IN THE SUPREME COURT OF CALIFORNIA
COSTCO WHOLESALE CORPORATION,
Petitioner,
S163335
v.
Ct.App. 2/3 B197692
THE SUPERIOR COURT OF LOS
ANGELES COUNTY,
Los Angeles County
Super. Ct. No. BC29636
Respondent;
GREG RANDALL et al.,
Real Parties in Interest.
In this case we consider whether the trial court erred by directing a referee
to conduct an in camera review of an opinion letter sent by outside counsel to a
corporate client, allowing the referee to redact the letter to conceal that portion the
referee believed to be privileged, and ordering the client to disclose the remainder
to the opposing party. We conclude the court‟s directions and order violated the
attorney-client privilege, and violated as well the statutory prohibition against
requiring disclosure of information claimed to be subject to the attorney-client
privilege in order to rule on a claim of privilege. (Evid. Code, § 915, subd. (a).)
BACKGROUND
In June 2000, Costco Wholesale Corporation (Costco), which operates
warehouse-style retail establishments throughout California, retained the law firm
of Sheppard, Mullin, Richter & Hampton to provide legal advice regarding
whether certain Costco warehouse managers in California were exempt from
California‟s wage and overtime laws.1 Attorney Kelly Hensley, an expert in wage
and hour law, undertook the assignment, ultimately producing for Costco the 22-
page opinion letter at issue here. The letter followed conversations held by
Hensley with two warehouse managers Costco had made available to her. Costco,
the managers, and Hensley understood the communications between the managers
and Hensley were, and would remain, confidential. Similarly, Costco and Hensley
understood that Hensley‟s opinion letter was, and would remain, confidential.
Several years later, real parties in interest, Costco employees (hereafter
collectively referred to as plaintiffs), filed this class action against Costco,
claiming that from 1999 through 2001 Costco had misclassified some of its
managers as “exempt” employees and therefore had failed to pay them the
overtime wages they were due as nonexempt employees. In the course of the
litigation, plaintiffs sought to compel discovery of Hensley‟s opinion letter.
Costco objected on the grounds the letter was subject to the attorney-client
privilege and the attorney work product doctrine. Plaintiffs disagreed, arguing
both that the letter contained unprivileged matter and that Costco had placed the
contents of the letter in issue, thereby waiving the privilege.
1
Labor Code section 510, subdivision (a) requires payment at a rate of no
less than time-and-one-half the regular rate of compensation for any work in
excess of eight hours in one workday and any work in excess of 40 hours in any
one workweek. However, California Code of Regulations, title 8, section 11070,
subdivision 1(A) provides an exemption for persons who for more than one-half of
their work time are “employed in administrative, executive, or professional
capacities.”
2
The trial court, over Costco‟s objection, ordered a discovery referee to
conduct an in camera review of Hensley‟s opinion letter to determine the merits of
Costco‟s claims of attorney-client privilege and work product doctrine. The
referee produced a heavily redacted version of the letter, stating her conclusion
that although much of it “constitutes attorney client communications and/or the
type of attorney observations, impressions and opinions plainly protected as work
product,” those portions of text involving “factual information about various
employees‟ job responsibilities” are protected by neither the privilege nor the
doctrine. The referee explained that statements obtained in attorney interviews of
corporate employee witnesses generally are not protected by the corporation‟s
attorney-client privilege and do not become cloaked with the privilege by reason
of having been incorporated into a later communication between the attorney and
the client. She also found that while interviewing the two Costco managers,
Hensley had acted not as an attorney but as a fact finder. The trial court, without
ruling on plaintiffs‟ assertion that Costco had waived the privilege by placing the
contents of the letter in issue, adopted the findings and conclusions of the referee
and ordered Costco to produce a version of the letter in the same form as
recommended and redacted by the referee.
Costco petitioned the Court of Appeal for a writ of mandate, arguing the
trial court had erred by ordering the in camera review of Hensley‟s opinion letter
and by ordering disclosure of a redacted version of the letter. The Court of Appeal
denied the petition. Without ruling on the merits of the trial court‟s discovery
order or its decision to refer the opinion letter to the referee for in camera review,
the court concluded Costco had not demonstrated that disclosure of the unredacted
portions of the letter would cause it irreparable harm in the action, explaining the
unredacted text simply referred to factual matters that would be easily
discoverable by other means.
3
We hold the attorney-client privilege attaches to Hensley‟s opinion letter in
its entirety, irrespective of the letter‟s content. Further, Evidence Code section
915 prohibits disclosure of the information claimed to be privileged as a
confidential communication between attorney and client “in order to rule on the
claim of privilege.” (Id., subd. (a).) Finally, contrary to the Court of Appeal‟s
holding, a party seeking extraordinary relief from a discovery order that
wrongfully invades the attorney-client relationship need not also establish that its
case will be harmed by disclosure of the evidence.
As we find the attorney-client privilege precludes discovery of the opinion
letter, we do not consider whether the work product doctrine would also apply to
prevent its discovery. And, as the trial court‟s ruling extended only to the opinion
letter, neither do we consider the separate but related question of whether,
independent of the letter, the conversations between Hensley and Costco‟s
warehouse managers might be subject to either the attorney-client privilege or the
work product doctrine.2
DISCUSSION
I.
