The opinion
Filed 5/13/21 Novartis Pharmaceuticals v. Superior Court CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
COURT OF APPEAL FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
NOVARTIS PHARMACEUTICALS D077934
CORPORATION,
(San Diego County Super. Ct. No.
Petitioner, 37-2013-00070440-CU-MM-CTL )
v.
THE SUPERIOR COURT OF SAN
DIEGO COUNTY,
Respondent;
T.H. et al.,
Real Parties in Interest.
ORIGINAL PROCEEDING in mandate. Ronald F. Frazier, Judge.
Petition denied.
Morrison & Foerster and Eric M. Bosman, Julie Y. Park, Alexandra L.
Preece; Hollingsworth and Robert E. Johnston, Kathryn Jensen, Gregory S.
Chernack, for Petitioner.
Thorsnes Bartolotta McGuire and Kevin F. Quinn, Kyle Lee Pederson,
Jarrett Scott Charo; Singleton Schreiber McKenzie & Scott and Brett Justin
Schreiber, Benjamin Israel Siminou, for T.H. and C.H., Real Parties in
Interest.
No appearance for Respondent.
Petitioner and defendant Novartis Pharmaceuticals Corporation
(Novartis) challenges an order of respondent San Diego Superior Court
denying in part its motion to seal the contents of an e-mail as an attorney-
client privileged communication. The court denied the motion on grounds
Novartis had waived the attorney-client privilege by failing to request the e-
mail’s prompt return once it was used during a deposition by counsel for
plaintiffs and real parties in interest T.H. and C.H., suing via their guardian
ad litem (plaintiffs). In a petition for writ of mandate, Novartis contends it
preserved the attorney-client privilege by objecting and preventing plaintiffs’
counsel from further questioning the deponent about the e-mail, which was
marked privileged and confidential, and by triggering a provision in the
parties’ stipulated protective order assertedly putting the burden on the
plaintiffs to return the document and seek a resolution of the issue. Novartis
argues writ relief is necessary because once a privileged communication is
disclosed there is no way to undo the harm that extends to other actions
against it, and the disclosure undermines the privilege as well as the
attorney-client relationship. We conclude Novartis did not take reasonable
remedial steps to protect and preserve its claim of privilege, and thereby
waived it. Accordingly, we deny the petition.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs sued Novartis as well as other companies and individuals,
alleging they had been diagnosed with autism resulting from exposure in
2
utero to terbutaline, a drug manufactured by Novartis and prescribed “off-
label” to delay premature labor.
During the course of the litigation, the parties stipulated to a protective
order addressing the inadvertent production of confidential information. In
part, the protective order (par. 7(c)) provides: “Nothing in this stipulated
protective order shall require disclosure of information which is protected by
the attorney-client privilege, work product immunity, or other privilege or
immunity. The inadvertent production or disclosure by a producing party of
materials subject to the attorney-client privilege, work-product protection, or
any other applicable privilege or protection (‘privileged information’), despite
the producing party’s reasonable efforts to prescreen such material prior to
production, will not waive the applicable privilege and/or protection, nor shall
it result in a subject-matter waiver, in this litigation or in any other state or
federal proceeding, if a request for return of such inadvertently produced
privileged information (‘clawback’) is made promptly after the producing
party learns of its inadvertent production. The producing party need not
provide the basis for its privilege assertion in its notice to a receiving party.
“If a receiving party, upon review of materials produced to it, becomes
aware that any portion of such material is protected by the attorney-client
privilege, work product immunity, or other privilege or immunity, the
receiving party shall promptly notify the producing party of the specific
materials which could be so considered and will not use such materials for
any purpose until the issue has been resolved by agreement of the parties or
by order of the court. Each receiving party must immediately return such
materials and all copies to the producing party, except for any pages
containing privileged markings by the receiving party, which shall instead be
3
destroyed and certified as such by the receiving party to the producing party.”
(Some capitalization omitted.)
On January 15, 2020, plaintiffs took the deposition of David Catalano,
a Novartis executive. During the deposition, plaintiffs’ counsel questioned
Catalano about an October 2001 e-mail chain, which included an e-mail from
Sean Reilly that Novartis had marked “CONFIDENTIAL—SUBJECT TO
PROTECTIVE ORDER.”1 Novartis’s counsel objected and instructed
Catalano “not to answer on the grounds it seeks information about attorney-
client privileged communications, which are clearly stated on the document
itself.” Counsel continued: “We can take up later what the consequences of
this disclosure are, but I’m not going to allow him to answer this question
without a court order requiring him to do so.” Plaintiffs’ counsel asked if
Reilly was an attorney, and Novartis’s counsel responded, “He is. And the
document is stated privileged and confidential.” Counsel confirmed the
deponent would follow the instruction and stopped questioning about Exhibit
12.
