KANTER v. SAFECO INSURANCE COMPANY OF AMERICA (1988)

This petition for a writ of mandate presents the question whether or not the inadvertent disclosure of documents otherwise subject to a claim of attorney-client privilege ¹ waives that privilege.   For the reasons discussed in this opinion, we conclude that defendants (who are the real parties in interest) waived their privilege.

FACTUAL AND PROCEDURAL BACKGROUND

In March 1986, Kanter filed an action for insurance bad faith ² against Safeco Insurance Company (erroneously sued as Safeco Insurance Companies), Gerald A. Edelstein and Sandy Gray.³

The complaint alleges that Safeco is the automobile liability insurer of Zelda Foreman, who caused the accident in which Kanter was injured.   When Kanter sued Foreman, Safeco retained Edelstein to defend Foreman.   A jury found Foreman to be 100 percent liable for Kanter's injuries.

The complaint alleges that the defendants violated, and conspired to violate, their duties under Insurance Code section 790.03, subdivision (h).   The defendants, who were all represented by the law firm of Perona, Langer, LaTorraca & Beck, generally denied all the allegations.

On July 24, 1986, plaintiff's counsel served a subpena duces tecum on the custodian of records for the law office of defendant Edelstein seeking “[a]ll non-privileged documents from the legal file maintained in connection with the action entitled Kanter v. Foreman.”

Edelstein forwarded his entire, unsegregated Kanter v. Foreman legal file to the firm which represents him in the instant case.

After Edelstein forwarded his Kanter v. Foreman file, “the file was segregated into privileged and nonprivileged documents in order to photocopy both portions for our file and to forward the nonprivileged portion of Mr. Edelstein's legal file in response to the subpoena.”   A cover sheet designating “PRIVILEGED DOCUMENTS FROM EDELSTEIN'S FILE” was prepared at some point.

On August 7, 1986, a photocopy request to Tabi and Associates was prepared for one copy of the entire file.   Under special instructions, was a note that read:  “privileged docs. (yellowed pages) are to be kept in our office;  remaining copies are to be sent to opposing counsel.”

In August 1986, the requested documents were delivered to plaintiff's counsel in a single box, accompanied by a letter from defense counsel stating that:  “Enclosed are the documents requested in your 7–24–86 subpena duces tecum.”

The documents received by plaintiff's counsel were not numbered or lettered.   The documents were not in chronological order, but were segregated by type, i.e., correspondence, medical reports and depositions.   The privileged documents were not in a separate pile, but were interspersed among the documents in the box.

Among the documents produced were letters, memoranda and other correspondence between Edelstein and Safeco.   Of the approximately 1,600 documents produced, about 160 documents were later identified as privileged.   Of the documents produced, 425–450 documents fell into the category of correspondence.

Counsel for defendants declared that “[a]t no time did I intend to produce any privileged documents,” and that the “legal file would not have been produced but for my mistake and clerical error in my office.”   LaTorraca also declared that his legal file contained a separate set of copies of the privileged documents.

On November 12, 1987, plaintiff's counsel deposed Edelstein and attempted to question Edelstein about the documents produced 15 months earlier.   Defense counsel objected to this line of questioning, asserted the attorney-client privilege and claimed that the documents had been produced inadvertently.

In December 1987, defendants Safeco and Edelstein filed a motion for a protective order, asserting that the production was inadvertent.   Plaintiff then moved to compel answers to the questions that Edelstein had been instructed not to answer.

A hearing on both motions was held on March 22, 1988.   The trial court found no waiver of privileges.   The court repeatedly stated that there had to be a knowing and intelligent waiver to have a waiver of the attorney-client and work product privileges.

The trial court stated that the question whether defense counsel had taken reasonable precautions to preserve the privilege to be “borderline” and “a real close question.”

The court entered a tentative order granting a protective order pending an in camera review of the documents by a referee to determine whether the attorney-client privilege applied to the documents.   With one exception, the referee found that the documents were privileged.

On June 10, 1988, the court orally made the tentative order final, finding that there was no intelligent waiver, that the disclosure was inadvertent, and that the attorneys had made reasonable efforts to protect the privileges.   The written order granting the protective order was signed on July 29, 1988.

