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March 24, 2026 Get Citation Alerts Download PDF Add Note

Guardian Storage Centers v. Simpson

California Court of Appeal

• Citations: None known

• Docket Number: G064847

• Opinion

• Authorities (15)

• Cited By (0)

• Summaries (0)

• Similar Cases (51.3K)

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Combined Opinion

Filed 3/24/26

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

GUARDIAN STORAGE CENTERS,
LLC, et al.,
G064847, G064852
Plaintiffs, Cross-defendants and
Appellants, (Super. Ct. Nos. 30-2023-
01356616, 30-2024-01383640)
v.
OPINION
JULIE SIMPSON,

Defendant, Cross-complainant
and Respondent.

RHIANA DAVIS et al.,

Plaintiffs, Cross-defendants and
Respondents,

v.

GUARDIAN STORAGE CENTERS,
LLC, et al.,

Defendants, Cross-complainants
and Appellants.
Appeal from orders of the Superior Court of Orange County,
Nathan R. Scott, Judge. Reversed and remanded with directions.
Burkhalter Kessler Clement & George, Alton G. Burkhalter and
M. Michelle Rohani for Appellants.
Aarons Ward, Martin I. Aarons and Shannon H.P. Ward for
Respondents.

---

One of the key facets of the legal profession is the robust and
ever-growing set of ethical obligations to which attorneys must adhere.
Among those obligations, with which every attorney should be very familiar,
is one concerning what an attorney should do if they come into possession of
seemingly attorney-client privileged material belonging to another that
appears to have been inadvertently transmitted.
These employment related cases require us to determine an
attorney’s obligations in slightly different circumstances: an attorney receives
from their client a seemingly attorney-client privileged email belonging to an
opposing party; the email was originally and intentionally sent to the client
when the client was an executive employed by the opposing party employer;
however, unbeknownst to the employer, the email was subsequently
forwarded by the executive employee to their personal email address and,
following their termination, provided to their attorney for use in a lawsuit
against their former employer.
Appellants Guardian Storage Centers, LLC (Guardian) and John
Minar appeal from orders denying disqualification of the law firm
representing respondents, Aarons Ward (Aarons), under such circumstances.
They contend the trial court abused its discretion by making unsupported
factual findings and applying incorrect legal standards in parts of its

2
analysis. From their perspective, the proper analysis compels the conclusion
that Aarons should be disqualified because it impermissibly conducted a
detailed review of the attorney-client privileged emails, failed to notify
Guardian it possessed them, refused to return them upon Guardian’s
demand, and has indicated its intent to use them against Guardian and
related parties in the instant litigation.
We conclude the denial of disqualification was an abuse of
discretion under the circumstances. The trial court’s finding that the
disputed emails are attorney-client privileged, with Guardian being the
privilege holder, is supported by substantial evidence, and respondents failed
to demonstrate waiver of the privilege. Although the respondents who
received the emails were intended recipients at the time they were sent, the
court erred in finding this factor favored denying disqualification and,
thereby, implicitly rejecting application of the analytical framework set forth
in State Comp. Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644 (State
Fund). We find what has come to be known as the State Fund rule, which
originated from a situation involving inadvertent disclosure by a party’s
attorney, equally applicable to a situation in which it is reasonably apparent
the privileged material was impermissibly taken from the privilege holder
without authorization. Because the trial court did not analyze the
circumstances through that proper legal lens, employed too limited a test for
determining whether the content of the privileged emails could likely be used
to Guardian’s disadvantage in the instant litigation, and made an
unsupported finding related thereto, we reverse the challenged orders and
remand the matter so the court may reconsider Guardian’s disqualification
motions in accordance with this opinion.

3
FACTS

Respondents are all former employees of Guardian. At all
relevant times, Julie Simpson was Guardian’s chief operating officer, Tracie
Dotterer was Guardian’s chief financial officer, and Rhiana Davis and
Gustavo Amezola held other positions. Appellant John Minar was and is
Guardian’s chief executive officer. He co-owns Guardian along with his son
and daughter-in-law, Eric and Claire Minar. 1
I.
THE SIMPSON ACTION

In October 2023, after terminating Simpson, Guardian and John
sued her for, inter alia, breach of contract, breach of fiduciary duty,
conversion, and intentional and negligent interference with prospective
economic advantage. Among the complaint’s allegations were the following:
(1) Guardian’s employee handbook required Simpson to keep a variety of
information confidential, obligated her to return all Guardian property upon
termination of employment, and prohibited her from transmitting without
authorization any document or email created by or for Guardian; (2) Simpson
refused to return a variety of Guardian owned items after her termination,
including books, documents, equipment, and data; (3) most of the unreturned
information and data is “of a confidential and sensitive nature”; (4) in the
couple of months before her termination, Simpson “forwarded 25 company
emails to her personal email address”; (5) during her employment, and
unbeknownst to Guardian, Simpson used Guardian funds to purchase a

1 Because they share the same last name, we refer to each of the

Minars by first name. No disrespect is intended. We sometimes refer to John,
Eric, and Claire, collectively, as the Minars.

