SEGAL, J. —
This action arises out of a lawsuit by Nicholas Behunin against Charles R. Schwab and his son Michael Schwab over an unsuccessful real estate investment deal. As part of a plan to induce the Schwabs to settle the lawsuit, Behunin's attorneys, Leonard Steiner and Steiner & Libo, engaged a public relations consultant, Levick Strategic Communications, to create a website containing information linking the Schwabs and their real estate investments in Indonesia to the family of former Indonesian dictator Suharto. In Charles Schwab's subsequent action against Behunin for libel and Michael Schwab's subsequent action against Behunin for libel, slander, and invasion of privacy, Behunin filed a special motion to strike under Code of Civil Procedure section 425.16. In response to that motion, the Schwabs sought discovery of communications among Behunin, Steiner, and Levick relating to the creation of the website and its contents. Behunin objected, claiming the communications were protected from disclosure by the attorney-client privilege.
The questions in this proceeding are whether the communications among Behunin, Steiner, and Levick were confidential, attorney-client privileged communications and whether disclosure to Levick waived the privilege. We conclude that, although in some circumstances the attorney-client privilege may extend to communications with a public relations consultant, it did not do so in this case because Behunin failed to prove the disclosure of the communications to Levick was reasonably necessary for Steiner's representation of Behunin in his lawsuit against the Schwabs. Therefore, we deny Behunin's petition for a writ of mandate.
Behunin, represented by Steiner, filed an action against the Schwabs relating to a business dispute over the creation and funding of a company
After filing the Sealutions lawsuit, Steiner hired Levick to create a social media campaign to induce the Schwabs to settle the case. As part of this strategy, Levick created a website, www.chuck-you.com, linking the Schwabs to corruption, human rights violations, and atrocities associated with Suharto and his family. In a letter to Steiner and Behunin, a senior vice-president at Levick stated: "Per our discussion with your client, Nicholas Behunin, LEVICK's goal will be to develop and deploy strategy and tactics of Mr. Behunin's legal complaint." The rest of the letter is redacted.
According to Behunin, "Steiner played no role in the creation or publication of [the chuck-you.com website].... [T]hat website and the content contained in the website were created by me and a public relations firm with which I was working. Steiner's only role was, at my specific request, to enter into a contract on my behalf with that public relations firm in connection with the prosecution of the [Sealutions action].... Steiner merely acted as a liaison between myself and the public relations firm without knowledge of or connection to the substance of the website. The website always has been and remains my sole and exclusive property." Behunin also stated in a subsequent declaration the parties intended that all communications among Behunin, Steiner, and Levick would be protected by the attorney-client privilege and "all documents prepared on [Behunin's] behalf would be protected by the work-product privilege unless and until they entered the public domain."
The Schwabs each filed an action against Behunin and Steiner. Charles Schwab asserted a cause of action for libel and alleged Steiner created and registered the "chuck-you.com" website. Charles Schwab further alleged he is informally known as Chuck, and the name of the website is a play on the words "fuck you." Charles Schwab also alleged the website "stole the design and format of Charles Schwab & Co., Inc.'s investment services website
Michael Schwab asserted causes of action for libel, slander, and invasion of privacy and alleged the statements on the website "attempted to smear [him] by associating him with Tommy Suharto, a son of the former Indonesian dictator [who] also has been linked to corrupt activities and is a convicted murderer." Michael Schwab further alleged the website falsely suggested the Schwabs were doing business with the dictatorial regime in Indonesia through the surviving members of Suharto's family, some of whom have been convicted of murder, bribery, and seizing land by force.
Behunin filed a special motion to strike the Schwabs' defamation complaints under Code of Civil Procedure section 425.16. He argued the purpose of the Schwabs' lawsuits was to inhibit his constitutionally protected petitioning activity of filing the Sealutions lawsuit against the Schwabs. Behunin's supporting declaration provided the details of extensive communications among Behunin, Michael Schwab, Charles Schwab, and various members of the Suharto family.