The attorney-client privilege, set forth at Evidence Code section 954,
confers a privilege on the client “to refuse to disclose, and to prevent another from
disclosing, a confidential communication between client and lawyer . . . .” The
privilege “has been a hallmark of Anglo-American jurisprudence for almost 400
2
After the briefing was complete, Costco‟s counsel informed us the case had
settled. Costco, however, filed an unopposed request that we retain jurisdiction,
pointing out the case raises issues of continuing public importance that have
attracted the interest of several amici curiae. We have discretion to retain
jurisdiction in such circumstances (Rojas v. Superior Court (2004) 33 Cal.4th 407,
415, fn. 3), and we exercise that discretion here.
4
years.” (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 599.) 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. [Citation.] . . . [¶] 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. As
this court has stated: „The privilege is given on grounds of public policy in the
belief that the benefits derived therefrom justify the risk that unjust decisions may
sometimes result from the suppression of relevant evidence.‟ [Citations.]” (Id. at
pp. 599-600.) “[T]he privilege is absolute and disclosure may not be ordered,
without regard to relevance, necessity or any particular circumstances peculiar to
the case.” (Gordon v. Superior Court (1997) 55 Cal.App.4th 1546, 1557.)
A trial court‟s determination of a motion to compel discovery is reviewed
for abuse of discretion. (2,022 Ranch v. Superior Court (2003) 113 Cal.App.4th
1377, 1387.) An abuse of discretion is shown when the trial court applies the
wrong legal standard. (Zurich American Ins. Co. v. Superior Court (2007) 155
Cal.App.4th 1485, 1493.) However, when the facts asserted in support of and in
opposition to the motion are in conflict, the trial court‟s factual findings will be
upheld if they are supported by substantial evidence. (HLC Properties, Ltd. v.
Superior Court (2005) 35 Cal.4th 54, 60; D. I. Chadbourne, Inc. v. Superior Court
(1964) 60 Cal.2d 723, 729.) The party claiming the privilege has the burden of
establishing the preliminary facts necessary to support its exercise, i.e., a
communication made in the course of an attorney-client relationship. (D. I.
Chadbourne, Inc., at p. 729; Wellpoint Health Networks, Inc. v. Superior Court
(1997) 59 Cal.App.4th 110, 123.) Once that party establishes facts necessary to
support a prima facie claim of privilege, the communication is presumed to have
5
been made in confidence and the opponent of the claim of privilege has the burden
of proof to establish the communication was not confidential or that the privilege
does not for other reasons apply. (Evid. Code, § 917, subd. (a); Wellpoint Health
Networks, Inc., at pp. 123-124.)
That Costco engaged Hensley to provide it with legal advice and that the
opinion letter was a communication between Costco‟s attorney (Hensley) and
Costco are undisputed. The letter was “confidential,” defined as “information
transmitted between a client and his or her lawyer in the course of [the attorney-
client] relationship and in confidence by a means which, so far as the client is
aware, discloses 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 . . . .” (Evid.
Code, § 952.) Indeed, the referee heavily redacted the letter because she believed
it was a confidential communication between attorney and client. That Hensley‟s
opinion letter may not have been prepared in anticipation of litigation is of no
consequence; the privilege attaches to any legal advice given in the course of an
attorney-client relationship. (Roberts v. City of Palmdale (1993) 5 Cal.4th 363,
371; Zurich American Ins. Co. v. Superior Court, supra, 155 Cal.App.4th at
p. 1495.) And it is settled that a corporate client such as Costco can claim the
privilege. (Evid. Code, § 954, final par.; D. I. Chadbourne, Inc. v. Superior Court,
supra, 60 Cal.2d at pp. 732, 736.) The undisputed facts, therefore, make out a
prima facie claim of privilege.
II.
The attorney-client privilege attaches to a confidential communication
between the attorney and the client and bars discovery of the communication
irrespective of whether it includes unprivileged material. As we explained in
6
Mitchell v. Superior Court, supra, 37 Cal.3d at page 600: “[T]he privilege covers
the transmission of documents which are available to the public, and not merely
information in the sole possession of the attorney or client. In this regard, it is the
actual fact of the transmission which merits protection, since discovery of the
transmission of specific public documents might very well reveal the transmitter‟s
intended strategy.” We therefore held in Mitchell that a client could not be
questioned about warnings from her attorney about the health effects of an
industrial chemical even if the warnings might be described as factual matter
rather than legal advice. We observed: “Neither the statutes articulating the
attorney-client privilege nor the cases which have interpreted it make any
differentiation between „factual‟ and „legal‟ information.” (Id. at p. 601; see In re
Jordan (1974) 12 Cal.3d 575, 580 [finding the attorney-client privilege attached to
copies of cases and law review articles transmitted by an attorney to the attorney‟s
client].)
Focusing on the warehouse managers‟ statements to Attorney Hensley,
plaintiffs point out that the statements of a corporate employee to the corporation‟s
attorney are not privileged if the employee speaks as an independent witness, even
if the employer requires the employee to make the statement. (D. I. Chadbourne,
Inc. v. Superior Court, supra, 60 Cal.2d at p. 737.) They further maintain that
when a corporate employer has more than one purpose for directing an employee
to make a report, whether the employee‟s statement should be classified as that of
the corporation or as that of an independent witness depends upon the employer‟s
“dominant purpose” in requiring the employee to make the statement. (Id. at
p. 737.) And they emphasize that the question of whether the employer‟s
dominant purpose in requiring a report was for transmittal to an attorney in the
course of professional employment, like the question of whether a particular
employee‟s statement was that of an independent witness, is for the trial court or
7
other finder of fact, whose conclusion is binding on the reviewing court if
supported by substantial evidence. (HLC Properties, Ltd. v. Superior Court,
supra, 35 Cal.4th at p. 60; Martin v. Workers’ Comp. Appeals Bd. (1997) 59
Cal.App.4th 333, 346-347.)
