McDermott Will & Emery LLP v. Superior Court of Orange County
10 Cal. App. 5th 1083
Cal. Ct. App.2017Background
- Dick Hausman received a privileged attorney-client e-mail from his lawyer Blaskey summarizing a meeting about control of M. Hausman, Inc. (MHI). Blaskey copied Dick’s personal assistant Lindsay and his partner.
- Dick forwarded that e-mail from his smartphone to his sister-in-law Ninetta (no explanatory text). Ninetta later forwarded it to her husband Gavin, who distributed it to others and forwarded a copy to attorney Lurie; several recipients retained or produced copies.
- Rick (Dick’s son) found a copy among his documents and raised the privileged-document issue in a probate case; Dick’s counsel asserted the e-mail was privileged and inadvertently disclosed and sought return/destruction of copies.
- Gibson Dunn (counsel for defendants in separate malpractice actions) discovered a copy in their client file, reviewed it, used it in depositions and discovery, and refused to return all copies despite Dick’s counsel’s objections.
- The trial court ruled the e-mail remained privileged because Dick inadvertently disclosed it and had not waived the privilege; the court also disqualified Gibson Dunn for violating the State Fund duties by reviewing and using the document.
- Defendants sought a writ directing vacatur of both the privilege ruling and the disqualification; the appellate court denied the petition.
Issues
| Issue | Plaintiff's Argument (Dick) | Defendant's Argument (Defendants) | Held |
|---|---|---|---|
| Did Dick waive the attorney-client privilege by forwarding the e-mail? | No; forwarding was inadvertent (smartphone, age, MS, no intent), so no voluntary waiver. | Yes; forwarding to third parties and subsequent distributions constituted waiver. | Held: No waiver — substantial evidence supports inadvertent disclosure and lack of consent to later distributions. |
| Do State Fund duties apply to privileged materials received from a client or only to materials produced by opposing counsel in discovery? | State Fund duties apply regardless of source when a reasonably competent lawyer would conclude the material obviously appears privileged and was inadvertently disclosed. | Limit State Fund to materials inadvertently produced during discovery by opposing counsel. | Held: State Fund duties are not limited to discovery productions; they apply when materials clearly appear privileged and their disclosure seems inadvertent, even if received from client or third party. |
| Did Gibson Dunn breach State Fund duties by reviewing/using the e-mail after receiving notice of privilege? | Gibson Dunn exceeded permissible review, failed to notify privilege holder promptly, and used the e-mail in depositions and discovery. | Gibson Dunn reasonably believed privilege was waived; producing the e-mail in response to subpoena and later using it satisfied obligations. | Held: Gibson Dunn violated State Fund duties (reviewed beyond necessary and used the document after objection). |
| Was disqualification of Gibson Dunn an appropriate remedy? | Disqualification was necessary to protect the integrity of proceedings and prevent exploitation of privileged information. | Disqualification was excessive; no substantial likelihood of continuing prejudice and the firm complied with subsequent court orders. | Held: Trial court did not abuse discretion — disqualification was appropriate given review/use of privileged material and risk of unfair advantage. |
Key Cases Cited
- State Comp. Ins. Fund v. WPS, Inc., 70 Cal.App.4th 644 (Cal. Ct. App.) (announcing duties of counsel who receive materials that "obviously or clearly appear" privileged and appear to have been inadvertently disclosed)
- Rico v. Mitsubishi Motors Corp., 42 Cal.4th 807 (Cal. 2007) (adopting State Fund framework and applying objective standard including work-product materials)
- Clark v. Superior Court, 196 Cal.App.4th 37 (Cal. Ct. App.) (applying State Fund duties where privileged materials were received from client and attorney used them in discovery)
- Costco Wholesale Corp. v. Superior Court, 47 Cal.4th 725 (Cal. 2009) (discussing scope and presumption of attorney-client privilege)
- DP Pham, LLC v. Cheadle, 246 Cal.App.4th 653 (Cal. Ct. App.) (burden and presumptions on privilege and waiver)
- Gregori v. Bank of America, 207 Cal.App.3d 291 (Cal. Ct. App.) (disqualification standard: whether misuse of confidences creates reasonable probability it will affect litigation outcome)