In response to the special motion to strike, the Schwabs filed motions for limited discovery under Civil Procedure Code section 425.16, subdivision (g),
The trial court ruled the Schwabs were entitled to some of the discovery they sought in order to oppose the special motion to strike. In particular, the court allowed Michael Schwab to serve a set of requests for production of documents on Steiner & Libo, a subpoena for a deposition and documents on Levick, and a business records subpoena on Bruce Fein, an attorney in
The Schwabs served discovery they believed the court gave them permission to serve. Charles Schwab served Behunin with 33 document requests regarding the website and communications among Behunin, Steiner, and Levick. He also served a subpoena on Levick for documents regarding the creation and publication of the website and its content. Michael Schwab served document requests regarding communications among Behunin, Steiner, Steiner & Libo, and Levick relating to the website or any of the entities involved in the Sealutions litigation. He also served a deposition subpoena on Levick with document requests regarding communications among Levick, Behunin, Steiner, and Bruce Fein concerning the website, Sealutions, and two apparently related entities, Seathos and Emergent Indonesia Opportunity Fund.
Behunin and Steiner objected to the discovery on the grounds the requests exceeded the scope of the order authorizing discovery under Code of Civil Procedure section 425.16, subdivision (g), and sought documents protected from disclosure by the attorney-client privilege and work product doctrine. Behunin and Steiner also provided extensive privilege logs.
The parties filed competing discovery motions. Steiner and Behunin moved for a protective order, arguing they intended all communications with Levick to be protected by the attorney-client privilege and work product doctrine, and claiming Steiner engaged Levick to create and execute legal strategies and tactics relating to Behunin's litigation. The Schwabs filed motions to compel the production of documents from Behunin and Steiner.
The trial court referred the motions to a discovery referee, who summarized the disputed document requests as follows:
In a 34-page document that summarized the parties' positions and included findings and recommendations, the discovery referee determined the documents the Schwabs sought from Levick and Steiner were not protected by the attorney-client privilege or work product doctrine. The referee stated: "Based on the evidence provided by [Behunin and Steiner] as of this date, it is unclear whether Levick actively participated in developing and employing strategy in connection with the
Steiner and Behunin submitted 21 documents to the referee for in camera review. After reviewing the documents, the referee confirmed his final recommendation was consistent with his initial conclusion. Behunin and Steiner objected in the trial court to the discovery referee's recommendations.
The trial court overruled the objections by Behunin and Steiner to the discovery referee's report and adopted the referee's recommendations. The court ordered Levick to be deposed and to produce responsive documents, including his communications with Steiner and Behunin. The court also ordered Behunin and Steiner to produce the documents responsive to Michael
Behunin filed a petition for writ of mandate and requested an immediate stay of the trial court's orders. We issued an order to show cause why we should not compel the trial court to vacate its orders, and stayed all discovery proceedings pending the disposition of this proceeding.
"`The appellate court may entertain a petition for extraordinary relief when compulsion to answer a discovery order would violate a privilege.'" (Fireman's Fund Ins. Co. v. Superior Court (2011) 196 Cal.App.4th 1263, 1272 [127 Cal.Rptr.3d 768]; see Zurich American Ins. Co. v. Superior Court (2007) 155 Cal.App.4th 1485, 1493 [66 Cal.Rptr.3d 833].) In general, "[a] trial court's determination of a motion to compel discovery is reviewed for abuse of discretion." (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733 [101 Cal.Rptr.3d 758, 219 P.3d 736]; see Kirchmeyer v. Phillips (2016) 245 Cal.App.4th 1394, 1402 [200 Cal.Rptr.3d 515]; Bank of America, N.A. v. Superior Court (2013) 212 Cal.App.4th 1076, 1089 [151 Cal.Rptr.3d 526].) "We review the trial court's privilege determination under the substantial evidence standard. `"`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
Whether a party has waived a privilege, however, is often a mixed question of law and fact. "`Mixed questions of law and fact concern the application of the rule to the facts and the consequent determination whether the rule is satisfied.' [Citation.] As the historical facts are undisputed, the question is whether, given those historical facts, [a party] has waived the attorney-client privilege and attorney work product protection. That inquiry `requires a critical consideration, in a factual context, of legal principles and their underlying values.' [Citation.] Therefore, the question is predominately legal, and we independently review the trial court's decision." (McKesson HBOC, Inc. v. Superior Court (2004) 115 Cal.App.4th 1229, 1235-1236 [9 Cal.Rptr.3d 812]; see City of Petaluma v. Superior Court (2016) 248 Cal.App.4th 1023, 1031 [204 Cal.Rptr.3d 196].)
