Lead Opinion
The sole question presented by this mandate proceeding is whether a certain written statement, obtained by a representative of petitioner’s insurance carrier and delivered to its attorney, was privileged as a matter of law,
The pertinent facts are that William and Constance Smith, the real parties in interest, commenced an action for personal injuries in which they alleged that Constance was injured when she fell upon a sidewalk, as a result of the negligence of defendant D. I. Chadbourne, Inc., the petitioner. In response to interrogatories served upon it by the real parties, petitioner admitted that it had obtained the written statement of one John Makuszi, a person “who performed work on the sidewalk referred to in the complaint.” When the real parties moved for an order allowing inspection of that statement (pursuant to § 2031 and subd. (b) of § 2016), petitioner opposed the motion solely on the ground that the statement was protected by the attorney-client privilege.
The declaration filed in support of the motion for inspection showed: that Makuszi had performed work on the sidewalk both before and after the accident, and had information relevant to the cause of action; that petitioner had obtained written statements from Makuszi and others, and had allowed the real parties to inspect all of such statements other than that of Makuszi; that petitioner refused to allow inspection of Makuszi’s statement; and, that petitioner had failed to produce Makuszi for a noticed deposition, indicating that he was (and is) on duty with the Armed Forces in Germany.
In opposition to the motion, petitioner filed the declaration of one Louis Rovens, showing that: declarant was an investigator and adjuster for a firm employed by petitioner’s insurance carrier for the purpose of investigating accidents which are likely to lead to litigation involving persons or firms insured by such carrier; that the attorneys now appearing for petitioner were (and are) the attorneys for such insurance carrier, and the latter had directed declarant’s firm to investigate all such accidents and transmit their reports “to their attorneys”; that the policy issued by such carrier to petitioner required the latter to cooperate and furnish to declarant’s employer (as agents for the insurance company) all information incidental to the defense of claims; that Makuszi’s statement “was taken by me [declarant] as part of the investigation and preparation for defense, and ... after plaintiff herein had engaged the services of her attorneys and the said statement ... was intended to be confidential and made for the purpose of being transmitted to and was transmitted to ... [the insurance carrier] for transmission to
If the facts set forth in the two declarations support petitioner’s contention that Makuszi’s statement was privileged as a matter of law, respondent court was required to deny the motion for inspection (§ 2016, subd. (b)). If, however, the claimed privilege does not appear as a matter of law, but presented a question of fact, then the determination of the trial court may not be set aside. When the facts, or reasonable inferences from the facts, shown in support of or in opposition to the claim of privilege are in conflict, the -determination of whether the evidence supports one conclusion or the other is for the trial court, and a reviewing court may not disturb such finding if there is any substantial evidence to support it (Holm v. Superior Court,
In support of its contention that it has met the burden required of it, petitioner relies almost exclusively upon the authority of Gene Compton’s Corp. v. Superior Court,
Compton’s involved facts substantially similar to those now before us. There the appellate court held that in Grey
- No petition for hearing was filed in Compton’s. The problem first came to our attention in a petition for hearing in Atchison, Topeka & S.F. Ry. Co. v. Superior Court,
Almost immediately thereafter we were presented with a petition for hearing in Atlas Heating & Ventilating Co., Ltd. v. Superior Court (Cal.App.)
Although, undoubtedly, the privilege should not be denied to a corporate client in California there are several questions that have not been answered. What is the extent of such privilege? What tests are to be applied? What principles determine whether the natural person who speaks is speaking from the status of a client (actual or prospective), or is merely a witness whose unprivileged communication someone else is seeking to suppress under a claim of privilege? And where the element of confidentiality is challenged, whose intention to communicate confidentially is the criterion, that of the original communicant, or that of the insurance investigator who obtains the statement from the employee ? Various settled rules complicate, rather than simplify, the answers to these questions. For example, it is well settled that a communication is not protected by the attorney-client privilege, even when made in the course of''professional employment, unless the client intends that it be treated in confidence (Solon v. Lichtenstein,
The existing California authorities are not helpful in the attempt to answer these questions. Holm {supra,
To speak of “dominant purpose” alone answers very few of the problems here involved. Assuming a situation where the employee was free to choose between making a statement
„But, if we are to assume that the employee is not free to make or refuse a statement, but is required by the corporate employer to speak, then the employee’s frame of mind ceases to be of great importance. In such a situation the corporation be the client who desires to communicate its knowledge to its attorney, without fear that others may be informed. In such case, its basic reason for requiring the statement (including, but not confined to, the ‘dominant purpose”) must be inquired into. In no event should the undisclosed dominant purpose of the person who obtains the employee’s statement, standing alone, control the issue of privilege.
