1ST Class Legal (I.S.), Ltd. v. Niro, et al.

Northern District of Illinois, ilnd-1:2016-cv-06793

RESPONSE by 1st Class Legal (I.S.), Ltd. in Opposition to MOTION by Defendant Niro Law, Ltd., Counter Claimant Niro Law, Ltd. for protective order {{28}}

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Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 1 of 9 PageID #:507 MARC S. MAZER WEILL & MAZER, A Professional Corporation 90 New Montgomery Street Suite 1400 San Francisco, CA 94105 Telephone: (415) 421-0730 STEVE VARHOLA LYMAN LAW FIRM, LLC 227 West Monroe Street, Suite 2650 Chicago, Illinois 60606 Attorneys for Plaintiff and Counter-Defendant 1st CLASS LEGAL (I.S.), LTD. UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION 1st CLASS LEGAL (I.S.), LTD., a foreign) Case No.: 16-cv-6793 corporation,)) Plaintiffs,)) Honorable Robert. M. Dow, Jr. v.)) Honorable Magistrate Judge Sheila M. RAYMOND NIRO, individually and doing) Finnegan business as NIRO, HALLER & NIRO, an) Illinois Law Partnership, NIRO LAW, LTD.,) an Illinois Corporation, formerly known as) NIRO, HALLER & NIRO, LTD.,)) Defendants.)) and related Counter claim)) PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER Plaintiff 1st CLASS LEGAL (I.S.), LTD. ("1CL") raises the following objections and comments with regard to Defendant NIRO LAW, LTD.'s ("Niro") Motion for Model Protective Order: PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 1 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 2 of 9 PageID #:508 Before stating specific objections, 1CL requests that the Court consider the following contentions which are at issue in this action: 1CL entered a written Loan Agreement with Niro (or some entity known as Niro, Haller & Niro) whereby Niro borrowed money from 1CL to be utilized in the prosecution of patent infringement claims held by Niro's clients. The funds were to be used for specific stated purposes under the loan agreements. The funding of the loans were ongoing and conditioned upon the Borrower satisfying all of its obligations under the loan agreement, as indicated in purported "drawdown requests" signed by attorney's from Niro (an example of which is attached hereto as Exhibit B), which represented that "each and every condition of the Agreement is satisfied on the date of this Drawdown Request". The agreement provides that "borrower may not deliver the drawdown request unless the Lender has received all confirmations and related information as listed in Clauses 17-26…" and Lender is not required to fund if there exists any default on the loan agreement. One of the requirements in the agreement was that the Borrower was to provide to 1CL all Relevant Information about the underlying proceedings. In addition, the Borrower warrants that "in Borrower's reasonable judgment, the prospects of success in the Proceedings are "good" taking into consideration all of the information known to the Borrower. 1CL filed its lawsuit claiming that Niro breached the agreement on many grounds including, but not limited to, failing to provide all Relevant Facts pertaining to the Proceedings and breaching the warranties set forth in the Agreement. Only in response and despite purportedly knowing of an alleged breach since March, 2013, Niro filed its Counterclaim PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 2 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 3 of 9 PageID #:509 seeking the shortfall in the loan funding so that it can effectively receive the loan without ever having to pay it back.1 Niro's Motion for Protective Order is a disingenuous attempt to avoid complying with the provisions of the subject agreement and to interfere with 1CL's ability to seek recovery through "after event insurance" purchased as part of this transaction. So far, Niro has refused to identify the specific requests for Niro is withholding documents on grounds of privacy or any other grounds which would justify the issuance of the Protective Order. It is believed that Niro is refusing to provide this information since most of 1CL's requests for documents seek documents which Niro claims were previously provided to 1CL pursuant to the provisions of the subject loan agreements. In addition, the other documents being sought by 1CL in these requests are documents which Niro was required to provide to 1CL pursuant to the provisions of the Loan Agreement (e.g. documents having "Relevant Facts" pertaining to the underlying Proceedings). Waiver. Niro's effort to designate privileged documents as subject to a protective order must be rejected, because claims of privilege and privacy have been waived by failure to provide a privilege log or a description of the nature of the documents withheld. Furthermore, a party invoking the claim of privilege has the burden of establishing all of its elements. U.S. v. White, 950 F.2d 426, 430 (7th Cir.1991). The discovery opponent must state the claim expressly and describe the nature of the document so withheld in a manner that will enable the other parties to assess the claim of privilege. AM International, Inc. v. Eastman Kodak Co., 100 F.R.D. 255–256 (N.D.Ill.1981); see also, von Bulow by Auersperg v. von Bulow, 811 F.2d 136, 144 (2nd Cir.1987). The aircraft defendants have not done so and this is fatal to this objection and claim. Fed.R.Civ.P. 26(b)(5). The mere naked claim of privilege, as occurs in this