These points have little to do with the case before us. In Chadbourne we
considered whether a corporate employee, reporting to the corporation‟s attorney,
was speaking on behalf of the corporation so that his report was in effect the
communication of the corporate client. (D. I. Chadbourne, Inc. v. Superior Court,
supra, 60 Cal.2d at pp. 736-738.) In that context, the dominant-purpose test
determines whether the relationship between the attorney and the corporate
employee is an attorney-client relationship; if the corporation‟s dominant purpose
in requiring the employee to make a statement is the confidential transmittal to the
corporation‟s attorney of information emanating from the corporation, the
communication is privileged. (Id. at p. 737.) And as we have explained, because
the privilege protects the transmission of information, if the communication is
privileged, it does not become unprivileged simply because it contains material
that could be discovered by some other means. Chadbourne and its progeny
therefore would be relevant if we were considering whether the statements of the
warehouse managers interviewed by Hensley were themselves subject to the
attorney-client privilege. But these authorities are not relevant to the question
before us: whether the communication between Costco‟s attorney and Costco was
privileged.
Plaintiffs make a second, related point also directed at a concern not present
here, asserting that a client cannot protect unprivileged information from
discovery by transmitting it to an attorney. As we explained in Greyhound Corp.
v. Superior Court (1961) 56 Cal.2d 355, 397: “ „Knowledge which is not
otherwise privileged does not become so merely by being communicated to an
8
attorney. [Citation.] Obviously, a client may be examined on deposition or at trial
as to the facts of the case, whether or not he has communicated them to his
attorney. [Citation.] While the privilege fully covers communications as such, it
does not extend to subject matter otherwise unprivileged merely because that
subject matter has been communicated to the attorney.‟ ” Thus, “a litigant may
not silence a witness by having him reveal his knowledge to the litigant‟s attorney
. . . .” (D. I. Chadbourne, Inc. v. Superior Court, supra, 60 Cal.2d at p. 734.) But
again, we are not here concerned with whether the privilege covers the statements
of the warehouse managers to Hensley.
Plaintiffs next point out that the attorney-client privilege does not attach to
an attorney‟s communications when the client‟s dominant purpose in retaining the
attorney was something other than to provide the client with a legal opinion or
legal advice. (2,022 Ranch v. Superior Court, supra, 113 Cal.App.4th at pp. 1390-
1391; Aetna Casualty & Surety Co. v. Superior Court (1984) 153 Cal.App.3d 467,
475.) For example, the privilege is not applicable when the attorney acts merely
as a negotiator for the client or is providing business advice (see Aetna Casualty &
Surety Co., at p. 475); in that case, the relationship between the parties to the
communication is not one of attorney-client. But while plaintiffs insist Hensley‟s
interviews of Costco‟s warehouse managers was simple fact gathering that could
have been done by a nonattorney, they have never disputed that Costco retained
Hensley, an expert in California wage and hour law, to provide it with legal advice
regarding the exempt status of some of its employees, nor did the trial court base
its discovery order on a finding that Costco‟s dominant purpose in retaining
Hensley was to obtain her services as a fact gatherer. The situation is comparable
to that in Aetna, where in reversing the trial court‟s order allowing discovery of
the attorney‟s files, the appellate court explained: “This is a classic example of a
client seeking legal advice from an attorney. The attorney was given a legal
9
document (the insurance policy) and was asked to interpret the policy and to
investigate the events that resulted in damage to determine whether Aetna was
legally bound to provide coverage for such damage.” (Id. at p. 476.) Here,
Hensley was presented with a question requiring legal analysis and was asked to
investigate the facts she needed to render a legal opinion. As we have explained,
when the communication is a confidential one between attorney and client, the
entire communication, including its recitation or summary of factual material, is
privileged. In sum, if, as plaintiffs contend, the factual material referred to or
summarized in Hensley‟s opinion letter is itself unprivileged it may be
discoverable by some other means, but plaintiffs may not obtain it by compelling
disclosure of the letter.
III.
There is a second reason for overturning the discovery order. Evidence
Code section 915 provides, with exceptions not applicable here, that “the presiding
officer may not require disclosure of information claimed to be privileged under
this division[3] . . . in order to rule on the claim of privilege . . . .” (Evid. Code,
§ 915, subd. (a).) Section 915 also prohibits disclosure of information claimed to
be privileged work product under Code of Civil Procedure section 2018.030,
subdivision (b), but as to the work product privilege, if the court is unable to rule
on the claim of privilege “without requiring disclosure of the information claimed
to be privileged, the court may require the person from whom disclosure is sought
3
“[T]his division,” division 8 of the Evidence Code, includes not just the
attorney-client privilege (Evid. Code, § 954), but a variety of others arising out of
confidential relationships, such as the marital privilege (id., § 980), the physician-
patient privilege (id., § 994), the psychotherapist-patient privilege (id., § 1014) and
the clergy-penitent privilege (id., § 1033).
10
or the person authorized to claim the privilege, or both, to disclose the information
in chambers out of the presence and hearing of all persons except the person
authorized to claim the privilege and any other persons as the person authorized to
claim the privilege is willing to have present.” (Evid. Code, § 915, subd. (b).) No
comparable provision permits in camera disclosure of information alleged to be
protected by the attorney-client privilege. (Southern Cal. Gas Co. v. Public
Utilities Com. (1990) 50 Cal.3d 31, 45, fn. 19.)4 Nonetheless, the trial court
caused Hensley‟s opinion letter to be reviewed at the in camera hearing, and its
order compelling Costco to produce the redacted version of the letter was based in
large part on the referee‟s review of the very information Costco claimed to be
privileged.
