The Privity Defense in Illinois Today
“There is no privity of contract between these parties, and if the plaintiff can sue, every passenger, or even any person passing along the road, who was injured by the upsetting coach, might bring a similar action. Unless we confine the operation of such contracts as this to the parties who entered into them, the most absurd and outrageous consequences, to which I can see no limit, would ensue. Lord Abinger, Winterbottom v. Wright, 152 ER 402, Meeson & Welsby 109; pages 109 – 116 (1842); see also, Tweddle v. Atkinson, EWCH J57 (QB) (1861).
“Privity is an elusive concept.” Manley v. Hain Celestial Grp., Inc., 417 F. Supp. 3d 1114, 1122 (N.D. Ill. 2019).
Those of us “of a certain age” might remember studying the above-mentioned old English case, probably in your contracts class. It may also be the first time that you were exposed to the term “privity,” not a word used in everyday parlance. Privity is, basically, a central aspect of the commercial relationship between buyer and seller. Simply stated, it is “that connection. . . which exists between two or more contracting parties.”1 Both under the Uniform Commercial Code, and at common law, privity has been, and remains, an essential element in many of an aggrieved buyer’s claims against a seller for non-performance of the goods bought and sold.2
Practitioners of tort law might also recall that in 1965 the Illinois Supreme Court abolished the defense of privity of contract in tort actions involving personal injury, as part of the still-developing body of product liability law in Illinois. Suvada v. White Motor Co.,3 making “explicit that which was implicit” in such earlier cases as Lindroth v. Walgreen Co.4 and Gray v. American Radiator and Standard Sanitary Corp.5
The next major milestone in the evolution of Illinois product liability law may be said to have come in the case of Moorman Mfg. Co. v. National Tank Co.6, in which the Illinois Supreme Court held that economic loss – defined as “damages for inadequate value, cost of repair and replacement of the defective product, or consequent loss of profits . . . without any claim of personal injury or damage to other property . . .”7 – was not recoverable under tort theories. The court thereby resolved the Santor/Seeley debate for Illinois8, and answered a question left unresolved by Suvada, i.e. “whether a consumer could recover under a strict liability in tort theory for solely economic loss.”9
Having been relegated to a contract theory for disappointed commercial expectations, the aggrieved consumer faces another hurdle on the road to recovery – privity – a concept whose very existence was challenged before the Illinois Supreme Court in the case of Szajna v. General Motors Corp.10
The Szajna and Rothe Cases.
Mr. Szajna purchased a 1976 Pontiac Ventura but subsequently discovered that the car contained a Chevette transmission, which was allegedly inferior to the Pontiac transmission Szajna thought he had purchased. He brought a class action lawsuit against General Motors on his own behalf and on behalf of all others who had purchased a 1976 Pontiac Ventura. The class action alleged breach of both express and implied warranties along with other counts. Damages were based solely on economic loss, with plaintiff claiming that the Chevette transmissions required more repairs, had shorter service lives and lessened the value of the cars in question. Also, additional damages were claimed for the cost of replacing the transmission.
Among its other rulings, the trial court dismissed the plaintiff’s implied warranty of merchantability claim, and the Appellate Court affirmed,11 finding no privity between Szajna and General Motors which, the court held, was fatal to the plaintiff’s UCC-based implied warranty claim.
At the Illinois Supreme Court, Szajna urged the court “to abolish the privity requirement in suits for breach of implied warranty when a plaintiff seeks to recover for economic loss.”12
The court reviewed the various commentators and case law regarding recovery for purely economic loss, which the court recognized “most certainly is not uniform in all jurisdictions.”13
Citing its decision in Moorman four years earlier, the court said, “we held that recovery for economic loss must be had within the framework of contract law.”14
Noting that the distinction between the two standards of recovery (tort and contract) is not arbitrary but rests upon an understanding of the nature of the responsibility a manufacturer must undertake in distributing his product, the court said the consumer should not be charged with bearing the risk of physical injury when he buys a product on the market, but he can, however, fairly be charged with the risk of disappointed commercial expectations in the quality or performance of a product.15
The court expressed its belief that “it is preferable to relegate the consumer to the comprehensive scheme of remedies fashioned by the UCC, rather than requiring the consuming public to pay more for their products so that the manufacturer can insure against the possibility that some of his products will not meet the business need of some of his customers.”16
The same rationale, the court concluded, supports the prohibition of recovery for economic loss by non-privity plaintiffs. The court therefore declined to abolish the privity requirement in implied warranty economic loss cases, and affirmed the judgment in favor of the defendant on the plaintiff’s UCC warranty claim.17
As to plaintiff’s implied warranty claim based upon the Magnuson – Moss Act,18 however, the Supreme Court resurrected this claim, reversing the dismissal of this count and remanding it to the trial court.19
The privity rules in Szajna were endorsed two years later in Rothe v. Maloney Cadillac, Inc.,20 when the Illinois Supreme Court again ruled that “with respect to purely economic loss, the UCC article ll implied warranties give a buyer of goods a potential cause of action only against his immediate seller”, and not against a remote manufacturer.21
As in Szajna, however, the plaintiff’s implied warranty claim based upon the Magnuson – Moss Act was allowed to stand, despite the absence of privity between the plaintiff and the remote manufacturer, ruling that the effect of the Act imposes against the remote manufacturer the same warranty obligations as would be imposed against the immediate seller.22
Post-Szajna/Rothe Rulings.
The last time the Illinois Supreme Court weighed in on the issue of implied warranties arising under the UCC and the Magnuson-Moss Act was in the case of Mydlach v. DaimlerChrysler Corp.,23 a 2007 decision that dealt primarily with questions of which statute of limitations applied to plaintiffs’ claims, when was it triggered, and whether the remedy of revocation was available against the remote manufacturer of the motor home plaintiffs had purchased from an independent RV dealer.
Refusing to extend the remedy recognized by the court in the Szajna decision to the facts of the case, the court said that the limited implied warranty created by the Magnuson-Moss Act does not provide a basis for relief against a remote manufacturer by a purchaser of a used motor vehicle.
The most recent appellate-level case to discuss the issue of privity in the context of an implied warranty of merchantability under the UCC is Zaffiri v. Pontiac RV, Inc.,24 a 2012 decision from the Fourth District Appellate Court of Illinois.
In Zaffiri, the plaintiffs purchased a motor home from the defendant that experienced problems with the exterior and interior walls. After multiple attempts to obtain repairs the plaintiffs sued multiple defendants under a number of theories, one of which was a UCC-based claim for breach of the implied warranty of merchantability. As to one of the defendants with whom the plaintiffs had not directly dealt, the court recognized their privity defense, stating that under the UCC, “a plaintiff must be in vertical privity of contract with the seller in order to file a claim for economic damages for breach of implied warranty of merchantability . . . Thus, pursuant to the UCC, a buyer of good seeking purely economic damages for a breach of implied warranty has ‘a potential cause of action only against his immediate seller.’”25
Plaintiffs invited the court to abandon the concept of privity, arguing that “most states hold that the existence of privity in order to enforce an implied warranty is not necessary”,26 but the court declined, holding that “[a]lthough the vertical privity requirement has been challenged on a number of occasions, our supreme court has consistently declined to abolish the doctrine in cases where, as here, purely economic damages are sought.”27
As will be seen in the following section, the vast majority of federal courts, including the Seventh Circuit, have disagreed with the Illinois Supreme Court and have rejected its rulings in Szajna and Rothe concerning the viability of implied warranty claims brought under the Magnuson- Moss Act.
The Privity Rule in the Illinois Federal Courts.
As can be seen from the number of cases cited below, the federal courts sitting in Illinois, particularly the Northern District, have been very active on the topic of privity, perhaps because of the federal nature of Magnuson-Moss claims. Ironically, however, those claims have fared much better in the Illinois state courts than in their federal counterparts.
The United States District Court for the Northern District of Illinois has taken a very different approach from the Illinois Supreme Court regarding the viability of a claim for breach of an implied warranty arising under the Magnuson – Moss Act while agreeing with the state court as to the dismissal of UCC – based implied warranty claims.
In Larry J. Soldinger Assocs. V. Aston Martin Lagonda of N. Am., Inc. (“Soldinger”)28 the plaintiff purchased a very expensive automobile which was beset with a myriad of mechanical problems. Plaintiff sued the American distributor of the British manufacturer, with whom he was not in privity. Plaintiff’s suit included implied warranty claims under both the UCC and the Magnuson-Moss Act. The court readily disposed of the UCC-based implied warranty claim, citing Szajna and Rothe, supra.29
In support of his Magnuson-Moss implied warranty action, the plaintiff cited the same two above-referenced cases, which he claimed constituted controlling law, and which he argued eliminated the need for privity in a Magnuson-Moss implied warranty claim.
The defendant relied upon a Second Circuit case30 as well as an earlier Northern District of Illinois ruling,31 both of which held that implied warranty claims asserted under the Magnuson-Moss Act are subject to state-law privity rules and that only purchasers from states not requiring privity could maintain an implied warranty action, because the Act did not create a federal cause of action for breach of implied warranty without privity.32
Noting that “[t]he Seventh Circuit had not yet addressed the question of whether privity of contract is a prerequisite to a Magnuson-Moss breach of implied warranty claim brought in Illinois”,33 the court declined to follow Szajna and Rothe and instead found “the Abraham line of authority [from the Second Circuit, requiring privity in Magnuson-Moss implied warranty claims] more persuasive.”34
While recognizing that it was “not bound by a Second Circuit decision, Abraham holds greater sway than Szajna, since the Seventh Circuit asks that district court[s] give ‘substantial weight’ to the ‘direct authority of a sister circuit.’”35
The court examined the legislative history of the Magnuson-Moss Act and, like the observations in Walsh36 and Skelton,37 concluded that “Magnuson-Moss does not create a federal cause of action for breach of implied warranty sans privity.”38
The Voelker decision.
