An Employer’s Use of Outside Counsel to Perform a Pre-Litigation Factual Investigation Protects the Investigation From Discovery
Breaking from the usual, the California Court of Appeal recently reached a decision that will provide more protection to employers when an employment discrimination or harassment claim is made.
The case involved an employee who filed claims of sexual harassment and retaliation against her employer, and shortly thereafter resigned. The employee’s resignation came before the employer had an opportunity to initiate an investigation. Instead of conducting an in-house factual investigation of the claim, the employer hired outside counsel to conduct an impartial factual investigation and to prepare the employer for the anticipated lawsuit. The employer did so in order to benefit from the outside counsel’s experience and expertise in employment law. The outside attorney was not asked to provide legal advice about the steps the employer should take based on the findings of the factual investigation.
After the EEOC investigation, the former employee filed a lawsuit, and demanded that the employer produce all documents pertaining to the investigation, as well as testimony regarding the employer’s pre-litigation investigation. The employer objected to the requests on the grounds that the documents and investigation were protected because they were performed by an attorney. The attorney-client privilege protects confidential communications between an attorney and the client. The work product privilege protects an attorney’s impressions, conclusions, opinions and legal theories.
The trial court disagreed with the employer, and found that because the attorney had only conducted a factual investigation, and did not provide advice to the employer on how to proceed after the investigation, the documents and information about the process were not privileged.
The Court of Appeal reversed the trial court’s decision, and determined that the employer did not have to produce the documents or testify regarding the pre-litigation investigation, because such information and documents were privileged. The Court decided that the attorney-client and work product privileges protect legal services in general, not just legal advice. The Court reasoned that the overriding purpose of the attorney’s factual investigation was to provide the employer with legal services in anticipation of litigation. The attorney does not have to provide any direct legal advice regarding how to proceed after the investigation in order for the privileges to apply.
The Court of Appeal also decided the privileges were not waived when the employer asserted the “avoidable consequences” defense. This defense provides that: (1) the employer took reasonable steps to prevent and correct harassment; (2) the employee unreasonably failed to use those preventative and corrective measures; and (3) reasonable use of those measures would have prevented at least some of the employee’s harm. The defense focuses on what type of investigation was done or could have been done while the employee was still employed. It does not put at issue a post-employment factual investigation. In invoking the defense, the employer could only have been referring to pre-termination measures that were available to the employee. The employer cannot rely on the post-termination investigation for this defense, and thus the employee is not entitled to information and documents pertaining to it.
City of Petaluma v. Superior Court of Sonoma County (June 30, 2016) A145437, 2016 Cal.App. LEXIS 532.