California Labor & Employment Law Blog

By Robin E. Weideman

In Costco Wholesale Corp. v. Superior Court, a putative class action alleging misclassification of certain Costco managers, California’s Second Appellate District held that the trial court did not err by ordering Costco to produce portions of a pre-litigation attorney-client memorandum prepared for Costco by its outside counsel.  Specifically, in 2000, Costco retained outside counsel to analyze whether its department managers (including those at issue in this class action) qualified for exempt status.  Outside counsel conducted interviews, reviewed job descriptions, and prepared an in-depth 22-page memorandum to Costco’s in-house counsel, analyzing the exempt status of these managers.  Costco unsurprisingly refused to produce this memorandum to plaintiffs in discovery, asserting the memorandum was protected from disclosure by the attorney-client privilege and work product doctrine.  The trial court ordered Costco (over Costco’s objections) to produce the memorandum for an in camera review by a referee.  The referee determined that portions of the memorandum summarizing the managers’ job duties were not privileged and should be produced.  Costco petitioned for a writ of mandate.

On review, the Second Appellate District affirmed the trial court’s order, based on its determination that Costco has not proven the need for “extraordinary” writ relief. According to the court, Costco had not demonstrated that it would be “irreparably harmed” by disclosure of portions of the memorandum describing managers’ job duties because, according to the court, this information “came from job descriptions and interviews with two managers,” was “inconsequential,” and did not “infringe on the attorney-client relationship.”  The court rejected Costco’s argument that the factual portions of the memorandum were work product in that they necessarily reflected counsel’s legal impression of the facts.  The court also concluded that Costco would not be harmed by the disclosure because the information was readily available through other sources anyway, i.e. depositions, interrogatories, requests for production of job descriptions.

Assuming the Costco decision withstands further appeal, it should be expected that plaintiffs’ attorneys will heavily rely on this decision going forward as a means of trying to obtain in camera review and possible production of legal memoranda and other communications between counsel and their clients, analyzing the propriety of exempt classification.