Case Name: M’Guinness v. Johnson, et al.
Case No.: 2013-1-CV-239996

This action initiated by plaintiff James J. M’Guinness (“M’Guinness”) against defendants
Steven Johnson (“Johnson”) and Think It, Love It, Construct It, Inc. dba TLC Builders, Inc. (“TLC”) arises from the alleged mismanagement of TLC.

According to the complaint (“Complaint”), Johnson engaged in self-dealing and concealment in the operation of TLC, in which Johnson, M’Guinness, and Scott Stuart (“Stuart”) are officers, directors, and one-third shareholders. (Complaint, ¶ 1.) M’Guinness alleges Johnson has taken complete control of TLC’s operations, does not meaningfully communicate with other shareholders, locked him out of the TLC office, misapplied/wasted TLC property, did not disclose his separate financial interests in certain contracts prior to entering TLC into those contracts, and unilaterally blocked TLC’s delivery of plans to a customer. (Id. at ¶¶ 11, 14.)

M’Guinness asserts five causes of action for: (1) Involuntary Corporate Dissolution; (2) Breach of Fiduciary Duties; (3) Fraudulent Concealment; (4) Unjust Enrichment; and (5) Appointment of Receiver and/or Preliminary Injunction. Several cross-complaints have been filed. Stuart is named as a cross-defendant in the cross-complaint filed by Johnson.

Currently before the Court is TLC, M’Guinness, and Stuart’s (the “Moving Parties”) motion to strike and seal portions of the record, disqualify Johnson’s current counsel, Gates Eisenhart Dawson (“GED”), and enjoin communications with subsequent counsel.

The following background is relevant to the determination of this motion. In 2013, the Moving Parties filed a motion to disqualify Johnson’s previous counsel, Casas Riley & Simonian, LLP (“CRS”). The court subsequently issued an order denying the motion, and the Moving Parties filed a notice of appeal of that order. While the appeal was pending, Johnson, through CRS, filed a motion for summary judgment. Thereafter, M’Guinness filed a notice of an order from the Sixth District Court of Appeal staying the action during the pendency of appellate proceedings. On December 30, 2015, the Sixth District Court of Appeal, in a published opinion, reversed the order denying the motion to disqualify Johnson’s counsel and directing the court to enter a new order granting the motion. This court subsequently issued an order granting the motion to disqualify Johnson’s counsel.

I. Evidentiary Matters

A. Requests for Judicial Notice

1. The Moving Parties’ Request

In support of the motion, the Moving Parties request judicial notice of the following documents: (1) the declaration of Gregory Simonian previously filed in this action in opposition to the motion to disqualify CRS as counsel filed in 2013; (2) the docket and request for stay filed in M’Guinness v. Superior Court, Sixth District of the Court of Appeal, Case No. H040254; (3) six case management statements filed in this action by Johnson while the appeal was pending; (4) a print-out of the California State Bar website indicating Thomas M’Guinness (“Tom”) is licensed to practice in California; and (5) Stuart’s declaration previously filed in this action in support of the motion to disqualify CRS as counsel in 2013. Evidence Code section 452, subdivision (d) provides that courts may judicially notice court records. Therefore, the declarations, the case management statements, and the docket are proper subjects for judicial notice. (See Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 753.)

With respect to the print-out of California State Bar website, the Moving Parties do not indicate under which provision it may be judicially noticed. Courts have taken judicial notice of information from websites pursuant to Evidence Code section 452, subdivision (h), which provides judicial notice may be taken of facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy. While a court generally may not rely on the mere fact information is published on a website for the proposition that the information is not subject to dispute, (see Huitt v. Southern California Gas Co. (2010) 188 Cal.App.4th 1586, 1604, fn. 10), where a fact is not actually disputed, judicial notice is proper even if the source of the information is a website (Scott v. JPMorgan Chase Bank, N.A., supra, 214 Cal.App.4th at pp. 760-61). Here, the parties do not dispute that Tom is an attorney licensed to practice law in California. Further, the website indicates the information is from the official records of the State Bar of California. Accordingly, the print-out from the California State Bar website is a proper subject for judicial notice.