On May 1, 2020, plaintiffs included Exhibit 12 in papers opposing
Novartis’s summary judgment motion. On May 28, 2020, Novartis’s counsel
Kathryn Jensen invoked the protective order’s “clawback” provision and
demanded that plaintiffs return or confirm the destruction of Exhibit 12 and
1 At the hearing on Novartis’s motion to seal, its counsel pointed out that
the document at issue includes three e-mails: one from another executive to
Catalano, Catalano’s response to a different recipient but including Reilly,
and Reilly’s e-mail response to Catalano. Counsel explained the only e-mail
it claimed was privileged was the latter e-mail from Reilly to Catalano. The
parties refer to this e-mail chain as “Exhibit 12,” based on the number
plaintiffs gave the document when it was submitted as an exhibit in
opposition to Novartis’s summary judgment motion (the e-mail was marked
Exhibit 5 during the deposition). We likewise at times refer to the e-mail in
question as Exhibit 12.
4
all copies within five days. The next day, plaintiffs’ counsel advised Jensen
that Exhibit 12 had been brought to Novartis’s attention in January 2020
during Catalano’s deposition and as five months had passed since then,
under the protective order its failure to seek a prompt return of Exhibit 12
waived the attorney-client privilege.
Days later, Novartis moved to seal portions of plaintiffs’ opposition to
the summary judgment motion, including Exhibit 12. Novartis argued
Exhibit 12 referenced or contained proprietary and trade secret information,
submitting declarations from its attorney Julie Park, and a regulatory
director, Susan Brabant. Plaintiffs responded to Novartis’s motion in part by
pointing out that Novartis did not mention in its motion that Reilly was an
in-house counsel, nor did Novartis argue the e-mail should be sealed so as to
protect the attorney-client privilege. Plaintiffs argued Novartis could not
establish the e-mail was subject to attorney client privilege, that is, that its
“dominant purpose” was to provide Novartis with legal advice. Specifically
plaintiffs argued: (1) the e-mail was not sent in the context of a discussion
regarding whether Novartis should seek approval from the Food and Drug
Administration (FDA) for terbutaline; (2) Novartis had voluntarily disclosed
the substance of the e-mail to the FDA eight years earlier; and (3) Novartis’s
conduct in seeking to claw back Reilly’s e-mail was inconsistent with a belief
the communication was a privileged one between lawyer and client, as
Novartis had not sought to claw back Catalano’s e-mail to Reilly. According
to plaintiffs, internal Novartis memos confirmed that the e-mail did not
contain privileged information but instead referenced a business decision
Novartis made and disclosed to the FDA long in the past. Plaintiffs further
argued even if a privilege applied, Novartis waived it by voluntarily
disclosing Catalano’s half of the communication, failing to promptly ask for
5
the e-mail’s return after it learned it had been produced, and failing to assert
attorney-client privilege in its motion to seal, which was filed days after
Novartis notified plaintiff it was seeking the document’s return. Plaintiffs
asked the court to deny Novartis’s motion to seal.
In its reply, Novartis argued the e-mail was privileged and it did not
waive the privilege; that it was plaintiffs’ counsel who failed to abide by their
obligations under State Compensation Ins. Fund v. WPS, Inc. (1999) 70
Cal.App.4th 644, 652 (State Fund) to stop using the document, which was
clearly marked privileged. Novartis submitted a declaration from Brabant
stating, “During the relevant time period, and currently, Sean Reilly served
as [Novartis’s] in-house counsel providing legal advice on a variety of issues.”
In July 2020, Novartis’s counsel advised the trial court that it wished to
address the matter in an upcoming discovery conference. On the court’s
request for further briefing on the issue, Novartis argued that the fact the
document was marked privileged and confidential put plaintiffs on notice and
triggered their counsel’s obligation under the protective order and State Fund
to notify Novartis of the issue and refrain from using the document. Novartis
further argued it had no obligation to seek Exhibit 12’s return once it alerted
plaintiff’s counsel the e-mail was privileged; that it was plaintiffs’ burden
under the protective order to cease any use of the document and seek a
resolution with Novartis or the court. Novartis argued its May 2020 letter, as
well as its assertion of privilege immediately upon discovery of the
document’s production during Catalano’s deposition, confirmed it had not
relinquished or abandoned the privilege.
The trial court denied Novartis’s motion as to the e-mail within Exhibit
12. The court found Novartis “waived privilege as to the contents of the
6
e[-]mail on page 2 of Exhibit 12 . . . . Both sides discovered at the same time
that the document may have been inadvertently produced during the
deposition of Mr. Catalano on January 15, 2020. Although defendant’s
counsel objected at the deposition, the parties’ stipulated protective order
requires that when an inadvertent production occurs, it shall not result in
waiver ‘if a request for return of such inadvertently produced privileged
information (“clawback”) is made promptly after the producing party learns
of its inadvertent production.’ . . . In the absence of evidence of defendant’s
prompt request for return of the inadvertent production, the court concludes
defendant abandoned its assertion of privilege and that at this point, the
privilege has been waived. In its motion to seal itself, filed many months
after the inadvertent production discovery, there was no reference to attorney
client privilege and no requested ‘clawback[.]’ By separate order, the court
stayed entry of this order as it relates to Exhibit 12 and directed that Exhibit
12 shall remain confidential and will not be entered into the public record
during the pendency of the stay.” (Some capitalization omitted.)
