S. Cal. Edison Co. v. Super. Ct. of L.A. Cty.

321 Cal.Rptr.3d 617

SOUTHERN CALIFORNIA EDISON COMPANY, Petitioner,

v.The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent;

21st Century Insurance Company, et al., Real Parties in Interest.

B333798

Court of Appeal, Second District, Division 1.

Filed May 31, 2024

ORIGINAL PROCEEDING; petition for writ of mandate. Elihu M. Berle, Judge. Petition granted with directions. (Los Angeles County Super. Ct. No. 21STCV18308)

Hueston Hennigan, John C. Hueston, Newport Beach, Douglas J. Dixon, Padraic Foran, Los Angeles, Brandon Marsh; Southern California Edison Company, Belynda B. Reck, Patricia A. Cirucci and Brian Cardoza, Rosemead, for Petitioner.

No appearance for Respondent.

Berger Kahn, Craig S. Simon, Irvine; Grotefeld Hoffman, Adam Romney; Engstrom, Lipscomb & Lack and Gregory P. Waters, Los Angeles, for Real Parties in Interest.

WEINGART, J.

INTRODUCTION

California law protects the work product of attorneys and those assisting them in investigating facts related to providing a client legal advice. This case requires that we decide whether a client’s statutory obligation to publicly report certain events trumps the protection applicable to attorney work product generated during an internal investigation into facts concerning the reportable event.

Real parties in interest (plaintiffs) are insurance companies that paid policyholders for losses resulting from a conflagration known as the Creek Fire. Plaintiffs claim an arc from the electric powerlines of Southern California Edison Company (SCE) caused the fire and have sued SCE under a subrogation theory to recover their payments to insureds.

During discovery in the subrogation case, SCE withheld certain documents that it asserted were generated during an attorney initiated and directed internal investigation into the cause of the Creek Fire. Plaintiffs moved to compel, arguing the attorney-client privilege and attorney work product doctrine did not exempt these documents from production. Among other things, plaintiffs argued that SCE could not assert privilege and withhold documents because the primary reason SCE conducted the investigation was to comply with state law requiring it to publicly report any involvement it had in causing the fire. The trial court agreed the dominant purpose of the investigation was to comply with public reporting requirements, held the documents thus were not privileged, and compelled production.

We conclude the trial court’s order improperly invaded the protection afforded by the attorney work product doctrine. Even where the dominant purpose of an attorney directed internal investigation is to comply with a client’s public reporting requirement, attorney work product generated in connection with gathering facts to assist counsel in advising the client on how to comply with that statutory or regulatory reporting requirement remains protected. As plaintiffs have not shown grounds for production of their adversary’s work product, the trial court erred in compelling its production. Our conclusion regarding the attorney work product doctrine is dispositive in this matter, and therefore we do address, and express no opinion on, whether the order also violated the attorney-client privilege.

FACTUAL AND PROCEDURAL BACKGROUND

A. Legal Obligation of Utilities to Investigate and Report Certain Fires to the Public Utilities Commission

Public Utilities Code section 315 requires the Public Utilities Commission (PUC or commission) to "investigate the cause of all accidents occurring within this State upon the property of any public utility or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it." The statute also requires public utilities to "file with the commission, under such rules as the commission prescribes, a report of each accident so occurring." (Pub. Util. Code, § 315.)

In turn, PUC General Order 95, section 1, rule 17 (PUC rule 17) requires utilities such as SCE to "establish procedures for the investigation of major accidents and failures for the purpose of determining the causes and minimizing the possibility of recurrence." The rule defines "major accidents and failures" as "[i]ncidents associat- ed with utility facilities which cause property damage estimated at or about the time of the incident to be more than $50,000" and "[i]ncidents resulting from electrical contact which cause personal injury which require hospitalization overnight, or result in death." (Ibid.)

