The opinion of the court was delivered by: BLANCHE M. MANNING
This matter is before the court on the motion of defendants, Keck, Mahin and Cate, Brian McGinty and Wesley Walton, for reconsideration of the court's
ruling that information surrounding the business transaction that a third party firm client previously voluntarily authorized to be released to the Securities and Exchange Commission (hereafter "SEC") and the Attorney Registration and Disciplinary Commission (hereafter "ARDC") is no longer privileged because of the disclosure. In the alternative, defendants request that the court, pursuant to 28 U.S.C. 1292(b), certify for interlocutory appeal, the question of whether limited disclosures to the SEC and ARDC caused a general waiver of a client's privileges. For the reasons that follow the motion for reconsideration and, in the alternative, to certify the question is denied.
Defendants in this cause filed a motion to reconsider the Court's ruling that the client's voluntary disclosure of information surrounding a certain business transaction prohibits it from now claiming that the information is a secret. Defendants assert that the court's decision rests on the wrong notion that if the client has waived the attorney-client privilege by allowing limited disclosure to be made to ARDC and SEC, in response to plaintiff's claims, plaintiff may now use and disclose client information in pursuing her claims.
Erin Isaacson, a former associate attorney of defendants, filed a complaint in the district court alleging sex discrimination, intentional infliction of mental distress and retaliation in the termination of her employment by Keck, Mahin and Cate. Defendants filed a motion for an order protecting client confidences. Counsel for the parties were instructed by the court to attempt to agree to the terms of a protective order. The parties were in agreement with all terms of the protective order with the exception of provisions which would prevent plaintiff from disclosing her former firm client's confidences to her attorney, verbally or by way of writings, without prior client authorization.
On April 23, 1993, the district court entered the protective order which stated inter alia, that in accordance with the Illinois Rules of professional Conduct, no party shall disclose, inquire into or discuss any client confidence or secret to or with any person, including his/her attorneys, in the course of this litigation without prior authorization by the client. Any client confidence or secret which has already been disclosed by any party to any person, including his/her attorney or prior attorneys, shall not be further disclosed by or to any person in the course of this litigation without prior authorization by the client. On February 3, 1994, the agreed protective order was modified to include: "In any pleading, discovery document, court appearance or proceedings of any kind, the parties and their attorneys shall not seek or disclose client identities where such disclosure would reveal client confidences or secrets, or where such disclosure is gratuitous or merely incidental to the questions at issue."
In response to plaintiff's motion to compel, defendants asserted that plaintiff's attempt to disclose and use her former client's confidences and secrets in pursuit of her personal claims is particularly wrong because her claims caused the disclosures she now wants to use. Defendants further contended that plaintiff cannot avoid the basic ethical obligations to her former firm client by her belated filing of an ARDC charge and by her filing of this charge which prompted the SEC's investigation of her former firm client's transaction.
The court granted plaintiff's motion to compel disclosure and denied the motion for sanctions. The court found that defendants may not raise the defense that plaintiff was terminated for violating ethical policies while simultaneously claiming that all information concerning the firm's normal procedures with respect to past ethics violations are privileged. In citing Lorenz v. Valley Forge Ins. Co., 815 F.2d 1095, 1098 (7th Cir. 1987), the court applied the Seventh Circuit's rationale that if defendants rely on attorney-client communications to support their defense, the attorney-client privilege will be waived as to those communications and others pertaining to the same subject matter.
The court reasoned that defendants and their client cannot claim that information is not a secret" when dissemination of the information is beneficial to them and a "secret" when release of the facts is detrimental to them, citing In re Subpoenas Duces Tecum (D.C. Cir. 1984), 238 U.S. App. D.C. 221, 738 F.2d 1367. In In re Subpoenas Duces Tecum, 238 U.S. App. D.C. 221, 738 F.2d 1367, 1370, the court held a client cannot waive the attorney client privilege in circumstances where disclosure might be beneficial while maintaining it in other circumstances where nondisclosure would be beneficial.
Alternatively, the court in this case, held the information surrounding the business transaction is not a "secret" as defined by the Illinois Rules of Professional Conduct since the client who permitted release of the information in order to fend off the SEC, also permitted Keck, Mahin & Cate to use the information in order for the firm to respond to an ARDC investigation. The court further held that the facts do not meet the necessary threshold of "embarrassing" or "detrimental" under the Rules of Professional Conduct, since the client voluntarily released the information about the business transaction to the SEC and ARDC.
The first issue is whether the court's ruling presents a manifest error of law or fact or whether defendants presented newly discovered evidence to merit granting its motion for reconsideration. Motions for reconsideration serve a limited function:
"To correct manifest errors of law or fact or to present newly discovered evidence. Such motions cannot in any case be employed as a vehicle to introduce new evidence that could have been adduced during pendency... Nor should a motion for reconsideration serve as the occasion to tender new legal theories for the first time." Publishers Resource, Inc. v. Walker-Davis Publications, Inc., 762 F.2d 557, 561 (7th Cir. ...