In sum, all requested documents are proper subjects for judicial notice. Additionally, all documents are relevant to the underlying issues to be resolved in the motion. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [any matter to be judicially noticed must be relevant to a material issue].) Accordingly, the Moving Parties’ request for judicial notice is GRANTED.

2. Johnson’s Request

In support of his opposition, Johnson requests judicial notice of the following court documents related to this action: (1) the complaint filed by TLC on January 23, 2013; (2) the decision in M’Guinness v. Superior Court, Sixth District of the Court of Appeal, Case No. H040254; (3) the memorandum of points and authorities filed by M’Guinness and Stuart in support of the motion to stay the depositions of M’Guinness, Stuart, and Laura M’Guinness (“Laura”); (4) the opposition to the motion staying the depositions of M’Guinness, Stuart, and Laura; (5) the reply to the opposition to the motion staying the depositions of M’Guinness, Stuart, and Laura; (6) the Order regarding the motion staying the depositions of M’Guinness, Stuart, and Laura; (7) the motion for sanctions filed by M’Guinness, Stuart, and TLC; (8) the opposition to the motion for sanctions; (9) Johnson’s declaration in support of the opposition to the motion for sanctions; (10) the Order regarding the motion for sanctions; (11) the petition for writ of mandate regarding the motion for sanctions; (12) the Order of the Court of Appeal denying the petition for writ of mandate; (13) the petition for review to the California Supreme Court of the motion for sanctions; (14) the Order of the California Supreme Court denying the petition for review; (15) memorandum of law in support of Johnson’s motion for summary adjudication, and (16) the outline entitled “Corporate Management and Structure Outline,” which was authored in 2004 by Tom (the “Outline”) and filed in support of the reply to Johnson’s motion for protective order.

Johnson additionally requests judicial notice of: (17) the deposition transcript of M’Guinness in the matter of TLC v. CRS, Santa Clara Superior Court, Case No. 2014-1-CV-258588; and (18) e-mail exchanges between Ned Gelhar and Marc Eisenhart dated February 4, February 9, and February 10, 2016.

With respect to the court documents, as indicated above, they are proper subjects of judicial notice pursuant to Evidence Code section 452, subdivision (d). The Court additionally finds the documents relevant to the matters to be resolved in this motion. As to the e-mails, Johnson only requests judicial notice pursuant to Evidence Code section 452, subdivision (d), and it is not apparent that the e-mails were ever filed with the court. The e-mails do not fall within the ambit of any of the other categories provided by the Evidence Code, and thus they are not proper subjects for judicial notice.

In light of the above, the request for judicial notice is DENIED as to the e-mails, and GRANTED as to all remaining documents.

B. Evidentiary Objections

Johnson filed written objections to the Moving Parties’ evidence. The evidence is not material to this Court’s decision with respect to the motion. Accordingly, the Court declines to rule on the objections.

II. Motion to Strike and Seal

The Moving Parties move to strike and seal three documents in the record. The first and second documents are the deposition transcripts of M’Guinness and Stuart taken by CRS prior to the firm’s disqualification (the “Casas Depositions”) and were submitted as exhibits in support of Johnson’s motion for summary adjudication, set to be heard on April 27, 2017 (the “MSA”). The third document is the Outline, which was authored in 2004 by Tom. Johnson filed the Outline with the Court in support of his reply to a motion for protective order filed in February 2017. The Moving Parties seek to strike and seal these documents on the bases they are protected by the attorney work product doctrine and attorney-client privilege. The Moving Parties additionally move to strike the MSA as it is predominantly based on the Casas Depositions.

In this reply brief, the Moving Parties further request that this Court strike and seal the Outline that Johnson filed with his request for judicial notice in support of the opposition. Given the Outline is the subject of this motion, it was entirely inappropriate for Johnson to once again file it, thereby creating another instance where it is in the record. Therefore, the Court will consider this motion to include the Outline filed with the opposition as well.

The Moving Parties do not cite any legal authority as a basis for bringing this motion. The Court will first address whether the documents are protected. If the Court determines any of the records are protected, it will then determine if it has authority to strike and seal the records.

