206 - Ethical Issues in Employment Investigations and

LitigationDeborah L. MartinHeather Anderson

Darren S. ChiappettaWanda M. Morris

SCENARIO

Welcome to the UHOH – the Ultimate Home of Harmony

• Female General Counsel, Cant Helpmyself, initiates an affair with male staff counsel, Takin Advantageof. She wisely ends it after a couple of months.• Staff counsel’s wife, Notso Fast, finds out and calls the company’s ethics helpline to complain. She offers pics of the 2 of them that she found on the internet – apparently the 2 were facebook friends under assumed identities.• Cant Helpmyself retaliates against Takin Advantageof for making this public. He decides to sue the company and obtains counsel. He communicates with both Notso Fast and his counsel, Easy Quickbucks, on his personal smart phone used for company business. • Cant Helpmyself also obtains separate counsel, Bob Laub, but communicates with the Bob Laub Law Firm using her company email.

WHY INVESTIGATE?

• Triggers– Helpline– Internal Complaint– External Complaint/Litigation– Audit

• Benefits• Consequences

WHY INVESTIGATE?

• Triggers• Benefits– Faragher/Ellerth Defense– Avoid Punitive Damages– Prepare Defense/Know what Feds will find

• Consequences

WHY INVESTIGATE?

• Triggers• Benefits• Consequences – Punitive damages– Surprised executives

WHO SHOULD INVESTIGATE?

• Human Resources• In-house counsel• Outside counsel• Audit• Private investigator

INTERVIEW PREPARATION

PREPARING FOR INTERVIEWS• Who should be interviewed?– How broad does the investigation need to be

(e.g., what is needed to determine the outcome)?– Does order matter (e.g., which witnesses should

be interviewed when)?• What documents are needed?– Some can be collected and reviewed prior to

interviews– Some may need to be requested during

interviews.

PREPARING FOR INTERVIEWS• Is it mandatory for a witness to submit to an

interview?– Does the Company have a policy requiring such?– If so, does the policy apply (e.g., is the witness a

current or former employee)?– Does the Company plan to enforce the application?

• Is a witness represented by counsel and request/insist that counsel be present during the interview?

PREPARING FOR INTERVIEWS• Do actual or perceived conflicts of interest

related to the interviews exist?– Between the investigator and a witness (e.g., if the

investigator reports to the witness).– For the witness’ attorney (e.g., can the attorney

representing a witness also participate in an interview?).

PRIVILEGE & CONFIDENTIALITY CONSIDERATIONS

PRIVILEGE ISSUES

• Interviews by counsel– Upjohn v. United States, 449 U.S. 383 (1981)– In re: Kellogg Brown & Root, Inc., et al., 2014 U.S.

App. LEXIS 12115 (D.C. Cir. June 27, 2014).• Investigation report• Employee communication with separate

counsel

PRIVILEGE ISSUES

• Interviews by counsel• Investigation report– Might you want to waive the privilege?– Admissibility issues at trial

• Employee communication with separate counsel

PRIVILEGE ISSUES

• Interviews by counsel• Investigation report• Employee communication with separate

counsel– In re Information Management Services, Inc., 2013

WL 5426157 (Del. Sept. 5, 2013)

CONFIDENTIALITY ADVISEMENTS

• Banner Health System d/b/a Banner Estrella Medical Center and James A. Navarro, 358 NLRB No. 93 (2012).

PRIVACY AND SOCIAL MEDIA

PRIVACY AND SOCIAL MEDIA

Does an employee have a reasonable expectation of privacy for communications conducted on employer email/devices?• City of Ontario, California v. Quon, 130 S.Ct. 2619

(2010)

Does the employer have a social media policy in place?

PRIVACY AND SOCIAL MEDIAEmployers should implement social networking policy

Some key elements of social networking policy:• Clearly state that employees have no expectation of privacy in

any communications made on or with company property, including personal communications on webmail and social network pages.

• Remind employees that other company policies regarding work also apply to social networking, including the company code of conduct, compliance , confidentiality EEO, etc.

