CONNECTICUT INDEMNITY COMPANY v. SUPERIOR COURT (1999)

In this consolidated matter several insurance companies (the Insurers) seek writs of mandate to compel the Superior Court of San Joaquin County to quash administrative subpoenas duces tecum issued by the City of Lodi (Lodi) under Government Code section 37104 ¹ or to grant protective orders limiting the documents which they may compelled to produce.   We issued alternative writs of mandate upon direction from the Supreme Court.

Lodi is charged with the responsibility for cleaning up a contaminated groundwater site within the city by prosecuting enforcement actions against the other potentially responsible parties (PRPs) or by doing the cleanup itself and seeking reimbursement.   It served notices on the PRPs asserting it would sue them if settlement was not reached.

Lodi seeks the Insurers' entire files on the PRPs, their insureds, pursuant to a resolution by the Lodi City Council (the City Council) authorizing inter alia an investigation into potential financial mechanisms to fund the cleanup.   The Insurers contend the subpoenas should be quashed as an unlawful device to obtain prelitigation discovery or, in the alternative, they should be granted protective orders limiting the scope of the subpoenas to production that could be compelled in discovery if the litigation had already commenced.

The Insurers' core claim is grounded on the privacy interest of their insureds.   Property and privacy are deeply intertwined;  the law recognizes a legally protected interest in keeping financial information private.   The use of the power of government to compel the production of financial information requires a legally recognized justification.   The justification is then weighed against the privacy interest and if found sufficient will warrant the compelled production under appropriate safeguards to minimize the scope of intrusion and disclosure.

In the case of a novel claim of justification the court must exercise discretion to perform this weighing and balancing task.   As with every exercise of discretion the court must attend to the analogies and examples of existing law.   To the extent the claimed justification implicates a policy embedded in the existing law, the policy constrains the exercise of discretion.

In this case Lodi seeks a particular kind of financial information:  the nature and extent of potential liability insurance coverage of the insureds.   The justification that Lodi tenders is its interest as a prospective litigant in assessing the ability of potential defendants to respond in damages if it is successful in obtaining a judgment against them.

As we will show, there are several pertinent rules of law.   The most important is the Legislature has limited the insurance information which may be obtained by a litigant.   As a litigant a city has no greater right to obtain information by means of its subpoena power than it would have if it were employing the judicial subpoena power.   Hence, a city is entitled, at most, to what it would receive in litigation-the insurance discovery allowed by Code of Civil Procedure section 2017, subdivision (b).

The remaining question is whether this information should be made available to Lodi as a prospective litigant.   The subpoena power asserted by Lodi may be enforced by the sanction of contempt. (§ 37109.)   This poses the danger of one prospective litigant sitting in judgment on another with potential criminal sanctions, requiring as a practical matter court supervision, i.e., litigation in any event.   In view of this consideration and that all Lodi can obtain is what they could obtain in litigation, we conclude a city's interest in disclosure, as a prospective litigant, does not overcome the privacy interests of prospective defendants.

We will issue a writ directing the trial court to render a judgment declaring that Lodi has no right to employ its subpoena power to obtain the demanded insurance information.

FACTS AND PROCEDURAL BACKGROUND

In 1994, the California Department of Toxic Substances Control (DTSC) began an investigation into the responsibility of Lodi and three PRPs for a contaminated groundwater site in Lodi. The three PRPs are a printing business named Lustre-Cal Nameplate Corporation, and two dry cleaners-Guild Cleaners and Busy Bee Cleaners.   Discussions between DTSC, Lodi and the PRPs continued through late 1996.

In January 1997, the City Council adopted Resolution No. 97-09.   It establishes a legislative proceeding to investigate the adequacy of existing environmental legislation, to craft legislative measures and to investigate potential financial mechanisms to abate the contamination.²

In May 1997, DTSC and Lodi announced they had entered into a “Comprehensive Joint Cooperative Agreement” (Agreement).   Under the Agreement, Lodi and DTSC apparently resolved Lodi's liability as a PRP;  Lodi promised to pay the DTSC $1 million for preliminary cleanup assessment, and the DTSC appointed Lodi as the lead cleanup agency for the contaminated site.   Pursuant to the Agreement, Lodi promised to start the actual cleanup within 24 months, by prosecuting enforcement actions against the other PRPs or by doing the cleanup itself and seeking reimbursement.

Around the time of the Agreement, Lodi served subpoenas on the known liability insurers of the PRPs, the Insurers.   Lodi conceded that “[s]ubject to valid claims of privilege or immunity, ․ City Council is essentially seeking [through the subpoenas] the [insurers'] entire files on the policyholders at issue.” ³

Lodi asserts it wants to determine the existence and terms of liability policies insuring the PRPs during the entire time they have been in business.   Some of them have been in business for several decades.   Lodi refers to this inquiry as “insurance archeology.”

On May 30, 1997, several of the Insurers, collectively referred to as Maryland Insurance, moved for protective orders or to quash the subpoenas on the grounds, inter alia, the subpoenas sought premature prelitigation discovery prohibited under Code of Civil Procedure section 2017, and sought documents protected by constitutional or statutory protections of the right of privacy (e.g., Ins.Code, § 791), the attorney client privilege, or the attorney work product privilege.

In June 1997, Lodi sent Notices of Endangerment to the PRPs. They assert that Lodi would sue the PRPs if settlement was not reached.   Enclosed with the notices were offers to settle for the limits of their liability insurance policies.

On July 16, 1997, and July 22, 1997, some of the Insurers, collectively Connecticut Indemnity, filed motions to quash or for protective orders pertaining to other subpoenas on grounds similar to those asserted in the Maryland Insurance motions.

On July 22, 1997, the Maryland Insurance motions to quash or for protective orders came on for hearing.   At the conclusion of the hearing the superior court said the motions to quash were denied and the protective orders would not be granted and directed Lodi to prepare a formal order.

On August 29, 1997, the superior court entered an order declaring that Lodi has a serious groundwater contamination problem, it can exercise legislative and regulatory power to deal with the problem, and the Maryland Insurance motions were denied based on the briefs and arguments of the parties, but that enforcement of the subpoenas would be stayed pending completion of anticipated extraordinary writ proceedings in the court of appeal by Maryland Insurance.

On September 10, 1997, the Connecticut Indemnity motions came on for hearing.   At the outset of the hearing, the superior court said that Lodi requested clarification of the stay provisions of the Maryland Insurance order.   The superior court then made the following remarks concerning the Maryland Insurance order.

The parties had challenged the process by which the subpoenas were issued as inappropriate and the court had rejected these arguments.   That ruling would now be the subject of writ proceedings in the court of appeal and thereafter the court would consider a number of different objections to specific areas of inquiry.   In the interim the stay would be in effect.

The court then heard argument concerning the Connecticut Indemnity motions.   Counsel for the Insurers argued that, assuming the subpoenas were not entirely inappropriate, all of the requests for information other than the insurance policy were inappropriate, as irrelevant to the ostensible purpose of the inquiry (e.g., the insurer's document retention practices, reinsurance, premium information) or a violation of privacy rights of the policy holders (e.g., claims made information, and underwriting files containing personal information regarding the insured's occupation, finances, and credit) under the California Constitution, article I, section 1, or Insurance Code section 791.   Counsel argued that disclosure of this information should be limited to the information that would be available for discovery under statutes specifically authorizing such disclosure, i.e., Code of Civil Procedure section 2017.

Counsel for Lodi argued as follows.   Lodi was not asking for privileged information, i.e., “information that was protected by the attorney-client privilege and the work-product immunity․”  As to relevancy, counsel said the Insurers were “dead flat wrong” in asserting the resolution was basically looking for financial information;  the resolution was not only looking for information concerning financial assets but also the source, nature, and release of the contamination in issue;  neither the Insurance Code nor case law restricting the discovery of insurance information applied to the subpoenas issued under section 37104.

When the matter was submitted, the superior court said it remained persuaded the subpoenas were allowed;  “And as to the information regarding document retention practices, premiums charged for policies, reinsurance information, claims files, and underwriting files, all of them can be discovered through these subpoenas.”

The Insurers petitioned this court for writs of mandate.   The petitions were denied summarily.   The California Supreme Court granted the insurers' petitions for review and directed this court to vacate our summary denials and to issue orders to the superior court to show cause why the relief sought in the petitions should not be granted.

We have done so, directing the parties to address, inter alia, whether the superior court had jurisdiction to entertain the motions to quash and for protective orders.

