McDermott Will & Emery LLP v. Superior Court of Orange County

Filed 4/18/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

McDERMOTT WILL & EMERY LLP
et al.,

Petitioners,
G053623
v.
(Super. Ct. Nos. 30-2015-00785773
THE SUPERIOR COURT OF ORANGE & 30-2015-00785872)
COUNTY,
OPINION
Respondent;

RICHARD P. HAUSMAN, SR., et al.,

Real Parties in Interest.

Original proceedings; petition for a writ of mandate to challenge two orders
of the Superior Court of Orange County, Sheila Fell, Judge. Petition denied.
Gibson, Dunn & Crutcher, James P. Fogelman, Julian W. Poon, Shannon E.
Mader and Jennafer M. Tryck for Petitioners.
No appearance for Respondent.
Sall Spencer Callas & Krueger, Robert K. Sall, Suzanne Burke Spencer and
Michael A. Sall for Real Parties in Interest.
* * *
 In this original proceeding, we consider several issues relating to a
confidential attorney-client communication, including (1) whether the client waived the
attorney-client privilege by disclosing the communication to third parties, and
(2) whether the trial court erred in disqualifying the law firm that represented one of
those third parties because its attorneys failed to notify the client or the client‟s attorney
that counsel had obtained a copy of the communication, reviewed and analyzed the
communication, and used it in the lawsuit.
The trial court found that plaintiff and real party in interest Richard P.
Hausman, Sr. (Dick),1 did not waive the attorney-client privilege by forwarding a
confidential e-mail he received from his personal attorney to his sister-in-law because
Dick inadvertently and unknowingly forwarded the e-mail from his iPhone, and therefore
lacked the necessary intent to waive the privilege. The trial court also impliedly found
that Dick‟s sister-in-law did not waive the privilege when she forwarded the e-mail to her
husband, who then shared it with four other individuals, because neither Dick‟s
sister-in-law nor his brother-in-law could waive Dick‟s attorney-client privilege, and
Dick did not consent to these additional disclosures because he did not know about either
his initial disclosure or these additional disclosures until a year after they occurred.
In a separate order, the trial court disqualified Gibson, Dunn &
Crutcher LLP (Gibson Dunn) from representing defendants and petitioners McDermott
Will & Emery LLP and Jonathan C. Lurie (collectively, Defendants) in the underlying
lawsuits because Gibson Dunn failed to recognize the potentially privileged nature of the
e-mail after receiving a copy from Lurie, and then analyzed and used the e-mail despite

1
The other plaintiffs and real parties in interest are Mary Jo Hausman
(Mary Jo), John Gavin Hausman (John), and Teresa Lynn Hausman (Teri). Because
members of the same family are involved in this matter, we use their first names for the
sake of clarity, and no disrespect is intended. We collectively refer to Dick, Mary Jo,
John, and Teri as Plaintiffs.

2
Dick‟s objection that the e-mail was an inadvertently disclosed privileged document. The
court explained Gibson Dunn had an ethical obligation to return the privileged material
and refrain from using it under State Comp. Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th
644 (State Fund). The court found Gibson Dunn‟s disqualification was necessary
because there was a genuine likelihood Gibson Dunn‟s improper use of the e-mail would
affect the outcome of the lawsuit, the integrity of the judicial proceedings, and the
public‟s confidence in the proceedings.
Defendants petition this court for a writ of mandate directing the trial court
to vacate both its order finding Dick did not waive the attorney-client privilege as it
applied to the e-mail, and its order disqualifying Gibson Dunn from representing
Defendants in the underlying lawsuits. We deny the petition in its entirety. As we
explain below, substantial evidence supports the trial court‟s orders and the court did not
abuse its discretion in selecting disqualification as the appropriate remedy to address
Gibson Dunn‟s violation of its State Fund duties.
Contrary to Defendants‟ contention, an attorney‟s State Fund duties are not
limited to inadvertently disclosed, privileged documents the attorney receives from
opposing counsel, but also may apply to documents the attorney receives from the
attorney‟s client. Indeed, regardless of how the attorney obtained the documents,
whenever a reasonably competent attorney would conclude the documents obviously or
clearly appear to be privileged and it is reasonably apparent they were inadvertently
disclosed, the State Fund rule requires the attorney to review the documents no more than
necessary to determine whether they are privileged, notify the privilege holder the
attorney has documents that appear to be privileged, and refrain from using the
documents until the parties or the court resolves any dispute about their privileged nature.
The receiving attorney‟s reasonable belief the privilege holder waived the privilege or an
exception to the privilege applies does not vitiate the attorney‟s State Fund duties. The
trial court must determine whether the holder waived the privilege or an exception

3
applies if the parties fail to reach an agreement. The receiving attorney assumes the risk
of disqualification when that attorney elects to use the documents before the parties or the
trial court has resolved the dispute over their privileged nature and the documents
ultimately are found to be privileged.

I

FACTS AND PROCEDURAL HISTORY

A. The Hausman Family, Defendants’ Legal Representation, and the Dispute Over
M. Hausman, Inc.
Marilyn H. Hausman and her husband, Dick, had four children, Mary Jo,
John, Teri, and Richard P. Hausman, Jr. (Rick). The primary source of the couple‟s
considerable wealth was Marilyn‟s multi-million dollar investment portfolio. In 2000,
Marilyn formed a holding corporation, M. Hausman, Inc. (MHI), to manage her portfolio.
Marilyn was MHI‟s sole shareholder and director, and also served as its president. Dick
served as the officer primarily responsible for making and managing MHI‟s investments,
and joined Marilyn as a director in 2002. A few years later, Rick and William J. Cox also
became directors of MHI. According to Dick, the value of MHI‟s portfolio grew to
approximately $50 million under his management.
In approximately 2002, Marilyn and Dick hired Defendants to provide a
variety of estate planning services for their family. Over the years, Lurie formed several
trusts and subtrusts for Marilyn and Dick, and the assets of those trusts included the
shares in MHI. Dick, Rick, and Cox were appointed as cotrustees for many of these
trusts, and the trust beneficiaries included the four Hausman children and Marilyn‟s
mother. As part of their representation of the Hausman family, Defendants also
represented MHI on corporate, employment, and other miscellaneous matters.
Marilyn died in June 2008, and Dick succeeded her as MHI‟s president.
Rick and Cox also became vice presidents at that time. Over the next several years, MHI

4
continued to operate under the direction of Dick, Rick, and Cox, and Defendants
continued to represent the members of the Hausman family and MHI.
In 2013, Dick agreed to Rick‟s request to be named MHI‟s president so
Rick could gain experience in managing MHI, but Dick continued to perform many of
the president‟s essential functions. Soon after becoming president, Rick sought to
dramatically increase his and Cox‟s salaries and other benefits, but Dick objected because
he thought the substantial increases were not in MHI‟s best interests or the best interest of
the various trust beneficiaries. A struggle for control of MHI ensued and Dick, Rick, and
Cox engaged in protracted discussions attempting to resolve their dispute. To advise him
in these discussions and about his options under the various trusts, Dick hired his own
attorney, Mark Blaskey.
On August 22, 2013, Dick, Rick, Cox, Blaskey, and Lurie met to discuss
their disagreement. Immediately after that meeting, Dick, Blaskey, and Jill Lindsay met
to review their options. Lindsay was MHI‟s employee and bookkeeper, but she also
performed a variety of services for the various Hausman trusts and she was Dick‟s
longtime personal assistant and advisor. Lindsay worked for Dick for nearly 40 years,
starting as his executive secretary when he was an executive with Allergan and then
working personally for him after he left the company. In her capacity as Dick‟s personal
assistant, Lindsay regularly received and maintained correspondence on Dick‟s behalf.

B. The Blaskey E-mail
On August 27, 2013, Blaskey sent Dick a lengthy e-mail summarizing the
August 22 meeting and providing legal advice to Dick about his options for resolving the
dispute. Blaskey entitled the e-mail “Summary of 8/22/13 meeting,” and copied Lindsay
and his law partner, Alan Kessel. He copied Lindsay on the e-mail because she was
responsible for maintaining Dick‟s correspondence. Lindsay replied to all recipients the
same day.

5
 The following day Dick forwarded the Blaskey e-mail from his iPhone to
“„Mr. & Mrs. Gavin Shearer Herbert” at Ninetta Herbert‟s e-mail address. Dick‟s
transmission did not include any additional text other than “Sent from my iPhone.” That
same day Ninetta forwarded the e-mail to Gavin at his e-mail address. Gavin was
Marilyn‟s brother and Dick‟s brother-in-law. Gavin had not been involved in the various
Hausman trusts or MHI for many years, but he was attempting to act as an intermediary
or informal mediator to resolve the dispute between Dick, Rick, and Cox. Gavin engaged
in several discussions with these individuals and also Lurie and Blaskey about the
dispute.
Dick testified he did not intend to forward the Blaskey e-mail to Ninetta or
Gavin, and did not know he had done so until the forwarded e-mail came to light
approximately a year later. Dick was nearly 80 years old when he forwarded the e-mail
and he explained multiple sclerosis had limited his physical dexterity. Gavin testified he
did not recall receiving the Blaskey e-mail and he had not read it before it was shown to
him at his deposition. He further testified that he had no idea why Dick would forward
the e-mail to Ninetta, that doing so must have been a mistake, and that he never discussed
the e-mail with Dick. Finally, Gavin testified he could not find a copy of the Blaskey
e-mail when he was later asked to do so.
On September 4, 2013, Rick, Cox, and Greg Pellizzon, a financial advisor
who was working with MHI, met with Gavin to discuss the ongoing dispute. According
to Rick and Pellizzon, Gavin passed out copies of the Blaskey e-mail at this meeting and
described them as minutes from the August 22 meeting. Gavin testified he had no
recollection of this. Pellizzon testified he read the e-mail during the meeting, but did not
keep a copy. During this meeting, Gavin also phoned Lurie to discuss the dispute and
later that day forwarded the Blaskey e-mail to Lurie, although Gavin testified he did not
recall this. Lurie testified he had some discussions with Gavin about the e-mail‟s
contents.

6
C. The Probate Action
Unable to resolve the dispute with Rick and Cox, Dick exercised a power
he believed he held under the various trusts to reacquire all of MHI‟s voting shares and
seize control of the company. Lurie, however, asserted Dick could no longer reacquire
MHI‟s voting shares because Lurie had eliminated that option under the trusts‟ terms
shortly after Marilyn‟s death. In October 2013, Dick filed a probate petition to confirm
the actions he had taken to reacquire all MHI voting shares under the various Hausman
family trusts (hereinafter, Probate Action).
In August 2014, Rick‟s counsel in the Probate Action, Jason Kirby,
discovered a copy of the Blaskey e-mail among Rick‟s documents as he prepared to
respond to Dick‟s demand to produce documents. Kirby pulled the e-mail and separately
sent it to Dick‟s counsel, Alan Kessel, with a letter explaining the e-mail appeared to be a
privileged communication between Blaskey and Dick, but that Dick later waived the
privilege by forwarding it to Ninetta and Gavin. The letter further explained that Rick
obtained a copy of the e-mail when Gavin handed it out at the September 4, 2013 meeting
involving Rick, Cox, Pellizzon, and Gavin. Kirby asked whether Dick‟s counsel would
claim the Blaskey e-mail still was privileged, and if so, for authority supporting that
contention. Finally, Kirby assured Dick‟s counsel he had not used or disclosed the
contents of the e-mail. This letter was the first time Dick and his attorney learned the
Blaskey e-mail had been forwarded to anyone other than the original recipients, and they
did not yet know the e-mail also had been forwarded to Lurie.
Dick‟s attorney, Kessel, responded that the Blaskey e-mail was a privileged
attorney-client communication, and that Dick inadvertently disclosed the e-mail to
Ninetta without intending to waive the privilege. Dick‟s counsel explained that Dick
rarely communicated with Ninetta and never talked to her about MHI affairs, and
therefore he inadvertently forwarded the e-mail to Ninetta when he was trying to forward
it to Lindsay. Based on State Fund and Rico v. Mitsubishi Motors Corp. (2007)

7
42 Cal.4th 807 (Rico), Dick‟s counsel argued Kirby had an ethical obligation to return the
inadvertently disclosed e-mail and destroy any copies. Dick‟s counsel also asked Kirby
to contact any other party he knew had received a copy of the Blaskey e-mail, including
Ninetta, Gavin, and Pellizzon, and direct them to destroy their copies.
Kirby argued neither Rico nor State Fund applied because those cases did
not involve a client waiving the privilege by disclosing a communication to third parties
before any litigation arose. Nonetheless, Kirby agreed to destroy all copies of the
Blaskey e-mail except one, to seal that copy, and only use the copy to resolve the parties‟
dispute over whether Dick had waived the attorney-client privilege. Kirby also promised
not to question anyone about the e-mail‟s content until the parties resolved the waiver
issue. Finally, Kirby asserted he had no obligation to ask third parties to return the
Blaskey e-mail. All parties to the Probate Action honored this agreement for several
months.
In late July 2015, Defendants produced several thousand pages of
documents in the Probate Action based on Dick‟s subpoena, and that production included
a copy of the Blaskey e-mail that Gavin had forwarded to Lurie in September 2013. On
August 13, 2015, the parties deposed Lurie in the Probate Action, and James Fogelman of
Gibson Dunn represented Lurie in the deposition. When Rick‟s counsel questioned Lurie
about the copy of the Blaskey e-mail that was included in Defendants‟ document
production, Dick‟s attorney, Paul George, immediately objected that the e-mail was
privileged and should not be used in the deposition. George also explained that Dick‟s
other attorney, Kessel, had asked Rick‟s counsel to return all copies of the e-mail. This
was the first time Dick and his counsel learned the Blaskey e-mail had been forwarded to
Lurie.
Fogelman claimed the Blaskey e-mail was not privileged and asserted
neither he nor Defendants had ever been asked to return it. To remove any doubt, Dick‟s
counsel therefore requested that Fogelman and his clients return all copies of the Blaskey

8
e-mail because Dick inadvertently disclosed the privileged communication and all
attorneys, including Lurie, had an ethical obligation to return or destroy inadvertently
disclosed, privileged communications. Fogelman refused to return or destroy the Blaskey
e-mail, disputing it was privileged because Dick had disclosed it to third parties,
including Ninetta, Gavin, and Lindsay. Fogelman claimed an attorney‟s ethical
obligation to return inadvertently disclosed documents only applied to documents that
were inadvertently produced during discovery. Dick‟s counsel disagreed and the
deposition continued. Lurie testified he reviewed the e-mail to refresh his recollection
before the deposition, but he did not specifically testify about the e-mail‟s content.

