United States District Court, N.D. California
August 9, 2005.
SONY COMPUTER ENTERTAINMENT AMERICA, INC., Plaintiff,
GREAT AMERICAN INSURANCE CO., et al., Defendants.
The opinion of the court was delivered by: EDWARD CHEN, Magistrate Judge
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO
COMPEL ANSWERS TO DEPOSITION QUESTIONS BY ANDREW VU; AND GRANTING
IN PART AND DENYING IN PART DEFENDANT'S MOTION TO COMPEL FURTHER
DEPOSITION OF JENNIFER LIU
Defendant American Home Assurance Co. ("American Home") has
filed two motions to compel contesting the assertion of privilege
by Plaintiff Sony Computer Entertainment America, Inc. ("SCEA")
at the depositions of Jennifer Liu and Andrew Vu. Part of the
motion related to Ms. Liu has been withdrawn. See Joint letter
of 7/25/05, at 2. The Court hereby addresses the remaining issues
raised in each motion. Each motion is GRANTED in part and DENIED
I. FACTUAL & PROCEDURAL BACKGROUND
SCEA has filed suit against various insurance companies,
including American Home. In essence, SCEA contends that American
Home and the other insurance companies wrongfully and in bad
faith denied insurance coverage to SCEA for defense and indemnity
in connection with consumer lawsuits against SCEA claiming
property damage, false advertising, and other injury in connection with PlayStation and PlayStation 2. See FAC ¶ 1. The
consumer lawsuits at issue are known as the Nickerson/Muccioli
lawsuits and the Kim/Kaen lawsuits.
A. Deposition of Ms. Liu
On December 14, 2005, American Home noticed the deposition of
Ms. Liu, the director of legal and business affairs at SCEA.
See Davis Decl., Ex. 1; see also id., Ex. 5 (Liu Dep. at 68).
SCEA produced Mr. Liu for deposition on January 11, 2005. See
Mot. at 8.
On December 15, 2004, American Home also noticed a 30(b)(6)
deposition regarding the underlying Nickerson and Muccioli
lawsuits, see Davis Decl., Ex. 2, and another 30(b)(6)
deposition regarding the underlying Kim and Kaen lawsuits.
See id., Ex. 3. SCEA elected to designate Ms. Liu for both
30(b)(6) depositions, which took place on January 12 and 14,
2005. See Mot. at 8.
During the depositions of Ms. Liu, both in her individual and
30(b)(6) capacities, privilege objections were made by SCEA's
B. Deposition of Mr. Vu
On December 14, 2004, American Home noticed the deposition of
Mr. Vu, a lawyer at SCEA. See Davis Decl., Ex. 1; Mot. at 3.
SCEA produced Mr. Vu for deposition on January 21, 2005. See
Mot. at 3.
During Mr. Vu's deposition, privilege objections were asserted
by SCEA's counsel.
At the hearing on the motions to compel, the parties agreed
that the disputes involving Ms. Liu and Mr. Vu could be boiled
down to three issues, namely, (1) whether SCEA's communications
with and in the presence of third parties are privileged; (2)
whether SCEA waived its privilege with respect to communications
with outside counsel (i.e., the Crosby Heafey and Gray Cary law
firms) by disclosing to third parties a document known as
"Exhibit A-49"; and (3) whether Ms. Liu and Mr. Vu played
business roles or legal roles, e.g., with respect to the
supervision of SCEA's counsel in the consumer lawsuits and events
related to the tender of SCEA's claim to American Home.
A. SCEA's Communications with and in the Presence of Third
At the hearing on the motions, the parties clarified that the
only third party at issue is Mr. O'Neil, the insurance broker for
SCEA, and not Mr. Webber, the representative of another insurance company, Great American. (SCEA agreed that there is no privilege
as to communications to which Mr. Webber was a party.) American
Home argues that attorney-client communications involving or made
in the presence of Mr. O'Neil are not privileged. SCEA, in turn,
argues that such communications are confidential and privileged
because Mr. O'Neil was "present indisputably to further SCEA's
interest in Ms. Liu's consultations." Joint letter of 7/25/05, at
9 (citing Cal. Civ. Code § 952 (allowing for disclosure of
information to third parties "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
Generally, "[t]he burden of establishing that a particular
matter is privileged is on the party asserting the privilege."
San Diego Professional Ass'n v. Superior Court, 58 Cal.2d 194,
199 (1962). There is an exception: "Whenever a privilege is
claimed on the ground that the matter sought to be disclosed is a
communication made in the course of the lawyer-client . . .
relationship, 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 that the communication was not
confidential." Cal. Evid. Code § 917. That exception to the
normal allocation of burden is lost, however, when the
communication is disclosed to a third party under California
Evidence Code § 912(a). See id. § 912(a) (noting that party has
waived privilege if it has "disclosed a significant part of the
communication or has consented to such disclosure made by
anyone"); see also Moeller v. Superior Court, 16 Cal. 4th 1124,
1136 (1997) ("[T]he holder of an evidentiary privilege waives it
by voluntarily disclosing the privileged communication to a third
party. . . ."). Where a third party is present, no presumption of
confidentiality obtains, and the usual allocation of burden of
proof, resting with the proponent of the privilege, applies in
determining whether confidentiality was preserved under §
952.*fn1 See Raytheon Co. v. Superior Court,
208 Cal. App. 3d 683, 688 (1989) ("[T]he presence of third parties does not destroy
confidentiality if the disclosure was reasonably necessary to
accomplish the client's purpose in consulting counsel.")
