Cedar Street: Analysis of Colorado's new, comprehensive legal test for discovery of records possibly protected by the right to privacy

Following Cedar St. Venture, LLC v. Judd (In re Dist. Ct.), Colorado’s trial courts will now apply a new framework, incorporating the principles from two prior existing tests, to all discovery requests implicating the right to privacy.  This analysis discusses the prior tests and the Colorado Supreme Court’s newly announced Cedar Street framework merging them in future cases.

A party opposing discovery on the grounds that it would violate his or her right to privacy or confidentiality now warrants a trial court’s additional inquiry outside the general requirement of mere relevancy.  The right to privacy “protects ‘the individual interest in avoiding disclosure or personal matters.’”  Martinelli v. Dist. Ct., 612 P.2d 1083, 1091 (Colo. 1980).  When the right to privacy is at issue, the trial court must give the discovery request special consideration and balance an individual’s right to keep information private, with the general policy in favor of broad disclosure.  

Martinelli Test

Previously, the supreme court articulated two different tests to apply when private or confidential information is at issue.  In Martinelli, a case involving a request for police personnel files, the supreme court laid out a three-part balancing test: 

  1. the party seeking protection of the right to privacy has a legitimate expectation that the materials of information will not be disclosed;
  2. disclosure is required to serve a compelling state interest; and
  3. if so, the necessary disclosure should occur in the least intrusive manner with respect to the right to privacy.

The Martinelli test has also been employed in cases involving requests for personnel files, computers, and sexual history.

Stone Test

A separate test had been used in cases involving requests for tax returns.  See, e.g., Stone v. State Farm Mut. Auto. Ins. Co.,185 P.3d 15 (Colo. 2008);Alcon v. Spicer, 113 P.3d 735 (Colo. 2005).  The Stone test requires the requesting party to show that:

  1. the information is relevant to the subject of the action; and
  2. there is a compelling need for the information in the returns because the information sought is not otherwise readily obtainable.

Colorado federal courts have also applied the test in contexts other than tax returns, i.e., new hire data reported by employers and financial transactions.

Cedar Street Test

Because choosing which test to apply had proven difficult, the Cedar Street court effectively merged the Martinelli and Stone tests.  Trial courts must now apply a comprehensive framework, incorporating the principles from both tests, to all discovery requests implicating the right to privacy.  As it now stands, with discovery requests implicating the right to privacy or confidentiality, the requesting litigant in Colorado must now prove each of the following four elements:

  1. the documents are relevant to the subject matter of the case;
  2. disclosure is required to serve a compelling state interest or there is a compelling need for the documents;
  3. the requested information is not available from other sources; and, if it is,
  4. the requesting party is using the least intrusive means to obtain the information. 

After the requesting party establishes the documents are relevant, the party opposing the discovery must show that it has a legitimate expectation that the requested documents are confidential and will not be disclosed. 

In Cedar Street, the plaintiff in a legal malpractice case sought the following discovery:  (1) each and every document that identified a defendant-attorney’s compensation from his firm for the years 2004-07; and (2) each and every document that described the methodology by which the firm determined the amount of compensation it paid the defendant-attorney for the same time period.  The supreme court determined that, “based on the broader protection that we have afforded to financial records in other contexts . . . these documents fall under the umbrella of the right to privacy and necessitate analysis under the framework discussed above.”

The record revealed that the trial court had not considered whether there was a compelling need for the information (see element #2 of new test) or whether the requesting litigant was using the least intrusive means to obtain the information (see element #4 of new test).  Further, the trial court had placed the burden on the parties opposing the discovery to show good cause for protecting the information, when the burden should be on the requesting party to show a compelling need for the information.  For these reasons, the supreme court reversed the trial court’s order requiring the production of the documents and remanded the issue to the trial court with instructions to apply the new test. 

