A brief excerpt from the opinion of Justice Kruger and agreement of the Court's Chief Justice and Justices:

In 2010, the City of Los Angeles contracted with PricewaterhouseCoopers (PwC) to modernize the billing system for the City’s Department of Water and Power (LADWP). The rollout of the new billing system did not go smoothly. When the system went live in 2013, it sent inaccurate or delayed bills to a significant portion of the City’s population.

In March 2015, following the botched rollout, the City filed suit against PwC. In a complaint filed by the City’s attorneys and special counsel Paul Paradis, Gina Tufaro, and Paul Kiesel, the City alleged that PwC had fraudulently misrepresented its qualifications to undertake the LADWP billing modernization project. Then, about a month later, in April 2015, attorney Jack Landskroner, representing Los Angeles resident Antwon Jones, filed a putative class action against the City on behalf of overbilled LADWP customers (Jones v. City of Los Angeles). The two lawsuits were assigned to the same trial judge. (City of Los Angeles v. PricewaterhouseCoopers, LLC (2022) 84 Cal.App.5th 466, 477 (City of L.A.).)

Instead of filing an answer to the Jones v. City of LosAngeles complaint, the City quickly entered into negotiations with Landskroner...but Landskroner invoked his Fifth Amendment right against self-incrimination. During the same hearing, the City waived its claims of privilege over the draft Jones v. PwC complaint, but it did not waive its claims of privilege with respect to all communications regarding the class action. Several days later, Paradis, Tufaro, and Kiesel withdrew as special counsel for the City, and shortly thereafter, Peters turned over the full draft Jones v. PwC complaint to PwC counsel.

After the draft Jones v. PwC complaint was produced, theCity and PwC continued to engage in protracted discovery disputes over the extent of the City’s knowledge and involvement in the collusive litigation scheme. In April 2019, the City produced a file titled “Emails Responsive to PMQ (1).pst,” which contained 131 files that Kiesel had given to Peters in advance of the February 26 PMQ deposition. The file metadata revealed that Peters had downloaded the file to his hard drive before the deposition occurred but had failed to disclose these documents to PwC.

Several weeks after Clark’s deposition, the City provided an errata sheet that attempted to qualify several of his most significant admissions. These recantations prompted a flurry of additional depositions and document requests. PwC took 18 additional fact witness depositions, and it filed a motion to compel documents and answers to deposition questions that the City had previously withheld on the basis of mediation privilege. The City opposed the motion and claimed, inter alia, that it was not aware of special counsel’s actions in the collusive litigation scheme. PwC further filed a motion to compel documents related to special counsel’s simultaneous representation of Jones and the City. The City also objected to this motion on the basis of attorney-client privilege, and it argued that the crime-fraud exception did not apply because Paradis and Kiesel acted alone.

The trial court granted both of PwC’s motions to compel production. It found that the purported mediation was not legitimate and that PwC had established a prima facie case of fraud in which the City was complicit. Additionally, with respect to the second motion to compel, it concluded that any attorney-client privilege had been waived because an attorney could not simultaneously represent two clients who are adverse to each other in related litigation without destroying the duties of confidentiality and undivided loyalty and trust owed to both clients. The City filed a petition for writ of mandate to appeal the court’s determination that the attorney-client privilege did not apply. But before the Court of Appeal could review the writ petition, the City voluntarily dismissed with prejudice its case against PwC. As a result of the dismissal, the City did not complete its production of documents responsive to PwC’s discovery requests.

After the dismissal, federal prosecutors announced that Paul Paradis, Thomas Peters, and two other City officials had pleaded guilty to criminal charges...