Novartis brought this petition for writ of mandate asking this court to
direct the trial court “to vacate its decision holding that [Novartis] waived
any applicable privilege to Exhibit 12.” Novartis argues it preserved the
attorney-client privilege not only by marking the document “privileged and
confidential” and objecting at Catalano’s deposition, preventing plaintiffs’
counsel from further questioning on Exhibit 12, but also by designating the
deposition itself as confidential. Novartis maintains that under the
protective order and California case law, it was plaintiffs’ obligation either to
return Exhibit 12 or to seek a judicial determination on Novartis’s claim of
privilege; that Novartis was not required to do anything further to preserve
7
its claim. We issued an order to show cause and granted Novartis’s motion to
file exhibits under seal.
DISCUSSION
I. Standard of Review
The parties dispute the applicable standard of review. Novartis argues
this court reviews the question of whether it waived the attorney-client
privilege de novo as a mixed question of law and fact. Plaintiffs maintain
that we must review the trial court’s finding of waiver for substantial
evidence.
Whether a party has waived a privilege is often a mixed question of fact
and law. (Behunin v. Superior Court (2017) 9 Cal.App.5th 833, 843.) “ ‘Mixed
questions of law and fact concern the application of the rule to the facts and
the consequent determination whether the rule is satisfied.’ ” (McKesson
HBOC, Inc. v. Superior Court (2004) 115 Cal.App.4th 1229, 1235-1236, citing
Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d
881, 888.) Where historical facts are undisputed, the question is whether,
given those historical facts, the holder of the privilege has waived it. (See
McKesson, at p. 1236.) The “inquiry ‘requires a critical consideration, in a
factual context, of legal principles and their underlying values’ ” and thus it
is “predominately legal, and we independently review the trial court’s
decision.” (Ibid.; accord, Regents of University of California v. Superior Court
(2008) 165 Cal.App.4th 672, 678 (Regents) [reviewing finding of fact as to why
defendants produced privileged documents for substantial evidence, but
reviewing de novo the “legal conclusions to be drawn from that
finding”].)
Here, the background facts are not in dispute. Plaintiffs in their return
admit that the e-mail about which their counsel sought to question Catalano
8
was from Novartis’s in-house counsel to other Novartis employees and
marked privileged and confidential. They further admit the allegation that
“[Novartis] was unaware Exhibit 12 had been inadvertently produced.”
Plaintiffs deny the implication that they were “aware prior to January 15,
2020, that the Reilly e[-]mail had been produced to them” or that they
violated the protective order. Because the trial court made a factual finding
that both sides discovered the inadvertent production at the same time, we
review that finding for substantial evidence, resolving all conflicts and
inferences in support of the court’s order. (See McDermott Will & Emery LLP
v. Superior Court (2017) 10 Cal.App.5th 1083, 1105 (McDermott).) But there
are no disputed facts and inferences about whether Novartis’s original
production was inadvertent, or whether it intended to waive the privilege at
the point when the document first got into plaintiffs’ counsel’s possession, as
there were in McDermott.2 Novartis’s conduct during and after Catalano’s
deposition—its actions or inaction—is not contested.
2 In McDermott, the privilege holder, Richard Hausman, forwarded to a
third party an e-mail from his lawyer containing legal advice. (McDermott,
supra, 10 Cal.App.5th at p. 1094.) The third party passed it on to others,
including a relative who was trying to informally mediate Hausman’s probate
dispute, and who had distributed copies to opposing parties in the matter.
(Ibid.) Hausman, who was 80 years old and suffered from limited dexterity
due to multiple sclerosis when he forwarded the e-mail, later testified he did
not intend to forward the e-mail to the third party and did not know he had
done so until a year later. (Ibid.) When opposing counsel in the probate
matter found the e-mail among documents as he was preparing discovery
responses, he notified Hausman’s attorney but asserted Hausman had
waived the privilege by forwarding it. (Id. at p. 1095.) The Court of Appeal
faced with those facts explained that the substantial evidence standard of
review applied in view of the conflicting evidence and competing inferences
on whether Hausman intended to waive the privilege. (Id. at p. 1102.)
9
Plaintiffs correctly assert that even if the underlying facts are admitted
or undisputed, an appellate court may not substitute its deductions for those
reasonably drawn by the trial court. But plaintiffs do not explain what
inferences the trial court drew from the undisputed facts about Novartis’s
production. As the court drew legal conclusions concerning waiver from the
uncontested facts, our role, as stated above, is to review those determinations
de novo. (Regents, supra, 165 Cal.App.4th at p. 678.)
To the extent a determination of waiver is based on construction or
interpretation of the stipulated protective order, this court applies the usual
rules of contract interpretation. (See Winograd v. American Broadcasting Co.
(1998) 68 Cal.App.4th 624, 632 [a stipulation is a contract governed by usual
rules of contract construction]; Los Angeles City School Dist. of Los Angeles
County v. Landier Management Co. (1960) 177 Cal.App.2d 744, 750-751.)
Absent extrinsic evidence surrounding the circumstances under which it was
made, we independently construe the protective order. (See Iqbal v. Ziadeh
(2017) 10 Cal.App.5th 1, 8.)