4
laptop for her brother and failed to file certain required corporate documents
with the relevant government entities; and (6) Simpson owes John over
$200,000 in principal and interest pursuant to a loan agreement.
Simpson responded with a cross-complaint against Guardian and
John (collectively, with the complaint against Simpson, the Simpson action).
Her claim against John alleged he sexually harassed her over the course of 14
years. As for Guardian, Simpson alleged wrongful termination, retaliation,
sexual harassment, and failure to prevent retaliation and harassment.
Simpson’s cross-complaint detailed a series of events which
allegedly occurred in the approximately six-week period before Simpson was
terminated. In mid-June 2023, multiple Guardian employees, including
Davis, complained to Simpson about “discrimination, harassment, and [a]
hostile work environment they had been experiencing” based on the actions of
Guardian’s then director of operations, Bobby Piccio, and the head of human
resources. The employees did not raise the issues with the head of human
resources because they felt she would not do anything. That same day,
Simpson spoke to the Minars and Dotterer about the allegations. Simpson
also emailed them with “suggestions for improvement” after investigating the
complaints herself, conveying her belief that the complaints could not be
ignored and needed to be rectified. At a subsequent meeting, John
purportedly stated “he did not care about the validity of the complaints[] and
he wanted [them] to ‘go away.’” Thereafter, and in response to an email from
Guardian’s in-house legal counsel (legal counsel), Simpson sent “a lengthy
email” to the Minars, Dotterer, and legal counsel. A few days later, John
emailed Simpson, stating her investigation was not authorized or sanctioned
by Guardian. Simpson was terminated the following day.

5
II.
THE DOTTERER ACTION

In March 2024, after Guardian terminated Dotterer and
Amezola, and Davis was allegedly constructively terminated, the three sued
Guardian, John, and Piccio. Among the causes of action were harassment,
retaliation, wrongful termination, negligent hiring, supervision, and
retention of employees, and failure to prevent harassment and retaliation.
The complaint alleged Davis was previously sexually harassed by Piccio when
he was her supervisor. After Amezola, Davis’s boyfriend, complained to
Simpson about the harassment, Guardian terminated Amezola. Thereafter,
Davis reported the harassment to Dotterer, who in turn reported the
harassment and other complaints received about Guardian’s head of human
resources to Guardian’s third-party payroll company. The payroll company
indicated it would conduct its own investigation into the matters. When
Dotterer tried to discuss things with John and Eric, including Simpson’s
termination, they would not speak to her about the situation. Shortly
thereafter, Dotterer began receiving accusatory emails and criticism for
errors she did not make, some of her responsibilities were removed, and she
was not being invited to company meetings. She refused to sign a separation
agreement proposed by John and was later terminated.
Guardian and John cross-complained against Dotterer
(collectively, with Dotterer’s complaint against Guardian and others, the
Dotterer action). Their breach of contract, breach of fiduciary duty, and civil
conspiracy claims were based on similar allegations to those made against
Simpson. Dotterer allegedly forwarded 11 confidential company emails to her
personal account in the weeks leading up to Simpson’s termination, and she
thereafter allegedly forwarded a privileged and confidential internal company

6
email to an unnamed former employee. Unlike in the Simpson action, the
Dotterer cross-complaint alleged Dotterer returned Guardian property after
receiving a demand letter, but Guardian remained unsure whether Dotterer
copied materials before returning them.
III.
GUARDIAN’S DISQUALIFICATION MOTIONS 2

After the filing of the cross-complaints in the Simpson and
Dotterer actions, Guardian moved to disqualify the Aarons, which was
representing all the former employees in both actions. The motions were
based on three emails Simpson produced during discovery which she had
previously shared with Aarons (collectively, the emails), and they were
supported by the declarations of Guardian’s in-house counsel and an attorney
representing Guardian in the two actions. Guardian said the emails were
privileged communications between Guardian’s legal counsel, owners and
then officers, including Simpson and Dotterer, “discussing sensitive,
confidential and legal issues and claims involving two Guardian employees.”
Each had the legal counsel’s signature block which listed her title and a
paragraph indicating they were “‘intended only for the use of the
addressee(s) . . . and may contain information that is privileged, confidential
and exempt from disclosure under applicable law.’” Simpson had allegedly
forwarded two of the emails to her personal email address while still
employed by Guardian, and the third was forwarded to her personal email
address by Dotterer after Simpson’s termination.

