Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-00751/USCOURTS-casd-3_14-cv-00751-6/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:0001 Antitrust Litigation (Monopolizing Trade)

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

BONA FIDE CONGLOMERATE, INC., 

Plaintiff,

v. 

SOURCEAMERICA, et al., 

Defendant.

 Case No.: 14cv751-GPC (DHB) 

REPORT AND 

RECOMMENDATION REGARDING 

DEFENDANT’S EX PARTE 

MOTION: (1) TO DISQUALIFY 

PLAINTIFF’S COUNSEL; (2) TO 

REVOKE PRO HAC VICE 

ADMISSION OF DANIEL J. 

CRAGG; (3) FOR PROTECTIVE 

ORDER; AND (4) FOR EXPEDITED 

DISCOVERY 

[ECF No. 251] 

On November 30, 2015, Defendant SourceAmerica (“SourceAmerica”) filed an Ex 

Parte Motion (1) to Disqualify Plaintiff’s Counsel, (2) to Revoke Pro Hac Vice Admission 

of Daniel J. Cragg, (3) for Protective Order, and (4) for Expedited Discovery. (ECF No. 

251) Plaintiff opposed the motion, and SourceAmerica replied. (ECF Nos. 259, 262.) At 

the request of Plaintiff’s counsel, the Court held oral argument on January 23, 2016. (ECF 

No. 281.) Having considered the parties’ submissions and supporting exhibits, the Court 

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hereby RECOMMENDS1

 that SourceAmerica’s motion be GRANTED IN PART and 

DENIED IN PART, as outlined below. 

I. INTRODUCTION 

This action arises out of the United States AbilityOne Program, which is a 

government procurement system that was created to increase employment opportunities 

for persons who are blind or have severe disabilities. (ECF No. 128, ¶ 2.) Plaintiff is an 

Affiliate in the AbilityOne Program. (Id. at ¶17.) Defendant SourceAmerica is the Central 

Non-Profit Agency responsible for allocating procurement opportunities for the 

AbilityOne Program among its Affiliates. (Id. at ¶4.) Plaintiff initially brought several 

antitrust claims against SourceAmerica and other entities, alleging Defendants rigged the 

process through which service providers compete for contracts through the AbilityOne 

Program. (Id. at ¶¶331-403.) Plaintiff also brought a breach of contract claim against 

SourceAmerica based on a July 27, 2012 settlement agreement between the parties 

stemming from a previous bid protest. (Id. at ¶¶405-414.) Plaintiff’s antitrust claims have 

been dismissed, and only the breach of contract claim remains against SourceAmerica. 

(ECF No. 189, 212.) 

Prior to the filing of this lawsuit, Plaintiff’s Chief Executive Officer, Ruben Lopez 

(“Lopez”), secretly recorded numerous conversations he had with SourceAmerica’s then 

General Counsel and Chief Compliance Officer, Jean Robinson (“Robinson”). In 

November 2015, transcripts and audio files of approximately 30 hours of recorded 

conversations between Lopez and Robinson (the “Robinson Tapes”) were publicly posted 

on the WikiLeaks website. SourceAmerica alleges the transcripts contain privileged 

information. 

/ / / 

                                                                

1

 The Court issues this Report and Recommendation pursuant to 28 U.S.C. 636 and Local Civil Rule 

72.1(c) because resolution of Defendant’s motion requires the Court to consider potentially dispositive 

issues relating to Defendant’s affirmative defenses and Counterclaims, and because the Court finds the 

sanction of evidence preclusion is appropriate. For judicial economy, any non-dispositive relief that 

could be addressed in a separate order of this court is discussed in this Report. 

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SourceAmerica now moves to disqualify Plaintiff’s counsel on grounds that they 

have had SourceAmerica’s privileged information in their possession for over two years, 

transcribed and distributed conversations that were illegally recorded by Lopez, 

excessively reviewed the transcripts, failed to notify SourceAmerica or seek a ruling from 

the Court concerning the privileged information, misrepresented their possession of the 

privileged information, and refused to return the transcripts containing privileged 

information to SourceAmerica despite multiple requests to do so. Plaintiff argues 

disqualification is not appropriate because the transcripts either do not contain privileged 

information, or any privilege has been waived. Plaintiff denies that it or its counsel 

uploaded the Robinson Tapes to WikiLeaks. 

II. BACKGROUND

To analyze this motion, the Court finds it is helpful to understand the history of the 

Robinson Tapes and this litigation. 

On July 27, 2012, Plaintiff and SourceAmerica entered into a Settlement Agreement 

to resolve an earlier lawsuit filed by Plaintiff based on a bid protest. (ECF No. 251-10.) 

