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Preserving Privileges In Discrimination Claim Investigations

Employers charged with discrimination by employees often turn to lawyers to conduct investigations into such claims.  Among employers’ reasons for using lawyers to conduct such investigations is to avoid disclosure of documents and information generated by the investigation in subsequent litigation based upon the attorney-client and work-product privileges.  

In recent years, New York courts have reached differing conclusions as to whether to order disclosure of documents and information generated during a lawyer’s investigation of discrimination claims.  At one end of the spectrum is the 1998 case of Pray v. New York City Ballet Co., No. 96 Civ. 5723 RLC, 1998 WL 558796 at *2 (S.D.N.Y. Feb. 13, 1998) in which Judge Robert Carter ordered the deposition of four attorneys regarding their roles in an investigation of a sexual harassment claim.  At the other end of the spectrum is a case decided in April 2000, Kayata v. Foote, Cone & Belding Worldwide, L.L.C., No. 99 Civ. 9022 VM KNF, 2000 WL 502859 (S.D.N.Y. April 26, 2000), where Magistrate Judge Fox denied a motion by the plaintiff to turn over documents generated by an employer acting at the direction of counsel during the investigation of a claim of discrimination on the basis of sex and sexual orientation.

These cases illustrate that the general rule in New York continues to be that the attorney-client and work-product privileges will shield from disclosure documents and information generated in the investigation, unless such privileges are waived.  A court may find waiver where the results of the investigation are asserted offensively by the employer.  In that case, a plaintiff may argue that such use places some or all of the investigation “in issue” justifying further disclosure of  documents and information generated in the investigation.
In this article, we analyze the Pray and Kayata cases in order to illustrate the way in which the attorney-client and work-product privileges are applied in the context of a lawyer’s investigation of discrimination claims.  We then propose steps employers can take in seeking to enhance the likelihood that a Court will honor their assertion of privilege.

Background
The attorney-client privilege is one of the oldest common law privileges, whose purpose is “to encourage full and frank communication between attorneys and their clients.”1  The privilege protects communications between attorneys and their clients, and also extends to the agents of both attorneys and clients.

In contrast to the attorney-client privilege, which serves to enhance communication and provide society with a better judicial system, the work-product doctrine exists to protect lawyers from having adversaries benefit from the “fruits of their labor.”  Its purpose is “to permit attorneys to prepare for litigation with ‘a certain degree of privacy,’ and without undue interference or fear of intrusion or exploitation of one’s work by an adversary.”2

The work-product doctrine, as to tangible items, is codified by Rule 26(b)(3) of the Federal Rules of Civil Procedure and applies only to those items prepared in “anticipation of litigation.”  This doctrine, then, may not apply to some materials that would otherwise be protected from disclosure if litigation was not anticipated.  Even where the doctrine applies, the production of work-product may be compelled where the party seeking the information demonstrates “substantial need” and “undue hardship.”

Pray

In Pray, three female violists brought a Title VII action against their employer, The New York City Ballet, for being sexually harassed by a male violinist.  They charged that the Ballet tolerated a hostile work environment by not taking adequate steps to stop the accused harasser, who allegedly blocked the plaintiffs’ access to their music stands, made lewd “grunting” and “sucking” noises, and gave them menacing glances.3  The Ballet then hired the law firm Proskauer Rose Goetz & Mendelsohn both to conduct an internal investigation and to serve as defense counsel in the suit.  Proskauer conducted three internal investigations and advised the Ballet about what, if anything, it should do in response to the complaints.

The plaintiffs sought to depose the Proskauer attorneys who conducted the investigations.  Proskauer consented to the deposition of two associates who participated in the investigations, but refused to allow the plaintiffs to depose the four partners involved.  The plaintiffs subsequently moved to compel the deposition of those four Proskauer partners and for the production of fifty identified documents concerning the investigation.