2 Guardian, John, StorAmerica Management, and Piccio were all

movants on the disqualification motions. For simplicity, we refer to the
movants, collectively, as Guardian.

7
Although Guardian informed Aarons the emails were privileged
and asked they be returned and not be further used, Aarons refused.
Guardian argued Aarons impermissibly reviewed the emails in-depth, failed
to notify Guardian about having them, and indicated an intent to use them to
support its client’s claims and defenses in the Simpson and Dotterer actions.
From Guardian’s perspective, disqualification was required to protect
Guardian’s rights and to “‘“preserve the integrity of the judicial proceedings”’
since there [was] a ‘genuine likelihood,’ if not certainty, that Aarons’ review
of the privileged communications [would] ‘affect the outcome of the
proceedings.’”
The former employees opposed the motions. Among other things,
they argued disqualification was unwarranted for the following reasons: (1)
the emails were not subject to the attorney-client privilege because
Guardian’s legal counsel was assisting with business decisions, not giving
legal advice; (2) even if the emails were privileged, Simpson could waive the
privilege as to emails she authored; and (3) Guardian impliedly waived the
privilege by putting them directly at issue in their claims against Simpson
and Dotterer, as well as by asserting an adequate investigation defense to the
former employees’ claims.
IV.
TRIAL COURT’S RULING

Based on the timing of the disqualification motions, the trial
court first held a hearing on the motion in the Simpson action. It provided a
tentative ruling denying the motion, which it confirmed as its final ruling
after hearing argument from the parties. Without doing an in camera review
of the emails, the court concluded they were attorney-client privileged and
Guardian, not Simpson, was the privilege holder. Nevertheless, quoting a

8
legal treatise, it indicated “‘[c]ourts are reluctant to disqualify attorneys who
receive confidential information regarding the opposing party from their own
clients.’” The court found it significant that Simpson “was an intended
recipient” of the emails, noting none of the cases cited by Guardian addressed
a situation in which a document was intentionally sent to a party who later
shares it with their counsel. In addition, it explained Guardian did not show
how Simpson would use the privileged information to Guardian’s
disadvantage in the Simpson action because the content of the emails was not
relevant to Simpson’s wrongful termination case. All she needed to
demonstrate was that she raised harassment and discrimination complaints
and Guardian fired her because of it. The court further stated the emails
“may help” Guardian with an adequate investigation defense, a defense
which the court said “Guardian ha[d] not disclaimed an intention to assert.”
Following the disqualification hearing in the Dotterer action, the
court concluded there did not appear to be a reason why the result should be
any different than in the Simpson action. Accordingly, it denied Guardian’s
motion. Although not reflected in its written ruling, the court expressed at
the hearing that one of the considerations it “had in mind” when denying
disqualification in the Simpson action was that the emails “were kind of at
the heart of Guardian’s claim[s],” and it found the same to be true about the
claims in Guardian’s cross-complaint in the Dotterer action.
Guardian timely appealed from the orders denying
disqualification of Aarons.
DISCUSSION

Guardian contends the trial court abused its discretion by failing
to disqualify Aarons. It argues the court applied certain inappropriate legal
standards and made some findings which are not supported by the

9
undisputed evidence. We agree the court erred, and we set forth the proper
legal standards to facilitate the court’s reconsideration of Guardian’s motions
on remand. 3
I.
ATTORNEY DISQUALIFICATION LEGAL PRINCIPLES AND STANDARD OF REVIEW

“A trial court’s authority to disqualify an attorney derives from
its inherent power to ‘control in furtherance of justice, the conduct of its
ministerial officers, and of all other persons in any manner connected with a
judicial proceeding before it, in every matter pertaining thereto.’” (Clark v.
Superior Court (2011) 196 Cal.App.4th 37, 47 (Clark).) “‘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.”’” (McDermott Will & Emery
LLP v. Superior Court (2017) 10 Cal.App.5th 1083, 1119–1120 (McDermott).)
The protection of attorney-client privileged communications is an
example of such a fundamental principle of our legal system. (People ex rel.

3 We reject respondents’ assertion that Guardian has waived its

right to review of some of the disputed matters by failing to include certain
factual information in its appellate briefs and failing to discuss legal
authority that respondents relied on at the trial court level.