Pursuant to that agreement, SourceAmerica agreed that it would “through its Office of 

General Counsel, reasonably monitor Bona Fide’s participation in the AbilityOne Program 

for a period of three (3) years from the date a Bona Fide representative signs this 

Agreement.” (Id. at 4.) 

According to Lopez, Robinson began making reports to him in the fall of 2012 as 

part of the reasonable monitoring procedures under the settlement agreement. (ECF No. 

259-2 at 2, ¶ 5.) 

On May 5, 2013, Lopez began recording Robinson at a conference they both 

attended in San Antonio, Texas. (Id. at ¶ 9.) Lopez subsequently recorded every 

conversation he had with her until July 2014, when Robinson’s tenure at SourceAmerica 

ended. (Id. at ¶¶ 5, 6, 11.) Some of the recorded conversations took place in person, others 

were over the telephone. Based on the information before the Court, it appears Lopez 

recorded Robinson over 25 times. (ECF No. 251-12.) It also appears that some of the 

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recordings may have been made while Lopez was in California. (ECF No. 253-1 at 27-28 

35, and 46.) 

On August 7, 2013, the first transcript of the recordings was prepared. (ECF No. 

251-8.) Recordings from May 5 and 8, 2013, and July 23, 2013 were transcribed. (Id.) 

Plaintiff’s counsel commissioned the transcripts. (Id.) 

On September 26, 2013, a second transcript was prepared. The transcript included 

recordings from September 5, 6, and 16, 2013. (ECF No. 253-1 at 25-31.) 

A third transcript was prepared on December 10, 2013. Recordings from November 

18 and 19, 2013 were transcribed. (ECF No. 253-1 at 50-54.) On December 14, 2013, a 

fourth transcript was made of a September 25, 2013 recording. (ECF No. 251-9.) 

On January 21, 2014, a fifth transcript was prepared. Three recordings from 

December 12, 2013 and January 3 and 6, 2014 were transcribed. (ECF No. 253-1 at 40-

48.) 

On April 1, 2014, Plaintiff initiated this action. (ECF No. 1.) 

On September 19, 2014, Plaintiff filed a First Amended Complaint (“FAC”). (ECF 

No. 128.) In the FAC, Plaintiff referred to three of the Robinson Tapes – from May 5, 

2013, May 8, 2013 and September 25, 2013 – in support of its federal antitrust claims. 

On October 6, 2014, SourceAmerica sent a letter to Plaintiff’s counsel to notify 

Plaintiff that based on the recording cited in the FAC, SourceAmerica believed Plaintiff 

had privileged information in its possession. (ECF No. 251-20.) SourceAmerica 

demanded return of the information. (Id.) 

On October 8, 2014, Plaintiff’s attorney, Daniel J. Cragg (“Cragg”) responded, 

stating that Plaintiff did not have any of SourceAmerica’s privileged information, and 

asserted Robinson had waived any privilege in the information she disclosed to Lopez 

based on the July 27, 2012 settlement agreement. (ECF No. 251-21.) 

SourceAmerica replied on October 9, 2014, and stated the settlement agreement did 

not authorize Robinson to reveal any privileged information. (ECF No. 251-22.) 

SourceAmerica demanded that Plaintiff’s counsel provide copies of all recordings made 

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by Lopez of conversations with Robinson. (Id.) It does not appear that Plaintiff’s counsel 

responded to the request. 

On October 16, 2014, SourceAmerica filed a Motion for Expedited Discovery 

regarding the recordings that were referenced in the FAC. (ECF No. 131.) SourceAmerica 

also filed a Motion to Dismiss and Motion to Strike the references to the Robinson tapes 

in the FAC. (ECF Nos. 139, 141.) 

The Court granted SourceAmerica’s request for expedited discovery on November 

7, 2014, and required Plaintiff to produce the recordings that were cited in the FAC. (ECF 

No. 161.) 

On January 6, 2015, Judge Curiel issued an order granting in part and denying in 

part, SourceAmerica’s Motion to Dismiss. (ECF No. 189.) Judge Curiel dismissed 

Plaintiff’s federal antitrust claims with leave to amend, and therefore, denied 

SourceAmerica’s Motion to Strike as moot. (Id.) Plaintiff’s breach of contract claim 

remained. (Id.) 

On January 23, 2015, a sixth transcript was prepared. Recordings from November 

7, 2013, January 1, 22, 28, 30, 2014, and February 6, 2014 were transcribed. (ECF No. 

253-1 at 33-38.) 

On March 4, 2015, SourceAmerica filed a motion to seal the three Robinson Tapes 

that were referenced in the FAC. (ECF No. 207.) 

