*1 In part through the arguments of counsel and in part through the statements of the Court, the issue here has become muddled with side issues under Rule 26, spousal privilege, joint-defense privilege, and the Wharton case. The narrow issue actually presented here is clear: Did Defendant's counsel have an ethical duty, as defined by State Fund and its progeny, to take some remedial action when they received the opposing party's likely privileged materials without an intentional waiver? The answer to that question is yes.

Before the Court is Plaintiff Jane Doe No. 2's Motion to Compel Compliance with Legal and Ethical Obligations Regarding Attorney-Client Privileged Communications (the “Motion”), filed July 11, 2022. (Docket No. 180). Defendant Daniel S. Fitzgerald filed an Opposition on July 22, 2022. (Docket No. 183). Plaintiff filed an Amended Reply on August 1, 2022. (Docket No. 187).

The Court has read and considered the papers filed in connection with the Motion and held a video hearing on August 18, 2022, pursuant to General Order 21-08 and Order of the Chief Judge 21-124 arising from the COVID-19 pandemic.

For the reasons stated more fully below, Plaintiff's Motion is GRANTED in part.

Though Defendant is entitled to a full hearing on the merits of Plaintiff's claim of privilege over the audio recordings, this Court clearly has made a preliminary finding that the recordings are privileged. (Order Denying Release of Audio Exhibits A-C (“Prior Order”) (Docket No. 171)). The Prior Order put Defendant's counsel on unequivocal notice that they possessed materials that were subject to a legitimate claim of privilege by the opposing party. At that point, Defendant's counsel had an ethical duty to take reasonable remedial action under State Compensation Insurance Fund v. WPS Inc., 70 Cal. App. 4th 644, 656-57, 82 Cal. Rptr. 2d 799 (1999) (“State Fund”). See also Gomez v. Vernon, 255 F.3d 1118, 1134 (9th Cir. 2001) (“The notion that receipt of privileged communications imposes a duty on counsel to take some reasonable remedial action is hardly a novel concept. It stems from common sense, ethical rules and the origins of the privilege.”). Instead, Defendant's counsel refused to destroy or turn over the recordings, continued to insist that the recordings were not privileged, and apparently threatened to continue using the recordings as evidence in this action.

At the hearing, Defendant's counsel continued to adamantly dispute whether the audio recordings are privileged, but those arguments miss the point. The privileged nature of the documents does not need to be established to “a legal certainty” to trigger an attorney's State Fund duties. See McDermott Will & Emery LLP v. Super. Ct., 10 Cal. App. 5th 1083, 1108, 1118, 217 Cal. Rptr. 3d 47 (2017). This Court's Prior Order, holding the documents were privileged, could not have made counsel's State Fund duties any clearer.

Accordingly, the Court finds it is within its authority to regulate the conduct of the attorneys and parties before it to require Defendant and his counsel to turn over the audio recordings to Plaintiff until their ultimate admissibility is determined by the Magistrate Judge following a full hearing upon an appropriate motion.

I. BACKGROUND

*2 At issue are two audio recordings that were the subject of this Court's previous Order denying their release as Exhibits on the public docket. (Prior Order). As detailed in that Order, the audio recordings were filed as Exhibits B and C to the Declaration of Jane Roe in support of Defendant's Reply to Plaintiff's Opposition to Defendant's Motion for a Preliminary Injunction. (Docket No. 134). The Exhibits were lodged with the Court because the Exhibits are media files that contain audio recordings. The Court received a public request to release the Exhibits, but before doing so, the Court invited the parties to file a joint statement to advise the Court whether a party objected to the audio recordings being publicly available. (Docket No. 154). In the joint statement, the parties agreed that the Exhibits are each a recording of a phone call initiated by Plaintiff Jane Doe No. 2, but the parties dispute the nature of the conversations. (Docket No. 157).

Because Plaintiffs are proponents of the alleged privilege, the Court then ordered Plaintiffs to show cause as to why the Exhibits are privileged. Plaintiffs filed a Response to the Order to Show Cause on March 28, 2022. (Docket No. 163). Defendant filed a Reply to the Order to Show Cause on April 1, 2022, arguing that the audio recording Exhibits were not privileged. (Docket No. 166).

