Kahl v. Minnesota Wood Specialty, Inc.
| Decision Date | 30 March 1979 |
| Docket Number | No. 48961.,48961. |
| Citation | 277 NW 2d 395 |
| Parties | Harold M. KAHL, Respondent, v. MINNESOTA WOOD SPECIALTY, INC., Employer-Petitioner, and Employers Mutual Liability Insurance Co., Insurer-Petitioner, Warren Spannaus, Attorney General, State of Minnesota, Respondent. |
| Court | Minnesota Supreme Court |
Ochs, Larsen, Klimek & Olson, Candice E. Hektner and Gerard J. Ochs, Minneapolis, Richards, Montgomery, Cobb & Bassford and Lynn G. Truesdell, III, Minneapolis, for employer-petitioner and insurer-petitioner.
William C. Hoffman, St. Paul, for Kahl.
Warren Spannaus, Atty. Gen., Richard Allyn, Sol. Gen., Winston Ehlmann, Asst. Atty. Gen., St. Paul, for State of Minnesota.
Heard, considered, and decided by the court en banc.
The narrow issue presented by these proceedings initiated in this court for a writ of prohibition is whether, in a workers' compensation proceeding to impose a penalty for unreasonably and vexatiously delaying payment pursuant to Minn.St. 176.225, an employer-insurer is precluded from asserting the attorney-client privilege. We hold that the applicable provisions of our workers' compensation laws do not abrogate the common-law privilege reiterated in § 595.02(2) and that it may be asserted to prevent disclosure of any communications falling within the purpose and scope of the privilege.
Following an award of compensation benefits for a back injury, the employee filed an amended petition seeking the imposition of a penalty pursuant to § 176.225, upon allegations that the employer-insurer unreasonably and vexatiously refused and delayed payment of benefits. At the hearing and in response to the employee's subpoena, the insurer produced its file, but its counsel informed the compensation judge that documents pertaining to communications between the insurer and its counsel had been removed upon claims of privilege and "attorney's work product."1 Although of the view that the privilege did not apply, the judge did not order full disclosure, finding that the delay in payment of benefits was due to the employee's refusal, after waiver of medical privilege, to allow the insurer unconditional disclosure of the employee's preinjury medical records.2 Upon the employee's appeal, the Workers' Compensation Court of Appeals issued an order reciting that the penalty issue "creates the need of the examination of the insurer's file" and requiring the insurer to furnish the court its "complete original file * * * without any deletions whatsoever." On petition of employer-insurer, these prohibition proceedings followed.
The employer-insurer contends that the order violates § 595.02(2). This statute provides:
"An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him or his advice given thereon in the course of professional duty; nor can any employee of such attorney be examined as to such communication or advice, without the client\'s consent."
The court of appeals found § 595.02(2) not applicable by reason of § 176.225, which provides in part:
The employee, in support of the order, points to § 176.411, subd. 1, which provides:
Although the broad language used in these provisions appears to lend support to the challenged order, our consideration of the history and policy underlying the attorney-client privilege convinces us that the privilege should not be abrogated in compensation proceedings, including those concerning an assessment of penalties. Section 595.02(2) was first enacted in 1851. It was recognized in Struckmeyer v. Lamb, 75 Minn. 366, 77 N.W. 987 (1899), as embodying the common-law privilege, which since the 18th Century has had universal acceptance as indispensable to an attorney's professional relationship with his client. Unlike the exclusionary rules of evidence, which have for their purpose finding the truth of a factual dispute by excluding unreliable, prejudicial, or misleading evidence, the rule suppressing disclosure of confidential communications from the client as well as advice from the attorney has for its purpose protecting a narrowly prescribed relationship, preservation of which by prohibiting such disclosure is regarded as of greater social importance than the benefits which would be gained by the state's exercise of its coercive or supervisory powers to compel the client and the attorney to make their private discussions public.3 This ancient and well-established resolution of conflicting social values between accurate factfinding and protection of the attorney-client relationship promotes the administration of our adversary system of justice by insuring that a client with claims that may lead to litigation can best pursue them by employing an attorney. The attorney can only effectively fulfill his roles as counselor, intermediary, and advocate if the client, assured of confidentiality, is wholly free to completely and candidly disclose all the facts, favorable or unfavorable, to him.
We have recognized that § 176.411, subd. 1, plainly evinces the legislature's intention that workers' compensation proceedings are not to be governed by strict rules of evidence. Johnson v. Iverson, 175 Minn. 319, 221 N.W. 65, 222 N.W. 508 (1928); Debeltz v. Oliver Iron Min. Co., 172 Minn. 549, 216 N.W. 240 (1927). However, the attorney-client privilege should not be viewed as merely an exclusionary rule, even though at the trial stage it may incidentally and secondarily have that effect. Rather, the ancient history and wide recognition of the attorney-client privilege persuades us that the rule must be regarded as peculiarly related to the practice of law and our adversary system of administering justice and, therefore, not properly within the scope of § 176.411, subd. 1. The inherent power of this court to regulate the practice of law, based on Minn.Const. art. 3, § 1, and recognized by the legislature in Minn.St. 480.05, further supports our conclusion. Accordingly, we construe § 176.225, subd. 2, as permitting the court of appeals to examine the employer-insurer's books, records, and other information relating to the payment of compensation except for materials privileged by reason of § 595.02(2).4
The attorney general urges that § 176.225, subd. 2, is a regulatory statute and that public policy requires us to construe it as...
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