Wunderlich-Malec Sys., Inc. v. Eisenmann Corp., No. 05 C 04343, 2006 WL 3370700 (N.D. Ill. Nov. 17, 2006) (Ashman, Mag. J.).

Magistrate Judge Ashman granted plaintiff’s motion to compel certain documents and held that defendant waived privilege as to certain documents it produced despite claiming attorney-client and work product privileges.  Defendant produced for inspection twenty two binders of documents, including four binders which defendant’s counsel had internally identified as privileged and did not intend to produce for inspection.  About six weeks after the inspection, defendant realized that it had provided certain of these documents to plaintiff and sought the return of seventeen pages from the four binders.  Then, over the next several weeks, defendant sought the return of the remainder of the produced documents from the four binders claiming that they contained privileged information or trade secrets unrelated to the case.  Plaintiff retained the bulk of the documents arguing that any privilege that existed had been waived by disclosure of the documents.  Defendant argued that the documents were disclosed inadvertently and should be returned.

The Court employed the Northern District’s standard three part test and found the privilege waived.  First, the Court assumed for purposes of the motion, without ruling upon the issue, that the documents for which defendant claimed privileged were privileged.  For those documents defendant claimed included trade secrets, the Court suggested defendant could seek a protective order, but noted that inclusion of trade secrets was not a basis to seek retraction of produced documents.

Second, the Court considered whether the disclosure was inadvertent.  The court held that the disclosure was not inadvertent because of defendant’s failure to produce a privilege log (prior to the request that plaintiff return the privileged documents) listing the supposedly inadvertently produced documents and because of the time it took for defendant to request the return of all of the documents after learning of the supposedly inadvertent disclosure.

Finally, the Court used the balancing test to determine that defendant had waived the privilege.  The court found that defendant’s precautions to prevent disclosure were not sufficient and that defendant did not act promptly to seek return of all of the produced documents.

Despite holding that the privilege was waived, the Court did not find a complete subject matter waiver, but instead limited the waiver to the specific documents at issue in the motion because a subject matter in this case would have been an essentially complete waiver of privilege and would have been to harsh for the facts of the case.

Practice tip:  Make sure to produce privilege logs as quickly as possible after producing documents.  The Court in this case repeatedly cites the lack of a privilege log as a factor weighing against defendant’s arguments.