California Supreme Court Spells Out "Inadvertent Production" Duty
In Rico v. Mitsubishi Motors Corp., (2007) 42 Cal.4th 807, the California Supreme Court recognized an affirmative duty of counsel who receive inadvertent productions that are obviously identifiable as confidential or privileged:
When a lawyer who receives materials that obviously appear to be subject to an attorney-client privilege or otherwise clearly appear to be confidential and privileged and where it is reasonably apparent that the materials were provided or made available through inadvertence, the lawyer receiving such materials should refrain from examining the materials any more than is essential to ascertain if the materials are privileged, and shall immediately notify the sender that he or she possesses material that appears to be privileged.
The parties may then proceed to resolve the situation by agreement or may resort to the court for guidance with the benefit of protective orders and other judicial intervention as may be justified.
This is a critical requirement for counsel who receive productions that appear to be inadvertent and obviously privileged.
It is also important to anticipate how this affirmative duty to return obviously privileged documents may be affected by the proposed California Rules governing electronic discovery currently under consideration by the California Judicial Counsel.
Opinion Highlights:
1. The trial court ruled that plaintiff's counsel, Johnson, came into possession of notes taken at the direction of defense counsel, Yukevich, by inadvertence.
2. Johnson admitted that he knew within "a minute or two" that Yukevich did not intend to produce the document and that it would be a "powerful impeachment document."
3. Johnson thereafter gave copies to his co-counsel and to his experts, all of whom studied the document. Johnson specifically discussed the contents of the document with each expert.
4. The trial court concluded that the notes were absolutely privileged by the work product rule, and that Johnson had acted unethically by examining the document more closely than was necessary to determine that its contents were confidential by failing to notify defense counsel that he had a copy of the document and by surreptitiously using it to gain maximum adversarial value from it.
6. There is no distinction between the attorney-client privilege and the work product privilege in this context because the standard applies to documents that are plainly privileged and confidential regardless of whether they are privileged under the attorney-client privilege, the work product privilege, or any other similar doctrine that would preclude discovery based on the confidential nature of the document.
Discussion:
In affirming the trial court's ruling disqualifying plaintiff's attorney and experts who had improper access to the privileged document, the California Supreme Court also reviewed, and adopted, an earlier holding by the California Court of Appeals in a similar matter, State Comp. Ins. Fund v. WPS, Inc. (1999) 70 Cal. App. 4th 644 ("State Fund").
The Supreme Court emphasized that "[m]ere exposure to an adversary's confidences is insufficient, standing alone, to warrant an attorney's qualification. (State Fund, supra, 70 Cal.App.4th at 657.)"
The problem in the Rico case was that plaintiff's counsel made copies and disseminated them to plaintiff's experts and other attorneys.
A question arises as to how the affirmative duty recognized in the Rico case may change, or be affected, by the proposed new rules governing electronic discovery currently under consideration for California state courts.
The proposed California Rules for electronic discovery do not impose an affirmative duty on counsel receiving an inadvertent production. Rather, the proposed statutory change addresses the problem of inadvertent productions from the viewpoint of the party claiming privilege.
The proposed California Rules for electronic discovery add an entirely new section to the Civil Discovery Act, Code Civ. Proc. §2031.285, which can be summarized as follows:
• If privileged (or attorney work product protected) electronically stored information is discovered, the party making the claim may give notice of the privilege claim and the basis for the claim.
• After being notified, the receiving party shall “immediately sequester” the information and either return the information (and any copies) or, within 30 days present the information to the court conditionally under seal for a determination of the claim. Until resolution, the receiving party shall preserve the information and keep it confidential.
• Any receiving party shall be precluded from using or disclosing the specified information until the claim of privilege is resolved.
This kind of provision is known as as a “claw back” provision, since a party who inadvertently produces an electronic document can simply “claw” or take it back after production without regard to waiver issues.
It is important under the proposed rules that the receiving party move the court to address the privilege question within 30 days, or it will lose the ability to use that document.
The proposed California Rules for electronic discovery should be read in context of this duty spelled out by the California Supreme Court. It is not always the case that inadvertent productions are obvious. In fact, some companies seem to have an unspoken policy to include an attorney on many emails that are sensitive, but not necessarily privileged.
Under the proposed new California electronic discovery rules, it will be important for counsel to agree as part of the initial meet and confer conference precisely how all forms of privileged and confidential documents will be dealt with in discovery.
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