D. The Malpractice Actions
In May 2015, Plaintiffs filed two malpractice lawsuits against Defendants
based on an alleged conflict in representing various members of the Hausman family, the
Hausman family trusts, and MHI (collectively, Malpractice Actions). They brought one
suit in their individual capacities and as trustees under certain Hausman family trusts.
They brought the second lawsuit as a derivative action on MHI‟s behalf. Dick has
different counsel in the Malpractice Actions than he had in the Probate Action, and
Defendants are represented in the Malpractice Actions by Fogelman and Gibson Dunn.
On August 19, 2015, less than a week after Lurie‟s deposition in the
Probate Action, Gibson Dunn deposed Lindsay in the Malpractice Actions. Lindsay
testified she worked for MHI, the Hausman family trusts, and Dick personally at the time
she received the Blaskey e-mail.
Five days later, Gibson Dunn deposed Mary Jo in the Malpractice Actions.
Fogelman marked the Blaskey e-mail as an exhibit, sought to question Mary Jo about it,
and read substantial portions of it into the record. Dick‟s attorney, Suzanne Burke
Spencer, explained she was not familiar with the document or how it was produced, but
she asserted it was a privileged, attorney-client communication that appeared to have

9
been produced inadvertently and she requested that Fogelman return all copies. He
disputed that the e-mail was privileged or that either Lurie or Gibson Dunn had an
obligation to return the e-mail because Dick had disclosed it voluntarily to various third
parties. Spencer maintained her privilege objection and demand for the return of the
e-mail, but stated she would allow questions about the e-mail subject to a motion to strike
once she learned the circumstances surrounding the communication and its disclosure.
Fogelman failed to inform Spencer that Dick‟s attorney in the Probate Action had raised
the same objections less than two weeks earlier at Lurie‟s deposition in that separate
lawsuit, nor did he inform her of the agreement the parties in that lawsuit reached about
the e-mail. The following day, Gibson Dunn deposed Teri in the Malpractice Actions
with Fogelman and Spencer engaging in essentially the same exchange. On
August 24, 2015, Fogelman also quoted the Blaskey e-mail in interrogatory responses
he served on Defendants‟ behalf.
On September 4, 2015, Spencer wrote Fogelman to explain the Blaskey
e-mail remained a privileged communication between Dick and Blaskey. Spencer
explained Lindsay‟s inclusion on the e-mail did not destroy the privilege because she
received it as Dick‟s personal assistant, Dick‟s inadvertent disclosure of the e-mail did
not waive the privilege because he did not intend to disclose the e-mail to Ninetta or
anyone else, and the disclosure of the e-mail by various third parties was done without
Dick‟s consent. Spencer further explained that Rick‟s counsel in the Probate Action
recognized the privileged nature of the Blaskey e-mail and brought it to the attention of
Dick‟s counsel even though Rick‟s counsel also asserted the privilege had been waived.
The attorneys in the Probate Action then agreed to preserve the e-mail‟s privileged status
while they attempted to resolve the dispute over whether Dick waived the privilege.
Spencer also asserted Fogelman knew Dick had claimed the e-mail was privileged and
demanded its return because Fogelman had attended Lurie‟s deposition in the Probate
Action, but Fogelman nonetheless used the e-mail at Mary Jo‟s and Teri‟s depositions in

10
the Malpractice Actions without informing her about those objections. Finally, based on
Rico and State Fund, Spencer asserted Fogelman had an ethical obligation to return or
destroy all copies of the Blaskey e-mail and she demanded that he do so immediately.
After receiving Spencer‟s letter, Fogelman agreed that Gibson Dunn would
temporarily stop using the Blaskey e-mail while the parties conducted discovery about
the circumstances surrounding the e-mail and its disclosure. Nonetheless, Gibson Dunn
produced a copy of the Blaskey e-mail as part of a larger document production in the
Malpractice Actions on September 14, 2015.
During September and October 2015, Spencer conducted discovery about
the Blaskey e-mail, but asserted additional discovery was still required on the waiver
issue, including Lurie‟s deposition. In mid-November 2015, Fogelman wrote Spencer
claiming Dick had been given sufficient time to explore the circumstances surrounding
the e-mail and its disclosure, and none of the information uncovered established the
Blaskey e-mail was a privileged communication. Fogelman therefore announced Gibson
Dunn would resume using the e-mail.

E. The Privilege and Disqualification Motions
In early December 2015, Dick filed a motion in the Malpractice Actions
seeking (1) a judicial determination that the Blaskey e-mail was a privileged
attorney-client communication that Dick inadvertently disclosed, and (2) an order
requiring Gibson Dunn to return all copies of the e-mail and striking those portions of
Mary Jo‟s and Teri‟s depositions where Fogelman asked questions about the e-mail and
read portions of it into the record. Defendants opposed the motion, arguing the Blaskey
e-mail never was privileged based on Lindsay‟s inclusion as an original recipient, and
Dick nonetheless waived the attorney-client privilege by disclosing the e-mail to third
parties. In support, Defendants filed a copy of the Blaskey e-mail under seal. In
March 2016, the trial court granted Dick‟s motion, and ordered Defendants to seal or

11
return all copies of the Blaskey e-mail and seal the relevant portions of Mary Jo‟s and
Teri‟s deposition transcripts. Dick served notice of entry of the order on
March 15, 2016.2
Less than two weeks later, Dick filed a motion to disqualify Gibson Dunn
from representing Defendants in the Malpractice Actions based on its use of the Blaskey
e-mail and its refusal to return it. Gibson Dunn opposed the motion, arguing it was not
readily apparent from the face of the e-mail that it was an inadvertently disclosed,
privileged document. Gibson Dunn further argued its disqualification was not warranted
because there was no evidence its review and initial failure to return the e-mail would
substantially impact the litigation. On May 25, 2016, the trial court granted Dick‟s
motion and disqualified Gibson Dunn from representing Defendants in the Malpractice
Actions. The court stayed its ruling for 30 days to allow Defendants to petition this court
for relief.
On June 6, 2016, Defendants filed this writ petition seeking a writ of
mandate compelling the trial court to vacate (1) its order deeming the Blaskey e-mail
privileged, and (2) its order disqualifying Gibson Dunn as Defendants‟ counsel in the
Malpractice Actions. Defendants also sought a stay of all trial court proceedings pending
the resolution of this writ petition. We granted the stay request and issued an order to
show cause why a writ of mandate should not issue.

2
Dick did not file a similar motion in the Probate Action, and that case
settled shortly after the ruling on the privilege motion in the Malpractice Actions.

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 II

DISCUSSION

A. The Blaskey E-mail Was a Privileged Attorney-Client Communication and Dick
Did Not Waive the Privilege

1. We May Review the Trial Court‟s Privilege Ruling Because It Is
Inextricably Intertwined with the Disqualification Ruling
Dick contends we should deny Defendants‟ challenge to the trial court‟s
ruling that the Blaskey e-mail is privileged because Defendants filed their writ petition
more than 60 days after Dick served notice of that ruling. Despite the timing, we will
consider Defendants‟ arguments challenging the privilege ruling on the merits because it
is inextricably intertwined with the disqualification ruling and Dick fails to show any
prejudice.
Although there is no statutory time limit on a common law writ petition,
appellate courts generally apply the same 60-day time limit applicable to appeals. But
unlike appeals, appellate courts have discretion to decide a writ petition filed after the
60-day period, and typically look to whether there is any prejudice to the opposing party
in doing so. (People v. Superior Court (Lopez) (2005) 125 Cal.App.4th 1558,
1562-1563.) Here, Dick fails to identify how deciding Defendants‟ challenge to the
privilege ruling will prejudice him.
More importantly, when deciding a timely writ petition challenging a trial
court ruling, an appellate court also may review an unchallenged earlier ruling if it is
inextricably intertwined with the issues presented on the writ petition. (Travelers
Property Casualty Co. of America v. Superior Court (2013) 215 Cal.App.4th 561, 573,
fn. 17.) Here, the question whether the Blaskey e-mail was privileged is a “predicate
issue[]” we must resolve before determining whether the trial court erred in disqualifying

13
Gibson Dunn for reviewing and using the e-mail. (State Fund, supra, 70 Cal.App.4th at
p. 651.) We therefore must resolve the privilege question on the merits.

2. Legal Principles Governing the Attorney-Client Privilege
The attorney-client privilege is a legislative creation, which courts have no
power to expand or limit by implying exceptions. (Costco Wholesale Corp. v. Superior
Court (2009) 47 Cal.4th 725, 739 (Costco); McKesson HBOC, Inc. v. Superior Court
(2004) 115 Cal.App.4th 1229, 1236.) Based on the privilege, a client may refuse to
disclose, and may prevent others from disclosing, confidential communications between a
client and his or her attorney. (Evid. Code, § 954.)
A “„confidential communication between client and lawyer‟” is statutorily
defined as “information transmitted between a client and his or her lawyer in the course
of that relationship and in confidence by a means which, so far as the client is aware,
discloses the information to no third persons other than those who are present to further
the interest of the client in the consultation or those to whom disclosure is reasonably
necessary for the transmission of the information or the accomplishment of the purpose
for which the lawyer is consulted, and includes a legal opinion formed and the advice
given by the lawyer in the course of that relationship.” (Evid. Code, § 952.)
“Once the proponent makes a prima facie showing of a confidential
attorney-client communication, it is presumed the communication is privileged and the
burden shifts to the opponent to establish waiver, an exception, or that the privilege does
not for some other reason apply.” (DP Pham, LLC v. Cheadle (2016) 246 Cal.App.4th
653, 659-660 (Pham); see Evid. Code, § 917, subd. (a); Costco, supra, 47 Cal.4th at
p. 733.)
The attorney-client privilege may be waived, but only by the holder of the
privilege. (Pham, supra, 246 Cal.App.4th at p. 668.) A waiver results when the holder,
without coercion, (1) has disclosed a significant part of the communication, or (2) has

14
consented to the disclosure made by anyone else. (Evid. Code, § 912, subd. (a); State
Fund, supra, 70 Cal.App.4th at p. 652.) Under the second method of waiver, “Consent to
disclosure is manifested by any statement or other conduct of the holder of the privilege
indicating consent to the disclosure, including failure to claim the privilege in any
proceeding in which the holder has legal standing and the opportunity to claim the
privilege.” (Evid. Code, § 912, subd. (a).)
“Despite the statute‟s declaration that any uncoerced „disclosure‟ creates a
waiver, courts have consistently held that inadvertent disclosures do not.” (Newark
Unified School Dist. v. Superior Court (2015) 245 Cal.App.4th 887, 900 (Newark).) As
the Supreme Court explains, “the disclosure contemplated in Evidence Code section 912
involves some measure of choice and deliberation on the part of the privilege holder.”
(Ardon v. City of Los Angeles (2016) 62 Cal.4th 1176, 1188 (Ardon); see id. at p. 1189
[Evid. Code § 912, subd. (a), requires “a voluntary and knowing disclosure” to waive
privilege].) Similarly, in State Fund, the Court of Appeal concluded a waiver of the
attorney-client privilege occurs only when there is an “intention to voluntarily relinquish
a known right.” (State Fund, supra, 70 Cal.App.4th at p. 653; see Newark, at p. 900
[State Fund “read into the statute the requirement that a disclosure be „[]intentional,‟
notwithstanding the failure of section 912 to distinguish between intentional and
inadvertent disclosures. . . . This is consistent with the long-standing principle that a
privilege is not waived in the absence of a manifest intent to waive”].)
The privilege holder‟s characterization of his or her intent in disclosing a
privileged communication is an important consideration in determining whether the
holder waived the privilege, but is not necessarily dispositive. (Ardon, supra, 62 Cal.4th
at pp. 1190-1191.) When determining whether an inadvertent disclosure waived the
attorney-client privilege, a trial court must examine both the subjective intent of the
privilege holder and any manifestation of the holder‟s intent to disclose the information.
(Ibid.; State Fund, supra, 70 Cal.App.4th at pp. 652-653.) Other relevant considerations

15
include the precautions the holder took to ensure the privilege was maintained and the
promptness with which the holder sought return of the inadvertently disclosed document.
(Ardon, at p. 1191; State Fund, at p. 653.)
“„“When the facts, or reasonable inferences from the facts, shown in
support of or in opposition to the claim of privilege are in conflict, the determination of
whether the evidence supports one conclusion or the other is for the trial court, and a
reviewing court may not disturb such finding if there is any substantial evidence to
support it.”‟” (Pham, supra, 246 Cal.App.4th at p. 664; see Kerner v. Superior Court
(2012) 206 Cal.App.4th 84, 110.) Defendants contend we should employ the de novo
standard in reviewing the trial court‟s ruling because the facts are undisputed, and
whether Dick waived the attorney-client privilege is therefore strictly a question of law.
(See generally Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.) Not so.
As explained below, there is conflicting evidence on whether Dick intended
to waive the attorney-client privilege and competing inferences also may be drawn from
the evidence. Substantial evidence is therefore the controlling standard of review.
(Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2016)
¶ 8:60, p. 8-29 (Eisenberg, Civil Appeals and Writs) [“Even if the facts were admitted or
uncontradicted, the appellate court will not substitute its deductions for the reasonable
inferences actually or presumptively drawn by the trial court”]; see Escobar v. Flores
(2010) 183 Cal.App.4th 737, 752 (Escobar); Milton v. Perceptual Development Corp.
(1997) 53 Cal.App.4th 861, 867 (Milton).)