A. The Casas Depositions

The Moving Parties assert the Casas Depositions should be stricken and sealed from the record, as well as the MSA, because they constitute and reflect CRS’ work product developed during its representation of TLC and are the fruits of CRS’ receipt of confidential information.

Code of Civil Procedure section 2018.030 provides that “[a] writing that reflects an attorney’s impressions, conclusions, opinions, or legal research or theories is not discoverable under any circumstances” and “[t]he work product of an attorney, other than a writing described in subdivision (a), is not discoverable unless 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.” The statute does not define “work product” and the determination of what is “work product” is made on a case-by-case basis. (In re Jeanette H. (1990) 225 Cal.App.3d 25, 32.) The party claiming the privilege has the burden of establishing the preliminary facts necessary to support the existence of the privilege. (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733.)

The Moving Parties’ position that deposition testimony constitutes attorney work product is problematic because the Moving Parties ignore the purpose of the attorney work product doctrine. The attorney work product doctrine evolved from the protection “against invading the privacy of an attorney’s course of preparation[.]” (Coito v. Superior Court (2012) 54 Cal.4th 480, 490, citations omitted; see also Fireman’s Fund Ins. Co. v. Superior Court (2011) 196 Cal.App.4th 1263, 1281 [stating the doctrine protects the “mental processes of the attorney, providing a privileged area within which he can analyze and prepare his client’s case”].) A consequence of allowing the opposing party to obtain attorney work product would be that “[a]n attorney’s thoughts, heretofore inviolate, would not be his own.” (City of Long Beach v. Superior Court (1976) 64 Cal.App.3d 65, 72, citations omitted.) “Inefficiency, unfairness and sharp practices would inevitably develop in the giving of legal advice and in the preparation of cases for trial.” (Ibid., citations omitted.) With this in mind, a deposition transcript clearly is not attorney work product pursuant to Code of Civil Procedure section 2018.030. During a deposition, an attorney invariably exposes his or her thoughts by questioning the deponent. Counsel for the opposing party necessarily knows the questions posed, as he or she is present to protect the deponent’s interests. Therefore, the privacy of an attorney’s preparation is not implicated when obtaining deposition transcripts, and determining that a deposition transcript constitutes attorney work product would be contrary to the purpose of the doctrine. For the reasons stated above, the Casas Depositions do not qualify as attorney work product.
The Court observes that the work product claim as presented is less about whether the Casas Depositions qualify as work product and more about the Moving Parties’ objection to the use of the depositions as they were conducted by counsel that has since been disqualified. Disallowing the use of the Casas Depositions in the present circumstance would have an absurd result. Johnson asserts that GED initially agreed to “start from scratch” and depose M’Guinness and Stuart a second time in order to avoid using the Casas Depositions upon request by the Moving Parties. However, Johnson states that after serving deposition notices on M’Guinness and Stuart, the Moving Parties moved for a protective order disallowing the depositions on the basis they had already been deposed once in this action. The Court granted the motion, stating “M’Guinness and Stuart apparently concede that Johnson is entitled to use ‘the two prior depositions to the extent such use is allowed by the CCP, the Evidence Code, and the California Rules of Professional Conduct.’” (Dawson Decl., Exhibit 6.) The Court further held there had been no ruling on the admissibility of M’Guinness and/or Stuart’s deposition testimony. Thus, there was no basis for Johnson to conclude that they were prevented from using M’Guinness and/or Stuart’s prior deposition testimony. In this motion, the Moving Parties do not advance any legal arguments specifically addressing the admissibility of the Casas Depositions based on the Code of Civil Procedure, the Evidence Code, and the California Rules of Professional Conduct.
In sum, the Moving Parties fail to establish the Casas Depositions constitute work product. Accordingly, the Casas Depositions are not protected by the attorney work product doctrine. Thus, even assuming the Court had the authority to strike and seal the Casas Depositions, the motion necessarily fails. The Moving Parties’ request to strike the MSA similarly fails as it is predicated on the argument that the Casas Depositions qualify as work product.

B. The Outline

The Moving Parties assert the Outline is covered by the attorney-client privilege because it was prepared by Tom in his capacity as an attorney for the purpose of giving M’Guinness legal advice.

