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Client-Lawyer-PR Firm Communications: Privileged from discovery in a lawsuit?

Whether attorney-client privilege protects communications among a client, his lawyer, and a public relations consultant was the question before the California Court of Appeal (“Court”) in Behunin v. Superior Court (2017) 9 Cal.App 5th 833, 837.

After acknowledging that the attorney-client privilege may extend to communications with public relations consultants in some circumstances, the Court concluded that Behunin failed to prove communications among him, his lawyers, and a PR firm were “reasonably necessary for his lawyers’ representation of him in a lawsuit.” Thus, the communications were not protected by the attorney-client privilege, and the opposing party could compel their disclosure.

Below is a breakdown of how the Court reached its conclusion, with some TAKE-AWAYS for clients, lawyers, and PR firms.

BACKGROUND

Nicholas Behunin had filed a lawsuit against Charles R. Schwab and son Michael Schwab over an unsuccessful real estate investment deal. As part of a strategy to induce settlement, Behunin’s attorneys (Steiner) engaged a PR consultant (Levick) to create a website linking Schwab real estate investments to former Indonesian dictator Suharto. [The website can be seen at www.chuck-you.com, though it appears to have been changed since earlier versions (see e.g., Oct. 2014 version).]

Schwab responded by suing Behunin for libel, slander, and invasion of privacy. When Behunin filed an anti-SLAPP motion to have the Schwab case thrown out, Schwab sought discovery of communications among Behunin, his lawyers, and the PR firm concerning the creation of the website. Behunin objected, claiming the communications were protected from disclosure by the attorney-client privilege.

PRIMER:  HOW THIS ISSUE GETS TO THE COURT OF APPEAL

Behunin objected to producing the PR documents and filed a motion for a protective order based on the attorney-client privilege.

Schwab filed motions to compel the production of documents from Behunin and Steiner.

The trial court referred the motions to a discovery referee.

The discovery referee found the PR documents were not protected by the attorney-client privilege or work product doctrine, and thus, recommended denying the protective order and granting Schwab’s motions to compel.

Behunin and Steiner filed objections to the discovery referee’s recommendation with the court.

The trial court overruled the objections and adopted the referee’s recommendations as its own order.

Behunin filed a petition for writ of mandate with the Court of Appeal and requested an immediate stay of the trial court’s orders.

The Court of Appeal (“Court”) issued an order to show cause why it should not order the trial court to vacate (i.e., annul or set aside) its orders, and stayed (i.e., stop or put a hold on) all discovery proceedings pending its determination.

After the case was briefed and argued, the Court denied the petition for writ of mandate and vacated its order staying the discovery proceedings in the trial court.

THE COURT OF APPEAL ANALYSIS

The issues presented on appeal were:

(1)          whether communications among Behunin, Steiner (lawyers), and Levick (PR consultant) were confidential attorney-client privileged communications; and

(2)          whether the attorney-client privilege was waived.

The Court began by identifying and explaining the standard of review. First, it noted that a trial court’s ruling on a motion to compel discovery ordinarily is reviewed for abuse of discretion. However, where the issue concerns a legal privilege,[1] appellate courts will review the trial court’s decision under the substantial evidence standard of review.[2]

PRIMER:  APPELLATE COURT REVIEW STANDARDS

Important to any appellate analysis is what standard of review the appellate court applies. Does the Court of Appeal simply decide the issue independently, as if it was the trial court (i.e., de novo or independent review)? Or does the Court of Appeal give some level of deference to what the trial court found as facts and concluded after applying the facts to the applicable law? This is why the “DISCUSSION” section of appellate opinions almost always begins with “Standard of Review.”

The standard of review has a huge effect on (and hugely affects) the likelihood that an appellate court will alter a trial court’s decision. A trial court’s decision reviewed for abuse of discretion is rarely reversed on appeal. A trial court’s decision reviewed for substantial evidence stands a slightly better chance of being reversed. If you are a litigant trying to get a trial court decision reversed on appeal, you want the appellate court to independently review (or to apply a de novo review standard), whereby the appellate court essentially reviews the matter the same way the trial court did, though it is often limited to what is contained in “the record.”

As to the second question, the Court of Appeal explained that “whether a party has waived a privilege, however, is often a mixed question of law and fact.” Where there is a mixed question of law and fact, and the Court’s inquiry requires a critical consideration, in a factual context, of legal principles and their underlying values, the Court views the issues as predominantly legal, and will independently review the trial court’s ruling.[3]

The Court of Appeal explained the attorney-client privilege (Evid. Code § 954), as follows (italics added):

  1. a client, whether or not a party, has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer;
  2. the attorney-client privilege protects confidential communications between a client and his or her attorney made in the course of an attorney-client relationship; and
  3. the attorney-client privilege applies only to confidential communications made in the course of or for the purposes of facilitating the attorney-client relationship.

As to the third part, the Court of Appeal noted the definition of confidential communication between client and lawyer from Evidence Code § 952:

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 to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.

It then noted Evidence Code § 912, which concerns waiver of 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.”

