Mardi Gras is Over: NOLA Court Rejects Privilege for GC’s Post-Accident Form

Mardi Gras ended early for one New Orleans agency.  Just days before Fat Tuesday, the USDC for EDLA ruled that the attorney–client privilege did not protect a public entity’s “Executive Summary” of a post-accident review.  The Court issued the ruling even though the entity’s GC created the Executive Summary form and the summary contained information to put the GC “on notice of a potential lawsuit and so that [she could] assess legal liability.”  O’Malley v. Public Belt RR Comm’n for the City of New Orleans, 2018 WL 814190 (ED LA Feb. 9, 2018).  You may read the decision here.

I [Can’t] Hear that Train a Comin’

Unlike the Folsom Prison inmate, Bryan O’Malley could not hear a moving locomotive and suffered injuries when it struck him while he was working for NOLA’s Public Belt Railroad Commission.  The Commission conducted a post-incident meeting and created an Executive Summary that included sections discussing the incident’s “primary cause” and “contributing cause.”

In a subsequent lawsuit, the Commission produced the Executive Summary with the “cause” sections redacted. O’Malley wanted an unredacted version, and moved to compel it.

A Good Deposition

O’Malley’s lawyer deposed the Commission’s Safety Manager, and gained valuable admissions.  Under direct questioning, the Manager effectively testified that the Commission managers’ “general procedure” is to meet after every accident and prepare an Executive Summary.  The Safety Manager never testified that the managers prepared the Summary so that lawyers can render legal advice to the Commission.  You may read the Manager’s testimony here.

GC Saves the Day?

Perhaps sensing trouble, the Commission’s General Counsel submitted a declaration stating that she prepared the Executive Summary form after becoming GC in 2014.  More…

Privilege Covers Investigation Originated–but Delegated–by In-House Lawyer

Need a few pointers on how to help secure privilege protection for internal investigations? Then take a quick look at Celanese Corporation’s 21818294 - investigationconduct when investigating a horrific on-the-job injury.

While a Texas trial court held that the attorney–client privilege did not apply to Celanese’s investigation materials, an appellate court granted a writ of mandamus and reversed.  In re: Fairway Methanol LLC and Celanese Ltd., 2017 WL 422006 (Tex. Ct. App. Jan. 31, 2017).  You may read the decision here.

Post-Injury Investigation

On Nov. 19, 2014, Jose Salazar, a Celanese-employed electrician in Pasadena, Texas, was injured when he tripped and fell into charged electrical equipment.  The next day, Nov. 20, Gary Rowen, a Celanese in-house lawyer, perceived a worker’s compensation or personal injury lawsuit and immediately created an investigative team to provide accident-related information to the Celanese legal department.

In subsequent litigation, Salazar requested “any and all incident, accident, or investigation reports” pertaining to his incident.  The trial court conducted an in camera review of the putatively privileged documents and overruled Celanese’s privilege objection.  You may read the trial court’s order here.

In-House Lawyer’s Affidavit Prevails More…

GC’s “Talking Points” Memo to CEO Not Privileged—Leads to a Punitive Damages Verdict 2

In a case of first impression, the New Mexico Court of Appeals upheld a lower court’s rejection of the attorney-client privilege for a “talking points” memorandum authored by a hospital corporation’sExplaining idea General Counsel. The memo contained legal and business advice concerning two physicians’ employment separations, and the court ruled that the legal/business advice balancing weighed in favor of business advice, vitiating the privilege.

The court adopted a heightened standard for in-house lawyers, admitted the memo into evidence, and rendered a compensatory and punitive-damages verdict against the hospital. Bhandari v. Artestia Gen. Hosp., 317 P.3d 856 (N.M. Ct. App. 2013). You may access the opinion here.

Mixture of Business and Legal Advice

Dr. Chitra Bhandari sued VHA Southwest Community Health Corp. for breach of her employment contract. The hospital decided to terminate Bhandari’s husband, also an employed physician, for violating his contract and hospital policies. But the hospital wanted both physicians gone, and its General Counsel authored a memo to the CEO containing talking points for a meeting with both physicians where they would permit Dr. Bhandari’s husband to resign (rather than firing him) if she also agreed to resign.

The GC, who also carried the title of Senior Vice President, began his memo with this declaration: “CONFIDENTIAL SUBJECT TO ATTORNEY-CLIENT PRIVILEGE.” The memo contained talking points for the termination interview with Bhandari and her husband, and included a mixed discussion of the reasons for the termination of Bhandari’s husband and the reasons for also wanting Bhandari’s employment to end.

The trial court reviewed the memo and determined that the GC’s comments regarding Bhandari’s husband constituted legal advice, but his comments regarding Dr. Bhandari constituted business advice. Did the court make the right call?  Read the GC’s memorandum here and judge for yourself.

Courts Applies a Higher Standard

New Mexico courts had not previously defined the attorney–client privilege’s scope when an in-house counsel offers business and legal advice in the same communication. For a discussion of how other courts apply the “because-of” and “primary purpose” standards in these situations, see my prior post titled Dual-Purpose Emails to In-House Counsel: Are They Privileged?

The N.M. court adopted the primary purpose standard, stating that the privilege does not apply “if the primary purpose of a communication is to solicit or render advice on non-legal matters,” and that “an in-house counsel’s communications regarding business matters, management decisions, and business advice, which neither solicit or predominantly deliver legal advice, are not privileged.”

But the court went further. Noting that it had no specific standards by which to judge dual-purpose communications, the court recognized that some courts presume that an in-house attorney’s communication provides business advice. And if the court cannot determine whether the communication is primarily legal- or business-related, then the court should tilt the balancing scales towards business advice—

A court faced with a situation where the primary purpose of a communication is not clearly legal or business advice should conclude the communication is for a business purpose, unless evidence clearly shows that the legal purpose outweighs the business purpose.

This newly adopted standard represents a heightened burden for in-house counsel—for a dual-purpose communication containing an equal amount of legal and business advice, the in-house lawyer has to “clearly show” that the legal purpose outweighs the business purpose for the privilege to apply.

Ruling

Applying this heightened standard, the court found that the GC’s memo, despite containing the “confidential and privileged” moniker, was “essentially a script for securing Bhandari’s resignation” which “would be convenient for the hospital from a business standpoint.” The court tipped the scales in favor of business advice and ordered the memo produced. And the trial court used the memo as a basis, following a bench trial, for awarding punitive damages against the hospital.