10
Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th
1135, 1146.) Thus, under certain circumstances, an opposing attorney who
fails to take necessary steps geared toward preserving the sanctity of an
attorney-client privileged communication may be disqualified from further
participation in litigation. (Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th
807, 819 (Rico); McDermott, supra, 10 Cal.App.5th at p. 1120; see, e.g., Clark,
supra, 196 Cal.App.4th at p. 55.)
Because disqualification is “‘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.” (McDermott, supra, 10
Cal.App.5th at p. 1120.) At the same time, disqualification may not be used
“‘“simply to punish a dereliction that will likely have no substantial
continuing effect on future judicial proceedings.”’” (Ibid.) Hence, “‘“‘“[m]ere
exposure”’ to an adversary’s confidences is insufficient, standing alone, to
warrant an attorney’s disqualification.”’” (Ibid.) The critical question in each
case is whether there is a reasonable probability the attorney obtained
privileged information which “‘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.’” (Ibid.)
A ruling on a disqualification motion is generally reviewed for an
abuse of discretion. (Johnson v. Department of Transportation (2025) 109
Cal.App.5th 917, 933 (Johnson).) That is, considering the legal principles and
policies governing the court’s discretion in the particular situation, we look to

11
whether the “decision is so irrational or arbitrary that no reasonable person
could agree with it.” (Nissan Motor Acceptance Cases (2021) 63 Cal.App.5th
793, 811) “We draw all inferences in favor of the prevailing party[,] . . . accept
the trial court’s resolution of conflicts in the evidence,” and defer to the
court’s express and implied factual findings so long as they are supported by
substantial evidence. (Johnson, at p. 933; see also McDermott, supra, 10
Cal.App.5th at p. 1121.)
II.
PRIVILEGE AND WAIVER

Before turning to other disputed aspects of the disqualification
matters, we first address the issue of attorney-client privilege. Based on
representation by Guardians’ in-house legal counsel, the trial court found the
emails are protected by the attorney-client privilege and determined
Guardian is the holder of the privilege. While, unsurprisingly, Guardian’s
arguments on appeal embrace that premise, respondents defend the
disqualification denial by reviving attacks they made below on the privileged
nature of the emails. Specifically, they contend Guardian waived any
privilege by (1) basing all its causes of action against Simpson and Dotterer,
in part, on the emails; (2) defending against respondents’ claims by asserting
it took reasonable corrective action through, inter alia, an adequate
investigation; and (3) defending against the harassment and retaliation

12
claims for which the emails are key to respondents’ establishing a prima facie
case. 4 We are not persuaded.
A. Applicable Law

“The attorney-client privilege . . . confers a privilege on the client
‘to refuse to disclose, and to prevent another from disclosing, a confidential
communication between client and lawyer . . . .’ The privilege ‘has been a
hallmark of Anglo-American jurisprudence for almost 400 years.’
[Citation.] Its fundamental purpose ‘is to safeguard the confidential
relationship between clients and their attorneys so as to promote full and
open discussion of the facts and tactics surrounding individual legal matters.
[Citation.] . . . [¶] Although exercise of the privilege may occasionally result
in the suppression of relevant evidence, the Legislature of this state has
determined that these concerns are outweighed by the importance of
preserving confidentiality in the attorney-client relationship.” (Costco
Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 732 (Costco).)
“‘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.’” (McDermott, supra, 10 Cal.App.5th at p. 1101.) Aside from
express waiver, case law recognizes waiver may be implied under certain

4 Unlike in the trial court, respondents’ arguments on appeal are

limited to waiver. They do not challenge the trial court’s underlying
determinations that the emails would otherwise be attorney-client privileged
and Guardian is the privilege holder. Notably, even below, respondents did
not argue that any portion of the emails at issue were not privileged because
they, for example, contained statements by someone other than Guardian’s
legal counsel which fell outside the scope of the attorney-client privilege.

13
circumstances. Relevant to respondents’ arguments here, implied waiver may
be shown by demonstrating “the client has put the otherwise privileged
communication directly at issue and . . . disclosure is essential for a fair
adjudication of the action.” (Southern Cal. Gas Co. v. Public Utilities Com.
(1990) 50 Cal.3d 31, 40 (Southern Cal. Gas).) In contrast, “‘where the
substance of the protected communication is not itself tendered in issue, but
instead simply represents one of several forms of indirect evidence in the
matter,’” there is no implied waiver of the attorney-client privilege. (Id. at p.
41.)
B. Analysis

We begin with Guardian’s claims against Simpson and Dotterer.
Respondents assert Guardian waived privilege as to the emails by
“specifically referenc[ing] [the] emails as part of [its] claims in all [its] causes
of action against both [Simpson and Dotterer].” However, a thorough review
of the pleadings demonstrates Guardian’s claims are not based on the content
of the emails. Rather, they are based on what Simpson and Dotterer allegedly
did with the emails—i.e. transmit them to their personal email addresses.
While Guardian will have to establish the general confidential or privileged
nature of the emails to prevail on some of its claims, it may do so, as it
contemplates, by relying on matters other than their detailed content. This
may include, for example, testimony concerning who they were sent by and
to, as well as the signature block on the emails which included a confidential
communication warning. (See Costco, supra, 47 Cal.4th at p. 739 [“[B]ecause
the privilege protects a transmission irrespective of its content, there should
be no need to examine the content in order to rule on a claim of privilege”].)
Adopting respondents’ argument would mean that whenever a
party sues another for improperly taking attorney-client privileged

