By WK Editorial Staff
In a case presenting “a thorny issue of attorney-client privilege” in the context of internal investigations, the court found an employer waived attorney-client privilege as to conversations between an HR representative and in-house counsel.
Although communications between an HR representative and in-house counsel about decisions to discipline and terminate two employees were privileged, that privilege was waived because the HR rep’s testimony that he acted on advice of counsel opened the door for the employees to inquire into those conversations, held a federal district court in New York. This indirect assertion of reliance on legal advice as a defense waived attorney-client privilege partially, allowing the plaintiffs to question the rep about the legal advice he received in connection with his decision to issue a final warning to the manager who had allegedly sexually harassed them, as well as his (ostensibly unrelated) decision to terminate the employees. For similar reasons, the court denied the employer’s motion for a protective order for documents related to both investigations (Barbini v. First Niagara Bank, N.A., April 29, 2019, Roman, N.).
Sexual harassment complaint. After the two bank employees claimed their manager sexually harassed them, the bank assigned an HR rep to investigate their allegations, and their manager was given a final written warning. Shortly thereafter, the bank discovered that the manager and the two employees had violated New York state notary law as well as the bank’s own notary policy. The bank terminated the manager and the employees. The employees filed a discrimination and retaliation suit, contending that the alleged breach of notary policy was pretext for retaliation for their complaints of harassment.
On advice of counsel. The HR rep had consulted with in-house counsel as to the appropriate discipline for the manager’s sexual harassment, as well as the subsequent termination of the three employees for violating the notary policy. At deposition, defense counsel objected to any questions regarding those conversations as protected by attorney-client privilege. The bank asserted that it did not rely on its in-house counsel’s advice regarding the sexual harassment investigation or the manager’s final written warning in deciding to terminate the three employees for the notary policy violations; it sought a protective order to bar the employees from asking questions about the legal advice obtained from in-house counsel. The plaintiffs moved to reopen the deposition of the HR rep.
A magistrate granted the plaintiffs’ motion and rejected the bank’s. Here, the district court affirmed the magistrate’s order.
Communications privileged … The court concluded that the conversations between the HR rep and counsel about New York notary laws likely involved both legal and business advice. Because communications do not need to be exclusively legal for the privilege to attach, the conversations were protected by attorney-client privilege. The discussions regarding the manager’s written warning were also protected.
… but privilege is waived. However, the bank waived its privilege because the HR rep testified that he made the decision to issue the final written warning to the manager after thoroughly discussing it with in-house counsel. The bank contended the employees were terminated based solely on their violations of the notary law and bank policy. But to establish this defense, it had to show that HR’s investigations into this misconduct was truly independent of the investigation into their harassment complaints. However, the only way to make that showing was by accepting the HR rep’s testimony that he relied on counsel’s advice and handled the harassment investigation appropriately and independently of the second.
Testimony opened the door. Although the bank expressly disclaimed reliance on counsel as part of its defense, the court noted that it indirectly asserted reliance on legal advice as a defense to the employees’ discrimination claims, and thus opened the door to a waiver of privilege. The HR rep’s testimony went further than just “generalized references to counsel’s advice,” the court noted.
Moreover, the bank twice invoked a Faragher/Ellerth defense in its answer—not expressly, but by its assertions that it had made a good-faith effort to remedy the harassment and that it fired the employees for performance-related reasons. Such one-sided reliance creates the type of unfairness to opposing counsel that waives privilege.
Partial waiver only. The privilege was not entirely waived, the court ruled, but was waived only to allow the plaintiffs to question the HR rep about the legal advice provided in connection with the decision to give the manager a final warning and to terminate the employees.
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