Section 952 defines a confidential attorney-client communication: "[A] `confidential communication between client and lawyer' means information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present
Section 912, subdivision (d), similarly addresses whether disclosure of an attorney-client communication to a third person waives the privilege: "A disclosure in confidence of a communication that is protected by a privilege provided by Section 954 (lawyer-client privilege) ..., when disclosure is reasonably necessary for the accomplishment of the purpose for which the lawyer ... was consulted, is not a waiver of the privilege." For the purpose of this case, analysis of whether disclosure was "reasonably necessary" within the meaning of sections 954 and 912, subdivision (d), is the same. (See McKesson HBOC, Inc. v. Superior Court, supra, 115 Cal.App.4th at p. 1236, fn. 5 [the analysis under § 952 of whether information disclosed to a third party is made "`to further the interest of the client in the consultation'" and the analysis under § 912, subd. (d), of whether information disclosed to a third party is "`reasonably necessary for ... the accomplishment of the purpose for which the lawyer is consulted'" is essentially the same]; First Pacific Networks, Inc. v. Atlantic Mutual Ins. Co. (N.D.Cal. 1995) 163 F.R.D. 574, 581 [California courts have resolved privilege issues involving third parties with the "concept that is common to both sections 912 and 952 ... that the privilege can continue to attach to communications that are disclosed in confidence to third persons when that disclosure is reasonably necessary to achieve the ends for which the lawyer is being consulted"].)
This "exception to the normal allocation of burden is lost, however, when the communication is disclosed to a third party.... Where a third party is
"The second category is where the third party is not in any sense an agent of the litigant or attorney but is a person with interests of his or her own to advance in the matter, interests that are in some way aligned with those of the litigant.... `... The words [in section 952] "other than those who are present to further the interest of the client in the consultation" indicate that a communication to a lawyer is nonetheless confidential even though it is made in the presence of another person — such as a spouse, parent, business associate, or joint client — who is present to further the interest of the client in the consultation. These words refer, too, to another person and his attorney who may meet with the client and his attorney in regard to a matter of joint concern.' [Citation.] [¶] It is this last notion, `joint concern,' that is the basis of the common-interest doctrine.... [I]n limited situations, the alignment of the parties' common interests may mean disclosures between them are reasonably necessary to accomplish the purposes for which they are consulting counsel." (Citizens for Ceres, supra, 217 Cal.App.4th at p. 916.) The communications by Behunin and Steiner with Levick do not fall into either of these two categories.
Behunin argues, "As a third party litigation consultant, Levick must be treated in the same manner as any other third party intermediary engaged to further litigation objectives, just like an expert or consultant who aids an attorney in litigation and who performs litigation-related work." For disclosure of communications by Steiner or Behunin to Levick to be protected by the attorney-client privilege under section 952 and section 912, subdivision (d), however, the disclosure must have been reasonably necessary for the accomplishment of the purpose for which Behunin consulted Steiner to represent him in the Sealutions litigation. (See, e.g., Sony, supra, 229 F.R.D. at
There are no California cases analyzing whether a communication disclosed to a public relations consultant is a confidential communication between a client and a lawyer under section 952 or whether such a disclosure waives the attorney-client privilege under section 912. California cases analyzing the exception from a waiver of privilege under section 912, subdivision (d), provide little guidance in determining whether and when sharing a privileged communication with a public relations consultant is "reasonably necessary" because those cases involve very different factual situations. (See, e.g., National Steel Products Co. v. Superior Court (1985) 164 Cal.App.3d 476, 484 [210 Cal.Rptr. 535] [no waiver of the privilege in a lawsuit for negligent construction because it was reasonably necessary for the client to give an engineering expert information about the construction of the building so the expert could provide the client's lawyer with a technical analysis]; Blue Cross v. Superior Court (1976) 61 Cal.App.3d 798, 801 [132 Cal.Rptr. 635] [no waiver of the physician-patient privilege by disclosing patient names and medical conditions to an insurance company because disclosure "was `reasonably necessary for ... the accomplishment of the purpose for which the physician [was] consulted'"]; see also Raytheon Co. v. Superior Court, supra, 208 Cal.App.3d at p. 689 [case remanded for trial court to determine whether it was reasonably necessary for the client to disclose documents to other companies and their attorneys who also were under investigation by Environmental Protection Agency].)
There are, however, federal decisions applying state law in diversity cases that address whether disclosure of an attorney-client privileged communication to a public relations consultant waives the privilege.
In Egiazaryan the plaintiff, a former Russian politician, sued a writer for defamation, and the writer brought counterclaims for defamation and violation of New York's anti-SLAPP statute.