DISCUSSION

I

 Preliminarily, we consider Lodi's challenge to the propriety of the procedure employed by petitioners in the superior court to contest the subpoenas, the motions to quash the subpoenas or for protective orders.   Lodi claims the exclusive procedure is established by statute.   We disagree.

A.

The authority of a city to compel the attendance of witnesses and the production of documents is provided by statute.  “The legislative body may issue subpenas requiring attendance of witnesses or production of books or other documents for evidence or testimony in any action or proceeding pending before it.” (§ 37104.)

If a person or entity subpoenaed refuses to obey the subpoena, the mayor is directed to report that fact to the superior court (§ 37106), the superior court judge shall issue an attachment to the sheriff to bring the person before the judge (§ 37107), and “[o]n return of the attachment and production of the witness, the judge has jurisdiction.” (§ 37108).

Lodi argues that in the light of this statutory scheme the Insurers could not invoke the jurisdiction of the superior court, implying the scheme supplies the exclusive means to test a challenged subpoena.   However, Lodi admits that, as to the motion to quash, when it appeared before the superior court and acknowledged noncompliance with the subpoenas, the defect was cured and the court had jurisdiction under section 37108.

B.

Lodi does not squarely address the superior court's jurisdiction to issue protective orders.   It joins issue on the merits of the Insurers' claims the subpoenas violate rights of privacy and seek information that is not pertinent to any lawful municipal purpose.   However, Lodi also argues that because the Maryland Insurance claims do not relate to every document Lodi seeks, they must be resolved by presentation to the City Council for preliminary rulings under Evidence Code section 914.

The Insurers ⁴ claim the superior court has jurisdiction to entertain motions to quash or for protective orders under Code of Civil Procedure section 1987.1, independent of the proceedings specified under sections 37106-37108, citing Dibb v. County of San Diego (1994) 8 Cal.4th 1200, 1218, 36 Cal.Rptr.2d 55, 884 P.2d 1003.⁵  They rely on case law holdings that, under the Fourth Amendment to the United States Constitution, an administrative subpoena, ordinarily, (1) must relate to an inquiry which the administrative agency is authorized to make;  (2) must seek information reasonably relevant to that inquiry;  (3) must not be too indefinite;  and (4) the subpoenaed party must be accorded an opportunity for judicial review before suffering a penalty for refusing to comply.  (See, e.g., Pinney v. Phillips (1991) 230 Cal.App.3d 1570, 1587, 281 Cal.Rptr. 904.)

The proceedings addressed by sections 37106-37109 are contempt proceedings.   Section 37109 provides:  “The right of a witness to purge himself of the contempt and the proceedings, penalties, and punishment shall be the same as if the contempt had been committed in a civil trial in a superior court.”   Contempt in the nature of willful disobedience of process committed in a civil trial is punishable as a misdemeanor.  (Pen.Code, § 166.)   The case law cited by the Insurers strongly implies that in light of sections 37106-37109 a person subject to an administrative subpoena must be accorded an opportunity for judicial review of the subpoena in lieu of committing a contempt at least before becoming subject to punishment for a contempt pursuant to that scheme.  (Also cf. In re Berry (1968) 68 Cal.2d 137, 148-149, 65 Cal.Rptr. 273, 436 P.2d 273;  see generally, e.g., Natural Gas Pipeline Co. v. Slattery (1937) 302 U.S. 300, 310, 58 S.Ct. 199, 204, 82 L.Ed. 276, 281.)

This implication from the case law is reinforced by the policy manifest in statutes governing discovery in the judicial forum.   Code of Civil Procedure section 1985.3 prescribes detailed requirements for notice to a consumer and an opportunity to object when a subpoena duces tecum is served on a witness, including an insurance company, seeking writings pertaining to the consumer.

The implication is also reinforced by the imminent prospect that Lodi will commence litigation involving the recipients of its subpoena concerning matters that pertain to the subpoenas.   If there is no preliminary avenue of judicial review, Lodi as a prospective litigant would be in the position of ruling on its own authority, e.g., under Evidence Code section 914 on privilege claims, with its prospective adversaries subject to its rulings and potential consequent punishment.   The determination of such matters by a prospective litigant implicates due process concerns.  (See generally, 2 Rotunda and Nowak, Treatise on Constitutional Law (2d ed.1992) § 17.8, pp. 656-658.)

However, the petitioners did not employ the correct procedure in the superior court.   The motion procedure employed presupposes an action on file in the superior court and there was none.   The appropriate procedure was to file a complaint for declaratory and injunctive relief or a petition for writ of mandate.

That procedural failure does not vitiate our review of the matter.  “The court must, in every stage of an action, disregard any error, improper ruling, instruction, or defect, in the pleadings or proceedings which, in the opinion of [the] court, does not affect the substantial rights of the parties.”   (Code Civ. Proc., § 475.)

In this case the procedure followed in the trial court is the functional equivalent of a request for declaratory and injunctive or mandamus relief.   The application for relief framed the issues and was adequate to perform the function of a complaint.   Lodi appeared, contested the issues on the merits and submitted the matter for adjudication.   In this context no purpose would be served by exalting form over substance.

Accordingly, we conclude the superior court had jurisdiction to entertain an affirmative challenge to a subpoena issued by a city under section 37104 and is not limited to a contempt proceeding instituted under sections 37106-37109.  (C.f., e.g., Southern Pacific Transportation Company v. State Bd. of Equalization (1987) 191 Cal.App.3d 938, 950, 237 Cal.Rptr. 191.)

II

The Insurers contend the superior court erred in failing to grant relief in these circumstances.   They argue, inter alia, that the superior court should have quashed the subpoenas or granted a protective order to preserve the constitutional right of privacy of their policy holders, under California Constitution, article I, section 1. We agree.

A.

Preliminarily, we consider Lodi's claims the merits of these questions should not be reached in this case.

Lodi first argues that because Maryland Insurance concedes that its claims of privacy and lack of pertinence do not relate to every document Lodi seeks, such claims must be resolved by presentation to the City Council for preliminary rulings under Evidence Code section 914.

The orders of the superior court are not clear concerning either the mechanism for resolution of the residual claims of privilege or the scope of objections it might entertain, in part because of equivocal usage of the parties concerning the term “privilege.”   However, Connecticut Indemnity's motion for a protective order on grounds of privacy and pertinence was directed to less than the entire scope of the subpoenas.

In denying the motion and in light of the trial court's concluding remarks it appears the court ruled against the Insurers' claims that Lodi can only compel production of evidence that would be obtainable in discovery in the judicial forum and against the claims that Lodi's request concerning the practices of the Insurers is not pertinent to the ostensible purposes of the City Council proceeding.

Accordingly, we reject Lodi's claims that an examination of such matters is premature.

 Lodi also claims the privacy interest, if any, in avoiding the disclosure of the insurance information is an interest of the insureds and has either been waived or cannot be asserted by the Insurers in this case.

Lodi asserts in its return that it “provided notice, and thus an opportunity to object, to each of the policyholders it asked [the Insurers] about.”   In support of this assertion it provides as exhibits to the return ostensible copies of letters to two of the insureds informing them of the impending subpoenas and requesting submission of written objections to Lodi if the insured objects to the insurer providing the subpoenaed documents.   Lodi asserts that it received only one set of objections and argues that because the insureds were provided with an opportunity to object the Insurers are not entitled to object on their behalf.

 We note at the outset that an insurer has standing to assert the privacy interest of an insured in the nondisclosure of information in the possession of the insurer.  (See, e.g., Wood v. Superior Court (1985) 166 Cal.App.3d 1138, 1145, 212 Cal.Rptr. 811.)   However, if the insured consents to disclosure, the vicarious standing of the insurer would be vitiated.   The question whether in a particular situation the insured has waived objection or impliedly consented to disclosure by failing to object in person to disclosure is ordinarily a fact laden inquiry.  (See, e.g., Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1052-1053, 68 Cal.Rptr.2d 758, 946 P.2d 427.)

Lodi fails to show that it tendered a claim of this nature in the superior court and that the superior court ruling was based upon such a theory.   It is impracticable at this point to ascertain the reasons for the failure of some insureds to appear in their own behalf in these proceedings.   We cannot say the Insurers are precluded from asserting the privacy rights of their insureds in these proceedings, accordingly, we turn to the merits of the Insurers' privacy claim.

B.