In arguing in favor of the trial court‟s ruling, plaintiffs cite Moeller v.
Superior Court (1997) 16 Cal.4th 1124, 1135, and Cornish v. Superior Court
(1989) 209 Cal.App.3d 467, 480, for the proposition that despite the unequivocal
language of Evidence Code section 915 subdivision (a), the section‟s prohibition
“is not absolute,” and a litigant might be required to reveal some information in
camera to enable the court to determine whether a communication is subject to the
attorney-client privilege. But in citing these cases, plaintiffs fail to recognize the
critical distinction between holding a hearing to determine the validity of a claim
of privilege and requiring disclosure at the hearing of the very communication
4
Because a court may order disclosure of information in order to determine
whether it is protected by the work product doctrine, but may not order its
disclosure to determine if it is subject to the attorney-client privilege, a court
should without requiring disclosure first determine if the information is subject to
the attorney-client privilege. If the court determines the privilege does not apply,
it may then consider whether to order disclosure of the information at an in camera
hearing for the purpose of deciding if it is protected work product.
11
claimed to be privileged. Evidence Code section 915, while prohibiting
examination of assertedly privileged information, does not prohibit disclosure or
examination of other information to permit the court to evaluate the basis for the
claim, such as whether the privilege is held by the party asserting it. (Moeller, at
p. 1135 [hearing on type of attorney-trustee communications to determine who
holds the privilege].) Evidence Code section 915 also does not prevent a court
from reviewing the facts asserted as the basis for the privilege to determine, for
example, whether the attorney-client relationship existed at the time the
communication was made, whether the client intended the communication to be
confidential, or whether the communication emanated from the client. (Cornish,
at p. 480.) Accordingly, while the prohibition of Evidence Code section 915 is not
absolute in the sense that a litigant may still have to reveal some information to
permit the court to evaluate the basis for the claim of privilege (Moeller, at
p. 1135), it does not follow that courts are free to ignore the section‟s prohibition
and demand in camera disclosure of the allegedly privileged information itself for
this purpose.
Plaintiffs also cite Lipton v. Superior Court (1996) 48 Cal.App.4th 1599,
but the court in that case distinguished between documents that “would, in all
probability, be protected by the attorney-client privilege” (id. at p. 1618) and those
that might be protected by a qualified privilege, not subject to the prohibition of
Evidence Code section 915, subdivision (a). With respect to the documents
purportedly protected by the qualified privilege, the court suggested it would be an
abuse of discretion to permit discovery “without the court first examining those
documents and communications, by in camera inspection, to determine if they
have sufficient relevance to the requesting party‟s case to overcome the . . . claim
of qualified privilege.” (Lipton, at p. 1618.) That suggestion cannot be interpreted
12
to hold that a court is free to order in camera inspection of documents to determine
if they are subject to a privilege to which Evidence Code section 915 applies.
The Court of Appeal read our decision in In re Lifschutz (1970) 2 Cal.3d
415 to hold that in camera disclosure of privileged information is permissible to
determine if a party has waived the privilege or if the communication falls under
some exception to the privilege. But in that case, we found the patient had waived
the psychotherapist-patient privilege by initiating litigation that put his mental and
emotional state at issue. Notwithstanding the waiver, we held caution should be
exercised in disclosing the content of the patient‟s communications with his
psychiatrist “to avoid unwarranted intrusions into the confidences of the
relationship.” (Id. at p. 431.) Because only the patient could know both the nature
of the ailments for which he was seeking recovery and also the general content of
the psychotherapist communications, we held “the burden rests upon the patient
initially to submit some showing that a given confidential communication is not
directly related to the issue he has tendered to the court.” (Id. at p. 436.) We
stated: “Although ordinarily a patient cannot be required to disclose privileged
information in order to claim the privilege (Evid. Code, § 915, subd. (a)), because
the privileged status of psychotherapeutic communications under the patient-
litigant exception depends upon the content of the communication, a patient may
have to reveal some information about a communication to enable the trial judge
to pass on his claim of irrelevancy. Upon such revelation, the trial judge should
take necessary precautions to protect the confidentiality of these communications;
for example, he might routinely permit such disclosure to be made ex parte in his
chambers.” (Id. at p. 437, fn. 23.) Thus, although we observed that when the
patient-litigant‟s information about the contents of a communication might
compromise its confidentiality the court may appropriately review the information
in camera, we said nothing about reviewing the communication itself. In such
13
instances, however, the party claiming the privilege may choose to reveal the
communication in camera to prevent the court from ordering disclosure of private
information bearing no relevance to the litigation. Such a procedure does not
violate Evidence Code section 915 because the court, without examining the
confidential communication, has previously ruled that an exception to the
privilege applies, and the in camera review is now sought by the party holding the
privilege to prevent its disclosure. Similarly, nothing in Evidence Code section
915 prevents a party claiming a privilege from making an in camera disclosure of
the content of a communication to respond to an argument or tentative decision
that the communication is not privileged.
