May 26, 2020

This California Evidentiary Privilege May Stop At The Border

Unlike other states, California’s rules of evidence are found in statutes, not court rules.  This is not simply a legal curiosity.  The statutory basis of California’s “rules” of evidence have real world implications.

The California Evidence Code begins with the underlying premise that disclosure is required. Thus, no person has a privilege unless otherwise provided by statute to:

  • refuse to be a witness;

  • refuse either to disclose a matter or to produce a writing, object, or other thing; or

  • to insist that another not be a witness, not disclose a matter, or not produce a writing, object, or thing.

Cal. Evid. Code § 911.  Because the statute includes no express exceptions for court decisions or other rules of court, the courts may not elaborate on the statutory scheme.

The California Evidence Code specifies certain evidence that is affected by or excluded by extrinsic policies.  As explained by the California Supreme Court, one of those policies is “to encourage the candor necessary to a successful mediation”.  Cassel v. Superior Court, 51 Cal. 4th 113 (2011).  Thus, Section 1119 provides:

No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

Given the broad and unqualified scope of the privilege, I was disturbed by a recent ruling that refused to recognize the privilege.  In OptimisCORP v. Waite, 2015 Del. Ch. LEXIS 222 (Del. Ch. Aug. 26, 2015), Vice Chancellor Donald F. Parsons, Jr. refused to apply the privilege, noting the geographic limits of the California Evidence Code:

Plaintiffs have not offered any explanation, however, as to how the California Evidence Code applies in this action.  That Code, by its terms, applies only to the courts and judicial proceedings of California.

(footnote omitted).  Oddly, the opinion omits any consideration of comity.  The Vice Chancellor, however, didn’t rest his ruling solely on geography.  He found that the voluntary production of documents had waived the California privilege.

The ruling is disturbing because I expect that the parties to a California mediation expect that their statements, including admissions, won’t be used against them.  That expectation and candor are vitiated if courts in other states refuse to honor the privilege.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...