II. Attorney-Client Privilege, Waiver, and the State Fund Rule
“Protecting the confidentiality of communications between attorney and
client is fundamental to our legal system. The attorney-client privilege is a
hallmark of our jurisprudence that furthers the public policy of 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.” ’ ” (People ex rel. Dept. of
Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135,
1146.) “ ‘[T]he privilege is absolute and disclosure may not be ordered,
without regard to relevance, necessity or any particular circumstances
peculiar to the case.’ ” (Costco Wholesale Corp. v. Superior Court (2009) 47
10
Cal.4th 725, 732 (Costco); DP Pham, LLP v. Cheadle (2016) 246 Cal.App.4th
653, 664.) Courts have no power to expand or limit the privilege by creating
exceptions. (McDermott, supra, 10 Cal.App.5th at p. 1100, citing Costco, at p.
739.)
“The attorney-client privilege protects the transmission of information
regardless of the content or whether the information is discoverable from
other sources. [Citation.] It attaches to a confidential communication
between the attorney and the client and bars discovery of the entire
communication, including unprivileged material. [Citation.] ‘ “Neither the
statutes articulating the attorney-client privilege nor the cases which have
interpreted it make any differentiation between ‘factual’ and ‘legal’
information.” ’ [Citation.] . . . ‘ “[T]he privilege covers the transmission of
documents which are available to the public, and not merely information in
the sole possession of the attorney or client. In this regard, it is the actual
fact of the transmission which merits protection, since discovery of the
transmission of specific public documents might very well reveal the
transmitter’s intended strategy.” ’ ” (DP Pham, LLC v. Cheadle, supra, 246
Cal.App.4th at p. 664.)
“[I]t is settled that a corporate client . . . can claim the privilege.”
(Costco, supra, 47 Cal.4th at p. 733; Edwards Wildman Palmer LLP v.
Superior Court (2014) 231 Cal.App.4th 1214, 1225.) “ ‘The party claiming the
privilege has the burden of establishing the preliminary facts necessary to
support its exercise, i.e., a communication made in the course of an attorney-
client relationship. [Citations.] Once that party establishes facts necessary
to support a prima facie claim of privilege, the communication is presumed to
have been made in confidence and the opponent of the claim of privilege has
the burden of proof to establish the communication was not confidential or
11
that the privilege does not for other reasons apply.’ ” (DP Pham, LLC v.
Cheadle, supra, 246 Cal.App.4th at p. 665, quoting Costco, 47 Cal.4th at p.
733; Wood v. Superior Court of San Diego County (2020) 46 Cal.App.5th 562
580.)
The holder of the privilege—here Novartis—may waive it. (Evid. Code,
§§ 912, 953 [holder of the privilege is the client]; see Ardon v. City of Los
Angeles (2016) 62 Cal.4th 1176,1186 (Ardon); McDermott, supra, 10
Cal.App.5th at p. 1101; Kerner v. Superior Court (2012) 206 Cal.App.4th 84,
112; State Fund, supra, 70 Cal.App.4th at p. 652; Transamerica Title Ins. Co.
v. Superior Court (1987) 188 Cal.App.3d 1047, 1052.) Evidence Code section
912, subdivision (a) provides that “the right of any person to claim [the] . . .
lawyer-client privilege . . . is waived with respect to a communication
protected by the privilege if any holder of the privilege, without coercion, has
disclosed a significant part of the communication or has consented to
disclosure made by anyone. Consent to disclosure is manifested by any
statement or other conduct of the holder of the privilege indicating consent to
the disclosure, including failure to claim the privilege in any proceeding in
which the holder has legal standing and the opportunity to claim the
privilege.” “What constitutes a significant part of the communication is a
matter of judicial interpretation; however, the scope of the waiver should be
determined primarily by reference to the purpose of the privilege.”
(Transamerica, at p. 1052; see also Fish v. Superior Court (2019) 42
Cal.App.5th 811, 819 [involving psychotherapist-patient privilege].) Waiver
may occur by tendering certain issues and by conduct inconsistent with
claiming the protection. (Regents, supra, 165 Cal.App.4th at p. 679.)
Under the statute, a holder’s failure to claim attorney-client privilege
in certain circumstances can be deemed consent to disclosure. (See Kerner v.
12
Superior Court, supra, 206 Cal.App.4th at p. 112; Regents, supra, 165
Cal.App.4th at p. 679.) Consent of the privilege holder can be “manifest[ed]
through words or conduct . . . that the communication may be disclosed by
another.” (State Fund, supra, 70 Cal.App.4th at p. 652 [Evidence Code
section 912 “indicates that we are to look to the words and conduct of the
holder of the privilege to determine whether a waiver has occurred”].) A
waiver may be found “if the holder, in a proceeding in which he or she has the
legal standing and opportunity to claim the privilege, fails to claim the
privilege knowing that the disclosure of privileged information is sought.”
(Kerner, at p. 112; see also Calvert v. State Bar (1991) 54 Cal.3d 765, 780.) “If
these conditions are satisfied, the holder’s failure to assert the privilege
through his or her attorney constitutes a waiver if the holder had an
opportunity to consult with the attorney.” (Kerner, at p. 112.) In Calvert, the
client-holder of the privilege was held to have waived it when, after the
privilege issue was raised at an attorney disciplinary hearing, the client
consulted with her attorney regarding the issue and did not instruct the
attorney to claim the privilege during the attorney’s testimony. (Calvert, at
p. 780.) The attorney then testified she was “ ‘not sure’ ” whether her
testimony created a conflict or jeopardized the client’s case. (Ibid.) The
“equivocal statement by [the] attorney after consultation with [the client]
amounts to a failure to claim the privilege when the opportunity arose.”