The Seventh Circuit itself weighed in on the matter of privity in the context of implied warranty claims under the Magnuson-Moss Act four years later in the case of Voelker v. Porsche Cars N. Am., Inc.39 In Voelker, the plaintiff leased a car from a Porsche dealer. As part of plaintiff’s lease, he was provided with a “New Car Limited Warranty” which obligated Porsche to “repair or replace any factory-installed part that was defective in material or workmanship under normal use.”40
The plaintiff was involved in an accident with an SUV shortly thereafter which did extensive damage to the car, necessitating major repairs and replacement of parts. The car was in the shop for several months while awaiting parts from Porsche which were in short supply. The plaintiff stopped making lease payments on the car, and the Porsche-affiliated finance company demanded the surrender of the car for overdue payments, in response to which the plaintiff filed suit against Porsche under a number of theories, including breach of implied warranty under the Magnuson-Moss Act.
The court noted that the Act allows for breach of “‘an implied warranty arising under State law (as modified by sections 2308 and 2304(a) of this title)’”41
“Because secs. 2308 and 2304(a) do not modify or discuss in any way [the court continued], a state’s ability to establish a privity requirement, whether privity is a prerequisite to a claim for breach of implied warranty under the Magnuson-Moss Act therefore hinges entirely on the applicable state law. “42
Since, under the law of Illinois, privity of contract is a prerequisite to recover economic damages for breach of implied warranty,43 the plaintiff’s claim against Porsche was properly dismissed.44
The Federal/State Court Split, Examined.
Perhaps the most comprehensive description of the complexities of the conflict between the Illinois state courts and their federal counterparts, both in Illinois and nationally, can be found in a 2004 decision from the First District Appellate Court of Illinois in the case of Mekertichian v. Mercedes-Benz U.S.A., L.L.C.45
In Mekertichian, the plaintiff purchased a new Mercedes-Benz automobile from a dealership in Illinois. The car came with a 48-month or 50,000-mile limited written warranty issued by the defendant-manufacturer. Shortly after the purchase, the plaintiff began experiencing problems with the car and returned it to the dealership on several occasions for repairs. Ultimately the dealership said it was unable to repair the vehicle, and the plaintiff thereafter filed suit against the defendant-manufacturer claiming breach of written and implied warranties under the Magnuson-Moss Act.
As to the plaintiff’s claim for breach of the implied warranty of merchantability, the defendant argued that since the plaintiff did not purchase the vehicle directly from the manufacturer, no vertical privity existed and therefore the breach of implied warranty claim could not be sustained. The defendant-manufacturer moved for partial summary judgment on this basis on the implied warranty claim but because of the rulings in the Szajna and Rothe cases (holding that Magnuson-Moss expanded Illinois state law to excuse the absence of vertical privity to allow a direct action by a consumer against a remote manufacturer), the trial court denied the motion, but certified for immediate appeal the question of whether privity was required to maintain such a suit. The appellate court denied the defendant’s application for leave to appeal, but the Illinois Supreme Court issued a supervisory order directing the interlocutory appeal to proceed.46
The appellate court began its analysis of the certified question by reviewing the language and effect of the Magnuson-Moss Act which provides that actions predicated upon a breach of an implied warranty brought under the Act are governed by state law. Under common law, as well as under the Uniform Commercial Code, actions for breach of the implied warranty of merchantability seeking economic damages require privity between buyer and seller.47 The Illinois Supreme Court had ruled, however, in 1986, and again in 1988, that the Magnuson-Moss Act served to modify state law with regard to the privity requirement, eliminating it in order to “furnish broad protection to a consumer”48. . . “where a manufacturer has expressly warranted a product to a consumer.”49
In such instances “vertical privity will be deemed to exist with respect to the consumer,”50 allowing direct actions by the consumer against a remote manufacturer in Illinois state courts.
This finding, eliminating the requirement of vertical privity in implied warranty cases brought under the Magnuson-Moss Act, has been rejected by every federal appellate circuit to have ruled on the issue, as well as by the overwhelming majority of federal district courts,51 which have taken the position that the Magnuson-Moss Act, by itself, has not relaxed the privity requirement, and that the need for privity must be determined by state law. Since “Illinois requires contractual privity as a prerequisite for breach of implied warranty claims under internal law”, the federal courts hold, “there must also be vertical privity in breach of implied warranty claims brought pursuant to Magnuson-Moss in Illinois.”52
In taking the position, it staked out in the Szajna and Rothe decisions, the Illinois Supreme Court, according to Mekertician, was “not purporting to construe state law, which still requires privity, but purports to construe federal law,”53 and while the Illinois supreme court has said in the past that “federal decisions are considered controlling on Illinois state courts interpreting a federal statute,”54 six months later the Illinois supreme court held that it need not follow Seventh Circuit precedent interpreting a federal statute where there is a split in the federal circuits on the issue, where the Supreme Court of the United States has not yet ruled, and where it believed that the Seventh Circuit had wrongfully decided on the issue.55
Hence, federal court decisions, including those of the Seventh Circuit, are considered persuasive, but not binding, on Illinois state courts in the absence of a decision by the Supreme Court of the United States.56
Until then, Illinois courts remain bound by the Szajna and Rothe cases in deeming privity to be present between a consumer and a remote manufacturer in implied warranty cases brought under the Magnuson-Moss Act.57
District Court Cases After Voelker.
Post-Voelker decisions from the Northern District of Illinois remain consistent with the ruling of that Seventh Circuit holding, rejecting the Magnuson-Moss exception to the privity rule that the Supreme Court of Illinois announced in the Szajna and Rothe cases.
A very instructive case that discussed in detail the history and rationale of the Illinois/federal distinction is Watson v. Coachman Rec. Vehicle Co.58 Plaintiff purchased a motor home from an RV dealership, which was not a party to the case. The defendant-manufacturer provided a written warranty covering all “parts, components and features” of the motor home while limiting its liability under the warranty to repair or replacement of defects in materials or workmanship.59
Shortly after taking possession of the motor home, the plaintiff began to experience various problems with the motor home and after giving the dealer sufficient opportunity to repair the defects, sued the manufacturer for, inter alia, breach of the implied warranties of merchantability and fitness for a particular purpose. The manufacturer asserted the defense of lack of privity, in response to which plaintiff attempted to use the manufacturer’s written warranty as an exception to the no-privity defense, citing Szajna and Rothe, to which the district court responded: “[a]s The Court has already determined not to follow the Illinois Supreme Court’s holding[s] in Szajna and Rothe, it finds the Plaintiff’s instant argument unavailing. . .”60
Before announcing its decision, as mentioned, the district court provided a comprehensive contrast between “The Illinois View” and “The Federal View” regarding the privity defense, and whether the existence of a written warranty from a manufacturer provides an exception to the privity rule,61 finding it did not, and ruling in favor of the defendant-manufacturer.
Another significant post-Voelker case is Rodriguez v. Ford Motor Co.62 This case involved an alleged defect in the trunk lid wiring harness of the plaintiff’s car which caused intermittent failure of the backup camera, which was said to be a common problem among Ford Mustang vehicles manufactured between 2015 and 2017. Plaintiff sued the defendant-manufacturer with whom he had no direct dealings, having purchased the car from an authorized Ford dealership. In response to the manufacturer’s defense of lack of privity, plaintiff attempted to invoke one of the court-created exceptions to the privity requirement known as the “direct dealing exception”, which is the subject of the following section. As more fully discussed, infra, this exception only applies when there are direct dealings between the customer and the remote manufacturer and has been applied quite restrictively by the courts.
The Direct Dealing Exception to the Privity Requirement.
In discussing the history and evolution of the direct dealing exception to the privity requirement, one court said: “Much as all roads led to Rome, the cases that mention a ‘direct-dealing’ exception to the privity requirement under Illinois law seem to trace back to one case, Rhodes Pharmacal Co. v. Continental Can Co.” (citation omitted).63
In Rhodes, the plaintiff was a marketer of various cosmetic and hair beauty products. It purchased from a distributor a certain type of “rustproof” aerosol cans manufactured by the defendant. When the plaintiff began receiving complaints from its customers that the aerosol cans were leaking, causing not only loss of the product but damage to the inventory of its customers, the plaintiff complained to the manufacturer of the cans who responded that the contents of the cans was incompatible with the “rustproof” linings of the cans, resulting in corrosion.64
When plaintiff sued the manufacturer for breach of implied warranty, the defendant asserted a lack-of-privity defense. Plaintiff argued that the absence of privity should not foreclose its implied warranty action since it alleged that its employees had direct dealings with the manufacturer of the cans, in that they had met with the manufacturer to discuss various design issues.65 The Appellate Court agreed, concluding that the plaintiff could sue the manufacturer on a third-party beneficiary theory, given that the plaintiff had worked directly with the defendant-manufacturer on product specifications for the cans.66
The holding in Rhodes eventually evolved into two distinct exceptions to the privity rule in implied warranty cases; the “direct dealing exception” which “applies when there are direct dealings between the manufacturer and the remote customer,”67 and the “third-party beneficiary exception” which allows warranty claims “to bypass the privity requirement if ‘the manufacturer knew the identity, purpose and requirements of the dealer’s customer and manufactured or delivered the goods specifically to meet those requirements.’”68
Having observed the number of cases “which evidence the increasing disregard for the privity requirement through the continued expansion of the class of permissible plaintiffs under [the] third-party beneficiary doctrine”, the Illinois Supreme Court, beginning with Rozny v. Marnul,69declined any further erosion of the privity requirement. Written advertisements cannot serve as the basis for a direct dealing relationship.70
Also, “Illinois courts have made clear that their direct-dealing exception does not extend to goods mass-produced and sold at retail to a third party who is not a beneficiary of the manufacturer-seller contract.”71
Given the fact that “the Illinois Supreme Court has hammered home the necessity of privity in claims for breach of implied warranty”72 at least one court has been led to believe that if the Illinois Supreme Court is squarely faced with the issue of the continued viability of the exceptions to vertical privity in implied warranty cases, “[t]his Court is not alone in doubting the Illinois Supreme Court would recognize any exceptions to the requirement of privity for implied warranty cases.”73
Conclusion.
