Inadvertent Disclosure of Privileged Information
It is every lawyer's worst nightmare. "The" memo -- the one directed to the client analyzing in detail the strengths and (more importantly) weaknesses of his case -- falls into the hands of opposing counsel. Maybe the document was buried amongst hundreds of other documents delivered to the adversary as part of the discovery process, maybe it was simply accidentally left where it could get mixed up with opposing counsel's papers during a deposition; or maybe some other twist of fate created the unfortunate circumstance. In any event, whenever privileged documents are inadvertently disclosed, a number of questions are immediately raised: "Is the producing party entitled to return of the document?" "Is the recipient obligated to return it?" "If so, may he first review the entire document?" And perhaps most importantly, "Is any privilege protecting the document waived by virtue of the unintended disclosure?"
While it may not be possible to "unring the bell," there is recent authority holding that an unintentional recipient of a confidential document must return said document as quickly as possible, and should not benefit from whatever fortuitous circumstance gave him access to the privileged information. Moreover, the attorney who tries to take advantage of his adversary's mistake by crying "waiver" of any applicable privilege, and/or keeping and using an inadvertently produced document, may find himself subject to sanctions and potentially even disqualification, even if he acquired the document entirely innocently.
The latest word on the subject is found in the Second Appellate District's decision in the case of State Compensation Insurance Fund v. WPS, Inc. 70 Cal.App.4th 644 (1999), which asks the question. "What is a lawyer to do when he or she receives, through the inadvertence of opposing counsel, documents plainly subject to the attorney-client privilege?" The answer, holds WPS, is: "When a lawyer who receives materials that obviously appear to be subject to an attorney-client privilege or otherwise clearly appear to be confidential and privileged and where it is reasonably apparent that the materials were provided or made available through inadvertence, the lawyer receiving such materials should refrain from examining the materials any more than is essential to ascertain if the materials are privileged, and shall immediately notify the sender that he or she possess material that appears to be privileged." Moreover, "in an appropriate case, disqualification might be justified if an attorney inadvertently receives confidential materials and fails to conduct himself or herself" in accordance with the directive of WPS.
In WPS, a lawyer innocently obtained confidential claim summary forms belonging to State Compensation Insurance Fund. The forms had been inadvertently produced during discovery in another case. The recipient lawyer was sanctioned when he refused to return the documents at issue upon request. The sanction award was appealed and reversed based on the absence of published case law explicitly setting forth the obligations on an attorney who is the innocent but unintended recipient of privileged material. However, now that WPS is on the books, the implication is that sanctions would be imposed for failure to comply with its holding.
In coming to the conclusion that inadvertently produced documents must be returned, the WPS court answered in the negative, the previously unresolved question of whether inadvertent disclosure could constitute a waiver of the attorney-client privilege pursuant to Evidence Code Section 912(a) ["waiver occurs if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to such disclosure"]. In examining this question, the court concluded that a trial court "must examine both the subjective intent of the holder of the privilege and the relevant surrounding circumstances for any manifestation of the holder's consent to disclose the information." In WPS, this exercise revealed no waiver where it was evident the client had not made the disclosure, the lawyer testified there was no intent to disclose confidential information, and the inadvertently disclosed document itself was clearly marked as confidential. Another factor considered by the WPS court in coming to its "no waiver" conclusion, was the fact that the State Fund attorney had acted promptly after learning of the improper disclosure, in an attempt to secure the return of the documents at issue. Finally, the WPS court also noted that issues of fundamental fairness and public policy goals are consistent with its holding, citing O'Mary v. Mitsubishi Electronics America, Inc., 59 Cal.App.4th 563, 577 (1997) ["Plaintiff invites us to adopt a 'gotcha' theory of waiver, in which an underling's slip-up in a document production becomes the equivalent of actual consent. We decline." (Emphasis added.)]. This common sense acknowledgment that "to err is human" should cause all but those members of the bar who are infallible to heave at least a small sigh of relief.
WPS is one of the few (if not the only) published California authority directly addressing the question of whether inadvertent production constitutes a waiver. (Kanter v. Superior Court, 88 Daily Journal D.A.R. 15731 (1988), an opinion ordered not published, found that inadvertent disclosure was a waiver). The pre-WPS case of Aerojet v. Transport Indemnity Insurance,18 Cal.App.4th 996 (1993), however, raises some closely related issues, and may be of use to recipients of inadvertently disclosed confidential material who would like to argue (albeit at their peril in light of WPS) that they are entitled to keep and use the protected information.
