Legal Action suit in Wis. Court of Appeals bears on privileged documents.

Byline: David Ziemer

A Wisconsin Court of Appeals decision issued on June 19 was not recommended for publication, but it is likely to be studied nonetheless, as it involves an issue important to all private attorneys -- the attorney-client privilege. Sandee Stadler was employed by Legal Action of Wisconsin, Inc., as a paralegal. After termination, she filed a complaint with the EEOC/ERD, alleging discrimination along with a union grievance. During an ERD proceeding, she attempted to introduce into evidence documents containing confidential client information. Legal Action then filed a complaint seeking a temporary restraining order ordering Stadler to return the documents to the agency, and alleging misappropriation of trade secrets. The same day, the circuit court granted the restraining order, and the documents were later returned by Stadler. In response, Stadler counterclaimed, alleging that the action was frivolous and sought sanctions. The trial court dismissed the trade secrets claim, concluding that Legal Action had an adequate remedy at law -- redaction of the names on the confidential documents by the administrative law judge. Legal Action did not appeal this ruling. The court also dismissed the counterclaim that sought sanctions. Stadler appealed, but the court of appeals affirmed, in a decision by Judge Ted E. Wedemeyer, Jr. The court concluded, "The trial court found that it was Stadler's actions with respect to the confidential documents, which forced Legal Action to file this lawsuit. There was no evidence that Legal Action filed the lawsuit to harass Stadler or for any other improper purpose. It is also clear from the record that, based on the case law at the time this lawsuit was filed, Legal Action had a reasonable basis for filing this suit and had factual support." Because Legal Action's suit was filed in response to Stadler's attempt to disclose confidential information, which she was not entitled to possess, the court concluded that the suit was filed by Legal Action to protect itself, rather than to harass Stadler, and affirmed.

What the court held Case: Legal Action of Wisconsin, Inc., v. Stadler, No. 2006AP1740. Issue: Is it frivolous to file a suit alleging misappropriation of trade secrets based on a former employee's possession of documents subject to the attorney-client privilege? Holding: No. At the time the suit was filed, the claim was tenable. Attorneys: For Appellant: Stadler, Sandee, pro se; For Respondent...