Orozco, et al. v. WPV San Jose, LLC, et al.		CASE NO. 113CV252116
DATE: 14 November 2014	TIME: 9:00	LINE NUMBER: 8

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose.  Any party opposing the tentative ruling must call Department 19 at 408.808.6856 and the opposing party no later than 4:00 PM Thursday 13 November 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 14 November 2014, the motion of defendants WPV San Jose, LLC (“WPV”) and Vornado Realty Trust (“Vornado,” collectively with WPV, “Defendants”) for a protective order and for monetary sanctions was argued and submitted.  Plaintiffs Paul Orozco and Solid Restaurant Ventures, LLC (“Plaintiffs”) filed a formal opposition to Defendants’ motion in which they also request monetary sanctions.

1. Statement of Facts

In this landlord-tenant action, Plaintiffs, who operate an eatery called Pauly’s Famous Franks N Fries, allege that they leased space from Defendants in a San Jose development based upon Defendants’ representations that no competing business was being considered as a tenant.  In fact, a direct competitor, Al’s Beef, was negotiating for space in the development.  On 20 October 2011, Plaintiffs executed their lease without knowledge of this fact.  Ultimately, Al’s Beef completed its negotiations and entered into a lease of its own.

In April 2013, Al’s Beef opened for business, and the revenues generated by Pauly’s Famous Franks N Fries declined dramatically.  Plaintiffs stand to sustain substantial losses over the ten-year life of their lease.

On 28 August 2013, Plaintiffs filed this action for (1) negligent misrepresentation, (2) intentional fraud, (3) fraudulent concealment, (4) rescission, restitution, and damages, (5) unfair business practices, and (6) declaratory relief against Defendants and other entities to which Defendants transferred their rights under their lease with Plaintiffs.

1. Discovery Dispute

On 25 June 2014, Plaintiffs took the deposition of a non-party witness who was formerly employed by Defendants.  During the deposition, Plaintiffs’ counsel attempted to introduce an email between Stan Morrow, Vornado’s “Vice President Retail General Counsel,” and another Vornado employee.  Defendants’ counsel objected on the basis that the document reflected attorney-client privileged communications, and stated that it seemed that Defendants had inadvertently produced the document.  Despite Defendants’ objection, Plaintiffs’ counsel proceeded to ask the witness a number of questions about the document.

Later that day, Defendants’ counsel sent Plaintiffs’ counsel an email, in which she renewed Defendants’ objection that the document was privileged and requested that Plaintiffs’ counsel destroy all copies of the document and instruct the court reporter to exclude it from the deposition exhibits.  Plaintiffs’ counsel responded, stating that other documents showed that Mr. Morrow was involved with leasing issues in a business capacity, but he would not make further use of the document until the parties had met and conferred on the issue.  Plaintiffs agreed that the document would not be included in the deposition transcript.

On 8 July 2014, Defendants’ counsel sent Plaintiffs’ counsel a letter in which she stated that the document introduced during the deposition, as well as several other documents, were privileged and had been inadvertently produced.  In the letter, Defendants’ counsel identified the documents at issue by Bates numbers and requested that Plaintiffs’ counsel destroy all copies thereof.

The parties exchanged several more emails concerning these documents, and Defendants’ counsel indicated that she intended to file a motion and request sanctions if Plaintiffs would not agree to destroy the documents.  On 22 August 2014, Plaintiffs’ counsel sent a letter to Defendants’ counsel stating that Mr. Morrow was acting as a lease administrator when he authored the emails in question, and the emails were consequently not privileged.  Plaintiffs’ counsel requested that Defendants provide a declaration setting forth facts sufficient to support their claim of privilege.

On 26 September 2014 and again on 6 October 2014, Defendants’ counsel sent Plaintiffs’ counsel a declaration by Mr. Morrow, which also was filed in support of the instant motion, and asked whether Plaintiffs would change their position concerning the inadvertently-produced documents.  On 10 October 2014, Plaintiffs’ counsel responded, stating that Plaintiffs believed that the declaration supported their position that Mr. Morrow was acting in a business capacity when he engaged in the communications at issue.

On 15 October 2014, Defendants filed the instant motion for a protective order with respect to the document introduced during the deposition only.  On 31 October 2014, Plaintiffs filed papers in opposition to Defendants’ motion.  On 6 November 2014, Defendants filed reply papers in support of the motion.

III.           Discussion

1. Legal Standard[1]

A party from whom documents have been demanded may move for a protective order.  (Code Civ. Proc. (“CCP”), § 2031.060, subd. (a); see also Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 817 [when privileged documents are inadvertently produced, the parties “may resort to the court for guidance with the benefit of protective orders and other judicial intervention as may be justified”].)  Upon such  motion, the court may make any order that justice requires to protect the party  from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.  (CCP, § 2031.060, subds. (b) and (b)(1).)