Magistrate Judge Pitman held that the two partners who were “substantially involved” in the investigations could be deposed because the Ballet’s defense was based on the investigations and the resulting corrective action taken.  The Court deemed the Ballet to have waived the protection of the attorney-client and work-product privileges “by virtue of its defense,” placing the investigations “at issue.”  The Ballet agreed that the scope of the depositions could include what occurred during the investigations, i.e., who the attorneys interviewed and what questions they asked.  The Ballet even conceded at oral argument that the plaintiffs could ask questions concerning the attorneys’ unarticulated mental processes regarding the investigations.  The Ballet sought to preclude the plaintiffs from inquiring as to their initial communications between the Ballet and its lawyers, and their communications after the investigation regarding corrective action.

Magistrate Judge Pitman ruled in the plaintiffs’ favor, holding that the Ballet’s use of the investigation as a defense permitted plaintiffs to discover the initial communications from the Ballet to Proskauer, requesting that Proskauer conduct an internal investigation into any statements the Ballet may have made to Proskauer concerning investigative leads or the direction of the investigation.  Similarly, Judge Pitman noted that plaintiffs could conduct discovery as to advice rendered because that advice was in issue.

On appeal, District Judge Carter affirmed the order to the extent it permitted the deposition of the partners as to what occurred during the investigation, but reversed to the extent that the scope of discovery was held to include communications between the employer and counsel before and after the investigation.  Judge Carter wrote that this part of Magistrate Judge Pitman’s order was “troubling” because the employer’s defense was not merely that it “sought and relied on the advice of counsel” per se, but rather that it investigated the complaints on the advice of counsel. Judge Carter opined that if the employer had used the former defense, then the ruling that it had waived its protection of the privileges as to the conversations before and after the investigations would have been correct. Instead, the Court said, the employer was using the latter defense while giving the plaintiffs access to “every aspect of the investigation,” rendering access to communications before and after the investigation of little use to the plaintiffs.  

Kayata

A little more than two years after the Pray decision, another Judge of the U.S. District Court for the Southern District of New York upheld an employer’s assertion of privilege to avoid disclosures of documents generated in an investigation of claims of discrimination on the basis of sex and sexual orientation.  By contrast to Pray, in Kayata v. Foote, Cone & Belding Worldwide, L.L.C., No. 99 Civ. 9022 VM KNF, 2000 WL 502859 (S.D.N.Y. April 26, 2000) there was no indication that the employer relied on the investigation as a defense or otherwise put the investigation “in issue.”  

In Kayata the plaintiff, Joanna Kayata, sued the advertising agency Foote,Cone & Belding Worldwide (“FCB”) alleging that she was fired because of her sex and sexual orientation in violation of Title VII of the Civil Rights Act of 1964 and the New York City Human Rights Law.  In her deposition, FCB’s vice president and director of human resources, Linda Fraser, stated that she contacted legal counsel upon learning of the discrimination charge filed with the Equal Employment Opportunity Commission (“EEOC”) but before Kayata brought the lawsuit against FCB.  Fraser said she conducted an investigation “at the direction of legal counsel.”  

Magistrate Judge Fox denied Kayata’s application to compel disclosure of certain documents generated by Fraser’s internal investigation.  The Court first held that the documents were eligible for protection under the work-product doctrine.  The Court focused on whether the documents were “prepared in anticipation of litigation,”4  a prerequisite to invoking the work-product doctrine.  The Court deemed the documents to have been prepared “because of the prospect of litigation,”5  and therefore eligible for protection under the work-product doctrine.

The Court focused on Fraser’s deposition testimony that she departed from routine FCB procedure by first contacting counsel and then investigating the charge, whereas the regular procedure upon receiving discrimination complaints under the company’s antidiscrimination policy would have been to conduct the investigation before contacting counsel.  Fraser testified that she contacted counsel first because she anticipated litigation, and that every facet of her investigation was directed by counsel with an “eye toward litigation.”  Based on this testimony, the Court rejected Kayata’s assertions that Fraser conducted her investigation pursuant to FCB’s discrimination complaint policy, in the ordinary course of business, and in accordance with her routine duties.  The Court held, therefore, that the documents generated by the investigation were eligible for work-product protection.

