Wellpoint Health Networks, Inc. v. Superior Court

Citation59 Cal.App.4th 110,68 Cal.Rptr.2d 844
Decision Date13 November 1997
Docket NumberNo. B110436,B110436
CourtCalifornia Court of Appeals
Parties, 75 Fair Empl.Prac.Cas. (BNA) 706, 97 Cal. Daily Op. Serv. 8639, 97 Daily Journal D.A.R. 13,991 WELLPOINT HEALTH NETWORKS, INC. et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Barry McCOMBS, Real Party in Interest.

Lafayette, Kumagai & Clarke, Gary T. Lafayette and Susan T. Kumagai, San Francisco, for Petitioners.

No appearance for Respondent.

Jeffrey K. Winikow, Los Angeles, for Real Party in Interest.

BARON, Associate Justice.

In this case we are asked to resolve two issues: (1) whether a law firm's prelitigation investigation into the circumstances surrounding the claims of an employee who may have suffered discriminatory treatment is protected by the attorney-client privilege and/or the attorney work product doctrine, and (2) if so, whether the employer waives these protections when it raises the investigation as a defense to the employee's ensuing discrimination lawsuit. The trial court ruled that a prelitigation investigation of an employee's discrimination claims did not result in attorney-client communications or attorney work product and so did not reach the second issue. After review of the record, we conclude that no substantial evidence supports the trial court's ruling concerning the inapplicability of the privilege and the work product doctrine. We further hold that resolution of the waiver issue is dependent on the claims asserted in the complaint and the defenses raised thereto. As there was neither a complaint nor an answer on file when the trial court made its ruling, the order compelling discovery was premature. We, therefore, instruct the trial court to vacate its order requiring production of the investigative files prepared on behalf of petitioners. We do this without prejudice to the employee's ability to bring a motion to compel production of the subject documents at a later stage in the proceedings.

The Complaint and Initial Discovery

Real party in interest Barry McCombs brought a complaint against defendants Wellpoint Health Networks, Inc., Blue Cross of California, and Craig Plassmeyer. He alleged that he was employed by Blue Cross since 1987. He reportedly received several merit increases, outstanding performance reviews, and a promotion, but was denied a further promotion in May of 1994 despite the recommendation of his immediate supervisor.

According to the complaint, when McCombs tried to find out why, he was given no satisfactory answer and came to the conclusion that it was due to racial discrimination. Defendant Plassmeyer was an independent contractor brought in to supervise McCombs's department at around this time. McCombs believed Plassmeyer was responsible for the failure to obtain the promotion.

In a separate incident in 1994, McCombs complained about inadequate disclosures to potential investors when Wellpoint spun off from Blue Cross. At the same time, he continued to bring up his suspicions about racial discrimination and went to the Human Resources Department with his concerns. Ultimately, he filed a formal charge with the Department of Fair Employment and Housing ("DFEH"). Thereafter, according to the complaint, McCombs began to receive negative performance reviews and was "singled out, harassed and maligned." He "became a marked man" and "... Plassmeyer became verbally abusive with McCombs and sought to undermine McCombs' credibility with his peers and with management."

McCombs took a medical leave of absence in January 1995, which he attributed to the "abusive conduct[.]" In May of 1995, when he returned, he was laid off after the work of his department was contracted out to Arthur Andersen & Co.

The complaint purported to state a cause of action for interference with prospective contractual relations based on McCombs's failure to obtain employment with Arthur Andersen, which he believed was the result of information provided by defendants. The second cause of action alleged that defendants retaliated against McCombs for filing the DFEH complaint by "abuse" and by "negative performance criticism" prior to the lay off, in violation of California's Fair Employment and Housing Act (FEHA) (Gov.Code, § 12900 et. seq.). The third cause of action was for failure to promote due to the 1994 complaint to the DFEH. It too was brought under the FEHA. The fourth cause of action claimed "wrongful retaliation in violation of public policy." Here, McCombs alleged that "defendant refused to promote plaintiff to a supervisor's position, and otherwise maintained a retaliatory and oppressive work environment based upon (i) plaintiff's race, (ii) plaintiff's efforts to oppose racial discrimination, and (iii) plaintiff's efforts to ensure compliance with federal and state securities laws."

