In a wage-and-hour case against Chipotle Mexican Grill, the USDC SDNY ruled that the attorney-client privilege did not protect a consultant’s report prepared for and delivered to Chipotle’s outside counsel. In doing so, the court provided an instructive analysis of the Kovel doctrine. Scott v. Chipotle Mexican Grill, Inc., 2015 WL 1424009 (SDNY Mar. 27, 2015). You may read the decision here.
Counsel’s Retention of Consultant
Chipotle retained a law firm to assess whether the restaurant chain had properly classified its apprentices under the FLSA. Chipotle, through the law firm, retained an HR consultant who conducted a “job function analysis” and provided its resulting report directly to the law firm. Chipotle explained that the purpose of the consultant’s investigation was to gain an understanding of the apprentices day-to-day job and provide the law firm with this information so the firm could provide legal advice to Chipotle.
Plaintiffs’ counsel learned of the consultant’s report and moved to compel its production. Chipotle, relying on the Kovel doctrine, argued that the attorney-client privilege protected the report from discovery.
The Kovel Doctrine
Arising from the court’s decision in United States v. Kovel, 296 F2d 918 (2d Cir. 1961), the Kovel doctrine extends the attorney-client privilege to experts, such as an accountant, that the attorney retains to assist her in understanding complex issues so that she can provide legal advice to the client. The Kovel doctrine recognizes a “privilege derivative of the attorney-client privilege where a third party clarifies or facilitates communications between the attorney and client in confidence for the purpose of obtaining legal advice from the attorney.”
Under the Kovel doctrine, the privilege attaches to third-party reports made at the attorney’s or client’s request where the report’s purpose is to put complicated information received from the client into a form usable by the attorney. In other words, the third-party takes a client’s complicated information and transforms it into a form that the attorney understands so that the attorney can render legal advice to the client.
Applying Kovel, the court stated that Chipotle’s claim that its outside counsel needed an HR consultant to evaluate whether Chipotle properly classified its employees “strain[ed] credulity.” Although the consultant drafted her report for and delivered it to Chipotle’s outside counsel, the court noted that “this formalism is insufficient to establish that it is a privileged communication.”
And the report did not state that the law firm retained her to assist in providing legal advice. The consultant did not label the report “confidential” or “privileged.” Moreover, the consultant set up interviews with Chipotle employees without mentioning that the interviews were privileged, confidential, or conducted to assist Chipotle in receiving legal advice.
The court found that Chiplotle failed to present evidence that the consultant was taking information that was incomprehensible to its attorneys and putting it into a “usable form.” Rather, the consultant simply combined employee interviews and provided the attorney with a report of her factual analysis.
For these reasons, the court found that Chipotle failed to prove the consultant’s report fell under the Kovel doctrine and ordered its production.
The Kovel doctrine is a narrow exception to the rule that the attorney-client privilege does not protect communications from a non-client to the attorney. The Scott decision should remind lawyers needing expert assistance to understand complicated factual issues to take certain steps to ensure the privilege applies. Some practice tips include:
- The attorney should retain the specialist;
- Ensure the engagement letter expressly states that the specialist’s services are for the purpose of understanding the client’s information so the attorney can provide the client with legal advice;
- The engagement letter should describe the reasons why the information the attorney needs from the specialist is complicated and in need of interpretation into a format the attorney can understand;
- The specialist should receive and gather information in a confidential manner and take steps to ensure its continued confidentiality;
- The specialist should inform any interviewees that the meetings are confidential and conducted so that the company’s attorney can render legal advice, and consider obtaining a written acknowledgement from the interviewee on these points; and
- All communications between the specialist and the attorney should be confidential and labeled “Confidential & Privileged.”