Opinion
No. C-99-5328 MJJ (EDL)
September 22, 2000
Order Granting in Part And Denying in Part Plaintiffs' Motion to Compel Production of Documents.
Plaintiffs have brought claims against defendant pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., as amended, 42 U.S.C. § 1981, the California Fair Employment and Housing Act, Government Code §§ 12940, et seq., Fair Credit and Reporting Act, 15 U.S.C. § 1681, et seq., and California contract law. Plaintiffs allege discrimination and harassment based on race, sex and retaliation. On August 1, 2000, plaintiffs moved to compel production of documents by defendant Main Street. Defendant submitted a timely objection and plaintiffs a reply. On July 6, 2000, Judge Jenkins referred this case to a magistrate judge for all discovery matters.
This Court conducted a hearing on the motion on September 19, 2000. S. Raye Mitchell and Sheila Thomas represented plaintiffs. Jennifer Walt represented defendant.
As authorized at the hearing, defendant subsequently filed Supplemental Declarations of Marilyn Wineman, Director of Human Resources for defendant, and Charles L. Fine, senior counsel for Streich Lang. Upon consideration of the parties' submissions, the arguments at the hearing, the relevant authorities and the record in this case, and good cause appearing, IT IS HEREBY ORDERED as follows.
Documents Relating to the Investigation of Plaintiffs' Claims
In response to Document Request Nos. 12, 13, 14, 15 and 24, plaintiffs' motion to compel the production of documents relating to the investigation of plaintiffs' claims is DENIED without prejudice. Based on the original papers, the supplemental declarations and representations made at the hearing, it appears that two investigations were conducted in response to plaintiffs' claims of harassment and discrimination. According to defendant, the first investigation was internal, while the second investigation was conducted externally by the law firm Streich Lang. This distinction is crucial in analyzing defendant's objections based on the attorney-client privilege and work product doctrine. Defendant failed, however, to provide the Court with an exact date of when the first investigation was completed and the second investigation began. Defendant is ordered to provide a declaration indicating those dates.
When plaintiff McIntyre complained of sexual harassment by Eric Gremillion, defendant conducted an in-house investigation into her complaint. Defendant provided plaintiffs in its initial disclosures the statements that were collected from the interviewed people during this investigation. See Def.'s Opp'n to Pls.' Mot. to Compel Docs. at 8 ("Def.'s Opp'n"). According to Walt's representation at the hearing, defendant provided plaintiffs with the only two documents relating to this internal investigation. Accordingly, defendant shall provide a declaration under oath specifically identifying the documents that relate to the internal investigation that have already been produced and stating that no other such documents exist.
The law firm of Streich Lang apparently conducted a second, more comprehensive investigation into plaintiffs' allegations of sexual harassment and race and sex discrimination. On or about March 19, 1999, plaintiffs' counsel provided oral notice of representation and followed with written notice to defendant. See Pls.' Mem. of P. A. in Supp. of Mot. to Compel Resp. at 4. According to Mr. Fine, his law firm of Streich Lang became involved in this case only after the internal investigation was completed and defendant received a demand letter from plaintiffs' counsel. See Decl. of Charles L. Fine Regarding Def.'s Opp'n to Pls.' Mot. to Compel ("Fine Decl."). Defendant argues, therefore, that the tapes of witness interviews, notes and memoranda from defense counsel's investigation are protected from disclosure.
Defendant initially failed to produce a privilege log. Subsequently, it produced to plaintiffs a log that claimed the attorney client privilege for memoranda prepared by paralegal Brownell regarding the investigation of a hostile work environment. See Ex. 4 attached to Decl. of S. Raye Mitchell in Supp. of Pls.' Mem. of P. A. in Supp. of Mot. to Compel Resp., filed August 12, 2000 ("Mitchell Decl."). Plaintiffs do not dispute, nor could they, that such memoranda fall within the attorney-client privilege. Rather, they rely on arguments of waiver, the crime-fraud exception and the Fair Credit and Reporting Act, as set forth below.
Plaintiffs also argue that defendant forfeited the privilege by its failure to timely provide the privilege log and the absence of dates when it finally did. The Court does not condone the defendant's failure to do so and warns against future non-compliance, but will nonetheless reach the merits of the attorney-client and work product objections.
The privilege log also claimed work product protection for: (1) interview notes by paralegal Brownell given to attorney Fine regarding her investigation of plaintiffs' allegations of sexual harassment; (2) memoranda by Brownell given to attorney Fine regarding plaintiffs' allegations of sexual harassment and racial discrimination; and (3) tapes of interviews of unspecified witnesses regarding the investigation of plaintiffs' claims of sexual harassment and racial discrimination/hostile environment, for which no author is specified but the recipient is listed as Mr. Fine. Id. The log failed to include any dates, although dates are generally required for an adequate privilege log and are especially important here because of defendant's contention that the two investigations were separate and did not overlap in time.
