HR Manager’s Internal Investigation Memo—Ghostwritten by In-House Lawyer—Not Privileged

In an employment race-discriminghostwritingation case, the USDC for the Northern District of California ruled that the attorney–client privilege did not protect the HR Manager’s memo regarding his internal investigation of hotline complaints. The court issued this ruling even though the company’s in-house lawyer “ghostwrote” the memo. Thompson v. C&H Sugar Co., 2014 WL 595911 (N.D. Cal. Feb. 14, 2014). You may access the opinion here.

Thirteen African–American employees sued C&H Sugar Company and its parent corporation, American Sugar Refining, Inc., alleging that C&H failed to properly train and promote them because of their race. The employees claimed that C&H’s Packaging Department Manager, Cliff Sullivan failed to promote them, and sought in discovery an internal investigation memo regarding the company’s hotline complaints about Sullivan’s alleged discriminatory acts.

The memo, sent from the HR Manager to the HR VP, contained conclusions as to work-place dynamics and training recommendations. In an effort to buttress the privilege assertion, the company’s in-house attorney (title: Senior Director of Corporate Labor and Employee Relations) submitted a declaration stating that he “essentially ghostwrote” the memo, particularly the investigation summary and conclusion. You may read the in-house lawyer’s declaration here.

Ruling

The Court found unpersuasive the in-house lawyer’s ghostwriting assertion, stating

The Court has found no support indicating that an attorney “essentially ghostwriting” a communication—whatever that means—renders that communication protected by the attorney–client privilege.

Noting that protecting communications “ghostwritten” by a lawyer did not serve the privilege’s purpose of encouraging frank communications between client and attorney, the Court found that the in-house lawyer’s declaration did not meet the burden of establishing that he, rather than the HR Manager, wrote the memo or that it was written in response to a request for legal advice.

What about the Work Product Doctrine?

The in-house lawyer also declared that he directed and supervised the HR Manager’s investigation in anticipation of litigation. And the Court held that this declaration proved that the work-product doctrine covered the investigation memo.

But that ruling did not end the inquiry. The Court also held that the plaintiffs demonstrated a substantial need for the investigation memo because they could not otherwise obtain the hotline-complaints information. The Court therefore ruled that the plaintiffs “demonstrated a substantial need for the investigation documents and the qualified work product doctrine must give way.”

PoP Analysis

The Thompson decision reinforces the concept that the privilege protects only confidential communications between the client and attorney made for the purposes of rendering legal advice. Here, the company’s “ghostwriting” argument established neither an attorney–client communication nor a legal-advice request.

And the decision highlights a critical distinction between the attorney–client privilege and the work-product doctrine. Once established, the attorney–client privilege is absolute, meaning that it stands regardless of the requesting party’s need for the information. The work-product doctrine, by contrast, is qualified, meaning that a party may obtain the information upon a substantial-need showing. This ruling demonstrates why in-house counsel should endeavor to establish the privilege for employee–lawyer communications rather than relying on the unequal work-product doctrine.

Court Rules Post-Injury Incident Reports Not Privileged 1

An Illinois federal court, applying Illinois privilege law, ruled that incident reports completed by hotel employees following a guest’s accident were not protected from discovery by the attorney–client privilege or the work-product doctrine. Nelson v. Intercontinental Hotels Group Operating Corp., 2013 WL 5890612 (N.D. Ill. Nov. 1, 2013). You may access the opinion here.

Following a hotel guest accident, the hotel’s employees—pursuant to company policy—completed incident reports titled “General Liability Claim Report Form.”  accidebt reportThese forms were then sent to the hotel’s Risk Management Team.  In a subsequent lawsuit, the plaintiff moved to compel production of these incident reports, but the hotel objected on grounds that the attorney–client privilege and work-product doctrine precluded their disclosure.

Although the employees were specifically requested—in accordance with a company policy—to complete the reports, the court found that the hotel failed to establish the requisite elements of the attorney–client privilege.  The hotel did not demonstrate that the employees sent the reports to the risk management team “for purposes of seeking legal advice,” or that the reports were confidential when made and intended to remain confidential.

The court also rejected the hotel’s work-product objection.  Noting that the work-product doctrine protects documents prepared by an attorney or his agent in anticipation of litigation, the court found that the hotel submitted no evidence that its attorneys directed the hotel employees to prepare the incident reports or that the reports reflected attorneys’ thought processes and mental impressions.

Instructively, the court stated that simply making the conclusory statement that the employees prepared the incident reports in anticipation of litigation is insufficient, particularly when employees prepare the reports in the ordinary course of business:

Based on the court’s in camera review, the incident reports were completed in the ordinary course of business, per corporate policy, which may have the incidental effect of being helpful in the event of future litigation.

Contrasting Case and Lessons

The court distinguished its situation with the incident-report situation in Fojtasek v. NCL (Bahamas) Ltd., 262 F.R.D. 650 (S.D. Fla. 2009).  In Fojtasek, legal counsel requested that an employee prepare an incident report and then send that report to the company’s legal department.  The company supported the privilege and work-product assertions with a detailed affidavit explaining the request, reasons for the report, and how the company used the report.

In contrast, employees in Nelson prepared the incident reports pursuant to existing corporate policy—in the ordinary course of business—and sent the reports to the risk department.  The Nelson court distinguished Fojtasek and ordered the incident reports produced.

Court Refuses to Adopt Federal “Private Investigator’s Privilege”

A Florida federal court refused to adopt a federal common law “private investigator’s privilege” and refused to apply Florida’s state investigator privilege in a federal-question case.  Ubiquiti Networks, Inc. v. Kozumi USA Corp., 2013 WL 5880606 (N.D. Fla. Feb. 13, 2013).  You may access the opinion here.

A Florida  state statute provides an evidentiary privilege protecting from discovery, withsherlock holmes silhouette some exceptions, a licensed private investigator’s investigative file.  Florida Stat. § 493.6119.  In Ubiquiti, a case invoking federal-question jurisdiction, a party subpoenaed the investigative file of a Florida private investigator who, citing the Florida statute, refused production on privilege grounds.

The Court held that, because the case arose under federal-question jurisdiction, Federal Rule of Evidence 501 governed all privilege questions.  As a result, Florida’s state-law investigator privilege was inapplicable. And unlike some other courts, the Florida federal court refused to recognize the state-law privilege on grounds of comity, stating

State privilege law is sometimes a factor in the Rule 501 analysis, but a federal court in a federal-question case cannot properly abdicate its responsibility to apply the common law, as interpreted by the court in light of reason and experience, just because state law takes a different approach.

The court also refused to recognize a federal common-law investigator privilege, noting that “the common law has never recognized a private investigator’s privilege”; “nor should it.”  The court cited the “good reasons” for the common-law attorney–client privilege, psychiatric privilege, legislative privilege, and self-incrimination privilege, but found that a “private investigator’s work does not come close” to matching the bases for these evidentiary privileges.

The court agreed that a private investigator’s work may fall within the attorney–client privilege or the work-product doctrine, but rejected an investigator’s privilege as an independent basis for protection.