## Facts

- Florence E. Manville bought a waterbed manufactured by American National Watermattress Corporation (ANWC) from retailer Jack Pendley.
- The bed rolled off its pedestal, pinned Manville, and caused serious injuries.
- Manville pursued claims including negligence, breach of warranties, and strict products liability against ANWC and Pendley.
- While hospitalized shortly after the accident, Manville contacted a law firm; because attorneys were in trial, the firm sent Chuck Ward, a nonlawyer full-time employee, to interview her to enable the firm to provide legal advice and possible representation.
- Ward interviewed Manville in her hospital room, tape-recorded part of the conversation, and provided a transcript to the attorneys; the firm later accepted the case.
- During discovery, defendants sought production of the Ward statement; Manville refused, asserting attorney-client privilege; the trial court denied the motion to compel.
- Before trial, Pendley settled with Manville for $60,000; Manville proceeded to trial against ANWC alone.
- The jury found for Manville (about $150,000), and also found Pendley had a right to indemnity from ANWC for the settlement amount.
- The trial court reduced the verdict to account for the settlement and Manville’s comparative negligence, entering a net judgment of roughly $105,000 including costs and attorney’s fees.

## Issues

1. Whether Manville’s recorded statement to a law firm’s nonlawyer employee, taken to enable legal advice and representation, was protected by the attorney-client privilege.
2. Whether the trial court abused its discretion in contested discovery and evidentiary rulings apart from the privilege issue.
3. Whether the evidence supported instructing the jury on impaired earning capacity and sustaining an award on that basis.
4. Whether the trial court properly computed the reduction of the verdict to reflect a prior settlement with a co-defendant and comparative negligence.

## Decision

- The Alaska Supreme Court held the taped interview with the firm’s nonlawyer employee was protected by attorney-client privilege and was not discoverable.
- The court found no reversible error in the challenged discovery and evidentiary rulings.
- The court held the evidence was sufficient to submit impaired earning capacity to the jury and to sustain the award.
- On cross-appeal, the court addressed the method for applying settlement credits and comparative-fault reductions and affirmed the adjusted judgment in Manville’s favor.

## Legal Principles

- Attorney-client privilege protects confidential communications made for the purpose of obtaining or providing legal advice, including communications made to an attorney’s agents when reasonably necessary to deliver legal services.
- A client’s statement does not lose privileged status merely because it contains factual or eyewitness information when the communication is made in confidence to facilitate legal advice.
- Trial court discovery and evidentiary determinations are reviewed for abuse of discretion; reversal requires material prejudice.
- In a comparative-fault setting, a court must apply settlement credits and comparative-negligence reductions using a legally correct computation method so the plaintiff’s recovery is adjusted consistently with Alaska law.

## Conclusion

The Alaska Supreme Court affirmed the judgment for the injured plaintiff, holding that her recorded hospital interview with a law firm’s nonlawyer employee was protected by attorney-client privilege, upholding the impaired earning capacity submission, rejecting claims of reversible discovery or evidentiary error, and clarifying how settlement offsets interact with comparative-fault reductions in computing the final judgment.


Am. Nat’l Watermattress Corp. v. Manville, 642 P.2d 1330 (Alaska 1982)