Finally, the attorney-client privilege is a legislative creation, which courts
have no power to limit by recognizing implied exceptions. (Roberts v. City of
Palmdale, supra, 5 Cal.4th at p. 373.) Concern that a party may be able to prevent
discovery of relevant information therefore provides no justification for inferring
an exception to Evidence Code section 915. As noted earlier, it has long been
understood that “ „[t]he privilege is given on grounds of public policy in the belief
that the benefits derived therefrom justify the risk that unjust decisions may
sometimes result from the suppression of relevant evidence.‟ ” (Mitchell v.
Superior Court, supra, 37 Cal.3d at p. 600.) And because the privilege protects a
transmission irrespective of its content, there should be no need to examine the
content in order to rule on a claim of privilege. (Cornish v. Superior Court, supra,
209 Cal.App.3d at p. 480.)
Because we hold that a court may not order disclosure of a communication
claimed to be privileged to allow a ruling on the claim of privilege, we disapprove
two cases plaintiffs have cited in support of the trial court‟s orders. In Martin v.
Workers’ Comp. Appeals Bd., supra, 59 Cal.App.4th at page 347, the court,
without considering Evidence Code section 915, subdivision (a), ordered a
14
workers‟ compensation judge to conduct an in camera review of the statements of
employee witnesses to determine whether the statements were from independent
witnesses or had emanated instead from the corporate employer. As we have
explained, Evidence Code section 915 prohibits a court from ordering in camera
review of information claimed to be privileged in order to rule on the claim of
privilege.
Insofar as inconsistent with our conclusion, we also disapprove 2,022
Ranch v. Superior Court, supra, 113 Cal.App.4th 1377, an insurance bad faith
action. At issue were communications transmitted to the insurer from its in-house
claims adjusters who also were attorneys. The insurer claimed all the
communications were privileged, as involving legal advice emanating from its
attorneys, whereas the petitioner asserted none were, as the attorneys were serving
merely as claims adjusters. The Court of Appeal distinguished communications
reporting the results of factual investigations from those reflecting the rendering of
legal advice, held only the latter were privileged, and ordered the trial court to
review each of the communications to determine its dominant purpose. (Id. at
p. 1397.) In this respect, the court erred. The proper procedure would have been
for the trial court first to determine the dominant purpose of the relationship
between the insurance company and its in-house attorneys, i.e., was it one of
attorney-client or one of claims adjuster-insurance corporation (as some of the
evidence suggested, see id. at pp. 1385, 1397-1398). The corporation, having the
burden of establishing the preliminary fact that the communications were made
during the course of an attorney-client relationship (D. I. Chadbourne, Inc. v.
Superior Court, supra, 60 Cal.2d at p. 729), was free to request an in camera
review of the communications to aid the trial court in making that determination,
but the trial court could not order disclosure of the information over the
corporation‟s objection. If the trial court determined the communications were
15
made during the course of an attorney-client relationship, the communications,
including any reports of factual material, would be privileged, even though the
factual material might be discoverable by some other means. If the trial court
instead concluded that the dominant purpose of the relationship was not that of
attorney and client, the communications would not be subject to the attorney-client
privilege and therefore would be generally discoverable. However, even then, the
corporation would be entitled to request an in camera review of a particular
communication to support a claim that it should be protected despite the general
absence of an attorney-client relationship.
Plaintiffs also cite OXY Resources California LLC v. Superior Court (2004)
115 Cal.App.4th 874, 896, and Cornish v. Superior Court, supra, 209 Cal.App.3d
at page 480, where the appellate court observed that notwithstanding Evidence
Code section 915, subdivision (a), courts have allowed in camera review of
information claimed to be privileged where necessary to determine whether an
exception to the privilege applies. As we have explained, section 915 prohibits
disclosure of information claimed to be privileged in order to determine if a
communication is privileged. But after the court has determined the privilege is
waived or an exception applies generally, the court to protect the claimant‟s
privacy may conduct or order an in camera review of the communication at issue
to determine if some protection is warranted notwithstanding the waiver or
exception.
IV.
The remaining question is whether the Court of Appeal was justified in
denying Costco relief despite the invalidity of the trial court‟s order. The court
concluded extraordinary relief was not warranted because Costco had not
demonstrated it would be irreparably harmed by the release of the opinion letter in
redacted form because much of the remaining material could easily be obtained by
16
some other means. This reasoning implies that the harm in an order compelling
disclosure of privileged information is the risk the party seeking disclosure will
obtain information to which it is not entitled. But, as we have said, the
fundamental purpose of the attorney-client privilege is the preservation of the
confidential relationship between attorney and client (Mitchell v. Superior Court,
supra, 37 Cal.3d at p. 599), and the primary harm in the discovery of privileged
material is the disruption of that relationship (Roberts v. Superior Court (1973) 9
Cal.3d 330, 336), not the risk that parties seeking discovery may obtain
information to which they are not entitled. As we explained in Roberts: “The
need for the availability of the prerogative writs in discovery cases where an order
of the trial court granting discovery allegedly violates a privilege of the party
against whom discovery is granted, is obvious. The person seeking to exercise the
privilege must either succumb to the court‟s order and disclose the privileged
information, or subject himself to a charge of contempt for his refusal to obey the
court‟s order pending appeal. The first of these alternatives is hardly an adequate
remedy and could lead to disruption of a confidential relationship. The second is
clearly inadequate as it would involve the possibility of a jail sentence and
additional delay in the principal litigation during review of the contempt order.
Thus, the use of the prerogative writ in a case [seeking review of an order
compelling disclosure of records claimed to be subject to a privilege] is proper.”
(Ibid.)
