In re California Bail Bond Antitrust Litigation

Background

This putative antitrust class action concerns allegations that bail bond surety companies conspired to maintain a 10% premium rate and suppress rebates by bail bond agents. The plaintiffs assert claims under the California Cartwright Act, California’s Unfair Competition Law, and Section 1 of the Sherman Antitrust Act.

Lexington National Insurance Corporation and American Surety Company asked the court to confirm that 29 documents they had inadvertently produced in discovery were protected by the attorney-client privilege. The companies later reclaimed portions of the documents under the parties’ stipulated electronic-discovery agreement. Plaintiffs Shonetta Crain and Kira Monterrey challenged the privilege claim. The court ordered the documents submitted for private review and held a hearing.

Attorney-Client Privilege Standard

The attorney-client privilege protects confidential communications between a lawyer and client made for the purpose of obtaining or providing legal advice. The party asserting the privilege bears the burden of proving that it applies. For communications having both legal and nonlegal purposes, the court applied the Ninth Circuit’s “primary purpose” test: the privilege applies only when the primary purpose was obtaining or providing legal advice, rather than business advice. The court also explained that communications intended to be shared with third parties generally lack the confidentiality required for privilege.

Court’s Analysis

The disputed communications involved Mark Holtschneider, who was Lexington’s Executive Vice President and General Counsel, Robert W. Hogeboom, a regulatory lawyer jointly retained by Lexington, American Surety, and Bankers Insurance Company, and other company representatives. Most communications concerned a 2016 California Department of Insurance inquiry into whether bail bond rates were excessive.

The Moving Defendants argued that Hogeboom was providing legal advice about how to respond to the Department of Insurance’s regulatory demands and possible regulatory action. Plaintiffs argued that the communications primarily sought business advice and coordinated an industry response to influence the agency.

After reviewing the documents, the court found that Hogeboom’s advice was primarily and explicitly to “rally the industry” and coordinate an industry-wide response. The communications described efforts to persuade the Department of Insurance to stop reviewing bail bonds, organize other sureties, send industry letters, hold meetings with agency officials, and encourage other sureties not to make rate filings. The court characterized this as lobbying advice, not legal advice. It rejected the argument that advice became legal merely because it concerned regulatory activity or came from a lawyer with regulatory expertise.

The court found that almost all of the communications were not privileged because their primary purpose was lobbying rather than legal advice. It identified a few communications that might contain legal advice, specifically Lexington Exhibits 11, 19, and 21 and ASC Exhibit 7, and then considered whether any privilege over those communications had been waived.

Common Interest and Waiver

The Moving Defendants argued that sharing communications among Lexington, American Surety, and Bankers did not waive privilege because the three companies jointly retained Hogeboom and had a common interest. The court found sufficient evidence that the companies had agreed to jointly engage Hogeboom, even though the agreement was not written.

But the court held that the companies had not shown a common legal interest. Their primary purpose was to coordinate a commercial lobbying effort to influence how the Department of Insurance regulated the bail bond industry. Each company had received a separate inquiry, independently submitted its own data, and would have faced separate proceedings. The companies’ shared interest in the industry’s regulatory treatment was commercial rather than legal. Therefore, sharing the few potentially privileged communications among the companies waived any privilege.

Disposition

The court denied the Moving Defendants’ clawback motion. It held that the vast majority of the documents were not privileged because their primary purpose was not legal, and that any privilege over the few potentially privileged communications was waived. The Moving Defendants were ordered to produce the documents in full.

The opinion is signed by Donna M. Ryu, Chief Magistrate Judge.