Our legal system depends on clients and lawyers being able to have complete, candid, and effective communications. To allow for this communication, California law protects from disclosure without consent of confidential communications between a lawyer and client (see Cal. Evidence Code Section 950 et seq.) However, in the practical realities of transactions and litigations, parties may inadvertently disclose attorney-client privileged materials, or these may leak out in other ways, and sometimes it is not clear if material is attorney-client privileged.
A recent California appellate court opinion (Johnson v Department of Transportation) serves as a cautionary reminder of a lawyer's duties when the lawyer receives a communication that is possibly privileged and not produced clearly with the consent of the opposing party.
In March of 2019, Christian L. Johnson, an employee of the California Department of Transportation (Caltrans), filed an employment-related lawsuit against the agency.
Early in 2022, Paul Brown, an attorney for Caltrans, sent an email about the litigation (the “Brown email”) to Johnson’s supervisor, Nicolas Duncan, who was not a party to the lawsuit.
The email contained a “CONFIDENTIALITY NOTICE” that stated: “This is a privileged attorney-client communication and/or is covered by the attorney work-product doctrine. It is for the sole use of the intended recipient(s). Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. Do not print, copy, or forward.”
Unbeknownst to Caltrans, Duncan took a photo of the Brown email and sent that to Johnson, who forwarded the image to John Shepardson, Johnson’s attorney.
On the following day, Shepardson sent an email to Christopher Sims, counsel to Caltrans, attaching the image which he said “was sent to my client.”
Shepardson asserted that the email was intentionally disclosed by Caltrans and so “appears to be a waiver of attorney-client privilege, if any privilege attaches to communications with Mr. Duncan.”
Sims responded to Shepardson within hours, saying the Brown email was an attorney-client privileged communication, as evidenced by the confidentiality language at the bottom of the email.
Shepardson replied with a request that Sims provide legal authority for his statement that the Brown email to Duncan was privileged communication.
Shepardson then sent Sims a letter asserting that the Brown email was not protected by the attorney-client privilege.
If it was protected, he argued, the privilege was waived, first because the email was disclosed and also because it was “subject to the crime-fraud exception,” implying that Caltrans and its attorney had committed or were planning to commit a crime or fraud.
Subsequently, Shepardson shared the image of the email with several other individuals, including experts Shepardson had retained to assist in Johnson’s lawsuit.
The litigation proceeded with multiple hearings over the next two years, mostly focused on the Brown email to Duncan and whether its disclosure by Shepardson violated attorney-client privilege.
In January of 2023, the Superior Court of San Joaquin County ruled that the Brown email was indeed privileged, as indicated by the confidentiality notice in it, because the predominant purpose of the email was to obtain information from Duncan that would help Caltrans prepare its defense in the case and Caltrans had not waived the privilege through Duncan's disclosure.
The court issued a protective order, barring Shepardson from any further distribution of the email, and ordering him to pay Caltrans $4,400 in attorneys’ fees.
However, the parties continued to argue over the use of the Brown email. Shepardson took the position that the content of the email could be used by Johnson and his expert witnesses.
Caltrans then filed a motion to disqualify Shepardson as Johnson’s attorney, along with the expert witnesses Shepardson had retained.
After a hearing, the trial court ruled that Shepardson was required by legal ethics to refrain from using or even reading the contents of the Brown email as soon as he saw that its contents were privileged. Instead, it said, he “breached his ethical obligations by using and disseminating” the email, even after the court's protective order.
Shepardson appealed, and the Court of Appeal affirmed the lower court’s decision.
First, the court agreed with the trial court ruling that the Brown email was protected by the attorney-client privilege. Importantly, the Court looked at Shepardson's actions after receiving the Brown email from his client.
He took the proper step in notifying Caltrans' lawyer of the email. However, after Caltrans immediately claimed the privilege applied to the email, Shepardson continued to use the email, even after the trial court's protective order, and distributed it to others, including his client's expert witnesses. Shepardson should not have used or disclosed the Brown email while the parties were working through the privilege issue, even if Shepardson believed there was a basis that the privilege did not apply.
Although the Court did not dive into Rule 4.4 of the California Rules of Professional Conduct, it did consider the case law upon which the Rule is based. Under Rule 4.4, a lawyer who receives a writing that was inadvertently sent or produced and that the lawyer knows or reasonably should know is privileged, the lawyer must refrain from examining it any more than is needed to determine that it is privileged and promptly notify the sender. Comment [1] to the Rule further states that the lawyer should return the writing to the sender, seek to reach agreement about the privilege, or seek guidance from the court.
Applying this concept in this case, the Court noted that “[a]fter receiving the email, and especially after Caltrans unequivocally asserted the privilege hours after learning of the disclosure, Shepardson was not permitted to examine the email any further, much less distribute the email to other witnesses or use it to formulate case strategy.”
Disqualifying Shepardson and his expert witnesses was appropriate, the justices said, because his actions went beyond a simple error that would not affect the litigation. Instead, “Shepardson’s failure to comply with his ethical duties through his continued use of confidential material created a substantial risk of undue prejudice and risked undermining the integrity of the proceedings.”
For these reasons, the justices affirmed the trial court’s disqualification.
This decision serves as a reminder that when an attorney receives what appears could be attorney-client privileged material that was sent without the consent of the holder of the privilege, an attorney not only has to disclose its receipt to the other side, but must either agree with the other side on how the material will be handled or seek court guidance.
Here, not only did Shepardson start to use the Brown email without any agreement with Caltrans, but he later violated a protective order after the court had determined the email was protected by the attorney-client privilege. Although the appellate court's decision was not dependent on Shepardson violating the trial court's protective order, that fact was mentioned several times in the higher court's opinion, and likely informed the trial court's decision to disqualify Shepardson and the expert witnesses.
By Rachelle Cohen