“Since the mid-nineteenth century, courts have used privity of contract as a way of limiting relief based on warranties.”74
“Thus, remote sellers were relieved of liability for injuries to persons other than those for whom the goods were constructed or to whom they were sold.”75
The adoption of sec. 402A of the Restatement of Torts rendered the privity rule irrelevant in cases involving personal injury,76 but instances of purely economic loss remained the province of warranty law.77
At present, the federal/state court split appears to remain, with state court cases excusing the absence of privity in implied warranty cases brought pursuant to the Magnuson-Moss Act, with cases holding that (while absent), vertical privity will be “deemed” to be present, thus allowing direct actions by consumers against remote manufacturers. Federal courts, on the other hand, have strictly interpreted Illinois common law to require actual privity in all such cases.
Vertical privity has withstood its challenges in the Illinois state and federal courts and, in certain cases, remains a viable defense to remote sellers from whom purely economic losses are sought to be recovered. Therefore, at least for now, there remains a legitimate place for the notion of vertical privity in Illinois contract jurisprudence.
BLACK’S LAW DICTIONERY 1079 (5th ed. 1979).
Szajna v. General Motors Corp., 115 Ill. 2d 294, 311, 503 N.E. 2d 760, 767 (1986), see also, J. White & R. Summers, Uniform Commercial Code (2d ed. 1980).
32 Ill. 2d 612, 210 N.E. 2d 182 (1965).
407 Ill.121, 94 N.E. 2d 847 (1950).
22 Ill. 2d 432, 176 N.E. 2d 761 (1961).
91 Ill.2d 69, 435 N.E. 2d 443 (1982).
Note, Economic Loss in Product Liability Jurisprudence, 66 Colum. L. Rev. 917, 918 (1966).
Compare, Santor v. A & M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1965) (allowing a direct action in warranty by a purchaser against a manufacturer despite an absence of privity between the parties, and inferring, in dicta, that recovery in tort for a product’s diminished value was also possible) and Seely v. White Motor Co., 63 Cal. 2d 9, 45 Cal. Rptr. 17, 403 P.2d 145 (1965) (denying recovery in tort for economic losses).
Moorman, 91 Ill. 2d at 74.
115 Ill. 2d 294, 503 N.E. 2d 760 (1986).
Szajna v. General Motors, Corp., 130 Ill. App. 3d 173, 474 N.E.2d 397 (1st Dist. 1985).
Szajna, 115 Ill. 2d at 301, 503 N.E. 2d at 762.
Id., 115 Ill. 2d at 302, 503 N.E. 2d at 763.
Id., 115 Ill. 2d at 304, 503 N.E. 2d at 764.
Id., referencing Seeley v. White Motor Co., 63 Cal. 2d 9 at 18, 45 Cal. Rptr. 17 at 23, 403 P.2d 145 at 151 (1965), and Moorman, supra, 91 Ill. 2d at 81, 435 N.E. 2d at 448.
Szajna, 115 Ill. 2d at 310, 503 N.E.2d at 767, quoting Moorman, 91 Ill. 2d at 79-80, 435 N.E. 2d at 448.
Id., 115 Ill. 2d at 311, 503 N.E. 2d at 767.
Specifically, 15 U.S.C. Sec. 2310(d)(1).
Id., 115 Ill.2d at 317, 503 N.E. 2d at 769.
119 Ill. 2d 288, 518 N.E. 2d 1028 (1988).
119 Ill. 2d at 292, 518 N.E.2d at 1029.
119 Ill. 2d at 294, 518 N.E.2d at 1030.
226 Ill. 2d 307, 865 N.E. 2d 1047 (2007).
2021 IL App (4th) 120042-U, 2021 Ill. App. Unpub. LEXIS 2211, 2021 WL 7050429 (4th Dist. 2012).
Zaffiri, 2012 IL App (4th) 120042-U at P88, quoting Mekertichian, supra, 347 Ill. App. 3d at 1168.
Id., at P89.
Id., at P90.
1999 U.S. Dist. LEXIS 14765, 1999 WL 756174 (N.D. Ill. Sept. 13, 1999).
Soldinger, 1999 U.S. Dist. LEXIS 14765 at *18.
Abraham v. Volkswagen of Am., 795 F.2d 238 (2d Cir. 1986).
Skelton v. General Motors Corp, No. 79 C 1243,1985 U.S. Dist. LEXIS 18649, 1985 WL 1860 (N.D. Ill. June 21, 1985).
Abraham, 795 F.2d at 249; Skelton, 1985 U.S. Dist. LEXIS 18649 at *7,8.
Soldinger,1999 U.S. Dist. LEXIS at *21.
Id., at 22.
Id., at *29, quoting Richards v. Local134, Int’l Bhd. Of Electrical Workers, 790 F.2d 633, 636 (7th Cir. 1986).
Walsh v. Ford Motor Co., 807 F.2d 1000 at 1012 (D.C. Cir. 1986).
Skelton, supra, 1985 U.S. Dist. LEXIS 18649 at*7, 1985 WL 1860 at *3.
Id.
353 F.3d 516 (7th Cir. 2003).
353 F.3d at 520.
353 F.3d at 525, quoting 15 U.S.C. sec. 2301(7).
Walsh, supra, 807 F.2d at 1014; Abraham, supra, 795 F.2d at 249.
Rothe, supra, 119 Ill. 2d at 292, 518 N.E.2d at 1029-30.
See also, Soldinger, supra, 1999 U.S. Dist. LEXIS 14765 at **27-31, 1999 WL 756174 at **6-10.
347 Ill. App. 3d 828, 807 N.E. 2d 1165 (1st Dist. 2004).
Mekertician, 347 Ill. App. 3d at 830, 807 N.E. 2d at 1167.
See, Szajna, 115 Ill. App. 2d at 311, 503 N.E. 2d at 767; Rothe, 119 Ill. 2d at 292, 518 N.E. 2d at 1029-30.
Szajna, 115 Ill. 2d at 315-16, 503 N.E. 2d at 769: Rothe, 119 Ill. 2d at 294, 518 N.E. 2d at 1030
Mekertichian, 347 Ill. App. 3d at 832, 807 Ill. App. 2d at 1168.
Id.
Id., 347 Ill. App. 3d at 833, 807 N.E. 2d at 1168 (citing cases).
Id.
Id.
Wilson v. Norfolk & Western Ry. Co., 187 Ill. 2d 369 at 383, 718 N.E. 2d 172 at 179 (1999) (following a Seventh Circuit interpretation of the Federal Employers’ Liability Act, 45 U.S.C. sec. 51 et seq. (1994)).
Wieland v. Telectronics Pacing Systems, Inc., 188 Ill. 2d 415 at 423, 721 N.E. 2d 1149 at 1154 (1999).
See, Sprietsma v. Mercury Marine, 197 Ill. 2d !!2, 757 N.E. 2d 75 (2001), rev’d on other grounds, 537 U.S. 51, 123 S. Ct. 518, 154 L. Ed. 2d 466 (2002); see also, Bishop v. Burgard, 198 Ill. 2d 495 at 507, 764 N.E. 2d 24 at 33 (2002).
See, People v. Spahr, 56 Ill .App. 3d 434 at 438, 371 N.E.2d 1261 at 1264 (1st Dist. 1978) ( holding that Illinois supreme court decisions are biding on all Illinois courts, but decisions of federal courts, other than the Supreme Court of the United States, are not binding on Illinois courts).
No. 05-CV-524, 2006 U.S. Dist. LEXIS 15087, 2006 WL 8455882 (N.D. Ill. March 31, 2006).
Watson, 2006 U.S. Dist. LEXIS 15087 at *4.
Id., at *27.
Id., at *15 -26; see also, Mekertichian v. Mercedes-Benz U.S.A., L.L.C., supra.
596 F. Supp. 3d 1059 (N.D.) Ill. 2022.
Manley v. Hain Celestial Grp., Inc., 417 F. Supp. 3d 1114, 1123 (N.D. Ill. 2019).
Rhodes Pharmacal Co. v. Continental Can Co., 72 Ill. App. 2d 362, 366, 219 N.E.2d 726, 729 (1st Dist. 1966).
Rhodes, 72 Ill. App. 2d at 372, 219 N.E. 2d at 732.
Id.
See, e,g., Edward v. Electrolux Home Prods., Inc., 214 F. Supp. 3d 701, 705 (N.D. Ill. 2016).
F.E. Moran, Inc. v. Johnson Controls, Inc., 697 F. Supp. 3d 786, 797 (N.D. Ill. 2023), quoting Frank’s Maintenance & Eng’g , Inc., v. C.A. Roberts Co., 86 Ill. App. 3d 980, 408 N.E. 2d 403 (1st Dist. 1980); see also, Redmon v. Whirlpool Corp., No. 20 C 6626, 2021 U.S. Dist. LEXIS 81628, 2020 WL 9396529 (N.D. Ill. April 28, 2021) (collecting cases).
43 Ill. 2d 54, 250 N.E. 2d 656 (1969).
In re VTech Data Breach Litig., No.15 C 10889, 2018 U.S. Dist. LEXIS 65060 at *18, 2018 WL 1863953 at *5 (N.D. Ill. Apr. 18, 2018) ( “I am not persuaded that the Illinois Supreme Court would conclude that advertising alone creates a direct relationship between a manufacturer and a customer. . .” )
Harris v. Kashi Sales, LLC, 609 F. Supp.3d 633, 643 (N.D. Ill. 2022); see also, Harmon v. Lenovo (U.S.) Inc., No. 3:23-CV-1643, 2024 U.S. Dist. Lexis 74091, 2024 WL 1741264 (S.D. Ill. Apr. 23, 2024).
Manley, supra, 417 F. Supp. 3d at 1124.
