions, the number of documents at issue has varied

from 40 to 440.

Petitioners subsequently filed a motion to reconsider the

magistrate judge’s order granting IIC’s motion to compel.

The magistrate judge denied the motion to reconsider,

commenting as follows:

The functioning of the federal courts depends on at-

torneys carrying out their duties with some modicum

of care and timeliness. More than two years ago IIC

was entitled to inspect any unprivileged documents,

and to challenge any claim of privilege. The rein-

surers claim that no one will be prejudiced if they

are permitted to assert their privilege claim belated-

ly. We point out that the prospect of substantial

delay to permit litigating new privilege claims is sig-

nificant prejudice.

(Resp. to Pet. at 8a.)

Petitioners filed objections to both of the magistrate

judge’s orders, granting respondent’s motion to compel

and denying petitioners’ motion to reconsider. The district

court overruled petitioners’ objections and affirmed the

magistrate judge’s order, which found that petitioners had

waived the claim of attorney-client privilege with respect

to the documents at issue by failing to raise it initial-

ly in their privilege log. The district judge reasoned as

follows:

sills

Our system requires that clients be bound by their

attorneys’ acts. . . . This is so because ‘“‘ilf the

lawyers’ neglect protected the client from iil conse-

quences, [such] neglect would become all toc common.

It would be a free good—the neglect would protect

the client, and because the client could not suffer the

lawyer would not suffer either.”

(Resp. to Pet. at 13a.)

[T)he functioning of federal courts depends on attor-

neys carrying out their duties in a timely fashion.

Permitting litigation of new privilege claims will cost

both the parties and the taxpayers additional money.

(Resp. to Pet. at 18a.)

On November 3, 1992, petitioners filed a petition for

writ of mandamus with the United States Court of Ap-

peals for the Seventh Circuit. The Seventh Circuit denied

the petition without a written opinion on December 22,

1992. (Resp. to Pet. at 15a.)

SUMMARY OF THE ARGUMENT

This Court’s review of an issue on writ of certiorari is

warranted only where the petition establishes special and

important reasons for such consideration. See Supreme

Court Rule 10. The Seventh Circuit's denial of petitioners’

request for writ of mandamus does not warrant this

Court’s review for several reasons. First, petitioners have

failed to present any special and important reason for this

Court’s review of this matter. Rulings on privilege issues

are committed to the discretion of the district court.

Review by this Court on writ of certiorari is not an ap-

propriate remedy for reviewing discretionary rulings on

discovery and privilege issues. Second, the Seventh Cir-

cuit’s denial of the petition for writ of mandamus was

= a

eminently correct. Third, the district court’s orders re-

jecting the assertion of new privilege claims in seriatim

fashion were a sound exercise of judicial administration,

well within the district court’s discretion.

REASONS FOR DENYING THE WRIT

i.

RULINGS ON PRIVILEGE ISSUES AND DOCUMENT

PRODUCTION ARE MATTERS FOR THE DISTRICT

COURT’S DISCRETION, NOT REVIEWABLE BY MEANS

OF CERTIORARI.

This Court’s review on writ of certiorari is warranted

only when the petition establishes special and important

reasons for such consideration. See Supreme Court Rule

10. “Special and important reasons” imply consideration

of an issue “beyond the academic or the episodic.”’ Rice

v. Stoux City Memorial Park Cemetery, 349 U.S. 70, 74

(1955). Such special and important reasons include, for ex-

ample, resolution of conflicts among courts of appeais, see

Braxton v. United States, US. —__, 111 S. Ct. 1854,

1857 (1991), and resolution of difficult questions of state-

federal relations posed by lower court rulings. Pate v.

Robinson, 383 U.S. 381, 377 (1966). The Court’s scarce

resources are “better spent addressing cases that are of

some general importance ‘beyond the facts and parties in-

volved,’. .. , than in. . . acting as ‘self-appointed . . .

supervisors of the administration of justice in the state

judicial systems,’. . .”. Pennsylvania v. Bruder, 488 U.S.

9, _____ (1988) (Stevens, J., dissenting). See also Watt v.

Alaska, 451 U.S. 274, ___ (1981) (Stevens, J., concurring)

(“whenever [the Court] grant{s] certiorari in a case not de-

serving plenary review, [it] increase[s] the likelihood that

certiorari will be denied in other, more deserving, cases.’’)

a

Above and beyond the usual criteria for certiorari, peti-

tioners face an exceptional burden in this case. The rem-

edy they sought in the court of appeals, the writ of man-

damus, is itself an extraordinary remedy. Issuance of the

extraordinary writ of certiorari, to compel the extraor-

dinary remedy of mandamus, requires an extremely com-

pelling demonstration of legal entitlement, factual proof,

and public importance. It may be said with understate-

ment that the instant petition concerning a waiver of

privilege in discovery—a discretionary ruling arising on

particular facts—falls short of that exceptional showing.

The instant petition expressly asks this Court to “super-

vise” the district court’s discovery rulings. Petitioners ef-

fectively seek to appeal the discovery rulings to this

Court, contending that the district court’s rulings con-

stitute a departure from the accepted and usual course

of judicial protection of attorney-client communications.

