Privilege Covers Investigation Originated–but Delegated–by In-House Lawyer

Need a few pointers on how to help secure privilege protection for internal investigations? Then take a quick look at Celanese Corporation’s conduct when investigating a horrific on-the-job injury.

While a Texas trial court held that the attorney–client privilege did not apply to Celanese’s investigation materials, an appellate court granted a writ of mandamus and reversed.  In re: Fairway Methanol LLC and Celanese Ltd., 2017 WL 422006 (Tex. Ct. App. Jan. 31, 2017).  You may read the decision here.

Post-Injury Investigation

On Nov. 19, 2014, Jose Salazar, a Celanese-employed electrician in Pasadena, Texas, was injured when he tripped and fell into charged electrical equipment.  The next day, Nov. 20, Gary Rowen, a Celanese in-house lawyer, perceived a worker’s compensation or personal injury lawsuit and immediately created an investigative team to provide accident-related information to the Celanese legal department.

In subsequent litigation, Salazar requested “any and all incident, accident, or investigation reports” pertaining to his incident.  The trial court conducted an in camera review of the putatively privileged documents and overruled Celanese’s privilege objection.  You may read the trial court’s order here.

In-House Lawyer’s Affidavit Prevails

The Texas Court of Appeals granted Celanese’s mandamus petition and reversed the trial court’s decision.  Texas’s attorney–client privilege rule, Tex. R. Evid. 503(b) provides that communications between lawyer and client, but also their representatives “who … makes or receives a confidential communication while acting in the scope of employment.”

In-house lawyer Rowen submitted an affidavit that persuaded the court that the privilege protected most of Celanese’s investigation materials from discovery.  Rowen made these unrebutted declarations—

• He, as in-house lawyer, requested that an investigative team provide “the Celanese Legal Department with information needed to assess potential liability.”
• The investigation’s primary purpose was to “aid Celanese in preparing to defend itself.”
• The investigative team “acted on instructions from Celanese attorneys” “at all times.”
• The team marked all communications and documents as “Privileged and Confidential” and “Attorney–Client Privilege—Attorney Work Product.”
• The team communicated its findings only to the Celanese Legal Department.

This affidavit, which you may read in full here, persuaded the appellate court in finding that Celanese created the investigation-related communications and documents in a confidential manner and for the purpose of rendering or receiving legal advice.

Primary Purpose Standard?

Salazar raised a good argument that the investigation’s “primary purpose” was not legal-related, but business related—to prevent future accidents and improve safety.  Indeed, Rowen’s affidavit also stated that the Celanese wanted the investigation so that, as a “secondary concern,” the legal department could provide “business advice” related to potential termination of at-fault employees.

The court, however, rejected the theory that the privilege-proponent must show that it created the putatively privileged communications “for the primary purpose of soliciting legal, rather than business advice.”  The court recognized that some federal courts apply the “primary purpose” standard to dual-purpose communications, but correctly noted that those decisions do not bind Texas courts.