Barnes & Noble

In a decision brimming with privilege nuggets, the SDNY ruled that the attorney–client privilege protected Barnes & Noble’s General Counsel’s internal investigation into sexual-harassment accusations against B&N’s now-former CEO. The Court upheld the privilege even though counsel provided the CEO no Upjohn warning and B&N’s Employee Handbook—a business document—required the investigation. Parneros v. Barnes & Noble, Inc., 2019 WL 4891213 (SDNY Oct. 4, 2019).

You may read this informative decision, which contains other privilege nuggets discussed below, at this link.

Accusations, Termination, and a “Curious” Lawsuit

In May 2018, B&N’s General Counsel received notice that a company Executive Assistant reported that B&N’s CEO, Demos Parneros, sexually harassed her. Following a short investigation and a failed meeting with a “Potential Acquirer,” B&N terminated Parneros and refused to pay him a severance under the employment contract. It also issued this press release, which upset Parneros.

Parneros filed breach-of-contract and defamation claims, and B&N counterclaimed for breach of fiduciary duties. You may read more about the case in the ABC News story, The Curious Case of the Fired Barnes & Noble CEO Demos Parneros.

GC’s Internal Investigation

Upon learning of the EA’s sexual-harassment allegation, the GC began an internal investigation that included meeting with the EA, delegating other interviews to other senior executives (but not the HR Director), and retaining outside counsel. One of the delegees was Leonard Riggio, B&N’s Founder and Board Chair.

The GC took notes during his meetings and instructed his delegees to do so as well. Parneros later moved to compel the GC’s notes and other documents prepared in the course of his investigation. He claimed that the GC’s investigation was for business, not legal, purposes.

The Privilege and Internal Investigations

The Court provided an excellent privilege overview that lawyers should review.Keep Reading this POP Post