Other basic rules of privilege pose other problems when applied to corporations. It is axiomatic that a litigant may not silence a witness by having him reveal his knowledge to the litigant’s attorney (City & County of San Francisco v. Superior Court, supra,
r; Another principle that may affect this problem is the rule that even where a communication is privileged in the first instance, the privilege may be waived by failure to maintain l confidentiality. Thus, where the client communicates with his attorney in the presence of other persons who have no interest in the matter, or where he communicates in confidence but later breaches that confidence himself, he is held to have waived the privilege (McKnew v. Superior Court,
Certainly the public policy behind the attorney-client privilege requires that an artificial person be given equal opportunity with a natural person to communicate with its attorney, within the professional relationship, without fear that its communication will be made public. As one writer has said, “The more deeply one is convinced of the social necessity of permitting corporations to consult frankly and privately with their legal advisers, the more willing one should be to accord them a flexible and generous protection.” (Simon, The Attorney-Client Privilege as Applied to Corporations (1956) 65 Yale L.J. 953, 990.)
But reason dictates that the corporation not be given greater privileges than are enjoyed by a natural person merely because it must utilize a person in order to speak. If we apply to corporations the same reasoning as has been applied in regard to natural persons in reference to privilege, and if we adapt those rules to fit the corporate concept, certain principles emerge clear. These basic principles may be stated as follows:
1. When the employee of a defendant corporation is also a defendant in his own right (or is a person who may ¡be charged with liability), his statement regarding the facts with which he or his employer may be charged, obtained by a representative of the employer and delivered to an attorney who represents (or will represent) either or both of them, is entitled to the attorney-client privilege on the same basis as it would be entitled thereto if the employer-employee relationship did not exist ;
2. When such an employee is not a eodefendant (or person who may be charged with liability), his communication should not be so privileged unless, under all of the circumstances of the case, he is the natural person to be speaking for the corporation; that is to say, that the privilege will not attach in such case unless the communication constitutes information which emanates from the corporation (as dis*737 fcinet from the nonlitigant employee), and the communicating employee is such a person who would ordinarily be utilized for communication to the corporation’s attorney;
3. When an employee has been a witness to matters which require communication to the corporate employer’s attorney, and the employee has no connection with those matters other than as a witness, he is an independent witness; and the fact that the employer requires him to make a statement for transmittal to the latter’s attorney does not alter his status or make his statement subject to the attorney-client privilege ;
4. Where the employee’s connection with the matter grows out of his employment to the extent that his report or statement is required in the ordinary course of the corporation’s business, the employee is no longer an independent witness, and his statement or report is that of the employer;
5. If, in the case of the employee last mentioned, the employer requires (by standing rule or otherwise) that the employee make a report, the privilege of that report is to be determined by the employer’s purpose in requiring the same; that is to say, if the employer directs the making of the report for confidential transmittal to its attorney, the communication may be privileged;
6. When the corporate employer has more than one purpose in directing such an employee to make such report or statement, the dominant purpose will control, unless the secondary use is such that confidentiality has been waived;
7. If otherwise privileged under the rules stated above, a communication does not lose its privilege merely because it was obtained, with the knowledge and consent of the employer, by an agent of the employer acting under such agency;
8. For such purpose an insurance company with which the employer carries indemnity insurance, and its duly appointed agents, are agents of the employer corporation; but the extent to which this doctrine may he carried, and the number of hands through which the communication may travel without losing confidentiality must always depend on reason and the particular facts of the ease;
9. And in all corporate employer-employee situations it must be borne in mind that it is the intent of the person from whom the information emanates that originally governs its confidentiality (and hence its privilege); thus where the employee who has not been expressly directed by*738 his employer to make a statement, does not know that his statement is sought on a confidential basis (or knowing that fact does not intend it to be confidential), the intent of the party receiving and transmitting that statement cannot control the question of privilege;
10. Similarly, where the corporate employer directs the employee, at the request of its insurance carrier, to make such a statement, the intent of the employer controls; and unless the insurance carrier (or its agent) has advised the employer that the employee’s statement is to be obtained and used in such manner, it cannot be said that the corporation intended the statement to be made as a confidential communication from client to attorney;
11. Finally, no greater liberality should be applied to the facts which determine privilege in the case of a corporation than would be applied in the case of a natural person (or association of persons), except as may be necessary to allow the corporation to speak.