On June 14, 2022, after reviewing the audio recordings, the joint statement, and the parties' supplemental briefing, the Court ordered Exhibits B and C to remain under seal because “the communications are protected from disclosure under the attorney-client privilege.” (Prior Order at 3-4). The Court explained that the Exhibits are recordings of phone calls between Jane Doe No. 2 and Doneth Cartwright, a Bahamian attorney employed by a Bahamian law firm. (Id. (relying on Declaration of Doneth Cartwright (“Cartwright Decl.”) (Docket No. 163-2)). Ms. Cartwright submitted a declaration asserting that she and Jane Doe No. 2 had an attorney-client relationship, that Exhibits B and C were confidential communications, and that she was unaware anyone else was listening to or recording the communications. (Id.). Likewise, Jane Doe No. 2 submitted a declaration asserting that in Exhibits B and C she was speaking with her attorney “seeking confidential legal advice” and never gave consent to Jane Roe to record the conversations. (Declaration of Jane Doe No. 2 (“Jane Doe No. 2 Decl.”) (Docket No. 163-1)). Indeed, even Jane Roe's declaration, to which the audio recordings were attached as Exhibits, describes the phone calls as being conversations between Jane Doe No. 2 and a Bahamian attorney, where Jane Doe No. 2 asks the attorney questions regarding legal matters. (Declaration of Jane Roe (“Jane Roe Decl.”) (Docket 134)).

Therefore, the Court held that “[b]ecause these communications were intended to be confidential, and they were made between Doe No. 2 and Ms. Cartwright,” they were privileged. (Prior Order at 3-4). The Court rejected Defendant's argument that Jane Doe No. 2 waived her privilege by having Jane Roe present because Jane Roe was her spouse at the time of the recording. Zurich Am. Ins. Co. v. Superior Ct., 155 Cal. App. 4th 1485, 1495, 66 Cal. Rptr. 3d 833 (2007) (“Those who are present to further the interest of the client in the consultation include a spouse, parent, business associate, joint client or any other person who may meet with the client and his attorney in regard to a matter of joint concern.”) (internal quotation omitted) (emphasis added).

Two days after the Court issued that Order, Plaintiff's counsel emailed Defendant's counsel seeking confirmation that all copies of the Exhibits had been destroyed and that Defendant would not seek to reacquire the recordings, as well as requesting Defendant's counsel remove all references to Exhibits B and C from Defendant's court filings. (Declaration of Greg Gutzler (“Gutzler Decl.”), Ex. A (Docket No. 180-2)). Defendants refused, insisting that nothing in this Court's Order required him or his client to do what Plaintiff's counsel demanded. (Id. at 3). Plaintiff's counsel responded by providing the law they deemed applicable. (Id.). Defendant's counsel explained that, in his view, because the Court found that Jane Roe's presence on the audio recordings did not vitiate the privilege as she was a spouse listening to a legal conversation of joint concern, Jane Roe “could do with tape recordings what she wishes.” (Id. at 3). Plaintiff's counsel responded by providing further explanation of the legal basis for his demands. (Id. at 1-2). Plaintiff's counsel also contends that during a telephone conference on July 29, 2022, Defendant's counsel indicated his intent to use the audio recordings in “Defendant's case-in-chief at trial.” (Reply at 7; Gutzler Decl. ¶ 5).

*3 Given counsel has not come to agreement over the status of the recordings following the Prior Order, Plaintiff now seeks intervention from the Court, specifically requesting an “order compelling Defendant and his counsel to: (a) destroy the Privileged Communications; (b) not use the Privileged Communications in any manner; (c) not seek to reacquire the Privileged Communications; and (d) immediately remove any references to the Privileged Communications.” (Motion at 6).

II. DISCUSSION

A. Violation of Local Rule 7-3

As a preliminary matter, Defendant's counsel argues that the Motion should be denied because Plaintiff's counsel failed to meet and confer as required by Local Rule 7-3. (Opposition at 2). The parties dispute whether and to what extent any conference of counsel occurred. This Court takes the meet and confer requirement of Local Rule 7-3 seriously, and ordinarily would consider denying a motion for failing to meet and confer.

