Pre-Litigation Investigations of Discrimination and Your Company's Attorney


Unfortunately, often the first time an employer is aware of an allegation of discrimination and/or harassment in the workplace is after an employee has already filed suit and a Complaint is served on the Company. At that point, the Company has little choice but to retain defense counsel and immediately begin defending against the employees' claims. Typically, the attorney-client privilege and/or the attorney work product doctrine prevents the work done by the Company's retained defense counsel from being disclosed and/or discovered by the employee-plaintiff. But, what happens if the Company has an "in house" attorney that performed work or investigation prior to the employee filing suit? Recently, the California Court of Appeals (under direction of the Supreme Court) addressed this issue in City of Petaluma v. Superior Court (Andrea Waters).

Andrea Waters ("Waters"), the first and only female firefighter and paramedic in the City of Petaluma ("the City"), claimed she was subjected to harassment and discrimination in the workplace on the basis of her sex. In May 2014, Waters filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission ("EEOC") against the City and soon thereafter resigned from her position. The City had a policy and practice of investigating all claims of retaliation and harassment in the workplace. The city attorney assessed that since Waters resigned after filing her claim, she was not seeking corrective action, but instead was exhausting her administrative remedies in order to file suit. The City then retained outside counsel to conduct an investigation into Waters' allegations of workplace discrimination and harassment. The retention agreement specified that outside counsel would conduct an impartial investigation including "interview witnesses, collect and review pertinent information, and report to [the City] on that information." Although the retention agreement anticipated outside counsel would offer a professional evaluation of evidence based upon their experience in employment law, the agreement did not request a legal opinion as to what the City should do in response to Waters' EEOC complaint.

Waters proceeded with filing suit and eventually sought production of outside counsel's report and other materials related to the investigation of Waters' complaint completed prior to the filing of the lawsuit. The City objected to the production on the basis of attorney-client privilege and/or work product doctrine. Undeterred, Water's sought a court order to compel the City to turn over the documents of outside counsel.

While the trial court granted the motion, the City sought a writ challenging the Court's order. The Court of Appeal indicated that the primary focus of whether a communication should be privileged is the "dominate purpose of the relationship" between the attorney and the client. If the court determines the communications were made during the course of an attorney-client relationship, the communication, including any reports of factual material, would be privileged, even though the factual material might be discoverable by other means.

The appellate Court determined that even though the outside counsel was hired to conduct an investigation and not provide legal advice to the City, the City still had an attorney-client relationship with outside counsel. The Court focused on the fact that outside counsel was hired to use her "legal expertise" to conduct the investigation to establish the attorney-client relationship which would mean the attorney-client privilege and attorney work product doctrine would apply.

The takeaway from City of Petaluma is that it may be prudent for a Company to retain outside counsel to conduct investigations regarding workplace claims, especially if there is any indication that the employee is not seeking corrective action from the Company, but rather just attempting to exhaust his/her administrative remedies. An outside attorney can use their legal expertise to ask questions of employees that internal human resources managers may feel are not appropriate to ask, or may be uncomfortable to discuss, due to a close working relationship with their fellow employees. Moreover, by having an attorney conduct the investigation, the Company gains the protection of privilege and/or work doctrine if the findings of the investigation uncover serious issues with discrimination and/or harassment.

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