Court Opinion

ID: 2929237
Source: CourtListenerOpinion
Date Created: 2015-09-14 21:41:20.022819+00
Date Added: 2024-06-11T11:37:04.380150
License: Public Domain

?fl/5SEP Ik 49 9:2.

   IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                                   DIVISION ONE

FOSS MARITIME COMPANY,                           No. 71611-5-1

                     Respondent,

       v.

JEFF BRANDEWIEDE and
JANE DOE BRANDEWIEDE and the
marital community comprised thereof;
BRANDEWIEDE CONSTRUCTION,
INC.,

                     Appellants,

CORE LOGISTIC SERVICES; LISA
LONG and JOHN DOE LONG and the
marital community comprised thereof;
FRANK GAN and JANE DOE GAN and                   PUBLISHED OPINION
the marital community comprised
thereof,                                         FILED: September 14, 2015

                     Defendants.

       Verellen, A.C.J. — Disqualification of counsel is a drastic sanction, only to be

imposed in compelling circumstances because it "exacts a harsh penalty from the

parties as well as punishing counsel."1 The trial court here disqualified Jeff

Brandewiede's counsel for accessing and reviewing an opponent's privileged

communications. But the trial court failed to consider on the record the principles and

       1 In re Firestorm 1991, 129Wn.2d 130, 140, 916 P.2d 411 (1996).
No. 71611-5-1/2

guidelines of In re Firestorm 19912 and Washington State Physicians Insurance

Exchange &Ass'n v. Fisons Corp.3 regarding (1) prejudice, (2) counsel's fault,

(3) counsel's knowledge of privileged information, and (4) possible lesser sanctions.

We reverse the trial court's disqualification order and remand for further proceedings

consistent with this opinion.

                                        FACTS

       This case arose from a contract dispute for the renovation of the vessel Alucia.

Foss Maritime subcontracted with Core Logistic Services to do the work. A key

question in the underlying dispute is whether Jeff Brandewiede and Brandewiede

Construction, Inc. were affiliated with Core Logistic Services or were an independent

contractor.

       Foss terminated Van Vorwerk, the project manager, in May 2012. In July

2012, Foss sued Core Logistic Services and Brandewiede for breach of contract,

unjust enrichment, and fraud. During discovery, Foss identified Vorwerk as a person

"likely to have discoverable information" and "who prepared, assisted with, or

furnished information" used to prepare Foss's discovery response.4 Foss did not

indicate that Vorwerk was no longer employed by Foss. Foss listed Vorwerk as a

potential witness and identified his contact information as in care of Foss's counsel.

       In September 2013, Brandewiede's counsel John Welch contacted Foss's

counsel John Crosetto about setting Vorwerk's deposition. Crosetto explained that

       2129Wn.2d 130, 916 P.2d 411 (1996).
       3 122 Wash. 2d 299, 858 P.2d 1054 (1993).
       4 Clerk's Papers (CP) at 135.
No. 71611-5-1/3

Vorwerk no longer worked for Foss and gave Welch contact information for Vorwerk.

In late September 2013, Welch met Vorwerk for an interview "in lieu of sitting for a

deposition."5 Foss agrees the interview itself was proper.

       During the interview, Vorwerk gave Welch a copy of a "wrongful termination"

letter that Vorwerk drafted and gave to Foss after his employment was terminated.

Vorwerk's letter recited facts about his work on the project. The letter included

several e-mails between Vorwerk, Foss's in-house counsel Frank Williamson, and

several other Foss employees. The e-mails were not designated as attorney-client

privileged communications but did contain some privileged information. Brandewiede

later identified the letter as a proposed trial exhibit. At the interview, Vorwerk offered

to provide copies of his other e-mails with Foss management about the project.

       In late October 2013, Welch again met with Vorwerk. Vorwerk gave Welch a

thumb drive containing e-mails about all of his work as a project manager for Foss.