However, it is not clear that Plaintiff's counsel violated the rule. Plaintiff's counsel has provided email correspondence as an Exhibit attached to his declaration, indicating that that he offered to schedule a telephone or in-person discussion on the issue, but Defendant's counsel ignored his offers. (Gutzler Decl., Ex. A). While a review of the correspondence suggests that perhaps Plaintiff's counsel could have been more persistent in demanding a conference, Plaintiff's counsel points out that he also provided a thorough explanation of the substantive basis for the forthcoming motion via email, as specifically requested by Defendant's counsel. (Id.). Additionally, in the Reply, Plaintiff's counsel has indicated that a call was held on July 29, 2022, and that the parties failed to reach an agreement. (Reply at 3 n.2). Therefore, Defendant was not prejudiced by any failure to meet and confer. It is also clear that no conference would have overcome the disagreement of the parties. The Court, thus, will proceed to the merits of the Motion. See Reed v. Sandstone Props., L.P., No. CV 12-5021-MMM (VBKx), 2013 WL 1344912, at *6 (C.D. Cal. Apr. 2, 2013) (“Because Reed suffered no real prejudice as a result of the late conference, however, the court elects to consider the motion on the merits.”).

Both Defendant's and Plaintiff's counsel, however, are warned to scrupulously comply with the Local Rules moving forward. This compliance not only requires that counsel for a party contemplating a motion to persistently and explicitly attempt to schedule a telephonic, video, or in-person meet and confer before filing, but also requires the counsel for the opposing party to timely respond to such attempts and make themselves available for a conference.

B. Merits of the Motion

Plaintiff's counsel has framed their Motion as a Motion to Compel Defendant's counsel to comply with their legal obligations, under the Federal Rules of Civil Procedure, as well as their ethical obligations, under applicable state court rulings. The Court discusses each potential source of authority in turn, but ultimately finds the matter to be one of ethical concern because Defendant's counsel received the audio recordings outside of the discovery process to which the Federal Rules apply.

Plaintiff's counsel argues that Federal Rule of Civil Procedure 26(b)(5)(B) requires that Defendant return, sequester, or destroy the audio recordings. The rule provides as follows:

*4 Fed. R. Civ. P. 26(b)(5)(B).

Defendant's counsel argues that the plain language of Rule 26 only refers to inadvertent disclosure of documents “produced in discovery.” (Opposition at 2) (emphasis added). Given this language, Defendant's counsel asserts that Rule 26 is inapplicable to this situation because he obtained the audio recordings from a non-party witness, outside the litigation process. (Id.)

Plaintiff acknowledges that the plain language limits Rule 26 to the discovery process, but insists that the Rule applies, nonetheless. (Reply at 5 n. 4). Plaintiff reasons that the specific situation is not specifically set forth in the rule “because honoring the attorney client privilege is so fundamental that one would not believe counsel would have the boldness to obtain such communications and subsequently maintain and suggest the future use of the same after a court has ruled the communications are protected by the attorney-client privilege.” (Id.)

Neither Plaintiff's nor Defendant's counsel cite any authority for their respective positions on this issue.

While Rule 26 clearly outlines the basic standards of professional conduct that should inform an attorney's actions when he or she inadvertently receives potentially privileged materials of an opposing party, Plaintiff has failed to convince the Court that Rule 26 itself provides district courts with the authority to issue an order when the attorney receives the materials outside of the discovery process.

While the Court is unaware of binding authority that decides this precise issue, the weight of the authority suggests that the “Federal Rules do not provide the authority to issue protective orders to documents obtained outside the scope of discovery.” See Eaglesmith v. Ray, No. 2:11-CV-0098-JAM-JFM, 2012 WL 1554922, at *3 (E.D. Cal. May 1, 2012) (concluding that the court's inherent authority, not Rule 26(b)(5), enabled it to issue an order requiring Plaintiff to return Defendant's privileged documents where Plaintiff acquired the documents through a non-party source outside the discovery process); United States v. Comco Mgmt. Corp., No. CV 08-00668-JVS (RNBx), 2009 WL 4609595, at *5 (C.D. Cal. Dec. 1, 2009) (same); Reinsdorf v. Skechers U.S.A., Inc., No. CV 10-07181-DDP (SSx), 2013 WL 12116415, at *4 (C.D. Cal. May 31, 2013) (same); cf. Kirshner v. Uniden Corp. of Am., 842 F.2d 1074, 1081 (9th Cir. 1988) (holding that a district court's power to control discovery does not extend to material discovered in a separate action).

Considering the relevant case law and Rule 26's plain language, the Court is unwilling to hold that the Federal Rules provide it with the authority to require the destruction of audio recordings that were obtained by Defendant's counsel outside of the discovery process.