Yet, even with all of this evidence, the court found the plaintiff had not established the involvement of the public relations consultant was "necessary to facilitate communications between [the plaintiff] and his counsel, as in the case of a translator or an accountant clarifying communications between an attorney and client," nor had the consultants "`improve[d] the comprehension of the communications between attorney and client.'" (Egiazaryan, supra, 290 F.R.D. at p. 431.) The court held "the party asserting the agency exception must show: `(1) ... a reasonable expectation of confidentiality under the circumstances, and (2) [that] disclosure to the third party was necessary for the client to obtain informed legal advice.'" (Ibid.) The court explained "`[t]he "necessity" element means more than just useful and convenient, but rather requires that the involvement of the third party be nearly indispensable or serve some specialized purpose in facilitating the attorney-client communications.'" (Ibid.) The court concluded the "mere fact that [the public relations consultant] was inserted into the legal decisionmaking process does nothing to explain why [the consultant's] involvement was
Behunin provided little evidence explaining how or why communications among Levick, Steiner, and himself were reasonably necessary to assist Steiner in his ability to advise Behunin or litigate his case. Behunin produced no evidence showing why his or Steiner's communications with Levick were reasonably necessary to develop a litigation strategy or to induce the Schwabs to settle. Behunin submitted none of the evidence the client in Egiazaryan submitted (which in that case still was insufficient) regarding Levick's involvement with Steiner in developing, discussing, or assisting in executing a legal strategy. To the contrary, according to Behunin, Steiner had little involvement with Levick: All Steiner did was act as a liaison in hiring the public relations firm. Behunin and Steiner stated they engaged Levick to "develop and deploy" strategy, they intended their communications with Levick to be confidential, and the goal of the agreement with Levick was "to develop and deploy strategy and tactics of [Behunin's] legal complaint" in the Sealutions lawsuit. But these statements are just conclusions. They do not include any evidentiary facts showing or explaining why Steiner needed Levick's assistance to accomplish the purpose for which Behunin retained him.
In arguing his and Steiner's communications with Levick were reasonably necessary to accomplish the purpose of Steiner's representation because the negative publicity would help get the Schwabs to the settlement table, Behunin extends the privilege too far. (See McKesson HBOC, Inc. v. Superior Court, supra, 115 Cal.App.4th at p. 1236 [attorney-client and other "evidentiary privileges should be narrowly construed because they prevent the admission of relevant and otherwise admissible evidence"]; see also People v. Sinohui (2002) 28 Cal.4th 205, 212 [120 Cal.Rptr.2d 783, 47 P.3d 629] ["[b]ecause privileges `prevent the admission of relevant and otherwise admissible evidence,' they `should be narrowly construed'"]; Union Bank of California v. Superior Court (2005) 130 Cal.App.4th 378, 392 [29 Cal.Rptr.3d 894] [evidentiary privileges "should be narrowly construed because they prevent otherwise admissible and relevant evidence from coming to light"].) To be sure, maximizing a client's negotiating position and increasing the prospects for a favorable settlement are important parts of representing a client in litigation. All kinds of strategies could conceivably put pressure on the Schwabs to settle with Behunin, such as hiring away employees of the Schwabs or their company, lobbying governmental officials to enact regulations adverse to the Schwabs' investment business, and creating a competing brokerage business to take away the Schwabs' clients. Such strategies might help get the Schwabs to settle the Sealutions litigation on favorable terms. But that does not mean Behunin's or Steiner's communications with headhunters, lobbyists, and lenders who might finance a competing company would be privileged. Without some explanation of how the communications
The case on which Behunin primarily relies, In re Grand Jury Subpoenas Dated March 24, 2003 (S.D.N.Y. 2003) 265 F.Supp.2d 321 (In re Grand Jury Subpoenas), is distinguishable. The court in that case applied the federal common law on attorney-client privilege, which is broader than New York law and California law and does not require a finding the communication was reasonably necessary for the attorney to provide legal advice. (See In re Grand Jury Subpoenas, supra, at p. 324 [scope of attorney-client privilege is governed by federal common law in cases involving federal questions]; see also Fine v. ESPN, Inc., supra, 2015 WL 3447690 at p. *11, fn. 7 ["courts have declined to extend In re [G]rand Jury Subpoenas to cases applying the New York attorney-client privilege rule on the ground that New York's agency exception is narrower than the federal rule applied in that case" (italics added)].)