• Employees are instructed to use good judgment and take personal and professional responsibility for what they publish online

PRIVACY AND SOCIAL MEDIADetermine whether and when to use information obtained from social media sources to make employment decisions:

• Does the company have a social media policy in place and does it adequately cover the employee’s conduct?

• Is the information protected under federal and/or state law?

• Would using the information run counter to recent NLRB decisions?

GENERATING THE INVESTIGATION REPORT

FORMAT OF THE REPORT• Written Report or Verbal Report?• Considerations– “Formal” Investigation Written Report• Possible Legal Exposure• Serious Violation of Policy (EEO / HIPAA)• Documentation of Investigation/Result Needed

– “Informal” Investigation Verbal Report• Minor Policy Infractions (Workplace Conflict)• Quickly Resolved Misunderstanding

VERBAL REPORTBENEFITS

• Minimizes SOME risks of investigating – documents used for presentation are usually Work-Product

• Provides flexibility to counsel if compelled to testify about investigation/findings

• Less likely to be discoverable• More likely to remain

confidential

RISKS• Memory/Recall can be

inexact, creating data integrity issues

• Courts have found lack of written report problematic – unable to scrutinize if thorough investigation or sound conclusions

WRITTEN REPORTBENEFITS

• Detailed info re: questionable activity/legal implications aids in remedial recommendations

• Tangible proof investigation conducted (dissuade gov’t)

• May be required by gov’t agency

RISKS• Less Flexible – confines later

testimony to fact/opinions/conclusions in report

• Risk it will not be privileged or privilege will be waived discoverable = liability

CONTENT OF WRITTEN REPORT• Report & Recommendations limited by scope• Identify type of complaint & policy/law implicated• Factual v. Legal Conclusions? DEPENDS– Privilege Concerns: A/C Privilege protects disclosure of

communications, not disclosure of underlying facts (Upjohn)

• Objective, Neutral Style– Consider if include conclusions/recommendations– Eliminate extraneous info collected but not relevant

CONTENT OF WRITTEN REPORT• Sample Format (if prepared by counsel)– SUMMARY OF ALLEGATIONS– CORPORATE RESPONSIBILITIES– INVESTIGATION PROTOCOL– CHRONOLOGY OF EVENTS– RELEVANT LAW– LEGAL ANALYSIS– CONCLUSION– EXHIBITS

PRIVILEGE CONSIDERATIONS• Conducted/prepared by and for compliance not

privileged • Clarify investigation is not pursuant to routine

compliance function, but for a legal purpose• Communicating mere facts may be discoverable

unless implied request for legal advice• Even if attorney involved, ensure lawyer’s role

involves obtaining/providing legal advice (K,B,&R)

ADDITIONAL CONSIDERATIONS• Who within the company should know the

results?• Should employees be apprised of results?• Remedial/Preventative measures warranted?• Any disciplinary action against employee(s)?• DISCLOSURE OF ALLEGATIONS / FINDINGS?– Report to court/gov’t/regulatory agency required or

desirable?– Public Announcement?

SELF-DISCLOSURE FACTORS• Is Co. bound by prior obligation to do so (i.e.

industry “voluntary disclosure” commitment)• Does the misconduct investigated involve

fraud or other criminal behavior?• Is senior management of a public company

involved?• Potential for better “treatment” by gov’t if

self-disclose prior to gov’t discovery?

SELF-DISCLOSURE CAUTION• Once report shared with 3rd party, A/C Privilege

waived forever• Assume any written report to gov’t could be

produced to plaintiffs in a civil action• Studies of enforcement pursuant to FCPA found no

difference in penalty level for self-disclosure vs. government independent discovery

• Conduct some investigation prior to contacting gov’t to avoid mistakenly blowing the whistle based on erroneous internal info

BEST PRACTICES• Label the written report “ATTORNEY-CLIENT

PRIVILEGED AND SUBJECT TO WORK-PRODUCT”

• Note that report prepared at the request of counsel (if prepared by non-lawyer)