3. Substantial Evidence Supports the Trial Court‟s Privilege Ruling
Defendants do not dispute the Blaskey e-mail was a privileged
attorney-client communication, but contend the trial court erred “as a matter of law” in
determining Dick did not waive the privilege. They argue the court “treat[ed] Dick‟s
own post-hoc characterization of his intent as dispositive, while ignoring (or declining to

16
consider) the objective, contemporaneous evidence of Dick‟s intent.” Defendants
mischaracterize the trial court‟s ruling and ignore the substantial evidence supporting the
court‟s conclusion Dick did not waive the privilege.
The trial court concluded Dick did not waive the attorney-client privilege
because “[t]here is no basis to find intentional waiver.” In support, the court cited Dick‟s
“unequivocal[]” testimony that he did not intend to forward the Blaskey e-mail to
Ninetta, and he did not know how it happened. The court also noted the privilege was
not waived by Dick‟s failure to request that Gavin and Pellizzon return the e-mail or to
ask Defendants to return copies of the e-mail they produced in discovery. Finally, the
court pointed out the “scenario” this case presented did not fit any of the recognized
means for waiving the privilege.
Nothing in the trial court‟s ruling suggests the court failed to consider all
the evidence in reaching its decision, and Defendants do not cite anything in the record to
support their contrary contention. We presume the trial court knew and properly applied
the law absent evidence to the contrary. (Harris v. Stampolis (2016) 248 Cal.App.4th
484, 500-501 (Harris); People v. Bush (2016) 245 Cal.App.4th 992, 1002 (Bush).)
Moreover, the trial court was not required to make any findings to support
its ruling on the privilege motion. (See Laabs v. City of Victorville (2008)
163 Cal.App.4th 1242, 1272 (Laabs); Higdon v. Superior Court (1991) 227 Cal.App.3d
1667, 1671 (Higdon).) We therefore review the court‟s order by inferring it made all
favorable findings that are supported by substantial evidence. (Clark v. Superior Court
(2011) 196 Cal.App.4th 37, 47 (Clark); Federal Home Loan Mortgage Corp. v.
La Conchita Ranch Co. (1998) 68 Cal.App.4th 856, 860 (Federal Home Loan).)
Building on their contention that the trial court failed to consider the
objective evidence of Dick‟s intent to waive the privilege, Defendants assert we may
infer factual findings to support the court‟s ruling only if the record shows the court
actually performed its factfinding function. (See Kemp. Bros. Construction, Inc. v. Titan

17
Electric Corp. (2007) 146 Cal.App.4th 1474, 1477 (Kemp Bros.).) Again, Defendants
misconstrue the trial court‟s order, and therefore their reliance on Kemp Bros. is
unavailing.
In Kemp. Bros., the plaintiff sought a pretrial writ of attachment, which
required the plaintiff to establish the probable validity of its breach of contract claim.
The trial court concluded the plaintiff met that burden by showing the defendant was
collaterally estopped from relitigating whether it breached the parties‟ contract, but the
court failed to consider whether the plaintiff presented evidence establishing the elements
of its claim. The Court of Appeal reversed, finding collateral estoppel did not apply. In
doing so, the Kemp Bros. court declined to consider whether it could infer findings to
uphold the trial court‟s decision because the record expressly showed the trial court never
weighed the evidence to determine whether the plaintiff established the probability of its
claims. (Kemp Bros., supra, 146 Cal.App.4th at pp. 1476-1478.) That simply is not the
case here. As explained above, the record does not show the trial court failed to consider
and weigh any evidence. Consequently, we properly may infer findings to support the
trial court‟s decision.
Although Dick‟s testimony about his intent is not dispositive, it is an
important consideration in deciding whether he waived the attorney-client privilege
because waiver requires an intention to voluntarily waive a known right. (Ardon, supra,
62 Cal.4th at pp. 1188-1189; Newark, supra, 245 Cal.App.4th at p. 900; State Fund,
supra, 70 Cal.App.4th at p. 653.) Moreover, substantial evidence besides Dick‟s
testimony supports the trial court‟s finding Dick did not intentionally waive his
attorney-client privilege: (1) the absence of any text in Dick‟s e-mail to Ninetta
explaining why he forwarded the Blaskey e-mail to her; (2) the forwarded e-mail came
from Dick‟s iPhone; (3) Dick‟s elderly age (nearly 80 years old); (4) his reduced
dexterity caused by multiple sclerosis; (5) the lack of any connection between Ninetta
and the MHI dispute discussed in the e-mail; (6) Dick‟s testimony he rarely spoke with

18
Ninetta and never about MHI; and (7) Gavin‟s testimony that transmission of the e-mail
was a mistake, Dick had no reason to forward the e-mail to Ninetta, and he never spoke
with Dick about the e-mail. This constitutes substantial evidence supporting the trial
court‟s conclusion Dick inadvertently forwarded the Blaskey e-mail to Ninetta, and he
had no intention of waiving the attorney-client privilege by doing so.
Ninetta‟s disclosure of the Blaskey e-mail to Gavin, and Gavin‟s disclosure
to Rick, Cox, Pellizzon, and Lurie, cannot support a waiver of the privilege because
Ninetta and Gavin are not holders of the privilege. (Evid. Code, § 912, subd. (a); Pham,
supra, 246 Cal.App.4th at p. 668 [only privilege holder may waive privilege].)
Substantial evidence supports the finding that Dick did not consent to these disclosures
because Dick‟s initial inadvertent e-mail to Ninetta led to these additional disclosures,
and he did not learn about either his e-mail to Ninetta or these further disclosures until a
year after they occurred. Indeed, Dick and his counsel did not learn about the disclosure
to Lurie until nearly two years after his initial disclosure to Ninetta. Dick simply could
not consent to disclosures he knew nothing about.
Defendants ignore the foregoing evidence, and instead argue Dick
consented to the disclosures and waived the privilege because Blaskey failed to take
precautions to prevent Dick‟s initial disclosure, Dick intentionally forwarded the e-mail
to Gavin to help Gavin mediate the MHI dispute, and both Dick and his various attorneys
failed to take prompt and reasonable steps to recover copies of the Blaskey e-mail once
the various disclosures were discovered. Defendants point to evidence showing Blaskey
failed to prominently mark the e-mail as privileged and confidential when he sent it,
when Gavin received the e-mail he was engaged in discussions with Dick, Rick, Cox,
Lurie, and Blaskey to mediate the MHI dispute, the timing of Dick‟s and his counsel‟s
efforts to recover all copies of the e-mail from third parties, Dick‟s failure to ask Gavin
and Pellizzon to return the e-mail, Dick‟s failure to bring a motion in the Probate Action
to declare the Blaskey e-mail privileged and require its return, and the failure of Dick‟s

19
counsel to suspend Mary Jo‟s and Teri‟s depositions in the Malpractice Actions when
Fogelman asked them questions about the e-mail.
At most, this creates a conflict in the evidence or supports additional
inferences the trial court could have drawn about whether Dick and his counsel intended
by their conduct to voluntarily waive the attorney-client privilege. But the governing
substantial evidence standard of review requires us to resolve all conflicts and draw all
reasonable inferences from the evidence in favor of the trial court‟s order. (Leung v.
Verdugo Hills Hospital (2012) 55 Cal.4th 291, 308; Escobar, supra, 183 Cal.App.4th at
p. 752 [“Under the substantial evidence standard of review, „where two or more different
inferences can reasonably be drawn from the evidence, this court is without power to
substitute its own inferences for those of the trial court and decide the case
accordingly‟”].)
For example, although the record shows Gavin attempted to mediate the
MHI dispute involving Dick, Rick, and Cox, the evidence also shows Dick forwarded the
Blaskey e-mail to Ninetta‟s e-mail address, not Gavin‟s. In addition, the evidence
showed Gavin did not know why Dick forwarded the e-mail to Ninetta, and Gavin never
spoke to Dick about the Blaskey e-mail. Similarly, although Defendants claim Dick and
his counsel unreasonably delayed seeking the return of the e-mail, the record shows
Dick‟s counsel in the Probate Action immediately asserted the attorney-client privilege
when Rick‟s lawyer first disclosed the e-mail and demanded that he return all copies.
Later in the Probate Action, Dick‟s counsel again immediately objected and demanded
that Fogelman return all copies of the e-mail when he learned during Lurie‟s deposition
that Lurie had received a copy of the Blaskey e-mail. The evidence also showed
Pellizzon never kept a copy of the e-mail after he reviewed it and Gavin could not locate
the copy in his possession. Significantly, Dick in the Probate Action obtained an
agreement that no one would use the contents of the Blaskey e-mail until the parties
resolved the waiver dispute, and therefore a motion to declare the e-mail privileged was

20
not necessary because the Probate Action settled before anyone used the Blaskey e-mail.3
In the malpractice lawsuits, Dick‟s counsel objected to the e-mail and asked Fogelman to
return it when Fogelman asked questions about it at Mary Jo‟s and Teri‟s depositions, but
did not suspend the depositions because she was not familiar with the document and did
not know the circumstances surrounding its disclosure.
Defendants correctly note a court may consider as relevant factors the
existence of prominent markings identifying a document as privileged in deciding
whether an inadvertent disclosure waived the privilege (State Fund, supra,
70 Cal.App.4th at p. 653), but the absence of any marking does not require the conclusion
the holder waived the privilege (Rico, supra, 42 Cal.4th at p. 818 [no waiver for
inadvertently disclosed document that was not marked as privileged]). Courts must
consider the totality of the circumstances, and in doing so repeatedly have found
inadvertently disclosed documents that were not marked as privileged retained their
privileged status. (Id. at pp. 818-819 [document not marked], Clark, supra,
196 Cal.App.4th at pp. 43, 52 [all inadvertently produced documents were privileged
even though only some were marked as privileged].)
Under the substantial evidence standard of review, we may not reverse a
trial court‟s ruling unless the appellant shows the evidence required the trial court to
reach a different conclusion. (See Roberts v. El Cajon Motors, Inc. (2011)
200 Cal.App.4th 832, 841; Horsford v. Board of Trustees of California State University
(2005) 132 Cal.App.4th 359, 379.) Defendants failed to satisfy that burden.

3
Defendants contend Rick‟s identification of the Blaskey e-mail on his trial
exhibit list in the Probate Action shows Dick failed to take reasonable steps to recover the
e-mail. But listing the e-mail as an exhibit does not disclose its contents and all parties
acknowledged the trial court in the Probate Action would have to make a ruling at trial to
determine whether the e-mail was privileged before it could be offered as evidence.

21
B. Gibson Dunn’s Use of the Blaskey E-mail Violated the State Fund Rule

1. Governing Legal Principles on Inadvertently Disclosed Materials
State Fund is the seminal California decision defining a lawyer‟s ethical
obligations upon receiving another party‟s attorney-client privileged materials. (State
Fund, supra, 70 Cal.App.4th at pp. 656-657.) It established the following “standard
governing the conduct of California lawyers”: “When a lawyer who receives materials
that obviously appear to be subject to an attorney-client privilege or otherwise clearly
appear to be confidential and privileged and where it is reasonably apparent that the
materials were provided or made available through inadvertence, the lawyer receiving
such materials should refrain from examining the materials any more than is essential to
ascertain if the materials are privileged, and shall immediately notify the sender that he or
she possesses material that appears to be privileged. The parties may then proceed to
resolve the situation by agreement or may resort to the court for guidance with the benefit
of protective orders and other judicial intervention as may be justified. We do, however,
hold that whenever a lawyer ascertains that he or she may have privileged attorney-client
material that was inadvertently provided by another, that lawyer must notify the party
entitled to the privilege of that fact.” (Ibid., italics added.)
In Rico, the Supreme Court quoted the first two sentences from the
foregoing quote as the State Fund rule, and extended the rule to materials protected by
the attorney work product doctrine because the rule is “a fair and reasonable approach”
that “holds attorneys to a reasonable standard of professional conduct when confidential
or privileged materials are inadvertently disclosed.” (Rico, supra, 42 Cal.4th at pp. 817
& 818.) The Rico court also explained the State Fund rule establishes “an objective
standard” that asks “whether reasonably competent counsel, knowing the circumstances
of the litigation, would have concluded the materials were privileged, how much review
was reasonably necessary to draw that conclusion, and when counsel‟s examination
should have ended.” (Rico, at p. 818.)

22
 The State Fund rule is “fundamentally based” on the sanctity of the
attorney-client privilege and is designed to safeguard the confidential relationship
between clients and their attorneys to promote full and open discussion of the facts and
tactics surrounding individual legal matters. (State Fund, supra, 70 Cal.App.4th at
p. 657; see Clark, supra, 196 Cal.App.4th at p. 48.) The rule also is designed to
discourage unprofessional conduct (State Fund, at p. 657), and it recognizes that “„[a]n
attorney has an obligation not only to protect his client‟s interests but also to respect the
legitimate interests of fellow members of the bar, the judiciary, and the administration of
justice.‟”4 (Rico, supra, 42 Cal.4th at p. 818; see Clark, at p. 48; State Fund, at p. 657.)
The parties point to different portions of the foregoing quote from State
Fund as the standard for determining when an attorney‟s State Fund duties are triggered.
Defendants point to the language stating the duties are triggered when the materials
“obviously . . . or . . . clearly appear” to be privileged and it is “reasonably apparent” the
materials were inadvertently disclosed. (See State Fund, supra, 70 Cal.App.4th at
p. 656.) Dick points to the language stating the duties are triggered “whenever a lawyer
ascertains that he or she may have privileged attorney-client material that was
inadvertently provided by another.” (See id. at p. 657, italics added.) The parties do not
cite, and we have not found, any authority reconciling the apparent conflict between these
two standards for triggering an attorney‟s State Fund duties.

4
To justify its conclusion the State Fund rule does not apply here, the dissent
acknowledges only the rule‟s goal of safeguarding the confidential relationship between
attorney and client. (Dissent, at p. 3.) The dissent ignores the rule‟s further purpose of
discouraging unprofessional conduct and its recognition of an attorney‟s ethical
obligation to respect the interests of other attorneys, the judiciary, and the administration
of justice. State Fund and Rico both relied on these additional policy considerations in
establishing the State Fund rule. (State Fund, supra, 70 Cal.App.4th at p. 657; see Rico,
supra, 42 Cal.4th at p. 818.)