Although Rule 26 does not provide the Court with authority to issue an order regarding the audio recordings, the weight of the authority makes it equally clear that a district court is certainly not powerless in these circumstances. Its source of such authority, however, stems from the inherent authority of federal courts “to manage their own proceedings and to control the conduct of those who appear before them.” Erickson v. Newmar Corp., 87 F.3d 298, 303 (9th Cir. 1996) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)). This includes enforcing standards of ethical responsibility. Id. Indeed, district courts have a “duty to examine [a] charge of unethical behavior” and to take remedial action as necessary. Englebrick v. Worthington Indus., Inc., 620 F. App'x 564, 567 (9th Cir. 2015) (internal citations omitted). In sum, although this inherent authority is certainly not without limits, it is well within the province of federal district courts to regulate the conduct of lawyers and parties appearing before it, particularly where they have not adhered to ethical standards. Compare Paul E. Iacono Structural Eng'r, Inc. v. Humphrey, 722 F.2d 435, 439 (9th Cir. 1983) (holding district court had the authority to disqualify lawyers based on violation of the ABA Model Rules of Professional conduct) with Wharton v. Calderon, 127 F.3d 1201, 1206 (9th Cir. 1997) (holding district court's inherent authority to regulate attorneys professional conduct “does not authorize the district court to reach out and ‘regulate’ attorneys not appearing before it) (internal citations omitted).

*5 Moreover, courts have repeatedly ordered the return of privileged or wrongfully obtained documents as part of their inherent equitable authority “over their own process, to prevent abuses, oppression, and injustices.” See e.g., Herrera v. Clipper Grp., L.P., No. 97-CIV-560 (SAS), 1998 WL 229499, at *1 (S.D.N.Y. May 6, 1998) (quoting Gumbel v. Pitkin, 124 U.S. 131, 144 (1888) (internal citation omitted)); Reinsdorf, 2013 WL 12116415, at *4 (ordering return of potentially privileged documents even in absence of wrongful conduct by recipient); Ashman v. Solectron Corp., No. C 08-1430-JF (HRL), 2008 WL 5071101, at *4 (N.D. Cal. Dec. 1, 2008) (“Obviously, the Court has within its power to order the return of the documents.”).

Attorneys appearing before the federal courts in the Central District of California must adhere to California laws and ethical rules. The “Central District applies the California State Bar Act, the California Rules of Professional Conduct, and the related judicial decisions in assessing the standards of professional conduct.” See e.g., Romero et al v. Select Emp. Servs., Inc. et al. Additional Party Names: California Rehab. Inst., LLC, Ricardo Ibarra, No. CV 19-06369-AB (ARGx), 2020 WL 2089486, at *1 (C.D. Cal. Jan. 29, 2020) (citing W. Sugar Coop. v. Archer-Daniels-Midland Co., 98 F. Supp. 3d 1074, 1080 (C.D. Cal. 2015)); Rodriguez v. Disner, 688 F3d 645, 656 (9th Cir. 2012) (“Under the local [Central] district court rules, California law governs district court's determination of whether an ethical violation has occurred.”).

Specifically, Local Rule 83-3.1.2 provides that “the standards of professional conduct required of members of the State Bar of California and contained in the State Bar Act, the Rules of Professional Conduct of the State Bar of California, and the decisions of any court applicable thereto” shall govern as the standards of professional conduct, and that any breach or violation thereof may be the basis for the imposition of discipline. L.R. 83-3.1.2. (emphasis added). “When a district court adopts a state professional code and relevant court decisions in its local rules, those sources of authority act as “applicable law.” Sirisup v. It's Thai LLC, No. CV 13-07246-DDP (PJWx), 2015 WL 404096, at *1 (C.D. Cal. Jan. 29, 2015); see also Augustine v. Department of Veterans Affairs, 429 F.3d 1334, 1340 (Fed. Cir. 2005) (Federal courts “may adopt or incorporate state law standards regarding the practice of law as their own”). Moreover, in Defendant's counsel's pro hac vice application, he explicitly certified that he is “familiar with the Court's Local Civil and Criminal Rules[.]” (Docket No. 33).

