Peat, Marwick, Mitchell & Co. v. Superior Court

The accounting firm of Peat, Marwick, Mitchell & Company (Peat Marwick), defendant in an accounting malpractice action, petitions for extraordinary relief from an order precluding it from controverting plaintiffs’ evidence on certain elements of the malpractice allegations. After Peat Marwick merged with KMG Main Hurdman (Main Hurdman), the accounting firm retained by plaintiffs as their expert witness, the trial court made the preclusion order to prevent the compromise of confidential information and to preserve the integrity of the judicial process. Peat Marwick contends the trial court was without power to enter a preclusion order in the absence of statutory authorization, and that any such power the court did enjoy was abused under the facts of this case.

We summarily denied Peat Marwick’s petition, but the California Supreme Court granted review and transferred the matter back to this court with directions to issue the alternative writ. We issued the writ and heard oral argument. We conclude that the petition is without merit.

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A

The underlying action concerns the financial failure of Western Community MoneyCenter (MoneyCenter), a Contra Costa-based thrift…

I concur in the opinion of Justice Haning, but write separately to comment on the apparently widespread use of the term “Chinese Wall” to describe the type of screening mechanism discussed in this case. While our opinion uses the term “screen,” both the parties and the trial court used the term “Chinese Wall,” which seems to have become a term of art. I write to express my profound objection to the use of this phrase in this context.

The origin of the use of “Chinese Wall” in the context of confidentiality is unclear. Evidently, the term was casually coined in some appellate opinion, then picked up and used without question or explanation by courts and commentators. The unquestioned use of the term was perpetuated by a leading note on the subject, The Chinese Wall Defense to Law-Firm Disqualification (1980) 128 U.Pa.L.Rev. 677, which is otherwise analytical and informative. (See lead opn., fn. 2, p. 280.)

The enthusiasm for handy phrases of verbal shorthand is understandable. Occasionally, however, lawyers and judges use a term which is singularly inappropriate. “Chinese Wall” is one such piece of legal flotsam which should be emphatically abandoned. The term has an ethnic focus…

I concur in the result because Peat Marwick’s petition challenges the trial court’s order of April 17, and this order was mooted by the trial court’s subsequent order of June 22. Our Supreme Court directed us to issue an alternative writ apparently not perceiving that the petition before it challenges an order which had been mooted by a later order. Peat Marwick has filed no challenge to the June 22 order and the Supreme Court’s direction to issue an alternative writ on Peat Marwick’s challenge to the April 17 order applies only to that order.

A petition for a rehearing was denied May 13, 1988, and petitioner’s application for review by the Supreme Court was denied July 28, 1988.

John K. Van de Kamp, Attorney General, Randall P. Borcherding, Deputy Attorney General, Jan T. Chilton, Robert L. Lofts, Donald J. Querio and Severson, Werson, Berke & Melchior for Real Parties in Interest.

OPINION

HANING, J.

The accounting firm of Peat, Marwick, Mitchell & Company (Peat Marwick), defendant in an accounting malpractice action, petitions for extraordinary relief from an order precluding it from controverting plaintiffs' evidence on certain elements of the malpractice allegations. After Peat Marwick merged with KMG Main Hurdman (Main Hurdman), the accounting firm retained by plaintiffs as their expert witness, the trial court made the preclusion order to prevent the compromise of confidential information and to preserve the integrity of the judicial process. Peat Marwick contends the trial court was without power to enter a preclusion order in the absence of statutory authorization, and that any such power the court did enjoy was abused under the facts of this case.

We summarily denied Peat Marwick's petition, but the California Supreme Court granted review and transferred the matter back to this court with directions to issue the alternative writ. We issued the…