       About two weeks later, Welch informed Crosetto of the materials he received

from Vorwerk, stating he had "only reviewed a portion" of them.6 The record is

unclear how much Welch reviewed. In his declaration, Welch stated he became

aware that the termination letter contained "potential attorney-client communications"

when Crosetto alerted him.7 Once Crosetto asserted that the thumb drive contained

privileged information, Welch stopped further review.

       5 CP at 114.
       6 CP at 200.
       7 CP at 116.
No. 71611-5-1/4

       Crosetto was concerned that Vorwerk had provided Welch with privileged

information. On November 12, 2014, Crosetto requested that Brandewiede give

Foss "all documents provided by Mr. Vorwerk."8 Three days later, Welch gave

Crosetto the thumb drive. Although Welch claims he stopped any further review of

Vorwerk's materials on November 12, 2013, he e-mailed Crosetto on November 22,

2013, stating that he wanted to read Vorwerk's termination letter again.

       On November 22, 2013, Foss filed a motion to disqualify Welch and his firm.

Foss argued that Vorwerk's materials contained privileged information and that

Welch's possession and use of the documents prejudiced Foss in violation of both

RPC 4.2 and 4.4(a). Foss also sought a CR 26(b) discovery sanction excluding all

evidence "tainted" by Vorwerk's and Welch's "wrongful conduct."9

       The trial court heard the parties' argument on Foss's motion to disqualify

counsel and for sanctions.10 Foss filed the allegedly privileged documents under seal

with a privilege log per the trial court's order.

       The trial court reviewed the documents in camera and issued an order

disqualifying Welch and his firm. The trial court determined that "Brandewiede's

counsel did not address case law cited in [Foss's] brief and that "some (but not all)

documents he reviewed were clearly attorney-client communications."11 The trial

court also excluded evidence "tainted" by Welch's "wrongful conduct," including

       8 CP at 82.
       9CPat45.
       10 While not at issue on appeal, both parties filed motions for CR 37 discovery
sanctions. The trial court denied both parties' motions.
       11
            CP at 277.
No. 71611-5-1/5

Vorwerk's letter, the thumb drive, and any further information containing or derived

from privileged information belonging to Foss that might be in Brandewiede's, his

counsel's, or Vorwerk's possession, unless Brandewiede obtained the information

from a source "untainted by the wrongful conduct."12 The trial court neither identified

what conduct was wrongful nor made findings or entered conclusions identifying what

discovery or ethical rules were violated.

       Brandewiede sought discretionary review of the trial court's order disqualifying

counsel and excluding evidence. This court granted discretionary review and a

temporary stay.

                                       ANALYSIS

       We generally review a disqualification order for an abuse of discretion.13 But

to the extent this case involves questions of law regarding "the application of a court

rule to a set of particular facts,"14 and "whether an attorney's conduct violates the

relevant Rules of Professional Conduct,"15 our review is de novo.16

                                            Burnet

       Brandewiede contends the trial court erred in not conducting an on-the-record

analysis of the Burnet v. Spokane Ambulance factors before disqualifying his counsel

       12 CP at 277.
       13 Pub. Util. Dist. No. 1 of Klickitat County v. Int'l Ins. Co.. 124 Wash. 2d 789, 812,
881 P.2d 1020 (1994); State v. Schmitt. 124 Wash. App. 662, 666, 102 P.3d 856
(2004).
       14 Firestorm. 129 Wash. 2d at 135.
       15 Eriks v. Denver, 118 Wash. 2d 451, 457-58, 824 P.2d 1207(1992).
      16 Firestorm. 129 Wash. 2d at 135; Lyons v. U.S. Bank Nat'l Ass'n. 181 Wash. 2d
775, 783, 336 P.3d 1142 (2014).
No. 71611-5-1/6

and excluding evidence.17 Specifically, Brandewiede contends Burnet and its

progeny apply not only to discovery sanctions under CR 37(b) but also to discovery

sanctions based on a CR 26(b) violation. We disagree.