 As related, property and privacy are deeply intertwined.   The law recognizes a legally protected interest in keeping financial information private.   Thus, use of the power of government to compel the production of financial information requires assertion of a legally cognizable justification.   The justification must then be weighed against the privacy interest and if found sufficient will warrant the compelled production under appropriate safeguards to minimize the scope of intrusion and disclosure.   (See, e.g., Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 125 Cal.Rptr. 553, 542 P.2d 977.)   It is not a sufficient justification to compel disclosure that the information is relevant to pending litigation.   (See, e.g., Lantz v. Superior Court (1994) 28 Cal.App.4th 1839, 1853-1857, 34 Cal.Rptr.2d 358.)   If disclosure is compelled, the intrusion on the privacy interest must be the minimum necessary.  (Id. at p. 1855, 34 Cal.Rptr.2d 358;  Wood v. Superior Court, supra, 166 Cal.App.3d at p. 1148, 212 Cal.Rptr. 811.)

In the case of a novel claim of justification the court must exercise discretion to perform this weighing and balancing task.   As with every exercise of discretion the court must attend to the analogies and examples derived from the existing law.   Balancing the interest in privacy against the interest in disclosure requires the exercise of judicial discretion.  “The discretion conferred upon the court ‘is a discretion, governed by legal rules, to do justice according to law or to the analogies of the law, as near as may be.’  (Lybecker v. Murray (1881) 58 Cal. 186, 189.)   That is to say, the range of judicial discretion is determined by analogy to the rules contained in the general law and in the specific body or system of law in which the discretionary authority is granted.”  (County of Yolo v. Garcia (1993) 20 Cal.App.4th 1771, 1778, 25 Cal.Rptr.2d 681.)   To the extent the claimed justification is analogous to the policy of the existing law, that law provides a boundary for the exercise of discretion.

In this case the kind of financial information that Lodi seeks is the nature and extent of potential liability insurance coverage of the insureds.   The justification that Lodi tenders is its interest as a prospective litigant in assessing the ability of potential defendants to respond in damages if it is successful in obtaining a judgment against them.⁶

There are several rules of law which pertain to the interest in obtaining such information.   One is that, unless the information is pertinent to the merits of the claim or a sufficient case for punitive damages has been shown, the interest of a litigant in obtaining financial information is generally insufficient to overcome the interest in privacy.  (See, Doak v. Superior Court (1968) 257 Cal.App.2d 825, 831-834, 65 Cal.Rptr. 193.)   Civil Code section 3295 prohibits the pretrial discovery of the financial condition of a defendant without a court order.

There is an exception to this general rule for litigants seeking information pertaining to possible liability insurance.  (See, e.g., Doak, supra.)   Because of the peculiar nature of this property, a litigant may obtain certain information about insurance.  (257 Cal.App.2d at p. 832, 65 Cal.Rptr. 193.)   Under Code of Civil Procedure section 2017, subdivision (b), a litigant is entitled to discover the existence and contents of potentially applicable insurance and whether the carrier disputes coverage.⁷

Another pertinent rule is that, notwithstanding the social interest in advancing settlement and avoiding the formality of litigation, a prospective litigant has no cause of action to obtain even this limited insurance information before commencing litigation against the insured.  (Griffith v. State Farm Mut. Auto. Ins. Co. (1991) 230 Cal.App.3d 59, 63-64, 281 Cal.Rptr. 165.) ⁸

We first examine the question whether, in any event, Lodi could obtain a broader range of insurance information by using a subpoena under section 37104 than would be available if it had filed suit against the insureds, the other PRPs, under Code of Civil Procedure section 2017, subdivision (b).  As related, balancing the interest in privacy against the interest in disclosure requires the exercise of judicial discretion and the range of discretion is bounded by analogy to the general law.   In this case, the analogy is clear.   Lodi wants the insurance information in issue because it is interested as a potential litigant in evaluating its chances of satisfying a judgment against the PRPs, the Insurers' policyholders.   The generic balance between such an interest in compelling the production of insurance information and the privacy interest against such disclosure is set out in Code of Civil Procedure section 2017, subdivision (b).⁹

 For these reasons, we agree with the Insurers that where a city investigation is pursued for the same ends as a cause of action in the judicial forum the same privacy limitations that apply to discovery by subpoena in the litigation apply to investigation by means of a subpoena under section 37104.   Thus, at a minimum, the superior court should have granted an order limiting the disclosure of the information in issue to matters prescribed in Code of Civil Procedure section 2017, subdivision (b).

 That brings us to the question whether such disclosure is available to a prospective municipal litigant under section 37104.   This also is a question requiring balancing the interest in disclosure against the privacy interest.   We note again the obvious possibilities for mischief inhering in having a prospective litigant sit in judgment on a likely intended target with potential criminal sanctions for refusal to produce the requested information.   As a practical matter the situation will require court supervision to resolve the inevitable borderline disputes, i.e., litigation in any event.   The interest of a prospective litigant is more attenuated than the interest of an actual litigant;  e.g., the actual litigant must be presumed to have probable cause that the insured is liable on the underlying claim.

Lastly, as explained above, all that the city can obtain with its subpoena is that which they could obtain in litigation in any event.   In light of these considerations, we conclude that a city's interest in disclosure, as a prospective litigant, does not justify overcoming the privacy interest of prospective defendants.

None of the other points raised in the briefs warrant discussion.

DISPOSITION

Let a peremptory writ of mandate issue directing respondent court to vacate its order denying the request of the Insurers for relief.   The respondent court shall enter judgment declaring invalid the subpoenas in issue.   Costs awarded petitioners.

I respectfully dissent.

The majority concludes that a city facing a potential environmental catastrophe to its drinking water supply cannot obtain through its legislative subpoena power basic liability insurance information that is routinely available to litigants.   This conclusion is reached notwithstanding, as more than one court has stated, that “ ‘it is difficult to imagine any interest that [a legislative entity] could have that would be more compelling, or ․ more “dominant and significant,” than its interest in determining the availability of funds for the cleanup of hazardous substances located within its boundaries[,]’ ” and notwithstanding that such a legislatively-subpoenaed party is protected the same as a judicially-subpoenaed party.  (Ford Motor Co. v. Insurance Co. of North America (1995) 35 Cal.App.4th 604, 613, 41 Cal.Rptr.2d 342, quoting Leksi, Inc. v. Federal Ins. Co. (D.N.J.1990) 736 F.Supp. 1331, 1335;  Gov.Code, §§ 37106-37109;  Evid.Code, §§ 901, 905, 914;  Code Civ. Proc., §§ 1985, 1987.1, 1991;  Dibb v. County of San Diego (1994) 8 Cal.4th 1200, 1218, 36 Cal.Rptr.2d 55, 884 P.2d 1003.)

The fundamental error the majority makes is viewing the City of Lodi (Lodi) as nothing more than a prospective litigant.   There is a troubling simplicity in viewing Lodi this way.   This view both minimizes Lodi's interest in obtaining the insurance information and magnifies the insured's privacy interest in not disclosing it.   But this view is wrong in both respects and the two wrongs here don't make a right, they simply make two wrongs.

Lodi is much more than a prospective litigant here.   Lodi's legislative subpoenas have been issued pursuant to a statutorily-authorized, resolution-defined legislative investigation.  (Gov.Code, § 37104.)   Those subpoenas advance not only potential litigation interests, but the quintessential legislative functions of appropriating and lawmaking.   The majority presumes to know what Lodi is really doing with its subpoenas, and sees only prospective litigation.   But it is not our job to be presumptuous.   Our job is to examine the record and the law and determine if Lodi's subpoenas are legal.   Through its resolution, Lodi has told us what it's doing;  through the record, we can see what it's doing.   I would conclude that what Lodi is doing is legal, in the threshold context presented here.

In the legislative subpoenas at issue, the City Council of Lodi (City Council) requested twenty-seven items of information from insurers of parties who may be responsible for the environmental contamination (these parties are termed potentially responsible parties or PRPs).¹  The information that City Council requested ranged from the insurance policies themselves to every communication involving the insured.   By requesting this information, City Council is attempting to determine the existence and terms of liability insurance policies the PRPs have had since they have been in business;  some PRPs have been in business for several decades.   Lodi refers to this quest as “insurance archeology.”   So will I. As one treatise notes, “environmental contamination may span decades and encompass hundreds of [insurance] policies, with continuing ‘triggers' of coverage.”  (Robie, Barg, Gibson and Smith, Bancroft-Whitney's California Civil Practice, Environmental Litigation, § 5:1, p. 5.) Lodi echoes this theme in its return:  “Because of the unique nature of environmental liabilities, ․ which may come to light years or decades after the accidents which led to the damage at issue, historic liability policies are often very important when marshaling assets for environmental cleanups.”