Lopez states that he shared the Robinson Tapes with another participant in the 

AbilityOne Program on March 6, 2015. (ECF No. 214-2 at ¶ 21.) Lopez does not specify 

which tapes he shared. 

On March 19, 2015, Plaintiff filed a Notice of Intent not to file a Second Amended 

Complaint, and elected to proceed solely on its breach of contract claim. (ECF No. 212.) 

On June 1, 2015, Judge Curiel denied SourceAmerica’s Motion to Seal. (ECF No. 

233.) Judge Curiel found Plaintiff failed to establish the three Robinson Tapes were 

privileged under the federal standard, and that even if the tapes were privileged, 

SourceAmerica had waived any privilege because it was dilatory in seeking to protect the 

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information. (Id.) 

On September 11, 2015, the District Court of Virginia issued a permanent injunction 

preventing Robinson from disclosing SourceAmerica’s privileged and/or confidential 

information.2

 (ECF No. 251-29.) 

In September 2015, SourceAmerica states it learned for the first time that there were 

additional Robinson Tapes, aside from the three recordings that were referenced in the 

FAC. (ECF No. 251-19 at ¶ 6.) SourceAmerica discovered the information when a 

declaration signed by Lopez was filed in NTI v. United States, 15cv293 (Ct. Fed. Claims), 

which is a case arising from a bid protest filed by another participant in the AbilityOne 

Program. (Id. at ¶ 7-8.) The Lopez declaration attached transcript excerpts from the 

Robinson Tapes. 

On October 2, 2015, SourceAmerica sent a letter Plaintiff’s counsel stating the 

Robinson Tapes filed in the NTI matter contained privileged information, and demanded 

their return. (ECF No. 251-25.) 

Plaintiff’s counsel responded on October 9, 2015, and reasserted his position that the 

tapes were not privileged. (ECF No. 251-26.) 

On October 14, 2015, the Court of Federal Claims sealed the transcripts, noting there 

were serious questions of privilege and legality surrounding the Robinson Tapes that were 

attached to the Lopez declaration. (ECF No. 251-24.) 

 On October 16, 2015, SourceAmerica sent another letter to Plaintiff’s counsel 

demanding return of the Robinson Tapes. Plaintiff’s counsel did not substantively respond 

to the letter. (ECF No. 251-27.) 

On October 30, 2015, SourceAmerica filed a Motion for Leave to file a First 

Amended Answer and Counterclaim. (ECF No. 247.) SourceAmerica sought to add 

additional affirmative defenses, including prevention of performance and unclean hands 

                                                                

2

 The permanent injunction was issued based on a settlement and stipulation between SourceAmerica 

and Robinson. 

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based in part on Lopez recording his conversations with Robinson. SourceAmerica also 

sought leave to file counterclaims for violation of the California Privacy Act and unfair 

business practices based partially on the basis that Lopez conspired with Robinson to obtain 

SourceAmerica’s privileged information. (Id.) 

On November 16, 2015, the Robinson Tapes were posted on the WikiLeaks website. 

(ECF No. 251-12.) 

On November 24, 2015, SourceAmerica sent a letter to WikiLeaks demanding that 

the Robinson Tapes be removed because they contain privileged information. (ECF No. 

251-13.) 

On November 30, 2015, SourceAmerica filed the instant motion to disqualify 

Plaintiff’s counsel. (ECF No. 251.) 

On January 5, 2016, Judge Curiel granted SourceAmerica’s motion to file an 

Amended Answer and Counterclaim. (ECF No. 266.) The Amended Answer and 

Counterclaim were filed on January 7, 2016. (ECF Nos. 268, 269.) 

III. ANALYSIS 

A. Motion to Disqualify Counsel 

District courts have the inherent authority to disqualify counsel. United States v. 

Wunsch, 84 F.3d 1110, 1114 (9th Cir. 1996). In determining whether to disqualify counsel, 

the Court applies California law. In re County of Los Angeles, 223 F.3d 990, 995 (9th Cir. 

2000). Motions to disqualify counsel are “strongly disfavored” because of their 

susceptibility to tactical abuse, and their potential to derail the litigation process. Visa 

U.S.A., Inc. v. First Data Corp., 241 F.Supp.2d 1100, 1104 (N.D. Cal. 2003). Therefore, 

“disqualification motions should be subjected to particularly strict judicial scrutiny.” Optyl 

Eyewear Fashion Int’l Corp. v. Style Companies, Ltd., 760 F.2d 1045, 1050 (9th Cir. 1985). 

