Burch v. Myers (CA1 6/4/15)

This case answers the question Lund v. Myers left undecided – whether moving to disqualify a firm that used inadvertently-produced privileged documents waives the privilege to them – and discusses the basis for disqualification.

This is actually the same case, up for yet another appeal after the Supreme Court remanded to the trial court. For some reason this opinion doesn’t say that (though you can catch it if you know the first case and read very carefully between a few lines), preferring to recite the facts at length despite being the third opinion to do so. 

Briefly, then: The context is a brother-v.-sister conservatorship controversy that has thrashed around our courts for several years, involving a varying cast of lawyers and fueled by the millions of grandpa Disney’s dollars that they’re really fighting about. Law Firm A had represented brother. Down the line a few years, Firm B subpoenaed its file. Firm A, for some reason thinking that B was taking over as counsel for its client, responded by sending B its whole file. Turns out that brother did indeed have another lawyer but it wasn’t Firm B, which instead represented sister. When brother’s lawyer found out about this he notified Firm B that parts of the file were privileged. But when that discussion lapsed Firm B disclosed the file to all parties and made some use of it. Brother moved to disqualify Firm B. That resulted in Lund, which is mostly about the procedure for getting a ruling on the documents. On remand the trail court disqualified Firm B, from which the case comes up again.

The Court of Appeals’ opinion in Lund had said that brother did not waive the privilege by moving to disqualify but the Supreme Court declined to comment, deeming that an issue for the trial court. The Court of Appeals now holds that no, brother did not waive the privilege. “[A] motion to disqualify neither establishes a cause of action nor defeats a claim of liability; it is not a claim or affirmative defense and does not have any apparent direct impact upon the merits of the underlying litigation. Reliance upon privileged information in support of a motion to disqualify does not place that information ‘at issue relevant to the case,’ as the phrase is contemplated under Arizona law, and does not impliedly waive privilege as to the opposing party.”  Since these are legal, not factual, conclusions it isn’t clear why the Supreme Court preferred not to address them.

As for the motion to disqualify Firm B, “when faced with a motion to disqualify premised upon the abuse of privileged information disclosed inadvertently, the trial court must: (1) determine whether the documents at issue are in fact privileged; (2) determine whether the receiving party exercised an unfair advantage over the documents, such as reviewing, copying, or distributing them in violation of Rule 26.1(f)(2) and ER 4.4(b); and (3) review the privileged information objectively, in light of the context of the case, to determine whether the receiving party possibly gained an unfair tactical advantage [proof of actual advantage is not required] . . .” The court can consider in mitigation whether the information was significant or already known and should consider alternatives to disqualification, which is disfavored. 

On this basis the trial court was within its discretion to disqualify Firm B.

[link to opinion]