“State Fund is the seminal California decision defining a lawyer's ethical obligations upon receiving another party's attorney-client privileged materials.” McDermott, 10 Cal. App. 5th at 1106 (citing State Fund, 70 Cal. App. 4th 644); Rico v. Mitsubishi Motors Corp., 42 Cal. 4th 807, 817-818, 68 Cal. Rptr. 3d 758 (2007) (California Supreme Court adopting the State Fund rule and extending it to work-product privilege). Under State Fund, “an attorney has an ethical obligation to protect an opponent's privileged and confidential information, and that of third parties, when the attorney receives the information without a waiver from the holder of the privilege.” DP Pham, LLC v. Cheadle, 246 Cal. App. 4th 653, 675, 200 Cal. Rptr. 3d 937 (2016). To “protect the sanctity of the privilege and to discourage unprofessional conduct,” State Fund established the following “standard governing the conduct of California lawyers:”

State Fund, 70 Cal. App. 4th at 656-57.

And once the State Fund rule is triggered, an attorney may not use the communication to prosecute or defend the action. McDermott, 10 Cal. App. 5th at 1117 n. 11 (citing Clark v. Superior Court, 196 Cal. Ap. 4th 37, 42-44, 125 Cal. Rptr. 3d 361 (2011)).

California courts applying State Fund have explicitly held that materials will be deemed as provided through “inadvertence” when the privilege holder did not intend to disclose them, and unlike the Federal Rules, an attorney's State Fund duties are not limited to documents produced through discovery. See McDermott, 10 Cal. App. 5th at 1109-1110; Clark, 196 Cal. App. 4th at 42-44. Although the State Fund rule stemmed from a case involving an inadvertent production of a privileged document during discovery, California courts have held “neither the statement of the rule nor the policy underlying it supports limiting the scope of the rule to that one circumstance.” Id. at 1109. Indeed, in Clark, the Court of Appeal held that the State Fund rule applied to an attorney who obtained an opponent's privileged documents from his client who stole them from his employer to use in litigation against that employer. Clark, 196 Cal. App. 4th at 42–44. The State Fund rule applied “because the documents were privileged and the employer did not intend to disclose them.” McDermott, 10 Cal. App. 5th at 1109 (citing Clark, 196 Cal. App. 4th at 52-54). The McDermott court also applied the rule to documents obtained outside of the discovery process, reasoning that if the rule were limited to documents obtained inadvertently in discovery, it “would perversely permit the use of stolen, privileged materials, but not those inadvertently disclosed.” Id.

Moreover, the ethical duties imposed by the State Fund rule are “affirmative [in] nature.” Id. at 1118. They do not require the privilege holder to assert an objection or otherwise establish the privileged nature of the documents to “a legal certainty” to trigger an attorney's State Fund duties. Id. at 1108, 1118. And the attorney receiving the material may not “act as judge and unilaterally make the determination” that the privilege has been waived or that an exception applies and then proceed to use the documents. Id. at 1113-1114. Rather, the obligations are “immediately triggered” when an attorney receives materials that “are likely privileged and were likely disclosed inadvertently.” Id. at 1118.

Here, Defendant, through his counsel, filed the audio recordings at issue as Exhibits to Jane Roe's Declaration. (Docket 134). Jane Roe's declaration describes the audio recordings as calls between Jane Doe No. 2 and her attorney, Ms. Cartwright, in which Jane Doe No. 2 discusses and asks questions regarding her immigration and/or criminal matter. (Jane Roe Decl. ¶¶ 8-9). Jane Roe, Jane Doe No. 2's former spouse, asserts that she recorded the conversations, though each side disputes whether Jane Roe had consent to record the conversations. (Compare Cartwright Decl., ¶ 8 and Jane Doe No. 2 Decl., ¶ 8 with Jane Roe Decl. ¶¶ 8-9).

*7 Thus, at some point before Defendant's counsel filed Defendant's Motion for a Preliminary Injunction, he had come into receipt of audio recordings, which clearly depict conversations between Jane Doe No. 2 and an individual with legal knowledge, discussing Jane Doe 2's personal legal matters. A reasonably competent attorney would and should have recognized within the first few minutes of listening to the audio recordings that they might be subject to the privilege. Accordingly, this Court's first instinct was to seek input from the parties before it readily made the audio recordings available to the public. Furthermore, Jane Roe's declaration, to which the audio recordings were attached as Exhibits, explicitly indicates that the phone calls were between Jane Doe No. 2 and a Bahamian attorney, where Doe was asking the attorney questions regarding legal matters. Those facts alone strongly suggest that Jane Doe No. 2 likely would have a claim of privilege over the audio recordings.