As I read the record, the trial court ruled generally, as a threshold matter, that City Council could obtain liability insurance information through its legislative subpoenas.   In the trial court's words, the subpoenas were not “entirely inappropriate.”   Particular questions of privacy, privilege, relevance, proprietary information, confidentiality and the like, as they pertain to particular requested items, were left for another day once this threshold issue was resolved.   The trial court invited the parties to seek appellate review of this threshold issue through a writ proceeding.   They obliged.

I believe that the City Council, as a threshold matter, is authorized to issue its legislative subpoenas for “insurance archeology information”-i.e., disclosable information showing the existence or terms of liability insurance policies the PRPs have had since they have been in business.   I would remand to the trial court to consider the application of this legislative subpoena power to the twenty-seven items requested in the subpoenas, as those items relate to “insurance archeology information.”   The specific issues of privacy, privilege, relevance, proprietary information, confidentiality, and the like, as they relate to particular requested documents, would have to be addressed on remand.

This matter begins in 1994, when the California Department of Toxic Substances Control (DTSC) began investigating four potentially responsible parties (PRPs) regarding a contaminated groundwater site in Lodi. The four PRPs were Lodi itself, a printing business named Lustre-Cal Nameplate Corporation, and two dry cleaners-Guild Cleaners and Busy Bee Cleaners.   Discussions between the DTSC and the PRPs continued through late 1996.

In January of 1997, City Council adopted Resolution No. 97-09.   Through this resolution, City Council established a legislative proceeding to investigate and assess legislative measures and financial mechanisms, including liability insurance, regarding the contaminated site.²  This resolution authorized the City Council to issue legislative investigatory subpoenas pursuant to Government Code section 37104.

Government Code section 37104 (section 37104) authorizes city councils to issue legislative subpoenas.   That section provides:  “The legislative body may issue subpoenas requiring attendance of witnesses or production of books or other documents for evidence or testimony in any action or proceeding pending before it.”

A legislative body, like a city council, may issue a subpoena for an investigation undertaken for a lawfully authorized purpose within the power of the legislative body.  (See Craib v. Bulmash (1989) 49 Cal.3d 475, 482, 261 Cal.Rptr. 686, 777 P.2d 1120;  see also Millan v. Restaurant Enterprises Group, Inc. (1993) 14 Cal.App.4th 477, 480-481, 18 Cal.Rptr.2d 198;  In re Battelle (1929) 207 Cal. 227, 240-241, 244, 277 P. 725.)

The power of a legislative body to conduct investigations is inherent in the legislative process.  (In re Battelle, supra, 207 Cal. at p. 241, 277 P. 725;  Matula v. Superior Court (1956) 146 Cal.App.2d 93, 97-98, 303 P.2d 871;  Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1219, 70 Cal.Rptr.2d 745.)   As one treatise on California law explains, citing Battelle:  “Legislative bodies have inherent power to conduct investigations in aid of prospective legislation and for the purpose of securing information requisite to the proper discharge of their functions and powers․  [¶] The power to conduct investigations carries with it the power to require and compel attendance of witnesses and the production of books and papers by means of legal process.”  (42 Cal.Jur.3d, Legislature, § 19, p. 574.)  “The types of legislative activities which have justified exercise of the power to investigate include:  the primary functions of legislating and appropriating․”  (Ashland Oil, Inc. v. F.T.C. (D.D.C.1976) 409 F.Supp. 297, 305, fn. 8;  see also In re Battelle, supra, 207 Cal. at p. 244, 277 P. 725 [the general principles governing legislative investigation ordinarily apply to both state and federal legislative bodies];  see also 64 Ops.Cal.Atty.Gen. 94, 104 (1981).)   The investigatory power encompasses inquiries concerning what to appropriate from the public purse, or whether to appropriate.  (See Barenblatt v. United States (1959) 360 U.S. 109, 111-112, 79 S.Ct. 1081, 1085, 3 L.Ed.2d 1115, 1120-1121.)

While the investigatory power is broad, it has limits;  the investigation must be authorized by the legislative body, it must satisfy constitutional and applicable legal standards, and it must not intrude into an area that is exclusively for the judiciary or the executive.  (In re Battelle, supra, 207 Cal. at pp. 240-245, 277 P. 725;  Allen v. Superior Court (1959) 171 Cal.App.2d 444, 451, 340 P.2d 1030;  Watkins v. United States (1957) 354 U.S. 178, 188, 204, 77 S.Ct. 1173, 1179, 1187, 1 L.Ed.2d 1273, 1284, 1293;  see Scott v. Common Council (1996) 44 Cal.App.4th 684, 693-694, 52 Cal.Rptr.2d 161; 64 Ops.Cal.Atty.Gen., supra, at p. 104.)   Nevertheless, the judiciary must tread carefully in the realm of legislative investigation, lest it intrude impermissibly with proper legislative action.   (See Scott v. Common Council, supra, 44 Cal.App.4th at pp. 693-694, 52 Cal.Rptr.2d 161;  Allen v. Superior Court, supra, 171 Cal.App.2d at p. 451, 340 P.2d 1030.)

From these principles, a three-prong standard has emerged to determine generally whether legislative investigatory power has been properly asserted in a particular case:  (1) the investigation must be approved by the legislative body;  (2) the investigation must be pursuant to a valid legislative purpose;  and (3) specific inquiries must be pertinent to the subject matter of the investigation.  (Ashland Oil, Inc. v. F.T.C., supra, 409 F.Supp. 297, 305;  Millan v. Restaurant Enterprises Group, Inc., supra, 14 Cal.App.4th at pp. 480-481, 18 Cal.Rptr.2d 198;  Craib v. Bulmash, supra, 49 Cal.3d at p. 482, 261 Cal.Rptr. 686, 777 P.2d 1120;  In re Battelle, supra, 207 Cal. at pp. 244, 247-251, 277 P. 725.)

The question of whether a legislative subpoena meets legal standards is a question of law and is reviewed by a court independently.  (See Millan v. Restaurant Enterprises Group, Inc., supra, 14 Cal.App.4th at p. 485, 18 Cal.Rptr.2d 198.)   The PRPs' insurers contend that the City Council's legislative subpoenas fail the second and third prongs of the three-prong standard (i.e., valid legislative purpose and pertinence).

As to whether the investigation is pursuant to a valid legislative purpose, the insurers argue essentially that the City Council's legislative subpoenas serve the purpose of litigation rather than legislation.   The insurers claim that Lodi is impermissibly pursuing pre-litigation discovery rather than genuinely considering any legislation.   The insurers point to the chronology encompassing Lodi's Agreement with the DTSC to pursue enforcement actions, the subpoenas themselves, and the Notices of Endangerment and Offers to Settle.   They also rely on statements from a couple of Lodi officials, including the City Attorney, as quoted in newspaper accounts.   These statements indicate a strategy of pursuing insurance coverage to pay for the cleanup of the contaminated site.   This is the view the majority has adopted.

While the legislative subpoenas advance potential litigation interests, that is not all they do.   The legislative subpoenas also advance the quintessential legislative purposes of appropriating and lawmaking.

In its resolution, the City Council established a legislative proceeding to investigate and assess the potential methods to finance the abatement of the contamination, and the adequacy of liability schemes and financial responsibility mechanisms at the state and federal levels and in the private and commercial sector of the community (including liability insurance).   As Lodi notes in its briefing:  “․ [Lodi] has a legitimate interest in determining whether [liability insurance] assets are available to respond to the threat to its drinking water supply․  The City Council must determine whether litigation would be a wise use of taxpayers' limited resources and, if so, how much to budget and appropriate for litigation.   Moreover, an assessment of the extent to which insurance funds will be available will have important ramifications to City Council decisions about appropriations and spending money directly on necessary environmental investigations and cleanup.”  (Italics added.)

The City Council's resolution is in line with the broad investigatory power of a legislature, which, as noted above, encompasses inquiries concerning what to appropriate from the public purse or whether to appropriate.  (See Barenblatt v. United States, supra, 360 U.S. at pp. 111-112, 79 S.Ct. 1081;  see In re Battelle, supra, 207 Cal. at p. 244, 277 P. 725.)   As I explain, there is an obvious link between insurance funding for hazardous substance cleanup and the City Council's investigation here.   There is also a link between state and federal funding for such cleanup and the City Council's investigation of liability insurance information.

