CHARLES ALLEN LEIBEL V GENERAL MOTORS CORP
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STATE OF MICHIGAN
COURT OF APPEALS
CHARLES ALLEN LEIBEL and GRACE
PATRICIA LEIBEL,
UNPUBLISHED
December 13, 2002
Plaintiffs-Appellees,
and
CHARLES A. LEIBEL and JENNIFER LEIBEL,
Plaintiffs,
v
No. 240971
Oakland Circuit Court
LC No. 99-016381-NI
GENERAL MOTORS CORPORATION,
Defendant-Appellant,
and
JAMES SAMUEL NAPIER and BIRDIE
VIRGINIA FISHER,
Not participating.
Before: Murray, P.J., and Cavanagh and Bandstra, JJ.
PER CURIAM.
Defendant appeals by leave granted from the trial court’s opinion and order holding that
defendant waived the attorney-client privilege and work-product protection in regard to the
“Toth Memo.” We affirm.
The facts and procedural history of this case were set forth in great detail in Leibel v
General Motors Corp, 250 Mich App 229, 232-236; 646 NW2d 179 (2002) and need not be
repeated. In the previous appeal, this Court concluded that the Toth Memo was protected by
both the attorney-client privilege and the work-product doctrine and that the trial court had erred
in finding otherwise. Id. at 238-240, 245-248. The case was remanded for the purpose of
determining whether defendant had waived these protections in regard to the Toth Memo. Id. at
243-244, 248. After conducting an evidentiary hearing, the trial court concluded, in part, as
follows:
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The record reflects that Defendant GM has acted inconsistently with its
assertion of the privilege, that is, GM has failed to take reasonable precautions
against inadvertent disclosure. Specifically, in four different cases, including the
Dubay case in Michigan, the Toth Memo would have been reviewed by the
McGuire, Woods law firm on two occasions, once by GM and once by local
counsel, before being produced to plaintiffs’ counsel without any claim of
attorney/client privilege and/or work[-]product privilege. There has been
repetition of the error several times over. The Court thus finds an intentional and
voluntary waiver by estoppel in this case. The risk of insufficient precautions
must rest with the party claiming the privilege.
In conclusion, the Court finds that GM has intentionally and voluntarily
waived any claims for attorney/client or work[-]product privilege with respect to
the Toth Memo.
On appeal, defendant argues that the trial court erred in holding that it waived both
privileges because the trial court applied the wrong legal standard with regard to determining
whether defendant executed a “true waiver.” See Leibel, supra at 242-243. Whether a party
voluntarily disclosed a document and thereby waived the document’s privileged status is a mixed
question of fact and law. Id. at 232. “The question of what constitutes a waiver of the attorneyclient privilege is a question of law that we decide de novo.” Id. at 240. However, “[t]his Court
grants more deference to a trial court’s decision whether the facts of a particular case
demonstrate a valid waiver of the privilege and the trial court’s ultimate decision whether to
grant or deny discovery.” Id. at 240, n 13, citing Koster v June’s Trucking, Inc, 244 Mich App
162, 166; 625 NW2d 82 (2000). “A trial court’s decision to grant or deny discovery is reviewed
by the Court of Appeals for abuse of discretion.” Id.
The waiver by estoppel doctrine was set forth in Kelly v Allegan Co Circuit Judge, 382
Mich 425, 427; 169 NW2d 916 (1969):
There are some circumstances, however, wherein justice requires that a
person be treated as though he had waived a right where he has done some act
inconsistent with the assertion of such right without regard to whether he knew he
possessed it. This is the doctrine of estoppel. [Sterling v Keidan, 162 Mich App
88, 92; 412 NW2d 255 (1987), quoting Kelly, supra (Emphasis in original).]