“The attorney-client privilege, codified in Evidence Code section 954, provides in pertinent part: ‘Subject to Section 912 and except as otherwise provided in this article, the client, whether or not a party, has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer . . . .’” (Southern Cal. Gas Co. v. Public Utilities Com. (1990) 50 Cal.3d 31, 37 (“Southern”), internal citations omitted.) “Evidence Code section 952 defines the term ‘confidential communication between client and lawyer’ as ‘information transmitted between a client and his 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.’” (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 600.) “‘Application of the privilege will occasionally shield relevant information which may very well create obstacles for the party seeking the privileged information; however, the Legislature and the courts of this state have determined that the party’s concern is ‘outweighed by the importance of preserving confidentiality in the attorney-client relationship.’” (Southern, supra, 50 Cal.3d at p. 37, internal citations omitted.)

“‘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. 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 that the privilege does not for other reasons apply.’” (DP Pham, LLC v. Cheadle (2016) 246 Cal.App.4th 653, 665 (“DP”), citations omitted.) Consequently, “it is neither customary nor necessary to review the contents of the communication in order to determine whether the [attorney-client] privilege applies.” (Cornish v. Superior Court (1989) 209 Cal.App.3d 467, 480.)

According to the Moving Parties, Tom was a licensed attorney in 2004 when he prepared the Outline and provided it to his brother. The Moving Parties contend the Outline was clearly meant only for M’Guinness—not TLC—because it is addressed to him and contains negative information about Johnson and other TLC members. (Mem. Ps. & As., p. 15: lis. 9-15.)
The Moving Parties assert the focus should be placed on whether M’Guinness received legal advice from an attorney, not whether the brothers were in a formal attorney-client relationship. The Moving Parties conclude the communication is presumed to be covered by the attorney-client privilege.

This argument is well-taken. The Moving Parties adequately establish the e-mail was meant to be confidential and was transmitted from an attorney to M’Guinness for the purpose of providing legal advice. The e-mail was sent to only M’Guinness upon his request. (M’Guinness Decl., ¶ 18.) The Outline advises M’Guinness on how to structure TLC, how the shares should be distributed, and the responsibilities that M’Guinness, Stuart, and Johnson should respectively have within the company. Therefore, the Outline fits within the definition of a communication protected by the attorney-client privilege. The arguments advanced by Johnson to support a contrary conclusion are misplaced.

First, Johnson contends the Outline is not covered by the attorney-client privilege because there was no formal attorney-client relationship between M’Guinness and his brother. In support, Johnson points to M’Guinness’ deposition testimony that he never “utilized” his brother’s “legal services” prior to Christmas 2012. (Opp., p. 4: lis. 17-19.) This argument is problematic because it conflicts with other deposition testimony. For example, when asked if he ever engaged his brother during this time period, M’Guinness responded: “Well, he’s my brother[,]” implying that he consulted him. (Dawson Protective Order Reply Decl., Exhibit 1, p. 45, lis: 5-6.) M’Guinness further testified that he did not hire a lawyer, but he “contacted” his brother. (Id. at p. 44: lis. 20-22.) Therefore, the testimony does not clearly indicate that M’Guinness never contacted his brother to obtain legal advice. Johnson’s argument is additionally flawed because a formal attorney-client relationship is not required to find that the attorney-client privilege exists. (See Kerner v. Superior Court (2012) 206 Cal.App.4th 84, 116–117.) “An attorney-client relationship exists for purposes of the privilege whenever a person consults an attorney for the purpose of obtaining the attorney’s legal service or advice. This is so even if the attorney is never hired.” (Ibid., citations omitted.) The privilege may attach without a formal agreement or compensation. (Ibid.) “When a party seeking legal advice consults an attorney at law and secures that advice, the relation of attorney and client is established prima facie.” (Beery v. State Bar (1987) 43 Cal.3d 802, 811–12, citations omitted.) Therefore, the fact M’Guinness and his brother did not have a formal attorney-client relationship in 2004 is not determinative.