The protective order required plaintiff's counsel to:  return the inadvertently produced documents;  destroy all copies of, or materials referring to, summarizing or analyzing the contents of the documents;  not discuss, interrogate or make mention of, or engage in any discovery of or about, the documents or their contents;  and place under court seal all references to the documents, including all copies marked as exhibits.

The court imposed monetary sanctions of $4,500 against defendants' counsel because the court felt that the firm was responsible for all the motions which had to be brought.   The amount of sanctions was based on the work involved in preparing and opposing the motions and the work involved with regard to the documents produced.

Plaintiff petitioned this court for a writ of mandate.   We issued the alternative writ.   Payment of the sanctions was stayed pending the outcome of the petition.

DISCUSSION

Plaintiff's writ application presents an issue of first impression in California—whether or not the inadvertent production of documents otherwise subject to a claim of privilege waives that privilege.

ATTORNEY–CLIENT PRIVILEGE

“The attorney-client privilege has been a hallmark of Anglo–American jurisprudence for almost 400 years.  [Citations.]  The privilege authorizes a client to refuse to disclose, and to prevent others from disclosing, confidential communications between attorney and client․  Clearly, the fundamental purpose behind the privilege 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.]”  (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 599, 208 Cal.Rptr. 886, 691 P.2d 642.)   As such, courts have held that the privilege should be liberally construed.  (People v. Flores (1977) 71 Cal.App.3d 559, 563, 139 Cal.Rptr. 546.)

On the other hand, as a statutory creation, the privilege is an exception to the general rule requiring disclosure.  (Gonzales v. Municipal Court (1977) 67 Cal.App.3d 111, 118, 136 Cal.Rptr. 475.)  “As an obstruction to the search for all relevant information, the privilege is to be strictly construed.”   (Ibid.)

Wigmore says of the privilege, “[i]ts benefits are all indirect and speculative;  its obstruction is plain and concrete․  It is worth preserving for the sake of a general policy, but it is nonetheless an obstacle to the investigation of the truth.   It ought to be strictly confined within the narrowest possible limits consistent with the logic of its principle.”  (8 Wigmore, Evidence (McNaughton ed. 1961) § 2291, p. 554.)

 The key to bringing the privilege into play is confidential communications between an attorney and the client.  (Evid.Code,4 § 952.)   The key to the continued availability of the privilege is the maintenance of that confidentiality.   Even though a communication is made in confidence to an attorney, the privilege may be lost (i.e., impliedly waived) by disclosure of the subject communication or by conduct inconsistent with a claim of privilege.  (Evid.Code, § 912, subd. (a) ⁵ .)

WAIVER

The privilege may be impliedly waived “where a party to a lawsuit places into issue a matter that is normally privileged.   It is said that in that case the gravamen of the lawsuit is so inconsistent with the continued assertion of the privilege as to compel the conclusion that the privilege has in fact been waived.  [Citation.]  The scope of either a statutory or implied waiver is narrowly defined and the information required to be disclosed must fit strictly within the confines of the waiver.  [Citations.]”  (Transamerica Title Ins. Co. v. Superior Court (1987) 188 Cal.App.3d 1047, 1052, 233 Cal.Rptr. 825.)

According to Witkin, the principal kinds of conduct amounting to waiver under section 912, subdivision (a) are:  advance waiver by contract, such as an insurance policy clause consenting to disclosure by physicians;  failure to claim the privilege, such as failing to object at trial to the testimony of the attorney or the client;  making statements in the known presence of unnecessary third parties;  and voluntary disclosure of the communication to a third person, although the disclosure may result in only a partial waiver depending on the circumstances.  (2 Witkin, Cal.Evidence (3d ed. 1986) Witnesses, §§ 1075–1080, pp. 1019–1025.)

In the context of discussing voluntary testimony as a waiver, Wigmore makes a frequently quoted and pertinent observation that:  “regard must be had to the double elements that are predicated in every waiver, i.e., not only the element of implied intention, but also the element of fairness and consistency.   A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation.   There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended the result or not․”  (Emphasis added.)  (8 Wigmore, Evidence (McNaughton rev. 1961) § 2327, p. 636.)

