No Privilege for Outside Counsel’s HR Investigation, Court Rules
This privilege loss is interesting, and likely avoidable. A federal court ruled that neither the attorney–client privilege nor the work-product doctrine protects from discovery emails between outside counsel and a corporate client exchanged before and during the lawyer’s internal investigation of an employee’s hostile-work-environment complaint.
Why? Because the investigation emails apparently pertained to business—not legal—advice. Guy v. Yusen Logistics (Americas), Inc., 2019 WL 2465173 (W.D. Tenn. Apr. 11, 2019), available here.
How could this happen?
Investigation Request
Alicia Guy, a female AR Manager at Yusen Logistics, located just above the Mississippi line in Memphis, complained to Yusen’s HR department that her supervisor subjected her and other female employees to a hostile work environment. Yusen did what employers do—it retained outside counsel to investigate the claims.
Lawyer’s Investigation-Related Emails
Before starting the investigation, outside counsel debated—internally and with the client—whether this endeavor should be a “discoverable investigation” with the HR Dep’t as the titular head, or a “privileged investigation” led by a specific outside lawyer.
They ultimately decided to conduct a “privileged investigation.” The lawyers labeled these emails as “Confidential” and “Attorney-Client Privileged.”
Unfortunately, these emails also revealed that this complaint represented Yusen’s third from the same department. You may read these emails here.
Business—or Legal—Investigation?
Yusen later fired Guy, allegedly because she recorded and distributed a conversation with her supervisor. Guy sued, and sought production of outside counsel’s investigation file and notes. For reasons that are unclear from the public record, Yusen produced some—but not all—of its counsel’s investigation file. It argued, however, that the privilege and work-product doctrine protected certain emails created before and during the investigation.
Ruling
The Magistrate Judge, in an opinion available here, rejected the privilege and work-product claims.
Noting the discussion between conducting a “discoverable investigation” or a “privileged investigation,” the Magistrate Judge found that Yusen HR Dep’t often conducts the internal investigations. For this reason, and citing CA6’s Alomari decision (see my post here), the privilege did not apply—to the pre-investigation emails or those sent during it—because the emails’ “predominant purpose” was not to solicit legal advice.
The work-product doctrine objection failed because Yusen did not prove that it anticipated litigation, with the Magistrate Judge finding that, when the investigation started, “it was improbable that Yusen anticipated Guy’s termination or this litigation.”
Maybe, but did Yusen anticipate that Guy would sue for hostile work environment claims? The District Judge’s affirming opinion did not discuss this point, ruling only that the lawyers created the emails because of “an internal investigation regarding an employee’s complaint, not necessarily in anticipation of litigation.”
“Not necessarily”?
PoP Analysis
The email exchanges appear to show that the client and its lawyers intended a “privileged investigation,” apparently meaning that the lawyers would conduct the investigation for the purpose of providing the client with legal advice. But this “appearance” and the “confidential and privileged” labels ultimately proved insufficient privilege-protecting evidence.
The employer did not submit a sworn declaration—through an employee or its lawyers—attesting to the “privileged investigation” and explaining why they communicated for legal-advice purposes. This lack of evidence proved fatal. For examples of lawyers proving the legal-advice element in internal investigations, see this post and this one.
To be fair, it does not appear that the employer was that concerned about a privilege loss. Its lawyers told the Magistrate Judge that it would withdraw the privilege claims, only to later reassert them. And it produced other investigation-related emails, prompting the court to consider that waiver. But the core ruling—the lack of privilege or work-product protections—was avoidable. If the employer really wanted it.