Second, Johnson argues TLC—and not M’Guinness—was the actual client. However, a reading of the Outline undercuts this argument. The contents of the Outline are clearly directed towards M’Guinness, as evidenced by the advice on how he should run the company. The Outline further contains comments about M’Guinness’ personal traits that render him a superior leader to Johnson and Stuart. Therefore, the Outline was clearly meant to advise M’Guinness and not TLC or its other shareholders. Johnson’s argument is further misguided as he attests he did not discover the Outline until 2013. Johnson was the President of TLC, but he apparently did not receive or receive this important legal document concerning the structure of the company. Therefore, this argument fails.

Last, Johnson avers there is no indication M’Guinness himself viewed the Outline as a privileged communication. Johnson argues this is evidenced by the fact the Outline was printed and left with other corporate material in TLC’s office. (Johnson Decl., ¶ 3.) This argument is not persuasive. There is conflicting testimony as to how Johnson discovered the Outline. Johnson attests he only discovered the Outline’s existence in 2013 when he found it in TLC’s office. (Ibid.) M’Guinness suggests Johnson found it by going through his computer at TLC’s office. Even assuming the truth of Johnson’s factual assertions, the description of events still suggests the communication was meant to be confidential. A confidential communication, for the purpose of determining whether the privilege applies, means information transmitted “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[.]” (Evid. Code, § 952.) The description of where Johnson found the Outline is vague and there is no indication it was accessible to third parties. Further, the fact Johnson did not discover the Outline for nine years supports M’Guinness’ contention that it was confidential. Thus, Johnson’s subsequent discovery of the Outline does not disprove that it was initially intended to be for M’Guinness’ eyes’ only and was not purposely disclosed to a third party.

For the reasons stated above, the Court finds the Outline is covered by the attorney-client privilege. Therefore, the Court must next determine whether it may be stricken from the record and sealed.

The California Rules of Court set forth specific rules for sealing court records. The sealed record rules provided in the California Rules of Court “do not apply to discovery motions and records filed or lodged in connection with discovery motions or proceedings.” (See Cal. Rules of Court, rule 2.550(a)(3); see also H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 893-894 (“Fuller”) [stating that the right of public access to discovery material is “favored neither by tradition nor by functional analysis”].) Here, the Outline was submitted to the Court in connection with a discovery motion, and thus the sealing rules provided in the California Rules of Court are inapplicable.

Although the sealing rules do not apply to materials filed in connection with discovery motions, the Sixth Appellate District interpreted that exemption as imposing a less stringent standard for sealing in the discovery context. (Fuller, supra, 151 Cal.App.4th at p. 894.) In support of a motion to seal documents in connection with a discovery motion, the moving party must: (1) identify specific information claimed to be entitled to such treatment; (2) identify the nature of the harm threatened by disclosure; and (3) identify and account for any countervailing considerations. (Ibid.) “The burden of presenting information sufficient to accomplish the first two steps is logically placed upon the party seeking the sealing of the documents, who is presumptively in the best position to know what disclosures will harm him and how.” (Ibid.) “This means at a minimum that the party seeking to seal documents, or maintain them under seal, must come forward with a specific enumeration of the facts sought to be withheld and specific reasons for withholding them.” (Ibid.)

As the sealing rules do not apply, the Moving Parties must meet the less stringent requirements set forth in Fuller. The Moving Parties sufficiently identified the information to be stricken and sealed and the nature of harm threatened by disclosure. Therefore, the Moving Parties met their burden of establishing the Outline should be stricken and sealed from the record.

C. Conclusion

In sum, the motion to strike and seal is GRANTED with respect to the Outline, and DENIED as to the Casas Depositions and the MSA. The Moving Parties shall submit two envelopes—one for the Outline filed in connection with the reply to the motion for protective order and one filed in connection with the opposition to this motion—to the Court that generally comply with the requirements of California Rules of Court, rule 2.551(d). Upon receipt of the envelopes, the clerk of the Court shall remove from the Court file: (1) the Outline attached as Exhibit 2 to the Declaration of James L. Dawson filed on February 15, 2017 in support of the reply to the motion for protective order, and (2) the Outline attached as Exhibit 17 to the Declaration of James L. Dawson and Request for Judicial Notice filed on March 30, 2017 in support of the opposition to this motion, and place them each under seal in the corresponding envelope provided by the Moving Parties.

