Judge: Walter P. Schwarm, Case: 30-2019-01094012, Date: 2022-08-02 Tentative Ruling
Motion No. 1:
Defendants’ (Global Financial Data Incorporated, Bryan Taylor, and Michelle Huff Kangas) Motion to Disqualify Plaintiff’s Counsels of Record and to Preclude Use of Attorney-Client Privileged and Confidential Documents (Motion), filed on 3-22-22 under ROA No. 537, is DENIED without prejudice.
Plaintiff’s (Kevin Iwanaga) Evidentiary Objections filed on 7-27-22 under ROA No. 601: The court SUSTAINS all of the objections.
Defendants’ Evidentiary Objections filed on 7-26-22 under ROA No. 595: The court SUSTAINS Objections Nos. 1, 4, 7, 8, 10, 11, 23, 25, 26, 27, and 28. The court OVERRULES the remaining objections.
Lynn v. George (2017) 15 Cal.App.5th 630, 637 (Lynn), states, “ ‘A trial court's authority to disqualify an attorney derives from the power inherent in every court “[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.” [Citations.] Ultimately, disqualification motions involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility. [Citation.] The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one's choice must yield to ethical considerations that affect the fundamental principles of our judicial process.’ [Citation.]”
McDermott Will & Emery LLP v. Superior Court (2017) 10 Cal.App.5th 1083, 1106-1107 (McDermott), states, “State Fund is the seminal California decision defining a lawyer's ethical obligations upon receiving another party's attorney-client privileged materials. [Citation.] It established the following ‘standard governing the conduct of California lawyers’: ‘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.’ [Citation.]” (Italics in McDermott.) “The language Defendants quote applies when an attorney receives materials that obviously or clearly appear to be privileged and it is reasonably apparent the materials were inadvertently disclosed. In that situation, the attorney receiving the materials must refrain from examining them any more than is necessary to determine their privileged nature, immediately notify the privilege holder the attorney has received materials that appear to be privileged, attempt to reach an agreement with the privilege holder about the materials' privileged nature and their appropriate use, and resort to the court for guidance if an agreement cannot be reached. The attorney must not further review or use the materials for any purpose while the issue remains in dispute. [¶] The language Dick quotes applies when an attorney ascertains that he or she received materials that are not obviously or clearly privileged, but nonetheless may be privileged materials that were inadvertently disclosed. This plainly is a lower standard, and it triggers a more limited response. In this situation, the attorney's duty is simply to notify the privilege holder that the attorney may have privileged documents that were inadvertently disclosed. At that point, the onus shifts to the privilege holder to take appropriate steps to protect the materials if the holder believes the materials are privileged and were inadvertently disclosed.” “In Clark, for example, the Court of Appeal applied the State Fund rule to an attorney who received an opponent's privileged documents from his own client rather than the opposing party or its attorney. There, the plaintiff stole some of his employer's privileged documents when the employer fired him, and then provided the documents to his attorney for use in the plaintiff's lawsuit against the employer. [Citation.]” (Id., at p. 1109.)
“ ‘[D]isqualification is proper as a prophylactic measure to prevent future prejudice to the opposing party from information the attorney should not have possessed’; an affirmative showing of existing injury from the misuse of privileged information is not required. [Citation.] A trial court, however, may not order disqualification ‘ “simply to punish a dereliction that will likely have no substantial continuing effect on future judicial proceedings.” ’ [Citations.] [¶] ‘[T]he significant question is whether there exists a genuine likelihood that the status or misconduct of the attorney in question will affect the outcome of the proceedings before the court. Thus, disqualification is proper where, as a result of a prior representation or through improper means, there is a reasonable probability counsel has obtained information the court believes would likely be used advantageously against an adverse party during the course of the litigation. Though such information cannot be unlearned, and the lawyer who obtained it cannot be prevented from giving it to others, disqualification still serves the useful purpose of eliminating from the case the attorney who could most effectively exploit the unfair advantage.’ [Citations.]” (Id., at p. 1120)
Costco Wholesale Corporation v. Superior Court (2009) 47 Cal.4th 725, 739 (Costco), provides, “As noted earlier, it has long been understood that ‘ “[t]he privilege is given on grounds of public policy in the belief that the benefits derived therefrom justify the risk that unjust decisions may sometimes result from the suppression of relevant evidence.” ’ [Citation.] And because the privilege protects a transmission irrespective of its content, there should be no need to examine the content in order to rule on a claim of privilege. [Citation.]” (Italics in Costco.)
