When an employer retains an outside attorney to conduct a sexual harassment investigation, is that attorney’s ultimate report protected by the attorney-client privilege? If you thought yes would be the obvious answer, you would be mistaken as to the obvious part. It took the intervention of the state Supreme Court in Waters v. City of Petaluma before yes became the answer.
In City of Petaluma v. Superior Court (Cal. Ct. App., June 8, 2016, No. A145437) 2016 WL 3568106, Andrea Waters (Waters) began working as a firefighter and paramedic for the City of Petaluma (City). Waters claimed she was immediately subjected to harassment and discrimination, and filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission (EEOC). The City retained outside counsel to investigate the charge. While counsel agreed to use its employment law and investigation expertise to assist the City, only the City Attorney would advise on how to respond to Waters’s EEOC complaint. Within this construct, outside counsel eventually generated a written report (“the Report”).
Waters eventually filed a lawsuit, and sought the Report. The City objected based on the attorney-client privilege. In overruling the City’s objection, the trial court found the City had waived the objection in various ways, including that the terms of outside counsel’s engagement specified that it would not render legal advice. The City sought review of this decision by the appellate court, which initially affirmed the trial court. The City then sought review of that ruling by the Supreme Court, which ordered the appellate court to look again. This time, the appellate court saw it differently.
The initial inquiry, the appellate court noted, should focus on the “dominant purpose of the relationship” between attorney and client, not on the purpose served by a particular communication. If a court determines that communications were made during the course of an attorney-client relationship, the communications, including any reports of factual material, would be privileged even if the purpose of retaining the lawyer was to secure legal services and not advice per se.
In this instance, the City retained outside counsel to provide a legal service because it was hired to act as an attorney in bringing legal skills to assist the City in developing a response to Waters’s EEOC complaint and the anticipated lawsuit. Outside counsel was not merely a fact finder whose sole task was to gather information and transmit it to the City. Rather, the dominant purpose of outside counsel’s representation was to provide professional legal services to the City Attorney so that it, in turn, could advise the City on the appropriate course of action.
Does the Waters decision help employers when they retain a lawyer to investigate a harassment claim? This time the obvious answer is yes if the employer retains counsel for the dominant purpose of securing legal services or advice.