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206 - Ethical Issues in Employment Investigations and Litigation Deborah L. Martin Heather Anderson Darren S. Chiappetta Wanda M. Morris.

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Presentation on theme: "206 - Ethical Issues in Employment Investigations and Litigation Deborah L. Martin Heather Anderson Darren S. Chiappetta Wanda M. Morris."— Presentation transcript:

1 206 - Ethical Issues in Employment Investigations and Litigation Deborah L. Martin Heather Anderson Darren S. Chiappetta Wanda M. Morris

2 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.

3 WHY INVESTIGATE? Triggers – Helpline – Internal Complaint – External Complaint/Litigation – Audit Benefits Consequences

4 WHY INVESTIGATE? Triggers Benefits – Faragher/Ellerth Defense – Avoid Punitive Damages – Prepare Defense/Know what Feds will find Consequences

5 WHY INVESTIGATE? Triggers Benefits Consequences – Punitive damages – Surprised executives

6 WHO SHOULD INVESTIGATE? Human Resources In-house counsel Outside counsel Audit Private investigator

7 INTERVIEW PREPARATION

8 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.

9 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?

10 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?).

11 PRIVILEGE & CONFIDENTIALITY CONSIDERATIONS

12 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

13 PRIVILEGE ISSUES Interviews by counsel Investigation report – Might you want to waive the privilege? – Admissibility issues at trial Employee communication with separate counsel

14 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)

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

16 PRIVACY AND SOCIAL MEDIA

17 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?

18 PRIVACY AND SOCIAL MEDIA Employers 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

19 PRIVACY AND SOCIAL MEDIA Determine 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?

20 GENERATING THE INVESTIGATION REPORT

21 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

22 VERBAL REPORT BENEFITS 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

23 WRITTEN REPORT BENEFITS 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

24 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

25 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

26 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)

27 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?

28 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?

29 SELF-DISCLOSURE CAUTION Once report shared with 3 rd 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

30 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)

31 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?

32 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

33 QUESTIONS?

34 THANK YOU!

35 Attorney-Client Privilege and Internal Company Communications Protecting communications with in-house counsel

36 Akerman | 36  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?

37 Akerman | 37  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

38 Akerman | 38  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

39 Akerman | 39  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

40 Akerman | 40  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

41 Akerman | 41  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

42 Akerman | 42  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

43 Akerman | 43  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?

44 Akerman | 44  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?

45 Akerman | 45  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

46 Akerman | 46  (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?

47 Akerman | 47  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

48 Akerman | 48  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

49 Akerman | 49  (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?

50 Akerman | 50  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

51 Akerman | 51  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

52 Akerman | 52  (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?

53 Akerman | 53  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

54 Akerman | 54  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

55 Akerman | 55  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


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