23
 The facts of this case do not require us to resolve this conflict because, as
explained below, we conclude substantial evidence supports the trial court‟s implied
finding the circumstances surrounding the Blaskey e-mail satisfied the more stringent
standard Defendants advocate for triggering Gibson Dunn‟s State Fund duties.
Nonetheless, we have three observations concerning the parties‟ dispute over the proper
standard.
First, nearly all the cases applying the State Fund rule quote the language
on which Defendants rely as the standard for triggering an attorney‟s State Fund duties,
while ignoring the language on which Dick relies. The few cases that include the “may
have privileged material” language do so while also reciting the “obviously . . . or . . .
clearly appear” standard, but do not adopt the language on which Dick relies as the
trigger for an attorney‟s State Fund duties. (See, e.g., Ardon, supra, 62 Cal.4th at p. 1187
[only acknowledging language on which Defendants rely]; Rico, supra, 42 Cal.4th at
p. 817 [same]; Clark, supra, 196 Cal.App.4th at p. 48 [same]; Bak v. MCL Financial
Group, Inc. (2009) 170 Cal.App.4th 1118, 1126-1127 [same]; cf. Pham, supra,
246 Cal.App.4th at pp. 675-676 [acknowledging without specifically applying language
on which Dick relies]; Collins v. State of California (2004) 121 Cal.App.4th 1112,
1131-1132 [same].) Dick does not cite a single case applying the language on which he
relies as the trigger for an attorney‟s State Fund duties.
Second, by using the terms “appear” and “apparent” in the language on
which Defendants rely, even with the qualifiers “obviously,” “clearly,” and “reasonably,”
the State Fund court made clear that the privileged nature of the materials and the
inadvertence of their disclosure need not be established to a legal certainty to trigger an
attorney‟s State Fund duties.
Finally, a reasonable way to reconcile the issue is to interpret State Fund as
establishing two standards, with each one applying to slightly different situations. The
language Defendants quote applies when an attorney receives materials that obviously or

24
clearly appear to be privileged and it is reasonably apparent the materials were
inadvertently disclosed. In that situation, the attorney receiving the materials must refrain
from examining them any more than is necessary to determine their privileged nature,
immediately notify the privilege holder the attorney has received materials that appear to
be privileged, attempt to reach an agreement with the privilege holder about the
materials‟ privileged nature and their appropriate use, and resort to the court for guidance
if an agreement cannot be reached. The attorney must not further review or use the
materials for any purpose while the issue remains in dispute.
The language Dick quotes applies when an attorney ascertains that he or
she received materials that are not obviously or clearly privileged, but nonetheless may
be privileged materials that were inadvertently disclosed. This plainly is a lower
standard, and it triggers a more limited response. In this situation, the attorney‟s duty is
simply to notify the privilege holder that the attorney may have privileged documents that
were inadvertently disclosed. At that point, the onus shifts to the privilege holder to take
appropriate steps to protect the materials if the holder believes the materials are
privileged and were inadvertently disclosed.
Regardless of how the State Fund rule is stated, Defendants and our
dissenting colleague seek to limit it to privileged materials an attorney receives through
the inadvertence of opposing counsel during litigation. Although the State Fund rule
originated in the context of one attorney inadvertently producing his client‟s privileged
documents to the opponent‟s attorney during litigation, neither the statement of the rule
nor the policy underlying it supports limiting the scope of the rule to that one
circumstance. Moreover, subsequent case law applying the rule has not limited it to that
circumstance.
In Clark, for example, the Court of Appeal applied the State Fund rule to an
attorney who received an opponent‟s privileged documents from his own client rather
than the opposing party or its attorney. There, the plaintiff stole some of his employer‟s

25
privileged documents when the employer fired him, and then provided the documents to
his attorney for use in the plaintiff‟s lawsuit against the employer. (Clark, supra,
196 Cal.App.4th at pp. 42-44.) The Clark court concluded the State Fund rule applied
because the documents were privileged and the employer did not intend to disclose them.
The attorney‟s receipt of the documents from his own client before the litigation began
did not factor into the court‟s analysis, nor did the court rely on the client‟s theft of the
documents in determining whether the State Fund rule applied. (Clark, at pp. 52-54.)
Adopting Defendants‟ limitation would perversely permit the use of stolen, privileged
materials, but not those inadvertently disclosed.5
In Rico, the Supreme Court applied the State Fund rule to attorney work
product notes that a plaintiff‟s attorney acquired during litigation, but were not produced
either by the defense attorney who created the notes or by the defendant he represented.
The plaintiff‟s attorney argued a court reporter mistakenly gave him the notes during a
deposition, but defense counsel argued the plaintiff‟s attorney stole the notes from his file
during the same deposition. (Rico, supra, 42 Cal.4th at pp. 811-812.) The Supreme
Court concluded the State Fund rule applied by simply examining whether the notes were
clearly privileged and whether it was reasonably apparent their disclosure was
inadvertent. Whether the plaintiff‟s attorney wrongfully took the notes, or the court

5
The dissent states, “The Clark court merely assumed the State Fund rule
applied and analyzed whether it was violated.” (Dissent, at p. 4.) Not so. In Clark, it
was undisputed the client stole the privileged communications from his employer and
turned them over to his attorney, and therefore no issue existed as to the inadvertence of
the disclosure. (Clark, supra, 196 Cal.App.4th at pp. 43-44, 52.) The Clark court
therefore examined the evidence concerning the communications to determine whether
they were privileged and the extent to which a reasonably competent attorney would need
to review the communications to determine their privileged nature. The court also
considered evidence regarding the extent of the attorney‟s review of the communications
to determine whether it exceeded what was reasonably necessary to determine whether
the communications were privileged. (Clark, at pp. 51-54.) Contrary to the dissent‟s
suggestion, that is an analysis of whether the State Fund rule applied, not an assumption.

26
reporter mistakenly gave them to the plaintiff‟s attorney, did not influence the court‟s
analysis because the record showed the defendant‟s attorney did not intend to disclose the
notes, and therefore the disclosure was inadvertent under either scenario.6 (Rico, at
pp. 818-819.)

2. Substantial Evidence Supports the Trial Court‟s Application of the State
Fund Rule
Defendants challenge the sufficiency of the evidence to support the trial
court‟s conclusion Gibson Dunn violated its State Fund obligations, arguing the record
lacks evidence showing the Blaskey e-mail obviously appeared to be privileged, it was
reasonably apparent the e-mail was inadvertently disclosed, or Gibson Dunn failed to
comply with its State Fund duties to the extent they were triggered. We disagree.
As with the privilege motion, the trial court was not required to make any
express findings to support its ruling on the disqualification motion, and we are required
to infer the court made all findings necessary to support its conclusion. (Clark, supra,
196 Cal.App.4th at pp. 46-47; Laabs, supra, 163 Cal.App.4th at p. 1272; Federal Home
Loan, supra, 68 Cal.App.4th at p. 860; Higdon, supra, 227 Cal.App.3d at p. 1671.) As
Clark explained, “„where there are no express findings, we must review the trial court‟s
[decision] based on implied findings that are supported by substantial evidence.‟” (Clark,
at pp. 46-47.) We also presume the court knew and properly applied the law absent
evidence to the contrary. (Harris, supra, 248 Cal.App.4th at pp. 500-501; Bush, supra,
245 Cal.App.4th at p. 1002.) The substantial evidence standard therefore governs our
review of the trial court‟s implied findings that Gibson Dunn‟s State Fund obligations

6
Rico debunks the dissent‟s suggestion that Clark is distinguishable from
this case because the client in Clark wrongfully obtained the privileged documents he
turned over to his attorney, but “[t]here was nothing wrongful about Lurie‟s acquisition
or possession of the Blaskey e-mail.” (Dissent, at p. 4.) Neither Rico nor Clark require a
wrongful acquisition for the State Fund rule to apply to documents an attorney received
from his or her client.

27
were triggered and it violated those obligations through its use of the Blaskey e-mail.7
(Clark, at pp. 46-47, 52-54.)
Here, the evidence shows that when Gibson Dunn in June 2015 discovered
the Blaskey e-mail in its client‟s files, it knew Blaskey was Dick‟s personal attorney
representing Dick in his dispute with Rick and Cox over control of MHI, and Lurie
potentially was an adverse party to Dick based on Lurie‟s actions regarding the Hausman
family trusts and MHI. A cursory review of the e-mail showed it was from Blaskey to
Dick, with copies to Blaskey‟s law partner, Kessel, and Dick‟s personal assistant and
advisor, Lindsay. The e-mail summarized a meeting among the parties to the dispute and
their attorneys. This constitutes substantial evidence supporting the conclusion the
Blaskey e-mail was a communication made in the course of an attorney-client
7
Citing Kemp Bros., the dissent concludes we “cannot” imply any findings
to support the trial court‟s decision because “[t]he record demonstrates the trial court
never weighed the evidence and performed the fact finding function regarding Gibson
Dunn‟s asserted State Fund obligations.” (Dissent, at p. 6.) Not true. As explained
above, Kemp Bros. observed an appellate court should not imply findings to support a
trial court ruling only when the record expressly shows the trial court never performed its
factfinding function concerning the issue on which the appellate court would otherwise
imply findings. (Kemp Bros., supra, 146 Cal.App.4th at pp. 1476-1478.) Here, the
record shows the trial court received evidence from the parties and decided Dick‟s
motion based on that evidence. Neither Defendants nor the dissent cites anything in the
record to show the trial court expressly refused to perform its fact finding function on a
particular issue.

The dissent also asserts we should determine the State Fund rule does not
apply in this case as a matter of law because the decisive facts are undisputed and the
rule‟s application therefore presents a question of law. (Dissent, at p. 5.) We disagree.
The dissent conveniently ignores many of the disputed facts we have described in this
opinion relating to the disclosure of the Blaskey e-mail and whether the State Fund rule
applies. Moreover, even if we assume the central facts were not in dispute, the trial court
nevertheless had to resolve the competing inferences presented by those facts. Of course,
the prevailing standard of review requires us to presume the court made the necessary
inferences required to support its decision. (Eisenberg, Civil Appeals and Writs, supra,
¶ 8:60, p. 8-29; see Escobar, supra, 183 Cal.App.4th at p. 752; Milton, supra,
53 Cal.App.4th at p. 867.)

28
relationship, and therefore it was presumptively privileged. (Evid. Code, § 917,
subd. (a); Costco, supra, 47 Cal.4th at p. 733; Pham, supra, 246 Cal.App.4th at p. 665.)
Under these circumstances, the Blaskey e-mail was a presumptively privileged document
and therefore was an “obviously privileged” document under the State Fund rule. (Clark,
supra, 196 Cal.App.4th at p. 53 [“Under Costco, once the examination showed a
document had been transmitted between an attorney representing [the defendant] and
either an officer or employee of [the defendant], that examination would suffice to
ascertain the materials are privileged, and any further examination would exceed
permissible limits”].)
This conclusion is further supported by evidence showing Rick‟s attorney
in the Probate Action concluded the State Fund rule applied when he found a copy of the
Blaskey e-mail in his client‟s documents. Specifically, after reviewing the e-mail, Rick‟s
counsel pulled the e-mail from his client‟s document production, sent it to Dick‟s counsel
under separate cover, and asked whether Dick claimed the e-mail was privileged because
the original e-mail appeared to be a confidential communication between Dick and his
personal attorney.
Defendants contend the Blaskey e-mail was not obviously privileged
because Lindsay was an original recipient of the e-mail and Gibson Dunn only knew
Lindsay as MHI‟s bookkeeper. According to Defendants, Lindsay was an unnecessary
party to the communication and therefore her inclusion prevented the privilege from
attaching. (See Evid. Code, § 952 [defining “„confidential communication between client
and lawyer‟”].) Defendants cite no evidence they did not know Lindsay also was Dick‟s
personal assistant and advisor when Gibson Dunn discovered the e-mail, produced it in
the Probate Action, and defended Lurie‟s August 13, 2015 deposition. (See Zurich
American Ins. Co. v. Superior Court (2007) 155 Cal.App.4th 1485, 1501 [disclosure to
client‟s secretary, assistant, advisor, or other representative does not prevent
attorney-client privilege from attaching].) Nonetheless, any question about Lindsay‟s

29
position as Dick‟s personal assistant and advisor was removed on August 19, 2015, when
Gibson Dunn deposed her and she testified she also worked for Dick personally. That
was several days before Gibson Dunn deposed Mary Jo and Teri about the e-mail.
Defendants also contend the Blaskey e-mail was not obviously privileged
because Gibson Dunn reasonably concluded Dick had waived the privilege by forwarding
it to Ninetta and then allowing her to forward it to Gavin, who then provided it to Rick,
Cox, Pellizzon, and Lurie. But the circumstances here did not permit Gibson Dunn to
decide on its own whether the privilege was waived. As explained above, the original
e-mail from Blaskey to Dick was presumptively privileged as a confidential
communication between attorney and client during the course of the representation.
Those facts triggered Gibson Dunn‟s State Fund obligations. (Clark, supra,
196 Cal.App.4th at p. 53.) Contrary to Defendants‟ suggestion, an attorney‟s State Fund
duties are not limited to situations where the materials are indisputably privileged,
leaving no basis to infer the privilege has been waived or an exception applies.
For example, Formal Opinion No. 2013-188 of the California State Bar
Standing Committee on Professional Responsibility and Conduct (State Bar, Formal
Opinion No. 2013-188) concludes an attorney‟s State Fund duties are triggered when the
attorney receives a communication that is presumptively privileged as a confidential
communication between another attorney and his or her client, even if “the [receiving]
attorney reasonably believes that the communication may not be privileged because of
the crime-fraud exception to the attorney-client privilege.” (State Bar, Formal Opinion
No. 2013-188, at p. 1; see Coldren v. Hart, King & Coldren, Inc. (2015) 239 Cal.App.4th
237, 250, fn. 8 [although not binding on courts, formal opinions from California State Bar
may be persuasive authority].) That opinion presents the hypothetical of an attorney who
sues a company for fraud and receives an anonymous e-mail and attachment from a
former company employee. The e-mail explains the attachment is a confidential
communication between the company and its attorney that proves the company planned

