Case Name: Yahoo Holdings, Inc., et al. v. Mozilla Corporation, et al.
Case No.: 17CV319921

I. Introduction

This is a contract dispute between plaintiffs and cross-defendants Yahoo Holdings, Inc., Yahoo! Singapore Digital Marketing Pte. Ltd., and Oath (EMEA) Ltd. (collectively, “Yahoo!”) and defendant and cross-complainant Mozilla Corporation (“Mozilla”). The parties have a discovery dispute over documents requested by Yahoo! and withheld by Mozilla based on the attorney-client privilege and work-product doctrine. The documents—mostly emails—were primarily authored or received by attorney Denelle Dixon who served as a point person for the negotiation and termination of the contract at issue. Yahoo! asserts that Ms. Dixon provided business advice, not legal advice, such that the documents withheld are not protected and must be produced. Mozilla disputes Yahoo!’s position on Ms. Dixon’s role and the nature of the documents withheld. Currently before the Court is Yahoo!’s “motion to compel production of certain withheld and redacted documents.” (Not. of Mot. at p. 1.) Additionally, both Yahoo! and Mozilla move to seal portions of the materials presented to the Court in connection with this discovery motion.

II. Motions to Seal

Yahoo! moves to seal portions of the memorandum of points and authorities and evidence submitted in support of its motion pursuant to rules 2.550 and 2.551 of the California Rules of Court. Mozilla filed a motion based on these same rules and asks the Court to seal exhibits attached to the declaration of attorney Kristin Madigan. Under these rules, a party must establish: “(1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.” (Cal. Rules of Court, rule 2.550(d).) But, these rules do not apply to discovery motions. (Cal. Rules of Court, rule 2.550(a)(3).) Accordingly, neither Yahoo! nor Mozilla needed to file a motion to seal the materials presented in connection with the discovery motion.

With that said, the Sixth District has stated that—even if the strict standards above do not apply in the context of a discovery dispute—“a reasoned decision about sealing or unsealing records cannot be made without identifying and weighing the competing interests and concerns…[namely:] (1) identifying the specific information claimed to be entitled to such treatment; (2) identifying the nature of the harm threatened by disclosure; and (3) identifying and accounting for countervailing considerations.” (H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 894.)

Under either standard, it is not apparent from the conclusory materials presented by Yahoo! that all of its redactions are warranted. Yahoo! does not consistently redact purportedly confidential information about the contract at issue and Ms. Dixon. Additionally, its redactions seem to go beyond the rationale articulated in the supporting declaration of Daniel Tepstein. Mozilla’s supporting declaration is also conclusory and it is not apparent its sealing of entire exhibits is consistent with its stated rationale.

For these reasons, the motions to seal by Yahoo! and Mozilla are DENIED without prejudice.

III. Motion to Compel

In Yahoo!’s notice of motion it states it is moving to compel Mozilla to produce unspecified documents purportedly identified in a portion of its evidence. The notice of motion is defective for a number of reasons.

The Code of Civil Procedure does not authorize a motion to compel the production of documents. In actuality, Code of Civil Procedure section 2031.320, authorizes a motion to compel compliance with an agreement to produce documents. It is obvious Yahoo! has used imprecise terminology and intended to move to compel compliance. Nevertheless, the true nature and identity of the motion is significant here.

Because a court does not compel the production of documents in a vacuum, but rather compels a party to comply with the representation made in response to a particular request, a party must identify in the notice of motion both the set and number of the requests for production at issue. (Cal. Rules of Court, rule 3.1345(d).) In focusing on the documents it desires, Yahoo! neglects to identify the requests for production that are actually at issue.

It is not otherwise obvious from Yahoo!’s reference to exhibit 56 to the declaration of attorney Kollin Zimmermann—which exhibit consists of a 223 page privilege log—what documents it requested and what documents Mozilla agreed to produce. Elsewhere in Yahoo!’s memorandum of points and authorities it refers to Request for Production (“RPD”) Nos. 10–11 and 14–18, and so those requests are presumably the only requests at issue for the purpose of this motion.

RPD Nos. 10–11 seek all documents, including meeting minutes and notes, relating to the possibility of or the decision to attempt to terminate the parties’ agreement. RPD Nos. 14–18 also seek documents providing insight into Mozilla’s decision to terminate the agreement. In response, Mozilla agreed to produce documents not subject to the attorney-client privilege or work-product protection. (Zimmermann Decl., Exs. 48–49.) Because Yahoo!’s motion is, in actuality, a motion to compel compliance with agreements to produce documents, the issue is whether Mozilla has complied with its agreements to produce documents by withholding only those documents subject to the attorney-client privilege and work-product doctrine. For the reasons that follow, the Court finds it has and that the motion must be DENIED.

