Costco Decision Could Significantly Change Scope of Attorney-Client Privilege

Michael A. Sands and Dan Ko ObuhanychJD Supra: Legal Articles - Costco Decision Could Significantly Change Scope of Attorney-Client Privilege, Jan. 13, 2009.

Costco (in California) asked counsel review its classification of its managers (bakery manager, meat manager, et al.) under wage and hour laws. To do so, the lawyer interviewed a couple of managers, gathered facts, and wrote a 22-page opinion letter. A year later, Costco reclassified the managers to be non-exempt so they would be eligible for overtime. Over a year after that, some managers filed a class action alleging that Costco's previous classification had been wrong. And the plaintiffs' attorneys sought the 22-page opinion letter in discovery.

The trial judge had a discovery referee read the letter, redact what was privileged, and let the plaintiffs the "factual information."

The California Court of Appeals denied writ relief because the company couldn't show "irreparable harm" because the parts of the opinion letter disclosed

were “inconsequential and do not infringe on the attorney-client relationship.” The appellate
court noted that the unredacted portions of the letters were “factual statements about the employees’ responsibilities” and did not reveal legal knowledge, advice or impressions, and stated that the information “is hardly startling and can easily be obtained from interviews, depositions, or from a production request.”

And now the case is pending before the California Supreme Court.

The authors of this newsletter article predict that this decision could have a big effect. Will clients be less forthcoming to their attorneys? Will attorneys start delivering more advice orally?

Think about how you weave facts into a memo or opinion letter. Can the way you order and state facts really be separated from your legal analysis?