30
and perpetrated the alleged fraud with the advice and assistance of its counsel. (Ibid.)
The formal opinion explains the potential application of the crime-fraud exception “does
not vitiate [the a]ttorney‟s duties under State Fund and Rico” (State Bar, Formal Opinion
No. 2013-188, at p. 4), and the attorney may not ethically read the attachment to the
e-mail. Instead, the attorney must notify opposing counsel, refrain from further
reviewing the communication, and otherwise proceed as described in State Fund. (State
Bar, Formal Opinion No. 2013-188, at pp. 5-6.)
That is a logical application of the State Fund rule. Allowing opposing
counsel to avoid their State Fund obligations any time they can fashion a colorable
argument for overcoming the privilege would create an exception that would swallow the
State Fund rule. As State Fund and the other cases explain, an attorney‟s obligation is to
review the materials no more than necessary to determine whether they are privileged,
and then notify the privilege holder‟s counsel. At that point, the parties may confer about
whether the material is privileged and whether there has been a waiver. If the parties are
unable to reach an agreement either side may seek guidance from the trial court. (Rico,
supra, 42 Cal.4th at p. 817; Clark, supra, 196 Cal.App.4th at p. 48; State Fund, supra,
70 Cal.App.4th at pp. 656-657.) The attorney receiving the material, however, is not
permitted to act as judge and unilaterally make that determination.
Defendants complain this application of the State Fund rule will allow the
privilege holder and its counsel to unduly delay a lawsuit and engage in other forms of
gamesmanship that prejudice the party whose counsel received the materials. But the
materials at issue must obviously or clearly appear privileged, and the recipient of
apparently privileged materials may expedite resolution of any dispute by bringing its
own motion seeking the court‟s guidance. The trial court then may impose sanctions and
issue other appropriate orders to address the privilege holder‟s alleged abuse of the State
Fund rule. The important policy considerations underlying the attorney-client privilege
and the State Fund rule, however, do not allow the recipient of inadvertently disclosed

31
documents to unilaterally determine the privilege has been waived and then proceed to
use the documents. In doing so, the recipient risks that the trial court will draw a
different conclusion, which would expose the recipient to adverse consequences for
violating the State Fund rule, including disqualification as attorney of record. In close
cases, prudence requires following the State Fund procedures.
Next, Defendants argue Gibson Dunn‟s State Fund duties were not
triggered because many of the same facts that purportedly showed the Blaskey e-mail
was not obviously privileged also showed it was not reasonably apparent the e-mail had
been disclosed inadvertently. Specifically, Defendants point to evidence showing Gibson
Dunn found the e-mail in its clients‟ own electronic documents while preparing
Defendants‟ response to a subpoena in the Probate Action, Lurie received the e-mail
because Gavin forwarded it to him well before any litigation commenced, Gavin then was
acting as an intermediary seeking to resolve the dispute over MHI, and Gavin had a copy
of the e-mail because Dick forwarded it to Ninetta, who forwarded it to Gavin. None of
this overcomes the substantial evidence supporting the trial court‟s ruling for the same
reasons already discussed.
Gibson Dunn‟s discovery of the e-mail in its clients‟ own files and Lurie‟s
receipt of the e-mail from Gavin when he mediated the MHI dispute does not render
Dick‟s disclosure of the e-mail any less inadvertent. On its face, the original e-mail still
was a presumptively privileged communication between attorney and client discussing
the MHI dispute. Dick‟s transmission of the e-mail to Ninetta, which eventually reached
Lurie, suggests the possibility Dick may have waived the attorney-client privilege, but the
State Fund rule does not allow Gibson Dunn to assume that he did. Dick‟s e-mail
transmission sheds no light on why he shared this presumptively privileged e-mail with
Ninetta, and therefore provides no assurances he intended to waive the privilege.8 As

8
The dissent accuses us of “improperly equating the presumption of
privilege (Evid. Code, § 917, subd. (a)), with a presumption of inadvertence.” (Dissent,

32
explained above, the State Fund rule establishes an objective standard and substantial
evidence supports the conclusion it was reasonably apparent the Blaskey e-mail was
inadvertently disclosed. Indeed, the same basic facts led Rick‟s Probate Action counsel
to determine the State Fund rule applied and required him to notify Dick‟s counsel and
not use the e-mail.9

at p. 8.) Not so. The presumption of privilege arises from the facts surrounding the
original transmission of the e-mail from Blaskey to Dick during their attorney-client
relationship (Evid. Code, § 917, subd. (a); Costco, supra, 47 Cal.4th at p. 733; Pham,
supra, 246 Cal.App.4th at p. 665), and that presumption supports the trial court‟s
determination the e-mail was obviously privileged under the State Fund rule (Clark,
supra, 196 Cal.App.4th at p. 53). Our inadvertent disclosure analysis, however, focuses
on the facts surrounding Dick‟s later disclosure of the Blaskey e-mail to Ninetta, her
disclosure to Gavin, and Gavin‟s disclosure to Rick, Cox, Pellizzon, and Lurie. We are at
a loss to see how we equated the presumption of privilege with a presumption of
inadvertence.
9
Citing Great American Assurance Co. v. Liberty Surplus Ins. Corp.
(N.D. Cal. 2009) 669 F.Supp.2d 1084, the dissent concludes it was not reasonably
apparent that Dick inadvertently disclosed the Blaskey e-mail. (Dissent, at p. 4.) Great
American does not support the dissent‟s conclusion. There, the federal district court
concluded the State Fund rule did not apply based on that court‟s factual determinations
that the privilege holder waived the attorney-client privilege by sharing an insurance
coverage opinion with an outside insurance broker, and the facts surrounding the
communications among the parties did not establish inadvertent disclosure. (Great
American, at pp. 1091-1092, 1093-1094.) The dissent fails to understand that we, as an
appellate court, are not free to make those factual determinations. Rather, we are limited
to deciding whether substantial evidence supports the trial court‟s express and implied
factual determinations. Here, the trial court determined Dick did not waive the
attorney-client privilege and the disclosure was inadvertent. We may overturn those
determinations only if the record lacks substantial evidence to support them, even if the
evidence also would support a different conclusion. (Clark, supra, 196 Cal.App.4th at
pp. 46-47.) As explained above, substantial evidence supports the trial court‟s
determinations, and therefore we must uphold the trial court‟s decision. The district
court‟s initial factual findings in Great American provide no guidance for applying the
standard of review on appeal. This procedural difference may explain why no California
appellate court has cited Great American.

Taking the issue a step further, the dissent also concludes the record lacks
substantial evidence to support the trial court‟s implied finding it was reasonably

33
 Moreover, even if the face of the Blaskey e-mail and the circumstances
surrounding its disclosure were not sufficient to put Gibson Dunn on notice it likely
received an inadvertently disclosed, privileged document, the objections of Dick‟s
counsel at Lurie‟s deposition in the Probate Action removed any doubt. (Clark, supra,
196 Cal.App.4th at pp. 52-53 [counsel‟s warning on privilege holder‟s behalf triggers an
opposing attorney‟s State Fund duties].) At that deposition, Rick‟s counsel asked Lurie
questions based on a copy of the Blaskey e-mail that Defendants produced in response to
the subpoena served on them in the Probate Action. Dick‟s counsel immediately
objected, asserting the Blaskey e-mail was privileged and that it had been disclosed
inadvertently. He not only demanded that Rick‟s counsel return all copies under their
earlier agreement to preserve Dick‟s privilege claim concerning the e-mail, but he also
demanded that Gibson Dunn return all its copies. Although Fogelman asserted the e-mail
was not privileged and that Gibson Dunn was not obligated to return it, the objections by
Dick‟s attorney constitute substantial evidence that Gibson Dunn reasonably should have

apparent the Blaskey e-mail was inadvertently disclosed. (Dissent, at pp. 7-8.) Although
the dissent acknowledges the governing substantial evidence standard of review, it fails
to properly apply it. Under that standard, “The trial court‟s order is „“presumed correct;
all intendments and presumptions are indulged to support [it]; conflicts in the declarations
must be resolved in favor of the prevailing party, and the trial court‟s resolution of any
factual disputes arising from the evidence is conclusive.”‟ [Citations.] Hence, we
presume the trial court found in [Dick‟s] favor on „all disputed factual issues.‟ . . . „In
viewing the evidence, we look only to the evidence supporting the prevailing party.
[Citation.] We discard evidence unfavorable to the prevailing party as not having
sufficient verity to be accepted by the trier of fact. [Citation.] Where the trial court has
drawn reasonable inferences from the evidence, we have no power to draw different
inferences, even though different inferences may also be reasonable.‟ [Citation.] „If the
trial court resolved disputed factual issues, the reviewing court should not substitute its
judgment for the trial court‟s express or implied findings supported by substantial
evidence.‟” (Clark, supra, 196 Cal.App.4th at pp. 46-47.) The dissent, however, does
precisely what appellate courts may not do. It looks only to the evidence favorable to the
nonprevailing party while ignoring the evidence supporting the trial court‟s implied
findings.

34
realized the Blaskey e-mail was an inadvertently disclosed, privileged document subject
to the State Fund rule.10
To support their contention any inadvertence in Dick‟s disclosure was not
readily apparent, Defendants also point to a letter Dick‟s Malpractice Actions counsel
wrote in November 2015. Dick‟s attorney stated she wanted to conduct additional
discovery of the facts underlying the privilege dispute before bringing a motion to resolve
the issue. According to Defendants, if Dick‟s counsel wanted to conduct discovery on
this issue in November 2015, then it could not have been apparent to Gibson Dunn in
August 2015 that Dick‟s disclosure was inadvertent. Defendants misconstrue this letter
and the governing standards.
Dick‟s attorney consistently maintained that Dick‟s disclosure of the
Blaskey e-mail was inadvertent and State Fund required Gibson Dunn to return the
e-mail. Dick‟s counsel made clear in this letter she wanted to conduct discovery on
Defendants‟ waiver theory. Specifically, she sought to depose everyone who received a

10
Citing State Fund, the dissent concludes the objections of Dick‟s counsel
are irrelevant because “Gibson Dunn‟s State Fund obligations were triggered, if at all, at
the time Gibson Dunn found it had received the privileged document.” (Dissent, at p. 8.)
State Fund, however, imposes no such limitation and the dissent provides no explanation
to support its contrary conclusion. As explained above, Clark relied on warnings and
objections from opposing counsel in concluding an attorney‟s State Fund duties were
triggered. (Clark, supra, 196 Cal.App.4th at pp. 52-53.) That is a logical application
because the State Fund rule establishes an objective standard that examines whether a
reasonably competent attorney, knowing the facts of the case, would determine a
document was clearly privileged and it was reasonably apparent its disclosure was
inadvertent. (Rico, supra, 42 Cal.4th at p. 818.) Objections or warnings by the privilege
holder‟s lawyer may provide the missing information necessary to enable an opposing
attorney to determine the State Fund rule applies. No policy or other reason justifies the
dissent‟s limitation on the State Fund rule. Obviously, an attorney cannot violate the
State Fund rule until he or she possesses sufficient information to allow a reasonable
competent attorney to determine the rule has been triggered, but once an attorney has
sufficient information, the rule applies and further review or use the privileged material is
prohibited.

35
copy of the e-mail to establish Dick did not intentionally disclose the e-mail to them. As
explained above, the State Fund rule applies whenever a reasonably competent attorney
would conclude the materials are obviously or clearly privileged and it is reasonably
apparent they were inadvertently disclosed. The rule applies to prevent further
disclosures while the parties resolve the dispute over whether the document remains
privileged. Conducting discovery to address Gibson Dunn‟s claim the document was not
privileged is consistent with the State Fund rule.
Finally, Defendants contend Gibson Dunn ceased using the Blaskey e-mail
when it received the September 4, 2015 letter from Dick‟s counsel providing a detailed
explanation to support Dick‟s claim the e-mail was privileged and that he had not waived
the privilege. Before receiving that letter, Defendants contend Gibson Dunn did not have
sufficient information to determine the State Fund rule applied. Not so.
As explained above, the Blaskey e-mail on its face and the circumstances
surrounding its disclosure supports the trial court‟s finding Gibson Dunn should have
realized the State Fund rule applied when it originally produced the e-mail in July 2015.
At a minimum, the record supports the conclusion Gibson Dunn should have realized the
State Fund rule applied after Lurie‟s August 13, 2015 deposition when Dick‟s Probate
Action attorney objected that the e-mail was an inadvertently disclosed, privileged
document and demanded Fogelman and Gibson Dunn return all their copies. At that
point, the State Fund rule required Gibson Dunn to stop using the Blaskey e-mail and
either return it to Dick or schedule further discussions with his lawyers to evaluate the
status of the e-mail. Defendants‟ contentions that Dick may have waived the privilege
did not prevent the State Fund rule from applying before September 4. Rather, these
contentions merely raised an issue for the parties to resolve in their discussions. Gibson
Dunn, however, violated its State Fund duties by using the Blaskey e-mail and reading
substantial portions of it into the record at Mary Jo‟s and Teri‟s depositions on August 24
and 25, quoting the e-mail in interrogatory responses it served on August 24, producing a

36
copy of the e-mail in responding to a discovery request on September 14, and submitting
a copy to the court in opposition to the privilege motion in February 2016.11
Defendants contend Gibson Dunn did not violate its State Fund duties by
questioning Mary Jo and Teri about the Blaskey e-mail because Dick‟s lawyer in the
Malpractice Actions allowed Fogelman to ask questions about the e-mail subject to a
later motion to strike. But the evidence showed that Dick‟s counsel in the Malpractice
Actions objected to Fogelman using the e-mail at these depositions. She explained she
was not familiar with the e-mail and needed to learn more about it and how Defendants
obtained it, but as she read the lengthy e-mail during the depositions she objected it was
an attorney-client privileged communication, it appeared to have been inadvertently
disclosed, and she demanded Fogelman return it to Dick. Fogelman disputed the e-mail
was privileged and refused to return it, but he failed to tell Dick‟s attorney that Dick‟s
other lawyer in the Probate Action had objected to the e-mail at Lurie‟s deposition a few
days earlier, had demanded Fogelman return it, and had reached an agreement with all
parties to the Probate Action to preserve the privilege until they resolved the waiver

11
Assuming the State Fund rule applied, the dissent concludes Gibson Dunn
discharged its State Fund duties by producing the Blaskey e-mail in July 2015, as part of
Defendants‟ response to the subpoena Dick served in the Probate Action. According to
the dissent, the State Fund rule simply required Gibson Dunn to “notify” Dick‟s attorneys
they had a copy of the Blaskey e-mail and the production did so. (Dissent, at p. 9.) We
disagree. Including the e-mail as part of a larger document production does not notify the
privilege holder that the producing party possesses a communication that appears to be
privileged. (State Fund, supra, 70 Cal.App.4th at p. 656.) “Notify” means to inform
someone of something or bring to their attention. (See [as of March 23, 2017.) More importantly, an attorney‟s State Fund
duties are not limited to merely notifying the privilege holder that the attorney possesses
a communication that appears to be privileged. The attorney also must refrain from
examining the communication any more than necessary to determine its privileged
nature, and the attorney may not use the communication to prosecute or defend the
action. (Clark, supra, 196 Cal.App.4th at pp. 53-54.) As explained above, Gibson Dunn
continued to review the Blaskey e-mail after producing it, formulated and asked
deposition questions based on it, and read portions of it into the record at two depositions.