Citing to the above quote from Wigmore, McCormick notes that:  “Traditionally, waiver is described as intentional relinquishment of a known right.  Johnson v. Zerbst, 304 U.S. 458, 464 [58 S.Ct. 1019, 1023, 82 L.Ed. 1461] (1938).   However, voluntary disclosure, regardless of knowledge of the existence of the privilege, deprives a subsequent claim of privilege based on confidentiality of any significance.”  (McCormick, Evidence (3d ed. 1984) The Client's Privilege, § 93, p. 223, fn. 3.)

 In the instant case, the trial court found that there was not a knowing and intelligent waiver of the privilege.   Although the privilege is a statutory creation and should be protected and nurtured, it is not as sacred as a constitutional right, which should require a knowing and intelligent waiver before it is lost.   Inadvertent production, like voluntary testimony about privileged communications, evidences an intent inconsistent with the continued assertion of the privilege.   We conclude that a knowing and intelligent waiver is not needed to waive the privilege.   Accordingly, the concept of an implied waiver is an appropriate one by which to evaluate whether or not the privilege has been waived.

 Before turning to the issue at hand, we make several observations.   As noted by Jefferson, a coerced disclosure of a privileged communication is not a waiver.  (2 Jefferson, Cal. Evidence Benchbook (2d ed. 1982) General Provisions, § 35.1, p. 1307.)   A coerced disclosure occurs when a person entitled to claim a privilege does so, but the court erroneously overrules the claim or when no person entitled to claim the privilege is present, and the trial judge fails to preclude the disclosure on his own motion, as required by section 916.  (§ 919.)   We are not dealing with a coerced disclosure in the instant case.

Nor are we dealing with a case in which the disclosure was intentional (i.e., known), but the waiver inadvertent.   Such a situation could arise where the attorney is attempting, through partial disclosure, to use the privilege offensively or where the client is asked to make a disclosure in cooperation with a government investigation or in response to a suggestion of the court.   (Note, Inadvertent Disclosure of Documents Subject to the Attorney–Client Privilege (1983) 82 Mich.L.Rev. 598, 605, fn. 30.)

Also, we are not addressing the situation in which the attorney acted in bad faith.   Our analysis is confined to situations involving a voluntary, but inadvertent disclosure or accidental production of a document otherwise subject to the privilege.

 We reject defendants' contention that only the holder of the privilege, i.e., the client, can waive the privilege.   Thus, by the provisions of our statutes (§§ 954 and 955), the rule that the one holding the privilege must assert it is changed to require the attorney representing the holder of the privilege to assert it.  (Merritt v. Superior Court (1970) 9 Cal.App.3d 721, 729, 88 Cal.Rptr. 337.)   The inadvertence of the attorney will be charged to the client.  (See Carroll v. Abbott Laboratories, Inc., (1982) 32 Cal.3d 892, 895, 187 Cal.Rptr. 592, 654 P.2d 775.)

 Furthermore, the burden of proving that there was no waiver is on the one asserting the privilege.  (Weil v. Investment/Indicators, Research & Management (9th Cir.1981) 647 F.2d 18, 25.)   Federal courts have reasoned that although the privilege is for the client to assert, since the attorney acts as the client's agent, the client cannot complain about the way the authority was exercised.  (In re Grand Jury Investigation of Ocean Transp. (D.C.C.1979) 604 F.2d 672, 675.)   We conclude that defense counsel could waive defendants' privilege and that the defendants had the burden of proving that the privilege had not been waived.

TEST OF IMPLIED WAIVER

Nationwide, a number of courts, mostly federal courts, have addressed some variation of the issue of the relationship between the inadvertent production of privileged documents and the waiver of the privilege.   At least four recent law review articles ⁶ have touched on the subject.   Each author has grouped the cases dealing with the issue into slightly different categories.   (For a more in-depth discussion of the various approaches and the many cases addressing this issue see articles in note 6, supra.)   For our purposes, we will discuss the three general analytic approaches employed by the courts in deciding this issue, and the reasons we have chosen the approach most complementary to California law.

