Foothill Fed. Credit Union v. Super. Court

66 Cal.Rptr.3d 249

155 Cal.App.4th 632

FOOTHILL FEDERAL CREDIT UNION, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent Edwin A. King et al., Real Parties in Interest.

No. B198664.

Court of Appeal, Second District, Division 7.

September 24, 2007.

Anderson, McPharlin & Conners, Eric A. Schneider and Jason C. Ming, Los Angeles, for Petitioner.

Law Offices of Peter L. Tripodes and Peter L. Tripodes, Pasadena, for Real Parties in Interest.

WRIT OF MANDATE

ZELON, J.

Edwin, Janet, Jill, Amy, and Melissa King sued Foothill Federal Credit Union (FFCU) for, inter alia, invasion of privacy and intentional infliction of emotional distress, claiming that FFCU produced consumer records beyond the scope of a subpoena that had been narrowed. FFCU demurred to these causes of action on the basis of the litigation privilege (Civil Code, § 47) as a complete bar to the causes of action, and the trial court overruled the demurrers. We grant FFCU's petition for writ of mandate because the litigation privilege bars real parties' claims.

FACTUAL AND PROCEDURAL BACKGROUND

The gravamen of the underlying litigation is a subpoena served upon FFCU in a probate action to which Janet King was a party. The subpoena required FFCU to produce copies of all account information for all accounts in the name of the individual whose estate was the subject of the action, Norman Kaplan, or in the name of Janet King, including accounts held jointly by Kaplan or Janet King and another person. The subpoena was later narrowed by agreement by counsel to records that were "in the name of Norman Kaplan or in the name of Norman Kaplan jointly (and/or) with Janet King, and no other documents." FFCU produced documents in response to the subpoena.

The Kings claim that the records produced by FFCU included personal financial records of all the real parties in interest despite the limitations placed on the subpoena and notwithstanding the fact that the only consumer notice served pursuant to Code of Civil Procedure section 1985.3 was served on Janet King. They filed a complaint alleging breach of contract intentional infliction of emotional distress, and invasion of privacy. FFCU demurred to each cause of action. The trial court sustained the demurrer to the breach of contract cause of action, and overruled the demurrers to the other two causes of action. FFCU filed a writ petition to challenge the trial court's denial of its demurrers to the causes of action for intentional infliction of emotional distress and invasion of privacy.

DISCUSSION

As codified in Civil Code section 47, subdivision (b), a privileged publication is one made "[i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable" under various portions of the Code of Civil Procedure. The Supreme Court has established a four-part test for the application of the litigation privilege: it "applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action." (Silberg v. Anderson (1990) 50 Cal.3d 205, 212, 266 Cal.Rptr. 638, 786 P.2d 365 (Silberg).) The privilege is absolute, and it applies to causes of action for intentional infliction of emotional distress and invasion of privacy. (Id. at p. 215, 266 Cal.Rptr. 638, 786 P.2d 365.)

The elements for application of the litigation privilege are met here. First, the communication—the disclosure of the private financial information contained within the credit union records—was made in the course of judicial proceedings: in the context of the pending litigation, the counsel of record for a party issued a subpoena duces tecum requiring FFCU to produce documents. Next, the FFCU was a participant authorized by law, as it was brought into the proceedings by the issuance of the subpoena ordering it to produce the specified documents. (Adams v. Superior Court (1992) 2 Cal.App.4th 521, 529, 3 Cal.Rptr.2d 49 [litigation privilege "is not restricted to the actual parties to the lawsuit but need merely be connected or related to the proceedings"].) Third, the communication was made to achieve the objects of the litigation—although the FFCU was not a party to the lawsuit, it was complying with a subpoena issued by the counsel of record for a party to that suit, and he sought the records to "prove [plaintiffs] position." The documents were produced to provide the party who subpoenaed them with potential evidence in the litigation. Finally, although the subpoena contained a broad demand for documents, it is clear that the records bore some relation to the action, as counsel declared under penalty of perjury that the funds in question were held or transferred through the accounts at FFCU and that the records were sought in order to prove the allegation of "elder financial abuse." The litigation privilege therefore applies.

