H. SAMPSON CHILDREN'S TRUST v. L. SAMPSON 1979 TRUST

• Decision Date: 25 May 2004
• Docket Number: No. 02-1515.,02-1515.
• Citation: 271 Wis.2d 610,679 N.W.2d 794,2004 WI 57
• Parties: HAROLD SAMPSON CHILDREN'S TRUST, a trust maintained for the benefit of Beth Bauer, Jamie L. Sherman, and Kay Yuspeh, and each of them individually as Plaintiffs, and The Beth Bauer Trust, The Jamie L. Sherman Trust and The Kay Yuspeh Trust, Plaintiffs-Respondents-Petitioners, v. The LINDA GALE SAMPSON 1979 TRUST, The Steven J. Sampson 1979 Trust and The Scott A. Sampson 1979 Trust, which are the successors to the B.J. Sampson Children's Trust, a trust maintained for the benefit of Linda Gale Sampson, Scott Sampson, and Steve Sampson, and Sampson Investments, Ann Mandelman, and Nancy Simos, Defendants-Third-Party Plaintiffs-Appellants, v. Beth BAUER, Third-Party Defendant.
• Court: Wisconsin Supreme Court

271 Wis.2d 610

2004 WI 57

679 N.W.2d 794

HAROLD SAMPSON CHILDREN'S TRUST, a trust maintained for the benefit of Beth Bauer, Jamie L. Sherman, and Kay Yuspeh, and each of them individually as Plaintiffs, and The Beth Bauer Trust, The Jamie L. Sherman Trust and The Kay Yuspeh Trust, Plaintiffs-Respondents-Petitioners, v. The LINDA GALE SAMPSON 1979 TRUST, The Steven J. Sampson 1979 Trust and The Scott A. Sampson 1979 Trust, which are the successors to the B.J. Sampson Children's Trust, a trust maintained for the benefit of Linda Gale Sampson, Scott Sampson, and Steve Sampson, and Sampson Investments, Ann Mandelman, and Nancy Simos, Defendants-Third-Party Plaintiffs-Appellants, v. Beth BAUER, Third-Party Defendant.

No. 02-1515.

Supreme Court of Wisconsin.

Oral argument March 9, 2004.

Decided May 25, 2004.

For the plaintiffs-respondents-petitioners there were briefs by Jane C. Schlicht, Steven L. Nelson and Cook & Franke, S.C., Milwaukee, and oral argument by Jane C. Schlicht.

For the defendants-third-party plaintiffs-appellants there was a brief by Paul S. Medved, Scott R. Halloin and Mallery & Zimmerman, S.C., Milwaukee, and oral argument by Scott R. Halloin.

SHIRLEY S. ABRAHAMSON, C.J.

¶ 1. This is a review of a published decision of the court of appeals¹ reversing an order of the circuit court for Milwaukee County, Dominic S. Amato, Judge. The circuit court's order directed The Linda Gale Sampson 1979 Trust et al., the defendants, to return to Harold Sampson Children's Trust et al., the plaintiffs, documents that the plaintiffs' attorney transmitted during discovery to the defendants' attorney. We reverse the decision of the court of appeals.

¶ 2. The question before this court is whether a lawyer's voluntary production of documents in response to opposing counsel's discovery request constitutes a waiver of the attorney-client privilege under Wis. Stat. § (Rule) 905.11 when the lawyer does not recognize that the documents are subject to the attorney-client privilege and the documents are produced without the consent or knowledge of the client.²

¶ 3. The circuit court answered the question "no," concluding that the plaintiffs' attorney in the present case could not waive the plaintiffs' attorney-client privilege, because only the client can waive the privilege for attorney-client communications. In contrast, the court of appeals answered the question "yes," concluding that the lawyer's disclosure waived the attorney-client privilege. It based its decision on two precepts: (1) under ordinary attorney-client agency principles, compliance with discovery requests is a matter that the client delegates to the attorney; and (2) the rule that waiver is the intentional relinquishment of a known right does not apply to waiver of evidentiary privileges.³

¶ 4. We agree with the circuit court. We conclude that a lawyer, without the consent or knowledge of a client, cannot waive the attorney-client privilege by voluntarily producing privileged documents (which the attorney does not recognize as privileged) to an opposing attorney in response to a discovery request. We hold that only the client can waive the attorney-client privilege under Wis. Stat. § (Rule) 905.11 regarding attorney-client privileged documents.

I

¶ 5. The underlying dispute is an inter-family disagreement arising out of commercial real estate transactions, the details of which are not important to this review. The following relevant facts relate to the issue of waiver of the attorney-client privilege by the release of documents in response to a discovery request.

¶ 6. The documents in question were prepared by Beth Bauer, a plaintiff, for the plaintiffs' attorney's use. Apparently the documents explain Ms. Bauer's view of the transactions and the valuation and accounting issues; disclose her thoughts and analysis concerning liability, damages, and strategy; and identify supporting evidence for claims against the defendants.