14
documents, the party would be deemed to have waived the privilege. Such a
result runs contrary to the law’s deeply rooted protection of attorney-client
privileged matters and is unsupported by any of the authority respondents
cite.
Turning to respondents’ cause of action for failure to prevent
harassment and/or retaliation, it is undisputed a defense to such a claim
would be that Guardian adequately investigated the relevant employee
complaints and took appropriate action based thereon. (See Wellpoint Health
Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, 128 (Wellpoint).)
The trial court stated “Guardian ha[d] not disclaimed an intention to assert
this defense,” and relied on Wellpoint to conclude Guardian, therefore, could
not assert the attorney-client privilege with respect to the emails. In a
similar vein, respondents rely on Wellpoint to argue implicit waiver.
We agree with Guardian that Wellpoint is inapposite under the
circumstances for the same reasons expressed in Kaiser Foundation
Hospitals v. Superior Court (1998) 66 Cal.App.4th 1217, 1226–1227 (Kaiser).
“In Wellpoint, a prelitigation investigation into an employee’s
discrimination claims was conducted by an attorney hired by the employer for
that specific purpose. After the employee initiated a lawsuit against the
employer alleging causes of action for racial discrimination in employment,
the employee served a subpoena on the employer’s attorney demanding
production of all documents pertaining to the attorney’s prelitigation
investigation. The employer and its attorney refused production, citing the
attorney-client privilege and the work product doctrine.” (Kaiser, supra, 66
Cal.App.4th at p. 1223.) The court of appeal found the employer could not
assert the attorney-client privilege or work product protection if it defended
against the employee’s claims by relying on the adequacy of its investigation.

15
(Wellpoint, supra, 59 Cal.App.4th at p. 128.) Its reasoning hinged on the fact
that the employer’s attorney conducted the investigation. (Ibid.) But, as
explained in Kaiser, “Wellpoint did not make a blanket holding that the
attorney-client privilege and the work product doctrine are waived in every
case that an employer puts the adequacy of its prelitigation investigation at
issue.” (Kaiser, at p. 1226.)
Here, the evidence submitted in conjunction with the motions
showed Guardian’s investigation into harassment complaints made by
employees was performed by Claire, a nonattorney, not its legal counsel.
Consistent with that fact, Guardian represented to the trial court, and
continues to represent on appeal, it would rely on Claire’s investigation,
which it agrees is not privileged, if it chooses to assert an adequate
investigation defense. Because disclosure of the privileged emails “is simply
not essential for a thorough examination of the adequacy of the investigation
or a fair adjudication of the action” under the circumstances (Kaiser, supra,
66 Cal.App.4th at p. 1227), the potential defense does not amount to an
implied waiver of the privileged nature of the emails.
Respondents’ final waiver argument concerns Simpson’s
retaliation claim. They argue the emails are part of the protected activity on
which she is basing her claim and “Guardian is effectively trying to thwart
her ability to prove her case and refute Guardian’s position.” We are not
persuaded. The limited evidence submitted concerning the emails
demonstrated they are communications from Guardian’s legal counsel to
Guardian’s owners and executives; the trial court so found. There is no
evidence they include communications by Simpson. And even if they did,
there would be no privilege waiver because disclosure would not be essential
for a fair adjudication of the action. (Southern Cal. Gas, supra, 50 Cal.3d at p.

16
40.) The content of the emails themselves would not be directly at issue, but
it instead might “‘simply represent[] one of several forms of indirect evidence
in the matter.’” (Id. at p. 41.) Privileged communications are not discoverable
and usable simply because they relate to, and/or are relevant to, issues raised
in a case. (Id. at p. 45.) Indeed, “it has long been understood that ‘“[t]he
privilege is given on grounds of public policy in the belief that the benefits
derived therefrom justify the risk that unjust decisions may sometimes result
from the suppression of relevant evidence.”’” (Costco, supra, 47 Cal.4th at p.
739.)
III.
AARONS’ OBLIGATIONS

With the privileged nature of the emails established, and no
waiver shown, the next question is what, if any, obligations Aarons had when
it obtained the emails from Simpson and/or Dotterer. Guardian contends the
obligations set forth in State Fund govern, making Aarons’ failure to comply
therewith grounds for disqualification under Rico. In conjunction with this
argument, it asserts the court erred in treating Simpson and Dotterer as
intended recipients and using that factual premise as a factor supporting
denial of disqualification. Respondents argue State Fund is irrelevant and
the circumstances are instead controlled by a handful of other cases which
demonstrate the trial court ruled appropriately. Although we find State Fund
factually distinguishable in certain respects, we conclude its requirements
must apply equally to situations like the one before us.
A. Inadvertent Disclosure Under State Fund and Rico