PUC also requires utilities to notify it within two hours of an incident during normal working hours or within four hours outside of normal working hours, and to submit, within 20 business days, "a written account of the incident which includes a detailed description of the nature of the incident, its cause and estimated damage." (Pub. Util. Com. Final Resolution E-4184 (Aug. 21, 2008) Decision No. 06-04-055, App. B.) PUC defines " ‘[r]eportable incidents’ " as "those which: (a) result in fatality or personal injury rising to the level of in-patient hospitalization and attributable or allegedly attributable to utility owned facilities; or (b) are the subject of significant public attention or media coverage and are attributable or allegedly attributable to utility facilities; or (c) involve damage to property of the utility or others estimated to exceed $50,000." (Ibid.) PUC rule 17 provides, "Nothing in this rule is intended to extend, waive, or limit any claim of attorney client privilege and/or attorney work product privilege."

B. The Creek Fire and Events Leading to Plaintiffs’ Lawsuit Against SCE

The Creek Fire ignited on December 5, 2017 in Los Angeles County, and damaged multiple properties before being extinguished. On December 11 and 12, 2017, counsel for several of the plaintiffs sent evidence preservation letters to SCE asserting that they believed SCE’s equipment likely contributed to the ignition and spread of the fire. The Department of Forestry and Fire Protection (CalFire) notified SCE on December 14, 2017 that its investigation of the fire’s area of potential origin did not include SCE facilities. CalFire nonetheless requested SCE provide information regarding some of its facilities and SCE responded.

The U.S. Department of Agriculture Forest Service (USFS) investigated and prepared a report dated January 13, 2018, in which it concluded the cause of the fire was Los Angeles Department of Water and Power (LADWP) electrical transmission lines.¹ In 2018, a lawsuit was filed against LADWP for allegedly causing the Creek Fire and, on or about July 21, 2020, a subpoena was served on SCE seeking data regarding specific elements of SCE’s electrical system in the area of the fire, including what the parties call the "Lopez Circuit."

Although the details are not part of the record, it appears that in June 2019 SCE was sued for contributing to the Creek Fire’s ignition and spread. SCE submitted an accident report to PUC regarding the fire on December 11, 2020—just over three years after the fire began and well beyond the 20 business days required by PUC. Scott Hayashi, a senior advisor in SCE’s claims department, wrote in the report that it was being made "under Public Utilities Code [s]ection 315 because litigation has been filed and served on SCE in which it is alleged that damage to third-party property is attributable to SCE facilities." The report indicated that USFS initially investigated the cause and origin of the fire and determined that SCE facilities were not involved. The report stated, "Given the allegations in the litigation, SCE is evaluating activity on the Lopez [C]ircuit, including a branch line fuse operation outside the vicinity of the origin of the fire and elevated amperage readings on the circuit on December 5, 2017."

Plaintiffs filed their initial subrogation complaint against SCE on May 14, 2021. A master subrogation complaint filed on April 18, 2022, which plaintiffs joined, alleged that an electrical arc on SCE’s Lopez Circuit "ignite[d] nearby trees, brush, and vegetation giving rise to the Creek Fire."

C. SCE’s Withholding of Documents from Production

During discovery in the subrogation case, SCE withheld certain documents, primarily emails, which it claimed were created as part of an investigation of the Creek Fire initiated by its in-house counsel. SCE asserted the documents were protected by the attorney-client privilege and the attorney work product doctrine. A subset of these documents (108 in total), dated from between December 7, 2017 and June 29, 2021, are relevant here. The documents at issue include emails between employees in SCE’s claims department (Claims employees) on which no attorney was copied, emails between Claims employees and SCE employees in other non-legal departments, and emails that did not include any Claims employees or attorneys. Also included are two documents purportedly drafted or edited by Hayashi, and a third described only as an "[e]mail or document reflecting communication with SCE [l]egal."

D. Plaintiffs’ Motion to Compel

Plaintiffs moved to compel production of these 108 documents. Plaintiffs contended that the dominant purpose of SCE’s investigation was to comply with its legal reporting obligation to PUC, and thus the investigation could not be privileged because PUC mandated reports are public. Plaintiffs further argued that Claims employees typically filed incident notifications with PUC without legal review, and SCE attorneys generally did not supervise Claims employees as those employees worked mostly on matters where litigation was not anticipated. Noting that SCE was not sued until June 2019, plaintiffs also argued that it was "not plausible" that SCE’s investigation (which began shortly after the fire started) was in anticipation of litigation and instead was to respond to requests from government agencies such as USFS, CalFire, and...