Yahoo! argues the documents withheld by Mozilla are not protected by either the attorney-client privilege or the work-product doctrine. But in presenting its motion, it never actually addresses the work-product doctrine and instead focuses on the attorney-client privilege. In any event, the present motion turns on the status of Ms. Dixon, and distinctions between the work-product doctrine and the attorney-client privilege do not appear to be implicated. Consequently, these protections are addressed collectively below.

Under Evidence Code section 954, “the client…has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer….” As explained by the California Supreme Court, “[t]he attorney-client privilege attaches to a confidential communication between the attorney and the client and bars discovery of the communication irrespective of whether it includes unprivileged material.” (Costco Wholesale Corp. v. Super. Ct. (2009) 47 Cal.4th 725, 734.) The privilege, thus, rests on the nature of the relationship between the communicators rather than the contents of the communication itself. (Id. at pp. 734–35.)

In evaluating the nature of the relationship between the parties to an assertedly privileged communication, courts use the dominant purpose test. (See, e.g., Costco Wholesale Corp., supra, 47 Cal.4th at pp. 734–35.) If the “client’s dominant purpose in retaining the attorney was something other than to provide the client with a legal opinion or legal advice[,]” their relationship is not truly an attorney-client relationship. (Id. at p. 735.) “For example, the privilege is not applicable when the attorney acts merely as a negotiator for the client or is providing business advice [citation]; in that case, the relationship between the parties to the communication is not one of attorney-client.” (Ibid.) On the other hand, when an attorney is retained to provide legal advice, such as advice on compliance with wage-and-hour laws, the fact that the attorney provides some services that could be provided by a lay person does not change the dominant purpose of the attorney-client relationship. (Id. at pp. 735–36.)

As the party invoking the attorney-client privilege, Mozilla bears “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., supra, 47 Cal.4th at p. 733.) If Mozilla does so, “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.” (Ibid.)

Courts apply the same standards when evaluating a claim of work-product protection. (See Wellpoint Health Networks, Inc. v. Super. Ct. (1997) 59 Cal.App.4th 110, 122–23.)

Mozilla presents evidence—namely the declarations of Ms. Dixon and CEO Chris Beard—establishing it had an attorney-client relationship with Ms. Dixon both generally and in the course of negotiating and terminating the contract at issue. With that said, Mozilla also acknowledges that Ms. Dixon had business responsibilities throughout the relevant timeframe. The evidence reflects Ms. Dixon’s business responsibilities were not insubstantial. Nevertheless, evaluating all of the evidence—including the evidence presented by Yahoo!—the Court does not find Ms. Dixon’s business responsibilities necessarily predominated. The evidence shows the dominant purpose of her relationship with Mozilla was to provide legal advice and to advise it on its legal rights and obligations under the parties’ agreement.

Yahoo!’s reliance on Chicago Title Insurance Co. v. Superior Court (“Chicago Title”) (1985) 174 Cal.App.3d 1142 for the proposition that the privilege should not be upheld when business and legal activities are intertwined is not persuasive. The evidence shows Ms. Dixon’s responsibilities were not intertwined. (Dixon Decl., ¶ 9 [“Throughout my time at Mozilla, my duties and responsibilities in furtherance of the attorney-client relationship with Mozilla were kept separate from my business functions for the company.”].) Additionally, contrary to the approach taken in Chicago Title, other courts have stated caution should be exercised and the privilege upheld when an attorney acts in a dual capacity as both an attorney and business agent. (Wellpoint Health Networks, Inc., supra, 59 Cal.App.4th at p. 122, citing Watt Industries, Inc. v. Super. Ct. (1981) 115 Cal.App.3d 802, 805, fn. 1.)

Based on the foregoing, the Court finds that, despite Ms. Dixon’s business responsibilities, she had an attorney-client relationship with Mozilla sufficient to give rise to the attorney-client privilege and work-product protection.

Next, while the California Supreme Court focused on the dominant purpose of the relationship in Costco Wholesale Corporation v. Superior Court, the purpose of the communications or documents at issue is material as well. (See Costco Wholesale Corp., supra, 47 Cal.4th at pp. 734–35.) Those made for the dominant purpose of obtaining legal advice—i.e. in furtherance of the attorney-client relationship—are privileged. (Wellpoint Health Networks, Inc., supra, 59 Cal.App.4th at p. 122.) Indeed, some courts have stated that “even though an attorney is hired to conduct business affairs, he or she may be called on to give legal advice during the course of the representation, and documents related to those communications should be protected notwithstanding the original purpose of employing the attorney.” (Ibid.; see also Aetna Casualty & Surety Co. v. Super. Ct. (1984) 153 Cal.App.3d 467, 476.)