As for insurance funding for hazardous substance cleanup, California case law has recognized the compelling interest that a legislative body has in determining whether there is insurance coverage in this regard.   In Ford Motor Co. v. Insurance Co. of North America, supra, 35 Cal.App.4th 604, 41 Cal.Rptr.2d 342, a forum non conveniens case, the court quoted from an out-of-state decision, noting:  “ ‘A corollary to [a state's] compelling interest in the remediation of hazardous waste sites is its interest in the availability of insurance coverage for the costs associated with the cleanup of those sites․  [¶] [I]t is difficult to imagine any interest that [a state] could have that would be more compelling, or ․ more “dominant and significant,” than its interest in determining the availability of funds for the cleanup of hazardous substances located within its boundaries.’ ”  (35 Cal.App.4th at p. 613, 41 Cal.Rptr.2d 342, quoting from Leksi, Inc. v. Federal Ins. Co., supra, 736 F.Supp. at p. 1335;  see also Continental Ins. v. Northeastern Pharmaceutical (8th Cir.1988) 842 F.2d 977, 985.)

As for state and federal funding for hazardous substance cleanup, a city may apply for state “Superfund” compensation if the party responsible for the release of the substance cannot be identified, if there is no liable party, or if a judgment cannot be satisfied, in whole or in part, against the liable party.  (Health & Saf.Code, §§ 25319;  25372, subds. (a), (b);  see also Health & Saf.Code, §§ 25173.6, 25330-25335;  2 Manaster & Selmi, Calif.   Environmental Law and Land Use Practice, (Matthew Bender) § 33.03[1] [e], p. 33-14.)   This statutory scheme apparently assumes the city has investigated liability insurance coverage.   The federal “Superfund” legislation contains a similar approach.  (See 42 U.S.C.A. §§ 9601(22);  9611(a)(1) (2);  see also Manaster & Selmi, supra.) ³

Moreover, as the DTSC did here, it can enter into cleanup agreements with cities that require the city to reimburse the DTSC, or the DTSC to reimburse the city and pursue cost recovery against the responsible party.  (Health & Saf.Code, §§ 25355.5, subd. (a)(1)(C);  25351.2;  see Robie, Barg, Gibson and Smith, Bancroft-Whitney's Calif.   Civil Practice, Environmental Litigation, §§ 3:80, 3:94, pp. 76, 83-84;  see also 3 Manaster & Selmi, Calif.   Environmental Law and Land Use Practice, § 55.23[1][b], pp. 55-35 to 55-36.)   These agreements, likewise, seem to contemplate the investigation of liability insurance coverage.  (In its “Comprehensive Municipal Environmental Response & Liability Ordinance,” Lodi has specified that the fund established by that ordinance can be used to reimburse the DTSC for environmental nuisance costs.)

The City Council's exercise here of its section 37104 subpoena power does not merely involve municipal appropriation.   It involves municipal legislation as well.

In its resolution, City Council established a legislative proceeding “to investigate the adequacy of existing legislative environmental schemes and to take such action, including legislation at the municipal level and recommendations to the appropriate state or federal legislative body, as the City Council deems appropriate.”

Since passing this resolution, City Council has enacted two municipal ordinances.   The first ordinance has declared the contaminated site to be a nuisance.   The second ordinance is entitled the “Comprehensive Municipal Environmental Response & Liability Ordinance.”

The “Comprehensive Municipal Environmental Response & Liability Ordinance” basically covers the abatement of municipal environmental nuisances and how to pay for that abatement.   This ordinance contains provisions that can be tied to the City Council's subpoena-based investigation of liability insurance information here.   For example, the ordinance contains provisions covering information gathering and access, including insurance policies of potentially responsible parties.   Another provision in the ordinance specifies that the local environmental enforcement officer may order less stringent requirements for abatement than would otherwise apply if that officer “ determines that [such a course of action] is in the best interests of the overall public health, welfare and the [e]nvironment, after considering the public and private resources that are, or are likely to be, available to respond to an [e]nvironmental [n]uisance․”  The ordinance also establishes a “Comprehensive Municipal Environmental Response Fund” into which all amounts “received by the City of Lodi from, or on behalf of, potentially [r]esponsible [p]arties shall be deposited”;  in this fund, City Council also set up a restricted account specifically for the contaminated site at issue here.   Each of these municipal legislative provisions can be linked to the City Council's request for liability insurance information here.

It may be that the City Council “is without authority to compel disclosures [via legislative investigatory subpoenas] for the purpose of aiding the prosecution of pending suits[.]”  (Sinclair v. United States (1929) 279 U.S. 263, 295, 49 S.Ct. 268, 272, 73 L.Ed. 692, 698.)   However, the authority of the City Council “to require pertinent disclosures in aid of its own constitutional power[ ] is not abridged because the information sought to be elicited may also be of use in such suits.”  (Ibid.) Before us is a legislative investigation, not a lawsuit.   This legislative investigation is a proceeding in its own right.   Recognizing this distinction also dispenses with the insurers' argument that the legislative subpoenas violate the ban against bypassing an insured and suing directly his or her liability insurer (the “direct action” ban).  (See Ins.Code, § 11580, subd. (b)(2);  Alex Robertson Co. v. Imperial Casualty & Indemnity Co. (1992) 8 Cal.App.4th 338, 346-347, 10 Cal.Rptr.2d 165.)

Furthermore, it matters little whether a litigation motive in issuing the legislative subpoenas can be gleaned from Lodi's Agreement with the DTSC, the Notices of Endangerment, the Offers to Settle, and the statements of city officials.   In its resolution, the City Council has specifically linked its compelling interest in determining whether there is insurance coverage to pay for environmental cleanup to one of its primary legislative functions-appropriating.   City Council has also passed a municipal ordinance that can be linked to its legislative investigation of insurance information.   Since a proper legislative purpose has been shown, motive is largely irrelevant.  (Watkins v. United States, supra, 354 U.S. at p. 200, 77 S.Ct. 1173;  see In re Battelle, supra, 207 Cal. at p. 244, 277 P. 725.)

As a final point on legislative purpose, the insurers claim that the City Council's focus on appropriation as a basis of its investigation is an after-the-fact rationalization to justify the investigation.   An appropriation focus, however, was set forth specifically in the resolution establishing the City Council's legislative investigation.   City Council has issued its legislative subpoenas pursuant to valid legislative purposes of appropriating and legislating.

In light of this analysis, the insurers' argument on pertinence falls as well.   In the context of the threshold issue of legislative authorization, the request for “insurance archeology information” is pertinent to the legislative investigation concerning the contaminated site.  (See Ashland Oil, Inc. v. F.T.C., supra, 409 F.Supp. at p. 305 [in deciding pertinence, “the specific inquiries need only be reasonably related to the major subject matter area under investigation”];  see also Millan v. Restaurant Enterprises Group, Inc., supra, 14 Cal.App.4th at p. 481, 18 Cal.Rptr.2d 198 [“documents demanded must be relevant and ‘ “adequate, but not excessive, for the purposes of the relevant inquiry” ’ ”;  italics omitted].)

This discussion on legislative purpose and pertinence-with its focus on the core legislative functions of appropriating and lawmaking-demonstrates that Lodi has a compelling interest in obtaining the insurance archeology information through its legislative subpoenas.   What about the PRPs' interest in not disclosing this information?   This issue raises the question of privacy, and forms the basis of the majority's decision.   The majority concludes that Lodi's interest in disclosure, as a prospective litigant, does not overcome the PRPs' privacy interests.   I have explained that Lodi's interest is not simply that of a prospective litigant-through the legislative subpoenas, Lodi is exercising its appropriation and lawmaking functions as well.   The threshold context presented here tenders only the foundational question of whether Lodi is foreclosed entirely from seeking insurance archeology information because that quest impermissibly intrudes into private matters.   The answer to this question, framed in this foundational way, is no.

Preliminarily, I depart company from the majority's general conclusion that there is a state constitutionally-based right of privacy in all “financial information.”  (Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 125 Cal.Rptr. 553, 542 P.2d 977;  Wood v. Superior Court (1985) 166 Cal.App.3d 1138, 1148, 212 Cal.Rptr. 811.)   Certainly Valley Bank of Nevada did not go that far, and such a generally-phrased conclusion can lead to mischief.  (15 Cal.3d at pp. 657-658, 125 Cal.Rptr. 553, 542 P.2d 977.)