Accordingly, Costco is entitled to relief because the trial court‟s order
threatened the confidential relationship between Costco and its attorney. Costco
was not also required to demonstrate that its ability to present its case would be
prejudiced by the discovery of the opinion letter.
17
DISPOSITION
The judgment of the Court of Appeal is reversed. The case is remanded to
that court with directions to issue a writ of mandate vacating the trial court‟s order
compelling discovery and to remand the case to the trial court for further
proceedings consistent with this opinion.
WERDEGAR, J.
WE CONCUR:
GEORGE, C. J.
BAXTER, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.
O‟LEARY, J.*
________________________________________
*
Associate Justice of the Court of Appeal, Fourth Appellate District,
Division Three, assigned by the Chief Justice pursuant to article VI section 6 of
the California Constitution.
18
CONCURRING OPINION BY GEORGE, C. J.
I agree with the majority that the lengthy opinion letter sent by outside
counsel to corporate counsel, containing both factual recitations and legal advice,
is protected by the attorney-client privilege. I also agree that the trial court erred
in requiring disclosure of the letter for the purpose of ruling on petitioner‟s claim
of privilege, and that the Court of Appeal erred in declining to grant extraordinary
relief on the ground that disclosure of the letter in redacted form did not harm
petitioner.
Although I also agree with the majority that “[t]he attorney-client privilege
attaches to a confidential communication between the attorney and the client”
(maj. opn., ante, at p. 6), in order to clarify the elements of the privilege I believe
it bears emphasis that to be privileged, the communication also must occur “in the
course of” the attorney-client relationship (Evid. Code, § 952) — that is, the
communication must have been made for the purpose of the legal representation.1
In its application of the privilege to the present case, the majority emphasizes the
purpose of the relationship between the attorney and the client. (See maj. opn.,
ante, at p. 15.) The privilege does not apply outside the context of such a
1
All further statutory references are to the Evidence Code unless otherwise
indicated.
1
relationship, certainly, but we should not forget that the purpose of the
communication also is critical to the application of the privilege.
The attorney-client privilege applies to a confidential communication
between the attorney and the client — the latter being defined as a person who
“consults a lawyer for the purpose of retaining the lawyer or securing legal service
or advice from him in his professional capacity.” (§ 951.)
A confidential communication between the attorney and the client is
defined as “information transmitted between a client and his or her lawyer in the
course of that relationship.” (§ 952, italics added.) The statutory requirement that
the communication occur “in the course of” the attorney-client relationship is
consistent with the law as it existed prior to the 1965 enactment of section 952.
(Cal. Law Revision Com. com., 29B pt. 3A West‟s Ann. Evid. Code (2009 ed.)
foll. § 952, p. 307.) Prior to the enactment of the statute, it long had been
established that, in order to be privileged, it was necessary that the communication
be made for the purpose of the attorney‟s professional representation, and not for
some unrelated purpose. (Solon v. Lichtenstein (1952) 39 Cal.2d 75, 80 [“A
communication to be privileged must have been made to an attorney acting in his
professional capacity toward his client”]; McKnew v. Superior Court (1943) 23
Cal.2d 58, 64-65; Carroll v. Sprague (1881) 59 Cal. 655, 659-660; Satterlee v.
Bliss (1869) 36 Cal. 489, 509; see also Chicago Title Ins. Co. v. Superior Court
(1985) 174 Cal.App.3d 1142, 1151 [“It is settled that the attorney-client privilege
is inapplicable where the attorney merely acts as a negotiator for the client, gives
business advice or otherwise acts as a business agent”]; Montobello Rose Co. v.
Agricultural Labor Relations Bd. (1981) 119 Cal.App.3d 1, 32 [communications
necessary to “secure or render legal service or advice” are privileged].) Secondary
sources reflect the same understanding of the privilege. (2 Witkin, Cal. Evidence
(4th ed. 2000) Witnesses, § 116, p. 373, and cases cited [“The burden is on the
2
claimant of the privilege to establish the condition of professional consultation”];
31 Cal.Jur.3d (2002) Evidence, § 488, p. 764.)
When section 952 is viewed as a whole, it is even clearer that the
Legislature intended to extend the protection of the privilege solely to those
communications between the lawyer and the client that are made for the purpose
of seeking or delivering the lawyer‟s legal advice or representation. Thus the
statute identifies a “ „confidential communication‟ ” in general terms as meaning
“information transmitted between a client and his or her lawyer in the course of
that relationship,” but the provision also supplies more specific examples of what
is meant by adding that a confidential communication “includes a legal opinion
formed and the advice given by the lawyer in the course of that relationship.”
Under the principle of statutory construction known as “ejusdem generis,” the
general term ordinarily is understood as being “ „restricted to those things that are
similar to those which are enumerated specifically.‟ ” (Harris v. Capital Growth
Investors XIV (1991) 52 Cal.3d 1142, 1160, fn. 7.) It follows that in order to be
privileged, the information transmitted between the lawyer and the client must be
similar in nature to the enumerated examples — namely, the lawyer‟s legal
opinion or advice.
Our description of a confidential communication in Roberts v. City of
Palmdale (1993) 5 Cal.4th 363, is instructive. In that decision, we explained that
such a communication in the context of section 952 need not concern litigation;
rather it suffices that the communication consist of information transmitted
between the client and the lawyer within the scope of the attorney-client
relationship. (Roberts v. City of Palmdale, supra, 5 Cal.4th at p. 371.) We further
explained that “the privilege applies not only to communications made in
anticipation of litigation, but also to legal advice when no litigation is threatened.”