Id., (citing Caterpillar, Inc. v. Usinor Industeel, 393 F. Supp. 2d 659, 678 (N.D. Ill. 2005) (emphasis added).
Arlie R. Nogay, Comment: Enforcing the Rights of Remote Sellers Under the UCC: Warranty Disclaimers, the Implied Warranty of Fitness for a Particular Purpose and the Notice Requirement in the Nonprivity Context, 47 U. Pitt. L. Rev. 873 (Spring, 1986), at p. 882, citing Winterbottom v. Wright, 152 Eng. Rep. 402 (Exch. 1842) (sustaining a demurrer to suit by injured coachman for breach of warranty against a third party who had contracted to maintain the coach), (see also, the reference to same at the beginning of this article).
Id.
See, Suvada, supra, n. 1.
See, Moorman, supra, n. 4.
Enforcing Foreign Judgments in England and Wales: How to Avoid Stumbling Over Jurisdictional Hurdles
Enforcing foreign judgments in England and Wales is not always straightforward, especially for those countries where there is no reciprocal enforcement regime. However, the recent case of Shovlin v Careless and Others [2024] EWHC 324 (KB) clarifies the legal concepts underpinning this area and provides practical guidance for litigants hoping to successfully enforce US judgments in England and Wales.
Shovlin v Careless and Ors
The High Court’s decision in Shovlin v Careless and Ors concerned enforcement in England of a default judgment granted against defendant companies by the Superior Court of the State of California. The case explores the procedure for enforcing foreign judgments in England and Wales and the concept of voluntary submission in relation to jurisdiction.
The California proceedings were initiated in 2013 and concerned alleged fraud and defamation. The underlying dispute arose from events that mainly took place in 2008 between the claimant and the first to fifth defendants – English companies in well-known price comparison website business Money Expert Group. The claimant requested that judgment be given in default, as the defendants had failed to file a defence. At a “prove up hearing” to assess damages in 2019, the defendants’ lawyer made a “special appearance”, arguing that the case should be dismissed as they had not complied with the five-year rule. Under California law, civil proceedings should be brought to trial within five years of the action being commenced.
However, the California court was not persuaded by the defendants and ultimately granted default judgment in the claimant’s favour for $10,066,353 (the US Judgment). Following this, in October 2021, the claimant, a UK citizen who had resided in the United States for years, issued proceedings in the courts of England and Wales to enforce the judgment debt at common law.
How are foreign judgments enforced in England and Wales as a matter of common law?
The common law regime is the default regime for countries where there is no applicable treaty, statute or convention providing for enforcement. To be enforceable at common law, a judgment must be:
Final and conclusive in the court which pronounced it.
For a sum of money, but not for a fine, penalty or for taxes. Non-monetary relief is therefore not capable of enforcement through the common law regime.
On the merits of the claim. In accordance with criteria laid down by Lord Brandon in The Sennar No 2 [1985] 1 WLR 490, a decision on the merits must establish certain facts as proved (or not in dispute), state what the applicable principles of law are and find a conclusion regarding the effect of the principles on the facts of the case in hand.
Have been established as the appropriate jurisdiction. The foreign court must have established proper jurisdiction over the defendant in accordance with English private international law. Broadly, this means that the foreign court must have jurisdiction on a territorial or consensual basis. The original court will be deemed to have had territorial jurisdiction if the debtor was present in the foreign country when the proceedings were commenced, and consensual jurisdiction if the debtor agreed to the relevant jurisdiction, voluntarily appeared in the proceedings, or otherwise submitted to the foreign jurisdiction.
Defences to enforcement include that the judgment was obtained by fraud; the judgment is contrary to English public policy; the defendant did not have a fair opportunity to be heard; and the judgment is inconsistent with a prior judgment on the same subject matter and between the same parties.
The Enforcement Proceedings
In Shovlin, the claimant sought to enforce the US Judgment at common law (there being no relevant treaty or statute providing for enforcement of a US Judgment). It was common ground that the US Judgment was a final and conclusive judgment on the merits for a definite sum of money. The critical issue for determination before the High Court was whether the defendants had voluntarily submitted to the California court’s jurisdiction by making a special appearance at the prove up hearing. The claimant argued that the defendants’ appearance and participation could constitute an implied submission to the California court’s jurisdiction. The defendants maintained that they had only made the special appearance to contest jurisdiction and had therefore not made a general appearance which could imply submission to the jurisdiction.
Rejecting the claimant’s arguments, the High Court concluded that the defendants had not voluntarily submitted to the California court’s jurisdiction. As a result, the Court dismissed the case and ruled that the California judgment could not be enforced in England. The Court concluded that submission to the jurisdiction required the unambiguous waiving of objection to the California court’s jurisdiction and in this case the defendants’ attendance at the prove up hearing did not constitute such a waiver. Instead, the defendants had maintained their position that they did not recognise the California court’s jurisdiction to hear and determine the claim and had not unequivocally represented that objection was not being taken to that jurisdiction.
Key Takeaways
The Shovlin decision demonstrates that enforcing foreign judgments in England and Wales does not come without its challenges and not every foreign judgment is enforceable. It is necessary to scrutinise the foreign judgment, and certain underlying facts, at an early stage to ensure the requirements for enforcement can be met.
When considering whether jurisdiction was established in the foreign proceedings, the presence or submission of the defendant is often determinative. As highlighted by the decision in Shovlin, this can include appearing in the foreign court without contesting jurisdiction. If an appearance is necessary, then it should be made clear that jurisdiction is disputed in order to preserve this position at a later stage.
However, submission to a certain jurisdiction can also include agreeing to the jurisdiction in a contract. Therefore, it is important to check any contractual provisions relating to jurisdiction. If a particular court is specified, which is different from the foreign court that gave the judgment being enforced, then that judgment may not be enforceable.
Whilst it doesn’t appear to have been a significant in Shovlin, whether a defendant is given proper notice of any foreign proceedings can also impact the decision to permit enforcement in England. If a defendant is not given proper notice and has not had a fair opportunity to present their case, then it’s unlikely that any subsequent judgment from the foreign court will be enforceable.
Accordingly, if foreign proceedings are initiated with a view to enforcing any subsequent judgment abroad, litigants should consider, at the outset with their legal advisors including those in the jurisdiction where enforcement will be sought, the requirements that the judgment should meet for it to be successfully exported.
The LWDA: There’s a New Sheriff in Town
In a sharply worded notice, the Labor & Workforce Development Agency (LWDA) recently demanded that a plaintiff-side law firm amend over 100 Private Attorneys General Act (PAGA) notices it had filed. The LWDA warned that failure to amend would risk a finding that they are insufficient to satisfy PAGA’s administrative notice requirement.
Before an allegedly “aggrieved” employee can commence a PAGA lawsuit, the employee must give written notice to the LWDA and the employer of the specific labor code provisions alleged to have been violated, including the facts and theories to support the alleged violations. This pre-litigation notice obligation has been described as an “administrative exhaustion” requirement.
The LWDA’s letter explains that a PAGA notice must include sufficient factual detail to apprise both the LWDA and the employer of the nature of the violations alleged. The purpose of this requirement is twofold. First, the LWDA needs enough specifics to intelligently assess the seriousness of the alleged violations and determine whether to devote government resources to an investigation. Second, the employer receiving the notice needs enough information to understand the nature of the violations, so it may decide whether to “fold or fight.” Importantly, none of this is new—this has always been the standard.
According to the LWDA, the PAGA notices this law firm filed, which the LWDA characterized as “boilerplate,” generally failed to demonstrate any applicability or relevance to a particular claimant, or their unique circumstances in terms of their employment with their current or former employee in any specific case. The LWDA commented that, based on a sampling of the notices, they appeared to be a “template form” prepared without regard to any individual claimant’s particular experiences or employment with their respective employer.
The LWDA then directed the law firm to amend over 100 notices it had filed. The LWDA commented that absent amendment, the notices appeared insufficient to satisfy PAGA’s administrative notice requirements. The LWDA directed that the amended notices set forth specific violations each particular claimant personally suffered and describe the particular facts and theories supporting the specific violations in each case.
While the LWDA pointed to the PAGA reforms enacted last year as evidence of a legislative intent to increase its oversight of PAGA matters, one has to wonder whether a trial court ruling about which we wrote last year, Whose Case Is It Anyway? Trial Court Orders State of California to Pay Court Costs in PAGA Action, might have also inspired the LWDA. In that case, an Alameda Superior Court judge awarded costs to a victorious employer in a PAGA matter and against the LWDA. That matter is now on appeal.
With the LWDA seemingly becoming more involved in reviewing PAGA filings, it remains to be seen how this may impact PAGA litigation in California.
NO LOGS FOR YOU: Court Declines to Require Privilege Log for Withheld Communications.
I have a fascinating tidbit from a TCPA discovery dispute.
In a recent decision on a motion to compel, a defendant was not required to produce purported communications between its attorneys and class members, or a “privilege log” thereof.
Taking a quick step back, Federal Rule of Civil Procedure 26(b)(5)(A)(ii) generally requires that parties withholding information based on attorney-client privilege or the work product doctrine “describe the nature of the documents, communications, or tangible things not produced or disclosed.” This description, generally known as a “privilege log,” was ultimately not required by a magistrate judge in Walston v. Nat’l Retail Solutions, Inc. d/b/a NRS Pay. No. 24 C 83, 2025 WL 580518, *6 (N.D. Ill. Feb. 21, 2025).
In Walston, the plaintiff wanted all records of communication between the defendant or its counsel and potential class members. Id. at *4. This lead to a motion to compel by the plaintiff and two interesting disputes regarding plaintiff’s discovery requests: (1) whether plaintiff was entitled to records of communication between defendant and potential class members and (2) whether plaintiff was entitled to records of communication between defendant’s counsel and potential class members.
Regarding the first dispute, the defendant contended that it had not communicated with class members—and that any such communications were made by its counsel. Id. at *5. The court agreed that documents that the defendant never possessed—i.e., because their counsel (probably) had the communications and never explicitly gave them to the defendant—could not be compelled by a discovery request. Id. at *6.