CLOSING DECISIONS• Decide…INVESTIGATION NEEDED?• Decide…STRATEGY

– Solutions range from fast & expensive to slow & cheap. No resolution is FAST & CHEAP

• Decide…WHO INVESTIGATES– Human Resources: Knows situation better, no privilege– In-House Counsel: Maintains privilege– External Counsel: More $ / Potentially more effective

• Decide…SCOPE CONSIDERATIONS– Seriousness of allegations– Potential Disruption to business / time and cost to investigate– Revisit as investigation progresses is more investigation needed, or will it change the

outcome?

• Decide…REPORTING MECHANISM– Written report of investigation findings?– Should report be privileged or not?

CLOSING THOUGHTS• Know your potential challenges in asserting privilege and

confidentiality• Understand employee privacy issues• Ensure the appropriate internal stakeholders are notified

before any investigation begins, including corporate communications group– May have to address outside commentary

QUESTIONS?

THANK YOU!

Attorney-Client Privilege and Internal Company Communications

Protecting communications with in-house counsel

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Communications between company employees/officers and outside counsel

Communications between employees/officers and in-house counsel

Work Product

Self-critical analysis privilege (not followed in Florida state courts)—protects analyses of past conduct to determine violations/improvements

Not universally recognized

What’s Protected?

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Ancient in its roots and foundational to judicial system

Know your rules (U.S. v. United Shoe Machinery Corp.; Deason)

Companies are people too (Upjohn Co. v. U.S.)

Attorney-Client Privilege• “Don’t misinform your Doctor nor your Lawyer.”

• - Benjamin Franklin

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Designating a communication “privileged” or “confidential” is not dispositive on establishing privilege

Communication is broad, includes non-verbal

Privilege lasts during or anytime after termination of attorney-client relationship

Privilege Basics

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To assert privilege must be a client or sought to become a client

Person receiving the communication must be acting as a lawyer

Communication must be between the lawyer and the client and exclusively, in confidence

Communication must be for purpose of securing legal services, a legal opinion, or assistance with a legal proceeding

Privilege has been claimed by client or attorney and not waived

US Supreme Court--United States v. United Shoe Machinery Corp. (1950)

The Rules: Federal

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Communications made “but for” contemplation of legal services;

Communication made at direction of superior;

Superior requested communication as part of corporation’s effort to secure legal advice or services;

Content of communication relates to legal services being rendered and subject of communication is within employee’s scope of duties; and

Communication is not disseminated beyond those that need to know (no waiver).

Southern Bell Telephone and Telegraph Co. v. Deason

The Rules: Florida

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Mind the law

Make clear e-mail is regarding legal advice/services

Limit internal distribution of written correspondence

Focus on legal issues for privileged meetings

Don’t lose it – waiver and inadvertent waiver

Rule Breakers

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Business entities are clients who can assert privilege

Internal company communications with in-house counsel can be privileged BUT substance matters

Not limited to communications with upper level management

Communications with lower-level employees protected if:

Communication is made at direction of superior

Subject matter is within the scope of the employee’s duties

Scandals mean scrutiny

Corporations Are People Too

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Fact work product—protects information relates to a case that is gathered in anticipation of litigation

Can be discovered upon a showing of “need” and “undue hardship”

Opinion work product—counsel’s mental impressions, conclusions, opinions, and theories.

Generally protected from disclosure

It’s Not Privileged, Now What?

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Regular business audits or investigations likely will not be protected

Must be created for a primary legal purpose vs. business purpose

Work Product: What Sticks?

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In connection with investigation by public entity and subsequent litigation:

Counsel directed telephone company to perform independent audits of company data containing over 1,000,000 reports pertaining to repairs performed by the company

While audits were typically done in course of business, these specific audits were done in response to investigation by a government entity

Scenario #1

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(a) Internal audit reports were held to be protected by attorney-client privilege, but not work product

(b) Internal audit reports were not protected by attorney-client privilege, but were protected by work product; however, undue hardship mandated production

(c) Internal audit reports were held to protected by the attorney-client privilege and work product

(d) Internal audit reports were held to not be protected by either the attorney-client privilege or work product

(e) Internal audit reports were not protected by the attorney-client privilege, but were protected by work product

ANSWER: (b) (Southern Bell Telephone and Telegraph Company v. Deason, 632 So. 2d 1377 (Fla. 1994))

What Happened?