I. Strict Responsibility Approach

 The first approach is a strict responsibility or automatic waiver test under which, once a privileged document is produced, the privilege is waived.   Wigmore is cited as a leading proponent of this approach.  (Ayres, supra, note 6, at p. 71.)   One rationale of the approach is that since the client and the attorney have the ability to preserve the secrecy of the documents, any disclosure is thought to be indicative of a lack of intent to maintain confidentiality.  (Id., at pp. 72–73.)   Another rationale for the approach is that once a privileged document has been disclosed, precluding use at trial would amount to no more than the mechanical obedience to a formula, since the confidentiality has been lost.  (Id., at p. 73.)

An example of this approach is Underwater Storage, Inc. v. United States Rubber Co. (D.D.C.1970) 314 F.Supp. 546.   The Underwater court stated that it would “not look behind this objective fact [the inadvertent production of a privileged letter] to determine whether the plaintiff really intended to have the letter examined.”  (Id., at p. 549.)

II. Client's Subjective Intent to Waive

 A second approach is one in which the client's intent to waive, rather than the client's intent to disclose, is the focus of the waiver test.   Under this analysis, the privilege is retained until the client affirmatively waives it.   Thus, any inadvertent disclosure would not waive the privilege.   Defendants advocate this approach—they contend that a waiver must be knowing and intentional.

Defendants argue that Jefferson supports this position because Jefferson concludes that section 952 ⁷ defines “a ‘confidential communication between client and lawyer’ in such a way as to make abundantly clear that the lawyer-client privilege is not lost through an accidental or unauthorized out-of-court disclosure of a lawyer-client communication.”   (Original emphasis.)  (2 Jefferson (2d ed 1982) Lawyer–Client Privilege, § 40.1, p. 1421.)

However, we are not persuaded by this argument and conclude that section 952 is not useful in analyzing inadvertent production since, as the agent of the client, the attorney is aware of the disclosure to a third person, having produced the requested documents to the third person.

Defendants would have us analogize to the physician-patient privilege and the line of cases interpreting that privilege which hold that a corroborative standard of intent is required to waive it (Newell v. Newell (1956) 146 Cal.App.2d 166, 178, 303 P.2d 839), and that only the holder of the privilege (i.e., the patient) may waive it.  (Mavroudis v. Superior Court (1980) 102 Cal.App.3d 594, 602, 162 Cal.Rptr. 724.)

We are not persuaded that the analogy is apt since attorneys have a role in the legal system and a duty to their clients to protect the privilege in an immediate legal setting, with which physicians are not generally or directly confronted.   Additionally, unlike physicians, attorneys are trained in legal matters and are equipped to appreciate the legal consequences that can follow from waiver or preservation of a privilege against disclosure.

The cornerstone of defendants' argument is Mendenhall v. Barber–Greene Co. (N.D.Ill.1982) 531 F.Supp. 951.   The Mendenhall court reasoned that since waiver imports the intentional relinquishment or abandonment of a known right, “[i]nadvertent production is the antithesis of that concept.”  (Id., at p. 955.)   Thus, Mendenhall wanted there to be more than negligence by counsel before the client could be deemed to have given up the privilege.  (Ibid.)

As support for its decision that the better-reasoned rule is that mere inadvertent production does not waive the privilege, Mendenhall cites Dunn Chemical Co. v. Sybron Corp. (S.D.N.Y.1975) 1975–2 Trade Cas. ¶ 60,561 at 67,463 and Connecticut Mutual Life Insurance Co. v. Shields (S.D.N.Y.1955) 18 F.R.D. 448, 451, which both hold that there must be evidence of the client's intent to waive.

However, Dunn relies on Connecticut Mutual, which in turn relies on cases interpreting waiver under a New York statute and holding that waiver under that statute must be in open court.  (See In re Associated Gas & Electric Co. (S.D.N.Y.1944) 59 F.Supp. 743, 744.)   Also, in support of its holding, Mendenhall cited two other cases involving “compelled production,” which some courts have concluded is not the same as voluntary production.