When considering a disqualification motion, courts must weigh the “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.” Clark v. Superior Court, 196 Cal.App.4th 37, 

47 (Ct. App. 2011). “The paramount concern must be to preserve public trust in the 

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scrupulous administration of justice and the integrity of the bar.” People ex rel. Dept. of 

Corp. v. SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135, 1145 (Cal. 1999). In addition, 

“the purpose of a disqualification must be prophylactic; an attorney may not be disqualified 

purely as a punitive or disciplinary measure.” Neal v. Health Net, Inc., 100 Cal.App.4th 

841, 844 (Ct. App. 2002). 

Under California law, “[w]hen 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. The parties may then proceed to resolve the situation 

by agreement or may resort to the court for guidance with the benefit of protective orders 

and other judicial intervention as may be justified.” Rico v. Mitsubishi Motors Corp., 42 

Cal.4th 807, 817 (Cal. 2007) citing State Compensation Ins. Fund v. WPS Inc., 70 

Cal.App.4th 644, 656-57 (Ct. App. 1999). This rule has been extended to situations where 

the privileged information was not inadvertently disclosed. See Clark, 196 Cal.App.4th at 

49 (disqualifying plaintiff’s attorneys’ law firm where plaintiff gave his attorneys 

numerous documents that were subject to his former employer’s attorney-client privilege). 

When evaluating a motion to disqualify counsel, “there are three steps to the process: 

determining (1) if an ethical violation occurred; (2) if the victim of the violation suffered 

damages; and (3) if there is a remedy other than disqualification that will mitigate the 

damage.” Martin v. Inland Empire Utilities Agency, 2015 WL 1289795, *8 (Cal. Ct. App. 

Mar. 19, 2015. In determining whether an ethical violation has occurred, “courts must 

consider whether reasonably competent counsel, knowing the circumstances of the 

litigation, would have concluded the materials were privileged, how much review was 

reasonably necessary to draw that conclusion, and when counsel’s examination should 

have ended.” Rico, 42 Cal.4th at 818. If the Court finds there has been an ethical violation, 

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the Court must then consider whether disqualification is the proper remedy to “prevent 

future prejudice to the opposing party from information the attorney should not have 

possessed.” Clark, 196 Cal.App.4th at 55. See also Rico, 42 Cal.4th at 819. 

 1. Whether an Ethical Violation Occurred 

 a. Whether the Robinson Tapes are Privileged 

In order to determine whether Plaintiff’s counsel violated his ethical duties, the 

Court must consider the predicate issue of whether the recently revealed Robinson Tapes 

in fact contained privileged information. See State Fund, 70 Cal.App.4th at 651. As an 

initial matter, the parties dispute the effect of Judge Curiel’s June 1, 2015 Order denying 

SourceAmerica’s motion to seal (“Sealing Order”) on the instant motion. (ECF No. 233.) 

Plaintiff argues that the Sealing Order forecloses many of the arguments SourceAmerica 

relies on here, that SourceAmerica is improperly seeking reconsideration, and that the law 

of the case doctrine resolves the issues in this motion. SourceAmerica counters that the 

Sealing Order concerned three different tapes, which are not the tapes at issue in this 

motion. The Court agrees with SourceAmerica. The Sealing Order addressed recordings 

that were made on May 6, 2013, May 8, 2013, and September 25, 2013. Whereas here, 

SourceAmerica claims privilege as to eight excerpts from different recordings made on 

July 23, 2013, September 6, 2013, November 19, 2013, December 12, 2013, and January 

3, 2014, that SourceAmerica and the Court were not aware of at the time the Sealing Order 

was issued. (See ECF No. 253-1 at ¶¶ 22(a)-(b), 29(a), 42(a)-(d), 49(a) and ECF No. 259-

2 at ¶23(e)-(g), (i)-(m).) SourceAmerica does not attempt to re-argue that the May 6, May 

8, or September 25, 2013 recordings are privileged. Therefore, the Court does not find the 

Sealing Order precludes SourceAmerica’s claim of privilege or motion to disqualify. 

The parties also dispute whether federal or California privilege law applies. The 

Court notes that Judge Curiel previously concluded that federal privilege rules should 

apply. (See ECF No. 233 at 9 (“Because the majority of the causes of action raised in the 

FAC alleged violations of federal statutes, the Court finds that federal common law should 

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govern its privilege review.”).) Therefore, the Court will apply federal law.3 Under federal 

law, “an eight-part test determines whether information is covered by the attorney-client 

privilege: (1) Where legal advice of any kind is sought (2) from a professional legal advisor 

in his capacity as such, (3) the communications relating to that purpose, (4) made in 

confidence, (5) by the client, (6) are at his instance permanently protected, (7) from 

disclosure by himself or by the legal advisor, (8) unless the protection is waived.” United 

States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009). The party asserting the privilege bears 

the burden of establishing that the privilege applies and that it has not be waived. Id. at 

608. 