case, does not justify a refusal to identify or produce the information and documents requested. Roesberg v. 1 As noted in the opposition to Niro's Motion to Compel, 1Cl has filed its Motion for Summary Judgment against Niro on the grounds that the measure of damages in this instance cannot be the amount of shortfall on the loan. PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 3 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 4 of 9 PageID #:510 Johns-Manville Corp., 85 F.R.D. 292, 302 (E.D. Pa. 1980). The aircraft defendants have proceeded improperly in their objections based on privilege, since they have not identified the documents for which the claim is made nor supplied the information required under Fed.R.Civ.P. 26(b)(5). In re Aircrash Disaster Near Roselawn, Ind. Oct. 31, 1994, 172 F.R.D. 295, 307 (N.D. Ill. 1997). Finally, as to Interrogatory # 1 and # 2, although there appears to be a generalized claim of attorney/client and/or work-product privilege, the privilege log required by Rule 26, Federal Rules of Civil Procedure, has not been produced. (Emphasis added) The defendant has had more than adequate time to prepare and serve a log but has simply chosen not to provide even the semblance of one. The claim of privilege is thus waived. (Emphasis added) See, Burlington Northern & Santa Fe Railway Co. v. United States District Court for the District of Montana, 408 F.3d 1142 (7th Cir.2005). United Auto. Ins. v. Veluchamy, No. 09 C 5487, 2010 WL 749980, at *5 (N.D. Ill. Mar. 4, 2010). Similarly, Niro's failure in its response to make a claim of privacy or confidentiality other than with regard to settlement agreements results in waiver. "If the party from whom the documents are requested objects to their production, that party has the burden to show why a discovery request is improper." Veluchamy, supra. Niro's General Objections are of no value in asserting a claim of confidentiality. "As courts have repeatedly pointed out, blanket objections are patently improper." Ritacca v. Abbott Labs., 203 F.R.D. 332, 335 (N.D. Ill. 2001). Furthermore, the assertion of privacy or confidentiality is completely nonspecific. Niro refuses to explain which categories of requests for production are involved, the general nature of the withheld documents (apparently approximately 2,500 pages), or any other information from which 1CL can assess the merits of the claim. Essentially, Niro is asking for unrestricted license to designate whatever it wants as confidential, as it sees fit, with no obligation to make any PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 4 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 5 of 9 PageID #:511 showing as to the basis of the claim. The above-quoted authorities show that this is not proper practice. Therefore, there is no need for a protective order as to those documents as to which claims of privilege or confidentiality have been waived. Privilege was waived by the underlying Master Loan Agreement ("MLA"). The MLA specifically provides that Niro was to disclose all Relevant Facts regarding the underlying litigation to 1CL. The term "Relevant Facts" is defined as follows: "Relevant Facts" means all facts and matters that are relevant or material to the Proceedings of which the Borrower is aware at the applicable time including (but without limitation) any potential right of set-off or counterclaim (or similar right) against the Borrower's client by any party and in particular, (but without any limitation), any facts and matters that might: (i) Adversely affect the Borrower's clients case or prospects in the Proceedings; (ii) Adversely affect the case or prospects of any other party or proposed party to the Proceedings; and/or (iii) Support the case or prospects of any other party or proposed party to the Proceedings. See, p. 3, MLA attached as Exhibit C. Niro was obligated to keep 1CL informed of any material developments with regard to Relevant Facts: 31.3 The Borrower shall inform the Lender without delay and in any case within 10 working days of all Relevant Facts of which the Borrower becomes aware related to this Agreement or any CSLA that have not previously been disclosed to the Lender and shall provide to the Lender any information or documentation reasonably requested by the Lender subject to the provisions of maintaining client attorney privilege. See, p. 11, Exhibit C. An express condition of the MLA at paragraph 20, subsection 4, was that Niro's client consent in writing to the terms of the loan. See, p. 7, Exhibit C. PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 5 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 6 of 9 PageID #:512 Thus, Niro's client agreed in writing to the disclosure of all Relevant Facts to 1CL. Under these circumstances, disclosure to 1CL must be deemed authorized, and Niro's assertion of privilege against 1CL is unavailing. If such documents are placed under protective order, 1CL will effectively be prevented from utilizing them in consideration of claims under the "after the event" insurance purchased as part of the loan transaction and also would effectively tend to relieve Niro from its existing contractual obligations to 1CL. Niro has not established the confidentiality of the settlement agreements, but in any event, it has waived any claim of confidentiality. Niro has claimed that it is precluded from disclosing the