37
dispute. The trial court reasonably could conclude Fogelman attempted to exploit Dick‟s
representation by separate counsel in the Probate Action and Malpractice Actions. This
constitutes substantial evidence supporting the conclusion Gibson Dunn violated its
ethical obligations under the State Fund rule. (See Rico, supra, 42 Cal.4th at pp. 815,
fn. 8 & 819 [attorney receiving opponent‟s attorney work product disqualified for
violating State Fund duties, and work product protection was not waived by failing to
assert it during deposition when attorney defending deposition lacked sufficient
information to know opponent was using his cocounsel‟s work product].)
Moreover, Defendants‟ contention ignores the affirmative nature of the
duties imposed by the State Fund rule when an attorney receives materials that are likely
privileged and were likely disclosed inadvertently. An attorney‟s State Fund obligations
are not contingent on the privilege holder asserting an objection or otherwise convincing
the attorney who received the materials that they are privileged and were disclosed
inadvertently. Rather, the obligations are immediately triggered when a review of the
materials would lead a reasonably competent attorney to conclude the materials are
clearly or obviously privileged and it is reasonably apparent they were disclosed
inadvertently.
We do not suggest the privilege holder is excused from taking reasonable
steps to preserve the privilege and recover inadvertently disclosed materials. A privilege
holder may waive the privilege, and render the State Fund rule inapplicable, by failing to
take reasonable steps necessary to preserve the privilege. (See Evid. Code, § 912,
subd. (a).) As explained above, however, substantial evidence supports the trial court‟s
implied findings that Dick did not waive the attorney-client privilege because he and his
attorneys acted reasonably to preserve the attorney-client privilege during the short time
period that elapsed between their discovery at Lurie‟s deposition that Gibson Dunn had a

38
copy of the Blaskey e-mail, and Gibson Dunn‟s use of the e-mail two weeks later at Mary
Jo‟s and Teri‟s depositions.12

12
The dissent prompts more head scratching when it concludes the State
Fund rule does not apply because Dick‟s attorneys failed to take reasonable steps to
preserve the attorney-client privilege after learning the Blaskey e-mail had been
disclosed. (Dissent, at p. 2.) First, the dissent asserts Dick‟s attorneys should have done
more after Rick‟s attorney in the Probate Action alerted them that Dick had sent the
Blaskey e-mail to Ninetta, including conducting an investigation to determine whether
the disclosure went beyond Ninetta, Gavin, Rick, Cox, and Pellizzon. (Ibid.) The record,
however, fails to show that anyone knew the disclosure went beyond those individuals.
Dick‟s attorneys immediately obtained an agreement from the attorney for Rick and Cox
that he would collect and destroy all copies of the e-mail they had except one, which they
kept to litigate the dispute over whether the e-mail remained privileged. Although
Pellizzon testified he saw a copy of the e-mail, he also testified he never kept one.
Similarly, Gavin testified he could not find a copy of the e-mail. As for Gavin
forwarding the e-mail to Lurie, he testified he did not recall doing so. This is substantial
evidence supporting the trial court‟s implied finding Dick‟s attorneys acted reasonably
because the disclosure went no further than these individuals and all available copies
were recovered.

The dissent also faults Dick‟s attorneys for failing to take action to preserve
the privilege after Gibson Dunn‟s production of the e-mail in the Probate Action.
(Dissent, at p. 2.) The record supports the trial court‟s implied finding Dick‟s attorneys
acted appropriately. Gibson Dunn produced the e-mail as part of a “several thousand
page document production . . . on or about July 31, 2015.” Dick‟s attorneys first learned
that Gibson Dunn had a copy of the e-mail when Rick‟s attorney questioned Lurie about
it at his deposition on August 13, 2015. Dick‟s attorneys immediately objected to the
questions about the e-mail, asserted it was an inadvertently produced, privileged
document, and demanded Gibson Dunn return all copies. The dissent apparently faults
Dick‟s attorneys for not finding the e-mail in the document production during the two
weeks that elapsed between the production and Lurie‟s deposition. Based on the size of
the production, we agree with the trial court‟s implied finding that Dick‟s attorneys acted
reasonably.

39
C. Disqualification Was an Appropriate Remedy

1. Governing Legal Principles on Attorney Disqualification
“A disqualification motion involves a conflict between a client‟s right to
counsel of his or her choice, on the one hand, and the need to maintain ethical standards
of professional responsibility, on the other. [Citation.] Although disqualification
necessarily impinges on a litigant‟s right to counsel of his or her choice, the decision on a
disqualification motion „involves more than just the interests of the parties.‟ [Citation.]
When ruling on a disqualification motion, „[t]he paramount concern must be to preserve
public trust in the scrupulous administration of justice and the integrity of the bar. The
important right to counsel of one‟s choice must yield to ethical considerations that affect
the fundamental principles of our judicial process.‟” (Clark, supra, 196 Cal.App.4th at
pp. 47-48; see People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc.
(1999) 20 Cal.4th 1135, 1145 (SpeeDee Oil).) Protecting the confidentiality of
communications between attorney and client is a fundamental principle of our judicial
process and an opposing attorney who breaches that principle may be disqualified from
further participation in the litigation. (SpeeDee Oil, at p. 1146; Clark, at p. 48.)
In the context of inadvertently disclosed, attorney-client communications,
“„“„[m]ere exposure‟” to an adversary‟s confidences is insufficient, standing alone, to
warrant an attorney‟s disqualification.‟” (Clark, supra, 196 Cal.App.4th at p. 54; see
Rico, supra, 42 Cal.4th at p. 819.) “„Protecting the integrity of judicial proceedings does
not require so draconian a rule [because it] would nullify a party‟s right to representation
by chosen counsel any time inadvertence or devious design put an adversary‟s
confidences in an attorney‟s mailbox.‟” (State Fund, supra, 70 Cal.App.4th at p. 657;
see Rico, at p. 819.) Nonetheless, “„“in an appropriate case, disqualification might be
justified if an attorney inadvertently receives confidential materials and fails to conduct
himself or herself in [accordance with his or her State Fund duties], assuming other

40
factors compel disqualification.”‟” (Clark, at p. 54; see Rico, at p. 819; State Fund, at
p. 657.)
“[D]isqualification is proper as a prophylactic measure to prevent future
prejudice to the opposing party from information the attorney should not have
possessed”; an affirmative showing of existing injury from the misuse of privileged
information is not required. (Clark, supra, 196 Cal.App.4th at p. 55.) A trial court,
however, may not order disqualification “„simply to punish a dereliction that will likely
have no substantial continuing effect on future judicial proceedings.‟” (Oaks
Management Corporation v. Superior Court (2006) 145 Cal.App.4th 453, 467 (Oaks
Management), quoting Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 309
(Gregori), italics omitted.)
“[T]he significant question is whether there exists a genuine likelihood that
the status or misconduct of the attorney in question will affect the outcome of the
proceedings before the court. Thus, disqualification is proper where, as a result of a prior
representation or through improper means, there is a reasonable probability counsel has
obtained information the court believes would likely be used advantageously against an
adverse party during the course of the litigation. Though such information cannot be
unlearned, and the lawyer who obtained it cannot be prevented from giving it to others,
disqualification still serves the useful purpose of eliminating from the case the attorney
who could most effectively exploit the unfair advantage.” (Gregori, supra,
207 Cal.App.3d at p. 309; see Oaks Management, supra, 145 Cal.App.4th at p. 467.)
“A trial court‟s ruling on a disqualification motion is reviewed under the
deferential abuse of discretion standard. [Citations.] „In exercising its discretion, the trial
court must make a reasoned judgment that complies with applicable legal principles and
policies.‟ [Citations.] „The order is subject to reversal only when there is no reasonable
basis for the trial court‟s decision.‟” (Clark, supra, 196 Cal.App.4th at p. 46.)

41
 “Even under [the abuse of discretion] standard, there is still a substantial
evidence component. We defer to the trial court‟s factual findings so long as they are
supported by substantial evidence, and determine whether, under those facts, the court
abused its discretion.” (Tire Distributors, Inc. v. Cobrae (2005) 132 Cal.App.4th 538,
544; see Clark, supra, 196 Cal.App.4th at p. 46.) “The trial court‟s order is „“presumed
correct; all intendments and presumptions are indulged to support [it]; conflicts in the
declarations must be resolved in favor of the prevailing party, and the trial court‟s
resolution of any factual disputes arising from the evidence is conclusive.”‟” (Clark, at
pp. 46-47.)

2. The Trial Court Did Not Abuse Its Discretion in Disqualifying Gibson
Dunn
Defendants contend the trial court erred in disqualifying Gibson Dunn
because the court based its ruling “solely upon Gibson Dunn‟s prior „use and review‟” of
the Blaskey e-mail without considering whether past use of that information would have
a substantial and continuing effect on future proceedings in the Malpractice Actions.
According to Defendants, the court applied an improper legal standard by concluding
Gibson Dunn‟s disqualification followed automatically from the court‟s finding Gibson
Dunn violated its State Fund obligations. We disagree and find no abuse of discretion.
In its minute order, the trial court explained it disqualified Gibson Dunn
because “[c]ounsel‟s review and use of the e[-]mail at deposition goes beyond „mere
exposure‟ and raises the likelihood that this could affect the outcome of these
proceedings both in terms of [Dick‟s] rights against use of his privileged communications
against him and in terms of the integrity of these judicial proceedings and public
confidence in them.”
The trial court‟s explanation demonstrates it understood it could not base
disqualification solely on Gibson Dunn‟s violation of its State Fund duties, but also must
determine whether there was a likelihood the violation would impact the outcome of the

42
Malpractice Actions and the public‟s trust in both the scrupulous administration of justice
and the integrity of the bar. (Clark, supra, 196 Cal.App.4th at pp. 54-55 & fn. 9; see
Oaks Management, supra, 145 Cal.App.4th at p. 467.) Nothing in the court‟s ruling
supports Defendants‟ contention the court disqualified Gibson Dunn solely because it
violated its State Fund duties by reviewing and using the Blaskey e-mail. Absent
evidence to the contrary, we presume the trial court knew and properly applied the law.
(Harris, supra, 248 Cal.App.4th at pp. 500-501; Bush, supra, 245 Cal.App.4th at
p. 1002.)
Defendants also fault the trial court for failing to make specific findings
explaining how Gibson Dunn‟s violation of its State Fund duties would impact the
outcome in the Malpractice Actions. The law, however, does not require the trial court to
make any findings to support or explain its ruling, and Defendants did not request any.
(Laabs, supra, 163 Cal.App.4th at p. 1272; Higdon, supra, 227 Cal.App.3d at p. 1671.)
We therefore review the trial court‟s ruling by inferring it made all findings favorable to
its decision that are supported by substantial evidence. (Clark, supra, 196 Cal.App.4th at
p. 47.)
The record shows Gibson Dunn received the Blaskey e-mail from its client
and fully reviewed the communication before producing it in response to Dick‟s
subpoena in the Probate Action. At Lurie‟s deposition in the Probate Action, Rick‟s
counsel questioned Lurie about the circumstances surrounding the e-mail, prompting
Dick‟s counsel to immediately object the e-mail was an inadvertently disclosed
attorney-client communication and demand that Gibson Dunn return its copies as
required by State Fund. Gibson Dunn refused to return the Blaskey e-mail, denying that
it was privileged and that the State Fund rule applied. Gibson Dunn then further
reviewed and analyzed the e-mail to determine its relevance to the claims and defenses in
the Malpractice Actions, formulated deposition questions based on the e-mail‟s content,
and deposed May Jo and Teri about the e-mail while reading portions of it into the

43
record. Gibson Dunn also identified and quoted the e-mail in its interrogatory responses
that described evidence supporting Defendants‟ defenses, produced the e-mail in
discovery, and lodged a copy with the trial court in opposition to the privilege motion.
This constitutes substantial evidence supporting the trial court‟s finding
disqualification was necessary to prevent future prejudice or harm to Dick from Gibson
Dunn‟s exploitation of the e-mail‟s contents. Indeed, this evidence shows Gibson Dunn
thought it could use the e-mail to Defendants‟ advantage in opposing Dick‟s claims.
Why else would Gibson Dunn identify the e-mail as relevant evidence in interrogatory
responses and depose Mary Jo and Teri about the e-mail in the face of Dick‟s strenuous
objection that the e-mail was an inadvertently disclosed, privileged document that must
be returned? Clark established that an attorney who knowingly uses inadvertently
disclosed, privileged materials to depose witnesses may affect the outcome of the lawsuit
and therefore justifies a trial court‟s exercise of its discretion to disqualify the attorney.
(Clark, supra, 196 Cal.App.4th at p. 55 & fn. 11.)
Substantial evidence also supports a finding that Gibson Dunn‟s continued
representation of Defendants could trigger doubts about the integrity of the judicial
process because whenever Gibson Dunn‟s advocacy touched on the August 22 meeting
summarized in the Blaskey e-mail, questions inevitably would surface about the source of
Gibson Dunn‟s knowledge. (Clark, supra, 196 Cal.App.4th at pp. 54-55.) Even if
Gibson Dunn‟s knowledge came from a legitimate, nonprivileged source, Gibson Dunn‟s
previous access to the Blaskey e-mail “could undermine the public trust and confidence
in the integrity of the adjudicatory process.” (Id. at p. 55.) On this record, we cannot say
the trial court abused its discretion in selecting disqualification as the appropriate remedy
for Gibson Dunn‟s violation of its State Fund duties.13 (Ibid.)