Here, in addition to the fact that Ms. Dixon’s business responsibilities did not predominate over her legal responsibilities, she represents that Mozilla is withholding communications and documents in furtherance of its attorney-client relationship and has produced documents pertaining to her business responsibilities. (Dixon Decl., ¶¶ 14–16, 20–22, 24–25.) There is no basis, other than pure speculation, for disregarding Ms. Dixon’s representations that Mozilla culled and withheld only those communications made for the purpose of obtaining legal advice and in furtherance of its attorney-client relationship. (See, e.g., In re 3dfx Interactive, Inc. (N.D.Cal. 2006) 347 B.R. 394, 402–03.) To be sure, Yahoo! does not address any particular entry in the privilege log or dispute Ms. Dixon’s representation; rather, it simply seeks to open the door to all communications by casting Ms. Dixon as a business agent only. And so, the record supports the conclusion that even if Ms. Dixon had business responsibilities, Mozilla only withheld communications made in furtherance of her attorney-client relationship with the company.

Yahoo! also argues Mozilla impliedly waved the attorney-client privilege and work-product protection by putting Ms. Dixon’s knowledge and beliefs in issue. Evidence Code section 912 establishes the circumstances in which consent and disclosure operate as a waiver of the privilege. Additionally, courts have recognized circumstances in which the privilege is impliedly waived. (Chicago Title, supra, 174 Cal.App.3d at p. 1149.) “[A]n implied waiver occurs where the plaintiff has placed in issue a communication which goes to the heart of the claim in controversy.” (Ibid.) Expanding upon this principle, courts have also held an implied waiver can occur when a plaintiff puts in issue, not just a particular communication, but the mental state and decisions of his or attorney and plans to call the attorney as a witness. (Id. at p. 1150, citing Merritt v. Super. Ct. (1970) 9 Cal.App.3d 721.) On the other hand, when the client’s state of mind is at issue and assertedly privileged communications merely serve as one potential source of evidence of that state of mind, the attorney’s state of mind has not been put at issue sufficient to trigger an implied waiver of the privilege. (Chicago Title, supra, 174 Cal.App.3d at pp. 1150–51, citing Mitchell v. Super. Ct. (1984) 37 Cal.3d 591.)

In Chicago Title, the First District applied these principles in the context of a relationship between an entity and its in-house counsel. (Chicago Title, supra, 174 Cal.App.3d at pp. 1147–48.) The case arose from an unusual scenario involving interrelated check-kiting and real-estate fraud schemes that both a bank and title insurer may have been participating in without each other’s knowledge. (Id. at pp. 1145–48.) And, it is important to note at the outset that the First District repeatedly emphasized its decision was significantly motivated by and should be limited to those unusual facts. (Id. at p. 1154.) With that clarification in mind, the court held the title insurer put in issue the fact of whether it detrimentally relied on statements by the bank because it asserted a fraud claim against the bank. (Ibid.) The in-house attorney was the only person that could testify to the facts material to the issue of detrimental reliance. (Id. at pp. 1153–54.) And so, the court concluded the privilege was impliedly waived. (Id. at p. 1154.)

Upon a review of the complaint and cross-complaint and with a focus on the clause at the heart of both parties’ claims, the Court is not persuaded that Mozilla has placed the knowledge and state of mind of Ms. Dixon at issue. Yahoo! indisputably and directly put Mozilla’s reasoning at issue. And, in proving whether it performed or was excused from performing for the purpose of the claims in the cross-complaint, Mozilla will likely have to establish the same. Nevertheless, Ms. Dixon’s state of mind and knowledge as an attorney are distinct. Furthermore, unlike in Chicago Title, the evidence does not support a finding that she is the only person capable of testifying to the fact in issue. Thus, while Yahoo! may prefer to hear from Ms. Dixon, the Court will not require Mozilla to accommodate this preference on the basis it impliedly waived its attorney-client privilege and work-product protection.

In light of this conclusion, and in the absence of a challenge to a specific entry in the privilege log, the Court holds Mozilla’s withholding of the documents listed in the privilege log comports with its agreements to produce documents not subject to the attorney-client privilege or work-product doctrine in response to RPD Nos. 10–11 and 14–18. Yahoo!’s motion to compel is therefore DENIED.