Furthermore, as the majority even acknowledges, there is a distinction drawn in the law between the permitted disclosure of the existence and terms of liability insurance and the prohibited disclosure of other financial assets.   (Doak v. Superior Court (1968) 257 Cal.App.2d 825, 828, 831-834, 65 Cal.Rptr. 193;  Code Civ. Proc., § 2017, subd. (b).)  Nevertheless, privacy concerns regarding the disclosure of insurance information are expressed in Code of Civil Procedure section 2017, subdivision (b), and the Insurance Information and Privacy Protection Act set forth in Insurance Code section 791 et seq.   These privacy concerns implicate claims of confidentiality that require a court-in its oversight of the legislative subpoena process through motions to quash and contempt actions (more on this later)-to balance the interest in disclosure against the interest in non-disclosure.  (See Valley Bank of Nevada v. Superior Court, supra, 15 Cal.3d at p. 658, 125 Cal.Rptr. 553, 542 P.2d 977.)   I therefore turn to that weighing process and find Lodi's interest in disclosure of insurance archeology information more weighty than the PRPs' interest in non-disclosure.

Lodi is trying to determine the existence and terms of liability insurance policies the PRPs have had since they have been in business.   The PRPs are commercial establishments engaged in enterprises that pose recognized dangers to the environment and the public health.   As noted, the City Council's investigation of the availability of liability insurance funds to clean up the contaminated site implicates an interest of Lodi that could not be “more compelling, or ․ more ‘dominant and significant.’ ”  (See Ford Motor Co. v. Insurance Co. of North America, supra, 35 Cal.App.4th at p. 613, 41 Cal.Rptr.2d 342.)

The existence and terms of liability insurance coverage are discoverable in civil litigation proceedings.  (Code Civ. Proc., § 2017, subd. (b).)  This discoverable information includes the identity of the carrier, the nature and limits of the coverage, the insurance policy itself, and whether there is a coverage dispute.  (Ibid.;  Irvington-Moore, Inc. v. Superior Court (1993) 14 Cal.App.4th 733, 739-741, 18 Cal.Rptr.2d 49.)   Information concerning liability insurance coverage is not an exclusively private matter between a liability insurer and its insured.  “[T]he broad issue of the availability of liability insurance coverage ․ for the costs of cleaning up hazardous waste sites is a question of substantial importance not only to liability insurers and their insureds, but to the public as well.”   (Continental Ins. v. Northeastern Pharmaceutical, supra, 842 F.2d at p. 985;  see also Ford Motor Co. v. Insurance Co. of North America, supra, 35 Cal.App.4th at pp. 612-613, 41 Cal.Rptr.2d 342.)

The court in Griffith v. State Farm Mut. Auto. Ins. Co. (1991) 230 Cal.App.3d 59, 281 Cal.Rptr. 165 concluded that liability insurance information (in that case, policy limits) is not discoverable by a private party absent a lawsuit or other formal proceeding.  Griffith's conclusion was founded on the Insurance Information and Privacy Protection Act (Ins.Code, § 791 et seq.).  (230 Cal.App.3d at pp. 65-67, 281 Cal.Rptr. 165.)  (That act, among other things, limits the dissemination of “personal” and “privileged” information about insureds to other persons and entities-Ins.   Code, §§ 791, 791.02 subds. (s) and (v), 791.13.)   The City Council's legislative investigation, however, qualifies as a formal proceeding and is being conducted by a public entity.   Investigations are an inherent part of the legislative process.  (In re Battelle, supra, 207 Cal. at p. 241, 277 P. 725.)   This particular investigation has been established and defined by resolution and its subpoenas are authorized by statute.   (Gov.Code, § 37104.)

As a threshold, foundational question of privacy, then, when one balances the PRPs' privacy interests against Lodi's compelling interest in disclosure of insurance archeology information, Lodi's interest comes out on top.  (This analysis does not address specific privacy questions as they relate to particular requested documents, issues suitable for remand.)

Does my position mean that a city council can use its investigatory subpoena power to snoop into personal financial or similar information under the open-ended guise of managing the public fisc?   In one word, No! As noted, while the legislative investigatory power is broad, it must satisfy constitutional and applicable legal standards.  (In re Battelle, supra, 207 Cal. at pp. 240-245, 277 P. 725;  Allen v. Superior Court, supra, 171 Cal.App.2d at p. 451, 340 P.2d 1030;  Watkins v. United States, supra, 354 U.S. at pp. 188, 204, 77 S.Ct. 1173.)   These standards include constitutional and statutory privacy protections.   A court, moreover, is likely to look askance at a local legislative subpoena that does not concern a genuine public issue or public function.

Furthermore, the party on the receiving end of a city council legislative subpoena is protected like a party receiving a judicial subpoena.   (See Dibb v. County of San Diego, supra, 8 Cal.4th at p. 1218, 36 Cal.Rptr.2d 55, 884 P.2d 1003 [characterizing, in part, the similar legislative subpoena power of a county board of supervisors].)   If a person refuses to obey a duly-issued city council legislative subpoena and the city presses the matter, a superior court judge assumes jurisdiction of the issue.   (Gov.Code, §§ 37106-37108.)   Under Government Code section 37109, “[t]he right of a witness to purge himself of the contempt [regarding a city council legislative subpoena] and the proceedings, penalties, and punishment shall be the same as if the contempt had been committed in a civil trial in a superior court.”   The Evidence Code sets forth the following three relevant provisions-on the subject of privileges-that apply to a city council's section 37104 legislative subpoena:

Two definitional provisions:

Evidence Code Section 901-

“ ‘Proceeding’ [includes] any action, hearing, investigation, inquest, or inquiry ( ․ conducted by a ․ legislative body ․ ) in which, pursuant to law, testimony can be compelled to be given.”

Evidence Code Section 905-

“ ‘Presiding officer’ means the person authorized to rule on a claim of privilege in the proceeding in which the claim is made.”

And a substantive provision applying those definitions:

Evidence Code Section 914-

“(a) The presiding officer [i.e., the superior court judge under Government Code section 37108] shall determine a claim of privilege in any proceeding in the same manner as a court determines such a claim․

“(b) No person may be held in contempt for failure to disclose information claimed to be privileged unless he has failed to comply with an order of a court that he disclose such information․  If no other statutory procedure is applicable [as is the case here], the procedure prescribed by Section 1991 of the Code of Civil Procedure shall be followed in seeking an order of a court that the person disclose the information claimed to be privileged.”

In Dibb v. County of San Diego, supra, 8 Cal.4th 1200, 36 Cal.Rptr.2d 55, 884 P.2d 1003, our state high court concluded that a charter county could grant the subpoena power to a citizens law enforcement review board.  (Id. at p. 1204, 36 Cal.Rptr.2d 55, 884 P.2d 1003.)   In addressing a concern about possible misuse of this subpoena power, Dibb stated:

“․ [W]e do not doubt the legitimacy of [that] concern․  In this context, however, the potential for abuse does not appear to be any greater than that which exists when various other nonjudicial county entities exercise their established powers to issue subpoenas (see, e.g., [Gov.Code] §§ 25170, 25171 [board of supervisors] ․ ) ․ In those situations, as in the present, the concern about potential misuse of the subpoena power may be addressed through close scrutiny by the court in motions to quash, or in contempt actions to enforce, subpoenas.  (See Code Civ. Proc. §§ 1985, 1987.1, 1991;  cf.  Gov.Code §§ 25173-25175 [specifying procedure regarding failure to obey subpoena from county board of supervisors].)   The mere potential for abusive issuance of subpoenas does not compel a conclusion that the power to issue subpoenas is beyond the scope of power conferrable on county officers․”  (8 Cal.4th at p. 1218, 36 Cal.Rptr.2d 55, 884 P.2d 1003;  some citations omitted;  some bracketed material added.)

The Government Code sections cited in Dibb-sections 25173 through 25175-specify the procedure used when one disobeys a legislative subpoena from a county board of supervisors.   Those sections are substantively identical to Government Code sections 37106 through 37109, which apply to city council legislative subpoenas and specify superior court jurisdiction over the issue and contempt protections as if in a superior court civil trial.   As Dibbalso notes, the party receiving such a legislative subpoena can bring a motion in court to quash it.  (8 Cal.4th at p. 1218, 36 Cal.Rptr.2d 55, 884 P.2d 1003;  Code Civ. Proc., § 1987.1.) Applying Dibb 's reasoning, then, concern about potential misuse of city council subpoena power may be addressed through close court scrutiny in motions to quash subpoenas or in contempt actions to enforce them.   So much for the majority's fear that one prospective litigant (i.e., a city council) will sit in judgment on another with potential criminal sanctions for refusal to produce the requested information-under the statutory scheme as interpreted in Dibb, Lodi's City Council will not be deciding subpoena compliance issues;  that is the job for the superior court pursuant to motions to quash subpoenas or contempt actions to enforce them.   Thus, the mere potential for abusive issuance of subpoenas does not compel a conclusion that City Council cannot issue the legislative subpoenas here.