In Leibel, supra at 240-241, this Court quoted Franzel v Kerr Mfg Co, 234 Mich App 600, 615616; 600 NW2d 66 (1999), in explaining when a party waives the attorney-client privilege:
(1) The attorney-client privilege has a dual nature, i.e., it includes both the
security against publication and the right to control the introduction into evidence
of such information or knowledge communicated to or possessed by the attorney;
(2) This dual nature of the privilege applies where there has been inadvertent
disclosure of privileged material; (3) An implied waiver of the privilege must be
judged by standards as stringent as for a “true waiver,” before the right to control
the introduction of privileged matter into evidence will be destroyed, even though
the inadvertent disclosure has eliminated any security against publication; (4) A
“true waiver” requires “‘an intentional, voluntary act and cannot arise by
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implication,’” or “‘the voluntary relinquishment of a known right;’” and (5) Error
of judgment where the person knows that privileged information is being released
but concludes that the privilege will nevertheless survive will destroy any
privilege. [Citations omitted.]
This Court further explained:
As discussed above, the fact that confidential information has been published does
not automatically waive the attorney-client privilege. Sterling, supra at 93.
Further, as Sterling and Franzel instruct, to constitute a valid waiver, there must
be an intentional, voluntary act or “true waiver.” Thus, a document inadvertently
produced that is otherwise protected by the attorney-client privilege remains
protected. Franzel, supra at 618. No Michigan case supports the proposition that
a document loses its privileged status when it is obtained by one of the parties
from an independent source. Absent a true waiver, therefore, a document retains
its privileged status, regardless of whether it has been publicly disclosed. To hold
otherwise would seriously erode one of the law’s most protected privileges. [Id.
at 241 (Footnotes omitted).]
“[O]nce otherwise privileged information is disclosed to a third party by the person who holds
the privilege, or if an otherwise confidential communication is necessarily intended to be
disclosed to a third party, the privilege disappears.” Id. at 242, quoting Oakland Co Prosecutor v
Dep’t of Corrections, 222 Mich App 654, 658; 564 NW2d 922 (1997). However, a document’s
privileged status is not destroyed or waived solely because the document was publicly disclosed.
Leibel, supra at 242-243. Although inadvertent or involuntary disclosure of a document
eliminates any security against publication, it does not destroy its privileged status. Id. at 243.
“At the very least, waiver through inadvertent disclosure should require a finding of no intent to
maintain confidentiality or circumstances evidencing a lack of such intent.” Sterling, supra at
96. Involuntary disclosure of information upon order of the court does not amount to a waiver of
privilege. Co-Jo, Inc v Strand, 226 Mich App 108, 113; 572 NW2d 251 (1997).
In the instant case, the trial court concluded that defendant waived the attorney-client
privilege and work-product doctrine by failing to take reasonable precautions against inadvertent
disclosure of the Toth Memo. The trial court found an intentional and voluntary waiver by
estoppel because “[t]here has been repetition of the error several times over.” Although the trial
court found that defendant’s disclosure of the Toth Memo was not “inadvertent,” it also found
that defendant had erroneously disclosed the Toth Memo. It appears that the trial court found
that several negligent inadvertent disclosures of the Toth Memo amounted to a purposeful
voluntary disclosure. The trial court then stated, “[t]he risk of insufficient precautions must rest
with the party claiming the privilege.” In coming to this conclusion, it appears that the trial court
relied on the federal district court’s conclusion in United States v Kelsey-Hayes Wheel Co, 15
FRD 461, 465 (ED Mich, 1954), that “the risk of insufficient precautions must rest with the party
claiming the privilege.” However, as discussed in Franzel, supra at 616-617, the Sterling panel
rejected the district court’s analysis in Kelsey-Hayes. Consequently, the trial court erroneously
relied on Kelsey-Hayes in reaching its conclusion that defendant waived the attorney-client and
work-product privileges. Defendant’s failure to take reasonable precautions to protect from
inadvertent disclosure of the Toth Memo is not enough to find a “true waiver.” Instead, the
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disclosure must have been an intentional, voluntary act or defendant must have voluntarily
relinquished the privileges. Leibel, supra at 240-241.
