Factual Investigation by Attorney is Protected by Attorney-Client Privilege

Andrea Waters worked for the City of Petaluma as a firefighter/paramedic. Waters claimed she was subjected to harassment and discrimination based on her sex and filed a charge of discrimination, sexual harassment, and retaliation with the Equal Employment Opportunity Commission (EEOC). Waters resigned shortly after filing her EEOC charge. The EEOC sent the City a copy of the charge, which the City alleged was the first time it learned of Waters' allegations. Since Waters had already resigned, the City Attorney concluded that by filing the charge, Waters was not seeking corrective action, but was attempting to exhaust her administrative remedies prior to filing a lawsuit.

The City Attorney retained an outside attorney to investigate Waters' EEOC charge and assist him in defending the City in the anticipated lawsuit. The retention agreement with the outside attorney specified that the City retained the attorney to perform an impartial investigation of Waters' complaint. The agreement instructed the attorney to arrive at findings based on her "impartial and professional evaluation of the evidence." The agreement also stated that it created an attorney-client relationship between the City and the investigator and that the investigator would use her employment law and investigation expertise in the investigation. The agreement also instructed the investigator to refrain from providing legal advice as to the appropriate actions the agency should take. The investigator provided a written investigation report to the City and labeled the report as attorney-client privileged.

Waters sued the City alleging harassment, discrimination and retaliation, among other things. The City asserted, as a defense, the "avoidable consequences doctrine," alleging that Waters unreasonably failed to take advantage of preventative or corrective opportunities and that she failed to take reasonable and necessary steps to avoid alleged harms and/or consequences.

The avoidable consequences defense allows an employer to escape liability for damages that the employee more likely than not could have prevented with reasonable effort by using the employer's internal complaint procedures. The avoidable consequences defense involves showing that (1) the employer took reasonable steps to prevent workplace harassment; (2) the employee unreasonably failed to use corrective and preventative measures provided by the employer; and (3) reasonable use of the employer's procedures would have prevented some of the harm that the employee suffered.

During discovery, Waters sought documents and testimony relating to the City's investigation. The City objected on the basis of attorney-client privilege and the attorney work product doctrine. Waters moved to compel production arguing that the documents were not privileged and that, even if they were, the City waived the privilege by putting the investigation at issue. The trial court granted the motion to compel. The City filed a writ with the Court of Appeal.

The attorney-client privilege gives the client the right to refuse to disclose and prevent another person from disclosing confidential communications between the client and a lawyer. A party seeking to prevent disclosure of confidential documents must establish that the communication was made in the course of an attorney-client relationship. The party opposing the privilege must establish that the communication was not confidential or that the privilege does not apply.

For a communication to qualify as a "confidential communication," the information must be transmitted between the client and lawyer by confidential means. The main inquiry is on the purpose of the relationship between the attorney and the client, not on the purpose served by the communication. The attorney-client privilege only applies to communications.

California Code of Civil Procedure section 2018.001 et seq. codifies the attorney work product doctrine. The attorney work product doctrine is intended to preserve the rights of attorneys to investigate cases and prevent others from taking advantage of an attorney's work product. The work product doctrine applies irrespective of whether the privileged materials were communicated to the client.

Both the attorney-client privilege and attorney work product doctrine may be waived by disclosure to a party outside the attorney-client relationship if the disclosure is inconsistent with goals of maintaining confidentiality or safeguarding the attorney's work product.

The Court of Appeal agreed with the City's claim that the investigation materials were protected by the attorney-client privilege even though the investigator's role was limited to a factual investigation and did not provide legal advice. The Court noted that the Evidence Code definition of "client" refers to a person retaining a lawyer for "legal service or advice." The Court concluded that an attorney-client relationship can exist even if an attorney does not provide legal advice.

In this case, the City retained the outside attorney to perform an investigation to assist the City in determining how to respond to an EEOC complaint and anticipated lawsuit, a legal service. The attorney was not only gathering facts; she was instructed to use her legal expertise to identify pertinent facts and come to a conclusion as to what happened. Waters, on the other hand, was not able to present relevant evidence to contradict the City's assertion that the investigation materials were privileged. As a result, the Court determined that both the attorney-client privilege and work product doctrine applied.

The Court rejected Waters' argument that the City waived the privilege by putting the investigation at issue through its avoidable consequences defense. The Court held that an employer does not waive privilege associated with an investigation conducted after the employee leaves employment simply by asserting the avoidable consequences defense. The Court determined that asserting the avoidable consequences doctrine may put the adequacy of an investigation into issue if the person was still employed and able to take advantage of an employer's corrective measures. However, a post-employment investigation would not be directly at issue since the employee could not take advantage of corrective measures. The City did not and could not attempt to rely on the investigation itself as a defense.

Note:

The Court of Appeal's decision is consistent withWellpoint Health Networks v. Superior Court(1997) 59 Cal.App.4th 110 in which the court decided that an employer had established a prima facie claim of privilege when the employer established that it had hired an attorney to investigate charges of discrimination. The plaintiff inWellpointwas not able to prove that the attorney investigator was solely engaged in fact-finding.

Agencies often retain outside attorneys to conduct investigations in order to maintain attorney-client privilege. The agreement between the agency and the investigator is crucial to ensuing the investigation is entitled to the attorney-client privilege. Here, the retention of the outside attorney for her legal expertise was key to determining the privileged applied.

Petaluma v. Superior Court of Sonoma County(2016) ___ Cal.App.4th ___ [2016 WL 3568106]