(Pet. at 14.) However, from the magistrate judge through

the court of appeals, not a single dissent appears of rec-

ord. The uniform treatment of the questions presented

in the proceedings below does not suggest that they are

difficult or doubtful when confined to the parties and facts

of this case, much less that they present an issue of gen-

eral or special importance.

Courts of appeals have uniformly treated discovery dis-

putes as matters entirely within the discretion of the dis-

trict courts. See, e.g. Naartex Consulting Corp. v. Watt,

722 F.2d 779 (D.C. Cir. 1983), cert. denied, 467 U.S. 1210

(1984) (district court has broad discretion in its resolution

of discovery problems that arise in cases pending before

it). The Seventh Circuit rightly denied petitioners’ request

for writ of mandamus that would have directed the dis-

trict judge to permit petitioners to withhold documents

requested over three years ago, and ordered produced on

aed

—_—(—

at least four subsequent occasions, on the grounds of a

newly-asserted privilege. There is no issue that warrants

this Court’s review.

Petitioners simplistically rely upon various decisions of

this Court, decided on writ of certiorari, in which the

Court refined the parameters of the attorney-client and

work product privileges and the doctrine of waiver. While

these authorities address fundamental issues concerning

the attorney-client privilege, they fail to demonstrate why

the discretionary, case specific discovery rulings at issue

warrant review by this Court on writ of certiorari. None

represents a case in which this Court granted certiorari

merely to review a lower court’s application of existing

privilege laws. In Hickman v. Taylor, 329 U.S. 495 (1947),

this Court addressed “an important problem under the

Federal Rules of Civil Procedure”: the extent to which

a party may inquire into oral and written statements of

witnesses, or other information served by an adverse par-

ty’s counsel in preparing for possible litigation. Jd. at 497.

Similarly, in Upjohn Co. v. United States, 449 U.S. 383

(1980), this Court granted certiorari ‘to address impor-

tant questions concerning the scope of the attorney-client

privilege in the corporate context and the applicability of

the work-product doctrine in proceedings to enforce tax

summaries.”’ Jd. at 386.

Certiorari has likewise been granted in cases involving

waiver issues where important questions of first impres-

sion were presented. For example, in Commodity Futures

Trading Comm’n. v. Weintraub, 471 U.S. 346 (1985), this

Court determined that the trustee of a corporation in

bankruptcy has the power to waive the corporation’s at-

torney-client privilege with respect to pre-bankruptcy com-

munications. Jd. at 358.

at.

The three criminal cases cited by petitioners, although

they do not address the issue of waiver of attorney-client

or work product privilege in a civil case, further exemplify

the level of general importance appropriate for considera-

tion by this Court on writ of certiorari. In United States

v. Nobles, 422 U.S. 225 (1974), the Court granted certiorari

to consider whether a federal trial court can compel de-

fense counsel to reveal relevant portions of the defense

investigator’s report where defense counsel has sought to

impeach the credibility of prosecution witnesses by the

investigator’s testimony concerning statements previously

obtained from the witnesses. Jd. at 227. In United States

v. Zolin, 491 U.S. 554 (1988), the question was whether

the crime-fraud exception must be established by indepen-

dent evidence or whether its applicability could be deter-

mined by in camera inspection of the privileged materials.

Id. at 556. United States v. Salerno, __. U.S. ___, 112

S. Ct. 2503 (1992), resolved the issue of whether Fed. R.

Evid. 804(bX1), an exception to the hearsay rule, permits

a criminal defendant to introduce grand jury testimony

of a witness who asserts the Fifth Amendment privilege

at trial. 112 S. Ct. at 2505.

Although the Court has granted certiorari in cases where

a court of appeals previously denied a petition for writ of

mandamus, the cases—including those cited in petitioners’

brief—involve issues of general importance which warrant

this Court’s review. In Societe Nationale Industrielle

Aerospatiale v. United States Dist. Court, 482 U.S. 522

(1987), the Court considered whether the Hague Evidence

Convention deprives the district court of jurisdiction to

order a foreign litigant to produce evidence physically

located within a signatory nation. In Mallard v. United

States Dist. Court, 490 U.S. 296 (1988), the Court granted

certiorari ‘‘to resolve a conflict among the Courts of Ap-

cele

peals as to whether 28 U.S.C. § 1915(d) authorizes com-

pulsory assignments of attorneys in civil cases.” Id. at 300.

Petitioners’ reliance on the foregoing decisions of this

Court to support this Court’s review in the present case

is wholly misplaced. The proceedings below present no

comparable question of general or special importance

which warrants the expenditure of this Court’s limited

resources. To the contrary, the Seventh Circuit’s denial

of the mandamus petition in a one-line unpublished order,

following unanimous rulings by the magistrate judge and

district court, suggests that the present petition presents

neither a difficult issue, nor one of any public or preceden-

tial importance.

THE COURT OF APPEAL’S ORDER DENYING THE PETI-

TION FOR WRIT OF MANDAMUS WAS MANIFESTLY

CORRECT.