In Transamerica Computer v. Intern. Business Machines (9th Cir.1978) 573 F.2d 646, under court order, the defendant produced 17 million pages in three months.   The Transamerica court did not reach the issue of whether or not inadvertent production was a waiver.   Instead it held, that under the facts of the case, the production was compelled, and, therefore, not voluntary.   (Id., at p. 651.)

Michigan is one of the few other states to conclude that there is no implied waiver by inadvertent production.  (Sterling v. Keidan (1987) 162 Mich.App. 88, 412 N.W.2d 255.)   The appellate court wanted a “finding of no intent to maintain confidentiality or circumstances evidencing a lack of such intent.”   (Emphasis added.)  (Id. 412 N.W.2d at p. 258.)   In Michigan, the privilege is a common-law rather than a statutory privilege.   The holding in Sterling was based on the second aspect of the privilege—the right to control the introduction of the privileged matter into evidence.  (Id., 412 N.W.2d at pp. 257–259.)

We are not persuaded that either one of these first two approaches—automatic waiver or subjective intent of the disclosure—satisfactorily balances the interest in protecting the attorney-client relationship against the fact that the privilege is an exception to the general rule of disclosure.   As discussed earlier in this opinion, we reject the notion that the waiver must be knowing and intentional.

The automatic waiver rule is too harsh, depriving the client of protection against the use of the privileged communication in court.   An error quickly discovered could not be corrected under this approach once the documents had been turned over, even if the opposing party had little opportunity to view the documents.

Under the subjective approach, a waiver would almost never be found.   From a practical standpoint, the privilege holder could claim the privilege at any time, even long after the party knew that the opposing side had received privileged documents.

In the instant case, plaintiff argues that the defendants would be in a position to object, either during discovery or at trial, that plaintiff is trading on information gained from the documents subject to the protective order.   Furthermore, plaintiff claims that he would be in no position to dispel such an objection because the protective order required the return of all the documents, as well as any materials summarizing or analyzing the contents of the documents.   The nature of the protective order supports this argument.   Thus, the onus of correcting one party's mistake would fall on the opposing party, who would have to prove that it was not trading on information gleaned from the privileged documents, but that it had obtained the information from another source.

III. Evaluation of The Circumstances Approach

 The third approach is one under which the courts make a decision based on an evaluation of the circumstances, rather than automatically finding a waiver or a retention of the privilege.   Although a more difficult approach to employ, ultimately this approach is fairer to both parties and the policy of preserving the privilege for confidential communications as it focuses on the confidentiality aspect of the privilege.   Also, this approach is consistent with California's policy of looking behind the objective fact of the disclosure in some circumstances, i.e., eavesdroppers and other wrongful interceptors.   (See Cal.Law Revision Com. com., 29B West's Ann.Evid.Code (1966 ed.) § 954, p. 544.)

We are aware that the 9th Circuit held, that under California law, there was no waiver of the privilege for the inadvertent production of a letter.  (KL Group v. Case, Kay & Lynch (9th Cir.1987) 829 F.2d 909, 919.)   However, KL Group has little bearing on our analysis.   First, federal interpretation of state law is not controlling.  (9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, § 781, p. 751.)   Second, the case is factually distinguishable as it involved the inadvertent production of documents to which a non-party held a claim of privilege.   Furthermore, the 9th Circuit has noted that, under federal law, inadvertence did not as a matter of law prevent waiver, but was “only one factor to be considered.”  (Clady v. County of Los Angeles (9th Cir.1985) 770 F.2d 1421, 1433.)

As early as 1954, a federal court concluded that documents, which had been inadvertently handed over to the government were no longer privileged.   (United States v. Kelsey–Hayes Wheel Co. (E.D.Mich.1954) 15 F.R.D. 461, 465.).   The court looked to the fact that the documents were indiscriminately mingled with other documents.   The court noted that no special protections had been made to preserve confidentiality.  (Ibid.)