(Ibid.)
A waiver can occur even when there is an inadvertent or unintentional
disclosure by the privilege holder, if the privilege holder does not take
reasonable steps thereafter to rectify the situation. (See Regents, supra, 165
Cal.App.4th 672.) In Regents, this court addressed such circumstances in the
context of plaintiffs’ request for documents that defendant energy suppliers
13
had previously disclosed to an investigating government task force. (Regents,
supra, 165 Cal.App.4th at p. 676.) The plaintiffs argued the defendants
waived the privilege by making a business decision to produce the
documents. (Id. at p. 677.) The defendants presented evidence that they
believed they would suffer severe regulatory or criminal consequences if they
were seen as uncooperative. (Id. at pp. 677-678.) Reviewing what level of
compulsion will permit the holder of a privilege to disclose privileged
information without waiving the privilege, this court reviewed authorities
pertaining to inadvertent discovery disclosures and concluded: “[I]t is clear
that when privileged documents have been disclosed either in response to the
request of a government agency or inadvertently in the course of civil
discovery, no waiver of the privilege will occur if the holder of the privilege
has taken reasonable steps under the circumstances to prevent disclosure.
The law does not require that the holder of the privilege take ‘strenuous or
Herculean efforts’ to resist disclosure.” (Id. at p. 683.)3
3 One of the cases relied upon by this court in Regents was U.S. v. de la
Jara (9th Cir. 1992) 973 F.2d 746, involving the government’s discovery of
privileged documents during a search warrant. (Regents, supra, 165
Cal.App.4th at p. 681.) This court quoted de la Jara: “ ‘In determining
whether the privilege should be deemed to be waived, the circumstances
surrounding the disclosure are to be considered. [Citations.] We have
previously held that the attorney-client privilege may be waived by
implication, even when the disclosure of the privileged material was
“inadvertent” or involuntary. [Citation.] When the disclosure is involuntary,
we will find the privilege preserved if the privilege holder has made efforts
“reasonably designed” to protect and preserve the privilege. [Citation.]
Conversely, we will deem the privilege to be waived if the privilege holder
fails to pursue all reasonable means of preserving the confidentiality of the
privileged matter. [¶] De la Jara did nothing to recover the letter or protect
its confidentiality during the six month interlude between its seizure and
introduction into evidence. By immediately attempting to recover the letter,
appellant could have minimized the damage caused by the breach of
14
Waiver, however, does not occur from an “ ‘accidental, inadvertent
disclosure of privileged information by the attorney’ ” for the privilege holder.
(Ardon, supra, 62 Cal.4th at p. 1187, quoting State Fund, supra, 70
Cal.App.4th at p. 654.)4 In State Fund, the Court of Appeal articulated the
ethical obligations of an attorney who receives privileged documents due to
inadvertence, a holding that the California Supreme Court has since
embraced as a “ ‘fair and reasonable approach.’ ” (Ardon, at p. 1187; Rico v.
Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 817 [applying State Fund to
work product doctrine].) State Fund involved the inadvertent production of
numerous attorney-client privileged documents by plaintiff’s attorneys to
defense counsel, who then refused the plaintiff’s counsel’s demand to return
the documents on grounds the plaintiff had waived the privilege. (Ardon, at
pp. 1186-1187; State Fund, at p. 654.) The trial court sanctioned the defense
lawyer. (State Fund, at p. 647.) Though the Court of Appeal agreed with the
sanctions in principle, it reversed them given the dearth of established law
governing the circumstances. (Ibid.)
Because in State Fund the disclosure was made by counsel, the court
“focus[ed] on whether any statement or conduct of [the client] indicates that
it consented to counsel’s disclosure.” (State Fund, supra, 70 Cal.App.4th at p.
confidentiality. As a result of his failure to act, however, he allowed “the
mantle of confidentiality which once protected the document[ ]” to be
“irretrievably breached,” thereby waiving his privilege.’ ” (Regents, at pp.
681-682, quoting de la Jara, 973 F.2d at pp. 749-750.)
4 In Ardon, the California Supreme Court extended State Fund’s
inadvertent disclosure rule to a city administrative office’s inadvertent
production of privileged materials to a plaintiff under a Public Records Act
request. (Ardon, supra, 62 Cal.4th at p. 1180.)
15
647.)5 The court stated that “[a] trial court called upon to determine whether
inadvertent disclosure of privileged information constitutes waiver of the
privilege must examine both the subjective intent of the holder of the
privilege and the relevant surrounding circumstances for any manifestation
of the holder’s consent to disclose the information.” (Id. at p. 653.) The
evidence provided by the disclosing attorneys showed the forms were
designed to make clear that they were intended to be confidential attorney-
client communications, and attorneys followed specific procedures to ensure
privileged documents were not produced. (Ibid.) An attorney testified the
disclosure of the documents was entirely unintentional, and “the promptness
with which counsel for State Fund moved to secure return of the documents
indicated that there was no intent on the part of [the client] to waive the
privilege.” (Ibid.)