A. Discretionary Rulings On Privilege Issues And Docu-

ment Production Are Not Reviewable Through Man-

damus.

The writ of mandamus is traditionally used “only ‘to

confine an inferior court to lawful exercise of its pre-

scribed jurisdiction or to compel it to exercise its authority

when it is its duty to do so.’’’ Mandamus will not issue

to correct or supervise the exercise of discretion, on issues

committed to the discretion of the district court. Will v.

Calvert Fire Ins. Co., 4837 U.S. 655, 665-66 (1978) (““where

a matter is committed to the discretion of a district court,

it cannot be said that a litigant’s right to a particular

result is ‘clear and indisputable.’ ”’); United States v. Darf-

man, 690 F.2d 1217, 1224 (7th Cir. 1982) (‘mandamus will

not lie to control the judicial discretion of the judge or

icine

court’’). The writ will be granted only where the peti-

tioner has shown that the district court committed a

“clear error or law” (see Sporck v. Peil, 759 F.2d 312,

314 (8d Cir. 1985), cert. denied, 474 U.S. 903 (1985)), and

issuance of the writ must be “clear and indisputable.”

Kerr v. United States Dist. Court, 426 U.S. 394, 403

(1976).

Under Fed. R. Civ. P. 26, federal district courts are

empowered to settle disputes about the scope of discov-

ery. See Identiseal Corp. v. Positive Identification Sys-

tems, Inc., 560 F.2d 298 (7th Cir. 1977). See also Naartex

Consulting Corp. v. Watt, 722 F.2d 779 (D.C. Cir. 1983),

cert. denied, 467 U.S. 1210 (1984) (district court has broad

discretion in its resolution of discovery problems that arise

in cases pending before it). A party seeking to assert the

attorney-client privilege or the work product doctrine as

a bar to discovery has the burden of establishing that

either or both is applicable. Barclays-American Corp. v.

Kane, 746 F.2d 653 (7th Cir. 1984). Moreover, it is the

burden of the party asserting privilege to show that the

privilege was not waived. United States v. Jones, 696 F.2d

1069 (4th Cir. 1982).

The district court clearly possessed the judicial power

and discretion to overrule petitioners’ assertion of work

product immunity and to deny petitioners’ later attempt

to invent new and different privilege claims with respect

to the same documents. To the extent the district court

exercised its discretion, in an area in which it had the

power to act, this matter was not appropriate for review

either by the Seventh Circuit through the extraordinary

writ of mandamus, or by this Court on writ of certiorari.

ii

me,

B. The District Court Exercised Sound Discretion In Rul-

ing That Petitioners Had Waived Their Right To Assert

Additional Privileges After Their Original Privilege

Claims Were Rejected.

Both district courts and courts of appeals have held that

a party waives a claim of privilege by not raising it in

a timely manner under Fed. R. Civ. P. 34. See, e.g.,

Poulos v. Naas Foods, Inc., 959 F.2d 69, 74 (7th Cir. 1992)

(noting that privilege objection was probably waived by

party’s failure to object when disclosure was due); Marx

v. Kelly, Hart & Hallman, P.C., 929 F.2d &, 12 (1st Cir.

1991) (one who fails to make a timely objection may be

held to have waived the privilege); Peat, Marwick, Mit-

chell & Co. v. West, 748 F.2d 540 (10th Cir. 1984) (the

assertion of work product privilege not enough to establish

that the privilege clearly applied, and plaintiff waived its

claim by not raising it in time); Jones v. Ada S. McKinley

Community Serv., No. 89 C 0319, 1989 U.S. Dist. LEXIS

14312, p.6 (N.D. Ill. Nov. 28, 1989) (Kocoras, J.) (“failure

to raise the work product priyilege until almost four

months after the discovery request was filed constitutes

waiver’); Krewson v. City of Quincy, 120 F.R.D. 6 (D.

Mass. 1988); Carey-Canada, Inc. v. California Union Ins.

Co., 118 F.R.D. 242, 249 (D.D.C. 1986); Perry v. Golub,

74 F.R.D. 360, 363 (N.D. Ala. 1976); see also 4A Moore’s

Federal Practice at 434.05{2].

In the proceedings below, petitioners utilized nearly a

year from the issuance of IIC’s production request to re-

view documents and assemble their privilege log. Specific

assignments of privilege were made as to each document.

While work product alone was assigned to the documents

in question, both attorney-client and work product privi-

leges were invoked as to many other documents. There-

fore, the assertion of work product alone, and the omis-

sion of any attorney-client claim on the subject documents,

—12—

was the product of a lengthy, deliberate analysis. By virtue

of magistrate judge’s August 29, 1989 ruling, petitioners

were on notice for six months before the privilege log was

produced that their work product claims for documents

other than those dated after May 5, 1988 were suspect

at the very least. They nevertheless produced a log assert-

ing that the documents at issue was subject only to the

work product privilege, and they persisted in their reli-

ance upon only the work product privilege for an addi-

tional nine months, until the district court affirmed the

magistrate judge’s ruling. Only then was a claim of attor-

ney-client privilege first asserted. This sequence of events

compels the conclusion that petitioners chose to adopt a

“wait and see” strategy respecting the district court’s

treatment of the work product issue, while holding attor-

ney-client privilege in reserve, to be asserted seriatim if

their work product claims were unsuccessful. The magis-

trate judge, the district judge, and the court of appeals

were correct in unanimously refusing to countenance such

tactics.