The party moving for a protective order bears the burden of demonstrating good cause for the order by explaining and justifying its objections. (See Fairmont Ins. Co. v. Super. Ct. (Stendell, et al.) (2000) 22 Cal.4th 245, 255, citing Goodman v. Citizens Life & Cas. Ins. Co. (1967) 253 Cal.App.2d 807, 819.)

1. Analysis

“The party claiming the [attorney-client] 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.  [Citation.]  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.”  (Costco Wholesale Corp. v. Super. Ct. (Randall, et al.) (2009) 47 Cal.4th 725, 733 (hereinafter, “Costco”).)[2]  “[T]he attorney-client privilege does not attach to an attorney’s communications when the client’s dominant purpose in retaining the attorney was something other than to provide the client with a legal opinion or legal advice. [Citations.]  For example, the privilege is not applicable when the attorney acts merely as a negotiator for the client or is providing business advice.”  (Id. at p. 735.)

In support of their motion, Defendants submit Mr. Morrow’s declaration, in which he states that his title is “Vice President, Retail General Counsel” of Vornado, he acts as in-house counsel for Vornado, and “the overarching purpose of [his] role is to provide legal advice” to Vornado.  (Decl. of Stanley L. Morrow ISO Mot., ¶¶ 1, 3, italics original.)  Somewhat unclearly, Mr. Morrow declares that his function as “lease administrator” is “one part of the role [he] play[s] in a lease negotiation,” but he “do[es] not have responsibility in a ‘business capacity’ for reviewing, analyzing, or negotiating leases.”  (Id., ¶¶ 8-9, italics original.)

Nevertheless, Mr. Morrow declares that it was in his role as in-house counsel in which he reviewed the leases at issue in this litigation “in order to ensure that they were sound from a legal point of view and were consistent with [Vornado’s] internal control document called a ‘lease execution request’ or ‘sign off’ memorandum.’”  (Id., ¶ 4.)  This document, “which summarizes the major business points of [the] lease,” “is prepared by the responsible attorney for [the] particular lease” “[i]n order to be in compliance with [Vornado’s] corporate governance requirements and Sarbanes Oxley.”  (Id., ¶ 5.)  The lease and memorandum “are submitted by the responsible attorney to the legal department of Vornado for [Mr. Morrow’s] review.”  (Id.)  “[T]he email in question was consistent with the manner [Mr. Morrow] review[s] every lease in [his] capacity as the chief legal officer of the neighborhood shopping center and enclosed mall division of Vornado.”  (Id., ¶ 7.)

Mr. Morrow’s declaration satisfies Defendants’ burden to show that the email in question was made in the course of an attorney-client relationship.  The declaration establishes that Mr. Morrow serves as in-house counsel for Vornado, and that the email pertained to his review of leases for both legal soundness and conformance with memoranda prepared by another attorney or attorneys for purposes of compliance with statutory and corporate governance requirements.  While it appears that Mr. Morrow may also perform some administrative functions with respect to lease negotiation, his overarching role is that of an attorney, and the specific function he describes in his declaration constitutes the provision of legal advice.  (See Costco, supra, 47 Cal.4th at pp. 730, 732 [opinion letter addressing whether certain employees were exempt from wage and overtime laws was privileged in its entirety]; Aetna Casualty & Sur. Co. v. Super. Ct. (Pietrzak) (1984)153 Cal.App.3d 467, 475-476 [privilege applied where an “attorney was given a legal document (the insurance policy) and was asked to interpret the policy and to investigate the events that resulted in damage to determine whether Aetna was legally bound to provide coverage for such damage”].)

Given Defendants’ showing, it is Plaintiffs’ burden to demonstrate that the email was not confidential (see Costco Wholesale Corp. v. Super. Ct., supra, 47 Cal.4th at p. 733), which they make no attempt to do.  It is also Plaintiff’s burden to demonstrate that Mr. Morrow was performing a non-legal function in reviewing the leases at issue.  (See Wellpoint Health Networks v. Super. Ct. (McCombs) (1997) 59 Cal.App.4th 110, 123-124 [where party claiming the privilege demonstrated that document’s author was “an attorney hired by his employer to conduct an investigation of … charges of discrimination,” burden was on party seeking discovery to show that attorney “was engaged in routine fact-finding on behalf of the company’s personnel department rather than legal work”].)

While Plaintiffs submit a declaration by their own counsel concluding that the email at issue is not privileged, Plaintiffs’ counsel does not disagree with Mr. Morrow’s characterization of the email.  (See Decl. of D.D. Hughmanick ISO Opp., ¶ 7 [“As the Morrow declaration itself indicates, the email relates simply to comparing business points of the lease documents for Pauly’s and Al’s Beef with execution memos for these leases to determine whether or not the business points matched.”].)  Addressing Mr. Morrow’s function of checking the leases against the “sign off memoranda,” Plaintiffs’ counsel opines that “this comparison work could have been easily performed by a real estate agent or an in-house business person.”  (Id.)  However, Mr. Morrow declares that he also reviewed the leases at issue for legal soundness.