The court in State Fund set forth the following rule: “When a lawyer
who receives materials that obviously appear to be subject to an attorney-
client privilege or otherwise clearly appear to be confidential and privileged
and where it is reasonably apparent that the materials were provided or
made available through inadvertence, the lawyer receiving such materials
should refrain from examining the materials any more than is essential to
ascertain [whether] the materials are privileged, and shall immediately
notify the sender that he or she possesses material that appears to be
privileged. The parties may then proceed to resolve the situation by
5 In a footnote, the State Fund court cited a law review article in which
the author summarized several approaches to viewing the client’s intent,
concluding: “ ‘Regardless of the approach used, the final determination of
whether an assertion of the attorney-client privilege will be upheld in an
inadvertent disclosure context depends upon whether the client either
expressly or impliedly waived the privilege.’ ” (State Fund, supra, 70
Cal.App.4th at p. 652, fn. 2.)
16
agreement or may resort to the court for guidance with the benefit of
protective orders and other judicial intervention as may be justified. . . .
[W]henever a lawyer ascertains that he or she may have privileged attorney-
client material that was inadvertently provided by another, that lawyer must
notify the party entitled to the privilege of that fact.” (State Fund, supra, 70
Cal.App.4th at pp. 656-657; see Ardon, supra, 62 Cal.4th at p. 1187.)6 The
court further held that “in an appropriate case, disqualification might be
justified if an attorney inadvertently receives confidential materials and fails
to conduct himself or herself in the manner specified above, assuming other
factors compel disqualification.” (State Farm, at p. 657.)
As stated, in assessing waiver a court must consider the privilege
holder’s subjective intent. (State Fund, supra, 70 Cal.App.4th at p. 653.)
But the disclosing party’s “own characterization of its intent is not dispositive
. . . .” (Ardon, supra, 62 Cal.4th at pp. 1190-1191; see also McDermott, supra,
10 Cal.App.5th at p. 1101.) Further, the court should weigh “[o]ther relevant
considerations” including “the precautions the holder took to maintain the
privilege and the promptness with which the holder sought return of the
inadvertently disclosed document.” (McDermott, at p. 1102.) The question in
assessing waiver in the case of an inadvertent disclosure is whether the
6 The State Fund rule is now the subject of California Rules of
Professional Conduct, rule 4.4, which provides: “Where it is reasonably
apparent to a lawyer who receives a writing relating to a lawyer's
representation of a client that the writing was inadvertently sent or
produced, and the lawyer knows or reasonably should know that the writing
is privileged or subject to the work product doctrine, the lawyer shall: [¶] (a)
refrain from examining the writing any more than is necessary to determine
that it is privileged or subject to the work product doctrine, and [¶] (b)
promptly notify the sender.” (Cal. Rules of Professional Conduct, rule 4.4.)
The rule does not put the obligation solely on the recipient to seek a
resolution with the opponent or court.
17
holder of the privilege has pursued reasonable means to preserve the
confidentiality of the information. (Regents, supra, 165 Cal.App.4th at pp.
681-682.)
III. Privileged Nature of the E-mail
Before we turn to the waiver issue, we address plaintiffs’ contention
that we may affirm the trial court’s order by concluding Novartis did not
establish the Reilly e-mail was an attorney-client privileged document.
Plaintiffs assert the court did not rule on that question, pointing to its minute
order language that Novartis failed to protect “any applicable attorney-client
privilege” over the document. But the court omitted that language from its
final ruling, finding implicitly that the privilege applied to the e-mail. We
conclude Novartis made a sufficient prima facie showing, creating a
presumption that plaintiffs did not overcome.
For a communication to be privileged it must occur in the course of an
attorney-client relationship for legal consultation. (Los Angeles County Bd. of
Supervisors v. Superior Court (2016) 2 Cal.5th 282, 297; see Wood v. Superior
Court of San Diego County, supra, 46 Cal.App.5th at pp. 575-576.) Here, the
privilege is asserted in a corporate setting, and a corporation is entitled to
invoke the privilege. (See Costco, supra, 47 Cal.4th at p. 733; Alpha Beta Co.
v. Superior Court (1984) 157 Cal.App.3d 818, 825.) The party claiming the
privilege must show the “dominant purpose of the relationship between the
parties to the communication was one of attorney-client.” (Clark v. Superior
Court (2011) 196 Cal.App.4th 37, 51; Costco, at pp. 739-740.) As stated,
Plaintiffs in their return admit that the e-mail about which their counsel
sought to question Catalano was from Novartis’s in-house counsel to other
Novartis employees and marked privileged and confidential. Novartis
presented evidence that Reilly was its in-house counsel who gave legal advice
18
on a variety of issues during the time in question. This established prima
facie the communication was made during the course of an attorney-client
relationship between in-house counsel and corporate executive. (Accord,
Clark, at p. 51 [privilege established by showing that memo was sent by
company employee to company’s attorney and director reporting to attorney;
rejecting argument that dominant purpose was an expression of frustration
as an impermissible inquiry into the content of the e-mail].)
Once the attorney-client relationship was established prima facie, the
burden shifted to plaintiffs as the party opposing the privilege to show the
communication was not made in confidence. (Costco, supra, 47 Cal.4th at p.