¶ 7. Robert Elliott, then the plaintiffs' attorney, apparently believed that the documents were not privileged and disclosed them to the defendants' counsel in response to a discovery request on or about July 17, 2001.

¶ 8. For purposes of this review, it is undisputed that the documents in question were attorney-client privileged, that the documents were released to opposing counsel without the consent or knowledge of the plaintiffs, and that the plaintiffs authorized their attorney to disclose all non-privileged documents in response to discovery requests.

¶ 9. Elliott withdrew as counsel on October 16, 2001, for reasons unrelated to the production of documents, and Cook & Franke, S.C., replaced Elliott as the plaintiffs' counsel. On reviewing the files, the plaintiffs' new counsel determined that privileged documents had been produced to opposing counsel and, on November 15, 2001, requested that the defendants return those documents. The defendants refused to return the documents and, on December 7, 2001, the plaintiffs filed a motion to compel the return of the privileged documents.

¶ 10. The circuit court ordered an evidentiary hearing and referred the matter to attorney Theodore Hodan, as referee, pursuant to Wis. Stat. § (Rule) 805.06 (1999-2000).⁴ The circuit court designated the referee as a "discovery master."

¶ 11. After a three-day evidentiary hearing, the referee made numerous findings of fact and concluded that the documents in question were "confidential communications made by a client or an attorney in order to facilitate the performance of professional legal services to the `client.'" The referee found that the plaintiffs did not consent to the production of the attorney-client privileged documents.

¶ 12. The referee described Elliott as a "prominent, experienced, competent, well-respected, board certified civil trial lawyer, who is known to have handled many difficult[,] complex and high-profile civil lawsuits." The referee found that Elliott "examined the documents in question, made no inquiry of his clients as to the reasons for and methods of their preparation and, therefore, intentionally and knowingly produced them for the [defendants] in response to their document request." Upon viewing the documents at the hearing, Elliott indicated that "on their face" the documents did not appear privileged. However, he also testified that he would not have produced the documents had he understood their purpose.

¶ 13. The referee found that each of the documents "raise[d] sufficient indicia or inferences of possible privilege so as to require, prior to their production to opposing counsel, that inquiry be made by [Elliott] of his clients to ascertain when and for what purpose each of the documents in question had been prepared." Further, the referee found as a matter of fact and concluded as a matter of law that the documents in question were confidential communications as defined by Wis. Stat. § (Rule) 905.03. The referee concluded that by intentionally disclosing the documents, Elliott waived the plaintiffs' attorney-client privilege with respect to those documents.⁵

¶ 14. The circuit court adopted the referee's findings of fact and most of his conclusions of law. The circuit court disagreed, however, with the referee's ultimate conclusion of law. The circuit court held that the attorney could not waive the attorney-client privilege because the privilege belonged to the client, and ordered the defendants to return the documents in question. The court of appeals reversed the order of the circuit court, holding that the privilege had been waived.

II

¶ 15. With regard to the standard of review of factual determinations, the circuit court shall accept the referee's findings of fact that are not clearly erroneous,⁶ and this court is bound by a circuit court's findings of fact unless they are clearly erroneous.⁷ This court reviews issues of law, including interpretation of statutes or court rules, independently of the circuit court and court of appeals but benefiting from the analyses of those courts.⁸

III

¶ 16. This case requires us to decide whether an attorney's voluntary disclosure to opposing counsel of attorney-client privileged documents, without the consent or knowledge of the client, constitutes a waiver of the attorney-client privilege under Wis. Stat. § (Rule) 905.11.

¶ 17. Four rules govern our decision on this issue: Wis. Stat. § (Rule) 905.03(1)(d) (defining "confidential"); Wis. Stat. § (Rule) 905.03(2) (general rule of attorney-client privilege); Wis. Stat. § (Rule) 905.03(3) (who may claim the privilege); and Wis. Stat. § (Rule) 905.11 (waiver of the privilege by voluntary disclosure). We shall examine each rule in turn.

¶ 18. Wisconsin Stat. § (Rule) 905.03(1)(d) defines a confidential communication as one that is "not intended to be disclosed to 3rd persons other than those to whom disclosure is in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication." For the purpose of this review, the documents were made to facilitate the rendition of legal services in the litigation, and the plaintiffs did not intend or agree that the documents in question be disclosed to opposing counsel. Thus the documents are confidential under the attorney-client privilege rule set forth in § 905.03(1)(d). ¶ 19. Wisconsin Stat. § (Rule) 905.03(2) codifies the attorney-client privilege. It states that a client "has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client . . . ."⁹ In some circumstances, the privilege does not apply because an exception exists¹⁰ or the privilege is waived under Wis. Stat. § (Rule) 905.11.¹¹

¶ 20. Section 905.03(2) provides as follows:

General rule of privilege. A client has a privilege to refuse to disclose and to prevent any other

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