February 2010 | Earn one hour of MCLE Credit in Legal Ethics
Warming An Ethicist's Heart
The California Supreme Court reaffirms the importance of the lawyer-client privilege
©2010. All rights reserved.
Peck
“The [lawyer-client] privilege has been a hallmark of Anglo-American jurisprudence for almost 400 years … Its fundamental purpose ‘is to safeguard the confidential relationship between clients and their attorneys so as to promote full and open discussion of the facts and tactics surrounding individual legal matters … Although exercise of the privilege may occasionally result in the suppression of relevant evidence, the Legislature of this state has determined that these concerns are outweighed by the importance of preserving confidentiality in the attorney-client relationship.’” Justice Katherine Werdeger for the majority in Costco Wholesale Corp. v. Superior Ct. (2009) 47 Cal.4th 725, 740-741 (Costco).
California Joan’s heart leapt with joy as she read this passage, reaffirming the vital importance of the lawyer-client privilege in the California Supreme Court’s recent Costco opinion. [Yes, readers, reaffirmation of the traditional ethics principles warms the cockles of an ethicist’s heart.] In 2009, Cali mused, the lawyer-client privilege and attorney work product doctrine have been at the heart of a number of important court opinions.
Cali’s reflections were abruptly interrupted by a telephone call from Polly Porter, a litigation attorney for MegaCorp. “Cali! We’ve got an issue about the lawyer-client privilege in a pending wage and hour class action matter. Several years ago, we hired Larry Laborlaw, an expert in wage and hour law, to render an opinion about whether certain company managers in California were exempt from California’s wage and overtime laws. The 20-page opinion followed some interviews of our managers that MegaCorp made available to Larry.
“Fast forward to early 2009 when MegaCorp employees filed a class action against MegaCorp claiming that it had misclassified some of its managers as ‘exempt’ employees, thereby failing to pay the overtime wages due them under law. Plaintiffs seek production of this opinion letter. We have already objected on the ground of lawyer-client privilege and they have brought a motion to compel. I would like to go over the procedures with you.”
“These facts,” Cali said, “are virtually identical to the recent Costco case which held that the lawyer-client privilege attaches to an opinion letter addressed to a corporation, regardless of the content contained therein. (Id., pp. 739-740.) Any party claiming the lawyer-client privilege has a burden to establish the preliminary facts necessary to demonstrate that the communication was made in the course of an attorney-client relationship.
“Once those facts sufficient for a prima facie claim of privilege are demonstrated, the communication is presumed to have been made in confidence and the burden shifts to the opposing party to establish either that (1) the communication was not confidential or (2) the privilege does apply.” (Id., p. 741.)
“I thought a legal opinion would automatically be privileged. What more do I need to show?” asked Polly.
“In Costco, the court found that a prima facie case was met by showing that (1) Costco engaged a lawyer to provide legal advice; (2) the opinion letter was a communication between that attorney and Costco and, (3) the letter was confidential within the meaning of Evidence Code §952 (because it was information transmitted between a client and a lawyer by means which, so far as the client is aware, disclosed the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted,” Cali answered. (Id.)
“Does it matter whether the opinion letter was prepared in anticipation of litigation?” Polly asked.
“No! The privilege attaches to any legal advice rendered during the lawyer-client relationship,” Cali said. (Id.)
“Plaintiffs claim that the information concerning Laborlaw’s interview of MegaCorp’s managers was not privileged,” Polly explained. “Since this was included in the opinion, they assert the opinion is not privileged.”
“If the document is privileged, discovery of the entire communication is barred regardless of the inclusion of unprivileged material,” Cali said. “As the Supreme Court pointed out, the privilege protects the transmission of information; therefore a privileged document does not become unprivileged due to the inclusion of information that is otherwise discoverable. Accordingly, the inclusion of material about Laborlaw’s interview with the employees should not render the opinion unprivileged.” (Id., pp. 741-742.)
“Plaintiffs claim that Laborlaw was acting as a fact finder rather than a lawyer and therefore there is no privilege. Are they right?” Polly asked.
“If MegaCorp’s dominant purpose in retaining Laborlaw was for another purpose than to obtain a legal opinion or advice, then the privilege does not attach to a communication. For example, where a lawyer is acting primarily as a negotiator or is providing business advice, the privilege may not apply,” Cali responded. “By contrast, in Costco, the lawyer’s primary purpose was to render a legal opinion. Even though the factual investigation was done, it was for the purpose of rendering legal advice. Therefore, the entire communication, including the recitation of facts which would otherwise be discoverable by other means, is privileged and its disclosure may not be compelled.” (Id., p. 743.)
“How should we respond to the plaintiffs’ claims that, if in doubt, the court should examine the opinion in camera to rule on whether it is privileged?” Polly wondered.
Cali explained that because there is much confusion on this issue, Costco clarified what courts can and cannot do:
- Evidence Code §915 prohibits a court from requiring disclosure of information claimed to be subject to the lawyer-client privilege in order to rule on the claim of privilege. The court reiterated that courts cannot ignore §915 by ordering in camera disclosure of the materials claimed to be subject to the lawyer-client privilege to evaluate the basis for the claim of privilege. (Id., pp. 743-744.)