In State Fund, the defendant’s attorney received copies of certain
attorney-client privileged communications belonging to the plaintiff because
the plaintiff’s attorneys inadvertently sent them to defendant’s attorney

17
along with other produced discovery. (State Fund, supra, 70 Cal.App.4th at p.
647.) Defendant’s attorney knowingly provided portions of the privileged
documents to a defense expert and refused to return the documents when
requested by the plaintiff’s attorney. (Id. at pp. 648–649.) After determining
the documents were privileged and there was no waiver of the privilege (id.
at pp. 652–654), the appellate court considered what an attorney is ethically
obligated to do when they receive, through inadvertence, documents plainly
subject to the attorney-client privilege (id. at p. 651). The court determined
an attorney’s obligations are as follows: “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.” 5 (Id. at pp. 656–657.)
While State Fund expressly left open the possibility that an
attorney’s noncompliance with the obligations it set forth could merit
disqualification in an appropriate case (State Fund, supra, 70 Cal.App.4th at
p. 657), the Supreme Court later confirmed in Rico that disqualification is an
available remedy for a State Fund rule violation (Rico, supra, 42 Cal.4th at p.
819). And applying the abuse of discretion standard, Rico concluded the trial

5 We refer to these requirements as the State Fund rule.

18
court did not err in disqualifying an attorney under the presented
circumstances. (Ibid.) Among the circumstances were the attorney’s
inadvertent receipt of a work product doctrine protected document, the
attorney’s noncompliance with the State Fund rule, the attorney’s
dissemination of the document to its experts, and the attorney’s surreptitious
use of the document’s contents during a deposition of an opposing party
expert. (Rico, at pp. 812–813.)
B. Intentional Disclosure by Person Lacking Authorization to Disclose

The circumstances before us are factually different than in State
Fund, Rico, and other cases of inadvertent disclosure by the privilege holder
to a lawyer. We are faced with a situation in which intended recipients of the
privileged communications, whose receipt did not break the privilege,
intentionally and unbeknownst to the privilege holder forwarded the
communications to one of their personal email accounts and later provided
them to an attorney representing them in their personal capacity against the
privilege holder. The trial court concluded Rico and State Fund were not
controlling because the person who provided the privileged emails to the
attorney at issue was an “intended recipient of all [three] emails” and she
provided them to her own counsel. We disagree.
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.) State Fund expressed two
primary justifications for it: (1) “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 or the retention of the privileged
information by an adversary who might abuse and disseminate the
information with impunity”; and (2) “it has long been recognized that ‘“[a]n

19
attorney has an obligation not only to protect [their] client’s interests but also
to respect the legitimate interests of fellow members of the bar, the judiciary,
and the administration of justice.”’” (Ibid.)
The concepts underlying each of those justifications apply with
equal force in the circumstances before us. (See McDermott, supra, 10
Cal.App.5th at p. 1109 [neither language of State Fund rule nor policy
underlying it supports limiting its scope to situations involving inadvertent
disclosure to attorney].) A business entity should not enter the attorney-client
relationship fearful that a covert, intentional wrongful act by an employee
could result in the waiver of privileged information or the retention of the
privileged information by an adversary who might abuse and disseminate the
information with impunity. In addition, an attorney does not respect the
interests of fellow members of the bar, the judiciary, and the administration
of justice when they receive what appears to be an attorney-client privileged
communication that was impermissibly obtained and thereafter fail to take
action that would allow the privilege holder to protect its privileged nature.
Here, Simpson and Dotterer were, in some sense, intended
recipients of the emails because Guardian’s legal counsel intentionally sent
the emails to them. But, they received them in their capacity as executives of
Guardian, not in their individual capacities. While they later provided them
to their own attorney, they did so in their individual capacities so the
attorney could represent them in their individual capacities against
Guardian. The trial court overlooked the import of this distinction
notwithstanding its adequately supported finding that there was no waiver of
the attorney-client privilege.
A person who receives an attorney-client privileged
communication because they are within the scope of those who may receive it

