June 2014 • Vol. 34 No. 6 | An E-Publication of the Los Angeles County Bar Association

The Lawyer-Client Privilege, Waiver, and “Common Interest” Doctrine: Seahaus La Jolla Owners Association v. Superior Court

By Kevin Mohr, professor, Western State College of Law, in Fullerton, California. He serves as the Consultant to the State Bar’s Rules Revision Commission and is the Secretary of LACBA’s Professional Responsibility and Ethics Committee. The opinions expressed are his own.

The lawyer-client privilege is central to the justice system, ensuring “the right of every person to freely and fully confer and confide in one having knowledge of the law, and skilled in its practice, in order that the former may have adequate advice and a proper defense.”1 When applicable, the privilege shields lawyers and clients from being compelled to disclose communications between them. The privilege, however, can be waived by disclosure to third parties. This is a concern for lawyers who often share information with other persons, whether to assist achieving the client’s objectives or in an attempt to achieve a consistent claim or defense between or among co-parties. How, then, might a lawyer avoid the privilege’s waiver when privileged information is shared with persons other than the client? Although arguably sui generis, a recent California Court of Appeal decision, Seahaus La Jolla Owners Association v. Superior Court,2 provides insight into employing the “common interest” doctrine3 to protect privileged communications from being waived through disclosure.

In Seahaus, counsel for a homeowner’s association board sent several letters to association’s members concerning a construction defect action regarding common areas brought against the developer and builder. The letters stated that the homeowner recipients might be required to provide the documents in relation to a sale or refinancing of their units. In addition to the association’s suit, some individual homeowners, represented by separate counsel, had filed their own suits. Both the litigating homeowners and other homeowners attended meetings at which the association’s counsel and structural engineer were available to answer questions. Some homeowners were employed by or otherwise affiliated with defendants. During depositions in the association’s action, defendants sought testimony from homeowners about what was communicated at the meetings. A discovery referee opined the meeting communications were privileged. The trial judge concluded there was no lawyer-client relationship between association’s counsel and homeowners—a point not contested by the association—and held the communications not privileged. The association petitioned for a writ of mandamus and the court of appeal granted the petition.

On review, the issue was whether, even assuming no lawyer-client relationship between association’s counsel and homeowners, the communications were privileged. The precise issue was waiver, i.e., whether the communications lost their privileged character because the association and homeowners did not have a sufficient “common interest” in the matters.4 Before discussing the court’s analysis, however, it is helpful to review (i) the requirements to establish the privilege, (ii) the legal effect or protection it affords, and (iii) how the protection can be lost or waived

First, Evidence Code Section 9525 defines a “confidential communication” as “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.”6 

Relevant to the “common interest” doctrine is the clause that recognizes there may be persons “present to further the interest of the client in the consultation.”7 These words are intended “to indicate that a communication with 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.”8 The last sentence contemplates disclosure to persons with a common interest.

Second, when Section 952’s requirements are satisfied, the client has “a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer.”9 

Third, Evidence Code Section 912(a) identifies situations that would waive the privilege and the ability to avoid compelled disclosure. However, Section 912(d) expressly provides that there is no waiver “when disclosure is reasonably necessary for the accomplishment of the purpose for which the lawyer...was consulted.”10 With these concepts in mind, the Seahaus analysis is better appreciated.

The court recited the two-part test for finding a “common interest” from the leading California case, OXY Resources California LLC v. Superior Court, for determining whether the doctrine applies: “[1] the two parties have in common an interest in securing legal advice related to the same matter—and [2] the communications [are] made to advance their shared interest in securing legal advice on that common matter.”11 First, the existence of an interest in common operates to protect the confidentiality of the communications under Section 952. Second, however, even if there is a common interest, the disclosures must still be “reasonably necessary” to accomplish the purpose for which the association’s counsel was consulted to avoid waiver of the privilege under Section 912.

In finding confidentiality was maintained, the court rejected several arguments offered by defendants to show there was no expectation of confidentiality: that some homeowners were affiliated with defendants; that some had discussed issues raised at the meetings with relatives; that the letters stated they could be shared with prospective purchasers or lenders; and that the association had shared e-mails its counsel had received from homeowners about defects in their units. The court noted first, the association had a duty to keep all homeowners informed about the common area litigation that could affect individual unit values. Second, unlike previous cases where persons to whom information was disclosed had divergent interests,12 here the association sought “to share its privileged information with homeowners, to the extent that it believes that they ‘all have the same goals in mind.’”13 Third, the content and circumstances of the communications warranted finding confidentiality was maintained. Between Civil Code sections regulating initiation of construction defect litigation14 and the association’s CCRs, which required notice to homeowners, the association and its counsel “maintained a reasonable expectation that information to be disclosed about the status of the litigation was confidential in nature.”15 Finally, the court concluded the presence of homeowners with conflicting loyalties—those affiliated with defendants—should not operate to destroy all other common interests.16