- A court may order disclosure or examination of other information to permit the court to evaluate the basis of the claim for lawyer-client privilege; or review facts asserted as the basis for the privilege to evaluate (1) whether the lawyer-client relationship existed at the time the communication was made; or (2) whether the client intended the communication to be confidential or whether the communication emanated from the client.
- A party may voluntarily disclose in camera (1) the content of a communication claimed to be privileged to respond to an argument or tentative decision that the communication is not privileged; or (2) after a ruling that an exception to the privilege applies, to dissuade the court from ordering disclosure of other confidential or private information in the communication which bears no relevance to the litigation.” (Id., pp. 743-744.)
“This really helps for my papers and argument,” Polly said. “But, suppose the court rules against MegaCorp’s claims of privilege. Will I have to show irreparable harm at the appellate courts to obtain relief?”
“No!” Cali exclaimed. “Costco held that because an erroneous order disclosing lawyer-client privileged material threatens the confidential lawyer-client relationship, relief is required without demonstration of irreparable harm or prejudice by release of the privileged information. (Id., pp. 746-747.)
Just as Polly was finishing up, Cali’s partner Meryl Terpitude slunk into the office, slouched into her “client” chair and recounted his tale of woe:
“For five years, Paul Plaintiff worked as a sorter and packager at Acme Concrete. Paul claimed that he sustained injuries to internal organs, became ill with asthma, asthma reactive airways disease and interstitial pulmonary fibrosis as a result of workplace exposure to hundreds of toxic chemicals. Paul then retained me to bring a personal injury action against Acme Concrete and 14 other defendants, which alleged that defendants ‘produced, refined, mixed, formulated, developed, researched, tested, inspected, manufactured, labeled, advertised, warranted, marketed, recommended, sold, distributed and delivered’ toxic chemicals.
“Another defendant, Beta Plastics, retained Derrick Defender to defend it. Beta, Acme and the other defendants entered into a Joint Defense and Costs Agreement, wherein all defense lawyers agreed to share work product for their common defense without waiving the attorney-client privilege. During the course of the litigation, Derrick had countless meetings with his fellow defense counsel concerning the matter.
“About two years ago, the trial court entered summary judgment against Paul and for the defendants. We appealed. During the appeal, I hired Derrick to work for this firm. Then the Court of Appeal reversed the judgment and remanded the case to the trial court. Beta settled. Acme just moved to disqualify the firm.
“Since Acme never had a lawyer-client relationship with Derrick, I think we can argue that Acme has no standing to bring a disqualification motion,” Meryl said hopefully.
“Meryl, what were you thinking in bringing Derrick into our firm before the case was resolved?” Cali asked. “Your case has the same facts as Meza v. Muehlstein & Co. (2009)176 Cal. App. 4th 969 which disqualified the plaintiff’s law firm that employed the former defense counsel.”
While Meryl blanched and sank lower into the chair, Cali continued: “In that case, the court held that the non-client defendants did have standing to bring a disqualification motion if they had an interest in protecting confidential attorney work product disclosed to Derrick during the time he participated in joint defense efforts. (Id., p. 981.)
“Under the common interest doctrine, a lawyer may share work product with another lawyer representing a different client without waiving the attorney work product privilege if (1) the disclosure pertains to a common interest of the lawyers’ respective clients; (2) the disclosing lawyer has a reasonable expectation that the other lawyer will maintain confidentiality; and (3) the sharing of information is reasonably necessary for the accomplishment for the representation. If Acme establishes these elements, it has standing to protect the confidentiality of attorney work product which was disclosed to Derrick, and by reason of his employment with this firm, is now imputed to you,” Cali said. (Id., pp. 981-983.)
“The court also rejected an argument that the defendants, including Acme, waived confidentiality by sharing work product and privileged material with Beta and other defendants,” she added. “Finally, the court disqualified the plaintiff’s lawyer who retained the former defendant’s prior lawyer, since the latter lawyer had acquired all of defendants’ confidential information which was imputed to the plaintiff’s lawyer upon employment. Even though at the time of the disqualification motion, the former defendants’ lawyer was no longer employed by plaintiff’s counsel’s law firm and even though that lawyer claimed that he did not transmit any information to plaintiff’s lawyer, disqualification was ordered,” Cali concluded. (Id., pp. 978-980, 982-983.)
After Meryl cleared his throat, he asked a new question. “I represent SmallCo, a closely held corporation, which is being sued by one of its minority shareholder/directors, Harry Hapless. Hapless wants to exercise his right as a director to inspect SmallCo’s books and records, including attorney-client privileged documents generated by SmallCo in defense of Hapless’s actions and all other attorney work product and other privileged material. Do I have to turn these documents over?”
“No, Meryl,” Cali answered. “The recent case of Tritek Telecom Inc. v. Superior Court (2009) 169 Cal. App. 4th 1385 held that a director does not have a right to access documents protected by attorney-client privilege or attorney work product doctrine that are generated in defense of a suit for damages that the director himself filed against the corporation.”
As Meryl hurried off, Cali mused about the importance of the strength of the lawyer-client privilege and work product doctrine to the preservation of the lawyer-client relationship.
• Ellen R. Peck, a former State Bar Court judge, is a sole practitioner in Escondido and a co-author of The Rutter Group California Practice Guide: Professional Responsibility.
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