Longs Drug Stores v. Howe

• Citation: 134 Ariz. 424,657 P.2d 412
• Decision Date: 04 January 1983
• Docket Number: No. 16242-SA,16242-SA
• Parties: LONGS DRUG STORES, a California corporation; Ray and Jane Doe Fragie; Gregg and Jane Doe King; Jim and Jane Doe McVeigh; Dixie and John Doe Lard; Lynn and John Doe Schmidt, Petitioners, v. The Honorable Joseph D. HOWE, Maricopa County Superior Court Judge, Respondent, and William and Toria Vanee Sorman, Respondents Real Parties in Interest.
• Court: Arizona Supreme Court

Page 412

657 P.2d 412

134 Ariz. 424

LONGS DRUG STORES, a California corporation; Ray and Jane Doe Fragie; Gregg and Jane Doe King; Jim and Jane Doe McVeigh; Dixie and John Doe Lard; Lynn and John Doe Schmidt, Petitioners, v. The Honorable Joseph D. HOWE, Maricopa County Superior Court Judge, Respondent and William and Toria Vanee Sorman, Respondents Real Parties in Interest.

No. 16242-SA.

Supreme Court of Arizona, In Banc.

Jan. 4, 1983.

Fennemore, Craig, von Ammon & Udall by Thomas V. Rawles, Phoenix, for petitioners.

Hocker & Axford by Naida B. Axford, Tempe, for respondents real parties in interest.

FELDMAN, Justice.

By special action, petitioners challenge an order of the trial court which required production of statements and reports. There being no remedy by appeal and the issues raised in this special action being sufficiently important to justify review, Jolly v. Superior Court of Pinal County, 112 Ariz. 186, 188, 540 P.2d 658, 660 (1975); Zimmerman v. Superior Court, 98 Ariz. 85, 87, 402 P.2d 212, 213 (1965), we accepted jurisdiction pursuant to Ariz. Const. art. 6, § 5(4).

William A. Sorman (Sorman) and Toria Vanee Sorman brought an action in the Superior Court of Maricopa County against the petitioners here, Longs Drug Stores and several of its employees (Longs). Sorman alleged he was wrongfully discharged from his employment with Longs and sought damages for wrongful termination of the employment contract.

The incomplete record before us indicates that immediately after Sorman was terminated, he retained the services of counsel. Longs learned of this and one of its executive employees requested Longs' house counsel, Barker, to gather the facts and render legal advice. Assuming that litigation was possible, if not probable, Barker gathered some information with regard to the nature of the claim, discussed the matter with Sorman's counsel, and then requested that representatives of Farmers Insurance Group (Farmers) undertake an investigation of the circumstances surrounding Sorman's termination. An employee of Farmers undertook an investigation which included discussions with Longs' employees, taking recorded statements made by Longs' employees and "reviewing those statements with such employees." Reports and copies of the statements were then provided to Barker and reviewed by him as part of his evaluation of the case and, presumably, formed the basis for whatever legal advice he may have rendered to Longs.

The investigator took the statements in May of 1982. Sorman later requested production of the statements and reports pursuant to Ariz.R.Civ.P. 34. ¹ On August 2, 1982, Longs responded, refusing to produce the statements or reports on the grounds of the "attorney/client and work product privileges." Sorman then moved under Rule 37 for an order requiring Longs to produce the following:

Any and all reports written by independent investigators included but not limited to George Columbo [the Farmers claims investigator] which describe or in any way relate to plaintiff William Sorman and/or his termination from Longs.

By minute entry order dated October 1, 1982, the trial court granted Sorman's motion. Longs then filed this special action, claiming that the order requiring them to produce the witnesses' statements and investigative reports was arbitrary, capricious and an abuse of discretion. We find that on the facts of this case the breadth of the trial court's order exceeded the limits set by Rule 26(b)(3).

THE ATTORNEY-CLIENT PRIVILEGE

Longs claims that the reports made by Columbo and statements taken by him are immune from discovery under the attorney-client privilege. A.R.S. § 12-2234. This argument rests upon a two-step analysis. First, Longs claims that Columbo was an agent of its attorney, Barker. Thus, any communications received by the investigator from Barker's "client" were privileged. Second, based upon the recent United States Supreme Court decision in Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981), ² Longs claims the communications made by Longs' lower-level employees to the investigator were communications from the "client" and were protected by the privilege.