Through the years, federal courts have concluded that inadvertent production of privileged documents can possibly waive the privilege.   A recurring theme is that the disclosing party is responsible for taking reasonable precautions to preserve confidentiality.  (See W.R. Grace & Co. v. Pullman, Inc. (W.D.Okla.1976) 446 F.Supp. 771, 775;  Coastal States Gas Corp. v. Department of Energy (D.D.C.1980) 617 F.2d 854, 863.)   Mere inadvertence was not enough to waive the privilege.  (In re Grand Jury Investigation Ocean Transp., supra, 604 F.2d 672, 675;  Kansas–Nebraska Natural Gas v. Marathon Oil Co. (D.Neb.1985) 109 F.R.D. 12, 21.)

On a somewhat analogous issue, reasoning that the means of preserving secrecy was in the client's hands, one decision concluded that there was a waiver of the privilege for documents found in a trash can.  (Suburban Sew ‘N Sweep, Inc. v. Swiss–Bernina, Inc. (N.D.Ill.1981) 91 F.R.D. 254.)

The reasonable precautions approach become more solidified in Lois Sportswear, USA., Inc. v. Levi Strauss & Co. (S.D.N.Y.1985) 104 F.R.D. 103.   In Lois, the court enumerated certain factors to be used in the determination of whether or not there had been a waiver by the inadvertent production of privileged documents.   In Lois, the court concluded that the disclosure was inadvertent and the privilege was not waived because only 22 documents out of 16,000 documents inspected and 3,000 documents produced were privileged.

The Lois factors are:  reasonableness of the precautions to prevent inadvertent disclosure;  time taken to rectify the error;  the scope of the discovery;  the extent of the disclosure;  and the overreaching issue of fairness and the protection of a privilege judged against the care or negligence with which the privilege was guarded with care and diligence or negligence and indifference.  (Id., at p. 105.)

Since Lois, the weight of authority is that waiver can occur through inadvertence.  (Chubb Integrated Systems v. National Bank of Wash. (D.D.C.1984) 103 F.R.D. 52, 67.)   The trend is to base the decision on all the circumstances.  (Hartford Fire Ins. Co. v. Garvey (N.D.Cal.1985) 109 F.R.D. 323, 329.)

Although New York, the state in which a federal court decided Mendenhall, rejected the automatic waiver approach, a New York court held that a client's intent could be demonstrated by objective evidence—the fundamental proof being a need to prove reasonable precautions.  (Mfrs. & Traders Trust v. Servotronics (1987) 132 A.D.2d 392, 522 N.Y.S.2d 999, 1004.)   The Servotronics court used factors similar to those used in Lois to conclude that there was no waiver, partly because of a letter saying that there was no intent to waive the privilege.  (Id., 522 N.Y.S.2d at pp. 1004–1005.)

Texas, which expands on Transamerica, held that the test of waiver “is not whether the disclosure was intentional or inadvertent, but whether the disclosure was voluntary or was consented to or whether the disclosure was compelled erroneously or was made without opportunity to claim the privilege.”  (Gulf Oil Corp. v. Fuller (Tex.App. 8 Dist.1985) 695 S.W.2d 769, 773.)   Texas appears to look at the circumstances of the production to determine if the production was consented to or voluntary.

Instead of deciding whether production was compelled rather than voluntary, courts have looked to see if there were special circumstances such that the inadvertent production was not a waiver.  (O'Leary v. Purcell Co., Inc. (M.D.N.C.1985) 108 F.R.D. 641, 646.)

In Liggett Group v. Brown & Williamson Tobacco Corp. (M.D.N.C.1986) 116 F.R.D. 205, the court held there were no special circumstances to relieve the waiver as the defendant had time to screen the single box of documents produced and should have exercised care, especially as the documents had been withheld before.  (Id., at p. 208.)

In a recent, factually similar case, a circuit court applied the automatic rule and held that disclosure of privileged documents operates as a waiver.   (Intern. Digital Systems v. Digital Equipment Corp. (D.Mass.1988) 120 F.R.D. 445, 450.)   In Digital, after the documents were returned from the copier, apparently the disclosing party failed to cull out privileged documents, which had been segregated prior to being sent to the copier.  (Id., at p. 448.)

The Digital court reasoned that since the line of cases holding that disclosure may result in a waiver came close to applying a per se rule and since a court order could not restore the confidential nature of the documents, it would not look at the intention of the disclosing party.  (Id., at pp. 449–450.)