Although petitioners contended that waiver should not

occur through their inadvertence, inadvertence was not

the basis for the rulings below. Both the magistrate judge

and the district judge found that the omission of an attor-

ney-client privilege claim was the result of an error of

judgment on the part of the person reviewing the docu-

ments, as opposed to inadvertence. (Resp. to Pet. at 8a,

12a.) Citing the case of In re Consolidated Litigation Con-

cerning International Harvester’s Disposition of Wisconsin

Steel, 666 F. Supp. 1148 (N.D. Ill. 1987), the district judge

acknowledged that ‘‘a party’s conduct [cannot] be char-

acterized as inadvertent, in order to preserve privilege

claims, when it had screened its files and examined every

document in question for privileged matter earlier in the

litigation.”’ (Resp. to Pet. at 12a); 666 F. Supp. at 1154.

—13—

Both the district judge and the magistrate judge fur-

ther found that an attorney has authority to waive the

attorney-client privilege with respect to documents pro-

duced in discovery, absent a showing that the attorney

was acting outside the scope of his or her authority.

(Resp. to Pet. at 8a, 12a.) Citing Tolliver v. Northrop

Corp., 786 F.2d 316, 319 (7th Cir. 1986), the district

judge similarly reasoned that “{oJur system requires that

clients be bound by their attorneys’ acts. . .” (Resp. to

Pet. at 13a.)

Both the district judge and the magistrate judge

thoughtfully contemplated the consequences of permitting

the belated litigation of new privilege claims. The magis-

trate judge commented that “(t]he functioning of the

federal courts depends on attorneys carrying out their

duties with some modicum of care and timeliness,” and

that “the prospect of substantial delay to permit litigating

new privilege claims is significant prejudice.’ (Resp. to

Pet. at 8a.) The district judge expressly endorsed that

analysis, acknowledging that “the functioning of federal

courts depends on attorneys carrying out their duties in

a timely fashion. Permitting litigation of new privilege

claims will cost both the parties and the taxpayers addi-

tional money.” (Resp. to Pet. at 13a.)

Petitioners’ suggestion that they should not have been

precluded from asserting the attorney-client privilege be-

cause IIC “supplemented” its privilege logs (Pet. at 6)

misstates the record, with which the district court was

intimately familiar in making its rulings. Although no

party was prevented from supplementing privilege logs

as the issues in the case expanded and new privileged

documents were found, the assertion of successive privi-

lege claims for records already identified—after the initial

privilege claims were rejected by the court—was never

a

contemplated. There was no evidence submitted either

in the proceedings below or before this Court to estab-

lish any agreement or acquiescence on IIC’s part to the

seriatim assertion of successive privilege claims over the

same documents. The parties discussed a reassessment of

their privilege claims, with a view toward withdrawing

questionable claims, not asserting new claims after the

old ones failed.

The district court exercised sound discretion in ordering

that petitioners had waived the claim of attorney-client

privilege as to the documents at issue by failing to raise

it in their privilege log. It cannot be said that this ruling

was clearly erroneous, much less that the petitioners’ en-

titlement to relief was clear and indisputable. Both the

district judge and magistrate judge have sought to admin-

ister this complex action as fairly and expeditiously as

possible by refusing to permit petitioners to engage in

the serial assertion of privileges with respect to docu-

ments requested more than four years ago. If petitioners’

position were accepted, this case would grind to a halt

in terms of document production. Every time a district

court overruled a party’s privilege claims, the party could

assert new claims and start the process all over again,

replete with multiple briefs before the magistrate judge,

motions to reconsider, objections to the district judge, a

petition for mandamus to the Seventh Circuit and, ulti-

mately, a petition for writ of certiorari to this Court.

The Seventh Circuit correctly denied petitioners’ request

for a writ of mandamus below. In this Court, petitioners

fall far short of justifying issuance of the extraordinary

writ of certiorari, to compel the extraordinary writ of

mandamus below.

CONCLUSION

For the reasons set forth above, Respondent Interna

tional Insurance Company respectfully requests that the

Court deny the Petition.

Respectfully submitted,

FRANCIS D. MORRISSEY

Counsel of Record

JOHN W. DONDANVILLE

PAUL B. O’FLAHERTY, JR.

WILLIAM M. SNEED

BARRIE L. BREJCHA

BAKER & McKENZIE

130 East Randolph Drive

Chicago, Illinois 60601

(312) 861-8000

Attorneys for Respondent,

International Insurance Company

APPENDIX

la-

[Dated December 27, 1991]

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

KASTERN DIVISION

INTERNATIONAL INSURANCE

COMPANY,

Plaintiff,

V.

CERTAIN UNDERWRITERS AT

LLOYD'S LONDON, et al.,

Defendants,

KEITH KERR, et al.,

Counter-plaintiffs,

V.