Although over 30 hours of recordings were made, SourceAmerica clarified at oral 

argument that it is only asserting attorney-client privilege as to eight excerpts, which are 

attached to the Declaration of Dennis Fields as Exhibits K, L, N and O, and discussed at 

Paragraphs 22(a)-(b), 29(a), 42(a)-(d) and 49(a).4

 (ECF No. 253-1.) The Court has 

reviewed the excerpts and finds that they are facially privileged. In the excerpts, Robinson 

explicitly relayed to Lopez certain conversations she had with outside counsel, 

SourceAmerica’s former CEO, and SourceAmerica executives. (Id.) These conversations 

concerned advice Robinson provided to SourceAmerica concerning matters such as 

termination of an employee, internal investigations, legal issues related to the Board of 

Directors, certain litigation against SourceAmerica, SourceAmerica’s obligations in 

response to subpoenas from the GSA OIG, as well as legal advice received from 

                                                                

3

 SourceAmerica urges the Court to apply California law because at this point, all of the federal claims 

have been dismissed with prejudice. Under California law, “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 any attorney-client relationship.” Clark v. Superior Court, 196 Cal.App.4th 37, 49 

(Ct. App. 2011). “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.” Id. Assuming the Court were to apply state law, the Court 

would reach the same result as under the federal standard. 

4

 SourceAmerica initially argued Paragraph 35(a) of the Lopez Declaration was privileged. (ECF No. 

253-1.) However, the Court finds SourceAmerica has waived the privilege as to that excerpt because it 

voluntarily provided the transcript to the United States Attorney’s Office. 

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SourceAmerica’s outside counsel. (Id.) The Declaration of Dennis Fields establishes that 

at the time the recordings were made, Robinson was SourceAmerica’s General Counsel 

and Chief Compliance Officer, and her duties included providing legal advice in 

connection with these topics to SourceAmerica, and supervising and working with outside 

counsel.5

 (Id. at ¶ 5-6.) SourceAmerica believed Robinson was prohibited from disclosing 

its privileged and confidential information. (Id. at ¶ 9-10.) Further, as SourceAmerica 

notes, the transcripts themselves reveal that Robinson knew she was not authorized to 

disclose privileged information to Lopez. (See Id. at ¶11(a) (“So I cut the header off 

because it’s faxed from our place. They’ve got a clear -- . . . do not disseminate . . . You 

didn’t get it from me. . . .”).) Therefore, the Court concludes that the information contained 

in the excerpts is privileged. 

 b. Whether the Privilege Has Been Waived 

Plaintiff contends that any privilege in the Robinson Tapes has been waived. First, 

Plaintiff argues the July 27, 2012 Settlement Agreement implicitly authorized Robinson to 

waive the privilege as part of her duties to “reasonably monitor Bona Fide’s participation 

in the AbilityOne Program.” (ECF No. 251-10 at 4.) Plaintiff asserts Robinson voluntarily 

disclosed SourceAmerica’s privileged information when she chose to speak with Lopez. 

The Court rejects this contention. The Settlement Agreement does not, by its terms, contain 

a reporting requirement, much less specify that ‘reasonably monitoring’ would include 

disclosing privileged and confidential information to Plaintiff. Further, the privilege 

belonged to SourceAmerica, not Robinson. SourceAmerica expected Robinson to hold its 

privileged information in confidence. (ECF No. 235-1 at ¶¶ 9, 10, 16.) Moreover, during 

part of the time Robinson was communicating with Lopez, Robinson was subject to a vote 

of no confidence by SourceAmerica’s Board of directors, which further supports the 

conclusion that her authority was limited, and that she was not authorized to waive or 

                                                                

5

 To the extent the Plaintiff objects to the portions of the Fields Declaration relied on by the Court, the 

objections are overruled. 

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disclose SourceAmerica’s privileged information. (ECF No. 235-1 at ¶11.) 

Next, Plaintiff asserts there has been a subject matter waiver as to all of the Robinson 

Tapes, based on the waiver related to the three recordings cited in the FAC. Generally, 

“disclosure of confidential information resulting in the waiver of the attorney-client 

privilege constitutes waiver of privilege as to communications relating to the subject matter 

that has been put at issue.” Phoenix Solutions Inc. v. Wells Fargo, N.A., 254 F.R.D. 568, 

576 (9th Cir. 2008). “There is no bright line test for determining what constitutes the 

subject matter of a waiver, rather courts weigh the circumstances of the disclosure, the 

nature of the legal advice sought and the prejudice to the parties of permitting or prohibiting 

further disclosures.” Id. The doctrine of subject matter waiver is based on notions of 

fundamental fairness. Wi-Lan, Inc. v. LG Electronics, Inc. 2013 U.S. Dist. LEXIS 26336, 

*7-8 (N.D. Cal. Feb. 23, 2013). 