The memoranda and interview notes by attorney Fine's legal assistant, which likely contain mental impressions and theories, are absolutely protected under the work product doctrine, unless stripped of that status by waiver or the crime-fraud exception. A closer question is presented by the tapes of interviews with percipient witnesses. Defendant did not provide any authority from the Ninth Circuit establishing that such materials are work product. Decisions of lower courts do tend to support defendant's argument, however, that the tapes may receive at least qualified protection, assuming that the interviews were conducted by counsel. See Jones v. ADA S. McKinley Community Serv., 1989 WL 152352, *3 (N.D.Ill. 1989) (holding that plaintiffs' counsel's tape recordings of interviews of witnesses received only qualified protection as work product because it was unlikely that they contained the mental impressions or trial strategy of counsel). In addition, the identity of witnesses who have been interviewed by opposing counsel are also arguably protected work product. See Board of Educ. v. Admiral Heating Ventilation, Inc., 104 F.R.D. 23 (N.D.Ill. 1984).
The materials must also have been prepared in anticipation of litigation. According to the Supplemental Declaration of Charles L. Fine, Streich Lang became involved only after the internal investigation was completed and defendant received a notice of appearance and then a demand letter from plaintiffs' counsel. Although plaintiffs state that the firm approached her for a demand letter, she concedes that she sent a notice of appearance before the firm contacted her. Even on plaintiffs' version of events, internal complaints of sexual harassment and a notice of appearance by an attorney appear to satisfy the requirement of preparation in anticipation of litigation.
To overcome qualified work product, plaintiffs must demonstrate a substantial need and the inability without undue hardship to obtain the substantial equivalent of the materials by other means. See Jones, 1989 WL 152352 at *3. Since the information plaintiffs seek likely can be obtained through interviews or depositions of the percipient witnesses, plaintiffs have not made an adequate showing at this time to overcome the work product protection.
Plaintiffs argue, however, that even if the attorney client privilege and work product doctrine are applicable, all documents relating to the second investigation are discoverable based on three distinct arguments: 1) waiver of the attorney-client privilege and work product doctrine; (2) inapplicability of the attorney client privilege based on the crime-fraud exception; and (3) violation of the Fair Credit and Reporting Act ("FCRA"). The Court is not persuaded by any of these arguments.
Waiver of the Attorney-Client Privilege and Work Product Doctrine
Plaintiffs argue that defendant waived any protection for its investigation by asserting that it took prompt remedial action as an affirmative defense pursuant to Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 765 (1998). Specifically, defendant pled in its answer as its Fifteenth affirmative defense that it "exercised reasonable care to prevent and promptly correct any harassing, discriminatory, retaliatory or otherwise unlawful behavior. . . ." See Def.'s Answer to Pl.'s Am. Compl. at 14.
Plaintiffs are correct that defendant cannot rely on the investigation by outside counsel as part of its defense, while at the same time shielding the investigation from discovery. Any use of the investigation in its defense would waive the privilege. See, e.g., Harding v. Dana Transport, Inc., 914 F. Supp. 1084 (D. N.J. 1996) (holding that defendant's use of its attorney's investigation of sexual harassment allegations as a defense waived the attorney-client privilege with respect to documents produced by the attorney or any agent of the employer that related to the investigation). To allow defendant to use its investigation affirmatively as a defense while shielding it from discovery would be patently unfair. Id.; cf. Handgards, Inc. v. Johnson Johnson, 413 F. Supp. 926, 929 (N.D.Cal. 1976) (holding that in a patent action, in order to demonstrate that prior lawsuits were pursued in good faith, defendant waived the attorney-client privilege with respect to all relevant records, opinion letters, interviews of witnesses, internal files, memoranda and notes which pertained to the validity of the attorney's assertions at issue).
Defendant did not make clear in its opposition papers whether it intended to rely on the investigation by Streich Lang in its defense. At the hearing, the Court asked defense counsel to clarify its position on this point. Defense counsel Jennifer Walt stated that defendant would only rely on the internal investigation and would not rely on the investigation by outside counsel Streich Lang. The Court pointed out that according to defendant, the internal investigation was limited in scope to sexual harassment by Mr. Gremillion and ended with his termination, and did not address the other allegations of plaintiffs regarding discrimination and harassment. Ms. Walt reiterated that defendant would not rely on the investigation by outside counsel. Based on this representation that defendant will not rely on the investigation by outside counsel and conditioned on the two investigations in fact being separate, defendant has not waived the attorney-client or work product protection.