However, it is worth noting that, if the defendant had communicated with potential class members, that information would have been discoverable. Id. at *5.
On the second dispute as to communications between defendant’s counsel and potential class members, the defendant again asserted that it never had those communications. Id. at *6. Further, to the extent that the defendant communicated with its counsel regarding those communications, the defendant asserted attorney-client privilege and the work product doctrine. Id. The plaintiff requested a privilege log of withheld communications, and the defendant argued that documents created after a lawsuit is filed are presumed privilege and thus not subject to a privilege log. Id. at 5.
The court noted an emerging trend in which courts are not enforcing strict adherence with Rule 26(b)(5)(A)(ii) and thus not requiring a privilege log for withheld communication between a client and their counsel that occurred after litigation has commenced. Id. at 5 (citing Rayome v. Abt Elecs., 2004 WL 1435098, at *4 (N.D. Ill. Apr. 3, 2024)).
That is the key takeaway from this case: the promising view that privilege logs are not required for communication between counsel and their client in litigation matters. Privilege logs can be burdensome and, in some cases, just as damaging as producing the privileged information.
More updates are to come, as we see how courts apply this emerging trend!
DOJ Reform on Collision Course: EDNY’s Netflix ‘Evidence’ and FBI Misconduct Under Scrutiny
As the Department of Justice undergoes a seismic shift under the Trump administration, prosecutors in the Eastern District of New York (EDNY) find themselves at the center of controversy over the prosecution of OneTaste co-founder Nicole Daedone and former sales leader Rachel Cherwitz. The case, which invokes human trafficking laws against meditation instructors, is emerging as a key test of the DOJ’s evolving priorities and its commitment to FBI reform.
The government’s attempt to introduce content from a Netflix documentary as trial evidence—journal entries created specifically for the streaming platform’s 2022 production—has already drawn scrutiny, particularly as the film predated the indictment by only a few months. With allegations of FBI misconduct also mounting, this prosecution may soon face the same intense DOJ oversight that recently rocked the Southern District of New York (SDNY).
Mounting Evidence of FBI Misconduct
A formal complaint filed with multiple federal oversight bodies by OneTaste’s legal team—led by former senior DOJ prosecutor Paul Pelletier—alleges a “pervasive pattern of prejudicial investigatory misconduct.” The 36-page document details allegations against FBI Special Agent Elliot McGinnis, including:
Participation in Netflix productions while investigating targets
Instructing witnesses to delete evidence
Using personal email accounts to evade oversight
Filing misleading affidavits
Suppressing Brady material
Illegally obtaining and utilizing attorney-client privileged materials
Despite defense motions for dismissal and requests for an evidentiary hearing into the FBI’s conduct, EDNY trial judge Diane Gujarati has thus far declined to intervene. However, with the expected confirmation of incoming FBI Director Kash Patel, this case could soon find itself under heightened scrutiny. Patel, whose nomination cleared the Senate Judiciary Committee on February 13, has signaled a commitment to rooting out political bias within the bureau. Senator Chuck Grassley, in supporting Patel’s confirmation, characterized the FBI as being “badly infected with political decision-making” and emphasized the need for transparency and accountability.
The SDNY Shake-Up and Its Implications for EDNY
The upheaval in the SDNY provides a stark warning to EDNY prosecutors. On February 10, Acting Deputy Attorney General Emil Bove ordered SDNY to dismiss corruption charges against New York City Mayor Eric Adams, citing two primary concerns: improper interference with Adams’ 2025 reelection campaign and the diversion of prosecutorial resources away from violent crime and immigration violations.
This decision ignited a firestorm within SDNY, culminating in the resignation of Acting U.S. Attorney Danielle Sassoon after she appealed directly to Attorney General Pam Bondi. DOJ officials responded swiftly, accusing Sassoon of pursuing a “politically motivated prosecution” based on “aggressive” legal theories. The Adams case was subsequently reassigned to DOJ headquarters in Washington, D.C., and seven SDNY prosecutors were terminated in the fallout.
SDNY’s long-standing reputation for operating with relative independence—often referred to as the “Sovereign District of New York”—appears to be a thing of the past under the current DOJ. EDNY prosecutors, who have historically enjoyed similar autonomy, now face the prospect of increased oversight as they navigate this high-profile case.
The Human Trafficking Paradox
On February 5, Attorney General Bondi issued directives instructing federal prosecutors to focus on “the most serious, readily provable offenses,” emphasizing illegal immigration, transnational crime, and human trafficking. Yet, as this directive takes effect, EDNY prosecutors continue to invest significant resources in a novel, single-count forced labor conspiracy case against wellness educators under the Trafficking Victims Protection Act (TVPA). The government’s untested theory of “coercive control” as a form of trafficking has drawn criticism from legal experts, who argue that it blurs the distinction between social pressure and criminal coercion.
The case against OneTaste presents a paradox: at a time when the DOJ is pivoting towards dismantling actual human trafficking operations, EDNY’s six-year-long pursuit of this prosecution may soon come under question. The precedent set by the SDNY shake-up suggests that DOJ leadership is willing to intervene aggressively when a prosecution is deemed misaligned with national priorities.
A Trial Under Increasing Pressure
With jury selection set to begin on May 5, 2025, the ground beneath the OneTaste prosecution is shifting rapidly. Judge Gujarati’s refusal to schedule additional pre-trial conferences suggests confidence in the case, but the broader DOJ realignment paints a different picture.
The question now is not just whether this case will proceed to trial, but whether EDNY prosecutors will maintain their current course in the face of growing federal scrutiny. As the DOJ consolidates control over its regional offices and refocuses its priorities, EDNY must weigh its prosecutorial independence against the new realities taking shape in Washington. If SDNY’s recent upheaval serves as any indication, the days of unchecked autonomy for federal prosecutors in New York may be numbered.
U.S. v. Cherwitz, et al., No. 23-cr-146 (DG) (E.D.N.Y.)
https://natlawreview.com/article/netflix-content-becomes-federal-evidence-ednys-onetaste-prosecution-faces-scrutiny
OIG complaint regarding FBI Agent Misconduct
Opioids and Common Law Liability for Indirect Economic Harm
Earlier this month, the Law Court weighed in on a hot-button legal issue—the potential liability of opioid manufacturers for the costs of the drug epidemic. In Eastern Maine Medical Center v. Walgreen Company, the Law Court affirmed a decision granting a motion to dismiss hospitals’ claims for negligence, public nuisance, unjust enrichment, fraud and negligent misrepresentation, fraudulent conspiracy, and civil conspiracy. The Court’s opinion reinforced several important principles circumscribing the scope of potential liability for economic harm under the common law.
The basic theory of the complaint was that various opioid sellers (pharmaceutical manufacturing and sales companies, and retail pharmacies and distributors) had created an epidemic of opioid misuse that required the plaintiff hospitals to incur high costs that were only partially reimbursed.
Before reaching the merits of the complaint, the Law Court first addressed Maine Rule of Civil Procedure 8, which requires a “short and plain statement” of a plaintiff’s claim. The complaint was anything but short—it was 509 pages, with over 1,800 paragraphs. Without resolving the case on this basis, the Law Court noted that the complaint was “decidedly not short or plain,” but was instead unnecessarily filled with “eye-watering detail” and repetition that would justify dismissal of the complaint. The Court’s discussion is an important reminder, in an age where complaints are growing (needlessly) ever longer, that Rule 8’s limitations have real teeth.
On the merits, the Court concluded—in an admirably concise opinion—that the hospitals’ theories of liability were insufficient because the hospitals had not directly suffered the harm allegedly caused by the opioid sellers. Instead, they had suffered only indirect and purely economic harm. Importantly, the Court observed that
[A]n actor has no general duty to avoid the unintentional infliction of economic loss on another.
Among the notable limits to economic liability reaffirmed by the Law Court were the following:
Under principles of duty and proximate causation, a hospital cannot assert an independent negligence claim to recover the costs of treating a victim injured by a negligent act.
A claim for fraud, fraudulent concealment, or negligent misrepresentation cannot be maintained absent a good faith allegation of reliance on the misrepresentation.
A public nuisance claim can be maintained by a private plaintiff only if the nuisance “infringe[d] on a right particular to the plaintiff” and “cause[d] injury different in kind from the injury to the public generally”—requirements that are not satisfied when the claim is based on widespread economic injury broadly affecting the public.
Given the increasing prevalence of negligence, fraud, and public nuisance claims for alleged instances of widespread harm, EMMC will provide an important guidepost for both plaintiffs and defendants in cases involving private causes of action. Time will tell whether it will cause such injuries to be addressed primarily through actions by government officials on behalf of the public.
Even Privilege Logs Can Be Privileged Under the Fifth Amendment
On January 28, 2025, the U.S. Court of Appeals for the Ninth Circuit issued a significant ruling reinforcing the Fifth Amendment’s protection against self-incrimination and clarifying the attorney-client privilege in the context of grand jury subpoenas.
In In Re Grand Jury Subpoena, 127 F.4th 139 (9th Cir. 2025), the Ninth Circuit held that counsel cannot be compelled to provide a privilege log delineating all documents a client previously sent to counsel for the purpose of obtaining legal advice unless and until the court conducts an in camera review of the documents at issue to determine whether the Fifth Amendment right against self-incrimination, as announced in Fisher v. United States, 425 U.S. 391 (1976), applies.[1]
The decision further defines the limits of government subpoenas in criminal investigations and clarifies when privilege logs themselves may be shielded from disclosure. This ruling has far-reaching implications for attorneys, clients, and government investigations, particularly in white-collar, tax fraud and corporate compliance matters.
