Aerojet- General Corp. v. Transport Indemnity Insurance

In Aerojet- General Corp. v. Transport Indemnity Insurance (1993) 18 Cal. App. 4th 996, during a stay in discovery in a lawsuit brought by Aerojet against its liability insurers, Attorney DeVries received a packet of documents concerning the litigation from an Aerojet employee. Within those documents, DeVries was interested in a memorandum revealing the existence of a witness who would have knowledge about matters involved in the lawsuit. The memorandum was on plain paper and was identified as a memorandum to the Aerojet file from "RAC." ( Id. at p. 1003.) After the discovery stay was lifted, DeVries took the witness's deposition. When the insurers later discovered the inadvertent delivery of the documents to DeVries, they brought a motion for sanctions in the trial court, which was granted on the basis that DeVries acted unethically and in bad faith in failing to immediately notify opposing counsel of his receipt of the documents, and in using information contained therein to his own advantage. The Court of Appeal reversed. Although it acknowledged that the packet of documents at issue contained some privileged information, the court focused on the fact that the information used by DeVries, the existence and identity of a potential witness, was nonprivileged and was subject to discovery. "Consequently, whether the existence and identity of a witness or other nonprivileged information is revealed through formal discovery or inadvertence, the end result is the same: the opposing party is entitled to the use of that witness or information. This fundamental concept was lost in the skirmish below." ( Aerojet-General Corp. v. Transport Indemnity Insurance, supra,18 Cal. App. 4th at p. 1004.) The court further found that the sanctions, awarded under the authority of Code of Civil Procedure, section 128.5, were not justified as the court could not conclude that "deposing a relevant witness constitutes frivolous conduct, in that it is 'totally and completely without merit,' or conduct that is undertaken 'for the sole purpose of harassing an opposing party.' " (18 Cal. App. 4th at p. 1005.)