INTERNATIONAL INSURANCE

COMPANY,

Counter-defendant.

INTERNATIONAL -INSURANCE

COMPANY,

Counter-defendant/Third-party plaintiff,

v.

SOCIETE COMMERCIALE DE

REASSURANCE S.A., et al.,

Third-party defendants.

Magistrate Judge’s Ruling on

No. &&® CC GR38

Judge Lindberg

Magistrate |

Judge Weisberg

Se ee ee Nee! New? Net Ne Ne Nee Nee ee Nee ee We ee ee ed ed ee eed eed ed ea “eat ed “eed “eed “eee ee

Defendant

Reinsurers’ Motion to Reconsider

February 14, 1991 Ruling

on Plaintiff's Motion to Compe!

—~2a—

This discovery dispute is now more than two years old,

and we briefly review its history. On August 29, 1989 this

court ruled that the work product doctrine did not pro-

tect certain documents created before May 5, 1988 because

litigation over the SKB claim was not anticipated before

that date. On November 13, 1990 the reinsurers’ objec-

tions to that ruling were overruled by Judge Lindberg.

In a letter dated January 2, 1991, Pl. Mo. to Compel of

January 10, 1991 Exh. D, counsel for the reinsurers told

IIC’s counsel that certain documents were being withheld

on the basis of attorney-client privilege. Only work prod-

uct immunity, not the attorney-client privilege, had previ-

ously been claimed for these documents.

On January 10, 1991 IIC moved to compel production,

contending that the documents were not protected by the

privilege, and that the reinsurers had waived the privi-

lege with respect to them by failing to raise it in their

privilege log. We granted the motion on February 14,

1991, finding that the reinsurers had waived the claim of

attorney-client privilege by not raising it in their privi-

lege log. We noted that the reinsurers had offered no facts

in support of their claim of inadvertence, and such a claim

was not plausible in view of the number of documents

involved.! We also found no evidence that the parties had

agreed that privilege logs could be amended to assert new

claims of privilege for the same documents.

The reinsurers filed this motion to reconsider on March

1, 1991. Consideration of this and other motions was

stayed while the court considered the question of diver-

1 There has been considerable dispute as to how many documents

are involved, but the reinsurers acknowledge sixty-two documents.

Def. Reply at 7.

_

sity jurisdiction. After reviewing the briefs, we deny the

motion to reconsider. Because the original ruling was oral,

we will present here in writing the reasons supporting

it at greater length than would be warranted by the mo-

tion to reconsider taken by itself.

The purpose of privilege logs is to inform opposing coun-

sel of claims of privilege for documents whose production

is required. Such claims are normally considered and ruled

on at the time documents are to be produced in response

to a Rule 34 document request. Document production and

preparation for trial are delayed if additional privilege

claims are permitted to be raised after privilege logs have

been delivered and the court has ruled on the disputed

issues based on those logs.

One way to require the timely assertion of privilege

claims is to hold that failure to raise a question of privi-

lege in a timely manner waives the privilege. ‘“Waiver”

can have two meanings here. It can mean a decision to

relinquish the right to preserve the confidentiality of the

privileged communication. A waiver in this sense is de-

scribed as the intentional relinquishment or abandonment

of a known right. However, the law may also deem a right

to have been waived whether or not a knowing choice

has been made. For example, a party who fails to object

to lack of personal jurisdiction or improper venue in a

timely manner has waived the objection under Rule 12(h),

Fed. R. Civ. P.

There is no express provision in the Rules regarding

claims of privilege as such. However, a party is required

by Rule 34 to respond to a document request within 30

days (or such time as may be ordered by the court), either

stating that inspection and copying will be permitted or

stating any objections and reasons for them. If not satis-

—da—

fied with the responding party’s objections, the other par-

ty may move to compel production under Rule 37(a), and

the court rules on the objections and either orders or de-

nies production. If there is no objection, it is a violation

of Rule 34 to refuse to permit inspection of any documents

requested.

The Advisory Committee Comments to the 1970 Amend-

ments of the Federal Rules note in their commentary on

Rule 33 that a party who does not make a timely objec-

tion to interrogatories risks waiving the objection, and the

Committee’s Notes on Rule 34 state that essentially the

same procedure applies to document requests. A number

of district courts have held that one who fails to raise

a claim of privilege in a timely manner under Rule 34

has waived it. See, e.g., Jones v. Ada S. McKinley Com-

munity Services, No. 89 C0319, 1989 U.S. Dist. Lexis

14312 (N.D. Ill. November 2%, 1989) (Kocoras, J.) (work

product immunity); Krewson v. City of Quincy, 120 F.R.D.

6 (D.Mass. 1988); Carey-Canada, Inc. v. California Union

Ins. Co., 118 F.R.D. 242, 249 (D.D.C. 1986); Perry v.

Golub, 74 F.R.D. 360, 363 (N.D.Ala. 1976); see also 4A

Moore’s Federal Practice at 4 34.05{2]; Cf. Bud Antle, Inc.

v. Grow-Tech Inc., 131 F.R.D. 179, 182-%3 (N.D.Cal. 1990)

(late claim of privilege with respect to document actually

produced not a waiver).

