2013-00145617-CU-BC

City of Folsom vs. North American Bus Industries

Nature of Proceeding: Motion to Compel Production of Documents

Filed By: Onstott, Christopher

City of Folsom’s (“City”) Motion to Compel Compliance, or in the alternative, for further
responses from NABI Bus, LLC (“NABI”) to Requests for Production of Documents is
granted.

A stipulated protective order was entered March 24, 2014 concerning the
confidentiality of documents.

City is suing NABI for breach of contract and warranty arising out of alleged failure to
perform satisfactory repairs on the City’s buses pursuant to a previous settlement
agreement. City contends that after the repairs were performed by NABI as part of the
settlement agreement, the buses continued to have serious problems including
exhaust fumes entering the cabins, wandering at high speeds, prematurely cracking
suspension parts and broken radiator brackets. NABI contends the problems are due
to City’s improper maintenance.

NABI’s initial discovery responses stated that non-privileged documents would be
produced. Later, NABI provided a 215 page privilege log that identifies documents
that were withheld or redacted by NABI. City contends the privilege log improperly
contends that any communication between employees that was cc’d to an attorney
was protected by the attorney client privilege. Most of the documents sought are non-
attorney email communications between NABI employees with a copy of the
communication going to NABI’s in-house counsel, Paul Marella. Other communications were cc’d to outside counsel Jay Mitchell, or litigation counsel, Dale
Campbell and Sach Wadle. City also contends that other responsive documents were
improperly redacted on the ground they contained “confidential business information.”
In addition, City contends that defendant has improperly asserted the work product
doctrine.

City has provided a copy of the privilege log provided by NABI and has placed an
asterisk by the documents that it seeks to have produced on the ground that the
documents are not protected by any privilege of work product.

Attorney Client Privilege

For the communication to be privileged when a corporate entity is the client, ‘the
dominant purpose must be for transmittal to an attorney in the course of professional
employment.” Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th
110, 120 ; Montebello Rose Co., Inc. v. Agricultural Labor Relations Bd (1981)119
Cal.App.3d 1 (“To make the communication privileged the dominant purpose must be
for transmittal to an attorney ‘in the course of professional employment. … The fact that
some of the communications involved strategy decisions regarding conduct of the
negotiations which may have had ‘legal significance’ with regard to a future unfair labor
practice charge … does not mean that the dominant purpose of these communications
was of a legal nature.”); Costco Wholesale Corp. V. Superior Court (2009) 47 Cal.4th
725, 735.

Internal communications between non-attorneys do not become privileged because an
attorney is copied on the correspondence. In Zurich American Ins. Co. v. Superior
Court (2007) 155 Cal.App.4th 1485, 1504, the court stated that “[i]t is established that
otherwise routine non-privileged communications between corporate officers or
employees transacting the general business of the company do not attain privileged
status solely because in-house or outside counsel is ‘copied in’ on correspondence or
memoranda.” In In re Vioxx Products Liability Litigation, the court elaborated on the
dominant purpose test, stating that “[w]hen, for example, Merk sends communications
to both lawyers and non-lawyers, it usually cannot claim that the primary purpose for
the communication was for legal advice or assistance because the communication
served both business and legal purposes.” In re Vioxx Prods Liab. Litig. (E.D. La.
2007) 501 F. Supp.2d 789, 805-06.

City has withdrawn its request for certain documents constituting communications that
were directed directly to the attorneys (See p. 12, fn. 16)

In opposition NABI contends that in house counsel and outside litigation counsel
directed that certain facts be collected by employees concerning the repair of the
buses and given to counsel so that they could determine strategy. The Declarations of
Dale Campbell (outside litigation counsel) and Paul Marcela (in house counsel) do not
establish the privilege as to each of the documents listed on the privilege log. The
declarations do not establish that the author of each communication had the dominant
purpose in making the communication to give or receive legal advice. No declarations
have been offered from any senders of the emails establishing the dominant purpose
of the email.

Work Product Doctrine

NABI has not established that the emails are subject to work-product protection.
NABI’s reliance on the case of Coito v. Superior Court (2012) 54 Cal.4th 480 (2012), to establish qualified work product protection for non-attorney email communications
regarding bus repairs and inspections is misplaced. NABI contends that “but for the
initiative, decision, and effort of NABI’s attomeys to obtain the [sic], these emails would
not exist” Opp. at 14:13-18. Supporting this statement is a generalized, conclusory
statement by NABI’s in-house counsel that “NABI management and employees were
instructed by me as NABI’s attomey to gather information relevant to these subjects
[compliance with the settlement agreement] and include me as part of those
confidential transmissions.” Marcela Decl. at 6-7. The fact that Marcella directed
NABI’s employees to comply with the settlement agreement does not make any
actions by its employees to comply with the settlement agreement by diagnosing and
repairing the buses somehow protected work product protection.

“Privilege statutes must be narrowly construed, while discovery statutes must be
liberally construed.” Sullivan v. Superior Court (1972) 29 Cal. App.3d 64, 72. The
attorney work product doctrine protects “[a] writing that reflects an attorney’s
impressions, conclusions, opinions, or legal research or theories….” Cal. Code Civ.
Proc. § 2018.030(a). Work-product not containing the attorney’s impressions under
Section 2018.030(a), is discoverable if “the court determines that denial of discovery
will unfairly prejudice the party seeking discovery in preparing that party’s claim or
defense or will result in an injustice.” Cal. Code Civ. Proc. § 2018.030(b). When
seeking to protect documents produced by those other than the attorney, only
“derivative” material constitutes work-product. Mack v. Superior Court (1968) 259 Cal.
App. 2d 7, 10-11. “Derivative” material is limited to writings derived from an attorney’s
evaluation and interpretation of the law on behalf of a client. Id. Materials created by
non-attorneys that do not include the attorney’s evaluation or interpretation, are not
protected. Id.

The Court has reviewed the privilege log and finds that NABI has not met its burden to
show that the documents set forth in the privilege log are protected confidential
information, protected by the attorney-client privilege, or protected by the work product
doctrine. Moreover, there was no objection in the initial responses based on
“confidential business information” therefore any objection on that basis has been
waived. In any event, any contended confidential information is adequately dealt with
in the protective order.

NABI is ordered to produce all documents in un-redacted form within 30 days of the
date of the formal order.

Sanctions are awarded in the reasonable amount of $4,400 (20 hours) to be paid by
NABI to City

The prevailing party shall prepare a formal order for the Court’s signature pursuant to
C.R.C. 3.1312.