The matter did not end there, though, as Rule 26(b)(3) permits the discovery of documents covered by the work-product doctrine “upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party’s case and that the party is unable without undue hardship to obtain the equivalent of the materials by other means.”  Without a lengthy discussion, Magistrate Judge Fox held that Kayata failed to meet both the “substantial need” and “undue hardship” prongs and, therefore, upheld the employer’s refusal to disclose the documents under the work-product doctrine.

Implications of ‘Kayata’ and ‘Pray’

The Kayata Court’s decision denying the plaintiff’s discovery motion on work-product grounds reaffirms the general rule that the privileges will protect information gathered during the course of a counsel-directed investigation from discovery if the employer denies the discrimination charges on grounds other than that it conducted an investigation and took remedial steps.  By contrast, Pray was based on a unique set of facts, and its outcome may have been the result of its markedly different circumstances.  First, the waiver of privilege that occurred in Pray apparently was driven by the employer’s decision to place the investigation “in issue,” a decision that may not be made in every case.  Second, the employer’s counsel consented to the deposition of two of the associates who conducted the investigation, and Magistrate Judge Pitman noted that there was no basis for the employer to distinguish between associates and partners who conduct an investigation.  Third, the employer consented to the plaintiffs’ questioning their attorneys as to their unarticulated mental impressions regarding the investigation.

Decisions that have considered Pray confirm that Pray should be limited to its facts.  In a 1999 decision from the Southern District, Robinson v. Time Warner, Inc., 187 F.R.D. 144 (S.D.N.Y. 1999), Judge Sweet held that because the employer charged with racial discrimination was not using its investigation as an affirmative defense, there is no waiver of the attorney-client and work-product privileges.  Rather than denying liability on the grounds that it conducted an adequate investigation, the employer’s defense was that the plaintiff did not suffer any discrimination and, therefore, the investigation was not put at issue.  The plaintiff’s discovery request was denied.

The Northern District, in Brownell v. Roadway Package Sys., Inc., 185 F.R.D. 19 (N.D.N.Y. 1999), ordered the disclosure of employees’ written statements given to the investigating counsel because the employer charged with Title VII sexual harassment raised the adequacy of its investigation as its affirmative defense.  Because the investigation was placed at issue, the Court held that the employer waived both the attorney-client and work-product privileges.  Yet, unlike Pray, the Court here made certain that none of counsel’s mental impressions were revealed to the plaintiffs.  It is noteworthy that, unlike Pray, counsel here did not concede that their unarticulated mental impressions were discoverable.

Magistrate Judge Dolinger, in Sealy v. Gruntal & Co.,  No. 94 Civ. 7948 (KTD)(MHD), 1998 WL 698257 (S.D.N.Y. 1998), illustrated the exceptional nature of the “at issue” waiver doctrine.  Here, the employer accused of sexual harassment under Title VII, actually invoked its investigation in its answer as an affirmative defense.  Yet,  according to the Court, the employer was “hinting, albeit without clearly stating,” that it was dropping that particular affirmative defense by arguing that the plaintiff would not be prejudiced by a rejection of her discovery demand.  The Court gave the employer seven days to state clearly its intentions with respect to the affirmative defense, stating that the plaintiff’s discovery request would be denied if the employer explicitly dropped the defense, but that the employer must supply the investigative information the plaintiff sought if it did not drop the defense.

Practice Pointers

To protect information gathered from an investigation, therefore, the employer’s counsel must first establish that either the attorney-client or work-product privilege applies.  To invoke the attorney-client privilege, the employer must show that the communication at issue was made for the purpose of rendering or seeking legal advice.  To invoke the work-product doctrine, the employer must show that the document at issue was created “because of” existing or expected litigation, and not solely in the ordinary course of business.