The Court finds that this dual function of reviewing the leases for regulatory compliance issues and legal concerns constitutes the provision of legal advice.  These functions are distinct from the business functions the courts have found to be unprivileged.  (See 2,022 Ranch v. Super. Ct. (Chicago Title Insurance Co.) (2003) 113 Cal.App.4th 1377, 1397 [material or communications developed by claims adjusters who were also attorneys not privileged to the extent they pertained to factual investigation of claims], disapproved on another ground in Costco, supra, 47 Cal.4th at pp. 739-740; Montebello Rose Co. v. Agricultural Labor Relations Bd. (1981) 119 Cal.App.3d 1, 32 [communications with attorney acting in his nonlegal capacity as a labor negotiator not privileged, although they might have “legal significance”]; In re Estate of Perkins (1925)195 Cal. 699, 705-706, 710 [communications with attorney, who was not retained as such, not privileged where attorney was consulted informally about feasibility of obtaining a loan and advisability of building bungalows on a property]; Watt Industries, Inc. v. Super. Ct. (Sternberg, et al.) (1981) 115 Cal.App.3d 802, 805 [“where, as here, the attorney acts merely as a business agent for the client in conveying the client’s position to a contracting party, we see no justification for protecting the attorney’s notes concerning the conversation”].)

Finally, Plaintiffs request that the Court review the email at issue in camera.  However, given that the content of the email is not in dispute, the Court finds that such review is unnecessary and improper.  (See Cornish v. Super. Ct. (Capital Bond & Insurance Co., et al.) 209 Cal.App.3d 467, 480 [court may conduct in camera review “if necessary to determine whether an exception to the privilege applies”; however, in general, “when there is a claim of attorney-client privilege, …it is neither customary nor necessary to review the contents of the communication in order to determine whether the privilege applies as the court’s factual determination does not involve the nature of the communications or the effect of disclosure but rather the existence of the relationship at the time the communication was made, the intent of the client and whether the communication emanates from the client”].)

In accordance with the above, Defendants’ motion for a protective order is GRANTED.  Plaintiffs are ordered to destroy all copies of the document at issue in their possession, custody, or control and to provide Defendants with a certification that they have done so within 20 calendar days of the filing of this Order.  Furthermore, Plaintiffs are prohibited from introducing, relying on, or referencing the document at any time in this case.  (See Furia v. Helm (2003) 111 Cal.App.4th 945, 949, fn.3 [noting that superior court had entered a protective order providing that receiving party must return an inadvertently-produced document and was “prohibited from introducing, relying on, or referencing the document[] at any time, in any proceeding”].)

1. Requests for Monetary Sanctions

Defendants request monetary sanctions in connection with their motion, but their request is not code-compliant because they fail to identify the type of sanction they seek and the person from whom they seek a sanction in their notice of motion.  (See CCP, § 2023.040 [“A request for a sanction shall, in the notice of motion, identify every person, party, and attorney against whom the sanction is sought, and specify the type of sanction sought.”].)  Accordingly, Defendants’ request for monetary sanctions is DENIED.

Plaintiffs request monetary sanctions against Defendants and their counsel pursuant to CCP section 2031.060, subdivision (h), which provides that the court shall impose a monetary sanction against any party or attorney who unsuccessfully moves for a protective order, unless he or she acted with substantial justification or other circumstances make the imposition of the sanction unjust.  Given that Defendants’ motion was successful, Plaintiffs’ request for monetary sanctions is DENIED.

 

 

 

 

 

 

 

 

1. Conclusion and Order

Defendants’ motion for a protective order is GRANTED.  Plaintiffs are ordered to destroy all copies of the document at issue in their possession, custody, or control and to provide Defendants with a certification that they have done so within 20 calendar days of the filing of this Order.  Plaintiffs are prohibited from introducing, relying on, or referencing the document at any time in this case.

Defendants’ request for monetary sanctions is DENIED.

Plaintiff’s request for monetary sanctions is DENIED.

 

________________­­­____________ DATED:

_________________________­­­________________________ HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara

[1] Although this motion seeks to claw back an email inadvertently produced during discovery, the motion is made pursuant to the Court’s general authority to issue a protective order rather than pursuant to CCP section 2031.285, which deals specifically with clawing back ESI.  Neither party addressed this section of the CCP in their papers.  Ordinarily, if an argument is not presented, it will not be considered.  (See Shoemaker v. County of Los Angeles (1995) 37 Cal. App. 4th 618, 634, n.17, citing Cox Cable San Diego, Inc. v. City of San Diego (1987) 188 Cal. App. 3d 952, 968.)

[2] Pursuant to this standard, it is the opponent’s burden to establish a waiver of the privilege.  (Reilly v. Greenwald & Hoffman, LLP (2011) 196 Cal.App.4th 891, 900.)  Here, although they argue that they did not violate any ethical obligations by using the document at issue because it did not appear to have been inadvertently produced (see Opp. at pp. 10-11), Plaintiffs do not contend that Defendants waived the privilege by producing the document.