Alternatively, plaintiffs argue that when a client voluntarily discloses some privileged communications to a third party, the privilege may, intentionally or not, be waived. See United States v. Hamilton, 19 F.3d 350, 353 (7th Cir. 1994). A "party cannot selectively divulge privileged information without impairing its attorney-client privilege as to the rest of that information concerning the same subject." Chinnini v. Central DuPage Hosp. Assoc., 136 F.R.D. 464, 465 (N.D.Ill. 1991). There are, however, exceptions to the general rule that voluntary disclosure of privileged communications to a third party waives the privilege. See, e.g., Rates Tech., Inc. v. Elcotel, Inc., 118 F.R.D. 133, 134-35 (M.D.Fla. 1987) (providing that in some circumstances, mere restatements of an attorney's conclusion do not disclose a particular attorney-client communication and therefore does not constitute a waiver).
Here, plaintiffs argue that defense counsel Fine's submission to plaintiffs of a detailed letter regarding its internal investigation waived the attorney client privilege and work product doctrine. The letter, dated April 19, 1999, provides defendant's findings and conclusions. See Ex. 1 attached to Mitchell Decl. While the letter does provide considerable detail regarding defendant's findings of fact and conclusions, the Court is not convinced that defendant waived the attorney-client privilege or work product doctrine. It appears that Mr. Fine wrote the letter in response to an earlier demand letter submitted on behalf of plaintiffs, at least in part for purposes of responding to a settlement demand. See Fine Decl. at 2.
Crime-Fraud Exception
The crime-fraud exception is firmly entrenched in the common law of the attorney-client privilege. In re International Sys., 693 F.2d 1235 (5th Cir. 1982). The exception requires conduct that, if proven, could amount to a crime or fraud. See Ekeh v. Hartford Fire Ins., 39 F. Supp.2d 1216, 1218 (N.D.Cal. 1999). In California, an actionable fraud may involve: (1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true; or (2) the assertion, as a fact, of that which is not true, by one who does not believe it to be true; or (3) the suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact. Cal. Civ. Code § 1709 (Deerings 1997).
Here, plaintiffs have not come close to identifying the type of crime or fraud required to apply this exception to the privilege.
Fair Credit and Reporting Act
Plaintiffs argue alternatively that the investigation was improper under the Fair Credit and Reporting Act. § 15 U.S.C. § 1681, et seq.. The statute defines a consumer report as:
[A]ny written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for . . .(B) employment purposes. 15 U.S.C. § 1681a(d)(1)
Further, a consumer reporting agency is defined as:
[A]ny person which, for monetary fees, dues, or a cooperative non-profit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.15 U.S.C. § 1681a(f).
Here, plaintiffs argue that defendant hired its attorneys, Streich Lang, to investigate and evaluate plaintiffs' allegations of harassment and discrimination. Therefore, according to plaintiffs, the law firm of Streich Lang is a consumer reporting agency. Plaintiffs, however, failed to show that Streich Lang "regularly engages in the practice of assembling credit information. 15 U.S.C. § 1681a(f) (emphasis added). In his Supplemental Declaration, Charles Fine states that Streich Lang "very rarely . . . conduct[s] internal investigations into internal employment harassment, discrimination, or other complaints asserted by employees of clients." See Fine Decl. at 2. Based on the record at this time, the FCRA does not apply to this case. See Friend v. Ancillia Sys. Inc., 68 F. Supp.2d 969 (N.D.Ill. 1999) (holding that attorneys hired by the employer to investigate an employee was not a "consumer reporting agency" within the meaning of the FCRA, absent any evidence that the attorneys regularly engaged in the practice of assembling credit information).
In summary, plaintiffs' Request for Document Nos. 12, 13, 14, 15 and 24 is DENIED without prejudice. Based on Walt's representation to this Court at the hearing, defendant's affirmative defense of adequate investigation is limited to the first in-house investigation. Therefore, defendant is precluded from relying on the second investigation conducted by Streich Lang as an affirmative defense. Furthermore, defendant shall produce an adequate privilege log containing the dates the documents and materials were prepared, the purpose in preparing the documents and, with respect to the tapes of witness interviews, the name of the attorney or other person who conducted the interview (but not the names of the witnesses).
