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California: The Right to Discovery vs. Privacy and Privilege

April 10, 2012 (9 min read)
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In Borrayo v. Tobar Industries, The Hartford Insurance, 2012 Cal. Wrk. Comp. P.D. LEXIS 10, Lisa Borrayo was working for Tobar Industries, when she sustained a cumulative trauma to her arms & neck ending on January 1, 2007. Tobar Industries terminated her employment on January 28, 2009, claiming economic business necessity. Ms. Borrayo filed a LC §132a claim, alleging that she had been fired because she had filed a workers’ compensation claim.

I. What Constitutes Allowable Discovery to Prove a LC §132a Claim?

To sustain her burden of proving her case for discrimination under LC §132a, Ms. Borrayo’s attorney designed a very comprehensive discovery plan. On June 1, 2011, Applicant issued a Notice of Deposition for the Person Most Knowledgeable (PMK) at Tobar Industries, along with a Request for Production of Documents. Defendant claimed that the documents were privileged, so the judge conducted an in camera review and then ordered that the Defendant should release the documents pursuant to Applicant’s Motion to Produce.

Defendant filed a Petition for Removal arguing that the documents in question were privileged and were protected by a constitutional right to privacy. The WCAB balanced the interests of both parties and determined that many of the documents requested by Applicant would be ordered produced, but that many of the documents requested would be exempt from that order.

The Workers’ Compensation Appeals Board (WCAB) also affirmed the judge’s Protective Order, so that the documents that were ordered produced would not be available to anyone outside the scope of this litigation.

II. Financial Documents - Privilege Rights v. Right of Discovery

The WCAB in Borrayo stated, “In general, discovery is permissible if the requested information is “not privileged,” “is relevant to the subject matter involved in the pending action,” and “appears reasonably calculated to lead to the discovery of admissible evidence. (See CCP §§ 2017.010 & 2017.020(a) and Willis v. Superior Court, (1980) 112 Cal.App.3d 277, 289.)

 

 

 

 

 

In this case, Ms. Borrayo was told that her termination was necessary due to the company’s financial constraints. Defendant explained they needed to cut costs in order to stay competitive as a result of a global economic downturn. Defendant asserted that Ms. Borrayo’s lay off was not in retaliation for her filing of a workers’ compensation claim.

 

 

 

 

 

In order to sustain her burden of proof on the 132a claim, especially with regard to the issue of “disparate treatment,” Ms. Borrayo requested the financial records of Defendant to verify whether an economic business necessity existed to justify her termination. Defendant objected to the release of their balance sheets and profit and loss statements. They claimed these documents contained privileged information, including “trade secrets.”

 

 

 

 