       CR 26(b)(1) limits the scope of discovery, allowing for discovery of anything

material and relevant to the litigation except for privileged matters.18 CR 26(b)(6)

also imposes obligations on attorneys who receive information an opposing party

claims is privileged:

       If information produced in discovery is subject to a claim of privilege
       . . ., the party making the claim may notify any party that received the
       information of the claim and the basis for it. After being notified, a
       party must promptly return, sequester, or destroy the specified
       information and any copies it has; must not use or disclose the
       information until the claim is resolved; and must take reasonable steps
       to retrieve the information if the party disclosed it before being notified.
       Either party may promptly present the information in camera to the
       court for a determination of the claim. The producing party must
       preserve the information until the claim is resolved.

       The trial court here neither made findings nor entered conclusions as to

whether any discovery or ethical rules were violated. The trial court determined

Vorwerk's and Welch's conduct was wrongful but did not state what conduct was

wrongful and whether that conduct violated any rules.

       Burnet and its progeny constrain a trial court's discretion to order "dismissal,

default, and the exclusion of testimony" as a CR 37(b)(2) discovery sanction.19 In

Burnet, the trial court imposed a protective order limiting discovery under

       17 131 Wash. 2d 484, 933 P.2d 1036 (1997).
       18 Dana v. Piper, 173 Wash. App. 761, 770, 295 P.3d 305 (2013).
       19 Mayer v. Sto Indus.. Inc.. 156 Wash. 2d 677, 690, 132 P.3d 115 (2006); see
also Jones v. City of Seattle, 179 Wash. 2d 322, 338, 314 P.3d 380 (2013).
No. 71611-5-1/7

CR 37(b)(2)(B).20 Burnet specifically involved a CR 26(f) violation, which triggered

sanctions under CR 37(b)(2). Burnet held that before imposing "'one of the harsher

remedies allowable under CR 37(b),'" the trial court must consider on the record

(1) whether a lesser sanction would probably suffice, (2) whether the violation at

issue was willful or deliberate, and (3) whether the violation substantially prejudiced

the opposing party's ability to prepare for trial.21

       Mayer v. Sto Industries, Inc. held that a trial court need not apply the Burnet

factors when imposing lesser sanctions, e.g., monetary sanctions, but must do so

when imposing severe sanctions under CR 37(b).22 Mayer refused to apply Burnet to

a CR 26(g) violation because Fisons governed CR 26(g) violations, and Burnet is

limited to CR 37(b)(2) violations.23 CR 37(b)(2) does not list disqualification of

counsel as a sanction.

       Washington courts have applied Burnet to a trial court's orders excluding

witnesses,24 dismissing claims,25 and granting a default judgment.26 But "nothing in

       20 Burnet. 131 Wash. 2d at 490-91.
       21 ]d at 494 (quoting Snedigarv. Hodderson, 53 Wash. App. 476, 487, 768 P.2d
1 (1989)).
       22156 Wash. 2d 677, 688-90, 132 P.3d 115 (2006) (concluding that Burnet's
reference to "'harsher remedies allowable under CR 37(b)'" applies to "sanctions that
affect a party's ability to present its case." (quoting Burnet, 131 Wash. 2d at 494)).
      23 Id.; Wash. Motorsports Ltd. P'ship v. Spokane Raceway Park, Inc., 168 Wn.
App. 710, 716, 282 P.3d 1107 (2012).
       24 Jones, 179 Wash. 2d at 335-37; Teter v. Deck, 174 Wash. 2d 207, 212, 274 P.3d
336 (2012); Blair v. TA-Seattle E. No. 176. 171 Wash. 2d 342, 346, 254 P.3d 797 (2011)
(Blair II); In re Dependency of MP.. 185 Wash. App. 108, 114-18, 340 P.3d 908 (2014).
       25 Rivers v. Wash. State Conference of Mason Contractors. 145 Wash. 2d 674,
683, 41 P.3d 1175 (2002) (dismissing claims for violating discovery orders).
No. 71611-5-1/8

Burnet suggests that trial courts must go through the Burnet factors every time they

impose sanctions for discovery abuses."27 And no case law suggests that a trial

court must apply Burnet for discovery sanctions based on a CR 26(b) violation.