Courts have held that there was a waiver because the protections were lax, careless, inadequate or indifferent.  (Eigenheim Bank v. Halpern (S.D.N.Y.1984) 598 F.Supp. 988, 991;  Standard Chartered Bank v. Ayala Intern. Holdings (S.D.N.Y.1986) 111 F.R.D. 76, 85.)

Using a factor analysis, one court held that a large number of disclosures in proportion to the number produced is indicative of careless, lax procedures.   (Parkway Gallery v. Kittinger/Pennsylvania H. Group (M.D.N.C.1987) 116 F.R.D. 46, 51.)

We hold apposite the reasonable precautions factors as delineated in Lois, plus a special circumstance factor (similar to Transamerica's concept of a compelled production) to see if there should be relief from the waiver.

FACTORS APPLIED TO THE INSTANT CASE

I. Reasonable Precautions

 According to the declarations filed with the motion for a protective order, after Edelstein was served with a subpoena duces tecum for “all non-privileged documents from the legal file maintained in connection with the action entitled Kanter v. Foreman,” he forwarded his entire, unsegregated Kanter v. Foreman file to the firm which represents him in the instant action.

“The file was segregated into privileged and nonprivileged documents in order to photocopy both portions for our file and to forward the nonprivileged portion of Mr. Edelstein's legal file in response to the subpoena.”   A cover sheet designating “Privileged Documents from Edelstein's File” was prepared at some point.

On August 7, 1986, a photocopy request to Tabi and Associates was prepared for one copy of the entire file.   Under special instructions, was a note that read:  “privileged docs. (yellowed pages) are to be kept in our office;  remaining copies are to be sent to opposing counsel.”

In August 1986, the requested documents were delivered to plaintiff's counsel in a single box, accompanied by a letter from defense counsel stating that:  “Enclosed are the documents requested in your 7–24–86 subpena duces tecum.”

The documents received by plaintiff's counsel were not numbered or lettered, nor in chronological order.   The documents were segregated by type, i.e. correspondence, medical reports and depositions.   The privileged documents were not in a separate pile, but were interspersed among the documents in the box.   Although the record in not clear on this point, we presume that the privileged documents were scattered in with the correspondence since the documents were segregated by type.

Of the approximately 1,600 documents produced, about 160 documents were later identified as privileged.   Of the documents produced, 425–450 documents fell into the category of correspondence.   According to our math, the privileged documents constituted 10 percent of all the production or 36 percent of the correspondence.

Defendants insist that these precautions were adequate to protect the confidentiality of the documents.   We disagree.   There are several facts which are troublesome to us.   First, who segregated the file—someone with the necessary legal skills to be able to distinguish the privileged from the nonprivileged documents?   Second, why did the defendants argue in their brief and at the hearing that only the nonprivileged documents were to be copied?   Both the declaration accompanying the motion and the order to the copier service make it clear that the entire file was to be copied.

Third, what was done with the box after it was returned by the copier?   Did anyone ever review the contents before shipping the box to plaintiff's counsel?   Defendants do not even allege that they attempted to find out what happened.   Four, why were the documents not numbered or lettered in some way?   Fifth, where did the second set of copies of the privileged documents in the files of the firm which represents defendants come from if only one copy of the file was made?

The fact that numerous privileged documents were produced creates a strong presumption of an intent not to maintain confidentiality and places a heavy burden on the party claiming the privilege to prove that reasonable precautions to maintain confidentiality were taken.   Defendants simply have not answered that challenge;  defendants did little more than segregate the documents prior to sending them to be copied.   Particularly acute is the defendants' failure to institute follow-up procedures to ensure that the privileged documents were culled from the nonprivileged documents prior to responding to the subpena duces tecum.

II. Time Taken to Rectify The Error

Even though defendants moved for a protective order soon after they discovered that plaintiff had the privileged documents, the fact remains that the documents were in plaintiff's hands for 15 months due to the lax follow up of defendants who did not discover the error until it was brought to their attention.

III. Scope of the Discovery

A large portion of the documents delivered to plaintiff's counsel were privileged.   35 percent of the correspondence, or 160 documents, is too large a proportion of the entire production to be characterized as inadvertent.