The Courts of Appeals have not offered any real discus-

sion of the issue. The First Circuit in Mars v. Kelly, Hart

& Hallman, P.C., 929 F.2d 8, 12 (1st Cir. 1991), stated

that one who fails to make a timely objection may be held

to have waived the privilege. In Peat, Marwick, Mitchell

& Co. v. West, 74% F.2d 540 (10th Cir. 1984), the court

denied a petition for mandamus to compel the district

court to vacate an order compelling production. The dis-

trict court had stated both that the bare assertion of work

=

product was not enough and that the plaintiff had waived

its claim by not raising it in time. The Court of Appeals

stated that ‘{t]he applicability of the privilege turns on

the adequacy and timeliness of the showing as well as

on the nature of the document,” id. at 542, and declined

to issue the writ. In Southern Ry. Co. v. Lanham, 403

F.2d 119, 133-34 (5th Cir. 1968), the district court had re-

jected the contention that failure to make a timely objec-

tion waived the privilege. The Fifth Circuit noted that

the privileged materials had not been voluntarily disclosed

and found no other circumstances supporting a finding of

waiver; it did not address whether waiver was appropri-

ate as a sanction.

In Eastern Technologies, Inc. v. Chem-Solv, Inc., 128

F.R.D. 74 (E.D. Pa. 1989), the court discussed the court’s

discretion in cases of untimely assertions of attorney-client

privilege. Discussing generally the failure to raise timely

objections to discovery requests, the court stated that,

while failure to object in a timely fashion can result in

a waiver, the court has discretion not to order discovery

that is patently improper, and that courts generally re-

serve the harshest sanctions only for the most flagrant

violations. Refusing to find the privilege waived, the court

stated:

It is not that we think that the discovery requested

is “patently improper’’; rather, we think that, given

the specific circumstances of this individual case, the

failure to object is not such a “flagrant violation” as

to warrant “the harshest sanctions.’”’ Also, the ob-

jection belatedly raised does not relate merely to rele-

vance or to burdensomeness.

Id. at 75.

The decisions cited above that held privilege objections

waived did not find waiver in the sense of an intentional

—fa—

relinquishment of a known right, but imposed it in order

to enforce obedience to rules of procedure and court dead-

lines. This case is unusual in that the reinsurers did not

neglect to serve IIC with their objections in the form of

the privilege log; they omitted their claim of attorney-

client privilege while asserting work-product immunity.

In its brief in support of the January 10, 1991 Motion

to Compel, IIC treated this as a question of inadvertent

disclosure, as if the reinsurers had inadvertently sub-

mitted privileged documents to TIC. IIC cited Bud An-

tle, 181 F.R.D. at 183, in which the court held that, al-

though plaintiffs’ late claim of privilege with respect to

documents already delivered did not waive the attorney-

client privilege, their lack of reasonable care in deliver-

ing the privileged documents did.

The reinsurers responded that here no disclosure has

occurred, but we find the analogy persuasive nonetheless.

Like an attorney reviewing documents to be supplied to

an opponent, an attorney preparing a privilege log is ex-

pected to review documents and determine whether they

may be privileged. If avoidance of waiver depends on an

attorney’s reasonable care in one instance, it should in

the other. The reinsurers did not attempt to show reason-

able care here.

The reinsurers argue that a waiver should not occur

through inadvertence. They cite Mendenhall v. Barber-

Greene Co., 531 F.Supp. 951, 954-55 (N.D.IIl. 1982)

(Shadur, J.), which held that an attorney’s negligent fail-

ure to discover privileged letters contained in a file turned

over to opposing counsel did not waive the privilege.

Viewing waiver as the “intentional relinquishment or

abandonment of a known right,” the court refused to find

a waiver as a result of the attorney’s negligence.

—Ta—

While we share Judge Shadur’s reluctance to find waiver

when it results in “harsh results out of all proportion to

the mistake of inadvertent disclosure,” Mendenhall, 531

F.Supp. at 955 n.8, this was a mistake, if it was a mis-

take, of greater magnitude and proportionately harder to

excuse than that in Mendenhall. The attorney reviewing

the file in Mendenhall merely overlooked the privileged

letters. Here, the reinsurers’ counsel (or someone acting

on their behalf) examined every document in question for

the purpose of determining attorney-client privilege and

work product immunity. We know this was done since

work product immunity was claimed for these documents

while both work product immunity and attorney-client

privilege were claimed for most of the other documents

listed in the privilege log. Nevertheless, the attorney re-

viewing these documents reviewed at least sixty-two docu-

ments as to which attorney-client privilege could be claimed

and failed to claim it. Further, when the question work-

product immunity was being litigated and the court was

being asked to determine at what point litigation was ac-

tively contemplated, reinsurer’s counsel apparently did not

return to these documents to see whether the attorney-

client privilege might be claimed.

