California draws a distinction between communications that enjoy an absolute privilege versus those that are considered to be a qualified privilege. Usually, communications on ordinary business operations are either not deemed to be privileged or falling under a qualified privilege. The burden falls on the party claiming privilege to establish that the communication was made in anticipation of litigation and with the expectation of privacy.
The determination of whether the communication is privileged lies with the trial judge. If the judge finds a qualified privilege applies, the judge then must weigh the benefits of the disclosure to the risk of prejudice to the other side. In some cases, the judge may elect to perform an in camera review of the material and can order the full or partial production of the material. This is why it is recommended that in house counsel retain defense counsel as soon as litigation becomes likely. If defense counsel is copied on the communication, it is more likely that the communication will be found to be protected. This may be sufficient, when identified on a privilege log, but there are no guarantees even with marking the communications as privileged because each judge comes to the analysis with their own experiences and beliefs which makes their discretion a wild card.
An article on this topic provides the recent case law on the issue.