13
The dissent concludes the trial court erred in disqualifying Gibson Dunn
because, “until today, no court has ever applied the State Fund rule in any case which
bears any material resemblance to this case. So here, as in State Fund, the disputed

44
 Defendants contend the trial court abused its discretion because there is no
evidence Dick will suffer any future harm based on Gibson Dunn‟s review and use of the
Blaskey e-mail. According to Defendants, the trial court‟s privilege order prevents future
harm to Dick because it prohibits Gibson Dunn from further using the e-mail by requiring
the firm to seal its copies and also those portions of the deposition transcripts that refer to

conduct has never before been condemned by any decision, statute or Rule of
Professional Conduct applicable in this state[, and therefore] it may not be equated to a
failure to act in good faith such that disqualification is warranted.” (Dissent, at p. 10.)
The dissent misconstrues State Fund, the facts of this case, and the standards for
disqualification.

In State Fund, the trial court imposed monetary sanctions against an
attorney for refusing to return his opponent‟s inadvertently disclosed, privileged
documents. The trial court concluded the attorney‟s conduct constituted bad faith
conduct under Code of Civil Procedure section 128.5 because it violated an American
Bar Association (ABA) ethics opinion addressing an attorney‟s ethical obligations in
handling such documents. (State Fund, supra, 70 Cal.App.4th at 651.) The State Fund
court reversed the sanctions, explaining the ABA opinion could not serve as a basis for
imposing monetary sanctions when no “decision, statute, or Rule of Professional Conduct
applicable in this state” previously had condemned the conduct. (State Fund, at
pp. 655-656.) The State Fund court went on to announce the foregoing State Fund rule
as the standard governing all future conduct by California attorneys. (Id. at pp. 656-657.)

In contrast to State Fund, when Gibson Dunn engaged in its conduct,
numerous decisions prohibited an attorney from excessively reviewing an opponent‟s
inadvertently produced, privileged documents, and held an attorney could be disqualified
for violating that prohibition. (See, e.g., Rico, supra, 42 Cal.4th at p. 810; Clark, supra,
196 Cal.App.4th at pp. 54-55.) Whether the dissent considers any of those cases to be
analogous to the specific facts of this case is irrelevant because State Fund and its
progeny undeniably prohibit the category of conduct at issue here. Moreover, the trial
court impliedly found that Gibson Dunn refused to return the Blaskey e-mail, continued
to review it, and used it to depose witnesses in the face of repeated objections and
warnings by Dick‟s attorneys. Substantial evidence supports those findings and they
make disqualification a potential remedy for addressing Gibson Dunn‟s conduct. Finally,
contrary to the dissent‟s suggestion, a trial court is not required to find an attorney acted
in bad faith to disqualify the attorney for violating the State Fund rule.

45
its contents. Defendants contend Gibson Dunn has complied with the court‟s order and
therefore disqualification was unnecessary. Defendants misconstrue the governing law.
As explained above, disqualification does not require evidence of an
existing injury from the use of the inadvertently disclosed materials. (Clark, supra,
196 Cal.App.4th at p. 55.) Disqualification is proper as a prophylactic measure to
prevent potential future harm to Dick from information Gibson Dunn should not have
used. (Ibid.) The critical question is whether there is a genuine likelihood that Gibson
Dunn‟s review and use of the Blaskey e-mail will affect the outcome of the Malpractice
Actions. (Oaks Management, supra, 145 Cal.App.4th at p. 467; Gregori, supra,
207 Cal.App.3d at p. 309.) We review the trial court‟s answer to that question for abuse
of discretion because the trial court has superior knowledge about the parties‟ claims and
defenses, and the impact of the inadvertently disclosed information on those claims and
defenses. (Clark, at pp. 46-47.)
“An abuse of discretion may be found only if „“no judge could have
reasonably reached the challenged result. [Citation.] „[A]s long as there exists “a
reasonable or even fairly debatable justification, under the law, for the action taken, such
action will not be . . . set aside . . . .”‟”‟” (O’Donoghue v. Superior Court (2013)
219 Cal.App.4th 245, 269.) We may not substitute our judgment for that of the trial
court, and provided the trial court properly applied the law, we may reverse the trial
court‟s exercise of its discretion only when the facts required the trial court to reach a
different result. (Avant! Corp. v. Superior Court (2000) 79 Cal.App.4th 876, 881-882;
Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 957.)
The trial court‟s privilege order prevented Gibson Dunn from using the
Blaskey e-mail and the portions of the deposition transcripts that referred to its content.
But the court‟s order could not prevent Gibson Dunn from using the knowledge it
acquired by carefully reviewing and analyzing the e-mail even if the e-mail itself is no
longer available to the firm. (See Clark, supra, 196 Cal.App.4th at pp. 41-42, 54-55

46
[rejecting contention trial court abused its discretion by disqualifying attorney instead of
entering a protective order precluding use of inadvertently disclosed materials].)
Even after a trial court has taken remedial action to protect the privilege,
“disqualification still serves the useful purpose of eliminating from the case the attorney
who could most effectively exploit the unfair advantage [acquired through the earlier
review and use of the inadvertently disclosed, privileged materials].” (Gregori, supra,
207 Cal.App.3d at p. 309; see Oaks Management, supra, 145 Cal.App.4th at p. 467.)
Here, the Gibson Dunn attorney who received and improperly reviewed the inadvertently
disclosed documents has a greater capacity than any replacement counsel to exploit the
information contained in those documents because the original attorney has personal
knowledge of the information. Any knowledge replacement counsel receives about the
documents would be secondhand information received from others who may have seen
the documents, and therefore it is unlikely replacement counsel could use the information
as effectively. (Gregori, at p. 309; Chronometrics, Inc. v. Sysgen, Inc. (1980)
110 Cal.App.3d 597, 607-608.)
If we accepted Defendants‟ argument, a trial court never could disqualify
an attorney who received, reviewed, and used inadvertently disclosed, privileged
materials unless the attorney continued to review and use the materials after the trial court
found them privileged and ordered them returned, sealed, or destroyed. That is not the
law. As we have explained, substantial evidence supports the finding that
disqualification was appropriate to prevent future harm to Dick despite the privilege order
because the Blaskey e-mail included information that Gibson Dunn believed it could use
to Defendants‟ advantage. Moreover, the privilege order does nothing to lessen the
damage caused to the public‟s trust in the administration of justice and the integrity of the
bar based on Gibson Dunn‟s previous access and extensive use of the Blaskey e-mail. On
this record, the privilege order did not require the trial court to deny the disqualification
motion.

47
 Finally, Defendants contend Clark is distinguishable because the attorney
there used one of several inadvertently disclosed, privileged documents as the basis for
one of his client‟s claims, and the attorney and client stated they would use the
documents at trial even after acknowledging their privileged nature. According to
Defendants, those egregious facts are not present here and therefore Clark does not
support the trial court‟s decision. Defendants misconstrue Clark.
Although the attorney in Clark used one of the documents as the basis for
the claim, Clark explained the trial court did not abuse its discretion in disqualifying the
attorney even if that document later was found not to be privileged. Clark explained
disqualification was appropriate because the attorney also used other privileged
documents to question witnesses at their depositions. (Clark, supra, 196 Cal.App.4th at
p. 55 & fn. 11.) Moreover, the statements by the attorney and client that they would use
the documents at trial occurred before their opponent filed the disqualification motion.
(Id. at pp. 44, 55 & fn. 11.) Nothing in Clark supports Defendants‟ suggestion
disqualification was ordered in that case based on the attorney‟s or client‟s allegedly
professed intent to use the inadvertently disclosed, privileged documents even after the
trial court found they were privileged. Clark therefore is not meaningfully different than
this case and supports the trial court‟s exercise of its discretion to disqualify Gibson
Dunn.

48
 III
DISPOSITION

The petition for writ of mandate or other appropriate relief is denied. This
court‟s order staying all trial court proceedings is dissolved upon the finality of this
opinion. Plaintiffs shall recover their costs for the proceedings in this court.

ARONSON, J.

I CONCUR:

O‟LEARY, P. J.

49
THOMPSON, J., Dissenting—I respectfully dissent. The court‟s decision today is an
unwarranted extension of the ethical rule declared in State Comp. Ins. Fund v. WPS, Inc.
(1999) 70 Cal.App.4th 644 (State Fund). The State Fund rule does not apply to the
unusual situation in this case, but even if it does apply, Gibson Dunn did not violate it.
And, in any event, disqualification was not proper because Gibson Dunn‟s conduct was
not clearly proscribed by the State Fund rule.
1. The State Fund Rule Does Not Apply.
The State Fund rule does not apply because the unusual situation in this
case bears no material resemblance to the situation in that case. In State Fund, the
plaintiff‟s lawyer erroneously sent the privileged documents directly to the defendant‟s
lawyers, together with copies of other documents previously produced during discovery,
all in preparation for trial. (State Fund, supra, 70 Cal.App.4th at p. 648.)
The erroneous disclosure was patently inadvertent and undisputed. (State
Fund, supra, 70 Cal.App.4th at p. 648.) When the defendant‟s lawyer refused to return
the privileged documents, the plaintiff‟s lawyer promptly sought an order compelling
destruction or return of the privileged documents and sanctions. (Id. at p. 649.)
In this case, a client, Dick, forwarded the Blaskey e-mail to a nonlawyer,
Ninetta, who forwarded it to Gavin, another nonlawyer. Gavin then gave hard copies to
Rick, Cox and Pellizzon, all nonlawyers. Gavin also forwarded it to Lurie, who was a
lawyer for MHI at that time but is now a client. Lurie put it in the MWE/MHI client file,
where it was later found by his lawyers, Gibson Dunn.
The only disclosure in this entire series of disclosures which was even
arguably inadvertent was the initial disclosure by Dick to Ninetta. That disclosure was
not patently inadvertent, and the claimed inadvertence was subject to reasonable dispute.
Furthermore, none of these disclosures occurred in the context of formal discovery or
preparation for trial. Instead, they all occurred in the context of an attempt to resolve the
MHI dispute without litigation, with Gavin acting as an informal mediator.

1
 After these disclosures came to light, Dick‟s lawyers did very little to
secure the destruction or return of all copies of the Blaskey e-mail. Kirby told Dick‟s
lawyers in the Probate Action in August, 2014, that Gavin had given copies to Rick, Cox
and Pellizzon. Kirby also told Dick‟s lawyers, “I would suspect the disclosure continued
beyond my clients and Mr. Pellizzon.” (Italics added.)
Dick‟s lawyers claimed Dick had inadvertently disclosed the Blaskey e-
mail to Ninetta, and asked Kirby to have Rick and Cox destroy their copies of it. They
also asked Kirby to have Rick and Cox contact any third parties who possessed copies
and ask them to destroy their copies too, but Kirby refused.
Kirby questioned the inadvertence claim and insisted discovery would be
necessary to resolve the privilege claim. He explained: “[T]his is going to be a fact
intensive issue about waiver . . . and the extent of its further distribution by persons other
than Dick . . . is currently unknown . . . . [¶] . . . [¶] . . . Until such time as we can garner
all the facts, we will proceed with deleting and destroying all copies in our possession,
but we will retain a single copy in a sealed envelope for use at your client‟s continuing
deposition and . . . for use at further depositions . . . . [¶] Likewise, we will make sure to
request the return of the same from our clients, but our ethical obligation extends no
further than dealing with our own clients.” (Italics added.)
Even so, Dick‟s lawyers never did anything else to secure the return of the
Blaskey e-mail from Rick, Cox or Kirby. More to the point, they never did anything else
to determine the extent of further disclosure either to or by other third parties like Lurie.
Gibson Dunn first became aware of the Blaskey e-mail in June 2015, when
they found it in the MWE/MHI client file while preparing MWE‟s response to a
subpoena from Dick‟s lawyers in the Probate Action. Gibson Dunn produced a copy of
the Blaskey e-mail to Dick‟s lawyers in the Probate Action about a month later. Dick‟s
lawyers did absolutely nothing in response. They neither demanded that it be returned
nor sought a protective order.

2
 These distinctions are material for three reasons. First, the State Fund rule
“is fundamentally based on the importance which the attorney-client privilege holds in
the jurisprudence of this state.” (State Fund, supra, 70 Cal.App.4th at p. 657.) The State
Fund rule essentially obligates the receiving lawyer to protect the attorney-client
privilege for the privilege holder, when the privilege holder‟s own lawyer is unable to do
so because he or she is unaware of the inadvertent disclosure. (Id. at pp. 656-657.)
In this case, the privilege holder‟s own lawyers were aware of the arguably
inadvertent disclosure long before the receiving lawyers. Dick‟s lawyers learned of the
arguably inadvertent disclosure in August 2014, almost a year before Gibson Dunn
learned of it in June 2015. So Dick‟s own lawyers were able to protect the attorney-client
privilege for Dick but they simply failed to do so. In these circumstances, Gibson Dunn
had no obligation to protect the attorney-client privilege for Dick.
Second, the State Fund rule is based on the belief, “a client should not enter
the attorney-client relationship fearful that an inadvertent error by its counsel could result
in the waiver of privileged information . . . . ” (State Fund, supra, 70 Cal.App.4th at p.
657.) “Without it, full disclosure by clients to their counsel would not occur, with the
result that the ends of justice would not be properly served.” (Ibid.)
But none of these policy concerns are implicated here because the arguably
inadvertent disclosure was made by the client, Dick, not his lawyer. Client error poses no
risk of disincentive to full candor by a client with his or her lawyer out of fear that an
inadvertent error by the lawyer could result in the waiver of privileged information.
Third, the State Fund rule preserves the rights of attorneys to prepare for
trial and, “addresses the practical problem of inadvertent disclosure in the context of
today‟s reality that document production may involve massive numbers of documents.”
(Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 818 (Rico).) None of these
policy concerns are implicated in this case either because the arguably inadvertent
disclosure occurred outside the context of trial preparation and document production.