This case is distinguishable from a scenario where the privilege holder selectively 

discloses privileged information in an attempt to use the privilege as a sword and shield. 

Here, it was Plaintiff, and not SourceAmerica, who initially disclosed the Robinson Tapes 

by quoting from them in the FAC.6

 The Court finds the unusual circumstances of the 

disclosure weighs against finding a subject matter waiver as to the later discovered Tapes. 

Also, the nature of the legal advice revealed differs between the three Robinson Tapes cited 

in the FAC and the excerpts at issue here. In the tapes at issue here, Robinson specifically 

disclosed conversations involving legal advice that she took part in. In addition, the Court 

finds the prejudice to SourceAmerica in having its confidential information disclosed 

without authorization, outweighs any prejudice to Plaintiff. Finally, the Court finds 

fairness counsels against holding SourceAmerica’s waiver as to the first three tapes should 

constitute a waiver as to the rest of the tapes because SoureAmerica had no knowledge of 

the other tapes until recently. Therefore, the Court declines to hold that there has been a 

                                                                

6

 Ultimately, the Court determined SourceAmerica had waived the privilege regarding those three tapes 

because it failed to pursue reasonable means to protect its privilege. (ECF No. 233.) 

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blanket subject matter waiver as to all of the Robinson Tapes. 

Third, Plaintiff argues SourceAmerica has waived the privilege by placing the 

Robinson Tapes at issue in its amended Answer and Counterclaims.7

 SourceAmerica 

counters that it has not placed the substance of tapes at issue because it does not need to 

rely on the content of the recordings to prove its claims. The Court defers ruling on what 

proof SourceAmerica must adduce to prevail on its claims or defenses. At this point, the 

Court finds the excerpts in the Robinson Tapes are privileged. However, if SourceAmerica 

relies on any portion of the privileged excerpts going forward, the privilege will be waived. 

Finally, the Court notes that SourceAmerica took reasonable measures to protect its 

privileged information and promptly took action after it learned of the additional Robinson 

tapes. Therefore, the Court does not find waiver based on a lack of diligence. 

Accordingly, the Court finds that the eight excerpts from the Robinson Tapes are 

privileged, and the privilege has not been waived. 

 c. Plaintiff’s Counsel’s Conduct With Regard to the Tapes 

Next, the Court must assess Plaintiff’s counsel’s conduct with regard to the 

Robinson Tapes. SourceAmerica argues Plaintiff’s counsel, Daniel J. Cragg, violated his 

ethical duties by excessively reviewing and transcribing the Robinson Tapes, refusing to 

return them when requested, and failing to obtain a Court order before using them. 

SourceAmerica also contends that Cragg wrongfully assisted Plaintiff in acquiring 

evidence in violation of the California Invasion of Privacy Act (“CIPA”). SourceAmerica 

further speculates that Cragg, or a party to whom he provided copies of the Robinson 

Tapes, must have uploaded the Tapes to Wikileaks. Plaintiff counters that Cragg was under 

no obligation to return the Robinson Tapes to SourceAmerica because in his opinion they 

were not privileged. Plaintiff further argues that even if the Tapes were privileged, Cragg 

                                                                

7

 Plaintiff also argued SourceAmerica waived the privilege by disclosing certain transcripts to the United 

States Attorney’s Office. The Court finds SourceAmerica has waived the privilege with respect to any 

documents it has produced to the government. At oral argument, SourceAmerica conceded as much when 

it stated it withdrew its request to seal the excerpt of the transcript that it had shared with the United States 

Attorney’s Office. 

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obtained them from his client, not SourceAmerica, and the disclosures were not 

inadvertent. Plaintiff also contends that neither Cragg, Lopez, nor anyone acting on 

Plaintiff’s behalf, uploaded the materials to WikiLeaks. 

Although this case does not involve a typical inadvertent disclosure scenario, 

Plaintiff’s counsel nonetheless had an ethical obligation not to review the recordings more 

than was reasonably necessary to ascertain if they contained privileged information, and to 

immediately notify SourceAmerica to try to resolve the situation. Rico, 42 Cal.4th at 810. 