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without waiving the privilege may not thereafter use it in their individual
capacity without the privilege holder’s authorization and claim to be an
intended recipient for purposes of an attorney disqualification analysis.
Concluding otherwise would encourage the unauthorized disclosure of
attorney-client privileged communications in situations where there is, at
minimum, a substantial question whether the privilege holder has waived
the privilege.
For all these reasons, we find the State Fund rule, as refined in
subsequent case law including Rico, equally applicable here, albeit with
slight modification to align with the circumstances. 6 To be clear: When a
lawyer receives material that the lawyer knows or reasonably should know is
attorney-client privileged or subject to the work product doctrine, and it is
reasonably apparent the material was impermissibly taken from the privilege
holder without authorization, the lawyer receiving such material should
refrain from examining the material any more than is essential to ascertain if
it is privileged or subject to the work product doctrine, and shall immediately
notify the privilege holder that they possesses the material. The parties may
then seek to resolve any resulting disagreement through the courts.
Our conclusion is supported by Clark, in which another appellate
court applied the State Fund rule to circumstances nearly identical to those
before us. After the employer terminated its chief administrative officer, the
latter sued the employer. (Clark, supra, 196 Cal.App.4th at p. 42.) During

6 The State Fund rule was later codified by the State Bar of

California in rule 4.4 of the California Rules of Professional Conduct. Like
State Fund, that existing rule concerns “inadvertently sent or produced”
writings and does not speak to the circumstances before us. (Rules Prof.
Conduct, rule 4.4.)

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discovery, the employer discovered the former employee had provided his
attorney with a variety of the employer’s attorney-client privileged
documents, many of which were clearly marked as such, as well as other
confidential documents taken in violation of a nondisclosure agreement
signed by the former employee. (Id. at p. 43.) The appellate court affirmed
disqualification of the former employee’s attorney, largely relying on the
State Fund rule and Rico. (Clark, at pp. 53–54.) It found the record contained
evidence the attorney conducted an in-depth examination of the contents of
the documents, and then they affirmatively used some of the information to
craft a claim against the employer, question witnesses, and support the
former employee’s claims. (Ibid.) Because the attorney’s continued
involvement “could trigger doubts over the integrity of the judicial process”
and “there was a ‘genuine likelihood’ [the] review of the privileged materials
could affect the outcome of the proceedings,” the court ultimately upheld the
attorney’s disqualification. (Id. at p. 55.)
C. Privileged Documents Provided to Attorney by Their Own Client

Respondents argue the State Fund rule does not apply to, and
disqualification is not appropriate in, situations where an attorney receives
an opponent’s privileged documents from their own client, as Aarons did from
Simpson and/or Dotterer. In doing so, they rely on cases which they claim
establish that a party cannot improperly disclose their adversary’s privileged
information by providing it to their attorney for purposes of pursuing their
own lawsuit. We are not persuaded the cases on which they rely stand for
such a broad proposition.
First, a few of the cases cited by respondents involved wrongful
termination or other employment claims brought by the defendant employer’s
former in-house counsel. (See General Dynamics Corp. v. Superior Court

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(1994) 7 Cal.4th 1164, 1169; Chubb & Son v. Superior Court (2014) 228
Cal.App.4th 1094, 1108; Fox Searchlight Pictures, Inc. v. Paladino (2001) 89
Cal.App.4th 294, 308 (Fox Searchlight).) Due to the unique circumstances of a
lawyer, who possesses a plethora of privileged information and who may face
discipline for ethical violations related to that information, courts have
permitted limited disclosure of such confidential information by an attorney-
litigant who is contemplating a wrongful termination action against their
former employer. (Fox Searchlight, at p. 310.) Doing so allows an attorney-
litigant to “consult meaningfully with counsel to ensure the action can be
pursued without a dismissal—and without disciplinary action for improper
disclosure of confidences.” (Chubb, at p. 1109; see also Fox Searchlight, at pp.
310–313.) The case before us does not involve similar considerations.
Second, although there may be other means for distinguishing
the remaining case law cited by respondents, we agree with a distinction
identified by another court that faced the same issue. The cases each involved
a client transmitting to their attorney knowledge they had about another
party’s confidential or privileged information. (Neal v. Health Net, Inc. (2002)
100 Cal.App.4th 831, 843; Bell v. 20th Century Ins. Co. (1989) 212 Cal.App.3d
194, 198.) None involved, as here, the sharing of another party’s privileged
documents that were allegedly improperly taken from the other party. As
explained in Militello v. VFARM 1509 (2023) 89 Cal.App.5th 602, “[c]ourts
cannot effectively police what a client, after reading or hearing another
party’s confidential communications, chooses to tell his or her lawyer. As the
cases indicate, attempting to restrict oral disclosures of that sort risks undue
interference with candid discussions between the client and counsel; and
disqualification would, in any event, be an ineffective remedy because the
client might provide the same information to new counsel. But it is an

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entirely different matter if the client improperly obtained (or maintained)
possession of written or digital copies of an adverse party’s confidential
information and provided them to counsel for use in litigation. Insisting that
counsel not read purloined documents any more closely than is necessary to
determine if they are privileged, as described in Rico . . . and [State Fund],
and prohibiting their use if they are, will not inhibit legitimate attorney-
client conversations; and a client whose counsel is disqualified for defying
such a rule is not likely to repeat the violation.” (Id. at pp. 621–622; see also
Johnson, supra, 109 Cal.App.5th at pp. 948–949 [agreeing with Militello
analysis].)
D. Conclusion

