Judge: Kenneth R. Freeman, Case: 22STCV08470, Date: 2023-02-03 Tentative Ruling

Case Number: 22STCV08470    Hearing Date: February 3, 2023    Dept: 14

[TENTATIVE] ORDER RE MOTION TO COMPEL

            Plaintiffs seek discovery of Defendant Auto Zone West LLC’s communications with Southland Corporation (now 7-Eleven) concerning this case and past cases.  Plaintiffs believe a provision in the 1988 Purchase and Sale Agreement allows Defendant and 7-Eleven to decide which of them will defend claims brought against them and under which party’s name.  Plaintiffs further believe that in this case Defendant is defending claims on behalf of 7-Eleven.

            Section 11.1(c)(ii) of the 1988 Purchase and Sale Agreement states that Southland Corporation is to indemnify Defendant for certain claims.  Section 11.4(a) states the Indemnifying Party must defend any claim with respect to which it is obligated to indemnify the Indemnified Party, and that “Any such contest may be conducted in the name and on behalf of the Indemnifying Party or the Indemnified Party as may be appropriate.”  Section 11.4 goes on to discuss the Indemnifying Party’s right to control the litigation and the Indemnified Party’s obligation to cooperate with the Indemnifying Party.  Plaintiffs interpret section 11.4 as allowing Southland Corporation to require Defendant to litigate claims for which Southland Corporation is liable under the 1988 Purchase and Sale Agreement.  Defendant states that language merely allows 7-Eleven to defend an action in the name of Autozone.  (Opposition at p. 3.) 

            It is not unreasonable to interpret section 11.4 as giving 7-Eleven the right to decide that Defendant will stand in for 7-Eleven in defending claims for which 7-Eleven is liable.  For example, 7-Eleven could decide that it does not want to be burdened with a lawsuit and instead would rather pay Defendant to defend claims for which 7-Eleven would be liable under the 1988 Purchase and Sale Agreement and then indemnify Defendant if there is a verdict in Plaintiffs’ favor on those claims.  In the context of this motion, the court is not deciding that this is the proper interpretation of section 11.4, but only that it is a possible interpretation.

            Plaintiffs contend they need discovery to determine if 7-Eleven asserted a right under the 1988 Purchase and Sale Agreement to have Defendant litigate this case in place of 7-Eleven on claims for which 7-Eleven will be liable if Plaintiffs prevail.  Plaintiffs seek expansive discovery into the communications between Defendant and 7-Eleven.  Defendant contends its communications with 7-Eleven are protected from discovery by the common-interest doctrine.

“The common-interest doctrine allows disclosure between parties, without waiver of privileges, of communications protected by the attorney-client privilege or the attorney work-product doctrine where the disclosure is necessary to accomplish the purpose for which the legal advice was sought.  [Citation.]  The doctrine is not an independent privilege but a doctrine specifying circumstances under which disclosure to a third party does not waive privileges.  [Citation.]  It does not mean there is ‘an expanded attorney-client relationship encompassing all parties and counsel who share a common interest.’  [Citation.]”  (Citizens for Ceres v. Superior Court (2013) 217 Cal.App.4th 889, 914.)  “The privilege survives disclosure to a party with a common interest only if it is necessary to accomplish the privilege holder’s purpose in seeking legal advice.”  (Id. at p. 916.) 

“[A] party seeking to rely on the common interest doctrine does not satisfy its burden to justify a claim of privilege simply by demonstrating that a confidential communication took place between parties who purportedly share a common interest.  Rather, the party seeking to invoke the doctrine must first establish that the communicated information would otherwise be protected from disclosure by a claim of privilege.  . . .  The next step in the analysis is to determine whether disclosing the information to a party outside the attorney-client relationship waived any applicable privileges.”  (OXY Resources California LLC v. Superior Court (2004) 115 Cal.App.4th 874, 890.)  “Thus, ‘[f]or the common interest doctrine to attach, most courts seem to insist that the two parties have in common an interest in securing legal advice related to the same matter – and that the communications be made to advance their shared interest in securing legal advice on that common matter.’  [Citation.]”  (Id. at p. 891.) 

Defendant asserts “Plaintiffs’ requests on their face seek common interest communications between [Defendant] and 7-Eleven.”  (Opposition at p. 7.)  But Defendant does not identify the interest held in common by Defendant and 7-Eleven.  Defendant must show that it and 7-Eleven shared an interest in securing legal advice related to a common matter.  Defendant does not specify that matter.  Nor does Defendant establish that its communications with 7-Eleven were necessary to advance that shared interest.

Defendant states it has no written agreement with 7-Eleven about this case other than the 1988 Purchase and Sale Agreement.  (Opposition at pp. 8-9.)  Defendant is silent about whether an oral or implied agreement exists.  If there is some sort of agreement that Defendant will stand-in for 7-Eleven in this case and defend against Plaintiffs’ claims including those claims for which 7-Eleven would be liable under the 1988 Purchase and Sale Agreement, a common interest might exist and the common interest doctrine might apply to Defendant’s and 7-Eleven’s communications about this case.  Defendant has not shown such an agreement exists.  Defendant did not establish that evidence of an oral or implied agreement would be privileged. 

Defendant cannot claim a common interest exists, fail to describe that common interest, and refuse to produce evidence establishing the existence of that common interest.  At this point, the motion to compel is granted in part.  Defendant is to produce evidence establishing the existence and scope of its alleged common interest with 7-Eleven within 15 days of the date of this order.

The motion is GRANTED in part.

The moving party is to give notice.