It does not matter that Plaintiff’s counsel received the information from Lopez. See 

Hartpence v. Kinetic Concepts, Inc., 2013 WL 2278122, *3 (C.D. Cal. May 20, 2013) 

(“Attorneys are not free, under the standards for proper ethical conduct . . . to do whatever 

they want with the privileged documents they obtain from their clients.”).8

 Plaintiff’s 

counsel should have been mindful of this ethical obligation, particularly in this case, where 

he had possession of surreptitious recordings of SourceAmerica’s general counsel. 

At the outset, the Court finds it was reasonable for Cragg to have the audio 

recordings transcribed, as this would have been the most efficient way to review their 

content. Therefore, Plaintiff’s counsel did not violate his ethical duties by transcribing the 

recordings. Further, the Court will give Plaintiff’s counsel the benefit of the doubt that 

initially it was reasonable for him to believe the Robinson Tapes were not privileged. 

However, by October 6, 2014, Cragg was on clear notice by SourceAmerica that it 

believed the Robinson Tapes contained privileged information. (See ECF No. 251-21 

(letter dated 10/6/14 from SourceAmerica to Plaintiff’s counsel putting Plaintiff on notice 

                                                                

8

 The fact that only eight excerpts out of approximately 30 hours of recordings are privileged also did not 

absolve Plaintiff’s counsel from his ethical obligations in the handling of potentially privileged 

information. As the Court in Rico noted, the State Fund rule was developed in the context of “today’s 

reality” that massive numbers of documents are often produced in litigation. Rico, 42 Cal.4th at 818. See 

also Martin v. Inland Empire Utilities Agency, 2015 WL 1289795, *2 (Cal. Ct. App. Mar. 19, 2015) 

(discussing attorney disqualification motion based on 83 privileged documents out of 2,600 pages 

produced) and In re Lidoderm Antitrust Litigation, 2015 WL 7566741, *2 (N.D. Cal. Nov. 25, 2015) 

(addressing disqualification motion based on 1 privileged email that was included in a 3,512 page 

document production). 

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that the recordings referenced in the FAC contained privileged information); ECF No. 251-

22 (letter dated 10/9/14 from SourceAmerica to Plaintiff’s counsel demanding “copies of 

all recordings made by Mr. Lopez, or anyone at Bona Fide, of conversations with Ms. 

Robinson.”).) At that point, Plaintiff’s counsel had a duty to return the tapes to 

SourceAmerica, or at a bare minimum bring the issue to the Court. Plaintiff’s counsel did 

neither. Instead he rested on his conclusion that the tapes were not privileged. See Gotham 

City Online, LLC v. Art.com, Inc., 2014 WL 1025120, * (N.D. Cal. Mar. 13, 2014) (“to the 

extent [counsel] argues that the documents are not in fact privileged and thus, it was entitled 

to review them, it was not [counsel’s] role to make that determination. As the Ninth Circuit 

stated in the Gomez case, “[t]he path to an ethical resolution is simple: when in doubt ask 

the court.”) (emphasis added); Hartpence v. Kinetic Concepts, Inc., 2013 WL 2278122 at 

*2-4 (stating counsel “should have sought guidance from the Court” once they were on 

notice they had received privileged documents). Therefore, the Court finds Plaintiff’s 

counsel violated his ethical duties when he retained the information over SourceAmerica’s 

objection and failed to bring the issue before the Court.9

 Moreover, Plaintiff’s counsel 

improperly concealed the existence of the additional recordings from SourceAmerica for 

nearly a year. 

At this time, the Court does not have sufficient evidence to find Plaintiff’s counsel 

is responsible for uploading the Robinson Tapes to Wikileaks. Certainly, Plaintiff’s 

counsel commissioned the transcripts that ended up on Wikileaks. However, 

SourceAmerica offers nothing more than speculation that Plaintiff’s counsel was involved 

in the dissemination and uploading of the transcripts. In addition, because SoureAmerica 

has not shown that Cragg participated, facilitated, or encouraged the actual recordings of 

the conversations between Lopez and Robinson, the Court finds it is not necessary to 

                                                                

9

The fact SourceAmerica initiated extensive motion practice concerning the three tapes quoted in the FAC, 

did not relieve Plaintiff’s counsel of his obligation to seek guidance from the Court, especially in light of 

the fact that Plaintiff’s counsel had possession of hours of additional recordings that SourceAmerica was 

not aware of at the time it filed its earlier motions. 

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resolve whether CIPA was violated. (See ECF No. 259-1 at ¶ 5.) 

Based on the foregoing, the Court finds Plaintiff’s counsel acted in bad faith and 

violated his ethical duties under Rico after receiving notice that the Robinson Tapes 

contained SourceAmerica’s privileged information. 