As noted, by filing a liability lawsuit, a private party plaintiff is entitled as a matter of routine to determine the existence and terms of the sued defendant's liability insurance coverage and whether the insurer is disputing coverage of the plaintiff's claim (Code Civ. Proc., § 2017, subd. (b));  production of the insurance policy itself may be compelled under Code of Civil Procedure sections 2017 and 2031 (Irvington-Moore, Inc. v. Superior Court, supra, 14 Cal.App.4th at p. 741, 18 Cal.Rptr.2d 49).   A city council, then, facing a potential environmental catastrophe within its jurisdiction, certainly can obtain similar information through its statutorily-authorized legislative subpoena power, when the legislatively-subpoenaed party is provided essentially the same protection as a judicially-subpoenaed party.  (See Brovelli v. Superior Court (1961) 56 Cal.2d 524, 529, 15 Cal.Rptr. 630, 364 P.2d 462.)   Any other conclusion trumps good sense, good policy, and the proper deference the judicial branch owes the legislative branch.  (See Scott v. Common Council, supra, 44 Cal.App.4th at pp. 693-694, 52 Cal.Rptr.2d 161;  Allen v. Superior Court, supra, 171 Cal.App.2d at p. 451, 340 P.2d 1030.) ⁴

I believe that City Council, as a threshold matter, is authorized to issue its legislative subpoenas for “insurance archeology information”-i.e., disclosable information showing the existence or terms of liability insurance policies the PRPs have had since they have been in business.   I would therefore deny the petitions for writs of mandate and remand this matter to the trial court for it to consider the specific issues of privacy, privilege, relevance, proprietary information, confidentiality, and the like, as they relate to particular requested documents and the quest for the “insurance archeology information.”

FOOTNOTES

1.   References to a section are to the Government Code unless otherwise indicated.

2.   Resolution No. 97-09 provides in pertinent part:“WHEREAS, the California Environmental Protection Agency, Department of Toxic Substances Control, the California Regional Water Quality Control Board-North Coast Region, and their various environmental consultants have conducted soil and groundwater Investigations of the Lodi Groundwater Site (‘Site’), consisting of approximately six hundred acres which encompasses the City of Lodi's central business district and peripheral commercial and residential community, from 1989 through 1996;  and“․“WHEREAS, as a result of these investigations, multiple areas of soil and subsurface contamination ․ have been detected throughout the Site;  and“WHEREAS, as a result of these investigations and the discovery of the contamination, the City Council of the City of Lodi has grown increasingly concerned about the protection of public health, safety, welfare, the environmental and natural resources within the jurisdiction of the City of Lodi, and the preservation and restoration of property values within the City of Lodi.“NOW, THEREFORE, BE IT RESOLVED, that based on the above, the City of Lodi does hereby establish a legislative proceeding before the City Council of the City of Lodi to investigate the adequacy of existing legislative environmental schemes and to take such action, including legislation at the municipal level and recommendations to the appropriate state or federal legislative body, as the City Council deems appropriate.“NOW, THEREFORE, BE IT FURTHER RESOLVED, that, based on the above, the City of Lodi does hereby establish an advisory committee of the City Council ․ to investigate the toxic environmental contamination at and emanating from within the City of Lodi․  It is the intention of the City Council that this advisory committee will assess, among other things, the nature and source of any toxic contamination at and emanating from within the City of Lodi, investigate potential sources of releases of the contamination, investigate potential methods to finance the abatement, if needed, of said contamination, investigate the adequacy and sufficiency of enforcement schemes at the municipal, state and federal levels, ․ investigate the adequacy and sufficiency of liability schemes and financial responsibility requirements at the municipal, state, and federal levels, and assess the adequacy, sufficiency, and limitations of financial responsibility mechanisms, including without limitation, liability insurance and other mechanisms in the private and commercial sector of the community.“․“NOW, THEREFORE, BE IT FURTHER RESOLVED, that, in order to assist the City Council in the conduct of its investigation, the advisory committee may, from time to time, recommend that the City Council issue subpoenas requiring attendance of witnesses or production of books or other documents for evidence or testimony in any action or proceeding pending before the City Council pursuant to California Government Code § 37104․”

3.   Each of the legislative subpoenas asked for the following documents:“1. EACH INSURANCE POLICY.“2. EACH insurance binder, bordereau, certificate, cover note or other indicia of insurance coverage issued to [insured].“3. EACH DOCUMENT that RELATES TO any application (or portion thereof) for any INSURANCE POLICY covering [insured].“4. EACH DOCUMENT that RELATES TO the negotiation or placement of any INSURANCE POLICY.“5. EACH DOCUMENT that RELATES TO the records, listings, or method of identification of any INSURANCE POLICY (e.g., coverage cards, policy registers) including, without limitation, any DOCUMENT that RELATES TO or sets forth any procedures or systems used to assign numbers or other identifying codes or marks to liability insurance policies and the meaning thereof.“6. EACH DOCUMENT that RELATES TO any INSURANCE POLICY as to which YOU do not have a complete copy or any copy.“7. EACH DOCUMENT that RELATES TO or in any way provides other evidence of insurance coverage issued to [insured] pursuant to INSURANCE POLICIES of which you do not possess a complete copy or any copy.“8. EACH DOCUMENT that RELATES TO the issue of whether YOU have discarded or destroyed any copies of or records concerning any INSURANCE POLICY.“9. EACH DOCUMENT that RELATES TO any search conducted by YOU for any INSURANCE POLICY.“10. EACH DOCUMENT that RELATES TO the calculation of rates and premiums during the time period(s) that any INSURANCE POLICY was issued.“11. EACH DOCUMENT that RELATES TO the assignment of any INSURANCE POLICY.“12. EACH DOCUMENT that RELATES TO the cancellation of any INSURANCE POLICY.“13. EACH reinsurance policy, treaty or agreement that RELATES TO any INSURANCE POLICY that covers any liabilities, losses or expenses which have been or may be incurred with respect to any INSURANCE POLICY.“14. EACH underwriting file that RELATES TO EACH INSURANCE POLICY, including without limitation, the complete contents of such file(s) and any file folders or dividers containing or separating such file(s).“15. EACH insurance claims file that RELATES TO [insured].“16.  EACH DOCUMENT that RELATES TO claims which have been made against any INSURANCE POLICY.“17. EACH DOCUMENT that RELATES TO any COMMUNICATIONS between YOU and [insured].“18.  EACH DOCUMENT that RELATES TO any COMMUNICATIONS between YOU and any PERSON concerning [insured].“19.  EACH DOCUMENT that RELATES TO any COMMUNICATIONS between YOU and any PERSON including, without limitation, any insurers, any reinsurers or retrocessionaires, concerning any INSURANCE POLICY.“20. EACH DOCUMENT that RELATES TO the remaining limits of EACH INSURANCE POLICY.“21. EACH invoice, contract, agreement, retention letter or other DOCUMENT that RELATES TO an expense that YOU have incurred or authorized to be incurred, or YOU have paid or is to be paid in the future by YOU that has been applied to reduce the applicable limits of any INSURANCE POLICY.“22. EACH DOCUMENT, including without limitation, invoices or other statement of services rendered or to be rendered, whether draft or final, evidencing any expense that YOU have incurred or authorized to be incurred, or YOU have paid or is to be paid in the future by YOU that RELATES TO [insured].“23.  EACH DOCUMENT that RELATES TO the exhaustion, in whole or in part, of any INSURANCE POLICY.“24. EACH DOCUMENT that RELATES TO the method or means utilized by YOU to allocate among the INSURANCE POLICIES any expense that YOU have incurred or authorized to be incurred, or YOU have paid or is to be paid in the future by YOU that RELATES TO [insured].“25.  EACH DOCUMENT that RELATES TO EACH expenditure that has been charged against any INSURANCE POLICY including, without limitation:  (i) the amount of the expenditure;  (ii) the date the expenditure was incurred;  (iii) the PERSON who provided the services or goods reflected in such expenditure;  (iv) the INSURANCE POLICY against which the expenditure was applied;  and (v) the amount charged to EACH INSURANCE POLICY.“26. EACH DOCUMENT that RELATES TO YOUR document retention policy.“27. EACH DOCUMENT that RELATES TO any search conducted by YOU for any DOCUMENT demanded by this subpoena.”

