Motorola Solutions, Inc. v. Zurich Insurance Co.
2017 IL App (1st) 161465
Ill. App. Ct.2017Background
- Motorola sued several insurers (including Zurich and Associated) seeking defense and indemnity for multiple "clean room" personal-injury suits; insurers asserted late-notice and release defenses.
- Motorola moved for summary judgment on Zurich’s duty to defend one underlying action; the court granted insurers limited Rule 191(b) discovery on notice issues and entered a protective order.
- Insurers sought two categories of withheld documents: (1) 1996 Clean Room Safety Program (CRSP) reports prepared at direction of outside counsel, and (2) documents related to Motorola’s 2003 SEC S-1 disclosures. Motorola asserted attorney-client and work-product protections.
- The trial court ordered production; Motorola refused and was found in friendly civil contempt to permit interlocutory appeal.
- The appellate court reversed the production order and vacated the contempt finding, holding that Waste Management did not bar assertion of the attorney-client privilege for these pre‑litigation materials and remanding for in camera review as needed.
Issues
| Issue | Motorola's Argument | Zurich/Associated's Argument | Held |
|---|---|---|---|
| Whether the attorney‑client privilege is categorically unavailable in insurer‑insured coverage disputes under Waste Management | Waste Management is factually distinguishable; the privilege remains available here because documents were created years before any underlying litigation | Waste Management and related authority render the privilege inapplicable where cooperation clauses and common‑interest principles require disclosure | Held: Privilege is available; Waste Management does not extend to pre‑litigation documents created by different counsel long before suits arose |
| Whether Motorola’s cooperation clause required production of the CRSP and S‑1 materials | The cooperation clause does not reasonably encompass disclosure of pre‑litigation safety reports or securities disclosures that do not aid in "making settlements, conduct of suits, or enforcing contribution/indemnity" | The contractual duty to cooperate (and principles of fairness) obligate Motorola to disclose facts in its possession relevant to insurers’ coverage defenses, including notice | Held: Trial court erred to the extent it treated Waste Management as automatically controlling; cooperation clause here did not compel categorical disclosure of the challenged pre‑litigation materials |
| Applicability of the common‑interest doctrine to render communications non‑privileged | Common‑interest principles do not reach these documents because there was no shared defense of underlying litigation when the CRSP reports were created | Motorola and insurers shared a common interest in minimizing liability and defending/indemnifying risk, so communications bearing on that common interest are discoverable | Held: Common‑interest/Waste Management analysis inapplicable on these facts; privilege may be asserted and the trial court must determine privilege as to individual documents in camera if necessary |
| Whether Peppers doctrine barred discovery in the declaratory coverage action | Peppers prevents deciding ultimate facts that would bind underlying tort plaintiffs; here discovery about privilege is procedural and not a forbidden adjudication of underlying liability | Insurers argued discovery was appropriate to oppose Motorola’s summary‑judgment motion on notice and did not improperly resolve underlying claims | Held: Peppers doctrine not implicated; resolving discoverability for summary‑judgment briefing does not decide ultimate facts of the underlying torts |
Key Cases Cited
- Waste Management, Inc. v. Int’l Surplus Lines Ins. Co., 144 Ill. 2d 178 (Ill. 1991) (supreme court held attorney‑client privilege inapplicable where insurers sought defense files under cooperation clause and common‑interest principles)
- Maryland Cas. Co. v. Peppers, 64 Ill. 2d 187 (Ill. 1976) (court should avoid deciding ultimate facts in a declaratory action that would bind parties in underlying litigation)
- Sharp v. Trans Union L.L.C., 364 Ill. App. 3d 64 (Ill. App. Ct. 2006) (applied Waste Management principles to require production of pre‑policy documents where policy language and exclusions made insured’s counsel’s analysis directly relevant)
- Norskog v. Pfiel, 197 Ill. 2d 60 (Ill. 2001) (contempt sanctions may be used to test correctness of discovery orders; standard of review discussion for discovery appeals)