Fisher v. United States: Fifth Amendment Protections for Document Production
The Ninth Circuit’s ruling relied upon the Supreme Court’s decision in Fisher v. United States, which laid the foundation of the “act of production” doctrine, governing the Fifth Amendment’s protection against self-incrimination in the context of document production.[2]
In Fisher, the Court held that, while the Fifth Amendment protects against compelled testimonial communication, it does not automatically shield pre-existing documents from disclosure. The Court reasoned that documents voluntarily created before a subpoena is issued are not “compelled testimonial” communication because they were not prepared under government coercion.[3]
The Court also clarified that attorney-client privilege does not extend to pre-existing documents that a client could have been forced to produce had they remained in the client’s possession.[4] Although attorney-client privilege protects confidential communications between a client and their lawyer, it does not transform otherwise discoverable records into privileged material.
However, the Supreme Court recognized that the act of producing documents can be “testimonial” if it forces a person to admit the existence, authenticity, or control of the documents.[5] In such cases, the Fifth Amendment may protect against compelled production, and the attorney-client privilege extends that protection to attorneys who possess documents on behalf of their client. Despite this protection, the Court also introduced the “foregone conclusion” exception, which allows the government to compel the production of documents if it can independently prove their existence, authenticity, and the individual’s possession of them.[6]
The Ninth Circuit’s Decision: When Privilege Logs are Protected
In In Re Grand Jury Subpoena, the Ninth Circuit clarified that Fisher extends beyond the production of documents to the content of privilege logs delineating documents withheld on the basis of privilege.[7]
The case arose from a grand jury investigation into an alleged tax evasion scheme. The government subpoenaed an individual, who declined to testify or produce documents, citing the Fifth Amendment. The government then subpoenaed a law firm that had previously represented the individual in connection with tax matters, demanding that the law firm produce documents related to its representation and prepare a privilege log listing any documents the firm withheld from its production. The law firm refused, asserting that production of the privilege log would violate the client’s Fifth Amendment rights. The district court disagreed and ordered the firm to comply.[8]
On appeal, the Ninth Circuit reversed, holding as a matter of first impression that a privilege log is protected under the Fifth Amendment if its production would confirm incriminating details about the existence, authenticity, or control of the documents.[9] The court reasoned that a privilege log can confirm facts the government cannot independently prove, making it potentially self-incriminating and protected under the Fifth Amendment. Because Fisher shields attorneys from producing documents their clients could not be compelled to provide, the court ruled that a privilege log—which would effectively reveal and confirm the existence and client’s custody of those same documents—may also be protected.[10]
The Ninth Circuit also rejected the government’s argument that the privilege log could be compelled under the “foregone conclusion” exception.[11] The government failed to independently establish the existence, authenticity, and control of the documents, meaning that compelling the privilege log would improperly force the client to provide self-incriminating testimony. To ensure courts properly apply Fisher, the Ninth Circuit further held that a district court must conduct an in camera review—a private judicial examination of the withheld documents—before ordering the production of the privilege log.[12]
Practical Implications
By recognizing that privilege logs can be testimonial, the decision strengthens Fifth Amendment protections and ensures that attorneys cannot be compelled to indirectly confirm the existence of incriminating documents.
The government is prevented from using privilege logs as a backdoor method to obtain knowledge of incriminating evidence that it could not otherwise access.
This case reiterates the importance of closely monitoring attorney-client privilege obligations and potential Fifth Amendment privilege issues when responding to a government subpoena.
ENDNOTES
[1] In Re Grand Jury Subpoena, 127 F.4th 139 (9th Cir. 2025).
[2] Id. at 142–43 (citing Fisher v. United States, 425 U.S. 391, 404–05 (1976).
[3] Fisher, 425 U.S. at 409–10.
[4] Id. at 404–05.
[5] Id. at 410–11.
[6] Id. at 411.
[7] 127 F.4th at 143–44.
[8] Id. at 142.
[9] Id. at 144–45.
[10] Id.
[11] Id.
[12] Id. at 145–46.
NewsBank Hit with Class Action over Employee Data Breach
Last week, a class action was filed against NewsBank, Inc., a Florida-based news database company, related to a 2024 breach of employee personal information.
NewsBank provides a database of archived news publications utilized by libraries, higher education institutions, and other organizations. NewsBank suffered a security incident affecting its employees’ personal information between June and July 2024.
The lead plaintiff claims that, as an employee of NewsBank from January 2023 to November 2024, they were required to provide their personal information (i.e., name, date of birth, Social Security number, and financial account information) as part of their employment.
The lead plaintiff alleges they now face a heightened risk of identity theft due to the breach. The complaint states, “Plaintiff and class members must now and for years into the future closely monitor their medical and financial accounts to guard against identity theft. The risk of identity theft is not speculative or hypothetical but is impending and has materialized as there is evidence that the plaintiff’s and class members’ private information was targeted, accessed, has been misused, and disseminated on the dark web.” The lawsuit alleges claims of negligence, breach of implied contract, and breach of fiduciary duty.
Additionally, the lawsuit alleges that NewsBank failed to follow its policies, including those outlined in its website Privacy Policy, stating that NewsBank had implemented security procedures to protect personal information from unauthorized access, use, and disclosure.
The class seeks over $5 million in damages and injunctive relief, requiring NewsBank to implement enhanced security measures and provide affected individuals with lifetime identity theft protection services. The complaint alleges that “[o]nce private information is exposed, there is virtually no way to ensure that the exposed information has been fully recovered or contained against future misuse [. . . ] For this reason, plaintiff and class members will need to maintain these heightened measures for years, and possibly their entire lives, as a result of defendant’s conduct.”
The Supreme Court Gears Up to Resolve Circuit Split on Class Injury Requirements
On January 24, 2025, the Supreme Court granted certiorari in Laboratory Corp. of America v. Davis, No. 24-0304, which may result in the resolution of a long-standing circuit split on a dispute key to class certification. In its petition for writ of certiorari, petitioner Labcorp sought Supreme Court review of an issue that has divided federal circuit courts: what should courts do when a putative class contains numerous members who lack any Article III injury?
The underlying class action was filed against Labcorp, a leading clinical diagnostic laboratory, alleging that Labcorp’s self-service check-in kiosks, which are not independently accessible to blind individuals, violate the Americans with Disabilities Act (ADA) and California’s Unruh Act. The standing issue concerned how many members of the class were actually injured—Labcorp presented evidence that a significant percentage of visually-impaired patients were either unaware of or did not intend to use the self-service kiosks, preferring to check in with the front desk. Despite these standing issues, and applying existing Ninth Circuit law, the district court in the underlying action certified the class and the Ninth Circuit affirmed.
In its petition for certiorari, Labcorp identified three Circuit blocs that answer the question of absent class member injury in different ways: (1) “the Article III Circuits,” which deny class certification where the class includes members who have suffered no Article III injury; (2) “the De Minimis Circuits,” which apply Federal Rule of Civil Procedure 23(b)(3) and not Article III to reject classes where there are more than a de minimis number of uninjured members; and (3) “the Back-End Circuits” (including the Ninth Circuit), which do not deny class certification based on Article III issues with uninjured class members and only deny class certification under Rule 23(b)(3) if the class contains a large number of uninjured members.
The Supreme Court granted certiorari on the question: “Whether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.” Notably, both the district court and Ninth Circuit’s decisions were unpublished. This suggests that the Court is likely poised to address the Circuit split and provide a definitive answer to the question whether any or many uninjured class members may be encompassed within a class in at the time of class certification. An answer restricting class certification to those who suffered harm from the alleged legal violation would be a game-changer for defendants facing lawsuits challenging practices that affect few people but present large potential exposure—such as those under the ADA and those concerning labels on consumer products that do not drive consumer purchasing decisions.
Navigating Text Messages in Discovery
In We The Protesters, Inc., et al., v. Sinyangwe et. Al, the Southern District of New York was recently called upon to resolve a discovery dispute that, according to the Magistrate Judge, “underscore[d] the importance of counsel fashioning clear and comprehensive agreements when navigating the perils and pitfalls of electronic discovery.” More specifically, the court was determining whether, without an express agreement between the parties’ counsel in place, plaintiffs could properly redact text messages based on responsiveness.
We The Protesters, Inc. Background
The litigation arose from a business divorce between the founders of nonprofit Campaign Zero. Plaintiffs’ complaint asserted 17 causes of action for inter alia, trademark infringement, unfair competition, misappropriation, and conversion. Defendants counterclaimed, accusing plaintiffs of copyright infringement, trademark infringement, cyberpiracy, and unfair competition.
In March 2024, the Hon. John P. Cronan granted in part and denied in part plaintiffs’ motion to dismiss three of defendants’ counterclaims. Discovery proceeded and the current dispute came to light after the parties exchanged productions of text messages and direct messages from a social media platform.
In drafting the operative discovery protocol, the parties agreed to collect and review all text messages in the same chain on the same day whenever a text within the chain hit on an agreed-upon search term. (Dkt. No. 64 at 1 & Ex. A). Plaintiffs understood this to mean they needed to produce only the portions of the messages from the same-day text chain that were responsive or provided context for a responsive text message.
Defendants had a different understanding, claiming the entire same-day text chain must be produced in unredacted form. Upon reviewing plaintiffs’ production, defendants objected and claimed plaintiffs’ unilateral redaction of these text messages was improper. Following an unsuccessful meet and confer, defendants filed a letter-motion seeking to compel production of unredacted copies of all text messages in the same chain that were sent or received within the same day. Plaintiffs responded, contending their redactions were proper and, in the alternative, seeking a protective order.
Discussion
Text Messages in Discovery
The court’s decision began with the observation that text messages are an increasingly common source of relevant and often critical evidence in 21st century litigation.[1] According to the court, text messages do not fit neatly into the paradigms for document discovery embodied by Rule 34 of the Federal Rules. Although amended in 2006 to acknowledge the existence of electronically stored information (ESI), i.e., email, the rules were crafted with different modes of communication in mind. Unlike emails, with text messages each text or chain cannot necessarily be viewed as a single, identifiable “document.”