4.   The insurance companies in these consolidated proceedings are, for the most part, similarly situated.   Those in the proceeding pertaining to the Maryland Insurance motions expressly adopt the arguments of their counterparts.   If successful, the arguments tendered would inure to the benefit of any insurer.   Accordingly, for editorial convenience, we refer to their arguments as tendered by the Insurers, without separate attribution.

5.   In addressing concern about possible misuse of the analogous subpoena power of a county, Dibb stated:“ ․ [W]e do not doubt the legitimacy of [that] concern․  In this context, however, the potential for abuse does not appear to be any greater than that which exists when various other nonjudicial county entities exercise their established powers to issue subpoenas (see, e.g., [Gov.Code] §§ 25170, 25171 [board of supervisors] ․ )․  In those situations, as in the present, the concern about potential misuse of the subpoena power may be addressed through close scrutiny by the court in motions to quash, or in contempt actions to enforce, subpoenas.  (See Code Civ. Proc., §§ 1985, 1987.1, 1991;  cf.   Gov.Code, §§ 25173-25175 [specifying procedure regarding failure to obey subpoena from county board of supervisors].)   The mere potential for abusive issuance of subpoenas does not compel a conclusion that the power to issue subpoenas is beyond the scope of power conferrable on county officers․”  (8 Cal.4th at p. 1218, 36 Cal.Rptr.2d 55, 884 P.2d 1003;  some citations omitted;  some bracketed material added.)

6.   In its declaration of legislative purpose for the underlying City Council proceedings, Lodi also asserts an interest in the general subjects of environmental pollution and remediation by pertinent liability insurance mechanisms.   However, it has never articulated a connection between these general topics and the specific insurance information at issue in these proceedings, other than the specific interest in appraising the likelihood of this insurance as means of funding this cleanup and recovery effort.

7.   Section 2017, subdivision (b) is as follows.“(b) A party may obtain discovery of the existence and contents of any agreement under which any insurance carrier may be liable to satisfy in whole or in part a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment.   This discovery may include the identity of the carrier and the nature and limits of the coverage.   A party may also obtain discovery as to whether that insurance carrier is disputing the agreement's coverage of the claim involved in the action, but not as to the nature and substance of that dispute.   Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial.”

8.   In Griffith, the issue was “whether Insurer had to informally disclose the policy limits of its insureds [to a prospective litigant] prior to the filing of lawsuits or other formal proceedings against the insureds.”  (230 Cal.App.3d at pp. 63-64, 281 Cal.Rptr. 165, emphasis added.)   The Griffith opinion reasons that:  (1) the information on policy limits is “personal information” protected by the Insurance Information and Privacy Protection Act, Insurance Code sections 791-791.27, (2) it should not be freely released by an insurer absent a showing of a legal right to the information, (3) the prospective litigant failed to show any such right.  (Id. at pp. 65-72, 281 Cal.Rptr. 165.)

9.   In finding applicable the balance struck by Code of Civil Procedure section 2017 we do not say it is compelled by the constitution.   The privacy rules embedded in a statute may lie outside minimum constitutional standards.   The public policy manifest in such a statute can be applied as a rule governing the balance between the state interest and privacy without constitutionalizing the policy.

1.   “PRPs” is a term used in the federal and California “Superfund” legislation.  (42 U.S.C.A. § 9607(a)(1)-(a)(4);  Health & Saf.Code, § 25323.5;  Robie, Barg, Gibson, and Smith, Bancroft-Whitney's California Civil Practice, Environmental Litigation, §§ 3:3, 3:85, pp. 9, 78.)

2.   Resolution No. 97-09 provides in pertinent part:“WHEREAS, the California Environmental Protection Agency, Department of Toxic Substances Control, the California Regional Water Quality Control Board-North Coast Region, and their various environmental consultants have conducted soil and groundwater Investigations of the Lodi Groundwater Site (‘Site’), consisting of approximately six hundred acres which encompasses the City of Lodi's central business district and peripheral commercial and residential community, from 1989 through 1996;  and“․“WHEREAS, as a result of these investigations, multiple areas of soil and subsurface contamination ․ have been detected throughout the Site;  and“WHEREAS, as a result of these investigations and the discovery of the contamination, the City Council of the City of Lodi has grown increasingly concerned about the protection of public health, safety, welfare, the environmental and natural resources within the jurisdiction of the City of Lodi, and the preservation and restoration of property values within the City of Lodi.“NOW, THEREFORE, BE IT RESOLVED, that based on the above, the City of Lodi does hereby establish a legislative proceeding before the City Council of the City of Lodi to investigate the adequacy of existing legislative environmental schemes and to take such action, including legislation at the municipal level and recommendations to the appropriate state or federal legislative body, as the City Council deems appropriate.“NOW, THEREFORE, BE IT FURTHER RESOLVED, that, based on the above, the City of Lodi does hereby establish an advisory committee of the City Council ․ to investigate the toxic environmental contamination at and emanating from within the City of Lodi․  It is the intention of the City Council that this advisory committee will assess, among other things, the nature and source of any toxic contamination at and emanating from within the City of Lodi, investigate potential sources of releases of the contamination, investigate potential methods to finance the abatement, if needed, of said contamination, investigate the adequacy and sufficiency of enforcement schemes at the municipal, state and federal levels, ․ investigate the adequacy and sufficiency of liability schemes and financial responsibility requirements at the municipal, state, and federal levels, and assess the adequacy, sufficiency, and limitations of financial responsibility mechanisms, including without limitation, liability insurance and other mechanisms in the private and commercial sector of the community.“․“NOW, THEREFORE, BE IT FURTHER RESOLVED, that, in order to assist the City Council in the conduct of its investigation, the advisory committee may, from time to time, recommend that the City Council issue subpoenas requiring attendance of witnesses or production of books or other documents for evidence or testimony in any action or proceeding pending before the City Council pursuant to California Government Code § 37104․”

3.   Most of the state “Superfund” law was repealed by operation of law on January 1, 1999, when the Legislature failed to pass reauthorizing legislation in the 1998 legislative session.  (3 Manaster & Selmi, Calif.   Environmental Law and Land Use Practice, supra, § 55.02[1], p. 55-9.)   The Legislature is expected to reauthorize the state “Superfund” law in the 1999 legislative session.  (Ibid.)

4.   The insurers also raise issues of due process, unconstitutional taking, and unreasonable search and seizure.   Constitutional rights apply to legislative investigations as to all forms of governmental action.   (Allen v. Superior Court, supra, 171 Cal.App.2d at p. 451, 340 P.2d 1030;  Watkins v. United States, supra, 354 U.S. at pp. 188, 204, 77 S.Ct. 1173.)   These issues, however, in the threshold context of legislative authorization presented here, can be dispensed with readily in light of my prior analysis.Pursuant to due process requirements, legislative power must not be exercised in an arbitrary manner.  (See Wolff v. McDonnell (1974) 418 U.S. 539, 558, 94 S.Ct. 2963, 2975, 41 L.Ed.2d 935, 952;  see also Hale v. Morgan (1978) 22 Cal.3d 388, 398, 149 Cal.Rptr. 375, 584 P.2d 512.)   Legislative actions must have a reasonable relation to a proper legislative purpose.  (Hale v. Morgan, supra.)   In the threshold context presented here, I believe that City Council was authorized to issue these legislative subpoenas, that they were issued pursuant to valid legislative purposes, and that they were pertinent.   Due process is satisfied.In their taking argument, the insurers claim the subpoenas would compel them to turn over proprietary and confidential commercial information.   This argument is beyond the scope of the threshold issue presented here.A legislative subpoena will not constitute an unreasonable search and seizure (under the Fourth Amendment to the federal Constitution) if it (1) relates to an inquiry which the legislative body is authorized to make, (2) seeks reasonably relevant information, (3) is not too indefinite, and (4) is subject to pre-penalty judicial review.  (See Brovelli v. Superior Court, supra, 56 Cal.2d at p. 529, 15 Cal.Rptr. 630, 364 P.2d 462;  California Restaurant Assn. v. Henning (1985) 173 Cal.App.3d 1069, 1075, 219 Cal.Rptr. 630;  Pinney v. Phillips (1991) 230 Cal.App.3d 1570, 1587, 281 Cal.Rptr. 904;  see also Wood v. Superior Court (1985) 166 Cal.App.3d 1138, 1145-1146, 212 Cal.Rptr. 811.)   My prior discussions on legislative authorization, purpose, and pertinence, and on judicial review, show that Lodi's legislative subpoenas satisfy the Fourth Amendment, in the threshold context presented here.

BLEASE, J.

SCOTLAND, P.J., concurs.