Opinion ID: 2581569
Heading Depth: 2
Heading Rank: 1

Heading: Who May Hold the Attorney-Client Privilege Initially?

Text: With certain exceptions not relevant here, the Evidence Code provides that a client has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication the client has had with an attorney if the privilege is claimed by someone statutorily authorized to do so. (§ 954.) A client means a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity. (§ 951.) For purposes of the Evidence Code, a person includes a natural person, firm, association, organization, partnership, business trust, corporation, limited liability company, or public entity. (§ 175.) As for who may claim the attorney-client privilege, the Evidence Code designates a holder of the privilege (§ 954, subd. (a)); a person the privilege holder authorizes to claim the privilege ( id., subd. (b)); or the attorney at the time of the confidential communication if the privilege holder is in existence and has not authorized the communication's disclosure ( id., subd.(c)). Section 953, in turn, defines a holder of the privilege to mean [t]he client when he has no guardian or conservator (§ 953, subd. (a)), [a] guardian or conservator of the client when the client has a guardian or conservator ( id., subd. (b)), [t]he personal representative of the client if the client is dead ( id., subd. (c)), or [a] successor, assign, trustee in dissolution, or any similar representative of a firm, association, organization, partnership, business trust, corporation, or public entity that is no longer in existence ( id., subd. (d)). Pursuant to these statutory provisions, an individual, an association, or an organization may qualify as a client, and a living or existing client is the privilege holder initially. HLC contends that when an unincorporated organization such as Enterprises manages an individual's assets or business interests, and the individual, either personally or through agents, consults an attorney about those assets or business interests, the managing organization holds the privilege. To evaluate this contention, we consider what characteristics, if any, are necessary for an organization to hold the attorney-client privilege. In the proceedings below, the Court of Appeal reviewed various dictionary definitions of the term organization, as well as case law addressing the term in other contexts. (E.g., Random House Webster's College Dict. (2000) p. 933 [defining organization as a group of persons organized for some end or work or the administrative personnel or apparatus of a business].) Because the term generally describes a group of persons working to pursue a common purpose, the Court of Appeal concluded that the business staff assembled by Crosby to operate his entertainment interests qualifies as an organization ... for purposes of succession to the attorney-client privilege. Similarly, HLC contends here that Crosby developed Enterprises as a business organization by surround[ing] himself with long-term, loyal employees and attorneys to advise him in conducting his far-reaching business interests. The Evidence Code does not define the term organization. Neither did the Commission propose a statutory definition of the term for the Legislature's approval. The Commission, however, observed in a comment to the statute defining client that such unincorporated organizations as labor unions, social clubs, and fraternal societies have a lawyer-client privilege when the organization (rather than its individual members) is the client. (Com. com., reprinted at 29B pt. 3 West's Ann. Evid.Code (1995 ed.) foll. § 951, p. 207; cf. Smith v. Laguna Sur Villas Community Assn. (2000) 79 Cal. App.4th 639, 643, 94 Cal.Rptr.2d 321 [holding that a condominium association was the holder of the attorney-client privilege and that its individual members could not demand production of privileged documents, except as the association's board allowed].) While not binding, the Commission's official comments reflect the intent of the Legislature in enacting the Evidence Code and are entitled to substantial weight in construing it. ( Van Arsdale v. Hollinger (1968) 68 Cal.2d 245, 249, 66 Cal.Rptr. 20, 437 P.2d 508, overruled on another point in Privette v. Superior Court (1993) 5 Cal.4th 689, 702, fn. 4, 21 Cal.Rptr.2d 72, 854 P.2d 721; see People v. Williams (1976) 16 Cal.3d 663, 667-668, 128 Cal.Rptr. 888, 547 P.2d 1000.) As MCA points out, each of the three unincorporated organizations the Commission lists is a collective entity that the Internal Revenue Code recognizes as having tax exempt status. (Int.Rev.Code, § 501(c)(5) [labor organizations]; id., § 501(c)(7) [social clubs]; id., § 501(c)(8) [fraternal organizations].) Additionally, the assets of the listed organizations generally are not subject to probate administration when their individual members die. Here, there is no suggestion that Enterprises qualified for tax exempt status, and the three recording contracts at issue were probated as part of Crosby's estate. Nonetheless, such circumstances do not necessarily foreclose HLC's privilege claim because the comment to section 951 does not purport to limit availability of the attorney-client privilege to only those unincorporated organizations specifically listed. A core statutory concept is controlling on the matter, however. That is, even assuming an unincorporated business organization may consist of an individual and his employees working together to further the individual's business affairs, the Evidence Code makes clear that the attorney-client privilege belongs only to the client, whether the client is a natural person, an unincorporated organization, or some other entity. (§ 951; see Smith v. Laguna Sur Villas Community Assn., supra, 79 Cal.App.4th at pp. 643-645, 94 Cal.Rptr.2d 321.) Thus, the validity of HLC's claim that it holds the attorney-client privilege as Enterprises' successor depends on whether Enterprises itself, as opposed to Crosby or any other of its supposed individual members, was the original client and privilege holder with respect to the 59 