CA: The Absolute Attorney Client Privilege
Costco Warehouse v. Greg Randall (2009 CAL LEXIS 12375) (pdf)
Decided Nov. 30, 2009.
CA: Attorney Client Privilege
FACTS: In June of 2000, Costco retained Sheppard, Mullin, Richter & Hampton to provide legal advice regarding whether certain warehouse managers in California were exempt from California wage and overtime laws. One of Sheppard’s wage and hour law attorneys interviewed warehouse managers and produced a 22-page opinion letter on the issue. Costco, the interviewed managers and the lawyer all testified that they understood the communications between the managers and Hensley were, and would remain, confidential.
Several years later, a group of Costco employees filed a class-action suit against Costco alleging that between 1999 and 2001, Costco had misclassified some of its managers as ‘exempt’ and had therefore failed to pay overtime wages. In the course of the litigation, Costco employees sought to compel discovery of the lawyer’s opinion letter. Costco objected on grounds that the letter was subject to the attorney-client privilege and the attorney work product doctrine. Plaintiffs argued that the letter contained unprivileged information and that Costco had waived the privilege by placing the contents of the letter in issue.
RULING: Overruling the intermediate appellate court, the California Supreme Court reiterated California’s strong policy in favor of maintaining client confidences and secrets.
1. In Costco, after finding that an attorney-client privilege existed by virtue of an opinion letter written by independent counsel who had interviewed and taken witness statements from company employees, the Supreme Court found the entire letter, including the witness statement summaries, to be privileged.
2. Additionally, the majority ruled that, while the court can require an in camera hearing to determine whether the relationship constituted an attorney-client relationship, there is no authority for allowing the court to require in camera disclosure of the communications themselves. Those communications are privileged from disclosure, even in camera. If “ the dominant purpose” of the relationship was to provide legal advice from lawyer to client, no disclosure of communications is permitted.
3. Additionally, the Supreme Court held that it was not necessary to demonstrate any harm resulting from the disclosure; the intrusion into the attorney-client relationship was deemed to be harm in itself.
'[T]he privilege is absolute and disclosure may not be ordered, without regard to relevance, necessity or pany particular circumstance peculiar to the case.'
LESSON: From a legal malpractice point of view, it is crucially important to maintain client confidences, even in the face of a judicial order to reveal confidential material in camera. At least in California, it has long been held that a lawyer has a duty to preserve client secrets and confidences, even in the face of a contempt citation. See, In Re Navarro, 93 Cal. App. 3d 325,330 (pdf).
I agree with the notion of preserving an absolute attorney/client privilege. Further, I think the attorney client relationship between Costco and Sheppard (the attorneys who produced the opinion letter in question) is indisputable. The firm had been retained and produced a significant amount of work for Costco (the opinion letter was 22 pages.) I do not see how it would ever be fair for the Costco employees now suing Costco to use to their advantage privileged materials resulting from an attorney client relationship between their adversary and a law firm. This very practice would undercut the very purpose of attorney client privilege.
I don't think it's fair to force a lawyer to be in contempt of court if he doesn't reveal a privileged yet if he does, he is breaching an ethical duty. There needs to be a bright line rule to protect lawyers from harsh treatment.
The ruling in this case presents the importance of the attorney-client relationship. While many people are not careful with their daily speech, it remains imperative to protect a client's confidences even when in the face of contempt of court.
If the ruling would have come out in the opposite way, lawyers would be fearful to put anything in writing and would try to commit confidential conversations to memory. I think that if lawyers were to avoid committing discussions to paper because of the fear of disclosure, more malpractice would result because it would be impossible for lawyers to store all of their confidential relationships in their heads. It is therefore comforting that the legislature decided the case as it did.
Welcome Ellen Pansky! It is very pleasant, as a student contributor, to see veteran attorneys join this virtual review.
The COSTCO case is a helpful reminder of just what the privilege is about. While the plaintiffs were likely the main subject of the attorney's opinion letter, it is hard to imagine a different outcome. If a communication is made to provide legal advice, that communication should be treated as nonexistent.
I agree with this decision. Client confidences are important to maintain reliability and trust within the field of law. Clients need to feel comfortable speaking with you about anything, and lawyers need to be sure that their work product is safe from outsiders. If the courts started taking client confidences less seriously, lawyers would have a much tougher time doing their job and working in the best interest of their clients.
I agree with Ms. Goldberg. I think in an already tough profession, making it a lose lose situation for the attorney is unreasonable on behalf of the courts. An attorney should not be sanctioned for abiding by the ethical duty of confidentiality and keeping confidential information confidential which is something that an attorney MUST do. If the Model Rules of Professional Conduct REQUIRE an attorney to keep information confidential, it is unreasonable for the Courts to sanction an attorney for abiding by the MRPC.
I also agree that it would be unfair to hold an attorney in contempt of court for failing to reveal privileged information. I also believe that preserving confidentiality is extremely important and fundamental to preserving the attorney-client relationship and the court needs to do its best to make sure that confidentiality is protected. When I first read this blog I was asking myself, well was the opinion letter really made in anticipation of litigation (to be protected under the work-product doctrine) but then I realized that either way it does not matter because the duty of confidentiality is far broader than the work product doctrine and the attorney client privilege and this is just the kind of information that the duty of confidentiality is sought to protect.
I agree with MS. Goldberg as well,its a no win situation to have to choose between being in contempt of court or breaching an ethical duty. As a judge, they are well aware of the duty of confidentiality and thus should b more sympathetic to the attorneys' duty to his client rather than to hold him in contempt of court. An attorney has sworn to uphold his duties as a professional and could risk losing his license among other sanctions if he disobeys an ethical rule, and here the attorney risks other sanctions if he does not abandon his duty.