The Second District, Division Seven, has ruled that while an attorney who fails to produce documents and/or produce a privilege log may be subject to sanctions, or perhaps even referral to the State Bar, a trial court erred when it instead disqualified said counsel from representing one of the parties. (Sunholm v. Hollywood Press Association (February 27, 2024) B324842.) This is true even though the document withheld may have contained the other party's privileged information and, further, the to-be disqualified counsel was less than forthright about whether he currently possessed privileged material.
In Sundholdm privileged documents were accidentally filed and served upon counsel for plaintiff, who had sued the Holywood Foreign Press Association after he was expelled. HFPA mistakenly attached a draft copy of its by-laws to its complaint notwithstanding that these by-laws were marked as attorney-client privileged material. HFPA made an ex parte application to strike these by-laws from the record, which request was granted. An amended complaint was then filed with the final version of the by-laws attached, as these did not contain any privileged material.
Wendy W. Y. Chang, Judge presiding of the Superior Court of Los Angeles County, found the court lacked jurisdiction to consider the motion to compel due to the dismissal of the remainder of the complaint. The trial court nonetheless held it could rule upon the motion to disqualify and granted said motion.
The appellate court overturned the trial court’s grant of the motion to disqualify, not because it endorsed Quinto’s conduct, but because such was not the proper remedy for Quinto’s action. In an opinion written by Justice Feuer, the court held:
We agree with the trial court that Quinto improperly refused to produce documents in response to a subpoena from HFPA seeking HFPA documents in Quinto’s possession that were privileged or to provide a privilege log. But disqualification of an attorney affects a party’s right to counsel of choice, and it should not be used to punish an attorney for improper conduct. Quinto’s conduct could have been addressed by an award of sanctions or, if appropriate, reporting the conduct to the State Bar of California. The drastic remedy of disqualification of counsel is appropriate only where the attorney improperly or inadvertently received information protected by the opposing party’s attorney-client privilege, the information is material to the proceeding, and its use would prejudice the opposing party in the proceeding. Here, there was no showing the HFPA documents would prejudice HFPA in the proceeding. We reverse. (Id., p. 2.)
Key to the court’s finding the trial court erred was the drastic nature of the remedy of disqualification of counsel. The Second District explained disqualification is appropriate only where the following test is met: 1) opposing counsel improperly or inadvertently receives information protected by the opposing party’s attorney-client privilege, 2) the information is material to the proceeding itself, and 3) use of such by opposing party would result in actual prejudice of party seeking disqualification. HFPA, however, could not establish it suffered prejudice from the retention of the privileged material given the suit against it was dismissed.
Analysis: mistakes — whether inadvertent or intentional — were made by counsel for both parties
Counsel for HFPA — Robert Ellison— admitted that a draft copy of the by-laws which included attorney-client privileged information was filed with the Court and served on opposing counsel. Though swiftly corrected, this was a potential breach of the duty of due care owed to the client, necessitating the ex parte application to strike this matter.
At the same time, counsel for Quinto failed to either produce the privileged document or produce a privilege log detailing what document was being withheld.
Unresolved ethical issues, including “back ups” of information which should be "returned"
The Court of Appeal found that because HFPA could not establish prejudice from the retention of the privileged information, it did not need to consider whether Quinto acted unethically. However, as the Court of Appeal explained at footnote six, the scenario in Sundholm implicates the ethical duty of counsel to disclose and possibly return inadvertently-disclosed privileged material:
Pursuant to State Fund, supra, 70 Cal.App.4th at pages 656 to 657, “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 possesses material that appears to be privileged. The parties may then proceed to resolve the situation by agreement or may resort to the court for guidance with the benefit of protective orders and other judicial intervention as may be justified. We do, however, hold that whenever a lawyer ascertains that he or she may have privileged attorney-client material that was inadvertently provided by another, that lawyer must notify the party entitled to the privilege of that fact.” (See Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 817-818 [adopting the State Fund holding and extending it to material protected by the work product doctrine].)
The opinion therefore does not provide sufficient guidance to say with certainty whether or not Quinto acted unethically, instead merely hinting that he may have. The appellate court also did not discuss the issue of what is to occur after a party notifies the other party it has inadvertently received privileged material.
In the analog era, of course, the answer was often that the party “returns” the privileged material to the party who inadvertently disclosed such. As California Rules of Professional Responsibility, Rule 4.4, comment [1] states:
[1] If a lawyer determines this rule applies to a transmitted writing,* the lawyer should return the writing* to the sender, seek to reach agreement with the sender regarding the disposition of the writing,* or seek guidance from a tribunal.* (See Rico v. Mitsubishi (2007) 42 Cal.4th 907. . . .
But what does this mean in the digital era?
Even if a document is “returned” to its sender, it most likely has already been scanned. Moreover, even if it has ostensibly been “deleted,” a copy of the privileged material may be saved on a local or remote backup server.
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