Moreover, as explained, whenever a lawyer ascertains that he or she “may have privileged attorney-client material” that the privilege holder did not likely intend to disclose, his or her State Fund duties are “immediately triggered.” McDermott, 10 Cal. App. 5th at 1107, 1118 (emphasis in the original). In short, a reasonably competent attorney who listened to the audio recordings and/or read Jane Roe's declaration (Defendant's counsel presumptively did both before filing them), would have recognized their potentially privileged nature and further should have understood it is likely that Jane Roe No. 2 did not intend to disclose such recordings to the opposing party. Therefore, Defendant's counsel had an obligation to notify opposing counsel of their receipt of the audio recordings as soon as Jane Roe explained what they entailed. See McDermott, 10 Cal. App. 5th at 1107.

Instead, contrary to their State Fund obligations, Defendant's counsel further used and disclosed the recordings by filing them with the Court and specifically excluded them from Defendant's Motion to Seal. (Docket No. 134). Before filing them, Defendant's counsel was obligated to try to “resolve the situation by agreement or [ ] resort to the court for guidance.” State Fund, 70 Cal. App. 4th at 656-57; see also Gomez, 255 F.3d at 1135 (“[F]or counsel facing an ethical dilemma concerning privileged documents[,] [t]he path to ethical resolution is simple: when in doubt, ask the court.”). Defendant's counsel failed to adhere to the standards of conduct that State Fund demands.

Defendant's counsel's briefing indicates that he proceeded to use and rely on the recordings because he believed, and continues to believe, that the audio recordings are not privileged. (See Docket Nos. 157, 166, and 183). For instance, in the Opposition and at the hearing, Defendant's counsel reiterated his belief that the crime-fraud exception vitiates the privilege over the recordings. But those arguments ignore the “affirmative nature” of an attorney's State Fund obligations. See McDermott, 10 Cal. App. 5th at 1118. An attorney who receives potentially privileged material “is not permitted to act as judge and unilaterally make th[e] determination” that the material is not privileged. Id. at 1113 (“Allowing opposing counsel to avoid their State Fund obligations any time they can fashion a colorable argument for overcoming the privilege would create an exception that would swallow the State Fund rule.”); Bahdjedjian v. W. Diocese of the Armenian Church of N. Am., No. CV 19-4717-DSF (GJSx), 2020 WL 5353982, at *3 (C.D. Cal. April 29, 2020) (finding Plaintiff attorney's continued review and use of Defendant's “potentially privileged/confidential material” that opposing counsel had unsuccessfully tried to redact was “unquestionably an ethical violation,” despite Defendant's counsel's belief that the material was not actually privileged).

Regardless of whether Defendant's counsel believed that Jane Roe's presence on the calls or the crime-fraud exception would ultimately be found to overcome Jane Doe No. 2's claim to the privilege, Defendant's counsel's State Fund obligations were triggered when he either listened to the recordings or learned from Jane Roe what they entailed. See McDermott, 10 Cal. App. 5th at 1113 (citing State Bar, Formal Opn. No. 2013-188, at p. 4) (“[T]he potential application of the crime-fraud exception does not vitiate [the a]ttorney's duties under State Fund and Rico.”).

*8 And even if it was not obvious to Defendant's counsel that the audio recordings were subject to a claim of privilege when he first received, reviewed, and filed them, all doubts should have been resolved when this Court ordered the audio recordings to remain under seal based explicitly on the fact that “the communications are protected from disclosure under the attorney-client privilege.” (Prior Order at 3-4). At that point, Defendant's counsel's State Fund duties were unquestionably triggered and required counsel “to stop using” the audio recordings and “return [them]” or “schedule discussions” about their status before returning to Court for guidance. McDermott, Cal. App. 5th 1083, 1117. The “notion that receipt of privileged communications imposes a duty on counsel to take some reasonable remedial action is hardly a novel concept.” Gomez v. Vernon, 255 F.3d 1118, 1134 (9th Cir. 2001) (affirming trial court's grant of monetary sanctions where attorneys “continued to collect and read documents after being advised by the state bar” that the proper course of action after receiving apparently privileged documents was to send them to the court under seal). Rather than accepting the Court's Prior Order as implicating their ethical duties, Defendant's counsel has continued to insist the recordings are not privileged, refused to return or destroy their copies, and have apparently told Plaintiff's counsel of their intention to use the recordings in Defendant's case-in-chief. (See Reply at 7; Gutzler Decl. ¶ 5).