But we need not conclude, following Bud Antle, that

reasonable care is required. The reinsurers offered no ex-

planation of how this was permitted to occur—and with

respect to so many documents. The burden was properly

on them to show why their noncompliance with the rule

should be excused. Not only did the reinsurers fail to

show reasonable care, they failed to show that their omis-

sion of an attorney-client privilege claim was the result

of inadvertence rather than an error of judgment on the

part of the person reviewing the documents.

If it was an error of judgment, it binds the reinsurers.

The reinsurers contend, correctly, that only the client, not

—Sa—

the attorney, can waive the privilege. Def. Br. at 3. But

while courts would prefer to avoid visiting upon clients

the sins of their attorneys, our system requires that clients

be bound by their attorneys’ acts. Tolliver v. Northrop

Corp., 786 F.2d 316, 319 (7th Cir. 1986). An attorney has

an implied authority to waive the privilege on behalf of

his client. Jn re Von Bulow, 828 F.2d 94, 101 (2d Cir.

1981) (citing Drimmer v. Appleton, 628 F. Supp. 1249,

1251 (S.D.N.Y. 1986)). Deciding whether to claim privilege

is well within the scope of an attorney’s agency. Attorneys

customarily prepare privilege logs, and lawsuits would be

considerably more burdensome than they already are if

things such as privilege logs had to be ratified by prop-

erly authorized corporate officers. Absent a showing that

the attorney was acting outside the scope of his or her

authority, we believe an attorney has authority to waive

the privilege with respect to documents to be produced

in discovery.

We thus find taking waiver as a voluntary act, that the

privilege was waived as a consequence of counsel’s unex-

plained omission. We further believe that waiver is ap-

propriate as a sanction. The functioning of the federal

courts depends cn attorneys’ carrying out their duties

with some modicum of care and timeliness. More than two

years ago IIC was entitled to inspect any unprivileged

documents, and to challenge any claim of privilege. The

reinsurers claim that no one will be prejudiced if they

are permitted to assert their privilege claims belatedly.

We point out that the prospect of substantial additional

delay to permit litigating new privilege claims is signifi-

cant prejudice.

Finally, we add that this motion for reconsideration

should not have been brought. The reinsurers stated that

“there is no rule governing motions for reconsideration.”

—

Reply at 6 n.3, citing National Union Fire Insurance Co.

v. Continental Illinois Corp., 116 F.R.D. 252 (N.D.III.

1987) (Shadur, J.). They misread that opinion. Judge Shadur

stated, correctly, that there is no provision in the Fed-

eral Rules governing motions to reconsider. Jd. at 253.

However, the Seventh Circuit has ruled that motions to

reconsider serve a limited purpose: to correct manifest

errors of law or fact or to present newly discovered evi-

dence. They are not vehicles for arguments already made

or that could have been made on the first presentation

of the motion. Granite State Insurance Co. v. Degerlia,

925 F.2d 189, 192 n.7 (7th Cir. 1991); Rothwell Cotton Co.

v. Rosenthal & Co., 827 F.2d 246, 251-52 (7th Cir. 1987).

While reconsideration may on occasion produce a better

result, the court does not have time to reconsider every

ruling counsel thinks is wrongly decided, nor should an

opponent be required to respond to an argument more

than once. The reinsurers had no case law holding that

a finding of waiver under these circumstances would be

an abuse of discretion or otherwise improper. They had,

essentially, a plea for mercy based on a claim of inad-

vertence with no real explanation. When the court found

that insufficient, that should have ended the matter.

The motion for reconsideration is denied.

ENTER: /s/ BERNARD WEISBERG

United States Magistrate Judge

DATE: December 27, 1991

ec: All Attorneys of Record

(See Attached Service List)

[Service List omitted in printing.]

—10a—

[Dated October 20, 1992]

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

INTERNATIONAL INSURANCE

COMPANY,

Plaintiff,

No. 88 C 9838

V.

Judge Lindberg

CERTAIN UNDERWRITERS AT

LLOYD’S LONDON, et al.,

Defendants,

KEITH KERR, et al.,

Counter-plaintiffs,

V.

INTERNATIONAL INSURANCE

COMPANY,

Counter-defendant.

INTERNATIONAL INSURANCE

COMPANY,

Counter-defendant/Third-party plaintiff,

v.

SOCIETE COMMERCIALE DE

REASSURANCE 5S.A., et al.,

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Third-party defendants. )

MEMORANDUM AND ORDER

Defendants, Certain Underwriters at Lloyd’s London,

et al., pursuant to Rule 72(a) of the Federal Rules of Civil

—lla—

Procedure (FRCP) and Chapter 28 of the United States

Code, § 636(bX1XA), object to Magistrate Judge Weisberg’s

February 14, 1991, and December 27, 1991, orders on the

grounds that the orders are clearly erroneous and cpn-

trary to law.