III. Motion to Disqualify

The Moving Parties move to disqualify GED for willfully and deliberately accessing and using attorney client privileged and work product information in this case and make an attendant request to enjoin communications with subsequent counsel. Johnson does not specifically address the disqualification aspect of the motion; instead, he rests on his position that the Outline and Casas Depositions are not protected documents in the first instance. In light of the Court’s finding on the Casas Depositions, the Court’s analysis will be confined to GED’s use of the Outline.

“A trial court’s authority to disqualify an attorney derives from the power inherent in every court ‘[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.’” (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145, citations omitted.) “A disqualification motion involves a conflict between a client’s right to counsel of his or her choice, on the one hand, and the need to maintain ethical standards of professional responsibility, on the other. Although disqualification necessarily impinges on a litigant’s right to counsel of his or her choice, the decision on a disqualification motion ‘involves more than just the interests of the parties.’ When ruling on a disqualification motion, ‘[t]he paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.’” (Clark v. Superior Court (2011) 196 Cal.App.4th 37, 47-48, citations omitted.)

Disqualification is a drastic course of action that should not be taken simply because of the appearance of impropriety. (Hetos Investments, Ltd. v. Kurtin (2003) 110 Cal.App.4th 36, 47-48.) Courts must be skeptical of the impetus and purpose of an opposing party’s motion to disqualify “because it poses the very threat to the integrity of the judicial process that it purports to prevent. Such motions ‘can be used to harass opposing counsel, to delay the litigation, to intimidate an adversary into accepting settlement on otherwise unacceptable terms, or for other strategic purposes.’” (Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 434, citations omitted.)

The Moving Parties’ argument is entirely predicated on Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807 (“Rico”). There, the issue was whether counsel for the plaintiffs should be disqualified for purposely using the defendants’ counsel’s work product. The plaintiffs scheduled a deposition of the defendants’ expert witness. (Rico, supra, 42 Cal.4th at p. 810.) Prior to the deposition, the defendants’ counsel and experts met to discuss litigation strategy and vulnerabilities in the case. (Id. at p. 811.) The defendants’ counsel took detailed notes outlining the conversation and subsequently brought them with him to the deposition. (Ibid.) At the deposition, the defendants’ counsel left his notes in the conference room in his briefcase while using the restroom. (Ibid.) While he was in the restroom, attorneys for the plaintiffs arrived and asked to be alone in the conference room. (Ibid.) The plaintiffs’ attorneys were left alone in the room for several minutes. (Ibid.) Somehow, the plaintiffs’ counsel acquired the defendants’ counsel’s notes. (Id. at p. 812.) Counsel for the plaintiffs maintained they were accidentally given to him by the court reporter, but counsel for the defendants insisted they were taken from his file while he was out of the room. (Ibid.) As a result, the defendants moved to disqualify the plaintiffs’ attorneys and experts. (Ibid.)

The trial court held an evidentiary hearing to determine how the plaintiffs’ counsel obtained the document. (Rico, supra, 42 Cal.4th at p. 812.) The trial court determined the defense failed to establish that the plaintiffs’ counsel had taken the notes from the file, and thus the documents came into his possession through inadvertence. (Ibid.) The plaintiffs’ counsel “admitted that he knew within a minute or two that the document related to the defendants’ case.” (Ibid.) He additionally attested that he knew the defendants did not intend to produce the document and “that it would be a ‘powerful impeachment document.’” (Ibid.) Nevertheless, the plaintiffs’ counsel made a copy of the document, drafted his own notes based on the document, and gave copies to his co-counsel and experts. (Ibid.) The plaintiffs used the document soon thereafter during the deposition of another defense expert witness. (Ibid.) The notes specifically indicated several of that expert’s statements made during the strategy session. (Ibid.) When the expert gave testimony that was purportedly inconsistent with statements in the notes, the plaintiffs’ counsel asked about the expert’s participation in the strategy session and certain of his statements contained in the notes. (Ibid.) During the deposition, the counsel who authored the notes was not present and a different attorney represented the defendants. (Ibid.) This attorney objected to the line of questioning as he did not know the source of the information or what document was referenced. (Ibid.) The trial court concluded the notes constituted attorney work product. (Ibid.) The trial court further held the plaintiffs’ counsel acted “unethically” by examining the notes more closely than was necessary to determine that its contents were confidential, failing to notify the defendants’ counsel that he had a copy of the notes, and using it at the deposition. (Id. at p. 813.) The trial court determined that the plaintiffs’ counsel’s violation of the attorney work product doctrine prejudiced the defense and the damage could not be undone. (Ibid.) Therefore, the trial court ordered the plaintiffs’ attorneys and experts disqualified. (Ibid.)