(Ibid.) Our analysis was not restricted to an examination of the purpose of the
3
attorney-client relationship, but rather considered whether the nature of the
communication itself fell within the bounds of the statute.
In another example that demonstrates the importance of the purpose or
nature of the communication rather than the more general purpose of the attorney-
client relationship in this context, we have recognized that “[k]nowledge that is
not otherwise privileged does not become so merely by being communicated to an
attorney,” and that “ „the forwarding to counsel of nonprivileged records, in the
guise of reports, will not create a privilege with respect to such records and their
contents where none existed theretofore.‟ ” (Wells Fargo Bank v. Superior Court
(2000) 22 Cal.4th 201, 210-211.)
Ordinarily, when an attorney-client relationship exists, communications
between parties to the relationship are made for the purpose of receiving or
rendering legal advice, and the purpose of the communication rarely will be in
dispute. In the present case, the claimant of the privilege adequately demonstrated
that the purpose of the challenged opinion letter was to advise the client upon a
legal matter. Sometimes, however, the dominant purpose of the communication
will be a critical consideration. As discussed, communications between persons
who stand in an attorney-client relationship are not privileged in every instance,
because it sometimes occurs that an attorney-client relationship exists, but that the
attorney also acts in another capacity for the client, as, for example, the client‟s
agent in a business transaction. In view of the requirements of section 952 and the
authorities noted above, the question of the purpose of the communication arises
regardless of what element predominates in the relationship of the attorney and the
client.
GEORGE, C. J.
4
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Costco Wholesale Corporation v. Superior Court __________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 161 Cal.App.4th 488
Rehearing Granted
__________________________________________________________________________________
Opinion No. S163335
Date Filed: November 30, 2009
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Emilie H. Elias
__________________________________________________________________________________
Attorneys for Appellant:
Seyfarth Shaw, Kenwood C. Youmans, David D. Kadue, Aaron R. Lubeley and Ann H. Qushair for
Petitioner.
Fenwick & West, Victor Schachter, Michael A. Sands and Dan Ko Obuhanych for California Employment
Law Council as Amicus Curiae on behalf of Petitioner.
Robie & Matthai, James R. Robie, Steven S. Fleischman; Haight, Brown & Bonesteel and J. Alan Warfield
for Association of Southern California Defense Counsel and Los Angeles County Bar Association as Amici
Curiae on behalf of Petitioner.
__________________________________________________________________________________
Attorneys for Respondent:
No appearance for Respondent.
Hagens Berman Sobol Shapiro, Reed R. Kathrein, Lee M. Gordon, Elaine T. Byszewski, Steve W. Berman;
Rehwald Glasner & Chaleff, Rehwald Rameson Lewis & Glasner, Lawrence Glasner, William Rehwald
and Daniel Chaleff for Real Parties in Interest.
1
Counsel who argued in Supreme Court (not intended for publication with opinion):
David D. Kadue
Seyfarth Shaw
2029 Century Park East, 33d Floor
Los Angeles, CA 90067-3063
(310) 277-7200
Victor Schachter
Fenwick & West
801 California Street
Mountain View, CA 94041
(650) 988-8500
Lee M. Gordon
Hagens Berman Sobol Shapiro
700 South Flower, Suite 2940
Los Angeles, CA 90017-4101
(213) 330-7149
2
Petition for review after the Court of Appeal denied a petition for peremptory writ of mandate. This case presents the following issues: (1) Does the attorney-client privilege (Evid. Code, section 954) protect factual statements that outside counsel conveys to corporate counsel in a legal opinion letter? (2) Does Evidence Code section 915 prohibit a trial court from conducting an in camera review of a legal opinion letter to determine whether the attorney-client privilege protects facts stated in the letter?
| Date: | Citation: | Docket Number: | Category: | Status: | Cross Referenced Cases: |
| Mon, 11/30/2009 | 47 Cal. 4th 725, 219 P.3d 736, 101 Cal. Rptr. 3d 758 | S163335 | Review - Civil Original Proceeding | submitted/opinion due | COSTCO WHOLESALE v. S.C. (RANDALL) (S154853) |
| 1 | Costco Wholesale Corporation (Petitioner) Represented by Ann Helen Qushair Seyfarth Shaw, LLP 2029 Century Park East, 33rd Fl Los Angeles, CA |
| 2 | Costco Wholesale Corporation (Petitioner) Represented by David D. Kadue Seyfarth Shaw, LLP 2029 Century Park East, Suite 3500 Los Angeles, CA |
| 3 | Superior Court of Los Angeles County (Respondent) Represented by Frederick R. Bennett Superior Court of Los Angeles County 111 N. Hill Street, Suite 620 Los Angeles, CA |
| 4 | Randall, Greg (Real Party in Interest) Represented by Lawrence Matthew Glasner Rehwald Rameson Lewis & Glasner 5855 Topanga Canyon Boulevard, Suite 400 Woodland Hills, CA |
| 5 | Randall, Greg (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 6 | Chan, Brenda (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 7 | Engstrom, Trudy (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 8 | Godoy, Louis (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 9 | Head, Terry (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 10 | McManus, Susan (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 11 | Peterson, Cynthia (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 12 | Rogers, Alan (Real Party in Interest) Represented by Lee Matthew Gordon Hagens Berman Sobol Shapiro, LLP 700 S. Flower Street, Suite 2940 Los Angeles, CA |
