Kent Keller

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Attorney-Client Privilege and Work Product Privilege Clarified by California Court of Appeal

Recently, the California Court of Appeal for the Second Appellate District Division Three issued its opinion in Fireman’s Fund Insurance Company v. Superior Court (Front Gate Plaza, LLC). The opinion resolved two issues, one involving the attorney-client privilege and the other the work product privilege.

The first issue resolved was whether the attorney-client privilege applies to only communications directly between an attorney and the client and not to communications between lawyers in the same firm. 

Surprisingly, the trial court held that the privilege only applied to communications directly between an attorney and his client. According to the trial court, the privilege provided no protection for communications between attorneys and staff in a firm. 

The notion that discussions between lawyers in the same firm regarding a case are not protected would, I believe, surprise most California lawyers. What we know is that the holding surprised Justice H. Walter Croskey, since he authored the Fireman’s Fund opinion which reversed the trial court ruling, holding:

Surely, third persons to whom the information (in this case, an attorney’s legal opinions) may be conveyed without destroying confidentiality include other attorneys in the law firm representing the client.

If the first holding of Fireman’s Fund was predictable, the second holding cannot be so labeled. 

The second issue was whether the absolute work product privilege of the California Code of Civil Procedure Section 2018.030(a) protects work product that is not contained in writing

The trial court found that unwritten work product was not protected by section 2018.030(a). 

In reaching this conclusion, the trial court seemed to be on solid ground as section 2018.030(a) states that:

a writing that reflects an attorney’s impressions, conclusions, opinions or legal research of theories is not discoverable under any circumstances.” (Emphasis added.) 

Despite that language, Division Three held that the absolute work product privilege does protect work product that has not been reduced to writing. 

Fireman’s Fund is an important decision explaining and seemingly expanding the protection given California lawyers by the attorney-client and work product privileges. Adding to the significance of the opinion is that its author, again Justice Croskey, is one of the most respected members of the Court of Appeal.

Decision Stands: Proposition 103 Approved Insurance Rates Cannot be Attacked in a Civil Action

California Supreme Court Rejects Requests to Depublish MacKay

by Kent R. Keller

On October 6, 2010, Division Three of the Second Appellate District issued a landmark decision in MacKay v. Superior Court, 188 Cal. App. 4th 1427 (2010), declaring that approved insurance rates subject to Proposition 103 cannot thereafter be collaterally attacked in a civil action.

In brief, MacKay was a certified Unfair Competition Law (UCL) class action involving more than 500,000 class members who contended that 21st Century Insurance Company had used two illegal “rating factors” in developing automobile insurance premiums. The two factors had been included in rate and class plan filings approved on multiple occasions by the Insurance Commissioner. 

The issue, as the Court explained, was:

whether the approval of a rating factor by the DOI [Department of Insurance] precludes a civil action against the insurer challenging the use of that rating factor.” MacKay, supra at 1434. 

In a detailed opinion, authored by Justice H. Walter Croskey, the Court concluded that approval did preclude a collateral attack in a civil action. 

This decision is of critical importance to insurers and consumers subject to rate approval pursuant to Proposition 103. 

Prior to MacKay, it was not clear whether approval precluded civil actions. As a result, many insurers were sued, virtually always in class actions, by parties challenging approved rates on one basis or another. 

The result was that, while insurers were required to obtain rate approval before putting a rate into effect and once approval was obtained could had to use the approved rate, they did so at the peril of a class action lawsuit. 

Whether such lawsuits benefited insureds or simply increased premiums in the future is a continuing debate. What, however, was clear was that such actions often produced large attorneys’ fees awards.

Given the value of these class actions to the plaintiffs’ bar, it was not surprising that requests to depublish MacKay were numerous. 

In addition to a request from counsel for the plaintiffs in MacKay, requests were filed by Consumer Watchdog, the City and County of San Francisco, the Consumer Attorneys of California, Public Advocates, the Mexican American Legal Defense & Education Fund, the Southern Christian Leadership Conference of Greater Los Angeles, United Policyholders, the California State Insurance Commissioner, and others. 

Indeed, by a letter dated January 10, 2011, new Commissioner Dave Jones advised the California Supreme Court that he, like his predecessor, supported depublication.

Despite this tsunami of support for depublication, on January 12, 2011 the Supreme Court denied all requests and declared the case closed

While the reasons for denying or granting depublication are never certain, we have to believe that the Supreme Court recognized the correctness of Justice Crokey’s decision. As a result of the Supreme Court’s action, MacKay remains valid and precedential authority.

21st Century Insurance Company was represented in this case by Kent R. Keller, Steven H. Weinstein, Marina M. Karvelas and Peter Sindhuphak of Barger & Wolen.

Landmark Proposition 103 Decision Reached

On October 6, 2010, the California Court of Appeal issued a landmark decision involving Proposition 103 insurance rate approval in MacKay v. Superior Court, B220469 & B223772. 

The legal issue, as Division Three of the Second Appellate District explained, was

whether the approval of a rating factor by the DOI [Department of Insurance] precludes a civil action against the insurer challenging the use of that rating factor.”  

In MacKay, the plaintiff class sued 21st Century Insurance Company asserting that its use of certain rating factors (persistency and accident verification) was illegal and therefore actionable under California’s Unfair Competition Law (“UCL”), Bus. & Prof. Code § 17200

In a unanimous decision, written by Justice Croskey, the Court held "that the statutory provisions for an administrative process . . . are the exclusive means of challenging an approved rate,” precluding a UCL action and therefore ordered the trial court to enter judgment for 21st Century.

Prior to this decision, previous decisions had created uncertainty as to whether insurers, having fully complied with the requirements of Proposition 103 rate approval, could charge approved rates free from subsequent civil challenges. 

While Walker v. Allstate Indemnity Co, 77 Cal. App. 4th 750 (2000) held that approved rates could not thereafter be civilly challenged, Donabedian v. Mercury Ins. Co., 116 Cal. App. 4th 968 (2004) created confusion on this issue.

The MacKay decision resolves all prior confusion in declaring that approved rates and rating factors cannot thereafter be civilly challenged.

21st Century Insurance Company was represented in this action by Kent R. Keller, Steven H. Weinstein, Marina M. Karvelas and Peter Sindhuphak of Barger & Wolen.

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