3
 The only case cited by the majority which bears any resemblance to the
unusual situation in this case is Clark v. Superior Court (2011) 196 Cal.App.4th 37
(Clark). And Clark is only similar in one respect. There, as here, the attorney received
the privileged documents from his own client, not from the opposing attorney. The Clark
court merely assumed the State Fund rule applied and analyzed whether it was violated.
Regardless, Clark is easily distinguished. In Clark the client had taken the
privileged documents from his employer in violation of a nondisclosure agreement. So
the client‟s acquisition and possession of the privileged documents was itself wrongful.
The same cannot be said here. There was nothing wrongful about Lurie‟s acquisition or
possession of the Blaskey e-mail.
Great American Assurance Co. v. Liberty Surplus Insurance Corp. (N.D.
Cal. 2009) 669 F.Supp.2d 1084 (Great American) illustrates why the State Fund rule
does not apply under these circumstances. There, the defendant insurer‟s claims
specialist forwarded a privileged coverage counsel opinion to the outside insurance
broker for a business claiming coverage. (Id. at p. 1088.) The broker then sent the
opinion to the plaintiff, the business‟s primary insurer. The defendant claimed it did not
become aware of the inadvertent disclosure until a month later, at which point it sought to
recover the opinion, but the plaintiff refused. (Ibid.) Coverage litigation ensued and the
plaintiff produced, from its claims file, a copy of the opinion. (Id. at p. 1089.) The
plaintiff also attached a copy of the opinion to its motion for summary judgment. (Ibid.)
The Great American court concluded the State Fund rule did not apply
because the plaintiff “did not receive any communication directly from [the defendant],”
making this situation “much different from a case wherein some privileged or work-
product protected documents, part of a larger set of documents, were inadvertently sent
with the larger set, thus indicating that it might be a mistake.” (Great American, supra,
669 F.Supp.2d at p. 1093.) Instead there, as here, “a single document was sent, and it
was not sent directly to opposing counsel.” (Ibid.)

4
 The Great American court explained, “it was not reasonably apparent that
the coverage opinion was inadvertently sent. In fact, it may have been reasonably
apparent that any privilege or protection was waived.” (Great American, supra, 669
F.Supp.2d at p. 1093.) The court emphasized the defendant did not raise the issue of
inadvertent disclosure for well over a month after it came to light. (Ibid.) Thus, the
defendant‟s counsel “would have had little reason to think that the original email was not
voluntarily sent.” (Ibid.) All of the same is true here and the same result should obtain.
This result also makes sense. The State Fund rule prevents “„a “gotcha”
theory of waiver, in which an underling‟s slip-up in a document production becomes the
equivalent of actual consent [to waive the privilege].‟” (State Fund, supra,
70 Cal.App.4th at p. 654.) But extending the State Fund rule to the unusual situation here
results in a reverse gotcha which could “nullify a party‟s right to representation by chosen
counsel any time inadvertence or devious design put an adversary‟s confidences in any
attorney‟s mailbox.” (Id. at p. 657.) “Protecting the integrity of judicial proceedings
does not require so draconian a rule.” (Ibid.)
For all of these reasons the State Fund rule does not apply in this case as a
matter of law. (Ghirardo v. Antonioli (2007) 8 Cal.4th 791, 799 [when the decisive facts
are undisputed we are confronted with a question of law].) Gibson Dunn‟s discovery of
the Blaskey e-mail in the MWE/MHI client file is plainly too far removed from Dick‟s
arguably inadvertent disclosure to Ninetta. The majority is not just trying to put a square
peg in a round hole. They are trying to put a square peg in no hole at all.
2. Gibson Dunn Did Not Violate The State Fund Rule.
Gibson Dunn did not violate the State Fund rule for two reasons. First,
Gibson Dunn‟s State Fund obligations were never triggered because it was not
reasonably apparent that the Blaskey e-mail was provided or made available through
inadvertence. Second, even if Gibson Dunn‟s State Fund obligations were triggered they
were discharged when Gibson Dunn produced the Blaskey e-mail to Dick‟s lawyers.

5
 As a preliminary procedural matter, I note the trial court never expressly
determined that Gibson Dunn‟s State Fund obligations were triggered, or that Gibson
Dunn violated those obligations through its use of the Blaskey e-mail. In fact, the trial
court never made any express findings at all regarding Gibson Dunn‟s asserted State
Fund obligations or violations.
The majority would rely upon the doctrine of implied findings and the
presumption of correctness to overcome these procedural defects. This they cannot do.
“[W]here, as here, a respondent argues for affirmance based on substantial evidence, the
record must show the court actually performed the factfinding function. Where the
record demonstrates the trial judge did not weigh the evidence, the presumption of
correctness is overcome. [Citation.] As stated in Estate of Larson (1980) 106
Cal.App.3d 560, 567, „The [substantial evidence] rule thu operates only where it can be
presumed that the court has performed its function of weighing the evidence. If analysis
of the record suggests the contrary, the rule should not be invoked.‟” (Kemp Bros.
Construction, Inc. v. Titan Electric Corp. (2007) 146 Cal.App.4th 1474, 1477-1478.)
Such is the case before us. The record demonstrates the trial court never
weighed the evidence and performed the fact finding function regarding Gibson Dunn‟s
asserted State Fund obligations. Instead, it improvidently collapsed the three-part State
Fund inquiry into two parts: (1) the predicate inquiry as to whether the Blaskey e-mail
was privileged; and (2) the subsequent inquiry as to whether disqualification was
necessary. These procedural defects alone warrant issuing the requested writ relief.
Turning to the merits, Gibson Dunn‟s State Fund obligations were not
triggered when they found the Blaskey e-mail in the MWE/MHI client file because it was
not, “reasonably apparent that the materials were provided or made available through
inadvertence . . . .” (State Fund, supra, 70 Cal.App.4th at p. 656.) This part of the State
Fund rule states an objective standard, and in applying it “courts must consider . . . the
circumstances of the litigation . . . .” (Rico, supra, 42 Cal.4th at p. 818.)

6
 The burden of proof rested squarely on Dick‟s lawyers—not Gibson Dunn.
State Fund requires, “whenever a lawyer seeks to hold another lawyer accountable for
misuse of inadvertently received confidential materials, the burden must rest on the
complaining lawyer to persuasively demonstrate inadvertence.” (State Fund, supra, 70
Cal.App.4th at p. 657, italics added; accord Rico, supra, 42 Cal.4th at p. 817.)
In this case, the relevant objective circumstances of the litigation are:
• Gibson Dunn received the Blaskey e-mail from its own client, Lurie, who
innocently received it from a third party, Gavin, not from the privilege holder, Dick, or
from Dick‟s lawyers. Again this unusual situation is nothing like State Fund or Clark.
• The Blaskey e-mail stated it was a “Summary of [the] 8/22/13 meeting,”
a meeting attended by Dick, Rick, Cox, Blaskey and Lurie. That Lurie had a copy of the
Blaskey e-mail was unremarkable since he had attended the meeting as MHI‟s lawyer.
• The Blaskey e-mail, unlike the State Fund and Clark documents, was not
labeled with privilege or confidentiality warnings. (State Fund, supra, 70 Cal.App.4th at
p. 648 [“Attorney-Client Communication/Attorney Work Product . . . Do Not Circulate or
Duplicate . . . Confidential”] (capitalization omitted); Clark, supra, 196 Cal.App.4th at p.
43 [“„Attorney-Client Privileged‟ . . . „Highly Confidential‟”].) Thus, the Blaskey e-mail
did not “make clear to even a casual observer that [it was] intended to be [a] confidential
attorney-client communication[].” (State Fund, supra, 70 Cal.App.4th at p. 653.)
• The Blaskey e-mail was addressed to Dick and to Jill Lindsay. Lindsay
was, “MHI‟s longtime bookkeeper” according to the allegations of the complaints in the
Malpractice Actions served on May 4, 2015, over a month before Gibson Dunn found the
Blaskey e-mail in the MWE/MHI client file. Gibson Dunn first learned Lindsay also
claimed to be Dick‟s “personal assistant” on August 19, 2015, about three months after
Gibson Dunn found the Blaskey e-mail. Up until then Gibson Dunn had no reason to
even suspect it might have been “reasonably necessary” (Evid. Code, § 952) to address
the Blaskey e-mail to Dick and to Lindsay.

7
 • Unlike in Rico, no Gibson Dunn attorney ever “admitted that after a
minute or two of review he realized . . . [opposing counsel] did not intend to reveal
them.” (Rico, supra, 42 Cal.4th at p. 819.) This fact is relevant, although “such
admissions are not required for the application of the objective standard . . . .” (Ibid.)
• Dick forwarded the Blaskey e-mail to “Mr. & Mrs. Gavin Shearer
Herbert,” at Ninetta‟s e-mail address, at a time when everyone involved knew Gavin,
Dick‟s brother-in-law, was trying to mediate the MHI dispute. These circumstances
suggested Dick had deliberately forwarded it to Ninetta, who is Gavin‟s wife.
• At the time that Gibson Dunn found the Blaskey e-mail in the MWE/MHI
client file: it had been nearly two years since Lurie had received it from Gavin; it had
been almost one year since Dick‟s lawyer‟s had been told it had been distributed to third
parties other than Rick, Cox, Kirby and Pellizzon; and neither Dick nor his lawyers had
ever raised any concerns about it with either Lurie or Gibson Dunn.
On this record, there is no reasonable basis to conclude Dick‟s lawyers met
their burden to persuasively demonstrate inadvertence based upon the relevant objective
litigation circumstances. Hence, even if the trial court had made a factual finding on the
inadvertence issue, that finding would not have been supported by substantial evidence.
The majority‟s arguments for the opposite conclusion are legally unsound.
The majority improperly equates the presumption of privilege (Evid. Code, § 917, subd.
(a)), with a presumption of inadvertence. By doing so, the majority, like the trial court,
collapses the three-part State Fund inquiry into two parts, and effectively reads the
reasonably apparent inadvertence requirement out of the rule. There is no presumption of
inadvertence, and even if there were a presumption of inadvertence it was rebutted here.
Next the majority relies on evidence of events which occurred after Gibson
Dunn found it had received the Blaskey e-mail. This evidence is irrelevant. Gibson
Dunn‟s State Fund obligations were triggered, if at all, at the time Gibson Dunn found it
had received the privileged document. (State Fund, supra, 70 Cal.App.4th at p. 656.)

8
 The majority also argues “counsel‟s warning on privilege holder‟s behalf
triggers an opposing attorney‟s State Fund duties.” (Maj. opn. at p. 34, italics added;
citing Clark, supra, 196 Cal.App.4th at pp. 52-53.) The majority‟s reliance on Clark is
misplaced. Clark was addressing the question of whether the attorney had excessively
reviewed the privileged documents in violation of the obligations imposed by State Fund,
not the question of whether those obligations had been triggered in the first instance.
Besides, Gibson Dunn discharged their State Fund obligations, if any, when
they produced the Blaskey e-mail. State Fund declares the receiving attorney “should
refrain from examining the materials any more than is essential to ascertain if the
materials are privileged, and shall immediately notify the sender that he or she possesses
material that appears to be privileged.” (State Fund, supra, 70 Cal.App.4th at p. 656.)
Gibson Dunn notified Dick‟s lawyers they possessed the Blaskey e-mail
when they produced it in response to Dick‟s subpoena, and again when Rick‟s lawyers
questioned Lurie about it during his deposition. And there is no evidence Gibson Dunn
examined it any more than necessary prior to notifying Dick‟s lawyers they had it.
At that point, Gibson Dunn‟s State Fund obligations, if any, were
discharged, and the burden shifted to Dick‟s lawyers. Since the parties could not resolve
the situation by agreement, Dick‟s lawyers were obligated to promptly seek guidance
from the court, “with the benefit of protective orders and other judicial intervention as
may be justified.” (State Fund, supra, 70 Cal.App.4th at p. 657.) This is exactly what
the plaintiff‟s lawyers did in State Fund and what Dick‟s lawyers failed to do here.
The contrary conclusion by the majority upsets the delicate balance of
competing interests struck in State Fund. (See State Fund, supra, 70 Cal.App.4th at p.
657.) It imposes on Gibson Dunn an obligation to respect their opponent‟s interests
which is greater than and in direct conflict with their primary obligation to zealously
represent their own client‟s interests. It penalizes Gibson Dunn for Dick‟s lawyer‟s
failure to represent Dick‟s interests. This cannot be what the State Fund rule requires.

9
3. Disqualification Was Not Proper.
Disqualification was not proper because Gibson Dunn‟s conduct was not
clearly proscribed by the State Fund rule. On this point, State Fund is analogous.
In State Fund, the trial court awarded sanctions against the defendant‟s
lawyer, for refusing to return and for using the privileged documents in violation of an
American Bar Association (ABA) ethics opinion. (State Fund, supra, 70 Cal.App.4th at
p. 651.) The Court of Appeal reversed and explained the lawyer should not have been
sanctioned for engaging in conduct, “which has not been condemned by any decision,
statute or Rule of Professional Conduct applicable in this state. The finding that an
attorney has engaged in conduct contrary to an ABA formal opinion does not establish an
obligatory standard of conduct imposed on California lawyers. Consequently it may not
perforce be equated to a failure to act in good faith such that sanctions are warranted.”
(Id. at p. 656.)
Similarly, the trial court here granted Dick‟s motion to disqualify Gibson
Dunn, for refusing to return the Blaskey e-mail and for allegedly using it in violation of
their obligations under State Fund. But until today, no court has ever applied the State
Fund rule in any case which bears any material resemblance to this case. So here, as in
State Fund, the disputed conduct has never before been condemned by any decision,
statute or Rule of Professional Conduct applicable in this state. Consequently, it may not
be equated to a failure to act in good faith such that disqualification is warranted.
In the final analysis this was an unusual privilege dispute. Gibson Dunn‟s
conduct was objectively reasonable. That this court has now greatly expanded the State
Fund rule to condemn Gibson Dunn‟s conduct is not a proper basis for disqualification.

THOMPSON, J.

10