Moreover, the court's decision in In re Grand Jury Subpoenas was based on very specific facts not present here. The case arose in the context of a highly publicized grand jury investigation of a celebrity facing criminal indictment. (In re Grand Jury Subpoenas, supra, 265 F.Supp.2d at pp. 323-324.) The celebrity's attorneys hired a public relations firm whose "`primary responsibility was defensive — to communicate with the media in a way that would help restore balance and accuracy to the press coverage. [The] objective ... was to reduce the risk that prosecutors and regulators would feel pressure from the constant anti-[client] drumbeat in the media to bring charges." (Id. at p. 323.) The court explained that protecting such communications from disclosure would support one of the purposes of the attorney-client privilege, the administration of justice: "[The client], like any investigatory target or criminal defendant, is confronted with the broad power of the government. Without suggesting any impropriety, the Court is well aware that the media, prosecutors, and law enforcement personnel in cases like this often engage in activities that color public opinion, ... in the most extreme cases, to the detriment of his or her ability to obtain a fair trial.... Thus, in some circumstances, the advocacy of a client's case in the public forum will be important to the client's ability to achieve a fair and just result in pending or threatened litigation." (Id. at p. 330.)
The court in In re Grand Jury Subpoenas held that "(1) confidential communications (2) between lawyers and public relations consultants (3) hired by the lawyers to assist them in dealing with the media in cases such as this (4) that are made for the purpose of giving or receiving advice (5) directed at handling the client's legal problems are protected by the attorney-client privilege." (In re Grand Jury Subpoenas, supra, 265 F.Supp.2d at
Behunin also relies on a line of federal cases that have applied the attorney-client privilege to communications with public relations consultants on the ground that the consultant was the functional equivalent of an employee of the client. (See, e.g., Grand Canyon Skywalk Development LLC v. Cieslak, supra, 2015 WL 4773585 at p. *17 [communications between a public relations firm and tribal council were privileged because the public relations firm was the "functional equivalent" of a tribal employee]; In re Copper Market Antitrust Litigation (S.D.N.Y. 2001) 200 F.R.D. 213 [public relations firm that regularly conferred with the client's litigation counsel in preparing press releases and other materials incorporating the lawyer's advice was the "functional equivalent" of an in-house public relations department].)
These cases extend the rule that the attorney-client privilege applies to communications between counsel and corporate employees seeking legal advice to communications between counsel and those deemed the functional equivalent of corporate employees. (See U.S. v. Chen (9th Cir. 1996) 99 F.3d 1495, 1500, citing Upjohn Co. v. United States (1981) 449 U.S. 383, 390-394 [66 L.Ed.2d 584, 101 S.Ct. 677]). The functional-equivalent cases, however, require a detailed factual showing that the consultant was responsible for a
Behunin and Levick do not have a common interest "`in securing legal advice related to the same [shared] matter.'" (OXY Resources, supra, 115 Cal.App.4th at p. 891.) Behunin argues, "Levick and [Behunin] shared [an] interest in obtaining legal advice with respect to whether it was permissible to post content on the Internet," and "[s]uch advice clearly encompassed questions regarding [Behunin's and Levick's] potential exposure to legal liability for such statements." There is no evidence, however, that Levick sought legal advice from Steiner or that there was an attorney-client relationship between Steiner and Levick. To the contrary, Behunin stated in his declaration that Steiner hired Levick on behalf of Behunin without knowing anything about the content of the website Levick was to create. Although Levick, as a paid consultant, may have wanted its public relations campaign to succeed, that is not the kind of common interest contemplated by sections 912 and 952. (See McKesson HBOC, Inc. v. Superior Court, supra, 115 Cal.App.4th at p. 1237 ["[sections 912 and 952] permit sharing of privileged information when it furthers the attorney-client relationship; not simply when two or more parties might have overlapping interests"]; Roush v. Seagate Technology, LLC (2007) 150 Cal.App.4th 210, 225 [58 Cal.Rptr.3d 275] ["[the plaintiff] merely assumes that, given their overlapping interests, she and [the attorney's client in a different case] could freely share their confidential information without affecting its privileged character," but "[u]nder sections 912, subdivision (d) and 952, [the plaintiff] was bound to show, at minimum, that sharing her confidential information with [the other client] was reasonably necessary to advance her case"].) The common interest doctrine is inapplicable.
The petition for writ of mandate is denied. The request by Charles Schwab for sanctions is denied. This court's order staying the discovery proceedings in the trial court is vacated. The Schwabs are to recover their costs in this proceeding.
Zelon, Acting P. J., and Small, J.,