The facts of the instant ease are meager. The declarations filed by the respective parties advised the respondent court that Makuszi had been an employee of the defendant corporation, that he had performed some work on the sidewalk in question both before and after plaintiff’s accident, that he was unavailable by reason of being with the Armed Forces in Germany, and that defendant had in its possession or control his written statement. Although the employer was alleged to have been negligent in the premises, Makuszi was not named as a defendant, and there was no attempt made by either party to show that he was (or could be) responsible for the condition which caused the accident. Nor was there any claim that his statement contained any material or information which could not have been known to a nonemployee witness (i.e., there was no attempt to show that the statement was information which emanated from him in his capacity as a spokesman for the corporation). Of greater importance is the fact that there was almost a complete lack of any showing that the client from whom the communication emanated intended that the same be transmitted to its attorney, in confidence or otherwise. While it is true that the declaration filed in opposition to the motion to inspect showed that the declarant (the adjuster) intended the statement to be privileged, that declarant was the employee of a firm twice removed from the corporation’s insurance carrier. There is no need to determine whether he was acting as an agent for the defendant corporation. His declaration was limited to a statement
It cannot be said that the facts presented to the respondent court determine the question of privilege, one way or the other, as a matter of law.
Gibson, C. J., Traynor, J., Schauer, J., Tobriner, J., and Peek, J., concurred.
Notes
Code of Civil Procedure, section 1881, subdivision 2, provides, in part, "An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of professional employment; ...”
All code references, unless otherwise noted, are to the Code of Civil Procedure.
Under both ease law and the 1963 amendment to subdivision (b) of section 2016 (making work product of an attorney nondiscoverable under certain circumstances) an issue regarding work product may arise when witnesses ’ statements are gathered for delivery to an attorney. Petitioner did not base its opposition to inspection on that doctrine, but relied solely on the claim of absolute privilege, and hence the issue of work product was not presented to the trial court. It is not here involved. The sole question presented is whether the statement was or was not privileged as a matter of law.
The record does not include the oral arguments, if any, nor was there any opinion or finding made by respondent court other than as quoted above. As a result, the good cause, or lack thereof, must be determined from the declarations filed in support and in opposition.
The declaration also set forth further allegations regarding the real parties’ need for inspection; but since petitioner did not oppose the motion on any ground save privilege, it is assumed that it concedes that sufficient cause for inspection of any but a privileged document was shown.
In this action, as in Atlas (supra,
We are not here concerned with what might have been the result had the trial judge held the statement to have been privileged. Conversely, however, we are concerned with petitioner’s contention that the statement was privileged, as a matter of law, under the doctrine of Compton’s (supra,
Dissenting Opinion
I dissent. I would grant the writ of mandate as requested, for the reasons set forth by Mr. Justice Shoemaker in the opinion prepared by him for the District Court of Appeal and concurred in by Presiding Justice Kaufman and Justice Agee. (See B. I. Chadbourne, Inc. v. Superior Court (Cal.App.)