In implicitly rejecting the State Fund rule and basing its denial,
in part, on Simpson and Dotterer’s initial proper receipt of the emails, the
trial court applied the incorrect legal framework.
IV.
FUTURE PREJUDICE

Another reason given by the trial court for denying
disqualification was its conclusion that Guardian did not show “‘how
[Simpson] would use the privileged information to [Guardian’s] disadvantage
in this lawsuit—the required material link between the privileged
information and the issues presented in this lawsuit.’” Guardian argues the
court’s conclusion was error because “[t]he undisputed record, including
Aarons’ own letters and opposition, establishes that the emails are material
and that Aarons has used, and intends to further use, the emails against
Guardian.” We agree the trial court erred for two reasons.
To begin, the undisputed evidence showed Aarons intends to use
privileged information from the emails at trial. The emails purportedly

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contain Guardian’s legal counsel’s opinions and suggestions about the
harassment and discrimination complaints made about Piccio and the head of
human resources, as well as legal counsel’s in-depth legal analysis of
potential exposure to liability due to the head of human resources’ assertions
the complaints and Simpson’s and Dotterer’s actions related thereto were
slanderous. Among the causes of action in the Dotterer action are: (1) a claim
by Davis seeking to hold Guardian and Piccio responsible for Piccio’s alleged
harassment and creation of a hostile work environment; (2) a claim that
Guardian’s negligent hiring, supervision, and/or retention of Piccio caused
Davis and Amezola to be harmed by his harassing and abusive conduct; and
(3) a claim Guardian failed to prevent and remedy Piccio’s harassment.
Simpson also alleges Guardian failed to prevent and remedy the harassment.
Based on the general nature of the emails established by the evidence, it is
plain there is a reasonable probability Aarons obtained privileged
information which “‘would likely be used advantageously against’” Guardian
in respondents’ pursuit of their claims. (McDermott, supra, 10 Cal.App.5th at
p. 1120.) And Aarons, having already included an allegation concerning the
content of the emails in Simpson’s cross-complaint against Guardian, has
made clear its intent to do so.
In addition, the trial court wrongly restricted its focus to whether
respondents would need to use the information to prove any element of their
claims. The future prejudice with which the disqualification analysis is
concerned is not limited to whether the privileged information will be used at
trial. It more broadly looks at whether there is a genuine likelihood the
attorney’s obtaining of the opponent’s privileged information “would impact
the outcome of the [litigation] and the public’s trust in both the scrupulous
administration of justice and the integrity of the bar.” (McDermott, supra, 10

25
Cal.App.5th at p. 1121; see also Clark, supra, 196 Cal.App.4th at pp. 54–55;
City of San Diego v. Superior Court 30 Cal.App.5th 457, 472.) For example,
even if it appears the privileged information would not be admissible at trial,
a court should consider whether the information may give the attorney a
strategic advantage during the discovery process, including depositions, or in
trial preparation. (See Rico, supra, 42 Cal.4th at p. 819 [approving trial
court’s consideration of impact on attorney’s deposition strategy and conduct];
City of San Diego, at p. 473, fn. omitted [among other things, court considers
whether situation will provide “‘unfair advantage’”].) It should likewise
consider whether, and to what extent, the attorney’s continued involvement
in the case would degrade the public’s trust in the justice system and the
integrity of the legal profession. (See Clark, at p. 55.)
V.
CONCLUSION

Because the trial court erroneously found the State Fund rule
inapplicable, made findings unsupported by the evidence, and failed to
appreciate the full scope of the future prejudice factor of the disqualification
analysis, we conclude the denial of disqualification was an abuse of
discretion. Guardian requests we direct the trial court to disqualify Aarons
or, alternatively, direct the court “to order Aarons to sequester, expunge, and
return Guardian’s attorney-client privileged emails.” However, attorney
disqualification is a discretionary consideration for the trial court which
stems from its “‘inherent power “[t]o control in furtherance of justice, the
conduct of its ministerial officers.”’” (Sundholm v. Hollywood Foreign Press
Assn. (2024) 99 Cal.App.5th 1330, 1340.) Accordingly, we remand the matter
to the trial court so that it may reconsider Guardian’s motions in accordance
with the proper legal standards.

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DISPOSITION

The challenged orders are reversed and the matter is remanded
to the trial court with directions to (1) vacate the challenged orders, and (2)
reconsider Guardian’s disqualification motions in accordance with this
opinion.

DELANEY, J.

WE CONCUR:

SANCHEZ, ACTING P. J.

GOODING, J.

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