Legal Ethics Corner

Ethics Corner is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association for SDCBA members.

This is the fourth of a four part series on the duty of confidentiality.

Attorney-Client Confidentiality:  Respecting the Otherside’s Confidentiality

Trotting through the 100 Acre Wood, I doubt that Winnie the Pooh ever expected to be the subject of acrimonious litigation. (Barbie likely did not expect the same but fared no better. (See Christian v. Mattel, Inc. (9th Cir. 2002) 286 F.3d 1118, 1121.)) 

In the immediate prior Ethics Corner, we reviewed case law that prevents opposing counsel from unilaterally making the most of inadvertently disclosed attorney-client privileged and attorney work product information.  (State Comp. Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644; Collins v. State of California (2004) 121 Cal.App.4th 1112; Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807; Bak v. MCL Financial Group, Inc. (2009) 170 Cal.App.4th 1118.)  In broader terms, these cases impose upon opposing counsel/parties the obligation to respect the confidentiality/attorney-client privilege/work product of the adversary.  However, these cases involved coming into possession of such information by inadvertence.  What of coming into such possession by intention?  This is where Pooh comes in.

In Stephen Slesinger, Inc. v. Walt Disney Co. (2007) 155 Cal.App.4th 736, Plaintiff brought an action against Disney for the latter’s alleged breach of contract and fraud relating to the failure to account for royalties under a licensing agreement which gave Disney the right to commercial exploitation of the Winnie the Pooh series of children’s stories.  At one point in the long winding litigation, Disney was sanctioned for discovery abuses.  Not to be outdone, however, Plaintiff had hired a private investigator who, over the course of several years, obtained confidential documents from Disney’s private offices, trash dumpsters, and the facility of a contracted document disposal company.  Many documents were variously labeled, “Confidential—For Internal Use Only,” “Privileged and Confidential,” and “Attorney Work Product. […] Created at the Request of Counsel.”  Disney moved for a terminating sanction based on this misconduct, and after a five day evidentiary hearing, the trial court made detailed findings of fact including, inter alia, that the private investigator had taken confidential documents from several locations and that plaintiff explicitly or implicitly had authorized those activities and attempted to conceal the misconduct.  Concluding that no lesser sanction could ensure a fair trial for Disney, the trial court dismissed the action.

On appeal, the Court, noting that this was an issue of first impression, concluded that trial courts can exercise their inherent power to control the litigation before it by dismissing actions for deliberate and egregious misconduct if no other remedy could ensure a fair trial. (Id. at pp. 762, 764.) Among other things, the Court of Appeal reasoned that the authority “to impose sanctions under the Civil Discovery Act ([C.C.P.] § 2016.010, et seq.) supplements, but does not supplant, a court’s inherent power to deal with litigation abuse.” (Id. at p. 763.)  The Court also held that a dismissal need not be preceded by the violation of a court order.  Although violation of a court order is relevant to the question of whether to dismiss, it does not define the boundary of the power.  The “drastic remedy” of dismissal, which is to be “employed only in the rarest of circumstances,” involves consideration of all relevant circumstances, including the nonexclusive list of “the nature of the misconduct (which must be deliberate and egregious, but may or may not violate a prior court order), the strong preference for adjudicating claims on the merits, the integrity of the court as an institution of justice, the effect of the misconduct on a fair resolution of the case, and the availability of other sanctions to cure the harm.” (Id. at 763-764 [internal footnote and citations omitted].)

In somewhat of a similar vein is Wallis v. PHL Associates, Inc. (2008) 168 Cal.App.4th 882.  Therein, the parties stipulated to a protective order which allowed either party to file under seal certain confidential documents containing alleged trade secrets.  The protective order also provided for a means to challenge such filing on the basis that it was not confidential.  Despite one party’s filing of a document pursuant to the protective order (in a sealed envelope and properly labeled), the document later appeared in the court file available to the public.  When opposing counsel discovered this, she informed her clients and both then had third persons copy and view the material in an effort to defeat its alleged protection as a trade secret.  Finding that this conduct was both frivolous and done in bad faith, the trial court imposed more than $40,000 in sanctions, and the Court of Appeal affirmed.  Most noteworthy in the Court of Appeal’s analysis is that whether the information at issue was actually confidential as a trade secret was not relevant to the determination of whether the parties and their attorney violated the protective order. (Id. at 898-892)  The record aptly showed that they had certainly done so.

Whether by dumpster diving, by accessing what are to be sealed documents, or by other nefarious means, case law prohibiting the invasion of the opposing party’s confidentiality, attorney-client privilege, and work product—whether by initial inadvertence or by design—continues to develop. 

Technology presents yet more means for illicit intrusion.  A colleague once informed me that opposing counsel, who had provided him with a consultant’s report via email, later admitted that he (opposing counsel) implanted a “white bug” into the email so that he could trace to whom my colleague forwarded the report.

Increasingly, while trotting through the 100 Acre Wood of litigation (and even in a non-litigation setting), attorneys must be mindful to guard not only their own clients’ confidentiality but to accord an appropriate respect for the confidentiality of the opposing party.  The failure to do so can have drastic monetary and non-monetary consequences.  

--Luis E. Ventura

**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis.  Any views expressed are those of the author only, and not of the SDCBA or its Legal Ethics Committee.**