The Court then focused its analysis on the real issue:

Whether the disclosure to Levick (PR consultant) of communications between Behunin and Steiner (Behunin’s lawyers) was reasonably necessary to achieve the ends for which Behunin consulted Steiner.

Ordinarily, once a party establishes the facts necessary to support a claim of privilege (i.e., a communication made in the course of attorney-client relationship), the communication is presumed to have been made in confidence. However, this presumption does not apply when an attorney-client communication is disclosed to a third party. When that occurs, the party claiming the privilege bears the burden of proving the disclosure was reasonably necessary to achieve the ends for which the client consulted the lawyer.

The Court then discussed why Behunin had not proved that the communications were “reasonably necessary” for Steiner’s representation of Behunin. Initially, whether communications among a client, attorney, and a public relations consultant are protected by the attorney-client privilege depends on whether the communications were confidential and whether disclosing them to the consultant was reasonably necessary to accomplish the purpose for which the client consulted the attorney.

The Court identified two ways that disclosure of a privileged communication to a third party may not destroy the privileged nature of a communication:

  1. where the third party has no interest of his or her own in the matter, but a litigant must disclose a confidential communication to the third party because the third party is an agent or assistant who will help to advance the litigant’s interests;[4]
  2. where the third party is not an agent of the client or attorney, but is a person with his or her own interests to advance in the matter, and those interests are in some way aligned with those of the client (also known as “common interest”)

The Court elaborated, noting the words “other than those who are present to further the interest of the client” means that a communication to a lawyer is confidential even when made in the presence of another person—such as a spouse, parent, business associate, or joint client—who is there to further the interest of the client in the consultation. “Those who are present to further the interest of the client” also applies to persons who may meet with the client and his attorney on a matter of joint concern.

Noting an absence of California case law applying the law of privilege in the context of public relations consultants, the Court reviewed several cases from other jurisdictions before turning to the evidentiary showing by Behunin.

The Court said 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 to litigate his case. Similarly, Behunin presented 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.

Rather, the evidence showed that Steiner had little involvement with Levick, and that all Steiner did was act as a liaison in hiring the public relations firm. Steiner and Behunin merely stated, in conclusory fashion, that they engaged Levick to “develop and deploy” strategy, that they intended their communications with Levick to be confidential, and that the goal of the agreement with Levick was “to develop and deploy strategy and tactics of [Behunin’s] legal complaint” in the lawsuit.

Missing, said the Court, were “evidentiary facts showing or explaining why Steiner needed Levick’s assistance to accomplish the purpose for which Behunin retained him.”

The Court left open the possibility that “[t]here may be situations in which an attorney’s use of a public relations consultant to develop a litigation strategy or a plan for maneuvering a lawsuit into an optimal position for settlement would make communications between the attorney, the client, and the consultant reasonably necessary.” The Court also noted that “maximizing a client’s negotiating position and increasing the prospects for a favorable settlement are important parts of representing a client in litigation.”

But “[w]ithout some explanation of how the communications assisted the attorney in developing a plan for resolving the litigation, Behunin would not be able to show such communications were reasonably necessary to accomplish Steiner’s purpose in representing Behunin.”

The Court also reviewed cases in which communications with public relations consultants were privileged because the consultants were found to be “functional equivalents” of employees. The functional-equivalent cases, however, “require a detailed factual showing that the consultant was responsible for a key corporate job, had a close working relationship with the company’s principals on matters critical to the company’s position in litigation, and possessed information possessed by no one else at the company.” No such showing was presented by Behunin.

The Court said Behunin also had not presented evidence sufficient to protect the communications on the basis of common or aligned interests. Behunin and Levick apparently argued that they shared an interest in obtaining legal advice as to whether it was permissible to post content on the Internet, and that such advice clearly encompassed questions regarding both Behunin’s and Levick’s potential exposure to legal liability for such statements. However, the argument was not supported by evidence showing that Levick sought legal advice from Steiner or that there was any attorney-client relationship between Steiner and Levick.  In fact, Behunin’s own declaration said that Steiner hired Levick on Behunin’s behalf without knowing anything about the content of the website Levick was to create. The law allows “sharing of privileged information when it furthers the attorney-client relationship,” but not simply “when two or more parties might have overlapping interests.”  In other words, overlapping interests help, but are not sufficient without additional evidence showing (1) a party’s sharing its confidential information was reasonably necessary to advance the party’s case; or (2) that there was an attorney-client relationship between Steiner and Levick.

Accordingly, the Court of Appeal denied Behunin’s petition and did not disturb the trial court’s rulings ordering disclosure of communications involving the PR consultant.