 2. Damage to SourceAmerica 

Because the purpose of disqualification is not purely a punitive or disciplinary 

measure, the Court must consider whether SourceAmerica has been damaged or will be 

potentially damaged by Plaintiff’s counsel’s conduct. See Neal, 100 Cal.App.4th at 844; 

Martin, 2015 WL 1289795 at *7-8 (“[A]n ethical violation alone will not suffice – there 

must be a showing of damages”). Here, Plaintiff has already used some of the information 

in the Robinson Tapes to craft claims against SourceAmerica. However, the information 

that has been used so far was gleaned from the three tapes that have been deemed not to be 

privileged. Regardless, there is still the potential that Plaintiff may attempt to use 

information from the privileged excerpts of the Robinson Tapes. In Clark, the Court 

recognized that the prospect of future prejudice was sufficient to show damage for purposes 

of a disqualification motion. Clark, 196 Cal.App.4th at 55. Accordingly, the Court finds 

SourceAmerica is at risk of suffering future damage because Plaintiff’s counsel still has 

the privileged excerpts of the Robinson tapes, and could potentially use the excerpts in this 

litigation. 

 3. Whether Disqualification is the Appropriate Remedy 

The Court must next consider whether there is a remedy, other than disqualification, 

to mitigate the potential damage caused by Plaintiff’s counsel’s ethical violation. Rico, 42 

Cal.4th at 819; Martin, 2015 WL 1289795 at *7. Here, the Court determines that the 

remedy of evidence exclusion, rather than disqualification, is appropriate. See Unigard 

Security Ins. Co. v. Lakewood Engineering & Mfg. Corp., 982 F.2d 363, 368 (9th Cir. 1992) 

(stating a district court has discretion under its inherent powers to exclude evidence). At 

this point, it does not appear Plaintiff has used the privileged excerpts of the Robinson 

Tapes in this case. Therefore, the Court finds precluding Plaintiff from using the privileged 

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excerpts in its case in chief is sufficient to mitigate the potential future damage to 

SourceAmerica, as well as to preserve the integrity of the judicial proceedings. 

Accordingly, the Court RECOMMENDS that SourceAmerica’s Motion to 

Disqualify be GRANTED in part, and DENIED in part, and that Plaintiff shall be 

precluded from using as evidence at trial, at any hearing, on any motion, or in discovery, 

the privileged excerpts from the Robinson Tapes that are identified in the Declaration of 

Dennis Fields at Paragraphs 22(a)-(b), 29(a), 42(a)-(d) and 49(a), and Exhibits K, L, N and 

O. (See ECF No. 253.) The Court makes this recommendation in lieu of ordering the more 

severe sanction of disqualifying Plaintiff’s counsel. 

B. Motion to Revoke Pro Hac Vice Admission, for Protective Order and 

 Expedited Discovery 

SourceAmerica also requests that the Court revoke Cragg’s pro hac vice admission, 

issue a protective order staying discovery until after new counsel is retained and permitting 

SourceAmerica to produce documents on an attorneys’ eyes only basis. SourceAmerica 

further requests the Court order Plaintiff to respond to certain requests for production of 

documents and subpoenas within 10 days and without objection. Because the Court has 

determined that the remedy of evidence exclusion, rather than disqualification is 

appropriate, the Court finds SourceAmerica’s motion to revoke Cragg’s pro hac vice

admission and request for protective order are moot. The Court further finds 

SourceAmerica’s request for expedited discovery is moot at this point. The parties shall 

proceed with discovery in the normal course, including that SourceAmerica may conduct 

discovery to determine whether Plaintiff’s counsel participated in the recording or further 

distribution of SourceAmerica’s privileged information. 

/ / / 

/ / / 

/ / / 

/ / / 

/ / / 

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IV. CONCLUSION 

This Report and Recommendation is submitted to United States District Judge 

Gonzalo P. Curiel pursuant to 28 U.S.C. § 636 and Local Civil Rule 72.1(c) of the United 

States District Court for the Southern District of California. In this Report and 

Recommendation, this Court RECOMMENDS that the district court GRANT in part and 

DENY in part SourceAmerica’s Motion to Disqualify Plaintiff’s Counsel. 

IT IS HEREBY ORDERED that no later than March 2, 2016, any party to this 

action may file written objections with the Court and serve a copy on all parties. The 

document should be captioned “Objections to Report and Recommendation.” 

IT IS FURTHER ORDERED any Reply to the Objections shall be filed with the 

Court and served on all parties no later than seven (7) days from service of any filed 

Objections. The parties are advised that failure to file objections within the specified time 

may waive the right to raise those objections on appeal of the Court’s Order. See Turner 

v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1157 (9th 

Cir. 1991). 

IT IS SO ORDERED. 

Dated: February 17, 2016 

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