|November 2012 Vol. 9, No. 3|
Clearing Waivers: Rulings Bring Clarity to Waiver of the Attorney-Client Privilege and Attorney Work Product
Daniel E. Eaton1
It is black letter law in California that ordinarily “waiver” is the intentional relinquishment of a known right after knowledge of the facts. (See e.g., Don Johnson Productions, Inc. v. Rysher Entertainment (2012) 209 Cal.App.4th 919, 934.) For purposes of the attorney-client privilege and the attorney work product doctrine, waiver results “by failing to assert the protection, by tendering certain issues, and by conduct inconsistent with claiming the protection. Waiver also occurs by an attorney's voluntary disclosure or consent to disclosure of the writing to a person other than the client who has no interest in maintaining the confidentiality of the contents of the writing.” (Regents of University of California v. Superior Court (2008) 165 Cal.App.4th 672, 679 (EQ 5.3.8), internal marks and internal and external citations omitted.)
But what about where a party maintains, and the circumstances credibly suggest, that the party did not intend to relinquish the protection of those protections, even where the party took intentional steps that resulted in the privileged information somehow getting into the hands of, or becoming known to, the party’s legal adversary? What separates cases where waiver is found from those where it is not? And where waiver of these protections is found over a particular communication or piece of work product, is such a waiver limited to the particular document, does the waiver include all privileged documents related to the subject matter of the document, or something in between such as all communications between the same people, around the same time, on the same topic? Cases abstracted in this edition of Ethics Quarterly offer useful new answers to aspects of these frequently recurring questions.
A. Coito v. Superior Court: Use It and Lose It
Coito v. Superior Court (2012) 54 Cal.4th 480 (EQ 9.3.3) is a wrongful death action brought against the State of California and others following a drowning on public property. Counsel for the state sent two investigators to interview four witnesses. Counsel for the state provided the investigators with the questions he wanted asked. Each of the interviews was audio-recorded. (Id. at 487.) When one of the witnesses was then deposed, counsel for the state used the content of the recorded interview in questioning the witness. (Ibid.) Days later, plaintiff served a demand for documents seeking the audio recordings of the witnesses interviewed and moved to compel production of the recordings when the state resisted.
The essential holding of the California Supreme Court’s unanimous ruling in Coito is that a witness statement that has been obtained through an attorney-directed interview is entitled to at least qualified work product protection. (Id. at 499-500.) The Court also held that such a witness statement may be entitled to absolute work product protection, protected from discovery even if the requesting attorney can show unfair prejudice from withholding it, if the attorney seeking to withhold it can show that the statement would reveal the attorney’s impressions, conclusions, opinions, or legal research or theories. (Id. at 495-496). Having announced the applicable rule, the Court remanded the case to the trial court for consideration of whether the state could show that the absolute privilege applied to all or part of the recordings and, if not, whether the plaintiff could show that he would be unfairly prejudiced if the audio recordings were not produced. (Id. at 500.) The ruling, admirably free of footnotes, provides vital clarity in the law of privilege as it applies to witness statements and easily is among the most important California ethics decisions to come down so far this year.
But Coito also had something to say about how work product protection may be waived. The Court did not disturb the trial court’s ruling that the state had waived the protection of the work product doctrine as to the recording of the interview the content of which the state’s counsel had used to examine the witness at the witness’s deposition. (Ibid.) Thus, an attorney’s intentional use of work product against an opposing party -- in this case in the deposition of a percipient witness -- in such a way that the substance of the work product is disclosed relinquishes the right to claim the protection of the work product doctrine over the material so used.
The Supreme Court’s remand order makes it clear that waiver as to the recording used to question the witness did not waive the protection as to all of the recordings. So the question remains: If waiver is found, how far beyond the particular document or communication over which protection has been stripped does the waiver extend? Does such a waiver open to discovery the entire subject matter to which the erstwhile privileged communication relates? Not necessarily.
B. Resilient Floor Covering Pension Fund v. Michael’s Floor Covering, Inc.: Forward Email, Unravel Privilege
Email is a convenient way for an attorney and client to communicate with each other about the subject of the representation. The unguarded use of email, however, may compromise the privilege over those communications, such as where the client has given consent to a prospective litigation adversary to review his or her email. (See Holmes v. Petrovich Development Co. (2011) 191 Cal.App.4th 1047 (EQ 8.1.6).) Email also may easily be forwarded. And, as virtually anyone knows, sometimes an email is forwarded to the wrong person and sometimes the forwarding of the email has consequences.