Precautions that employers and their counsel can take to increase the likelihood that a Court will honor the assertion of attorney-client and work-product privileges are as follows:
  •  Counsel conducting an investigation should announce at the beginning of any interview that he or she is acting as the employer’s lawyer to investigate a claim being made by the complainant that his or her legal rights have been violated, and reflect this announcement in any notes, memoranda or report.  This helps to rebut any argument that counsel’s notes, memoranda or report were prepared in the ordinary course of business rather than in anticipation of litigation;
  •  If a non-attorney conducts an investigation, the investigator should similarly announce that the purpose of the investigation is to investigate a claim being made by the complainant that his or her legal rights have been violated;
  •  The non-attorney investigator should conduct the interviews at the direction of counsel and direct all notes, memoranda and reports directly to counsel and state in those documents that they were prepared at counsel’s request;
  •  On the first page of all notes, memoranda and reports, the investigator should write “Attorney Work-Product, Privileged and Confidential” and briefly state in the introduction that the employer anticipates litigation based on the employee’s complaint and any reasons why such litigation is anticipated;
  •  The investigator should not draw any conclusions on the merits of the parties’ claims until the investigation is complete because, if discovered, such conclusions could be used to suggest that the investigator did not have an open mind and was, therefore, biased;
  •  The investigator should not merely create a transcript of the witness’ testimony, but summarize the important points, describe the witness’ demeanor, and analyze how the witness’ testimony jibes with the complainant’s or the alleged harasser’s testimony, and make recommendations for further steps to be taken in the investigation;
  •  After creating file memoranda regarding all investigatory interviews, the investigator need not retain the underlying notes which may not contain complete or fully articulated thoughts, in accordance with the employer’s document retention policy.  This procedure avoids potential discovery disputes over production of the notes or any perceived credibility issue that may arise from any alleged inconsistency between the notes and memoranda;
  •  The investigator should keep the investigatory file in a secure area or locked drawer, and give access only to those with a need to know about the investigation to avoid waiver of any privilege;
  •  The investigator should not make comments publicly that appear to be at odds with the notion that the investigation is being performed in anticipation of litigation; and
  •  The investigator should keep any factual information separate from opinions and advice, to increase the likelihood that a court will deem the opinion and advice documents protected.6

Once the applicability of a privilege is established, employer’s counsel must then make sure that the protection of the privileges is not inadvertently waived.  Courts will not allow the use of the attorney-client privilege or the work-product doctrine both “as a shield and a sword.”7  In those situations where the privileges are being used to protect information from an investigation and, simultaneously, the investigation itself is being used as an affirmative defense, a court may find that the privileges apply to the investigation, but that the employer implicitly waived the protection of the privileges, in whole or in part, by placing the investigation “at issue.”  Where the privileges are not affirmatively put forth as a defense and are instead sheathed, courts will respect the privileged nature of an employer’s investigation.



1.  See Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).  
2.  Tribune Co. v. Purcigliotti, No. 93 Civ. 7222 LAP THK, 1997 WL 10924, at *3 (S.D.N.Y. Jan. 10, 1997) (quoting Hickman v. Taylor, 329 U.S. 495, 510-11 (1947)).
3.  Daniel Wise, “Firm Partners Must Testify on Investigation: Magistrate Orders Depositions in Musicians’ Harassment Suit,” New York Law Journal, May 20, 1997, p. 1.
4.  Fed. R. Civ. P. 26(b)(3).
5.  The Second Circuit defined the “anticipation of litigation” language in the 1998 case United States v. Adlman, 134 F.3d 1194 (2d Cir. 1998).  The Adlman court rejected the “primarily or exclusively to assist in the litigation” test used in some previous decisions from within the Second Circuit.  The court said the Second Circuit standard would be “whether the documents were prepared  “because of existing or expected litigation.” Id. at 1198 (emphasis added).  This new standard broadened the doctrine’s protection to some documents, prepared for both litigation and business purposes, that were not covered under the “primarily or exclusively” test.
6.  See Jeffrey S. Klein and Nicholas J. Pappas, “Responding to Claims of Sexual Harassment,” New York Law Journal, Aug. 18, 1994, p. 3.
7.  In re Grand Jury Proceedings, No. 99-6311, 2000 WL 1009484, at *3 (2d Cir. July 21, 2000); United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991); see, e.g., Harding v. Dana Transport, Inc., 914 F. Supp. 1084, 1094 (D. N.J. 1996) (“Dana provides the fact of an investigation while seeking to prohibit any probing into its substance.”).

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