Burnet is limited to CR 37(b)(2) sanctions. Although some similar concerns apply to

a disqualification of counsel, we conclude that Burnet does not apply here.

                                 Firestorm and Fisons

       Firestorm and Fisons define the standard for disqualification of counsel here.

Fisons established the principles that trial courts must follow in imposing discovery

sanctions for CR 26(b) violations.28 Firestorm expressly addressed disqualification.29

When disqualifying counsel based on access to privileged information, we conclude a

trial court must consider (1) prejudice; (2) counsel's fault; (3) counsel's knowledge of

claim of privilege; and (4) possible lesser sanctions.30

       Prejudice. In many discovery disputes, prejudice focuses upon the opposing

party's ability to prepare for trial when improperly denied discovery.31 Butfor

purposes of disqualification of counsel for access to privileged information, prejudice

       26 Magana v. Hyundai Motor Am.. 167 Wash. 2d 570, 581-82, 220 P.3d 191
(2009) (ordering default judgment for discovery violations); Smith v. Behr Process
Corp.. 113 Wash. App. 306, 315, 54 P.3d 665 (2002) (same).
       27 Mayer. 156 Wash. 2d at 688.
       28 Firestorm. 129 Wash. 2d at 142 (citing Fisons. 122 Wash. 2d at 355-56).
       29 JU at 139-45.
       30 Foss contends we should adopt the six-factor test enunciated by the Texas
Supreme Court to determine whether an attorney's receipt of privileged information
merits disqualification. In re Meador. 968 S.W.2d 346, 351-52 (Tex. 1998). Although
several concepts in the Meador test overlap with our four factors, we decline to adopt
Meador here.

       31 See, e.g.. Magana, 167 Wash. 2d at 588-90.

                                            8
No. 71611-5-1/9

turns on the significance and materiality of the privileged information to the underlying

litigation. Access to inconsequential information does not support disqualification,

but review of information material to the underlying litigation weighs in favor of

disqualification.32

       Fault. Counsel's access to privileged information may range from an

innocuous, inadvertent disclosure by the opposing party to serious ethics violations.

The level of fault or misconduct by counsel is an important factor in deciding whether

disqualification is appropriate.33 A trial court may also consider the "'wrongdoer's

lack of intent to violate the rules'" in fashioning sanctions.34 One example of fault

would be "trolling" for an opponent's former integral employees to take advantage of

opposing counsel.35

       Counsel's Knowledge of Claim of Privilege. If an attorney reviews materials

clearly designated as privileged information or continues review once the attorney

becomes aware there are claims of privileged information, disqualification may be

warranted.36

       32 Kurbitz v. Kurbitz, 77 Wash. 2d 943, 947, 468 P.2d 673 (1970) ("[Ajccess to
confidential information which is material to the present suit" supports disqualification,
(emphasis omitted)).
       33 Firestorm, 129 Wash. 2d at 139-45; Fisons. 122 Wash. 2d at 339-42; Richards v.
Jain. 168 F. Supp. 2d 1195, 1208 (2001).
        34 Firestorm. 129 Wash. 2d at 142 (quoting Fisons. 122 Wash. 2d at 355-56).
Additionally, the trial court may also consider the moving party's fault, such as its
failure to timely apprise the court of the misconduct. See id. at 144-45.
       35 Id, at 143.
        36 See Richards. 168 F. Supp. 2d at 1205-06 (different case if counsel, "when
first reviewing the documents with the plain and clear warning of 'attorney-client' and
'privileged' markings had . . . stopped all work and sealed or destroyed the
documents").
No. 71611-5-1/10