Indeed, there appears to be no dispute between the parties as to whether, on these facts, the elements of the litigation privilege are established. Instead, real parties in interest address the policy concerns that would support or discourage application of the privilege here. Real parties in interest raise three objections to the application of the litigation privilege: first, that the policy underlying the expansion of the litigation privilege to torts beyond defamation is not served by granting immunity to a custodian of personal financial records who violates Code of Civil Procedure¹ section 1985.3; second, that the effect of applying the litigation privilege as a defense to a violation of section 1985.3 would abrogate its purpose and effect because no custodian would then have any incentive to comply with section 1985.3; and third, that application of the litigation privilege to a violation of section 1985.3 leads to an absurd result in that the very event that gives rise to the operation of the statute—litigation—would also confer immunity for failure to comply with it. None of these arguments are availing.

Real parties' first contention is that the purposes of the litigation privilege are not served by granting immunity under the privilege to a custodian of records who discloses them in & manner not compliant with section 1985.3. We disagree. The "principal purpose" of the litigation privilege is "to afford litigants and witnesses [citation] the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions. [Citations.] [¶] [It] promotes the effectiveness of judicial proceedings by encouraging `open channels of communication and the presentation of evidence' in judicial proceedings. [Citation.] A further purpose of the privilege `is to assure utmost freedom of communication between citizens and public authorities whose responsibility is to investigate and remedy wrongdoing.' [Citations.] Such open communication is `a fundamental adjunct to the right of access to judicial and quasi-judicial proceedings.' [Citation.] Since the `external threat of liability is destructive of this fundamental right and inconsistent with the effective administration of justice' [citation], courts have applied the privilege to eliminate the threat of liability for communications made during all kinds of truth-seeking proceedings: judicial, quasi-judicial, legislative and other official proceedings. [¶] ... `"[T]he dictates of public policy ... require[ ] that the paths which lead to the ascertainment of truth should be left as free and unobstructed as possible" [citation].' [Citation.] Thus, witnesses should be free from the fear of protracted and costly lawsuits which otherwise might cause them either to distort their testimony or refuse to testify altogether. [Citations.] [¶] [The privilege] further promotes the effectiveness of judicial proceedings by encouraging attorneys to zealously protect their clients' interests .... [¶] Finally, in immunizing participants from liability for torts arising from communications made during judicial proceedings, the law places upon litigants the burden of exposing during trial the bias of witnesses and the falsity of evidence, thereby enhancing the finality of judgments and avoiding an unending roundelay of litigation, an evil far worse than an occasional unfair result: [Citations.]" (Silberg, supra, 50 Cal.3d at pp. 213-214, 266 Cal.Rptr. 638, 786 P.2d 365.) As the California Supreme Court stated, "Given the importance to our justice system of ensuring free access to the courts, promoting complete and truthful testimony, encouraging zealous advocacy, giving finality to judgments, and avoiding unending litigation, it is not surprising that ... the litigation privilege[] has been referred to as `the backbone to an effective and smoothly operating judicial system.' [Citation.]" (Id. at pp. 214-215, 266 Cal.Rptr. 638, 786 P.2d 365.)

Not every justification for the litigation privilege is presented here. Moreover, we do not approve or encourage any failure to comply with section 1985.3. Nonetheless the basic policy underlying the litigation privilege supports the application of the privilege to the production of documents in response to a subpoena duces tecum here. First, application of the litigation privilege gives the recipient of a subpoena duces tecum freedom to respond to that subpoena without fear of being harassed subsequently by derivative tort actions. (Silberg, supra, 50 Cal.3d at p. 213, 266 Cal. Rptr. 638, 786 P.2d 365.) Removing an external threat of liability promotes the effectiveness of judicial proceedings by encouraging open channels of communication and the presentation of evidence in judicial proceedings. It frees recipients of a subpoena duces tecum seeking consumer records from the "fear of...