2019-00250747-CU-WT

Geoff Scott vs. Track 7 Brewing Company LLC

Nature of Proceeding: Motion to Strike or Seal

Filed By: Rudin, Aaron P.

Defendant Track 7 Brewing Company, LLC’s (“Defendant”) motion to strike privileged portions of the Complaint and exhibits thereto is GRANTED.

Plaintiffs Geoff Scott and Rebecca Scott (collectively, “Plaintiffs”) request for judicial notice of the Complaint is granted.

Plaintiffs filed the Complaint on February 18, 2019, alleging retaliation in violation of

FEHA and Labor Code §§ 98.6 and 1102.5, wrongful termination in violation of public policy, and failure to prevent discrimination and retaliation, breach of fiduciary duty, breach of contract, and declaratory judgment.

Defendant contends the Complaint contains attorney-client privileged information that should be stricken pursuant to CCP §§ 435 and 436. Specifically, Defendant contends the privileged information is contained in paragraphs 55 and 59-62 and Exhibit B.

At the outset, Plaintiffs argue this motion should be denied because Defendant failed to meet and confer in person or by telephone as required by CCP § 435.5. Section 435.5 clearly states “A determination by the court that the meet and confer process was insufficient is not grounds to grant or deny the motion to strike.” Therefore, this argument is rejected. The Court may not grant or deny the motion on this basis. Further, there also appears to have been email meet and confer correspondence between the parties prior to the Court granting Defendant’s ex parte application for an order to shorten time on this motion.

Accordingly, turning to the merits of the motion, under section 436, the Court may “[s] trike out any irrelevant, false, or improper matter inserted in any pleading” as well as “all or part of any pleading not drawn or filed in conformity with the laws of this state.” (Code Civ. Proc, § 436, subds. (a) and (b).) However, motions to strike are disfavored. Courts considering such motions must presume the allegations contained therein are true and must consider those allegations in context. (Clauson v Superior Court (1998) 67 Cal.App.4th 1253, 1255.) The use of the motion to strike should be cautious and sparing. It should not be a procedural “line item veto” for the civil defendant. (PH II, Inc. v. Superior Court (1995) 33 Cal. App. 4th 1680, 1683.)

The attorney-client privilege confers a privilege “to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer.” (Evid. Code § 954.) The privilege protects “information transmitted between a client and his or her lawyer in the course of [the attorney-client] 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 to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted…” (Evid. Code § 952.) Simply, the privilege protects confidential communications between the attorney and client. (Evid. Code, § 952.) “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.” (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733.)

The party opposing the privilege has the burden to establish that the communication was not confidential or that the privilege does not apply for other reasons. (Id.)

Paragraph 55 and Exhibit B consist of a reference to and incorporation of the “Executive Summary of Investigative Findings” prepared by Van Dermyden Maddux

Law Corporation. Defendant contends this document is confidential attorney-client privileged and attorney-work product because it states in multiple locations that: (1)

Van Dermyden Maddux Law Corporation was retained by Track 7 to conduct an investigation; (2) that the document is Van Dermyden Maduxx Law Corporation’s “Executive Summary of Investigative Findings;” (3) that the “findings” were based on a “preponderance of the evidence;” and (4) that in reaching its “findings” counsel for Track 7 weighed and analyzed evidenced and conducted credibility assessments. Defendant contends this constitutes a privileged communication under City of Petaluma v. Superior Court (2016) 248 Cal.App.4th 1023, 1032.) Defendant contends

Plaintiffs are former employees of Track 7 who do not hold the privilege, were not at liberty to disclose this privileged information, and Defendant has not waived the privilege.

In opposition, Plaintiffs contend this “Executive Summary of Investigative Findings” is not privileged because it was prepared by an outside party and not in anticipation of litigation, but in response to defendant Ryan Graham’s complaints that plaintiff

Rebecca Scott’s investigation into the complaints against him was not objective. (Compl. ¶ 50.) Plaintiffs also contend no legal advice was provided in the VanDermyden report.

