Engineer’s Investigative Report—Sent to Outside Counsel—Not Privileged 1

The Nevada Supreme Court ruled that the attorney–client privilege did not protect from disclosure a post-accident investigative report by a manufacturer’s engineer.  The Court issued the ruling even though the investigator sent the report to the manufactureconfidential document flush awayr’s outside counsel.  Mega Manufacturing, Inc. v. Eighth Judicial District Court, 2014 WL 2527226 (Nev. May 30, 2014).  You may read the decision here.

Accident Investigation

Following an injury involving a press brake machine, the press brake manufacturer’s chief engineer conducted an investigation and sent his investigation report to the manufacturer’s outside counsel.  The engineer discussed the investigation with outside counsel before conducting the investigation.

The injured plaintiff sued and sought production of the investigation report.  The manufacturer objected, asserting the work-product doctrine and the attorney–client privilege.  The trial court rejected both objections.

Attorney–Client Privilege

One may question the court’s rejection of the attorney–client privilege.  The court applied Nevada’s privilege, which protects confidential communications between the “client’s representative and the client’s lawyer.”  While there was a factual issue whether the manufacturer or an affiliate company actually employed the engineer, there was no dispute that the engineer was the manufacturer’s representative while conducting the investigation.

Yet, the court relied upon federal common law in making its decision and noted that the Supreme Court’s Upjohn decision “largely turns on the issue of employment.”  The Nevada court therefore held the privilege inapplicable because there was some dispute whether the press brake manufacturer employed the engineer.

The court did not address several decisions finding that the privilege applied to consultants and others considered functional equivalent of employees.  See my post regarding a Google case applying the functional equivalent of employee test.

Work-Product Doctrine

The court similarly rejected the work-product doctrine because there was a factual issue whether the engineer prepared the report in anticipation of litigation.  The engineer testified that he spoke with the manufacturer’s outside counsel before conducting the investigation and sent the final report to him. But the court found this factual evidence insufficient to prove the anticipation-of-litigation element.

Other Privileges

The manufacturer also asserted the self-critical analysis privilege, but the court gave this privilege virtually no attention, stating simply that it “considered [the manufacturer’s] other arguments and conclude they lack merit.”

PoP Analysis

The court’s decision lacks a thorough analysis, but, fortunately, the court decided not to publish the opinion, meaning it has no precedential value.  Yet, the case is constructive for lawyers and corporations conducting post-accident investigations.  The evidence in this case appeared equivocal—but what if the manufacturer’s counsel had directed, in writing, that the engineer conduct the investigation because the company anticipated litigation?  And what if the engineer began his investigative report with a statement that he prepared it at the direction of counsel, on behalf of the manufacturer, and for purposes of the manufacturer’s counsel providing legal advice.  I suspect the court would have reached a different outcome.

Illinois Supreme Court to Decide on Self-Critical Analysis Privilege 1

The Illinois Supreme Court accepted appeal of an appellate court’s refusal to recognize the self-critical analysis privilege. The Court’s decision should determine (1) whether the underlying policies of the self-critical analysis privilege warrant its recognition and (2) whether the legislature should have complete dominion over the evidentiary-privilege development or whether courts may develop and refine privilAppealeges through normal common-law evolution.

The Case

An infant died while in her mother’s care and in One Hope United’s family services program. The public guardian, acting as the infant’s estate administrator, filed a wrongful death suit against the mother and One Hope. Discovery revealed that One Hope investigated the death and prepared a post-death “Priority Review” report that evaluated its services.

One Hope refused to produce the Priority Review report on grounds that the self-critical analysis privilege protected its disclosure. The trial court refused to recognize the privilege, held One Hope in “friendly contempt,” and set the stage for appeal.

The Ruling

The Illinois Appellate Court identified two competing concerns. On on the one hand, evidentiary privileges thwart the truth-finding process. On the other hand, the self-critical analysis privilege encourages companies to engage in critical internal investigations and permits their employees to participate candidly and honestly in the post-event critique.

But the court did not provide a satisfying analysis of these concerns. The court noted that One Hope’s argument for the privilege’s adoption resonated, but “believe[d] the overriding need to determine the truth with respect to the cause of death of an infant overrides the desire of One Hope to keep its self-evaluations confidential.”

And the court seemed perplexed whether it could even adopt a new evidentiary privilege as part of Illinois’ common law. Although noting that a 2011 amendment to the state evidence rules provides that evidentiary privileges “shall be governed by the principles of the common law as they may be interpreted by Illinois courts in the light of reason and experience,” the court nonetheless determined that “the establishment of a new [privilege] is a matter best deferred to the legislature.” (emphasis in original). Harris v. One Hope United, Inc., 2 N.E.3d 1132 (Ill. App. Ct. 2013). You may read the appellate court’s opinion here.

PoP Analysis

The Illinois Supreme Court accepted the case for review on March 26, 2014. Although some federal courts, including the USDC for the Northern District of Illinois, recognize a common-law self-critical analysis privilege, several states have not addressed the issue. The Illinois Supreme Court’s decision, therefore, could prove influential as other states consider the merits of this evidentiary privilege.

But the court will first have to decide whether evidentiary privileges may originate through normal common-law development, or whether they remain solely in the state legislature’s domain. The 2011 evidence rule tracks Federal Rule of Evidence 501 and appears on its face to permit common-law privilege development. The appellate court did not satisfactorily address this issue, but the Supreme Court should do so. The One Hope case is certainly one to watch.