Documents Relating to Complaints Filed by Other Employees
In response to Document Request Nos. 4 and 5, defendant shall produce all documents relating to discrimination complaints filed by other employees in all restaurants owned by defendant in the state of California since January 1, 1998. Although defendant objected to this request on the ground that it was burdensome, it failed to make a factual showing of undue burden. Document Request Nos. 4 and 5 are relevant to the subject matter of the existence (or not) of a hostile work environment and to defendant's defense that it took prompt remedial action to address the harassment. See Butta-Brinkman v. FCA Int'l, Ltd., 164 F.R.D. 475 (N.D.Ill. 1995) (holding that an employer was not entitled to have discovery limited to allegations of sexual harassment involving an employee's alleged harasser or allegations of harassment only in the office where the employee worked).
Accordingly, plaintiffs' Request for Document Nos. 4 and 5 is GRANTED.
Documents Relating to Manuals and Policies on Sexual Harassment/Discrimination
Plaintiffs' Document Request No. 7 seeks to discover all personnel, manager, supervisor and employee handbooks, manuals, or memoranda generated since 1998. Based on defendant's representation both in its papers and in open court, defendant previously produced its employee handbook. Therefore, with respect to the employee handbook the issue is moot.
With respect to the managerial materials, defendant shall produce the civil training materials to the extent that such materials contain information relating to sexual harassment or employment discrimination policies. If the civil training materials do not contain such policies, defendant shall so state under oath.
With respect to the operations manual, the Supplemental Declaration of Marilyn Wineman states that the manual contains only financial and operations information and not personnel policies. See Decl. of Marilyn Wineman Regarding Def.'s Opp'n to Pls.' Mot. to Compel at 2 ("Wineman Decl."). Based on this representation, defendant need not produce the operations manual.
In its "Opposition to Plaintiffs' Motion to Compel," defendant acknowledges the existence of a supervisor's manual. See Def.'s Opp'n at 6. Therefore, at the hearing, the Court directed defendant to file a supplemental declaration stating under oath whether the supervisor's manual contains any sexual harassment or employment discrimination policies. The Supplemental Declaration of Marilyn Wineman does not expressly address the supervisor's manual, but states that the only manuals that exist in the company are the employee handbook, civil training materials and an operations manual. For clarification, this Court orders defendant to state under oath whether a supervisor's manual exists. If defendant denies the existence of the supervisor's manual, defendant shall further state under oath what is meant by its reference to a supervisor's manual in its Opposition papers. If defendant acknowledges the existence of such a manual, however, defendant shall state under oath whether the manual does or does not contain any personnel policies relating to sexual harassment or employment discrimination. Further, if a supervisor's manual exists and contains such policies, defendant shall produce the manual subject to a protective order limiting its use to this litigation.
Accordingly, plaintiffs' Request for Document No. 7 is GRANTED in part and DENIED in part.
In response to Document Request Nos. 8, 9 and 10, defendant shall produce all documents relating to sexual harassment and employment discrimination policies since January 1998. To the extent that all such policies have already been produced, defendant shall so state under oath. Accordingly, plaintiff's Request for Document Nos. 8, 9 and 10 is GRANTED.
Other Requests
In response to Document Request Nos. 16, 18, 19, 20 and 22, in accordance with Walt's representation at the hearing and the Supplemental Declaration of Marilyn Wineman, all documents relating to communications about plaintiffs have been produced. See Wineman Decl. at 1. Accordingly, plaintiffs' Request for Document Nos. 16, 18, 19, 20 and 22 is DENIED.
In response to Document Request No. 17, defendant states that it has produced all documents relating to the termination of Eric Gremillion. To the extent that such documents have not been produced, however, plaintiffs' Request for Document No. 17 is GRANTED.
In response to Document Request No. 21, defendant shall produce all documents in the personnel file of Eric Gremillion pertaining to promotions or demotions, disciplinary proceedings, work performance reviews or evaluations and employee and/or customer complaints, but not medical or financial information.
Because such documents are relevant to the pending litigation and narrowly tailored to exclude financial and medical information, Gremillion's right to privacy is protected. See Ragge v. MCA/Universal Studios, 165 F.R.D. 601 (C.D.Cal. 1995) (holding that the plaintiff in a Title VII employment discrimination case was entitled to portions of the personnel files of each of the individual named defendants since the request was relevant and narrowly tailored).
Accordingly, plaintiffs' Request for Document No. 21 is GRANTED.
In response to Document Request No. 23, defendant shall produce all documents in the personnel file of plaintiffs McIntyre and Hibbitts. To the extent that defendant has not produced such documents, plaintiffs' Request for Document No. 23 is GRANTED.
In response to Document Request No. 25, defendant shall produce all portions of the sale documents reflecting assumption of liability clauses and representations regarding existing or threatened employment litigation. Accordingly, plaintiffs' Request for Document No. 25 is GRANTED in part and DENIED in part.
To the extent not already produced in accord with this Court's oral order at the hearing, defendant shall produce all documents required in this order by Thursday, October 5, 2000.