The events leading up to the orders are as follows. On

August 29, 1989, Magistrate Judge Weisberg ruled that

the work product doctrine did not protect certain docu-

ments created before May 5, 1988, because litigation over

the SmithKline Beckman Corporation (SKB) claim was not

anticipated prior to that date. On November 13, 1990, the

defendants’ objections to that ruling were overruled by

this court. Counsel for defendanis then informed plain-

tiff's (International Insurance Company) counsel, on Janu-

ary 2, 1991, that certain documents were being withheld

on the basis of attorney-client privilege. Previously, only

work product immunity, not the attorney-client privilege,

had been claimed for these documents. Consequently,

plaintiff moved, on January 10, 1991, to compel produc-

tion of these documents, contending that they were not

protected by the privilege and that defendants had waived

the privilege with respect to the documents by failing to

raise it in their privilege log. On February 14, 1991,

Magistrate Judge Weisberg granted plaintiff's motion hold-

ing that defendants had waived the claim of attorney-client

privilege by not raising it in their privilege log. Defen-

dants then filed a motion to reconsider on March 1, 1991.

Magistrate Judge Weisberg denied this motion on Decem-

ber 27, 1991.

Defendants object to Magistrate Judge Weisberg’s Feb-

ruary 14, 1991, and December 27, 1991, orders and now

assert that the attorney-client privilege should not be

waived because: 1) their failure to list the attorney-client

privilege on their log was an inadvertent mistake, 2) the

—12a—

parties agreed to produce new privilege logs, and 3) the

attorney-client privilege may not be waived by the at-

torney.

Magistrate Judge Weisberg’s ruling was neither clear-

ly erroneous nor contrary to law. FRCP 72(a); 28 USCA

§ 636(bX1XA) (Supp 1992). First, defendants have failed to

show any evidence that their omission of an attorney-client

privilege claim was the result of inadvertence rather than

an error of judgment on the part of the person review-

ing the documents. In addition to authority cited by Magis-

trate Judge Weisberg, In re Consol. Litig. Concerning

Int’l Harvester’s Disp. of Wisc. Steel, 666 F Supp 1148

(N D Ill 1987), is also pertinent to the issue of inadvert-

ence. In that case, this court stated that a party’s con-

duct could not be characterized as inadvertent, in order

to preserve privilege claims, when it had screened its files

for privileged matter earlier in the litigation. 7d. at 1154.

Similarly here, defendants’ counsel (or someone else act-

ing on defendants’ behalf) examined every document in

question for the purpose of determining attorney-client

privilege and work product immunity. After reviewing

these documents, they chose to claim work product im-

munity rather than attorney-client privilege. This court

does not find defendants’ omission of an attorney client

privilege claim an inadvertent act because the defendants

first reviewed the documents in question and then made

the subsequent decision to label these documents as pro-

tected by work product immunity rather than by attorney-

client privilege.

Second, no evidence has been presented which indicates

the parties agreed that the privilege logs could be amended

to assert new claims of privilege for the same documents.

Third, this court finds, as did Magistrate Judge Weis-

berg, that absent a showing that the attorney was acting

—13a—

outside the scope of his or her authority, an attorney does

have authority to waive the attorney-client privilege with

respect to documents to be produced in discovery. Our

system requires that clients be bound by their attorneys’

acts. Tolliver v Northrop Corp., 786 F2d 316, 319 (7th Cir

1986). This is so because ‘“‘{ilf the lawyer’s neglect pro-

tected the client from ill consequences, [such] neglect

would become all too common. It would be a free good—

the neglect would protect the client, and because the

client could not suffer the lawyer would not suffer either.”

Id.

Finally, the functioning of federal courts depends on at-

torneys carrying out their duties in a timely fashion. Per-

mitting litigation of new privilege claims will cost both

the parties and the taxpayers additional money.

ORDERED: The objections of defendants, Certain Under-

writers at Lloyd’s London, et al., to Magistrate Judge

Weisberg’s February 14, 1991, order, which found that

defendants had waived the claim of attorney-client privi-

lege by failing to raise it in their privilege log, and

December 27, 1991, order, which denied defendants’ mo-

tion to reconsider, are overruled.

/s/ GEORGE W. LINDBERG

United States District Judge

Date: October 20, 1992

—l4a—

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

December 22, 1992

Before

Hon. WALTER J. CUMMINGS, Circuit Judge

Hon. RICHARD D. CUDAHY, Circuit Judge

Hon. JOEL M. FLAuM, Circuit Judge

No. 92-3675

IN THE MATTER OF:

CERTAIN UNDERWRITERS OF LLOYDS’ LONDON

AND COMPANIES IN, INTEREST, KEITH KERR,

DENNIS JENNINGS, et al.,

Petitioners.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 8&8 C 9838 —George W. Lindberg, Judge.

This matter comes before the court for its considera-

tion of the following documents:

1. PETITION FOR WRIT OF MANDAMUS OF DEFEN-

DANTS AND COUNTER-PLAINTIFFS CERTAIN UNDER-

WRITERS AT LLOYD’S, ET AL. filed herein on 11/3/92,

by counsel for the petitioners.

2. RESPONSE OF PLAINTIFF/THIRD-PARTY PLAIN-

TIFF INTERNATIONAL INSURANCE COMPANY TO

PETITION FOR WRIT OF MANDAMUS filed herein on

12/8/92, by counsel.

— 1] 5a—

On consideration thereof,

IT IS ORDERED that said Writ of Mandamus is DE

NIED and the Petition for Writ of Mandamus is DIS

MISSED with costs.