Private Investigator’s Report:
Defendants contend that the court should disqualify Plaintiff’s counsel because they “. . . have exploited the information contained in the PI report to their benefit and have asked numerous witnesses about the private and privileged information, even though they should not have had access to it in the first place.” (Motion; 11:27-12:1 (“PI report” refers to a report prepared by a private investigator identified as Thomas Graybill.).) Defendants assert that the attorney-client privilege protects the PI report. (Motion; 9:7-12.)
Defendants have provided the following evidence regarding the PI report: (1) Bruce Zucker, an attorney, started representing Defendant—Kangas in 2016 on an unrelated legal matter and still represents Defendant—Kangas. (Zucker Decl., ¶¶ 3 and 5.) (2) As part of this representation, Mr. Zucker “. . . retained . . . Thomas Graybill . . . to investigate certain matters and prepare a report for . . .” Mr. Zucker. (Zucker Decl., ¶ 6.); (3) “Mr. Graybill conducted his investigation . . . and then emailed me the report containing the results of his investigation on or about August 26, 2018. I then provided the same report to my client, Kangas.” (Zucker Decl., ¶ 7.); (4) “The report was prepared by Mr. Graybill at my direction, after I had retained him to conduct an investigation into certain matters in an unrelated legal matter, and to prepare a report concerning his findings. I used his report to form my legal opinions and render advice to my client, as well as to determine my strategy in the legal matter that I was retained for.” (Zucker Decl., ¶ 12.); (5) Defendant—Kangas received the PI report by way of email on or about 8-16-18. (3-8-22 Kangas Decl., ¶ 9.); and (6) Defendant—Kangas states, “I did not waive my attorney-client privilege as to Mr. Graybill’s report and I did not instruct my attorney to waive it on my behalf.” (3-8-22 Kangas Decl., ¶ 15.)
Plaintiff’s Opposition to Defendants’ Motion to Disqualify Plaintiff’s Counsel (Opposition), filed on 7-20-22 under ROA No. 584, states, “Even if they did, any such privilege was waived by Defendants when Kangas herself provided the report to Plaintiff and authorized Plaintiff to review it – a fact Defendants conveniently omitted from their motion papers.” (Opposition; 2:22-24.) The declaration in support of the Opposition states, “During discovery in this case, in May of 2021, Plaintiff produced a copy of a report authored by Thomas Graybill – hereinafter referred to as the Graybill Report. Defendants were well aware that Iwanaga and his counsel possessed a copy of the Graybill Report. Michelle Kangas herself had provided the Graybill Report to Iwanaga in 2019. A true and correct copy of an e-mail from Michelle Kangas to Kevin Iwanaga, copying Bryan Taylor, in which Ms. Kangas expressly authorized Iwanaga to review ‘Tom Graybill’s work product,’ is attached to this Compendium of Evidence as Exhibit 4. That document was produced to Defendants and Defendants’ counsel as part of discovery in this case in May of 2021. In light of that e-mail and Michelle Kangas’ express waiver of any potential privilege claim and agreement to allow Plaintiff to review the Graybill Report, I have at all times believed and continue to believe that Defendants have no viable privilege claim as to the Graybill Report, that Plaintiff has every right to possess it as it was given to him without objection by Defendants, and that it is and was a proper subject of discovery. I have no reason to believe that Plaintiff or Plaintiffs’ counsel possess any information or materials that would provide Plaintiff with any undue or unfair advantage in this case.” (7-20-21 Ksadzhikyan Decl., ¶ 6 and Exhibit 4.)
Citizens for Ceres v. Superior Court (2013) 217 Cal.App.4th 889, 911 (Ceres), states, “Work produced by an attorney's agents and consultants, as well as the attorney's own work product, is protected by the attorney work-product doctrine. [Citation.]” Based on the evidence, the court finds that the PI report was attorney-work product because Mr. Graybill was acting as Mr. Zucker’s agent on the unrelated legal matter. Mr. Zucker’s act of sending the PI report to Defendant—Kangas was confidential communication necessary for the representation of Defendant—Kangas within the meaning of Evidence Code section 952. Plaintiff does not appear to dispute that the attorney-client privilege initially protected the PI report as a confidential communication between an Mr. Zucker and Defendant Kangas and as attorney work product. (Evid. Code, § 952 and Code Civ. Proc., § 2018.030.) Although Defendant—Kangas has waived the attorney-client privilege for the purpose of allowing the court to review the PI report (3-22-22 Dib Decl., ¶ 5), the court has not reviewed the PI report because review is unnecessary under Costco.