733.) We are not persuaded by plaintiffs’ argument that the record gives
“reason to doubt” Novartis intended the e-mail to be confidential. They point
to the fact Novartis produced Catalano’s e-mail to Reilly, and also assert
Novartis set out the substance of the communication—the reason Novartis
did not pursue an FDA indication for premature labor—years earlier in
meeting minutes with the FDA. Confidentiality of Reilly’s e-mail to Catalano
is not destroyed merely because Novartis produced a different e-mail from
Catalano in which he copied Reilly; a client cannot protect information by
merely transmitting it to counsel. (Los Angeles County Bd. of Supervisors v.
Superior Court, supra, 2 Cal.5th at p. 296.) Further, it is impermissible to
review the content of the communication to determine whether it is
privileged. (Clark v. Superior Court, supra, 196 Cal.4th at p. 51; accord, DP
Pham, LLC .v Cheadle, supra, 246 Cal.App.4th at pp. 667-668 [“nature of the
attorney-client privilege requires absolute protection for all confidential
communications between an attorney and a client regardless of their
content”].) Finally, the attorney-client privilege protects the transmission of
19
information regardless of whether the information is discoverable from other
sources. (DP Pham, at p. 664.)
IV. Waiver Analysis
On the question of waiver, Novartis’s position is simple: Once its
counsel advised plaintiffs that the inadvertently produced e-mail was a
privileged document, it was not required to do anything else to preserve the
attorney-client privilege. That is, according to Novartis, it was plaintiffs’
burden both under the parties’ protective order and California law to
immediately return the document and take steps to cease all use of it.
Novartis maintains it took reasonable steps to preserve its privilege by
sending its May 2020 letter once it realized plaintiffs had not complied with
these obligations but had used the e-mail in their summary judgment
opposition, and then by moving to seal the document. Novartis argues it
would be illogical and contrary to law to conclude plaintiffs’ failure to return
the document or seek a judicial determination caused it to waive the
privilege. Novartis argues its conduct was not an “ ‘intentional
relinquishment of a known right after full knowledge of the facts . . . .’ ”
As we have stated, plaintiffs admit and there is no dispute that
Novartis’s original production of the e-mail—the disclosure that resulted in
the document getting into the plaintiffs’ hands—was inadvertent. Under
State Fund, Ardon, and the authorities discussed above, Novartis’s counsel’s
accidental or inadvertent disclosure did not itself waive the attorney-client
privilege. (Ardon, supra, 62 Cal.4th at p. 1187, quoting State Fund, supra, 70
Cal.App.4th at p. 654.)
But Novartis as the privilege holder was still obligated to act
reasonably to protect and preserve the privilege so as not to create
circumstances indicating consent or some other intent to relinquish its claim.
20
(See Regents, supra, 165 Cal.App.4th at p. 679; U.S. v. de la Jara, supra, 973
F.2d at p. 750.) Whether Novartis adequately preserved and protected its
claim of attorney-client privilege requires an inquiry into its statements and
conduct following the parties’ discovery of the inadvertent disclosure at
Catalano’s deposition. At that point, Novartis became aware that plaintiffs’
counsel possessed the document, and its counsel’s objection simultaneously
put plaintiffs’ counsel on notice of Novartis’s claim that the document was
privileged. We agree Novartis could reasonably expect plaintiffs’ counsel to
comply with the ethical obligation to “refrain from examining the materials
any more than is essential to ascertain if the materials are privileged . . . .”
(State Fund, supra, 70 Cal.App.4th at p. 656; Ardon, supra, 62 Cal.4th at p.
1187; Rico v. Mitsubishi Motors Corp., supra, 42 Cal.4th at p. 810 [receiving
counsel “may not read a document any more closely than is necessary to
ascertain that it is privileged”]; Clark v. Superior Court, supra, 196
Cal.App.4th at p. 52.) Because Novartis’s attorneys had put plaintiffs’
counsel on notice of its claim of privilege at the deposition, there was no need
for plaintiffs’ counsel to notify opposing counsel of the disclosure. Under
those circumstances, State Fund explains it was for the “parties [to] then
proceed to resolve the situation by agreement or . . . resort to the court for
guidance . . . .” (State Fund, at pp. 656-657; see Rico, at p. 817 [adopting
State Fund’s holding]; accord, McDermott, supra, 10 Cal.App.5th at p. 1092
[State Fund rule requires the attorney to review the documents no more than
necessary to determine whether they are privileged, notify the privilege
holder and “refrain from using the documents until the parties resolve or the
court resolves any dispute about their privileged nature”].) Contrary to
Novartis’s arguments, neither State Fund nor the California Rules of
Professional Conduct (footnote 6, ante) place the burden solely on the
21
receiving party to take steps to resolve the situation with opposing counsel or
the court.
Under these circumstances, in the absence of plaintiffs’ prompt action
in either returning it, proposing an agreement with counsel, or seeking court
guidance, it was incumbent on Novartis to take prompt steps to resolve the
dispute over the privileged e-mail. We cannot agree it was reasonable for
Novartis to wait months resting on the belief that plaintiffs would avoid
using the document or seek a resolution, an obligation that State Fund did
not strictly impose only on plaintiffs.
