Page 24 - John Hundley 2011

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Although the subject-matter waiver doctrine is well established in privilege law, the objecting
defendants sought to distinguish cases applying that doctrine on the grounds that they involved
disclosures in the litigation context rather than as part of a business negotiation. The court rejected the
proffered distinction. Moreover, the court emphasized previous case law to the effect that any assertion of
the privilege had to be construed “very narrowly”.

Next the defendants sought to rely upon their attorneys’ assertion of objections under the work-product
doctrine. However, making explicit a premise which always has been implicit in the origin of that doctrine,
the appellate panel held that the objection was without merit because “the documents were not
generated in preparation for trial or litigation.”

Several observations may be offered with respect to Center Partners.

First, the court ignored the “common interest” doctrine which we and a number
of other writers have thought would justify protection of such information-sharing,
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analogous to the “joint defense” application of the privilege in litigation.

Second, Center Partners by its terms says nothing about waiver by
information-sharing with the opposite side of a transaction during the “due
diligence” process. 3 However, given that information-sharing among joint
buyers was found to be waiver, disclosure of information from a seller to a
buyer necessarily would seem to be waiver in this court’s opinion.

Third, notably absent from the appellate panel’s analysis is any discussion of
the fiduciary exception to attorney-client privilege. Under that exception, when
the client asserting the privilege is a fiduciary of the person seeking it, courts often
find that the privilege is not effective. The fact pattern in Center Partners is extremely complex, and
perhaps that doctrine would not have applied to all of the discovery requests at issue, but some analysis
of the doctrine would have been helpful.

Fourth, Center Partners is likely to send shock waves through the offices of business transaction
lawyers, as they learn that their work product is not entitled to the same protection which extends to their
litigation partners. However, the panel is well-founded in its result on this point.

Lastly, the Center Partners panel expressly said that the waiver which it found did not go to “all
privileged communication and information as related to a particular business transaction” but only to “the
subject matter of the privilege that is already waived.” That distinction likely will provide gist for many
future arguments as to what the decision really means.

John\SharpThinking\#52.doc

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For more information on the subject-matter waiver doctrine, and alternatives thereto, the interested reader may wish to consult
Hundley, Waiver of Evidentiary Privilege by Inadvertent Disclosure – State Law, 51 A.L.R.5th §§ 9-11 (1997 with current supp.),
and Hundley, Waiver of Evidentiary Privilege by Inadvertent Disclosure – Federal Law, 159 A.L.R. Fed. 153 §§ 7-10 (2000 with
current supp.). Cf. Hundley, “Inadvertent Waiver” of Evidentiary Privileges: Can Reformulating The Issue Lead to More Sensible
Decisions?, 19 S.I.U.L.J. 263 (1995).
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See, e.g., Hundley, White Knights, Pre-Nuptial Confidences, and the Morning After: The Effect of Transaction-Related
Disclosures on the Attorney-Client and Related Privileges, 5 DePaul Bus. L.J. 59, 82-85 (1992-93).
3 See generally the White Knights article cited in n. 2.
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