Plaintiff contends that Defendant—Kangas waived the attorney-client privilege. First, the court finds that Plaintiff’s possession of the PI report falls into the category of material received by Plaintiff’s attorney that was not obviously or clearly privileged. Plaintiff’s attorney has possession of an email that led Plaintiff’s attorney to conclude that the Defendant—Kangas has waived the attorney-client privilege as to the PI report based on Exhibit 4 attached to the declaration in support of the Opposition. (Ksadzhikyan Decl., ¶ 6.) Exhibit 4, which is a 5-29-19 email from Defendant—Kangas to Plaintiff and others states in part, “I give my permission to examine all of these pieces of information . . . including . . . Tom Graybill’s work product.” (Ksadzhikyan Decl., ¶ 6 and Exhibit 4.) Although Plaintiff’s attorney could rely on this email to form an opinion that Defendant—Kangas waived the attorney-client privilege, this email also suggests that the attorney-client privilege or work product doctrine may apply. The 5-29-19 email imposed a duty upon Plaintiff’s attorney to notify Defendants’ attorneys that the PI report may have been inadvertently disclosed. Plaintiff’s attorney did not comply with this duty. Plaintiff did not satisfy this duty by disclosing the PI report as part of discovery in May of 2021.
Second, the court must determine whether there is a genuine likelihood that misconduct in question will affect the outcome of the proceedings before the court. The Motion states, “The PI Report provided Plaintiff’s attorneys with inside information concerning the relationship between the owners of GFD, the issues they had with each other and their disagreements, their personal financial information, and GFD's financial information, information that they would not have had if the report was not taken by Iwanaga. They have exploited the information contained in the PI report to their benefit and have asked numerous witnesses about the private and privileged information, even though they should not have had access to it in the first place.” (Motion; 11:23-12:1.) Motion does not explain how Plaintiff’s attorneys exploited the PI report in terms of questioning the witnesses. Specifically, unlike McDermott, supra, 10 Cal.App.5th at pp. 1098 and 1122, the Motion does not describe how Plaintiff used the PI report in questioning witnesses about the information contained in the PI report. Defendants do not explain why the PI report is relevant to the issues in this action. Without further specificity, the court finds that Defendants have not shown a genuine likelihood that the misconduct of Plaintiff’s attorney will affect the outcome of the proceedings. Further, Plaintiff challenges whether Defendant—Kangas has waived the attorney-client privilege. The court cannot determine whether Defendant—Kangas has waived the attorney-client privilege without an evidentiary hearing on that issue. Therefore, the court DENIES the Motion to the extent it relies on the PI report.
Confidential Juvenile Report (CJR):
As to the CJR, the Motion states, “. . . any reasonable attorneys . . . would have quickly determined from a cursory review of the first page of the report that it was an attorney-client privileged document and highly confidential report because it relates to the investigation of a private criminal matter involving a minor.” (Motion; 10:8-11.) The declaration from Defendants’ attorney describes the contends of the CJR as follows: “I reviewed the documents produced by Dillon as bates stamp nos. PL000082-PL000105. For the Court's better understanding of the highly sensitive and confidential information contained in the Confidential Juvenile Report, I am providing the following general information concerning the contents of the report: the report contains private details regarding interviews conducted by the law enforcement and Social Services Agency with various individuals, including minors, as to the alleged events of the 2012 criminal case and other private matters, and including graphic details of the alleged events of the 2012 criminal case, private details as to criminal histories, private details as to investigations done by the law enforcement and Social Services Agency, and summaries of their respective investigations. The information in this report is highly sensitive and private, and the report is not accessible to the public.” (3-22-22 Dib Decl., ¶ 19.)
This description does not show that the CJR contains confidential communications between Defendant—Kangas and the attorney for Defendant—Kangas. Although the CJR may be confidential under Welfare and Institutions Code section 827, Defendants have not shown that Defendant—Kangas’ attorney or an agent for Defendant—Kangas’ attorney prepared the CJR. Defendants have not shown that the CJR contains confidential communications between Defendant—Kangas and Defendant—Kangas’ attorney. Since Defendants’ have not shown that the CJR is subject to the attorney-client privilege, the CJR does not provide a basis for disqualification for based on Plaintiff’s knowledge of the information contained in the CJR. Defendant—Kangas has waived the attorney-client privilege to allow the court to view the CJR. (3-22-22 Dib Decl., ¶ 18.) The court has not reviewed this report because a review was unnecessary based on the description of the contends provided in the 3-22-22 declaration from Monica Dib.
Laguna Beach County Water District v. Superior Court (2004) 124 Cal.App.4th 1453, 1458 (Laguna Beach), states, “Documents that are not originally protected do not become so merely by being provided to or transmitted by an attorney. [Citation.]” Since the Defendant has not shown that the attorney-client privilege protects the CJR, Defendant—Kangas’ receipt of the CJR from her attorney is immaterial under Laguna Beach. (3-8-22 Kangas Decl., ¶ 18.)