       Lesser Sanctions. Discovery sanctions serve to deter, punish, compensate,

educate, and ensure that the wrongdoer does not profitfrom the wrong.37 Generally,

the trial court should impose the least severe sanction adequate to serve the

sanction's particular purpose, but not so minimal as to undermine the purpose of

discovery.38 Similarly, the harsh sanction of disqualification of counsel should only

be imposed if it is the least severe sanction adequate to address misconduct in the

form of improper access to privileged information.39

       No one factor predominates or has greater importance than others. It is best

practice to enter written findings and conclusions identifying the specific grounds

relied upon for disqualification and applying the four factors above.40 At a minimum,

the record must permit us to evaluate the trial court's consideration of those four

factors.41

       Foss contends mere access to privileged communications requires

disqualification under Firestorm. But Firestorm did not establish a per se rule that

mere access to privileged information taints the judicial process and requires

disqualification, regardless of the circumstances. Rather, Firestorm requires

disqualification when counsel has access to an opposing party's privileged

information in a conflictof interest setting.42 In Firestorm, counsel violated

       37 Fisons. 122Wn.2dat356.
       38 Jd at 355-56.
       39 Firestorm. 129 Wash. 2d at 139-45; Fisons. 122 Wash. 2d at 339-42.
       40 Magana. 167 Wash. 2d at 583: see Burnet. 131 Wn.2dat494.
       41 See Blair v. TA-Seattle E. No. 176. 150 Wash. App. 904, 909, 210 P.3d 326
(2009), rev'd on other grounds. Blair II, 171 Wash. 2d at 352.
       42 Firestorm. 129 Wash. 2d at 140.

                                           10
No. 71611-5-1/11

CR 26(b)(5) by conducting an ex parte interview of an expert hired by opposing

counsel. The court noted the "limited applicability" of the disqualification sanction.43

The cases cited in Firestorm supporting its holding that counsel be disqualified upon

access to an opposing party's privileged information all involve conflicts of interest.44

       A disqualification based on a conflict of interest reinforces an attorney's

fiduciary duty to protect his or her former clients' confidential information. But

Welch's alleged discovery and ethical violations do not present the same concerns as

a conflict of interest.

       Further, CR 26(b)(6) provides that once a party has been notified that it has

access to an opposing party's privileged information, that party "must promptly return,

sequester, or destroy the specified information and any copies it has; must not use or

disclose the information until the claim is resolved; and must take reasonable steps to

retrieve the information if the party disclosed it before being notified." Nowhere does

CR 26(b)(6) state that an attorney must be disqualified for acquiring an opposing

party's privileged information. To the contrary, CR 26(b)(6) permits either party to

"promptly present the information in camera to the court for a determination of the

claim" of privilege. We reject any suggestion that an attorney's mere access to an

opposing party's privileged information compels disqualification.

       Foss attempts to distinguish Firestorm, but Firestorm and Fisons control. As

in Firestorm, the trial court here neither made findings nor entered conclusions

       43
            Id.

      44 \± (citing First Small Bus. Inv. Co. v. Intercapital Corp., 108 Wash. 2d 324,
337, 738 P.2d 263 (1987); Teia v. Saran, 68 Wash. App. 793, 798-99, 846 P.2d 1375
(1993); Intercapital Corp. v. Intercapital Corp., 41 Wash. App. 9, 16, 700 P.2d 1213
(1985)).

                                            11
No. 71611-5-1/12

supporting its disqualification order. And as in Firestorm. Welch was not trolling for

Vorwerk or attempting to "create delay or confusion" by interviewing Vorwerk.45

       Therefore, because the trial court did not expressly apply the four factors of

prejudice, counsel's fault, counsel's knowledge of claim of privilege, and possible

lesser sanctions, we reverse the trial court's disqualification order and remand for

further proceedings consistent with this opinion.