(emphasis added); see also D.I. Chadbourne, Inc. v. Superior
Court, 60 Cal. 2d 723, 729 (1964) ("The party claiming privilege
carries the burden of showing that the evidence which it seeks to
suppress is within the terms of the statute."); cf. 2 Paul R.
Rice, Attorney-Client Privilege in the United States § 9:20, at
53-54 (2d ed. 1999) ("[O]nce it is established that third parties
were either present at an attorney-client meeting or permitted to
examine confidential attorney-client communications, the
proponent must prove that those third parties were acting as
agents of either the attorney or client in order to avoid a
finding that confidentiality was missing.").
Here, SCEA provided no evidentiary support for its claim that
Mr. O'Neil was present to further the interest of SCEA in the
consultation or someone to whom disclosure was reasonably
necessary to accomplish the purpose for which the lawyer was
consulted. Although there was a great deal of discussion at the
hearing as to whether Mr. O'Neil was present as a claims advocate
to assist SCEA and its attorney or as a potential adversary to
SCEA, no admissible evidence was presented to the Court as part
of the parties' submissions in support of or in opposition to the
motion to compel.*fn2 SCEA did not, for example, provide a
declaration from Mr. O'Neil or even from Ms. Liu regarding Mr.
O'Neil's role with respect to SCEA's insurance claim. Thus, SCEA
failed to carry its burden of proving the privilege.
B. Waiver Through Disclosure of Exhibit A-49
Exhibit A-49 is an eight-page fax, dated June 13, 2002, sent
from Near North Insurance Brokerage, Inc. ("Near North") to AIG
Claim Services ("AIG"). AIG apparently then turned over the fax
to American Home. Exhibit A-49 states in part: "Attached is a
lawsuit in reference to the above captioned claim [i.e., Kaen
suit against SCEA]." Davis Decl., Ex. 3. One of the attachments to the Near North fax is a fax from SCEA to several individuals
at Sony Corporation of American and Near North, dated May 30,
2002. The fax states: "Per Andrew Vu's instructions, please
tender the [Kaen class action], putting our insurers on notice
of this potential claim. [¶] Enclosed are copies of the following
items: . . . May 28, 2002, fax from Luanne Sacks at Crosby,
Heafey, Roach & May to Andrew A. Vu." Id. The communication
from Ms. Sacks to Mr. Vu is a fax of an e-mail from Ms. Sacks to
Mr. Vu, which is labeled "URGENT CONFIDENTIAL DVD class claim
Edward Kaen." At the hearing on the motions, SCEA did not
contest that any privilege over Exhibit A-49 had been waived
through the disclosure of the Sacks e-mail to Near North. Thus,
the only question for the Court is the scope of the waiver. SCEA
argues that "the waiver must be strictly limited to the actual
contents of the email itself." Opp'n at 16 n. 17. In contrast,
American Home argues that there has been a waiver not only with
respect to the e-mail but also any communication with outside
counsel (at least the Gray Cary and Crosby Heafey firms).
Under California law, "the scope of [a] waiver should be
determined primarily by reference to the purpose of the
privilege. . . . [¶] . . . The scope of [the] waiver is narrowly
defined and the information required to be disclosed must fit
strictly within the confines of the waiver." Transamerica Title
Ins. Co. v. Superior Court, 188 Cal. App. 3d 1047, 1047 (1987).
Taking this into account, the Court concludes that the proper
scope of the waiver includes not only the actual contents of the
Sacks e-mail but also any follow-up discussions between Crosby
Heafy and SCEA regarding the e-mail. The Court rejects American
Home's argument that the waiver should extend to matters
regarding coverage or timeliness of SCEA's tender to American
Home because these subjects were not discussed in the e-mail
between Ms. Sacks and Mr. Vu. The Sacks e-mail concerned only the
merits of a particular consumer's claim against SCEA. Moreover,
so far as the Court can discern, SCEA has not obtained any
strategic advantage from the disclosure of the e-mail. In other
words, there does not appear to be any "selective disclosure" by
SCEA disclosing documents of benefit but hiding documents of
harm such that fairness might require a broader waiver.
C. Ms. Liu and Mr. Vu's Roles According to American Home, SCEA improperly asserted privilege
with respect to various questions asked of Ms. Liu and Mr. Vu
during their depositions because Ms. Liu and Mr. Vu performed
only business roles and not legal roles. The Court does not
agree. Just because, e.g., Mr. Vu may have asked that the
Kaen claim be tendered to American Home does not mean that he
did not play a legal role and should be considered only a claims
representative. See, e.g., Sheen Decl., Ex. D (Vu Dep. at 18)
("When I started in June of 2000 [at SCEA], I began to monitor
and manage Nickerson and Muccioli matter[s].").
That being said, the Court finds that American Home may
properly ask SCEA's 30(b)(6) witness what SCEA's understanding
was regarding, e.g., its legal obligations under the American
Home policy, even if the 30(b)(6) deponent is a lawyer and even
if the answer to such questions might indirectly reveal the
advice of counsel received by SCEA. American Home, however, may
not ask Ms. Liu or Mr. Vu about their actual communications or
individual understandings since that would contain mental
impressions protected by the work product privilege. As to any
claim of issue waiver, American Home has no need to ask Ms. Liu
or Mr. Vu what his or her individual understanding was because it
may ask SCEA's 30(b)(6) witness about SCEA's understanding
directly; fairness requires nothing more.
For the foregoing reasons, the Court hereby grants in part and
denies in part both American Home's motion to compel regarding
Ms. Liu and its motion to compel regarding Mr. Vu.
This order disposes of Docket Nos. 145 and 146.
IT IS SO ORDERED.
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