IV. Extent of the Disclosure

The extent was total as plaintiff had access to the documents for 15 months and had integrated them into his trial plans.   Had defendants discovered the error a short time after delivering the documents to plaintiff, then we would be more inclined to hold that a waiver had not occurred.

V. Fairness

As stated before, we conclude that the burden of maintaining the privilege is on the party asserting it.   Like all privileges, it is one which should not be taken for granted.   Plaintiff claims that he cannot segregate the information he learned from the documents from other sources and that he would be subject to an objection at trial if he used information which could have been obtained from the documents.

Since the court ordered the return of the documents and ordered plaintiff to destroy all copies of, or materials referring to, summarizing or analyzing the contents of the documents, we can foresee that, based upon the court order, plaintiff could have difficulty fielding an objection to admissibility.   Although we cannot evaluate the validity of this claim, it is logical to infer that, given the time that the documents were in the hands of plaintiff's counsel, the information gleaned from the documents has saturated counsel's mind;  thereby, presenting the old dilemma of “unringing the bell.”   As the party committing the error, defendants should bear the burden of dealing with the ramifications of the error, not plaintiff.

VI. Special Circumstances

We see no indication of any rushed or voluminous production such that we would be tempted to hold that the production was due to “mere inadvertence” or of a nature which could be held to be compelled rather than voluntary.

DISPOSITION

The alternative writ is discharged.   Let a peremptory writ issue directing the trial court to vacate its order of July 29, 1987, granting defendants' motion for a protective order, and thereafter, to issue a new and different order denying said motion.   The stay on payment of sanctions ordered paid to plaintiff by defense counsel pending the outcome of this writ proceeding, is lifted.   Costs of this writ proceeding to petitioner.

FOOTNOTES

1.   For the purposes of the issue presented by this writ, the attorney-client and work product privileges will be treated the same.   Throughout this opinion, the term privilege will be used to refer to both privileges.

2.   The underlying action was brought under Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329.   Although Royal Globe was overruled by Moradi–Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 250 Cal.Rptr. 116, 758 P.2d 58, the Supreme Court decided that Royal Globe would not be applied retrospectively and that third party bad faith cases filed prior to the finality of the opinion in Moradi–Shalal could be maintained if there had been a judicial determination of the insured's liability.  (Id., at p. 306, 250 Cal.Rptr. 116, 758 P.2d 58.)   Such a determination is alleged in the instant case.

3.   Although all three defendants filed the motion for a protective order, only Safeco and Edelstein filed opposition to this writ petition.   Accordingly, throughout this opinion, the term defendants will be used to refer to Safeco and Edelstein.

FN4. Unless otherwise noted, all statutory references are to the Evidence Code..  FN4. Unless otherwise noted, all statutory references are to the Evidence Code.

5.   Section 912, subdivision (a) provides that the privilege “is waived with respect to a communication protected by such privilege if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to such disclosure made by anyone.   Consent to disclosure is manifested by any statement or other conduct of the holder of the privilege indicating consent to the disclosure, including failure to claim the privilege in any proceeding in which the holder has the legal standing and opportunity to claim the privilege.”  (Emphasis added.)

6.   Ayres, Attorney–Client Privilege:  The Necessity of Intent to Waive the Privilege in Inadvertent Disclosure Cases (1986) 18 Pacific L.J. 59 (hereinafter referred to as Ayres);  Davidson and Voth, Waiver of the Attorney–Client Privilege (1986) 64 Or.L.Rev. 637;  Grippando, Attorney–Client Privilege:  Implied Waiver Through Inadvertent Disclosure of Documents (1985) 39 U. of Miami L.Rev. 511;  and Note, Inadvertent Disclosure of Documents Subject to the Attorney–Client Privilege (1983) 82 Mich.L.Rev. 598.

7.   Section 952 provides that a confidential communication means:  “information transmitted between a client and his lawyer in the course of that 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 ․ or those to whom disclosure is reasonably necessary․”  (Emphasis added.)

FRED WOODS, Associate Justice.

LILLIE, P.J., and JOHNSON, J., concur.