| 13 | Association of Southern California Defense Counsel (Amicus curiae) Represented by James R. Robie Robie & Matthai 500 S. Grand, Suite 1500 Los Angeles, CA |
| 14 | California Employment Law Council (Amicus curiae) Represented by Victor Schachter Fenwick & West, LLP 801 California Street Mountain View, CA |
| 15 | Los Angeles County Bar Association (Amicus curiae) Represented by Jeffrey Alan Warfield Haight Brown et al., LLP 6080 Center Drive, Suite 800 Los Angeles, CA |
| Opinion Authors | |
| Opinion | Justice Kathryn M. Werdegar |
| Concur | Chief Justice Ronald M. George |
| Dockets | |
| May 6 2008 | Petition for review with request for stay filed (civil) Petitioner costco Wholesale Corporation Attorney David D. Kadue request for immediate stay of disclosure. |
| May 6 2008 | Record requested |
| May 7 2008 | Received Court of Appeal record |
| Jun 11 2008 | Petition for review granted (civil case) The application for stay is denied, and the petition for review is granted. Kennard, J., was recused and did not participate. Votes: George, C.J., Baxter, Werdegar, Chin, Moreno, and Corrigan, JJ. |
| Jun 25 2008 | Certification of interested entities or persons filed Costco Wholesale, petitioner David Kadue, counsel |
| Jul 1 2008 | Request for extension of time filed Petitioner, Costco Wholesale, is asking to August 25, 2008, to file the opening brief on the merits. by counsel, Ann H. Qushair. |
| Jul 7 2008 | Extension of time granted On application of petitioner and good cause appearing, it is ordered that the time to serve and file petitioner's opening brief on the merits is hereby extended to and including August 25, 2008. No further extensions will be granted. |
| Aug 25 2008 | Opening brief on the merits filed Petitioner Costco Wholesale Corporation ~Attorney Ann H. Qushair |
| Sep 24 2008 | Answer brief on the merits filed Greg Randall, et al., RPIs Lee Gordon, Lawrence Glasner, Steve Berman, counsel |
| Oct 14 2008 | Reply brief filed (case fully briefed) Costco Wholesale Corporation, petitioner Ann H. Qushair, counsel |
| Nov 10 2008 | Received application to file Amicus Curiae Brief Association of Southern California Defense Counsel and Los Angeles County Bar Association in support of petitioner J. Alan Warfield, James Robie, counsel |
| Nov 13 2008 | Received application to file Amicus Curiae Brief California Employment Law Council Victor Schachter, counsel |
| Dec 1 2008 | Permission to file amicus curiae brief granted The application of Association of Southern California Defense Counsel and Los Angeles County Bar Association for permission to file an amicus curiae brief in support of petitioner is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief. |
| Dec 1 2008 | Amicus curiae brief filed Association of Southern California Defense Counsel and Los Angeles County Bar Association in support of petitioner. James Robie, J. Alan Warfield, counsel |
| Dec 1 2008 | Permission to file amicus curiae brief granted The application of California Employment Law Council for permission to file an amicus curiae brief in support of petitioner is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief. |
| Dec 1 2008 | Amicus curiae brief filed California Employment Law Council in support of petitioner. Victor Schachter, counsel |
| Jun 1 2009 | Justice pro tempore assigned Justice Kathleen E. O'Leary (4/3) (Kennard, J., recused) |
| Jul 31 2009 | Case ordered on calendar to be argued Wednesday, September 2, 2009, at 9:00 a.m., in San Francisco |
| Aug 3 2009 | Filed: Petitioner's Costco's Request for Court to Retain Jurisdiction Following Settlement of Case & Joint Notice of Final Approval of Settlement and Entry of Judgment. |
| Aug 11 2009 | Application filed Application to divide oral argument time filed by David D. Kadue, counsel for petitioner Costco Wholesale, asking to share 10 minutes of time with amicus curiae California Employment Law Council. |
| Aug 17 2009 | Order filed The request of counsel for petitioner in the above-referenced cause to allow two counsel to argue on behalf of petitioner at oral argument is hereby granted. The request of petitioner to allocate to amicus curiae California Employment Law Council 10 minutes of petitioner's 30-minute allotted time for oral argument is granted. |
| Sep 2 2009 | Cause argued and submitted |
| Nov 25 2009 | Notice of forthcoming opinion posted To be filed on Monday, November 30, 2009 @ 10 a.m. |
| Briefs | |
| Aug 25 2008 | Opening brief on the merits filed |
| Sep 24 2008 | Answer brief on the merits filed |
| Oct 14 2008 | Reply brief filed (case fully briefed) |
| Dec 1 2008 | Amicus curiae brief filed |
| Dec 1 2008 | Amicus curiae brief filed |
| Brief Downloads | |
 | |
| |
| May 4, 2010 Annotated by yinadong | FACTS: PROCEDURAL POSTURE: The trial court ordered a discovery referee to perform an in camera review of the opinion letter to determine whether it was in fact subject to any privileges. The referee produced a heavily redacted version of the letter, stating that the portions of the letter involving facts were not protected. Costco petitioned the Court of Appeal for a writ of mandate, but the Court of Appeal denied the petition because Costco had not demonstrated that disclosure of the unredacted portions of the letters would cause it irreparable harm in the lawsuit. HOLDING: ANALYSIS: A court may not order an in camera hearing to determine whether the attorney-client privilege exists, unless the court finds first that there is no privilege in the first place: The party petitioning for relief from the order does not need to show that its case would be harmed by the disclosure: CONCURRENCE: |