The Court is not persuaded that an investigation must be prepared in anticipation of litigation in order to be privileged, or that any legal advice must be provided. In City of

Petaluma, which both parties cite to, the City hired outside counsel to investigate a former employees’ complaints of discrimination and harassment. At issue was whether the pre-litigation factual investigation was privileged. The Court of Appeal began by noting that the plain terms of the statute support a conclusion that an attorney-client relationship may exist when an attorney provides a “legal service or advice” and, thus, the rendering of “legal advice” is not required for the privilege to apply. (City of
Petaluma, supra, at 1034 (emphasis added).) The Court of Appeal then found the investigator was not merely a fact finder, but was retained to provide a legal service “because she was hired to act as an attorney in bringing her legal skills to bear to assist the City in developing a response to Waters’s EEOC complaint and the anticipated lawsuit.” (City of Petaluma, supra, at 1035.) While the Court of Appeal noted the report was made in response to anticipated litigation, the Court of Appeal did not make the express finding that an investigation must always be conducted in anticipation of litigation to receive protection. Instead, the Court of Appeal concluded their conclusion was consistent with the approach taken by the court in

Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, where the court concluded there is no blanket rule excluding attorney investigations from attorney-client and work product protection.

The relevant analysis concerns whether there has been a communication made in the course of an attorney-client relationship. Generally, in order to establish that a particular communication is privileged, the party asserting the privilege must show that the communication was between a an attorney and a “client” seeking legal advice or a legal opinion from the attorney within the context of an attorney-client relationship, that the communication was intended to be confidential, and that the privilege was not later waived. (Evid Code §§ 952, 954.; D.I Chadbourne, Inc. v. Superior Court (1964) 60 Cal.2d 723; 2,022 Ranch LLC. v. Superior Court (2004) 113 Cal.App.4th 1377, 1397, disapproved on other grounds, Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733.) Accordingly, “An attorney-client relationship exists when the parties satisfy the definitions of “lawyer” and “client” as specified in Evidence Code sections

950 and 951, respectively. For purposes of the attorney-client privilege, “client” is defined in relevant part as “a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity.” (Evid. Code, § 951, italics added.) A “confidential communication” means “information transmitted between a client and his or her lawyer in the course of that relationship and in confidence” by confidential means. (Evid. Code, § 952.)” (City of Petaluma, supra, at 1032.)

Here, the allegations are that Van Dermyden Maddux Investigations Law Firm was retained by Alden Parker (Defendant’s outside counsel) on behalf of Defendant to investigate sexual harassment and workplace violence complaints lodged against defendant Ryan Graham. (Compl. ¶¶ 50-54.) Van Dermyden Madduxx Investigations then issued its investigative findings. (Compl. ¶ 55.) However, there are no allegations that these findings were issued to anyone except Defendant, the client. The Complaint merely says the findings were “issued.” Accordingly, the Court is persuaded Defendant has met its burden to demonstrate the investigative report is a confidential communication within the attorney-client privilege and work product doctrine.

Similarly, the Court agrees Paragraphs 59-62 of the Complaint contain allegations regarding communications with Track 7’s outside counsel, Mr. Parker of Fisher & Phillips LLP, that are privileged. Plaintiffs contend these allegations are nothing more than “a factual recounting of actions taken by Defendant Ryan Graham following the presentation of a corrective action plan as a consequence of his violation of

Defendant’s Sexual Harassment Policy and Work Place Violence Policy.” (Oppo. at 4:18-20.) The Court disagrees. The Complaint clearly alleges Mr. Parker is

Defendant’s outside counsel and paragraphs 59-62 discuss legal advice Mr. Parker provided to Defendant regarding how to handle Ryan Graham’s corrective plan. There are also no allegations that Mr. Parker communicated this legal advice to anyone besides Defendant. This supports the absence of waiver. Parenthetically, a waiver of the attorney-client privilege may occur, and support disclosure, where the party claiming the privilege has previously disclosed or consented to disclosure of a significant part of the communication at issue. (Evid. Code § 912; see Southern Cal.

Gas Co. v. Public Utils. Com (1990) 50 Cal.3d 31, 49.) Indeed, both Mr. Graham and Mr. Scott were managing members of Defendant at the time these communications were made by Mr. Parker and as such, disclosure to them was reasonably necessary for the transmission of the information to Defendant. (Compl. ¶¶ 2-3.)