And so, the issue is whether, for discovery purposes, each text message should be viewed as its own stand-alone “document”? Or is the relevant “document” the entire chain of text messages between the custodian and the other individual(s) on the chain, which could comprise hundreds or thousands of messages spanning innumerable topics?[2]
As the opinion notes, federal courts have adopted different approaches with respect to text messages. Some courts, including the Southern District of New York, suggest that a party must produce the entirety of a text message conversation that contains at least some responsive messages.[3] By contrast, other jurisdictions, like the Northern District of Ohio, hold “the producing party can unilaterally withhold portions of a text message chain that are not relevant to the case.”[4] “Still other courts have taken a middle ground.”[5]
Against this backdrop, the court noted that litigants are free to—and are well-advised to—mitigate the risk of this uncertain legal regime by agreeing on how to address text messages in discovery. Rule 29(b) specifically affords parties the flexibility to design their own, mutually agreed upon protocols for handling discovery, but “encourage[s]” counsel “to agree on less expensive and time-consuming methods to obtain information.”[6] Such “‘private ordering of civil discovery’” is “‘critical to maintaining an orderly federal system’” and “‘it is no exaggeration to say that the federal trial courts otherwise would be hopefully awash.’”[7]
The court noted a party may think twice about insisting on the most burdensome and costly method of reviewing and producing text messages for its adversary if it knows it will be subject to the same burden and cost. In general, the parties are better positioned than the court to customize a discovery protocol that suits the needs of the case given their greater familiarity with the facts, the likely significance of text message evidence, and the anticipated volume and costs of the discovery.[8]
Resolution Where Agreement is Incomplete
Here, the court noted the parties negotiated an agreement regarding the treatment of text messages. However, the agreement was incomplete. According to the court, email exchanged between the parties, along with the parties’ summary of the verbal discussions that took place show agreement that (1) discovery would include text messages; (2) specific search terms would be used to identify potentially responsive text messages; and (3) when a search term hit on a text message, counsel would review all messages in the same chain sent or received the same day, regardless of whether the text message that hit on the search term was responsive. The parties both produced responsive text messages in the form of same-day text chains, manifesting mutual assent that a same-day chain represented the appropriate unit of production. However, the parties’ agreement did not explicitly address whether, in producing those same-day text chains, texts deemed irrelevant and non-responsive would be redacted or, instead, the chains needed to be produced in their entirety. It was that failure that caused the instant dispute.
In resolving the dispute, the court viewed the issue through the prism of the parties’ prior agreement, discussions, and lack of discussions. The court indicated its task was not to determine the “right answer” to the redaction question in the abstract, but rather how to proceed with an agreement that was unknowingly incomplete. The court identified its task as akin to filling a gap in the parties’ incomplete agreement.[9]
In completing its task, the court noted the familiar principle of contract law that “contracting parties operate against the backdrop” of applicable law which, in this context, was supplied by Al Thani — the leading case in the Southern District on the issue of redactions from text messages and one authored by the presiding district judge in this litigation. Al Thani holds squarely that “parties may not unilaterally redact otherwise discoverable” information from text messages for reasons other than privilege.[10] Yet that is precisely what plaintiffs did.
The court further relied upon Judge Aaron’s decision in In re Actos Antitrust Litigation as instructive. In Actos, the issue involved “email threading,” i.e., the production of a final email chain in lieu of producing each separate constituent email. Specifically, a discovery dispute arose because defendants made productions “using email threading even though the Discovery Protocol, by its terms, did not permit such approach.”[11] Judge Aaron rejected defendants’ unilateral decision to use threading, explaining “if the issue had been raised when the parties were negotiating the Discovery Protocol, Plaintiffs may have been able to [avoid the issue], however, Plaintiffs were not provided the opportunity to negotiate how email threading might be accomplished in an acceptable manner.”[12] The court declined to impose threading on plaintiffs.
Here, the court found the Actos reasoning persuasive. If plaintiffs wanted to redact their text messages, it was incumbent upon them to negotiate an agreement to that effect or, in the absence of agreement, resolve the issue with the court before defendants made their production. Accordingly, as in Actos, the court construed the absence of a provision in the parties’ agreement allowing redaction of text messages to preclude plaintiffs from unilaterally redacting.
Considerations for Text Message Discovery
We The Protesters, Inc., is an important reminder of a few things. First, text messages and other forms of mobile instant messages are a critical form of evidence in today’s litigation. Any discovery protocol should address preservation, production, and potential redactions to that ESI. Additionally, given the cost and burden attendant to ESI, parties should leverage Rule 29(b) and fashion their own, mutually agreeable protocols for handling discovery, with an eye toward proportionality and efficiency. Finally, cooperation and communication are key in litigation. When in doubt, consider picking up the phone to opposing counsel. Here, had plaintiff confirmed its intention to redact content prior to production, much effort and cost may have been avoided.
[1] Mobile phone users in the United States sent an estimated 2 trillion SMS and MMS messages in 2021, or roughly 5.5 billion messages per day, a 25-fold increase from 2005. SMS and MMS messages represent only a subset of the universe of mobile instant messaging, or MIM, which also includes other means of messaging via mobile phones. MIM, in turn, does not account for the vast volume of instant messages, or IM, sent on computer-mediated communication platforms. The use of IM and MIM “has become an integral part of work since COVID-19.” Katrina Paerata, The Use of Workplace Instant Messaging Since COVID-19, Telematics and Informatics Reports (May 2023).
[2] After all, an email chain is typically confined to a single subject, whereas a single text chain can read more like a stream of consciousness covering countless topics.
[3] Lubrizol Corp. v. IBM Corp., (citing cases); see also Al Thani v. Hanke (noting the general rule that parties may not unilaterally redact otherwise discoverable documents for reasons other than privilege,) id. at *2; see also Vinci Brands LLC v. Coach Servs., Inc. (following Al Thani).
[4] Lubrizol at *4 (citing cases from various jurisdictions that follow this approach).
[5] Id. (citing cases from such jurisdictions).
[6] Id. 1993 Adv. Comm. Note.
[7] Brown v. Hearst Corp. (quoting 6 Moore’s Federal Practice § 26.101(1)(a)).
[8] See generally Jessica Erickson, Bespoke Discovery, 71 Vand. L. Rev. 1873, 1906 (2018) (“Parties should have more information than judges about the specific nature of their disputes and thus should be in a better position to predict the types of restrictions that will be appropriate.”).
[9] See In re World Trade Center Disaster Site Litig. (“In limited circumstances, a court may supply a missing term in a contract.”); Adler v. Payward, Inc.(“[C]ourts should supply reasonable terms to fill gaps in incomplete contracts.”) (citation omitted).
[10] Al Thani at *2.
[11] Id. at 551.
[12] Id.
Seventh Circuit Clarifies Plaintiffs’ Evidentiary Burden in FLSA Cases
In Osborn v. JAB Management Services, Inc., No. 24-1573 (January 22, 2025), the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s entry of summary judgment in favor of an employer on a former employee’s overtime claims under the Fair Labor Standards Act (FLSA), finding her testimony regarding the hours she worked insufficient to raise an issue of material fact.
The Seventh Circuit’s decision clarifies the evidence nonexempt employees must present to create a jury question as to whether they worked uncompensated overtime.
Quick Hits
The FLSA requires employers to pay nonexempt employees—including those paid on a salary basis—overtime for all hours worked beyond forty in any workweek.
The district court, applying a “just and reasonable inference” standard, found that an employee who had not tracked her time worked over forty hours and relied on her testimony of the duties performed to support her overtime claims had not presented evidence sufficient to overcome an order of summary judgment for the employer.
On appeal, the Seventh Circuit affirmed summary judgment for the employer, stating that Federal Rule of Civil Procedure 56 governs summary judgment, and the more lenient “just and reasonable inference” standard for calculating damages applies after a plaintiff meets the initial burden of establishing liability.
Background
Tara Osborn was a longtime employee of JAB Management Services, which contracts with other entities to provide prison healthcare. At the time of her termination of employment, Osborn was a technical support specialist providing on-call support regarding inmate medical records. The technical support specialist is a fully remote, salaried nonexempt position. Osborn was free to design her own schedule, although typical business hours ran from 8:00 a.m. to 5:00 p.m.
Osborn admitted she did not track any time she worked over forty hours. JAB Management did not track her overtime either. Still, Osborn claimed to have worked an average of ten hours per day and fifteen hours of overtime per week. When asked to describe her work, Osborn stated she “had to work outside of normal business hours to take support calls, respond to emails, drive to client sites, and ‘patch servers,’” including irregular weekend work.
The Seventh Circuit noted that toward the end of her employment with JAB Management, Osborn’s supervisors stated she “failed to explain what she was working on throughout the day, yet she complained about having too much to do.” As a result, some of her tasks were reassigned to her coworkers, while Osborn’s supervisors coached her to correct her performance. When Osborn’s performance did not improve, JAB Management terminated her employment.
Osborn then sued JAB Management, alleging the company had failed to pay her overtime compensation as required by the FLSA. JAB Management moved for summary judgment. The district court, applying a “just and reasonable inference” standard, granted JAB Management’s motion, holding that Osborn had failed to “prove by a just and reasonable inference the amount and extent of work she performed.” Osborn appealed to the Seventh Circuit.
The Seventh Circuit’s Analysis
The Seventh Circuit first clarified that the burden of proof at summary judgment (governed by Federal Rule of Civil Procedure 56) differs from the “just and reasonable difference” standard, stating, “The just and reasonable inference standard ‘applies to damages questions only after an employee has met the initial burden to establish liability.’”
To establish liability, an employee who claims that he or she was not compensated for overtime in violation of the FLSA must present evidence of the hours worked, which can be established through the employee’s testimony. To survive summary judgment, the employee’s evidence must place the employee’s version of events beyond the level of mere speculation or conjecture. As the Seventh Circuit noted, “While employees need not describe their schedules ‘with perfect accuracy,’ they should be able to offer ‘testimony coherently describ[ing]’ their typical workweeks.”