In their answer to the first amended complaint, defendants alleged in two separate affirmative defenses that "they had no knowledge plaintiff was subject to discrimination and/or retaliation in the workplace as alleged in his complaint," and that "all reasonable steps to prevent any alleged discrimination and/or retaliation were taken once these answering defendants were made aware of plaintiff's complaints."

McCombs submitted a request for admission asking Wellpoint to admit that "McCombs was faulted for having raised issues of racial discrimination with Blue Cross' human resources department." Wellpoint denied the request for admission, and in response to an interrogatory seeking the facts on which such denial was based, stated: "Plaintiff was never 'faulted' for having raised issues of race discrimination. Each one of his complaints for race discrimination was taken seriously and a complete investigated [sic] was conducted." 1

In December of 1996, defendants' demurrer to the first amended complaint was sustained in part with leave to amend. The court ruled that the claim for "wrongful retaliation in violation of public policy" could not be based on conduct that was discriminatory without being retaliatory and that since McCombs failed to specify when the objectionable treatment occurred, except for the alleged misinformation supplied to preclude McCombs's employment with Arthur Andersen, the claim would have to be amended. Insofar as the claim was based on the alleged whistleblowing, the court ruled that it was untimely.

McCombs filed a second amended complaint. Defendants again demurred. In conjunction with the discovery order which is the subject of the pending writ petition, the trial court sustained the demurrer to the The Document Request and Subpoena

second amended complaint in its entirety with leave to amend certain causes of action. The court ruled that the allegedly retaliatory acts of denying McCombs a promotion and giving him a negative performance evaluation predated the relevant limitations period, and that he had not met his burden of showing a continuing violation. The court further ruled that much of the alleged conduct--"denial of the right to an impartial investigation, firing and 'silencing' of a co-employee who supported [McCombs] and failure to inform [McCombs] during his medical leave that his position was eliminated"--did not constitute adverse employment action against McCombs. The court continued to believe that certain allegations had not been sufficiently pleaded, including the source of the public policy needed to support the claim of termination in violation of public policy and the date of the negative performance evaluation. Thus, when the trial court ruled on the motion to compel, there was no viable claim on file.

The issues raised by this petition arise from an investigation undertaken by the employer 2 prior to McCombs's lay off and lawsuit. In 1994, in response to McCombs's initial concerns, the law firm of Lafayette, Kumagai & Clarke performed an investigation on the employer's behalf. Gary Lafayette sent a letter to McCombs discussing the findings in three areas: failure to promote, unfair performance appraisal, and unfair discriminatory actions. The letter, dated November 1, 1994, summarized interviews with McCombs's supervisors concerning the reason the promotion fell through and the facts behind the negative performance review. It also discussed whether any negative comments or punitive actions had been taken against McCombs. The letter concluded that McCombs's suspicions of racial discrimination were unsupported by the investigation, and that "each charge [McCombs] ha[d] filed in the past ha[d] been fully investigated and taken seriously."

With this letter in mind, McCombs caused a deposition subpoena to be issued to Gary Lafayette, who at that point was representing defendants in the lawsuit. The terms of the subpoena are set forth in the footnote. 3

McCombs also sought his own "complete personnel file" which was defined [59 Cal.App.4th 118] to include documents pertaining to the " 'investigation of EEOC or DFEH matters,' " in a request to produce documents directed to Wellpoint and Blue Cross. Lafayette refused to produce such documents, raising the attorney-client privilege and work product doctrine. Similarly, Wellpoint and Blue Cross refused to produce documents related to the law firm's investigation of McCombs's initial complaints on attorney-client and work product grounds.

The discovery dispute was heard by a referee appointed by the trial court, retired judge Paul Breckenridge, who concluded the employer should be required to produce all documents responsive to the "complete personnel file" request, including documents related to the law firm's investigation. The report and recommendation specified that the responding parties "may redact from writings any attorney impressions, conclusions or portions representing attorney's thought processes," but further directed that "[c]opies of redacted and unredacted writings must be submitted to the...

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