A California federal court handed 7-Eleven a privilege victory for emails between an HR Rep and in-house and outside counsel regarding the company’s background check disclosure. The victory’s lesson is that companies must have their non-lawyer employees ready to answer the “legal advice” vs. “business advice” questions. Munoz v. 7-Eleven, Inc., 2019 WL 2610955 (C.D. Cal. May 1, 2019). You may read this short opinion here.
7-Eleven’s employment application announces that it will obtain a consumer report on the applicant or, later, the employee and provides certain FCRA notices. You may read the pertinent portions here.
7-Eleven’s HR Rep, Kristin Cope, obtained a draft form from a consultant, but then sent it to the company’s in-house lawyer for review and comment. The in-house counsel, in turn, sought legal advice from outside counsel. Together, they revised the consultant’s form. These lawyers and Cope exchanged many emails over the revisions.
In a later FCRA class action, the class plaintiffs sought production of these email exchanges, asserting—in conclusory fashion—that they pertained to routine business discussion, and not legal advice.
But did counsel recall the HR Rep’s deposition.
HR Rep Deposition
When asked about the emails during her deposition, which you may read in full here, Cope said this—
Q. When you were working on this disclosure form and you were talking to [in-house counsel], were you seeking [her] legal advice?
Q. And when you guys were communicating with [outside counsel], were you seeking [his] legal advice?
Q. Is it your testimony that the edits made to the form [were] a legal decision as opposed to a business decision?
The Court’s privilege analysis turned on the business-advice versus legal-advice distinction. It noted that “the fact that a person is a lawyer does not make all communications with that person privileged,” and that the privilege “does not attach to requests for business advice.” Indeed, “in-house counsel may be involved intimately in the corporation’s day to day business activities and frequently serve as integral players in business decisions.”
But not here, the Court ruled, because Cope’s deposition testimony slammed the door on the business-advice argument. The Court also reviewed the putatively privileged emails, and found each of them related to legal—not business—advice. The Court upheld the privilege and rejected the class plaintiff’s attempt to compel them.
The Court clearly made the correct ruling, but it is the lawyers’ underlying work that deserves attention. 7-Eleven’s counsel had its HR Rep ready to answer class counsel’s “legal advice” questions. When asked if she communicated with in-house counsel to obtain legal advice, she answered “yes” without hesitation or equivocation.
So many times non-lawyer employees are unprepared for these basic privilege-related questions. Convoluted or “I don’t know” answers may result in courts finding that the company forfeited the privilege because the employees and lawyers communicated for business, not legal, reasons.
To be sure, the Court’s review of the emails solidified its privilege ruling, but the HR Rep’s unequivocal “legal advice” testimony provided the foundation.
Is your employee witness ready?