Novartis’s position misunderstands State Fund’s import. State Fund
states an ethical rule for counsel in receipt of privileged materials; it does not
preclude a finding of waiver by the privilege holder client where the privilege
holder takes no immediate steps to demand return of an inadvertently
produced document or act reasonably to resolve such an accidental disclosure.
The State Fund ethical obligations on the receiving attorney do not eliminate
the producing party’s need to take reasonable steps to protect the privilege.
The producing party should not forego action on the assumption that
opposing counsel in possession of an inadvertently produced privileged
document will do the right thing once the parties learn of an inadvertent
disclosure. If the receiving counsel does not promptly return the document or
seek a resolution, then the producing party should do so. The consequence of
a State Fund ethical violation by the receiving counsel can be
disqualification, and even that is not automatic. (See Rico v. Mitsubishi
Motors Corp., supra, 42 Cal.4th 807, 810 [trial court properly disqualified
counsel who failed to comply with State Fund obligations and making full use
of a confidential document]; O’Gara Coach Co., LLC v. Ra (2019) 30
Cal.App.5th 1115, 1127, 1130; McDermott, supra, 10 Cal.App.5th at p. 1120 [“
22
‘[D]isqualification is proper as a prophylactic measure to prevent future
prejudice to the opposing party from information the attorney should not
have possessed’; an affirmative showing of existing injury from the misuse of
privileged information is not required”]; Clark v. Superior Court, supra, 196
Cal.App.4th at pp. 41, 53 [disqualification proper where counsel “had received
and excessively reviewed privileged documents” posing a “genuine likelihood
[that counsel’s] conduct could affect the outcome of the litigation” and counsel
“affirmatively used some of the substantive information contained in the
privileged documents to question witnesses or to support [its client’s]
claims”].)7 But a receiving counsel’s ethical violation cannot immunize the
privilege holder from waiving its attorney-client privilege if the holder
engages in conduct inconsistent with protecting the privilege.
Furthermore, as summarized above, the law provides a waiver may
occur by a privilege holder’s failure to claim the privilege in proceedings in
which the holder has the opportunity to claim it. (Evid. Code, § 912; see
Kerner v. Superior Court, supra, 206 Cal.App.4th at p. 112; Calvert v. State
Bar, supra, 54 Cal.3d at p. 780.) In that way, the “definition of a waiver
under Evidence Code section 912, subdivision (a) differs from the ordinary
definition of a waiver as the intentional relinquishment of a known right.”
(Kerner, at p. 112, fn. 13; see Savaglio v. Wal-Mart Stores, Inc. (2007) 149
Cal.App.4th 588, 598 [acknowledging that a waiver may stem from conduct
“ ‘so inconsistent with an intent to enforce the right as to induce a reasonable
belief that such right has been relinquished’ ”].) Here, Novartis waived the
privilege when, after demanding return of the privileged e-mail and receiving
7 Novartis acknowledges it is not seeking to disqualify plaintiffs’ counsel
despite plaintiffs’ asserted violation of their protective order and the State
Fund ethical obligations.
23
plaintiffs’ refusal, it filed a motion to seal that did not argue the document
contained an attorney-client privileged communication. At that point,
Novartis and its counsel participated “in a proceeding in which [it had] the
legal standing and opportunity to claim the privilege” but “fail[ed] to claim
the privilege knowing that the disclosure of privileged information [was]
sought.” (Kerner, at p. 112.)
Our conclusions are consistent with the parties’ protective order, which
we interpret de novo as neither party points to extrinsic evidence
surrounding its entry. Considering the whole of the protective order, we
decline to read it as triggering one provision to the exclusion of the other
under circumstances where the parties learned of the disclosure
simultaneously. Both provisions of paragraph 7 addressing the producing
party’s and the receiving party’s obligations became operational upon
Novartis’s and plaintiffs’ discovery of the inadvertently-produced e-mail at
Catalano’s deposition. Once plaintiffs learned of the privileged nature of the
e-mail, the protective order required them to “immediately return such
materials and all copies to [Novartis]” and “not use [the e-mail] for any
purpose until the issue has been resolved by agreement of the parties or by
order of the court.” (Some capitalization omitted.) On the other hand, once
Novartis learned of the inadvertent disclosure of the privileged e-mail, the
protective order provided that the accidental disclosure would not constitute
a waiver “if a request for return [of the e-mail] is made promptly after the
producing party learns of its inadvertent production.” (Some capitalization
omitted.)
Any asserted violation of plaintiffs’ obligations under the protective
order did not eliminate Novartis’s corresponding obligation to protect the
confidentiality of the privileged e-mail. When plaintiffs’ counsel did not
24
immediately return the e-mail or seek a resolution, it was for Novartis to
promptly request the e-mail’s return or take other reasonable remedial steps
to protect the e-mail’s confidentiality, else risk waiving the privilege. For the
reasons expressed above, we conclude it did not take such steps, thereby
waiving the privilege. We therefore deny the petition.
DISPOSITION
The petition for writ of mandate is denied. Plaintiffs shall recover their
costs for the proceedings in this court.
O’ROURKE, J.
WE CONCUR:
BENKE, Acting P. J.
HUFFMAN, J.
25