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November 30, 2009

Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725

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The Supreme Court holds a trial court may not review an attorney-client communication in camera to determine privilege. 

Costco Wholesale Corporation (Costco), retained Sheppard, Mullin, Richter & Hampton LLP to provide wage and hour legal advice.  The Sheppard attorney held confidential communications with managers, and reduced her opinion to writing.

Employees in later litigation sought production of the letter, and the trial court ordered an in camera review to determine privilege issues.  The court disclosed a redacted version of the letter revealing factual information about various employees’ job responsibilities obtained in the attorney interviews of employee witnesses.  The court concluded the attorney interviewing the witnesses acted as a “fact finder” not an attorney. 

If a party claiming attorney client privilege establishes a communication was made in an attorney-client relationship, it is presumed to have been made in confidence.  The opponent of the claim of privilege must establish the communication was not confidential, or that the privilege does not apply for other reasons. (E.C § 917(a))

An attorney-client communication cannot be discovered even if it includes unprivileged material available to the public.  The fact the material was transmitted between attorney and client can reveal the sender’s strategy.  If a communication is privileged, it does not become unprivileged because it contains material that could be discovered by some other means.

Statements by a corporate employee speaking as an independent witness are not privileged.  In mixed cases, the employee’s dominant purpose in making the statement to the attorney determines privilege.  This “dominant-purpose” test determines whether the relationship between the attorney and the employee is an attorney-client relationship.  If the corporation’s dominant purpose in requiring the employee to make a statement is the confidential transmittal to the corporation’s attorney of information emanating from the corporation, the communication is privileged.  The dominant-purpose test would be relevant if discovery of the statements between the Sheppard attorney and the employees were at issue.  However, the question was whether the communication between Costco and its attorney was privileged.

A client cannot protect unprivileged information from discovery merely by transmitting it to an attorney.  Costco was not seeking to suppress discoverable facts; it sought protection of the attorneys’ communication of facts.

The attorney-client privilege does not apply when the client’s dominant purpose is something other than obtaining a legal opinion or legal advice. When an attorney acts merely as a negotiator for the client, or is providing business advice, the relationship between the parties is not attorney-client. The Sheppard attorney’s interviews could have been accomplished by a non-attorney, but Costco’s dominant purpose was to obtain legal advice, and the communication of the content of the interviews was privileged.

A trial court may not require disclosure of information claimed to be privileged to rule on the claim of privilege or work product.  (Evid.Code, § 915(a); C.C.P. § 2018.030(b))  If a court cannot rule on work product without requiring disclosure of the information claimed to be privileged, the court may require in camera disclosure.  (Evid.Code, § 915(b))  The in camera disclosure provision does not apply to attorney-client privileged information.  The trial court’s review of the letter was improper.

The court may examine other information to evaluate the basis for the privilege claim, such as whether the privilege is held by the party asserting it, or if an attorney-client relationship existed.  A party claiming privilege believing the court may find an exception can reveal the communication in camera to prevent the court from ordering disclosure of private information bearing no relevance to the litigation.

Courts do not have the power to limit the attorney-client privilege by recognizing implied exceptions, even if this prevents discovery of relevant information.

Comment:  This case exemplifies California’s robust protection of the attorney-client privilege.

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