CEDAR STREET and ALCON

            Medical Records

In Alcon, the supreme court held that a plaintiff’s waiver of his or her physician-patient privilege was limited to records related to specific claims alleged in a lawsuit.  It further held that a plaintiff must compile a privilege log identifying the medical records he or she is withholding under a claim of the physician-patient privilege.  Alcon v. Spicer, 113 P.3d 735, 741-42 (Colo. 2005).  Alcon is distinguishable from Cedar Street in that Alcon dealt with the discovery of nonprivileged documents, and the Cedar Street test applies only when a discovery request implicates the right to privacy.  Thus, in theory, the Cedar Street test should never be applied when a defendant requests nonprivileged medical records. 

In practice, however, plaintiffs will continue to insist that most, if not all, of their medical records are privileged, and trial courts will be compelled to apply the new balancing test provided by Cedar Street.  Fortunately, I believe the Cedar Street holding does not eliminate a plaintiff’s Alcon obligation to produce a detailed privilege log of the medical records that he or she considers privileged and nondiscoverable.  Under the Cedar Street test, after the requesting party proves the medical records are relevant (see element #1 of new test), “the party opposing the discovery request must show that it has a legitimate expectation that the requested materials or information is confidential and will not be disclosed.”  In my (humble) opinion, a plaintiff cannot do this without preparing a detailed privilege log, “certifying that it contains information acquired by her physician necessary for treatment and unrelated to the cause and extent of injuries and damages claimed in the lawsuit.”  Alcon at 742. 

            Tax Returns

Public policy favors protecting the confidentiality of tax returns.  Thus, in Alcon, the supreme court applied the Stone test and determined that the plaintiff’s tax returns were not discoverable in those particular facts.  It concluded that the requesting party could not demonstrate a compelling need for the confidential tax returns.  The Cedar Street test, which merged the Stone and Martinelli tests, now requires that, in addition to proving relevance and a compelling need for the tax returns, the requesting party must also show that the requested information is not available from other sources, and, if it is, that the requesting party is using the least intrusive means to obtain the information.  The Cedar Street holding will likely make it even more difficult to procure a plaintiff’s tax returns if a plaintiff can reasonably produce the same information from a less intrusive source (i.e., written discovery responses, deposition, etc.).  

CEDAR STREET and REUTTER/SAMMS

Reutter provides defense counsel the opportunity to conduct ex parte interviews with nonparty medical providers who do not possess residually privileged information or if the risk of divulgement of residually privileged information is low.  Reutter v. Weber, 179 P.3d 977, 982 (Colo. 2007).  (“Residually privileged information” is medical information not relevant to a party’s action.)  The Reutter court considered and then clarified its prior Samms decision:  “Samms holds that the trial court must take appropriate measures to protect against the divulgement of residually privileged information. Where the risk that residually privileged information will be divulged during an interview is relatively high, the preferred method of protecting against divulgement is to provide the plaintiff-patient with prior notice and an opportunity to attend the interview.”  Id. at 983.  Therefore, unless a trial court finds that ex parte interviews present a high risk of divulgement of residually privileged information, Reutter interviews should be allowed to proceed without the presence of plaintiff or his or her counsel.

Here, too, like in Alcon, Reutter dealt with the discovery of nonprivileged information, so the Cedar Street test should not apply.  But, again, if plaintiffs contest such discovery as privileged, trial courts will be forced to apply the Cedar Street test to a litigant’s request for Reutter interviews.  The Cedar Street test requires that, after the requesting litigant proves the discovery is relevant, the party opposing the discovery must show that it has a legitimate expectation that the requested information is privileged or confidential and will not be disclosed.  Reutter already requires that “the trial court . . . assess the risk that there is residually privileged information, taking into account [] the evidence offered by the plaintiff-patient. ”  Id.  Thus, unless plaintiff presents sufficient evidence that the risk of divulgement of such information is high, Reutter interviews should still be allowed.  The Reutter analysis is seemingly unchanged by the Cedar Street holding.

Attorney Thomas Kranz focuses on Colorado construction-defect litigation, business litigation and healthcare liability defense law.