490 F.Supp.3d 1299
N.D. Ill.2020Background
- Plaintiff Pearlshire Capital Group (PCG), run by Farrukh Bagasrawala, sponsored and employed defendant Rehan Zaid on an H-1B visa; Zaid’s duties included analyzing hotel acquisitions and development opportunities.
- PCG alleges that while employed and using PCG’s name, Zaid usurped three hotel opportunities (Valparaiso Fairfield Inn, Des Plaines TIF, Burr Ridge), causing alleged losses in excess of $13 million and asserting claims for fraud, breach of fiduciary duty, tortious interference, and unjust enrichment.
- Defendants asserted attorney-client and work-product protections over roughly 800 documents and produced a late, extensive privilege log; discovery disputes were litigated after fact discovery closed.
- District court found defendants’ privilege assertions deficient: the record showed communications and retainer activity in PCG’s name, so privilege—if any—belonged to PCG, not Zaid; defendants failed to establish a personal attorney-client relationship.
- Magistrate judge ordered production of the logged documents within seven days, declined to accept blanket privilege claims, noted the option of a special master for voluminous in camera review, and emphasized counsel’s duty of candor about discovery status.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ~800 documents are protected by attorney-client/work-product privilege asserted by Zaid | PCG: documents were created and counsel engaged in PCG’s name; privilege belongs to PCG and must be produced | Zaid: he personally retained counsel (family-office arrangement) and thus owns the privilege over these communications | Court: Zaid failed to meet burden; objective record shows counsel acted for PCG; privilege belongs to PCG—produce documents |
| Whether tardy or deficient privilege logs resulted in waiver of privilege | PCG: late/inadequate logs may waive protection | Defendants: extraordinary circumstances justified timing; no waiver | Court: noted waiver is possible for late logs but prior judge found extraordinary circumstances; resolved on privilege merits and ordered production |
| Whether in camera review is required for voluminous documents | PCG: requested production; in camera review of hundreds would be inefficient | Defendants: sought protection to avoid production | Court: in camera review of ~800 documents is impractical; special master is preferable for large sets, but court resolved merits and ordered production |
| Whether the corporate-client privilege belongs to the entity or the employee who engaged counsel | PCG: privilege belongs to the corporate client (PCG) where employee used corporate name and resources | Zaid: claimed individual representation/ joint-client status and personal privilege | Court: corporate privilege belongs to entity by default; employee must prove individual representation—Zaid did not; privilege is PCG’s |
Key Cases Cited
- Upjohn Co. v. United States, 449 U.S. 383 (privilege protects corporate communications to counsel for legal advice)
- Swidler & Berlin v. United States, 524 U.S. 399 (privilege construed narrowly; serves public good but limited)
- Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343 (corporate privilege belongs to the corporation)
- Shaffer v. Am. Med. Ass'n, 662 F.3d 439 (7th Cir.) (burden on party asserting privilege; no blanket claims)
- United States v. Int'l Bhd. of Teamsters, 119 F.3d 210 (2d Cir.) (communications on corporate matters belong to corporation; employees generally cannot prevent waiver)
- Cleveland Hair Clinic v. Puig, 200 F.3d 1063 (7th Cir.) (duty of candor to the court)
- Binks Mfg. Co. v. National Presto Indus., Inc., 709 F.2d 1109 (7th Cir.) (blanket privilege assertions improper)
- United States v. Ruehle, 583 F.3d 600 (9th Cir.) (no prima facie presumption of privilege; party must establish applicability)