by Mark Travis
Reprinted with permission from Nashville Bar Journal.
February 26, 2016
Whether in cases of workplace harassment or whistleblowing, courts have placed increasing responsibility on employers to conduct investigations of alleged violations of employment laws, and an employer’s defense in seeking to minimize both liability and damages in these situations often depends on its prompt corrective action.
Whether or not an employer chooses to use its own legal counsel for such an investigation will directly impact the application of the attorney-client privilege and the attorney work product doctrine. As a neutral working in this area, I have seen these issues arise in the context of both mediation and arbitration when employer’s counsel seeks to raise the results of its investigation as a defense and plaintiff’s counsel seeks disclosure of that information.
The Attorney-Client Privilege.
Employers (and counsel) often expect that by including attorneys in an investigation, the results will be shielded from production in any subsequent litigation. Inclusion of lawyers in an internal investigation, however, does not automatically insulate an investigation from disclosure – despite assertions of attorney-client privilege. In determining whether the privilege applies, the key issue is whether the attorney is acting in the capacity of a legal advisor.
In the context of investigations of sexual harassment, various courts have held that investigation by an attorney is protected by the privilege.1 However, courts have sometimes struggled with determining whether an attorney is acting in his or her “legal capacity” in the course of conducting a workplace investigation.
In Koumoulis v. Independent Financial Marketing Group2 the court held that communications between outside counsel and human resources personnel during the pendency of EEOC charges and litigation were not protected by the attorney-client privilege because their predominant purpose was to provide “business”, and not “legal” advice. The magistrate judge found that the communications generally concerned counsel’s advice as to what actions human resources personnel should take regarding the investigation, who should perform those actions, and what should be documented. The magistrate judge also noted that the communications by outside counsel to human resources representatives included draft emails to the plaintiffs and scripts for conversations that human resources staff would have with the plaintiffs. The employer’s emails to outside counsel reported on the outcome of their actions and asked about next steps in the investigation. As a result, the court ordered production of documents the employer had withheld as privileged, as well as the deposition of the employer’s outside counsel regarding those communications.
Thus, utilizing an attorney to conduct the investigation is not necessarily sufficient to bring the investigative materials under the ambit of the attorney-client privilege. Instead, outside counsel must act in his or her “legal capacity” when conducting the investigation, such as preparing the employer for litigation or actually providing legal advice.
However, assuming the privilege applies, it should be noted that the privilege may otherwise be waived such as when the employer asserts that it properly investigated a complaint and responded appropriately to the findings of its investigation. In that case, the employer places the details of the investigation directly at issue, and it may be difficult to claim attorney – client privilege to preclude any scrutiny of the investigation.3
The case of Brownwell v. Roadway Package Sys., Inc.4 is illustrative. This case involved an internal investigation of an allegation of sexual harassment. After filing suit the plaintiff requested discovery of statements made to the employer’s counsel in connection with the investigation. The employer denied the charges against it and argued that the plaintiff’s claims were barred because it fully and fairly investigated her allegations and took prompt and appropriate action consistent with the results of the investigation.
Although it found the statements to counsel were privileged, the court held that the employer waived its right to invoke the privilege by asserting the adequacy of its investigation as a defense to the plaintiff’s claims. First, by arguing that it fully and fairly investigated the plaintiff’s allegations while objecting to the production of statements obtained in the course thereof, the court found that the employer was attempting to use the privilege as both a sword and shield, which it could not do. Rather, the court believed that equity required that the plaintiff be permitted to explore the parameters of the investigation in order to rebut this affirmative defense. Second, by asserting the adequacy of its investigation as a defense to the plaintiff’s allegations, the court held that the employer had implicitly waived the attorney-client privilege by placing the adequacy of the investigation at issue in the case, which was critical to the issue of liability. Accordingly, the court concluded that the statements were discoverable and had to be produced.
A somewhat different spin on this issue arose in the case of Koss v. Palmer Water Dept.5, where a sexual harassment investigation was contracted out from the defendant’s regular law firm to an employment law firm. While the latter firm conducted all of the interviews, the town’s regular law firm had significant involvement in advising and directing the investigating firm. After the plaintiff filed suit, the town’s regular law firm represented the town in that litigation.
The town’s defense was based, in part, on the investigation performed by the investigating firm. The plaintiff eventually moved to compel production of documents related to the town’s investigation. The town, meanwhile, maintained that the documents reflecting its regular law firm’s involvement in the investigation were protected from disclosure under the attorney-client privilege.