written communications at issue. [5] Here, the trial court found that Crosby, the natural person, not Enterprises or any other business organization, was the client who sought the legal advice reflected in the 59 documents. As a reviewing court, we may not disturb the trial court's finding if there is any substantial evidence to support it. ( Gionis, supra, 9 Cal.4th at p. 1208, 40 Cal.Rptr.2d 456, 892 P.2d 1199; Chadbourne, supra, 60 Cal.2d at p. 729, 36 Cal.Rptr. 468, 388 P.2d 700.) Our review of the record discloses the following evidence regarding Crosby's identity as the client whose communications with various attorneys are at issue. According to the sworn declaration of HLC's counsel of record, Mark A. Brodka, Crosby was a `business machine' who had business interests in a number of fields including entertainment, mining, oil, real estate, and other ventures. With regard to the three recording contracts at issue in this litigation, there appears no dispute that Crosby signed them in his individual capacity, rather than in a representative capacity on behalf of Enterprises or some other organization. The record also confirms that, after Crosby died, his many business assets and interests, including the three recording contracts, were probated as part of his estate. The record shows that the key person responsible for managing Crosby's business interests throughout Crosby's lifetime, Grillo, believed he was hired to work for Crosby as an individual. As Grillo stated in his deposition testimony, the Enterprises moniker was just a loose terminology to cover everything that [Crosby] did. Although Grillo also claimed that Enterprises had employed him, Mozelle Seger, Nancy Briggs, and others at the time of Crosby's death, the record contains no evidence that any source other than Crosby himself paid their salaries and benefits. Indeed, the court files of Crosby's probated estate contained an order showing that, after Crosby's death, his estate made employment termination payments to Seger and Briggs and paid their health and life insurance premiums. [6] All this supports the conclusion that Crosby acted in an individual capacity in running his business affairs, not in any representative capacity on behalf of an entity with independent interests or an organization representing the collective interests of Crosby and other members. Finally, the record indicates the attorneys listed on HLC's privilege logs as authors or recipients of the 59 withheld documents regarded Crosby as the client they represented. Referring to the logs, Brodka declared: Members of the [O'Melveny & Meyers] firm who represented Crosby included: John O'Melveny, Richard C. Bergen, and Donald Petroni. Additional attorneys who represented Crosby or whom Crosby consulted with were, among others: Thomas O'Sullivan, Stewart Schwartz, George Foley, Todd Johnson and B. Beck. (Italics added.) Similarly, Grillo testified in his deposition that John O'Melveny and Todd Johnson represented Crosby and hired Grillo for Crosby. Thomas O'Sullivan, a tax attorney, indicated in his deposition that he did tax planning and prepared state and federal income tax returns for both Crosby and Bing Crosby Productions, but not Enterprises. [7] Notably, none of these attorneys claimed to have performed separate legal work on behalf of Enterprises. [8] In sum, the record contains substantial evidence supporting the trial court's determination that a natural person, Crosby, was the original client who held the attorney-client privilege for the communications pertaining to his three recording contracts. Likewise, the evidence fails to demonstrate, as a matter of law, that Enterprises was the client of the named attorneys with interests of its own or its collective members to protect. (See Gionis, supra, 9 Cal.4th at p. 1208, 40 Cal.Rptr.2d 456, 892 P.2d 1199; Chadbourne, supra, 60 Cal.2d at p. 729, 36 Cal.Rptr. 468, 388 P.2d 700.) HLC offers no authority suggesting that Crosby himself could not be the client on whose behalf those attorneys were consulted, merely because he employed others to assist him in managing his business interests and assets. (See § 951 [client means a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity (italics added)].) Accordingly, we shall not disturb the trial court's determination. To support its claim of privilege, HLC relies on several cases involving trusts and/or incorporated organizations to argue that control over the assets of a business organization brings with it the right to assert the attorney-client privilege. HLC's authorities, however, merely hold or recognize that when corporate organizations are merged or when control of a corporation or formalized trust passes to new management, the power to assert or waive the privilege resides in the new managers. (E.g., Commodity Futures Trading Comm'n v. Weintraub (1985) 471 U.S. 343, 354, 105 S.Ct. 1986, 85 L.Ed.2d 372 [trustee of a corporation in bankruptcy has power to waive the corporation's attorney-client privilege with respect to prebankruptcy communications]; Moeller v. Superior Court, supra, 16 Cal.4th at p. 1127, 69 Cal.Rptr.2d 317, 947 P.2d 279 [successor trustee of a private express trust assumes all powers of a predecessor trustee and is entitled to access to trust documents reflecting confidential communications between the predecessor trustee and its attorney on matters of trust administration]; Dickerson v. Superior Court (1982) 135 Cal.App.3d 93, 98-99, 185 Cal. Rptr. 97 [corporation's attorney-client privilege passed to successor in interest through merger]; Pilates, Inc. v. Georgetown Bodyworks (D.D.C.2000) 201 F.R.D. 261, 263-264 [plaintiff was not entitled to assert the attorney-client privilege where it acquired no stock and obtained no control of the corporate client, but merely obtained two of the client's trademarks through an assignment].) Because there is substantial evidence in the record that Crosby, a natural person, initially held the privilege, we find these decisions, which pertain to invocations or waivers of a trust's or a business entity's privilege, inapposite.