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Audits may not be considered “communications” covered by the attorney-client privilege

Audits performed in regular business likely are not protected by work product

Even audits performed in anticipation of litigation may have to be disclosed if the underlying information audited is so voluminous that it would cause “undue hardship” for the other side to audit the same information

Take Aways

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In connection with investigation by public entity and subsequent litigation:

In-house counsel directed employees to give interviews with security personnel as a result of pending investigation by government entity

Statements made by employees to security personnel were shared by in-house counsel to personnel managers

Personnel managers summarized the communications and used them for panel recommendations for employee discipline

Scenario #2

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(a) Panel recommendation summaries were held to be protected by attorney-client privilege and work product

(b) Panel recommendation summaries were held to not be protected by attorney-client privilege, but were protected work product

(c) Panel recommendation summaries were held to not be covered by either the attorney-client privilege or work product doctrine

(d) Panel recommendation summaries were held to be protected by the attorney-client privilege, but not work product

ANSWER: (c) (Southern Bell Telephone and Telegraph Company v. Deason, 632 So. 2d 1377 (Fla. 1994))

What Happened?

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Underlying communications comprising recommendations are the focus, if not directly between attorney and employee—not privileged

Although initial communications may be requested in anticipation of litigation, using those communications for primarily business purposes voids protection

Take Aways

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In-house counsel for corporation requested to review environmental provisions of an asset purchase agreement

In-house counsel meets with opposing side’s lawyers and negotiates environmental provisions of asset purchase agreement for his company

In-house counsel was present for execution of asset purchase agreement

After execution, in-house counsel negotiated matters to be included in the schedule to the asset purchase agreement

Scenario #3

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(a) In-house counsel’s communications with his company regarding asset purchase agreement were protected by attorney-client privilege, but not work product

(b) In-house counsel’s communications with his company regarding asset purchase agreement were not protected by attorney-client privilege, but were protected work product

(c) In-house counsel’s communications with his company regarding asset purchase agreement were not protected by attorney-client privilege or work product

(d) In-house counsel’s communications with his company regarding asset purchase agreement were protected by both attorney-client privilege and work product

ANSWER: (c) (Georgia-Pacific Corporation v. GAF Roofing Manufacturing Corporation, 1996 WL 29392 (S.D.N.Y 1996)).

What Happened?

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Do not send in-house counsel as primary negotiator of any provision of any agreement

Minimize in-house counsel’s role as advising behind the scenes under communications specifically designated as those seeking legal advice

Take Aways

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Wear the “right hat”

Use different “control group” for legal e-mails/meetings/teleconferences

Delete, Don’t Auto-complete

Double, triple check your “to’s,” “cc’s” and “bcc’s”

Be careful, careful with bcc’s

Non-lawyers, avoid sending e-mail communications and/or documents you intend to be privileged to both in-house counsel and other non-lawyers.

“Affordable Bio Feedstock, Inc. v. Darling Intern. Inc. (MD Fla. 2012) (citing In re Vioxx for proposition that simultaneous delivery of document or communication prevents claim that primary purpose of communication/document was for legal services. Copying non-lawyers, however, triggers fact-based inquiry to determine whether primary purpose was legal)

Keep it Privileged: Best Practices for Ensuring Communications are Protected

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Minimize role in employee investigations

What if?

Employee complaint filed directly with in-house counsel

In-house counsel should document in non-privileged manner and then unambiguously distinguish privileged legal communications

If timing of complaint becomes an issue, company will not want to rely on otherwise privileged communication

Don’t become a fact witness

Step away from the negotiations

Staying out of the Hot Seat