Therefore, the court DENIES the Motion to the extent it relies on the Plaintiff’s possession or knowledge of the CJR.
Having found that the PI report may be subject to the attorney-client privilege, the court ORDERS Plaintiff to return the PI report to Defendants until the court can resolve the waiver issue regarding the attorney-client privilege. As to the CJR, the court ORDERS all parties, except Defendant—Kangas (Welfare and Institutions Code, § 827, subd. (a)(1)(D)) to return all copies of the CJR to Defendant—Kangas unless a party can demonstrate that the party obtained the report pursuant to Welfare and Institutions Code section 827. This order includes any copy of the CJR possessed by Brenna Johnson or Virginia Ksadzhikyan even in any litigation where Brenna Johnson or Virginia Ksadzhikyan possessed the CJR.
Based on the above, the court DENIES Defendants’ (Global Financial Data Incorporated, Bryan Taylor, and Michelle Huff Kangas) Motion to Disqualify Plaintiff’s Counsels of Record and to Preclude Use of Attorney-Client Privileged and Confidential Documents, filed on 3-22-22 under ROA No. 537, without prejudice.
Plaintiff is to give notice.
Motion No. 2:
Defendants’ (Global Financial Data Incorporated, Bryan Taylor, and Michelle Huff Kangas) unopposed Motion to File Exhibits Under Seal in Support of Defendants’ Motion to Disqualify Plaintiff’s Counsels of Record and to Preclude the Use of Attorney-Client Privileged and Confidential Documents (Motion), filed on 3-22-22 under ROA No. 533, is GRANTED in part and DENIED in part.
McNair v. National Collegiate Athletic Assn. (2015) 234 Cal.App.4th 25, 31 (McNair) explains, “ ‘The public has a First Amendment right of access to civil litigation documents filed in court and used at trial or submitted as a basis for adjudication. [Citation.] Substantive courtroom proceedings in ordinary civil cases, and the transcripts and records pertaining to these proceedings, are “ ‘presumptively open.’ ” [Citation.]’ [Citation.]”
California Rules of Court, rule 2.551, states, “(a) A record must not be filed under seal without a court order. The court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties. [¶] (b)(1) A party requesting that a record be filed under seal must file a motion or an application for an order sealing the record. The motion or application must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing.”
California Rules of Court, rule 2.550, subdivision (d) states, “The court may order that a record be filed under seal only if it expressly finds facts that establish: (1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.”
California Rule of Court, rule 2.550, subdivision (e), provides in part, “(1) An order sealing the record must: (A) Specifically state the facts that support the findings; and (B) Direct the sealing of only those documents and pages, or, if reasonably practicable, portions of those documents and pages, that contain the material that needs to be placed under seal. All other portions of each document or page must be included in the public file.”
The Motion seeks to seal Exhibits Nos. 1a, 1b, 3, 4, 5, 6, 7, and 8 attached to the declaration of Monica Dib filed on 3-22-22 under ROA No. 531.
Based on the attorney-client and confidentiality issues described in Motion No. 1, the court GRANTS the Motion as to Exhibit Nos. 1a, 1b, and 8. Under California Rules of Court, Rule 2.550(d), the Court finds that (1) there is an overriding interest in maintaining the attorney-client privilege and Welfare and Institutions Code section 827 as to Exhibit Nos. 1a, 1b, and 8, (2) these overriding interests support sealing these records, (3) there is a substantial probability that these matters will not remain confidential if the records are not sealed, (4) the proposed sealing is narrowly tailored because the court intends to seal these Exhibits only (5) no less restrictive means exist to achieve the interest in protecting the minor Plaintiff’s confidentiality.
The court DENIES the Motion as to the remaining Exhibits because the deposition testimony in these exhibits did not address the contents of the PI report or the Confidential Juvenile report.
Based on the above the court GRANTS Defendants’ (Global Financial Data Incorporated, Bryan Taylor, and Michelle Huff Kangas) unopposed Motion to File Exhibits Under Seal in Support of Defendants’ Motion to Disqualify Plaintiff’s Counsels of Record and to Preclude the Use of Attorney-Client Privileged and Confidential Documents, filed on 3-22-22 under ROA No. 533, as to Exhibit Nos. 1a, 1b, and 8. The court DENIES the Motion as to the remaining exhibits. The court ORDERS the sealing of the entire declaration of Monica Dib filed 3-22-22 under ROA No. 531. The court ORDERS Defendants to file a redacted version of the declaration of Monica Dib that is consistent with the court’s order no later than 8-5-22.
Defendants are to give notice.