The Court of Appeal affirmed the trial court’s finding. (Rico, supra, 42 Cal.4th at p. 813.) The Supreme Court of California affirmed the Court of Appeal’s holding that the notes constituted attorney work product. (Id. at p. 815.) The Supreme Court then set forth the law concerning disqualification. It stated: “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 if the materials are privileged, and shall immediately notify the sender that he or she possesses material that appears to be privileged.” (Id. at p. 817, citations omitted.) Under this standard, the Supreme Court affirmed the Court of Appeal’s decision to disqualify the plaintiffs’ counsel and experts. (Id. at p. 819.) The Supreme Court reasoned that “the damage caused by [the plaintiffs’ counsel’s] use and dissemination of the notes was irreversible” due to the “unmitigable damage caused by [the] dissemination and use of the document.” (Ibid.)

Rico is distinguishable from the instant case because the intent to disseminate privileged documents was much stronger in those circumstances. With respect to intent, the Supreme Court focused on the plaintiffs’ counsel’s own admission that he clearly knew the notes were privileged and used them nonetheless. (Rico, supra, 42 Cal.4th at p. 819.) Here, in contrast, there is no such admission by GED or Johnson. GED and Johnson maintain they did not know the Outline was covered by the attorney-client privilege and that using it was improper, particularly as it was discovered in TLC’s office. In addition, the evidence addressing how Johnson and/or GED obtained the Outline is inconclusive. While the Moving Parties insist Johnson obtained the evidence through improperly going through the computers at TLC, there is no evidence of any improper conduct outside of a mere suspicion that the documents were obtained on M’Guinness’ computer at TLC. It is unclear how—even if accepted as true—obtaining a document from a computer would render it improper as the computers were located within TLC’s office and belonged to the company. Further, in Rico, the plaintiffs’ attorney’s purpose in using the notes was a significant factor in deciding to disqualify him. The attorney copied the notes and disseminated them amongst all experts, and then used the notes during a deposition to impeach an expert witness. Here, GED attached the Outline as an exhibit to the motion for protective order. The protective order’s purpose was to limit Tom and Laura from accessing documents in this case. Johnson submitted the Outline to illustrate Tom’s purported animosity towards Johnson. The Court specifically stated in its ruling that the Outline did not impact this Court’s decision on the motion. Johnson’s transgression here is relatively minor to that described in Rico.

Rico is additionally inapposite because, there, the damage done to the case by the dissemination of the notes was irreversible as the notes included theory and vulnerabilities concerning the entire case. In stark contrast, here, it is unclear how the use of the Outline would have such an irreversible impact. The Outline was created in 2004 and covers the corporate structure of TLC and recommends a division of the shares among M’Guinness, Johnson, and Stuart. The crux of the instant action is Johnson’s alleged mismanagement of TLC, and the Outline does not appear to be related in any way to those allegations. As discussed above, the Outline was not even a document at issue in the motion for protective order. Therefore, in contrast to Rico, GED’s access to the Outline does not cause irreversible damage that would require disqualification.

In sum, the drastic measure of disqualification is not warranted in the present circumstances. The Moving Parties did not carry their burden of establishing the use of the Outline rises to the level of improper conduct as described in Rico or that any irreparable harm occurred due to the document’s use. Therefore, the motion to disqualify and enjoin communications with subsequent counsel is DENIED.