That is what happened in Resilient Floor Covering Pension Fund v. Michael’s Floor Covering, Inc. (N.D.Cal. 2012) 2012 WL 3062294 (EQ 9.3.7). An attorney emailed his client, the trustee of a pension fund, a preliminary, pre-litigation analysis of the strengths and weaknesses of an ERISA enforcement action the client was considering bringing against the alleged successor of a contributing employer to the trust fund. (Id. at *1). Both the predecessor company and the alleged successor company denied the existence of a successor relationship. The email was clearly marked “Attorney-Client Privileged/Attorney Work Product.” (Id. at *2) The client-trustee forwarded the email to a higher-up in the union, a non-party, questioning whether the attorney for the predecessor company had a conflict of interest in defending the suit. The client did not ask the union to keep the forwarded email and attachment confidential. (Id. at *7.) Predecessor company’s attorney was a board member of a union-affiliated and union-funded industry association and the trustee was concerned that the attorney was lending his expertise to a union adversary. (Id. at *2, note 1.) After a series of additional forwarding of the email, the email and attachment wound up in the hands of several members of the industry association – including the attorney for the predecessor company who in turn provided the email to counsel for the defendant, the alleged successor company.
Defendant contended that the manner in which the email had been forwarded deprived plaintiff of any work product and attorney-client privilege over the document and indeed gave the defendant the right to “unlimited” discovery into the plaintiff’s counsel’s analysis of, and opinions about, various legal issues in the case. (Id. at *1.) Defense counsel served a Federal Rule of Civil Procedure 30(b)(6) deposition notice, including document requests, seeking this information. (Id. at *2.) Plaintiff sought a protective order to shield from discovery the original email and attachment and all subsequently prepared attorney-client communications and work product.
Applying the federal law of privilege in this federal question ERISA action, the Court found that the original email and attachment initially were covered by both the attorney-client privilege and the attorney work product doctrine. (Id. at *4, *5-6.) But the Court further found that plaintiff had waived both protections by the manner in which the trustee forwarded the email. (Id. at *4-5, 6-7.) Trustee’s later “statement that he was ‘shocked’ that the e-mail escaped into the hands of the adversary and that this was not his intention is immaterial.” The way the trustee forwarded the email “substantially increased the likelihood of – and in fact led to – disclosure to an adversary and was thus inconsistent with preserving the adversary system.” (Id. at *7, internal citation to docket omitted.) The question remained how far the waiver of the privilege extended. Did plaintiff waive protection over all related and subsequently created privileged materials?
The Court concluded that there had been no such subject matter waiver. It would be unfair to find such a categorical waiver, said the Court, since subject matter waiver typically depended on a party’s deliberate, strategic use of confidential material such as its selective disclosure, testimonial use, or necessary incorporation into an advice of counsel defense of sorts in support of a litigation position. None of that applied here. (Id. at *8.)
The Court also rejected defendant’s contention that defendant’s assertion of a counterclaim for attorneys’ fees placed the assertedly privileged material at issue since the material would be needed to show that the action was brought in bad faith. “Defendant cannot simply raise an issue and thereby claim entitlement to protected materials. This sort of ‘reverse’ issue injection would destroy – not preserve – the adversary system by making it easy to circumvent the work product doctrine.” (Ibid.) Similarly unavailing was defendant’s contention that plaintiff placed all work product at issue by using the forwarded email, along with the threat of withdrawing union funding for the industry association, as leverage to get a better result in the litigation by getting predecessor company’s counsel, who sat on the industry association’s board, removed from the case and replaced with less capable counsel. (Id. at *8, note 2.) The Court found that it was unlikely plaintiff would use the work product to obtain a better outcome since plaintiff’s counsel’s analysis discussed shortcomings in plaintiff’s case. Moreover, defendant failed to explain how the discovery it sought into plaintiff’s counsel’s analysis was relevant to plaintiff’s alleged efforts to leverage a better outcome. (Ibid.)