Defendant's counsel defends these actions by arguing that the Prior Order did not hold that the audio recordings are privileged, but rather, just ordered that they should be sealed from the public. (Opposition at 2-3). But that argument is illogical. Given the audio recordings were ordered to be sealed based on their privileged nature, the Court necessarily concluded, at least as a preliminary ruling, that the audio recordings are privileged. And Defendant's counsel is simply incorrect when he states that “the Court did not request briefing on the applicability of privilege.” (Opposition at 2-3). The Court specifically ordered plaintiff to show cause “why Exhibits A – C are privileged communications that should be sealed.” (Docket 159). And Defendant was permitted to, and did, file a Reply brief in response to that Order, arguing against Plaintiff's claim of privilege. (Docket 166).

Defendant's counsel also insists that the issue of privilege has not been determined because there “was not a full and direct litigation over the privilege” or “admissibility” of the recordings. (Opposition at 3). While the Court unquestionably made a preliminary determination regarding the privileged nature of the audio recordings — which was more than sufficient to trigger Defendant's counsel's State Fund duties — the Court agrees that there is not yet a final ruling on the admissibility of the audio recordings. The briefing on the privilege issue concededly arose in an unusual context and outside of the formal discovery process. Once Defendant returns the audio recordings to Plaintiffs (as is so ordered herein), Defendant may still seek their production in a proper discovery request and then challenge the validity of any claim of privilege in an appropriate motion before the Magistrate Judge. See Bahdjedjian, 2020 WL 5353982, at *4 (ruling that although counsel had violated their ethical duties by continuing to review and use documents that were clearly subject to a claim of privilege, they were still entitled to challenge the validity of that claim at a proper hearing). That the claim to privilege may ultimately be defeated does nothing to overcome the fact that this Court's Prior Order requiring the recordings to remain sealed because they are privileged was clearly sufficient to put Defendant's counsel on notice of the claim of privilege. After that Order, under State Fund, “further review or use [of] the privileged material [was] prohibited.” See id. (citing McDermott, 10 Cal. App. 5th at 1116 n.10.)

And although not made explicitly as an argument in Defendant's Opposition, at the hearing it was made clear that Defendant's counsel is under the impression that the Court's Prior Order regarding the audio recordings means that Jane Roe holds the privilege. (See Gutzler Decl., Ex. A at 3). To be clear, while the Court held that Jane Roe's presence on the call did not waive the privilege given Jane Roe was the client's spouse listening to a matter of “joint concern,” that does not itself make Jane Roe the holder of the privilege. (See Prior Order at 4). Neither Defendant's counsel nor Jane Roe has at any point claimed that Jane Roe had an attorney-client relationship with Ms. Cartwright. And, of course, it is the attorney's client who holds the privilege and only the client can waive it. See Cal. Evid. Code §§ 953, 954.

*9 Even if Jane Roe were to be considered a joint client of Ms. Cartwright's, “[o]ne co-client does not have authority to waive the privilege with respect to another co-client's communications to their common lawyer.” Restatement (Third) of the Law Governing Lawyers § 75, cmt. (2000). At the hearing, Defendant's counsel insisted that a joint client can unilaterally waive the privilege, but he has not pointed the Court to a single case to establish that proposition. And the case law, in fact, says otherwise. See e.g., Roush v. Seagate Tech., LLC, 150 Cal. App. 4th 210, 223, 58 Cal. Rptr. 3d 275, 284 (2007) (“Each of the joint clients holds the privilege protecting their confidential communications with the attorney; one client may not waive the privilege without the consent of the other.”); Matter of Grand Jury Subpoena Duces Tecum, 406 F. Supp. 381, 394 (S.D.N.Y. 1975) (”[T]he privilege of one joint client cannot be destroyed at the behest of the other where the two have merely had a ‘falling out’ in the sense of ill-feeling or divergence of interests.”). Hence, Jane Roe alone may not unilaterally waive the privilege, or “do with the tape recordings as she wishes,” at least as far as the proceedings in this action are concerned. (Gutzler Decl., Ex. A at 3).

In short, at the very latest, Defendant's counsel's State Fund duties were triggered when this Court made a preliminarily determination in the Prior Order that the audio recordings are privileged. The triggered duties required him to stop reviewing, using, or disclosing them and to either turn over the recordings in their possession to Plaintiff or to seek further guidance from the Court. By refusing Plaintiff's requests for destruction of the audio recordings, threating to continue using them in this case, and repeatedly denying any ethical obligations as to the recordings, Defendant's counsel have demonstrated that absent Court intervention, they are unwilling to recognize and adhere to their State Fund duties. See DP Pham, 246 Cal. App. 4th at 675.