In concluding the communications were “reasonably necessary” to the purpose for which the association’s lawyer was retained, and thus protected from waiver pursuant to Section 912(d), the court rejected the defendants’ argument that even if the first meeting was required by the CCRs, other meetings were not. Instead, the court concluded the association’s counsel had ongoing communications with homeowners—who had a common interest with the association in favorably resolving the common area litigation—“in a manner that would advance their shared interests in securing legal advice on similar legal and factual issues.”17 

A casual reading of Seahaus might suggest that claiming a “common interest” would be a panacea for protecting disclosures to third persons. After all, here the court held no waiver despite disclosures to persons with interests aligned with the opposing party (homeowners “affiliated” with defendants). However, the court’s reasoning limits the scope of its decision. It relied heavily on the fact the CCRs and related Civil Code sections required the association to share the information.18 More importantly, the court expressed its concern that ordering disclosure of the communications might reveal much of the association’s investigative efforts and trial strategy, and granted the writ.19 Given the particular content and circumstances of the disclosure here, applying the “common interest” doctrine was warranted.20

1 Mitchell v. Superior Court, 37 Cal. 3d 591, 599 (1984).

2 Seahaus La Jolla Owners Ass’n v. Superior Court, 224 Cal. App. 4th 754 (2014).

3 The “common interest” doctrine is sometimes referred to as the “pooled information” doctrine or “joint defense” doctrine. See, e.g., OXY Resources California LLC v. Superior Court, 115 Cal. App. 4th 874, 887-88 (2004).

4 The “common interest” doctrine has been described as “a non-waiver doctrine, analyzed under...principles applicable to the attorney-client privilege....” See OXY Resources, 115 Cal. App. 4th at 889.

5 Unlike most other jurisdictions that recognize a common law lawyer-client privilege, the privilege in California is statutory in nature. See Evid. Code §§951 et seq.

6 Emphasis added.

7 As the Seahaus court noted, a second “third person” concept in §952, one “to whom disclosure is reasonably necessary for the transmission of the information,” would cover various agents and intermediaries of the lawyer, e.g., secretary, accountant, experts, etc., and is not germane to the common interest doctrine. Seahaus, 224 Cal. App. 4th at 769 n.5. A third concept, a person “to whom disclosure is reasonably necessary for...the accomplishment of the purpose for which the lawyer is consulted,” is discussed in relation to §912(d) regarding waiver.

8 See Citizens for Ceres v. Superior Court, 217 Cal. App. 4th 889, 916 (2013) (quoting Recommendation Proposing an Evidence Code (Jan.1965) 7 Cal. Law Revision Com. Rep. (1965) p. 172.) (Emphasis added.)

9 Evid. Code §954.

10 Emphasis added.

11 Seahaus, 224 Cal. App. 4th at 774, quoting OXY Resources, 115 Cal. App. 4th at 891.

12 E.g., Smith v. Laguna Sur Villas Community Assn., 79 Cal. App. 4th 639 (2000); Wells Fargo Bank v. Superior Court, 22 Cal. 4th 201 (2000).

13 Seahaus, 224 Cal. App. 4th at 775.

14 Civ. Code §§4000 et seq.

15 Seahaus, 224 Cal. App. 4th at 775.

16 Id.

17 Id. at 776.

18 Id. at 775.

19 Id. at 776-77.

20 Lawyers must exercise caution in advising a client whether to reveal information to a person perceived to have a “joint concern” in the matter. See, e.g., John J. Calandra and Sandra B. Saunders, The Not So “Common” Interest Privilege Applied to M&A Deals, N.Y.L.J. (4/14/14) (discussing the divergent court decisions on whether a “common interest” is present between acquirer and target in a merger), available at: http://newyorklawjournal.com/id=1202650560623/The+Not+So+Common+Interest+Privilege+Applied+to+MA+Deals%3Fmcode=0&curindex=0&curpage=ALL
 In California, however, the mere fact that parties originally might have been on opposite sides of a transaction will not by itself preclude consideration that there is a common interest. E.g., OXY Resources California LLC v. Superior Court, 115 Cal. App. 4th 874 (2004).

LACBA's Professional Responsibility and Ethics Committee welcomes new inquiries from LACBA members regarding ethical issues or concerns about professional responsibilities. The identity of the inquirer is kept confidential within the committee. The committee, however, does not publish formal opinions that are the subject of any pending litigation involving the inquirer. If you have an ethical question that you would like the committee to consider, you can mail your written inquiry to Los Angeles County Bar Association, Professional Responsibility and Ethics Committee, P.O. Box 55020, Los Angeles, CA 90055-2020, or e-mail your inquiry marked “Confidential” to Member Services at msd@lacba.org .


 

 




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