The next issue, then, is whether defendant’s actions amounted to a true waiver of the
attorney-client privilege and work-product protection. We first consider whether defendant
waived the privileges through the actions of its attorney, Evan A. Burkholder, in Simpson v
General Motors Corp, No. 17972 (Morris Co Ct, Tex).1 In Simpson, the plaintiff sought the
production of the Toth Memo, but GM opposed its production. When the parties went to court,
Burkholder went with the understanding that the judge was going to order the production of the
Litigation Study2 and the Toth Memo and that the only issue remaining was the language of this
order. In regard to the Litigation Study, Burkholder made the following statement on the record:
It has been argued in many different courts and again, General Motors has
never agreed to all the party Litigation Studies, we can agree to their production
here but I think what we have done is sort of short-circuited the whole argument
in a fashion. If permissible it will take up a—working up a proposed order if the
Court would be willing to enter it, it would be an agreed order but it would be an
order that would short-circuit the whole issue of Litigation Study. [Emphasis
added.]
Outside the presence of the court, Leon Russell, the attorney for the plaintiff, and
Burkholder then negotiated about the production of the Litigation Study and the Toth Memo.
Russell testified at the evidentiary hearing that he and Burkholder reached an agreement that GM
would produce the Litigation Study and the Toth Memo and not assert a claim of attorney-client
or work-product privileges. Russell testified that Burkholder told him that defendant waived
raising the attorney-client privilege and work-product doctrine in regard to the Litigation Study
and Toth Memo. Russell testified that, in exchange, GM would not produce all of the documents
requested by Russell, but would only produce the documents that GM had previously been
ordered to produce in Woody. Burkholder, on the other hand, testified at the evidentiary hearing
that he never agreed to produce the Toth Memo or any other part of the Litigation Study.
Burkholder further testified that, before the parties went back on the record in Simpson,
he argued that GM would not produce any portion of the Litigation Study. The parties then went
in front of the judge to put their agreement on the record. Before reading the proposed order into
the record, Burkholder stated, “[a]lthough General Motors objects to the production of any part
of the Litigation Study on the grounds of the attorney/client and work[-]product privileges we
understand that based on what has gone on this morning that the Court would consider entering
an order.” Burkholder also indicated that he was not sure that it was “entirely necessary” to
reduce the agreement to a written order. The agreement put on the record required defendant to
produce all of the Litigation Study documents “that were ordered produced in a September 25,
1997[,] order entered by Judge Jerry Baxter in the case of Woody v General Motors, Case No.
1
The privileges need only be validly waived one time to be conclusively destroyed. See Leibel,
supra at 242.
2
Although the Toth Memo is not technically part of the Litigation Study, it was grouped with
the documents comprising the Litigation Study.
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96-VS-0115085 . . . .” The order further provided, “[t]his court specifically finds that there is
neither an attorney-client privilege or a work[-]product privilege with regard to the documents
encompassed in this order.” The order also indicated that the court heard the parties’ arguments.
In the agreement, GM relinquished its right to appeal the order. After putting the agreement on
the record, Burkholder stated, “[e]ven though the order in fact, Your Honor, is a contested order,
GM does agree with the proposal that has just been announced to the Court by way of Rule 11
agreement.” The court then reduced the parties’ agreement to a written order, which was signed
by both parties and contained the word “APPROVED” above the parties’ signatures.
Russell testified that the order was erroneous because the court never heard the parties’
arguments and never determined whether the attorney-client privilege or the work-product
doctrine applied to the Toth Memo. Russell testified that the Simpson court did not order GM to
produce the Toth Memo, but only entered the order because Burkholder agreed to produce the
Toth Memo. He further testified that GM did not contest the order to produce the Litigation
Study and the Toth Memo. On the other hand, Burkholder testified that the “entire transcript . . .
represents my position and General Motors’ position that the Litigation Study will not be
voluntarily produced.” Burkholder testified that it was never his intention to voluntarily disclose
any portion of the Litigation Study, including the Toth Memo. He testified that he agreed to the
language of the order, but he contested the substance of the order. Russell testified that the
language of the order providing that the court found that the Toth Memo was not protected by
the attorney-client privilege or the work-product doctrine was only put in the order at the
direction of the attorneys because, in Texas, a court may enter orders under “Rule 11,” whereby
the court just accepts whatever the lawyers say without making its own determinations.
Burkholder testified that he never agreed to produce the Toth Memo and that he only agreed to
the order because the court was going to compel GM to produce it.
