California: Privilege Rules Clarified by Court of Appeal; Update on Stevens v. W.C.A.B.

The Court of Appeal has ordered publication of a decision which confirms the application of Evidence Code 915 to discovery and privilege issues before the W.C.A.B.  The Court had initially ordered the decision, Regents v W.C.A.B. (Lappi), to not be published, but with multiple requests for publication on an issue for which there was no prior appellate law, the Court determined the case met the criterion for publication.

In this matter the applicant had demanded a copy of all “unprivileged documents” from the claims file from the University of California’s claims administrator, Sedgwick, at the deposition of the claims adjuster.  The University moved to quash the deposition, however, the WCJ ordered the claims adjuster to make themselves available with all of the non-privileged documents from the claims file.  At the deposition the University produced the documents along with a privilege log identifying documents for which privilege was asserted including correspondence between counsel and its client, invoices and privileged portions of the “claims notepad after 1/2008.”  At that deposition the claims adjuster asserted privilege for all claims notes after 1/11/2008, which was the date the University/Sedgwick retained counsel.

Applicant objected and sought an order for disclosure of claims notes that were withheld.  The parties were not able to agree upon release of the information, and the WCJ ordered the disputed documents be filed with the W.C.A.B.  The WCJ then returned the documents to the University and issued an order for it to review the information and “serve any and all unprivileged notations” on applicant’s counsel along with a log with dates of documents for any withheld information.

Thereafter the University identified 205 privileged documents based on attorney client privilege, confidential communication or work product.  Applicant objected to 49 of the identified documents as not representing privileged communication with counsel.  48 of the disputed documents were identified as “notes, action plans, Email or communications which were either reflected or were based upon advice of counsel.”

At trial the University agreed to provide 2 of the documents leaving 47 in dispute, and Lappi requested the WCJ conduct an in camera review of the documents.  The WCJ determined based upon testimony of the claims adjuster that only 11 of the disputed documents were privileged as communication with counsel.

Defendant appealed and the W.C.A.B., granting Removal on its own motion (as opposed to Reconsideration), found that it could not adequately determine if the documents were privileged and ordered review by a special master to review the disputed documents followed by a new decision.

The Court of Appeal granted the University’s request for review and reversed the W.C.A.B.’s order, finding that Evidence Code 915, which precludes a civil court from reviewing documents privileged under attorney client or attorney work product also applies in W.C.A.B. proceedings and  prohibits the W.C.A.B. from ordering in camera review of such issues.

Evidence Code 915 provides in pertinent part:

“…the presiding officer may not require disclosure of information claimed to be privileged under this division or attorney work product under subdivision (a) of Section 2018.030 of the Code of Civil Procedure in order to rule on the claim of privilege . . . .”

The Court rejected the applicant attorney’s argument that the W.C.A.B. was not subject to strict application of the evidence code.  However, the Court noted the specific language of the Evidence Code related to privileged information trumped Labor Code § 5708 (which provides the W.C.A.B. is not bound by common law or statutory rules of evidence and procedure) and seemed to make that argument moot:

“However, when it comes to the treatment of privileged information specifically, division 8 of the Evidence Code trumps this provision of the Labor Code.  Division 8 expressly applies to “any action, hearing, investigation, inquest or inquiry (whether conducted by a court, administrative agency, hearing officer, arbitrator, legislative body, or any other person authorized by law) in which . . . testimony can be compelled . . . .”  (Evid. Code, § 901, italics added.)  Moreover, Evidence Code section 910 explicitly overrides any other statute which might otherwise be viewed as limiting application of the “rules of evidence” generally:  “The provisions of any statute making rules of evidence inapplicable in particular proceedings, or limiting the applicability of rules of evidence in particular proceedings, do not make this division inapplicable to such proceedings.”  (Evid. Code, § 910…

In light of these provisions, it is clear that while the WCAB is free to adopt rules of practice and procedures which ignore the “rules of evidence” set forth in the Evidence Code, it nonetheless remains bound by the statutory requirements for dealing with privilege found in division 8 of that code, including section 915.  As a consequence, the WCAB erred in this case when it ordered an in camera review of the University’s allegedly privileged documents by a special master for the purpose of assessing the merits of that privilege claim.”

COMMENTS AND CONCLUSIONS:

This case provides some clear guidance as to the W.C.A.B.’s ability to order disclosure of documents for which absolute privilege is asserted such as attorney-client privilege or attorney work product.  Based on the Court’s holding in this case, any assertion of absolute privilege by a party would seem to not be reviewable by the W.C.A.B. where the assertion is made in good faith and the explanation as to the basis for the privilege is adequate.  This would seem to allow assertion of attorney client privilege and work product for notations and file materials (such as reserve worksheets) that are based upon either communication with a party’s attorney or based on attorney input into the material.

It must be emphasized that in order to maintain a privilege, the party seeking to limit access to such information needs to assert the privilege at each stage of the proceedings and not waive the right.  In this case the applicant attorney argued that the initial production to the WCJ for in camera review (which was never performed) resulted in a waiver of the privilege.  The Appellate Court noted such waivers must be voluntary and production under order of court is not voluntary.  Vigorous assertion of such privileges should be made, however, at each level of inquiry including objection to requests for production and careful attention to privilege logs to document the documents for which privilege is asserted along with the specific privilege being identified.

UPDATE ON STEVENS V. W.C.A.B.:

This is the case with a filing directly with the Court of Appeal challenging the use of IMR on various constitutional bases.  One of the arguments made in the case by the DWC in opposition to the request for a writ of mandate was that the petition was premature as the applicant had not exhausted all of the administrative remedies and further that the applicant was not yet aggrieved as the IMR decision had not issued.  That issue does not appear to have figured into the court’s decision as will be discussed below.

The Court of Appeal, after accepting amicus briefing by CWCI, denying amicus briefing by the Cal Chamber¹and denying the Respondent’s Petition for Dismissal, ordered the Petition denied yesterday.  Further appeal to the Supreme Court is still possible for applicant, but that would appear to carry a low likelihood of success.

However, in the interim the decision from IMR had been received, the UR determination upheld and that issue has been raised at the W.C.A.B. with a decision adverse to applicant.  A Petition for Reconsideration has been filed on the IMR issue on 6/10/14 and it looks as though applicant attorney intends to take the same issue up on a parallel course (the W.C.A.B. cannot address constitutional issues so that issue has to be presented to the appellate courts before review can be obtained).  An interesting issue is whether the decision of the Court of Appeal, which denied the applicant’s Petition rather than dismissing it, will serve to bar further appeal based on res judicata principles.  The Court’s decision, assuming it is left undisturbed by the Supreme Court, would appear to be a final determination on the legal challenge to IMR on constitutional grounds.

The lack of success by applicant attorney in this Petition does not necessarily mean an end to the challenges to IMR, but may mean this case will not be the vehicle for further challenge.

Footnote:

1. The denial of the Chamber brief likely had little to do with the actual brief but in the timing.  The request to file was made just days before the court issued its decision to deny the Petition.  If the brief had been accepted, the Court would have had to delay its decision to allow responsive briefing.  Since the Court appears to have already made its decision to deny the Petition, it probably felt taking time to allow additional responsive briefing on a case where the Court was prepared to rule as argued by the Amicus brief anyway, was unnecessary.

© Copyright 2014 Shaw, Jacobsmeyer, Crain & Claffey PC. All rights reserved. Reprinted with permission.