Addressing the first prong of this argument, we recognize that some courts have extended the privilege to communications relayed from client to attorney through the latter's agents and intermediaries, including investigators. See United States v. Kovel, 296 F.2d 918, 920-23 (2d Cir.1961); American National Watermattress Corp. v. Manville, 642 P.2d 1330, 1333-34 (Alaska 1982); City and County of San Francisco v. Superior Court, 37 Cal.2d 227, 234-38, 231 P.2d 26, 29-32 (1951); 1 M. Udall & J. Livermore, Arizona Practice, Law of Evidence § 74, at 140-41 (2d ed. 1982). Even assuming, without deciding, that we were to adopt this reasoning, we do not agree that the Farmers investigator was an agent of Barker to the extent that the attorney-client privilege is applicable.

We have previously held that statements taken from an insured by insurance investigators working on a case in anticipation of litigation are not communications to counsel and are not within the attorney-client privilege. Butler v. Doyle, 112 Ariz. 522, 525, 544 P.2d 204, 207 (1975); see also State Farm Insurance Company v. Roberts, 97 Ariz. 169, 175, 398 P.2d 671, 674 (1965). Longs attempts to distinguish Butler on the grounds that the record in this case does not indicate that Farmers was investigating the claim because of any interest of its own as insurer, but was doing so only at the request of Barker. This is true; however, the record also fails to provide any information at all with respect to the reason for Farmers' involvement. Longs argues that on this record the trial court was bound to assume that Farmers had "lent" its claims investigator to Longs for the purpose of making this investigation, and that Farmers was not involved in the case as an insurer. We do not believe the trial judge is required to indulge in assumptions so contrary to common experience. If Columbo had been lent to Longs so that his services were performed only for Longs and it was work in which Farmers had neither interest nor right, then it was incumbent upon Longs to make a specific record on that point. ³ Having failed to do so, Longs failed in its burden of establishing that the material in question fell within the attorney-client privilege. The trial court was correct in concluding that the rule of Butler v. Doyle was applicable and that the material was not within the attorney-client privilege.

Having concluded that the investigator was not acting solely as an agent of the attorney, we need not reach the second issue concerning the applicability of the Upjohn decision to these facts.

TRIAL PREPARATION MATERIAL

Longs next asserts that the statements and reports were made and obtained in anticipation of litigation and are therefore immune from discovery under the "work product privilege."

We note at the outset that the concept of "work product" immunity was never a "privilege" in American jurisprudence as it was in England. Hickman v. Taylor, 329 U.S. 495, 509-10, 67 S.Ct. 385, 393, 91 L.Ed. 451 (1947). The Court in Hickman recognized, however, "the general policy against invading the privacy of an attorney's course of preparation" that is "so essential to an orderly working of our system of legal procedure." Id. at 512, 67 S.Ct. at 394. In order to effectuate this policy and provide protection to material such as witness statements taken during the course of an attorney's preparation, the Court stated that it was incumbent on the party seeking discovery of "relevant and non-privileged facts" in the other party's possession to "establish adequate reasons to justify production." ⁴ Id. at 511-12, 67 S.Ct. at 394.

The Court afforded more protection, however, to materials which reflect the attorney's mental impressions or opinions about a case. The Court reasoned that:

Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten. An attorney's thoughts, heretofore inviolate, would not be his own. Inefficiency, unfairness and sharp practices would inevitably develop in the giving of legal advice and in the preparation of cases for trial. The effect on the legal profession would be demoralizing. And the interests of the clients and the cause of justice would be poorly served.

Id. at 511, 67 S.Ct. at 393-94.

Arizona practice has always conformed to the Hickman rule on the question of discovery of an attorney's trial preparation materials. See Zimmerman v. Superior Court, 98 Ariz. 85, 402 P.2d 212 (1965); Dean v. Superior Court, 84 Ariz. 104, 324 P.2d 764 (1958).

The protection for trial preparation materials was reformulated in the revision of the discovery rules in 1970. In pertinent part, Rule 26(b)(3) now provides:

Subject to the provisions of subdivision (b)(4) of this rule, a party may obtain discovery of documents and tangible things otherwise discoverable under subdivision (b)(1) of this rule and prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including his attorney, consultant, surety, indemnitor, insurer, or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of his case and that he is unable without undue hardship to obtain the substantial equivalent of the materials by other means. In ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation. The 1970 revisions eliminated the "good cause" language as a predicate to production under Rule 34. With respect to trial preparation materials, Rule 26(b)(3) substituted...