When pressed for details on what she did for ten hours per day, Osborn responded vaguely that she worked on “[c]ustomer issues, the database, the reports, it is very labor intensive.” While Osborn claimed to have coworkers who could testify regarding her workload, she failed to offer their sworn testimony. The court found her claim of consistently working fifteen hours of overtime per week to be inconsistent with her reports of call volume declining over time and significant changes to her duties.
Citing Sixth and Eighth Circuit decisions in support, the Seventh Circuit held, “[T]he evidence [Osborn] has produced fails to provide us with even a general sense of her typical workweek.”
“If this claim survived summary judgment,” the court continued, “then any FLSA claim in which the employee vaguely describes her schedule as having exceeded forty hours per week would reach a jury.”
Key Takeaways
JAB Management clarifies the evidentiary burden employees must meet at the summary judgment stage of proceedings when alleging failures to pay overtime compensation under the FLSA. Like other circuits, the Seventh Circuit has held that conclusory estimates about an employee’s average workweek, without more, do not permit a trier of fact to conclude an employee worked overtime. Under the court’s holding, nonexempt employees claiming unpaid overtime have a burden of producing at least some admissible evidence of their specific overtime hours worked and the duties they allegedly performed during those hours.
Thinking Like a Lawyer: Agentic AI and the New Legal Playbook
In the 20th century, mastering “thinking like a lawyer” meant developing a rigorous, precedent-driven mindset. Today, we find ourselves on the cusp of yet another evolution in legal thinking—one driven by agentic AI models that can plan, deliberate, and solve problems in ways that rival and complement human expertise.
In this article, we’ll explore how agentic reasoning powers cutting-edge AI like OpenAI’s o1 and o3, as well as DeepSeek’s R1 model. We’ll also look at a technical approach, the Mixture of Experts (MoE) architecture, that makes these models adept at “thinking” through complex legal questions. Finally, we’ll connect the dots for practicing attorneys, showing how embracing agentic AI can boost profitability, improve efficiency, and elevate legal practice in an ever-competitive marketplace.
The Business of Law Meets Agentic Reasoning
Legal practice is as much about economics as it is about jurisprudence. When Richard Susskind speaks of technology forcing lawyers to reconsider traditional business models, or when Ethan Mollick highlights the way AI can empower us with a co-inteligence, they’re tapping into the same reality: law firms are businesses first and foremost. Profit margins and client satisfaction matter, and integrating agentic AI is quickly becoming a competitive imperative.
Still, many lawyers hesitate, fearing automation will erode billable hours or overshadow human expertise. The key is to realize that agentic AI, tools that can autonomously plan, analyze, and even execute tasks, don’t aim to replace lawyers. Instead, they empower lawyers to practice at a higher level. By offloading rote tasks to AI, legal professionals gain the freedom to focus on nuanced advocacy, strategic thinking, and relationship-building.
A Quick Tour: o1, o3, and DeepSeek R1
OpenAI’s o1: Laying the Agentic Foundation
Introduced in September 2024, o1 marked a significant leap forward in AI’s reasoning capabilities. Its defining feature is its “private chain of thought,” an internal deliberation process that allows it to tackle problems step by step before generating a final output. This approach is akin to an associate who silently sketches out arguments on a legal pad before presenting a polished brief to the partner.
This internal “thinking” has proven especially useful in scientific, mathematical, and legal reasoning tasks, where superficial pattern-matching often falls short. The trade-off? Increased computational demands and slightly slower response times. But for most law firms, especially those dealing with complex litigation or regulatory analysis, accuracy often trumps speed.
OpenAI’s o3: Pushing Boundaries
Building on o1, o3 arrived in December 2024 with even stronger agentic capabilities. Designed to dedicate more deliberation time to each query, o3 consistently outperforms o1 in coding, mathematics, and scientific benchmarks. For lawyers, this improvement translates to more thorough statutory analysis, contract drafting, and fewer oversights in due diligence.
One highlight is o3’s performance on the Abstraction and Reasoning Corpus for Artificial General Intelligence (ARC-AGI). It scores nearly three times higher than o1, underscoring the leap in its ability to handle abstract reasoning, akin to spotting hidden legal issues or anticipating an opponent’s argument.
DeepSeek R1: The Open-Source Challenger
January 2025 saw the release of DeepSeek R1, an open-source model from a Chinese AI startup. With performance on key benchmarks (like the American Invitational Mathematics Examination and Codeforces) exceeding o1 but just shy of o3, DeepSeek R1 has quickly attracted viral attention. Perhaps its biggest draw is cost-effectiveness: it’s reportedly 90-95% cheaper than o1. That kind of pricing is hard to ignore, especially for smaller firms or legal tech startups that need powerful AI without breaking the bank. DeepSeek R1’s open-source license also opens the door to customization: imagine a specialized “legal edition” any firm can adapt.
The market impact has been swift: DeepSeek R1’s launch catapulted its associated app to the top of the Apple App Store and triggered a sell-off in AI tech stocks. This frenzy underscores a critical lesson: the world of AI is volatile, competitive, and global. Law firms shouldn’t pin their entire strategy on a single vendor or model; instead, they should stay agile, ready to explore whichever AI solution best fits their needs.
How Agentic Reasoning Actually Works
All these models—o1, o3, and DeepSeek R1—share a common thread: agentic reasoning. They’re built to do more than just respond; they deliberate. Picture an AI “intern” that doesn’t just copy-and-paste from a template but weighs the merits of different statutes, checks your prior briefs, and even flags contradictory language before you finalize a contract.
But how do they manage this level of autonomy under the hood? Enter the Mixture of Experts (MoE) architecture.
Mixture of Experts (MoE) Architecture
Experts: Think of each expert as a specialized “mini-model” focusing on a single domain—perhaps case law parsing, contract drafting, or statutory interpretation.
Gating Mechanism: This is the brains of the operation. Upon receiving an input (e.g., “Draft a motion to compel in a federal product liability case”), the gating system selects the subset of experts most capable of handling that task.
The process is akin to sending your question to the right department in a law firm: corporate experts for an M&A agreement, litigation experts for a discovery motion. By activating only the relevant experts for a given task, the AI remains computationally efficient, scaling easily without ballooning resource needs. This sparse activation mirrors an attorney’s own approach to problem-solving; you don’t bring in your tax partner for a maritime dispute, and you don’t put your entire legal team on every single project.
For agentic reasoning, MoE models shine because they allow the AI to break down multi-faceted tasks into manageable chunks, using the best “sub-models” for each piece. In other words, the AI can autonomously plan which mini-experts to consult, deliberate internally on their advice, and then execute a cohesive final output, much like a senior partner synthesizing input from various practice groups into one winning brief.
Practical Impacts on Legal Workflows
Research and Drafting
Lawyers spend countless hours researching regulations and precedents. With agentic AI, that time shrinks dramatically. For instance, an MoE-based system could route textual queries to the “case law expert” while simultaneously consulting a “regulatory expert.” The gating mechanism ensures each question goes to the sub-model best suited to answer it. That means more accurate, tailored research in less time.
Document Review and Due Diligence
High-stakes M&A deals or massive litigation cases involve reviewing thousands of pages of documents. Agentic AI can quickly triage which documents to flag for deeper human review, finding hidden clauses or issues that might otherwise take an associate weeks to spot. The result? Faster, cheaper due diligence that can be billed in alternative ways: flat fees, success fees, or other value-based structures, enhancing client satisfaction and firm profitability.
Strategic Advisory
Perhaps the most exciting application is strategic planning. By running different hypothetical arguments or settlement options through an agentic model, attorneys can gain insights into possible outcomes. Imagine a “simulation-expert” sub-model that compares potential trial outcomes based on past jury verdicts, local court rules, and judge profiles. While final decisions rest with the lawyer (and client), AI offers a data-driven edge in deciding whether to settle, proceed, or counter-offer.
Profitability: Beyond the Billable Hour
One of the biggest hurdles to adopting AI is the fear that automated tasks will reduce billable hours. But consider how value-based billing or flat-fee arrangements can transform the equation. If AI cuts a 10-hour research task down to 2, you can offer clients a predictable cost and still maintain or even improve your margin. Clients often prefer certainty, and they value speed if it means resolving matters sooner.
Additionally, adopting agentic AI can allow your firm to take on more cases or offer new services, like real-time compliance monitoring or rapid contract generation. Scaling your practice to handle more volume without expanding headcount can be a powerful revenue driver.
The Human Element: Lawyers as Conductors
Agentic AI models are not a substitute for the judgment, empathy, and moral responsibility that define great lawyering. Rather, think of AI as your personal ensemble of experts, each playing a specialized instrument. You remain the conductor, guiding the orchestra to create a harmonious legal argument or transaction.
If anything, the lawyer’s role becomes more vital in an AI-driven world. Your expertise ensures the AI’s recommendations make sense in the real world of courts, regulations, and human relationships. Your ethical obligations and professional standards guarantee that client confidentiality is safeguarded, conflicts of interest are managed, and justice is served.
Closing Thoughts
The real paradigm shift here comes from recognizing how AI agents, powered by a Mixture of Experts architecture, can function like a fully staffed legal team, all contained within a single system. Picture a virtual army of associates, each specialized in key practice areas, orchestrated to dynamically route tasks to the right “expert.” The result? A law firm that can harness collective knowledge at scale, ensuring top-notch work product and drastically reducing turnaround times.
Rather than replacing human talent, this approach enhances it. Lawyers can channel their energy into strategic thinking, client relationships, and creative advocacy, those tasks that define the very essence of the profession. Meanwhile, agentic AI handles heavy lifting in research, analysis, and repetitive drafting, enabling teams to serve more clients, tackle more complex matters, and ultimately become more impactful and profitable than ever before.
Far from an existential threat, these AI advancements offer us the freedom to practice law at its best, delivering deeper insights with greater efficiency. In embracing these technologies, we build a future where legal professionals can make more meaningful contributions to both their firms and the broader society they serve.