TAKE-AWAYS FOR PRACTITIONERS AND PARTIES TO LITIGATION

1.  When hiring a PR firm, anticipate potential disclosure requests and challenges to attorney-client privilege.

a.  Consider limiting the creation of written communications by, to, and from the PR firm, just in case an attorney-client privilege is not found or is found to have been waived. (Note that here, Behunin and Steiner had to produce documents in which Levick participated, but did not have to produce communications solely between Steiner and Behunin.)

b.  Consider whether the PR firm should also retain the lawyers, so there is an attorney client relationship between the lawyers and PR firm as well. (Note that here, Behunin and Levick argued that they shared an interest in obtaining legal advice regarding whether it was permissible to post content on the Internet. However, the court said there was no evidence that the PR firm sought legal advice from the lawyer or that there was an attorney-client relationship between the lawyer and the PR firm.)

c.  Map out the process for determining whether the privilege applies and the process for determining if there was a waiver. Pay attention to the review standards, noting in particular, that the involvement of a third party (PR consultant) changes the burden of proof in litigating attorney-client privilege issues, and the party claiming the privilege will bear the burden of proving the privilege applies and was not waived.

d.  Consider getting appellate counsel involved early. On appeal, review of the trial court’s decision is likely to involve mixed questions of law and fact, to which the Court of Appeal will apply the independent review standard. It is critically important that the record be sufficiently developed, that all potential bases for privilege are covered (see No. 2 below), and that all arguments are supported by evidence in the trial court and are made part of the record on appeal (see No. 3 below).

[For more on standards of review, see California Court of Appeal – Civil Appellate Practices and Procedures for the Self-Represented in the Fourth Appellate District Division One, Chapter 5. Briefing the Case, beginning on page 5-5.]

2.  Parties and/or PR firms interested in preserving the attorney-client privilege must be prepared to provide evidence:

a.  explaining how or why communications among the PR consultant, lawyer, and client are reasonably necessary to assist the lawyer in his ability to advise the client or litigate his case;

b.  showing why the client’s or lawyer’s communications with the PR firm are reasonably necessary to develop a litigation strategy or settlement strategy or other litigation purpose;

c.  showing or explaining why the lawyer otherwise needs the PR firm’s assistance to accomplish the purpose for which client retained the lawyer; or

d.  showing (in detail) that the consultant was responsible for a key corporate job, had a close working relationship with the company’s principals on matters critical to the company’s position in litigation, and possessed information possessed by no one else at the company (consistent with the analysis in FTC v. GlaxoSmithKline (D.C.Cir. 2002) 352 U.S. App.D.C. 343 [294 F.3d 141, 148], Schaeffer v. Gregory Village Partners, L.P.(N.D.Cal. 2015) 78 F.Supp.3d 1198, 1204, and/or A.H. ex rel. Hadjih v. Evenflo Co., Inc. (D.Colo., May 31, 2012, No. 10-cv-02435-RBJ-KMT) 2012 WL 1957302, pp. *5, *3).[5]

3.  Parties and/or PR firms interested in protecting communications from disclosure also should consider the potential applicability of the work product doctrine. See California Code Civ. Proc., § 2018.030. Here, the court noted that Behunin failed to advance any arguments to support the application of the work-product doctrine, noting: “Although Behunin refers to the attorney work product doctrine in his petition and in his reply, he provides no legal argument or authorities to support the application of that doctrine to documents the court ordered produced. There is also no evidence in the record from which we might independently ascertain whether any of the communications to or from Behunin, Steiner, or Levick or any of the documents created by Levick would qualify as “[a] writing that reflects an attorney’s impressions, conclusions, opinions, or legal research or theories” and thus work product.”

_____________________________

[1] Confidential communication privileges allow a person to resist compulsory disclosure of certain communications.  These privileges exist not because of a fear that information provided will be inaccurate, but because there are public policy reasons why the information should not be disclosed.  For example, the lawyer-client privilege, marital communications privilege, physician-patient privilege, psychotherapist-patient privilege, clergy-penitent privilege, sexual assault counselor-victim privilege, and domestic violence counselor-victim privilege exist to foster free-flowing communication between persons in what the legislature has determined are socially beneficial relationships.

[2] The Court explained the substantial evidence standard as follows: “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.” Note that the word substantial can be confusing in this context.  It doesn’t mean, “There was a substantial amount of evidence supporting that point.”  In common parlance, it’s more like “There was some evidence supporting the point, and that evidence had substance to it.”  See more on Standard of Review here (see p. 5-5.)

[3] The Court of Appeal explained this that works in the context of the Behunin case. Mixed questions of law and fact concern the application of the rule to the facts and the consequent determination whether the rule is satisfied. 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. Therefore, the question is predominately legal, and appellate courts independently review the trial court’s decision. (Note: “independent review” is the same as de novo review, and means the Court reviews the issues much in the same way the trial court did, without deference to the trial court’s findings and decision.)  See also, IDENTIFYING AND UNDERSTANDING STANDARDS OF REVIEW from the Georgetown Univ. Law Center.

[4] Examples:  when an attorney shares a confidential communication with a physician, appraiser, or other expert in order to obtain that expert’s assistance, so the attorney is better be able to advise his client; or where a translator or an accountant is employed to help clarify communications between an attorney and client.

[5] This assumes a California state court would find the “functional equivalent of an employee of the client” theory viable.

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