“Once [a] 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 that the claim of privilege does not for other reasons apply.” (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 739-740.) Accordingly, the burden shifts to Plaintiffs to establish the privilege has been waived.

Apropos of the foregoing, Plaintiffs argue Mr. Scott waived the privilege because he was a managing member of Defendant as of December 20, 2016, and he served correspondence on two former rank and file employees of Defendant that disclosed a significant part of the Van Dermyden investigation. Specifically, that the investigation showed a violation of Defendant’s policies and indicating the company is discussing the corrective action that will be taken. Plaintiffs submit the declaration of Geoff Scott and actual correspondence he submitted to the employees. This extrinsic evidence may not be considered on a motion to strike. As pointed out by Plaintiffs in their opposition, and as the Court fully understands, “The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (CCP § 437.) No request for judicial notice has been filed for this declaration and attached correspondence, and even if one was filed, these documents do not appear to be documents of which the Court can take judicial notice. However, Plaintiffs also argue this allegation is contained in paragraph 58 of the Complaint, which states “On December 20, 2016, correspondence form TRACK 7 was forwarded to Tracy Masuda and Doug Woodward. In each letter there was an admission by TRACK 7 that the investigation of RYAN GRAHAM had revealed violations of company policy and that a corrective action plan was being discussed.”

Plaintiffs rely upon Evidence Code § 912(a), which provides a holder of a privilege may waive the privilege if they disclose a significant part of the communication. A “significant part” means disclosure of enough substantive information as to reveal the specific content of the alleged confidential communication. (Southern Calif. Gas Co. v

Public Util Comm’n (1990) 50 Cal.3d 31, 46; Mitchell v Sup. Ct. (1984) 37 Cal.3d 591, 601-602.) The attorney client privilege is not waived by disclosures that do not reveal the actual content or substance of the communications. (Mitchell, supra, at 602-603.)
If, for example, a client merely discloses he or she has consulted with an attorney regarding enforceability of a contract and that the lawyer concluded it was enforceable, this is not such a significant part of the communication to constitute a waiver. (
Southern Calif. Gas Co. v Public Utilities Commission, supra, 50 Cal.3d at 46-49.)

The Court is not persuaded that paragraph 58 constitutes disclosure of a significant part of the Van Dermyden report to constitute a waiver. The allegation reveals only the general conclusion of the investigation and nothing more.

Based on the foregoing, the Court concludes the allegations in paragraphs 55 and 59-

62 and Exhibit B are privileged and should be stricken as improper.

Defendant also contends the allegations are irrelevant to Plaintiffs’ claims, which are premised upon Plaintiffs’ purported participation as witnesses in the investigation and alleged later complaints of retaliation. As a result, Defendant argues the privileged information concerning the findings of the investigation or corrective actions taken after the investigation are entirely irrelevant. In opposition, Plaintiffs generally contend the allegations are relevant to ten of its twelve causes of action, but the factual reasoning behind this conclusion is left unsaid. Accordingly, the Court is also persuaded that the allegations in paragraphs 55 and 59-62 and Exhibit B could be stricken on the grounds they are irrelevant.

The Court rejects Plaintiffs’ argument that striking the allegations in paragraphs 55 and 59-62 and Exhibit B is against public policy pursuant to CCP § 1001. Section 1001 prohibits a settlement agreement that prevents the disclosure of factual information related to a claim based on Government Code § 12940. Plaintiffs reason this supports the conclusion that it is against public policy to prevent the disclosure of factual information in a complaint that will “ultimately be protected by express statute.” Plaintiffs have not presented any legal authority indicating that this section applies under these circumstances when privileged information is at issue.

Based on the foregoing, the Court need not rule on Defendant’s alternative motion to seal the Complaint in its entirety.

The motion to strike is GRANTED. Paragraphs 55 and 59-62 and Exhibit B to the Complaint are hereby STRICKEN.

The notice of motion does not provide notice of the Court’s tentative ruling system as required by Local Rule 1.06(D). Defendant is ordered to notify Plaintiffs immediately of the tentative ruling system and to be available at the hearing, in person or by telephone, in the event Plaintiffs appear without following the procedures set forth in
Local Rule 1.06(B).

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.