                        Practical Concerns in Arguing Prejudice

       We note there are practical concerns in reviewing the disputed materials in

order to effectively argue prejudice. Before appeal, Welch accessed and reviewed

significant portions of Vorwerk's termination letter. But Brandewiede's counsel on

appeal intentionally avoided reviewing any of Vorwerk's materials to preclude any

suggestion of impropriety. As a consequence, he is unable to articulate the presence

or absence of prejudice informed by the contents of the alleged privileged

communications. In such a setting, it may be appropriate for the trial court to enter a

protective order allowing special counsel to review the alleged privileged materials

solely for the purpose of presenting argument in the trial or appellate court regarding

prejudice.46

       Such an order would be similar to a "quick-peek" agreement, where "counsel

are allowed to see each other's entire data collection before production and

       45 ]d at 144.
       46 CR 26(c) permits a trial court to issue a protective order "to protect a party
or person from annoyance, embarrassment, oppression, or undue burden or
expense."

                                            12
No. 71611-5-1/13

designate those items that they believe are responsive to the discovery requests."47

Such an agreement does not constitute a waiver of privilege.48 Using a similar

approach in this context will insulate the privileged information and enable special

counsel to address the significance and materiality of the privileged information to the

underlying litigation.

                                    Tainted Records

       The trial court's disqualification order, as drafted by Crosetto, excludes

evidence "tainted" by Vorwerk's and Welch's "wrongful conduct."49 This vague

language is problematic, but Foss has made several concessions on appeal.

       First, Foss concedes that "Brandewiede can offer the Vorwerk Letter (properly

redacted to remove privileged communications)."50 We read this as a concession

that once the few pages that include an e-mail exchange with Foss's general counsel

about potential liability from the Alucia project have been redacted, Foss will not

object to the admission of the remainder of the letter based upon any claim of

misconduct by Welch.

       Second, Foss concedes that Brandewiede can also offer "non-privileged, non

proprietary, and non-confidential information on the thumb drive (all of which Foss

       47 Richard Van Duizend, Guidelines for State Trial Courts Regarding
Discovery of Electronically-Stored Information—What? Why? How?, 35 W. St. U. L.
Rev. 237, 252 n.36 (2007).
       48 Laura Catherine Daniel, Note, The Dubious Origins and Dangers of
Clawback and Quick-Peek Agreements: An Argument Against Their Codification in
the Federal Rules of Civil Procedure, 47 Wm. & Mary L. Rev. 663, 667 (2005).
       49 CP at 277.
       50 Resp't's Br. at 40-41.

                                           13
No. 71611-5-1/14

has already produced in discovery)."51 We read this as a representation that Foss

has already produced all documents on the thumb drive except those for which Foss

in good faith asserts a claim of privilege. The trial court has already conducted an in

camera review of the Vorwerk letter and documents on the thumb drive and has

concluded that "some (but not all) documents" reviewed by Welch "were clearly

attorney-client communications."52 The trial court may need to expressly determine

which of the documents on the thumb drive are subject to attorney-client privilege.

For those documents that Foss claims are not subject to discovery based upon

proprietary or other confidential information, the trial court may conduct an in camera

review to determine whether there is any valid basis for Foss to decline to produce

them.

        Moreover, there are significant distinctions between attorney-client privilege

and proprietary or other confidential information. This appeal only concerns the

unauthorized disclosure of privileged information. Because the briefing does not

extend to other forms of proprietary or confidential information, those issues are

beyond the scope of this appeal.

        Lastly, Brandewiede suggests the trial court may have imputed Vorwerk's

wrongful conduct in sanctioning Brandewiede and his counsel, but any claim against

Vorwerk is beyond the scope of this appeal.

        51 Id at 41.
        52 CP at 277.

                                            14
No. 71611-5-1/15

                                    CONCLUSION

       We conclude the trial court's order of disqualification does not satisfy the

principles and guidelines of Fisons and Firestorm. We therefore reverse the trial

court's order of disqualification. On remand, any order of disqualification will require

the consideration and analysis of (1) prejudice, (2) counsel's fault, (3) counsel's

knowledge of privileged information, and (4) possible lesser sanctions. We reverse

the existing order of disqualification and remand for further proceedings consistent

with this opinion.

WE CONCUR:

     J^^ucy^s
                     /

                                           15