The micro lesson in the Court’s finding that protection had been waived over the email and attachment is that attorneys should discourage their clients, particularly constituents of institutional and organizational clients, from forwarding confidential attorney-client communications without at least clearing it with the attorney in advance. An attorney should consider adding to the standard subject line warning on emails sent to clients, “Attorney-Client Privileged/Attorney Work Product,” the additional phrase “Do Not Forward.” The broader lesson in this ruling is that even if waiver is found, carefully crafted arguments rooted in fairness and relevance may limit the damage if discovery ultimately is confined to a particular communication or piece of work product. The Court in this case limited the discovery over privileged information to what was contained in the email and attachment. (Id. at *8, note 3.) But can counsel count on preventing discovery into privileged communications created at the same time as, and inextricably intertwined with, a communication over which a court finds the attorney-client privilege or attorney work product protection has been waived? The answer to that question apparently is no.
C. Garcia v. Progressive Choice Ins. Co.: Documents Found, Privilege Lost
In Garcia v. Progressive Choice Ins. Co. (S.D.Cal. 2012) 2012 WL 3113172, Plaintiff-insured alleged that her insurer had wrongfully denied her claim that the theft and burning of her Jeep was covered by her insurance policy. (Id. at *1.) The insurer initially asserted that its reliance on advice of counsel demonstrated that the insurer had not acted unreasonably. (See Id. at *1, note 3, pointing out that California law does not treat advice of counsel as an affirmative defense in a bad faith action, but that advice of counsel can be used to show the insurer did not act unreasonably.) Accordingly, the insurer produced the claims file to plaintiff, which included a substantial number of the communications the insurer had had with its outside counsel. Then, prompted by testimony at the deposition of a claims adjuster, defendant uncovered emails between the adjuster and outside counsel that were not part of the claims file but that were found on an email system the insurer no longer used. Some of those documents were disclosed to plaintiff, but others were withheld. The newly discovered emails caused the insurer to reconsider and withdraw its advice of counsel defense. (Id. at *1.) The insurer also submitted an amended privilege log listing previously disclosed communications.
The question was whether the insurer’s production of privileged communications during the time it asserted reliance of counsel as part of its defense waived protection over newly uncovered contemporaneous privileged communications that had not yet been produced to plaintiff and that defendant had uncovered before deciding no longer to make advice of counsel part of its defense. Had defendant disclosed “a significant part” of the newly discovered documents by earlier disclosing a large number of privileged communications made around the same time as the newly discovered documents? Applying California privilege law in this diversity action, the Court ruled that yes, the insurer had and had thereby waived the privilege over the newly discovered documents.
The Court rejected defendant’s contention that a party could disclose one group of otherwise privileged emails while retaining the privilege over other contemporaneous emails between the same people on the same topic. (Id. at *5.) Notwithstanding contrary guidance in certain respected California practice guides, the Court carefully analyzed California authority and concluded that the waiver that comes from the disclosure of a “significant part” of a privileged communication may extend beyond the particular communication itself to include related communications between the same people at the same time. The Court did not find that the defendant had acted in bad faith and no sanction was imposed. Nor did the Court compel the defendant to assert any particular defense. “The sole conclusion reach by this Court is that Defendant expressly waived attorney-client privilege with respect to communications between it and [its outside counsel] concerning Plaintiff’s claim.” (Id. at *7.)
There are two salient lessons from this ruling. The first lesson is that a party that discloses a significant subset of a large group of otherwise privileged documents may open to discovery privileged communications or other documents created at the same time between the same people on same topic. The second, more defensive lesson is that the broader waiver may not extend to the full extent of the subject matter of those communications regardless of when the communications were created, but instead may be limited by time, topic, and correspondents.
Arguably an attorney’s most important duty is to keep from a client’s legal adversary the client’s secrets and the attorney’s work product. That means being vigilant about preserving the protection of the attorney-client privilege and the attorney work product doctrine. A client may waive the privilege, which after all belongs to the client, by oversharing attorney-client privileged communications even where the client does not specifically mean to waive the protection of the privilege. An attorney may waive work product protection by using such material tactically in pursuit of his client’s interests. As the cases addressed above illustrate, even where waiver is found, there are rules that may limit the extent of a waiver so that the confidentiality that is at the heart of the attorney-client relationship is, in the main, preserved.
1 Daniel E. Eaton, the Editor-in-Chief of Ethics Quarterly, is a partner in the law firm of Seltzer Caplan McMahon Vitek, and a member and former Chairman of the San Diego County Bar Association’s Legal Ethics Committee. The views expressed here are his own.
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