In Aerojet, an attorney acquired, through entirely innocent means, an attorney-client privileged memorandum disclosing the existence of a potential witness whom the lawyer contacted and deposed. When it was learned that the identity of the potential witness was derived from a confidential document, the lawyer's firm was sanctioned (pursuant to C.C.P. §128.5), for failing to promptly advise opposing counsel that the lawyer had come into possession of the privileged communication. The Court of Appeal reversed the sanction award, primarily based on the conclusion that, while the communication was privileged, the facts contained therein -- i.e., the existence and identity of the witness -- were not. The court concluded, "whether the existence and identity of a witness or other non-privileged information is revealed through formal discovery or inadvertence, the end result is the same: the opposing party is entitled to the use of that witness or information."
WPS distinguishes Aerojet on the grounds that the documents at issue in Aerojet were not clearly marked as confidential, and on the grounds that no damages flowing from the disclosure could be articulated in the Aerojet case. In addition, the WPS court, at least impliedly, rejected Aerojet's suggestion that the factual nature of a communication between an attorney and client could somehow render it "unprivileged." WPS' reasoning is that, while "the facts contained in the communication might be subject to disclosure," that "does not change the conclusion that the claim summaries were prepared in the course of the attorney-client relationship between State Fund and its counsel. As such, they are privileged communications." (WPS at 652). Accordingly, it appears that WPS has called many of the precepts on which Aerojet is based into serious question. Caution should therefore be exercised in relying on Aerojet.
In addition to Aerojet and WPS, there are also a number of Ninth Circuit cases and formal opinions of the American Bar Association which address the issue of inadvertent production and which are generally consistent with WPS. While this article is not intended to be a comprehensive analysis of federal law or ethics opinions on this subject, there is persuasive authority in the federal arena which may be of use to the attorney who finds himself in an inadvertent disclosure situation.
In Transamerica Computer Co., Inc. v. International Business Machines Corp., 573 F.2d 646, 647 (9th Cir. 1978), for example, the court concluded that the privilege was not waived through inadvertent production of privileged documents based upon the "unique circumstances"
under which plaintiff had produced the documents there in question. Specifically, during a court ordered accelerated document inspection process, plaintiff had produced approximately 17 million pages of documents within three months. The court noted the "logistical problems" of producing so many documents and pointed out a number of exacerbating factors, such as the fact that the documents being produced had to be collected from multiple locations, were not well organized and were difficult to screen for privilege. Nevertheless, the Transamerica court found the defendant did its best to comply with the requests, and did develop effective screening procedures.
The Transamerica court focused on the question of voluntariness in order to answer the question of whether the privilege was waived. Section 912 provides for waiver of the privilege only where it is done "without coercion." It was agreed by all parties that a privilege could only be waived where a voluntary disclosure was made, and not where it was "compelled erroneously" or "made without opportunity to claim the privilege." It should be noted, however, that the Transamerica decision was very fact specific. The court found it "statistically inevitable that, despite the extraordinary precautions undertaken by [defendant], some privileged documents would escape detection by the [defendant's] reviewers."
Another Ninth Circuit case which similarly concludes that the inadvertent production of a "privileged" document by a third party witness does not constitute a waiver of the attorney-client privilege, is K.L. Group v. Case, Kay and Lynch, 829 F.2d 909 (9th Cir. 1987). There, a confidential letter between an attorney and third party was inadvertently disclosed by defendant who responded to a subpoena duces tecum. The third party and the defendant were represented by the same attorney. The third party successfully filed a Motion for Protective Order, requesting that all copies of the privileged letter be returned and that no use or reference to the letter be made in the action. On appeal, the Ninth Circuit held that the client is the holder of the privilege and since the client did not disclose the communication or consent to its disclosure the inadvertent disclosure by the third party did not constitute a waiver.
Finally, at least two pre-WPS American Bar Association Formal Opinions address this issue. The first, Formal Opinion 92-368 indicates that "an attorney who receives inadvertently sent confidential information should refrain from examining the information, notify the sender. . . and abide by the sending attorney's instructions." The second, Formal Opinion 94-382 provides: "When a lawyer is offered or sent materials from an unauthorized party that the lawyer determines are privileged, the lawyer should refrain from reviewing the materials any more than is necessary to determine how to proceed. The lawyer should then notify the adverse party or lawyer and follow their instructions, or ask the court for a ruling on the disposition of the materials." The latter opinion also "forewarns that this situation could . . . become a basis for disqualifying the receiving lawyer due to possession of an opponent's confidential information."
As the WPS court pointed out that these opinions, by themselves, does not necessarily prescribe a required course of conduct. Nevertheless, they are likely to be of interest to any court considering this issue, particularly since the WPS is consistent with the above-cited conclusions.
The foregoing authorities, for the most part, affirm the longstanding tradition of holding the attorney-client privilege sacrosanct, and acknowledge the practical reality that, on occasion, privileged documents will be accidentally disclosed. Thus, while there are circumstances under which the production of a privileged communication will result in waiver of the attorney client privilege, the opposite result is more likely to occur. Accordingly, while the self-evident disincentive to inadvertently disclosing privileged information remains strong, there are remedies available when confidential documents are accidentally produced.