After reviewing the documents at issue, the judge ordered the town to produce investigation-related documents involving the town’s regular firm. The judge found that the law firm had been intimately connected to and perhaps controlling of the investigation that formed the basis of the town’s affirmative defense. Thus, the judge concluded that the town had waived the attorney-client privilege for not only the investigative report itself, but for all documents, witness interviews, notes and memoranda created as part of and in furtherance of the investigation.
The Attorney Work Product Doctrine
The essence of the attorney work product doctrine prohibits disclosure of attorney work product which is prepared in anticipation of litigation, absent a showing of substantial need and undue hardship in obtaining equivalent materials by other means. Generally, a pre-complaint investigation by outside counsel is protected from disclosure, even if litigation is not yet imminent, so long as the purpose behind creation of the document is to aid in possible future litigation.6
On the other hand, just as with the attorney-client privilege, a claim of work product may be defeated when the investigation is used as a defense to the underlying claim. In Walker v. County of Contra Costa7, the county hired an outside attorney to investigate a charge of race discrimination and report to the county’s board of supervisors on the merits of the employee’s claim. In the litigation, when the county resisted providing this report to the plaintiff, the plaintiff moved to compel production of the documents. Although the court carved out and did not permit disclosure of the sections of the attorney’s report dealing with findings and conclusions, the court ultimately held that where a party puts the adequacy of its pre-litigation investigation at issue by asserting the investigation as a defense, the party must turn over documents related to that investigation, even if they would ordinarily be privileged.
On a final note, counsel should be aware that sanctions can be imposed for failure to turn over the investigation notes prepared by an in-house counsel or regular counsel who conducts an internal investigation. In EEOC et al. v. Spitzer8, the court ordered a mistrial after it was discovered the employer failed to produce the investigative notes of the attorney who conducted the internal workplace investigation into the plaintiff-employees’ complaints of discrimination, harassment and retaliation. The plaintiffs filed a motion for sanctions seeking attorneys’ fees and costs. Referencing what the court termed a conflict of interest when an employer uses regular counsel to conduct an investigation, the trial judge ordered the employer to pay more than $300,000 in fees to the plaintiffs.
About the Author
*Mark Travis is a full-time mediator and arbitrator, practicing exclusively in the area of labor and employment cases. He graduated from the Brandeis School of Law at the University of Louisville and holds a Master of Laws in Dispute Resolution from the Straus Institute at Pepperdine School of Law, where he also teaches employment dispute resolution. He may be reached at (931)252-9123 and by email at firstname.lastname@example.org.
- Brownwell v. Roadway Package System, Inc., 185 F.R.D. 19 (N.D.N.Y 1999); Peterson v. Wallace Computer Services, Inc., 984 F.Supp. 821 (D.Vt. 1997); Harding v. Dana Transport, Inc., 914 F.Supp. 1084 (D.N.J. 1996); Pray v. New York City Ballet Co., 1997 WL 266980 (S.D.N.Y. May 19, 1997).
- 295 F.R.D. 28 (E.D.N.Y. 2013).
- Wellpoint Health Networks, Inc. v. The Superior Court of Los Angeles County, 68 Cal. Rptr 2d 844 (2d Dist. 1997); Peterson v. Wallace Computer Services, Inc., 1997 U.S. Dist. LEXIS 15831(D. Vermont 1997); EEOC v. Outback Steakhouse of Fla., 251 F.R.D. 603 (D. Colo. 2008); Payton v. New Jersey Turnpike Authority, 691 A.2d 321 (N.J. 1997).
- 185 F.R.D. 19 (N.D.N.Y. 1999).
- 977 F.Supp. 28 (D. Mass. 2013).
- EEOC v. Lutheran Social Services, 186 F.3d 959 (D.C. Cir. 1999); Kayata v. Foote, Cone & Belding Worldwide, LLC, 200 WL 502859 (S.D.N.Y. April 26, 2000); Janicker v. George Washington University, 94 F.R.D. 648 (D.D.C. 1982); Ryall v. Appleton Elec. Co., 153 F.R.D. 660 (D. Colo. 1994).
- 227 F.R.D. 529 (N.D. Cal. 2005).
- 2013 WL 2250757 (N.D. Ohio May 22, 2013).
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