settlement agreements reached in the underlying litigation due to confidentiality clauses. However, Niro has refused to allow 1CL to review those settlement clauses to determine if they in fact apply. Confidentiality clauses come in many forms, and often simply require that in the event of a subpoena or discovery request, the only obligation is to give notice to the other party and the burden of seeking protection falls on that party. There is no way to assess the validity of Niro's claim of a confidentiality obligation absent review of the language of the relevant clause. In any event, Niro has previously disclosed to 1CL the amounts of the settlement payments received (See, a copy of an email from Niro, dated November 11, 2014, attached as Exhibit A). It would be a very unusual confidentiality provision that authorizes the disclosure of the amount of settlement payment, but not the settlement agreement itself. Either Niro's claims of confidentiality lack merit, or it has waived the claim of confidentiality. Either way, there is no reason to put the settlement agreements under protective order as requested by Niro. Since all possible claims of privilege or confidentiality have been waived by Niro or lack merit, there is no need for the protective order. PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 6 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 7 of 9 PageID #:513 If this Court is inclined to allow the Model Protective Order, certain changes should be made. The draft submitted by Niro is objected to in the following respects: Page 2: The inclusion of privileged items is improper and unnecessary. Niro's proper procedure to assert a privilege would have been to state the objection with specificity in its response and to provide a privilege log. It did neither, and has waived the claim of privilege. Niro should not be permitted to revive its waived claim of privilege in the guise of a protective order. Furthermore, the inclusion of contractual confidentiality is without support. If there is some basis for this claim, Niro should offer evidence in the form of the actual contract language. This Court should not grant Niro the ability to designate items as confidential under contract without providing a showing to this Court establishing the basis therefor. Similarly, the inclusion of common law confidentiality is unclear. Exactly what is under discussion, and what is its basis? Niro gives no clue. If Niro has a basis to claim confidentiality, it should have done so in the response and indicated the documents affected. Niro cannot evade the consequences of its failure to provide a proper response by making a vague request for a protective order. Pages 6-7, regarding Judicial Intervention: As written, the Model Order places the burden on the challenging party to bring a motion in the event an assertion of confidentiality is disputed, although the burden of persuasion is on the party asserting confidentiality. Here, this creates a risk that in response to a challenge, Niro will only disclose its basis for a claim of confidentiality in response to 1CL's motion, and 1CL will not be guaranteed a right of reply. This will be extremely prejudicial to 1CL since it places an unfair burden on the non-designating party to assert a motion for which it has no burden of persuasion. 1CL's suggestion is that the PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 7 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 8 of 9 PageID #:514 Model Order be modified to state that the challenging party merely request a court determination of whether the designated document remain "confidential", that the burden is then placed on the designating party to justify such designation by opposing the motion, and that the Order ensures that the challenging party be allowed a reasonable opportunity to reply to the designating party's opposition. 1CL also requests that the Protective Order specifically allow disclosure by 1CL for the purpose of making claims under the "after the event" insurance purchased pursuant to the subject loan agreement. 1CL also requests that the Protective Order specifically exclude documents claimed by Niro to have previously been provided by Niro to 1CL before the entry of the Protective Order. Dated: March 9, 2017 Respectfully submitted, 1ST CLASS LEGAL (I.S.), LTD. By: /s/Marc S. Mazer Marc S. Mazer WEILL & MAZER, A Professional Corporation 90 New Montgomery Street Suite 1400 San Francisco, CA 94105 (415) 421-0730 Attorneys for Plaintiff and Counter-Defendant 1st Class Legal (I.S.), Ltd. PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 8 Case: 1:16-cv-06793 Document #: 46 Filed: 03/09/17 Page 9 of 9 PageID #:515 CERTIFICATE OF SERVICE The undersigned, an attorney, certifies that on March 9, 2017, he caused the foregoing Plaintiff and Counter-Defendant's, 1st CLASS LEGAL, LTD., Opposition to Defendant NIRO LAW, LTD.'s Motion for Model Protective Order to be served upon all counsel of record via the court's electronic docketing system. Dated: March 9, 2017 1ST CLASS LEGAL (I.S.), LTD. By: /s/Steve M. Varhola Steve M. Varhola LYMAN LAW FIRM, LLC 227 West Monroe Street, Suite 2650 Chicago, Illinois 60606 (312) 762-9517 Attorneys for Plaintiff and Counter-Defendant 1st Class Legal (I.S.), Ltd. PLAINTIFF'S OPPOSITION TO DEFENDANT NIRO LAW, LTD.'S MOTION FOR MODEL PROTECTIVE ORDER CASE NO. 1:16-cv-06793 9