Peerless Industries, Inc. v. Crimson AV, LLC
WRITTEN Opinion entered by the Honorable Susan E. Cox on 5/14/13: Defendants have filed a motion for an in-camera inspection of a particular document inadvertently produced by plaintiff [dkts. 230, 231]. Defendants seek a ruling that this document is discoverable, and not to be returned to plaintiff, because of the crime-fraud exception. We deny that request and find plaintiff's inadvertent disclosure did not waive the attorney-client privilege. (For further detail see minute order). Mailed notice (vkd, )
Order Form (01/2005)
United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge
Joan H. Lefkow
11 C 1768
Sitting Judge if Other
than Assigned Judge
Susan E. Cox
Peerless Industries, Inc. vs. Crimson AV, LLC
DOCKET ENTRY TEXT
Defendants have filed a motion for an in-camera inspection of a particular document inadvertently produced
by plaintiff [dkts. 230, 231]. Defendants seek a ruling that this document is discoverable, and not to be
returned to plaintiff, because of the crime-fraud exception. We deny that request and find plaintiff’s
inadvertent disclosure did not waive the attorney-client privilege.
O[ For further details see text below.]
Docketing to mail notices.
*Copy to judge/magistrate judge.
Defendants have filed a motion for an in-camera inspection of a particular document inadvertently
produced by plaintiff [dkts. 230, 231]. Defendants seek a ruling that this document is discoverable, and not to
be returned to plaintiff based on the inadvertent disclosure provision of the parties’ protective order, because of
the crime-fraud exception. We deny that request and find plaintiff’s inadvertent disclosure did not waive the
The crime-fraud exception “‘places communications made in furtherance of a crime or fraud outside the
attorney-client privilege.’”2 Courts recognize that when legal advice relates “‘not to prior wrongdoing, but to
future wrongdoing,’” the attorney-client privilege no longer applies.3 Essentially, the purpose of this exception
is to avoid the privilege being used to shield communications made for the commission of a fraud or a crime.
Here, defendants claim that this document demonstrates that the law firm representing plaintiff filed, and
continues to pursue, a lawsuit against defendants knowing that it is without legal merit. Defendants reference
portions of the document, arguing that plaintiff’s counsel recognized plaintiff did not have a strong patent
infringement claim, and noted that litigation would only “distract and delay” defendants entry into the market
place.4 But plaintiff’s potential improper goal in pursuing this case does not constitute a crime or fraud. Though
plaintiff’s counsel may have advised their client that it had a weak legal claim, we simply cannot stretch the
crime-fraud exception to reach to this type of circumstance.
Defendants also argue that it should be awarded sanctions pursuant to 28 U.S.C. § 1927, a statute that
allows sanctions when an attorney has pursued a claim that is without plausible legal or factual basis, or has
pursued a case that a “reasonably careful attorney” would have known to be unsound.5 But we also have no basis
upon which to find that plaintiff’s claims are “entirely without support.”6 “The statute sets a high bar of
misconduct before sanctions may be awarded by the court,” and we simply cannot say that even this statement
by plaintiff’s counsel has met that bar.7
We do acknowledge, however, that there is a claim that can be made when a party seeks not to obtain a
judgment but to “obtain a competitive advantage independent of the outcome of the case by piling litigation costs
11C1768 Peerless Industries, Inc. vs. Crimson AV, LLC
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on a competitor”: abuse of process, which is a tort suit.8
But a proceeding for an award of attorneys' fees is not a suit; it is a tail dangling from a suit. We
don't want the tail to wag the dog, and this means that an elaborate inquiry into the state of mind
of the party from whom reimbursement of attorneys' fees is sought should be avoided. It should
be enough to justify the award if the party seeking it can show that his opponent's claim or
defense was objectively unreasonable—was a claim or defense that a rational litigant would
pursue only because it would impose disproportionate costs on his opponent—in other words only
because it was extortionate in character if not necessarily in provable intention.9
We are aware of defendants’ concern throughout this litigation that the lawsuit was brought for an improper
purpose. We also accept for purposes of this motion that defendants believe this document may shed some light
on their concerns. But again, at this point in the litigation this single document acknowledging the weakness
of a legal claim does not support a finding that plaintiff brought a frivolous claim “in order to obtain an advantage
unrelated to obtaining a favorable judgment.”10
As noted by plaintiff, the inadvertently produced document provided that it was “Privileged and
Confidential; Attorney-Client Privileged; Attorney Work Product,” at the top of the page. Defendants promptly
contacted plaintiff to inform it of its error in producing the document. Now it is time for defendants to, pursuant
to the protective order in place between the parties, promptly return it to plaintiff.
1.See Fed.R.Evid. 502(b); see dkt. 40, ¶6.
2.Shaffer v. Am. Medical Ass’n, 662 F.3d 439, 447 (7th Cir. 2011)(quoting States v. BDO Seidman, LLP, 492 F.3d .
806, 818 (7th Cir. 2007).
3.Id. (quoting U.S. v. Zolin, 491 U.S. 554, 562-63 (1989).
4.Def’s mt. at 2, dkt. 231.
5.See Brandon v. Advanced Correctional Healthcare, Inc., 2010 WL 4705513, *1 (C.D. Ill. Nov. 12, 2010).
6.See id; see also Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, 626 F.3d 958, 962 (7th Cir.
2010)(finding “vexatious” conduct by the losing party can justify the award of attorneys’ fees to the winner).
7.See Nightingale Home Healthcare, 626 F.3d at 962.
8.Id. at 962 (discussing the difference between a tort action and a claim for attorneys fees under the Lanham Act).
9.Id. at 966 (analyzing the “exceptional case” provision under the Lanham Act).
11C1768 Peerless Industries, Inc. vs. Crimson AV, LLC
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