Following the evidentiary hearing on remand here, the trial court made findings of fact
regarding whether defendant agreed to produce the Toth Memo in the Simpson matter. In
particular, the court noted that the Simpson record revealed that (1) “Burkholder informed the
court that GM had never agreed to produce the entire Litigation Study but it would ‘agree to their
production here,’” (2) Burkholder stated that “the parties needed additional time to work out a
‘proposed order.’ He confirmed that the order would be an ‘agreed order’ which ‘would short
circuit the whole issue of the Litigation Study,’” (3) “[t]he record reflects that the parties reached
an agreement under which GM would produce only a portion of the Litigation Study, the
Oleszko version of the Toth Memo and would not assert either attorney/client privilege or work
product privilege with respect to these documents,” (4) “[a]t the Simpson hearing, Mr.
Burkholder testified that ‘even though the order in fact . . . is a contested order, GM does agree
with the proposal that has just been announced to the Court by way of Rule 11 agreement,” and
(5) “[t]he Order that was signed by Mr. Burkholder on behalf of GM and subsequently entered,
however, reflects that it was ‘Approved.’” The trial court then concluded, “[t]his Court finds that
GM essentially approved the Order.”
The trial court’s findings of fact are reviewed under a clearly erroneous standard. See
MCR 2.613(C). Here, after comparing the extensive record related to the Simpson matter with
the trial court’s findings of fact, we conclude that the findings were not clearly erroneous. See
People v Gistover, 189 Mich App 44, 46; 472 NW2d 27 (1991). Next, although the trial court
did not make a specific finding regarding whether Burkholder’s actions in the Simpson case
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amounted to a true waiver, we may consider the issue as a question of law. Leibel, supra at 240.
A “true waiver” requires an intentional and voluntary release of the privileged information. See
Leibel, supra at 240-241. Here, we concur with the trial court that Burkholder agreed to the
discovery order in the Simpson matter and, thus, to the production of the memo as evidenced by
(1) the comments he made on the record which included his agreement to the production, (2) his
participation in the drafting of an order to reflect the same, (3) his agreement not to assert either
privilege, (4) his explicit acknowledgment of the agreement, and (5) his signature on the
“approved” order that was entered. Therefore, we conclude that defendant executed a true
waiver of the privileges with regard to the Toth Memo in that Burkholder intentionally and
voluntarily released the privileged information.
Defendant, however, argues that it did not voluntarily waive the attorney-client privilege
or work-product doctrine because the order itself provides, “[t]his court specifically finds that
there is neither an attorney-client privilege or a work[-]product privilege with regard to the
documents encompassed in this order.” A court speaks through its orders. Law Offices of
Lawrence J Stockler, PC v Rose, 174 Mich App 14, 54; 436 NW2d 70 (1989). Although the
order indicated that the Toth Memo was not privileged and Burkholder stated that the order was
a contested order, the transcript of the hearing shows that the court never made such a finding
regarding the privileges and that Burkholder agreed to the order requiring GM to produce the
Toth Memo. The parties apparently negotiated and agreed to the terms of the order. The order
was entered under Tex R Civ P 11,3 which allows for agreements by the parties to be enforced if
made on the record. The trial court here found that Burkholder “essentially approved” the order
requiring GM to produce the Toth Memo. That finding was not clearly erroneous.
Consequently, we conclude that Burkholder’s agreement to produce the Toth Memo was a
“voluntary relinquishment of a known right.” See Leibel, supra at 241, quoting Franzel, supra at
616. Burkholder’s agreement to produce the Toth Memo in Simpson, even if based on an error
in judgment that the privileges would not be destroyed in other cases, amounted to a waiver of
the privileges. See Leibel, supra, quoting Franzel, supra. Because we conclude that defendant
waived the attorney-client privilege and work-product doctrine through Burkholder’s actions in
Simpson, we need not address whether defendant waived the privileges through its other actions.
See Leibel, supra at 242.
Affirmed.
/s/ Christopher M. Murray
/s/ Mark J. Cavanagh
/s/ Richard A. Bandstra
3
Tex R Civ P 11 provides:
Unless otherwise provided in these rules, no agreement between attorneys or
parties touching any suit pending will be enforced unless it be in writing, signed
and filed with the papers as part of the record, or unless it be made in open court
and entered of record.
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