J.D. Edwards & Co. v. Podany

168 F.3d 1020 (7th Cir. 1999)

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Nature of the Case

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Facts

SNE manufactures windows. It hired P, to supply software for a project that SNE called PBS. While the transition to PBS was underway, there was a reorganization that made SNE one of three divisions of a corporation headed by Gary Massel. Massel knew D, an employee of Mercer, and asked him to do what is called in the consulting trade a 'sniff test' a very quick, light review of PBS. The fee was $10,000. D advised Massel that the basic approach that SNE had taken to streamlining its business, that of 'reengineering in parallel' and the leading role that it had assigned to P were unsound. D is not a software expert, and neither he nor his company had been retained to select software or offer a critique of the contract with P. D's advice had been sought at the business level. Reengineering in parallel fell within the scope of D's engagement. D advised Massel to stop installing P's software. P sued D arguing that this advice was outside the terms of the engagement and so outside the protection of the consultant's privilege. P was awarded $2.3 million, and D appealed.