November 2012 Vol. 9, No. 3

9.3.9

Attorney-Client Privilege, Waiver of

Case:

Garcia v. Progressive Choice Ins. Co. (S.D.Cal. 2012) 2012 WL 3113172

Issue:

In an insurance bad faith action, did defendant-insurer waive the attorney-client privilege over newly discovered emails between claims adjuster and outside counsel concerning plaintiff’s claim that were recovered after:  (1) disclosure to plaintiff of communications between outside counsel and claims adjuster as part of turning over the underlying claims file “subject to objection on the grounds of attorney-client privilege,” but also after (2) insurer withdrew its advice of counsel defense?

Holding:

Yes.  The Court in this diversity action applied California privilege law, under which the party asserting the privilege has the initial burden of establishing that the communication was made in the course of an attorney-client relationship and the opponent then bears the burden that the privilege does not for some reason apply.  (2012 WL 3113172 at *3.)   The Court found that the insurer had expressly waived the privilege over the newly discovered communications by earlier disclosing “a significant part” of communications between insurer and outside counsel in previously producing emails between outside counsel and claims adjuster that were contemporaneous with those over which insurer was asserting the privilege after withdrawing its advice of counsel defense. 

While the Court acknowledged that the waiver of the attorney-client privilege is narrowly construed (id. at *5), the Court also found that waiver by a party’s disclosure of a significant part of privileged communications is not limited to each individual communication partially disclosed, but may extend to related contemporaneous communications.  “The attorney-client privilege is designed to foster open communication between client and attorney, in this case, between [outside counsel] and Defendant.  However, Defendant voluntarily disclosed a large amount of communications it had with [outside counsel] regarding” the underlying claim, “and the purpose of that privilege was lost.”  (Id. at *7.) 

Notes:

In ruling that disclosure of a “significant part” of a privileged communication may result in waiver of the privilege over other related and otherwise privileged contemporaneous communications, the Court rejected the statement in the Rutter Group practice guides on professional responsibility and civil trials and evidence that  “[d]isclosure of a significant part of a privileged communication waives the privilege only with respect to that communication.”  (Id. at *4, emphasis in practice guides omitted in Court’s ruling.)  

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