In Wharton, the Ninth Circuit dissolved a district court's protective order prohibiting the respondent (Warden of San Quentin State Prison) from communicating with the petitioner's former trial or appellate counsel about any matters relating to the inmate's habeas petition, except in a deposition setting. 127 F.3d at 1203, 1205-07. The district court issued the order to protect the inmate's attorney-client privilege with his former counsel. Id. at 1205.

At the hearing in this action, Defendant's counsel indicated his belief that Wharton precludes this Court from issuing an order requiring Defendant and his counsel to turn over their copies of the recordings until the admissibility of those recordings is ruled on. The Court disagrees. In Wharton, the moving party sought an order forbidding persons not before the court from engaging in future communications. That order far exceeded the scope of the order herein and was in clear tension with the First Amendment's prohibition on prior restraints. See id. at 1207. The recordings at issue here involve past communications and the order is directed solely at parties appearing before this Court (i.e., Defendant and his counsel). And counsel's State Fund duties were in no way implicated in Wharton. Therefore, Wharton is inapt.

While State Fund does not itself explicitly require the receiving attorney to return or destroy the privileged materials, it does require the parties “to attempt to resolve the situation by agreement or resort to the court for guidance with the benefit of protective orders and other judicial intervention as may be justified.” State Fund, 70 Cal. App. 4th at 656-57. Other courts faced with the issue have concluded that an order requiring the return or destruction of the privileged material is a “justified” form of “judicial intervention.” See e.g., Clark, Cal. App. 4th at 45 n. 3; Bahdjedjian, 2020 WL 5353982, at *4; cf. Reinsdorf, 2013 WL 12116415, at *4 (concluding that although Rule 26 applies only to information produced in discovery, the procedures it sets forth are “instructive” of an attorney's “appropriate response,” and therefore, ordering the return of privileged documents to privilege holder). Indeed, the case law contains very little debate about the propriety of ordering a party to turn over documents once it is evident that counsel received an opponent's likely privileged material without an intentional waiver by the privilege holder. Rather, the debate around this issue typically regards the far more “drastic measure” of disqualification, which Plaintiff has not sought in the Motion (nor would this Court have seriously considered doing so). See e.g., Bahdjedjian, 2020 WL 5353982, at *4.

*10 As such, the Court finds the circumstances warrant the exercise of its inherent authority “to manage [its] own proceedings and to control the conduct of those who appear before [it].” Erickson v. Newmar Corp., 87 F.3d 298, 303 (9th Cir. 1996) (finding district court abdicated its duty to investigate charge of attorney's unethical conduct and ordering new trial based on attorney's ex parte contact with the opposing party's expert witness). Defendant and his counsel are ordered to turn over to Plaintiff the audio recordings in their possession, custody, or control that likely contain Jane Doe No. 2's privileged information within the next seven days, and any copies that remain in Defendant or Defendant's counsel's possession shall be destroyed. Plaintiff shall preserve the audio recordings so that further proceedings can determine their ultimate admissibility through a proper discovery motion at the appropriate time. The Declaration of Jane Roe (Docket No. 133-2) is hereby sealed from the public docket in its entirety. Defendant's counsel is granted leave to file a new version of the declaration redacting paragraphs 8 and 9 of Jane Roe's declaration, which discuss the contents of the audio recordings. See Bahdjedjian, 2020 WL 5353982, at *5 (ordering similar relief pursuant to State Fund).

Finally, the Court notes that at the hearing Defendant's counsel mentioned an offer to sequester the disputed recordings. This issue was not raised in the briefing and the Court doesn't know all the circumstances. If that offer was made, then the Court hopes it was seriously considered by Plaintiff's counsel. Under Rule 26, some form of sequestration could be an appropriate remedy. See Fed. R. Civ. P. 26 (indicating that after a party is notified that it has received potentially privileged information in error, the “party must promptly return, sequester, or destroy the specified information and any copies it has”). The reason the Court is not ordering sequestration here is because, as far as the Court is aware, under State Fund, courts have not employed that remedy but instead have ordered the return and/or destruction of the material.

To the extent Plaintiff's motion seeks relief that exceeds or differs from these orders, such relief is DENIED. Otherwise, Plaintiff's Motion is GRANTED.

IT IS SO ORDERED.