 
LC §5708 states that the WCAB “shall not be bound by the … statutory rules of evidence…” However, this section does not apply to issues of privilege, all of which are applicable in workers’ compensation cases. (See Ev Code §910.)
In the case of Hardesty v. McCord & Holdren, Inc., (1976) 41 CCC 111, the WCAB explained the premise for this doctrine as follows:
“Most rules of evidence are designed for use in courts. Generally, their purpose is to keep unreliable or prejudicial evidence from being presented to the trier of fact. Privileges, however, are granted for reasons of policy unrelated to the reliability of the information involved. A privilege is granted because it is considered more important to keep certain information confidential than it is to require disclosure of all the information relevant to the issues in a pending proceeding.”
“Trade secrets” are considered privileged information pursuant to Ev Code §1060. However, the WCAB found that the information contained in Defendant’s balance sheets and profit and loss statements did not qualify as “trade secrets.” Therefore Defendant was ordered to produce these financial documents. (See also Stephens v. WCAB, (1999) 64 CCC 287 (2nd DCA, writ denied.)
III. Personnel Records - Right of Privacy v. Right of Discovery
Ms. Borrayo also requested that Defendant produce the personnel records of two current non-party employees, since these individuals had not been fired during the Defendant’s “economic downturn.” At page 8 of her Report and Recommendation, the judge explained the applicant’s rationale for this request as follows:
“Defendant has asserted that Applicant was laid-off in part because of her limited skills and attributes, and Applicant needs the demanded information to establish that other employees with less skills and attributes were allowed to remain as employees, with the distinction being that these nonparty employees were not injured workers.”
Defendant claimed their current employees held a right of privacy that would be violated by producing their personnel records. The right of privacy is still alive and well in the workers’ compensation arena. (See Allison v. WCAB, (1999) 64 CCC 624 and California Constitution, Art 1; §1) However, that right must be balanced against the interests and rights of a particular litigant to conduct lawful discovery.
When discovery encompasses the request for personnel records of third parties, the WCAB in Borrayo, supra, stated the following:
“California Courts have generally concluded that the public interest in preserving confidential information outweighs the interest of a private litigant in obtaining confidential information. (Board of Trustees v. Superior Court, (1981) 119 Cal. App. 3d 516, 530.) Moreover, a balance of the competing interests will favor privacy for confidential information in third party personnel files unless the litigant can show a compelling need for the particular documents and that the information cannot reasonably be obtained through depositions or from non-confidential sources. (Harding Lawson Associates v. Superior Court, (1992) 10 Cal. App. 4th 7, 10.)
The WCAB recognized the awkward position forced upon the injured worker in this 132a case. To sustain her burden of proof, Ms. Borrayo was required to prove “disparate treatment,” that she had been treated differently than the other employees because of her workers’ compensation claim. (Dept of Rehab v. WCAB (Lauher) (2003) 68 CCC 831.) Applicant argued that other employees with “less skills and attributes” were allowed to remain on the payroll, while she had been fired. She intended to prove this by comparing her performance evaluations with those of the alleged “less skilled” remaining employees.
The WCAB stopped just short of allowing Ms. Borrayo the right to access those third party personnel records. Instead, in addition to the financial documents to be produced by Defendant, the WCAB ordered Defendant to produce the names and addresses for all employees terminated for economic reasons during 2008, 2009 and 2010. In addition, Defendant was ordered to produce the names and addresses for all employees hired or re-hired during this same time period.
Once Ms. Borrayo had received and reviewed all of this data she would then be allowed to return to court and attempt to establish the “element of disadvantageous (or disparate) treatment.” If she is able to surpass that hurdle, the WCAB held that the judge would then be allowed to appoint a special master (pursuant to LC §111) to determine what additional information, such as the personnel records, should be produced.
The WCAB noted that the judge is the proper trier of fact in these types of discovery controversies. However, they admonished the parties to resolve these issues among themselves without the use of court intervention, whenever possible. In the Borrayo case, the WCAB concluded, “discovery procedures which require frequent pre-trial appearances by counsel to argue discovery motions are not favored. (Cal. Const. Art XIV, Hardesty, supra.)”
IV. Conclusion
Although workers’ compensation courts enjoy a certain level of informality and are exempt from many of the rigid rules of evidence, parties still possess all privilege and privacy rights as mandated by the California Constitution, legislation and case law.
Still, there may be times when a judge must come up with unique solutions for balancing these rights against a litigant’s right to discover key information needed to prove his or her case. Both the judge and the WCAB went to great lengths in Borrayo, supra, to accomplish this goal. Many safeguards were put in place, such as the Protective Order, the deferral of certain Motions to Produce and the potential for securing a special master, all of which insure that each party’s interests were considered and protected.
Although considerable progress has been made lately in the staffing of district offices, parties should keep in mind that the judicial resources of the WCAB are still quite limited. Since motions to compel discovery are disfavored, parties should utilize the roadmap set forth in the Borrayo case to creatively resolve these issues among themselves. Court intervention should only be requested as a last and final resort.
© Copyright 2012 LexisNexis. All rights reserved. This article will appear in a forthcoming issue of the California WCAB Noteworthy Panel Decisions Reporter (LexisNexis).

 

 

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