United States: Communication Surrounding Litigation: Loose Lips Sink Ships!

Most employers are probably aware that communications with their attorneys for the purpose of obtaining legal advice are protected under the attorney-client and work-product privileges. That means if a lawsuit is filed and the employee's attorney wants to know what advice you received from your attorney about the matter (or what was prepared in anticipation of litigation), you don't have to answer.

But many employers don't understand that the privileges have limits and that communications with other individuals who aren't lawyers might have to be disclosed, even if those individuals were deeply involved in the decision-making process or the defense of the case. Recent Massachusetts cases can help you understand why it's important to be careful about what you say to anyone who is not your attorney.

Private Investigator on Hot Seat

The first case involves "Jim," who sued the city of Worcester, its city manager, its police chief, and four detectives based on events that occurred in March 2014. Jim alleged that police officers assaulted him when they attempted to serve a search warrant on a passenger in his car. A witness to the incident, "Timmy," was arrested and later convicted and sent to prison.

Two years later, as part of Jim's suit against the city, his attorney hired a private investigator, "Ryan," to interview Timmy in prison. Jim's attorney attended that meeting. Timmy gave Ryan a handwritten statement about what he had seen on the day of the incident, and he identified some of the police officers who had been present. The city's attorney wanted to take Ryan's deposition, but Jim's attorney objected. The dispute landed in federal district court, where a judge determined what needed to be disclosed to the city and the other individuals being sued.

The court ruled that Ryan would be required to testify about facts related to Jim's case that were learned during his investigation. The work-product privilege, however, protected documents and other things that were prepared in anticipation of litigation. Accordingly, any reports Ryan prepared for Jim's attorney wouldn't have to be produced, but the facts recited in those reports would need to be disclosed.

Moreover, since Jim's attorney had voluntarily provided Timmy's statement to the city, the city's attorney could ask questions about communications that took place between Ryan and Jim's attorney during their meeting with Timmy. That's because as a third party with no interest in the outcome of the litigation, Timmy was free to tell anyone about anything that had been said in the meeting. Ortiz v. City of Worcester (D. Mass., 2017).

Price Chopper Gets Cut Down

In another recent case, Price Chopper was sued by some employees who argued they had been improperly classified as exempt and therefore improperly denied overtime pay. Back in February 2011, "Kevin," who was then Price Chopper's general counsel, decided that the company should hire a consultant to assist him in analyzing the classification of the company's department managers.

Kevin wanted to find out whether the department managers were properly classified as exempt from overtime under federal and state wage and hour law. He hired Saratoga Human Resources Solutions (SHRS) to conduct a study of store-level department managers. SHRS conducted an audit with the assistance of employees in Price Chopper's HR department and prepared an audit report for Kevin.

As part of their wage and hour suit against Price Chopper, the employees asked to review documents related to the audit. The company objected, claiming the information was protected by the attorney-client and work-product privileges. Again, the dispute landed in federal court, and a judge reviewed the documents and issued a decision.

The court ruled that communications between Price Chopper employees about the report's subject matter were protected under the attorney-client privilege but that the audit report and any SHRS documents related to the preparation of the report weren't protected.

Moreover, the court ruled that the work-product privilege, which protects information and communications that are part of a company's preparation for litigation, didn't apply because the communications preceded the lawsuit by many years.

Price Chopper was required to make many documents available to the employees' attorney—documents that in all likelihood could have been damaging to their defense. Devine v. The Golub Corporation, et al. (D. Mass., 2017).

Massachusetts Pay Equity Act Raises Privilege Concerns

In October 2016, we reported the passage of the Massachusetts Pay Equity Act, which was signed into law in August 2016 and goes into effect in July 2018. The Pay Equity Act is designed to foster equality between men and women who perform comparable jobs, addressing what is commonly referred to as the "gender gap" in wages. Employees who feel they haven't been paid a fair wage can file a lawsuit against their employers.

Included in the Act's language is a provision that allows an employer to defend such actions if it completes a "self-evaluation of its pay practices in good faith" and "can demonstrate that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work."

If the employer can show those two elements, it is entitled to an affirmative defense to liability against a claim of wage disparity as well as any claim of pay discrimination under the state's antidiscrimination statute, Mass. Gen. L. Ch. 151B, for a period of three years following the completion of the self-evaluation. However, to avoid the circumstances that Price Chopper faced with regard to its internal audit of exempt and nonexempt status, any self-evaluation should be performed by an attorney who represents the company.

As these last two cases show, audits and investigations performed by outside vendors may not be protected under either the attorney-client or work-product privileges. If you are concerned about how to protect internal investigations from disclosure to litigious employees, we suggest you contact your labor and employment counsel for advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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