Internal Investigations: What you really need to know

March 13, 2019

Presented by:

Mark Burak, Shareholder - Boston

617-994-5721

mark.burak@ogletree.com

Kate Rigby, Shareholder - Boston

617-994-5719

kate.rigby@ogletree.com

Lisa Rahilly, Vice President, Global Employment Law

Alexion Pharmaceuticals, Inc.

Overview:

•Privilege/work product basics

• Investigations — privileged/work product, or not?

•Practice tips

•Confusion over “who is the client”

•Upjohn warnings

•Disclosure obligations

Overview (cont’d)

•Best practice tips

•Privilege

•Documentation

• International considerations

Attorney-Client Privilege: The Basics

•The client is the Company (and only the Company)

•Only confidential communications are privileged

•Only communications necessary to providing a legal opinion or advice are privileged

•Only the Company holds the power to waive privilege

• It is the Company’s burden to establish privilege

When are communications privileged?

Upjohn v. US, 449 U.S. 383 (1981) - communications between a lawyer and employee are privileged only if:

• Employee communicated to counsel for the purpose of providing legal advice to the corporation;

• In-house counsel often act as a business partner, however.

• Communication involved matters within the scope of the corporate employee’s duties;

• Employees involved are made aware statements are necessary to allow the lawyer to provide legal advice to the corporation;

• The communications must be confidential when made and must be kept confidential.

Work Product Doctrine• Shields from discovery materials that were prepared in

anticipation of litigation or for trial

• Creates “zone of privacy”

• Allows lawyer to develop legal theories and strategies regarding a claim in litigation

• The courts often apply a “because of” test: “Was the document created because of anticipated legal action?”

• Point to a shift from the normal course of business into preparation for litigation

• Work product can protect documents prepared by consultants, etc. if prepared on behalf of counsel and with litigation in mind

Work Product Doctrine – cont’d

• No work product protection to documents with a dual purpose –documents that are created for both a business purpose and because of anticipated litigation

• If document would have been prepared in substantially the same form if there was no threat of litigation, then the court may find that the document is not protected by the privilege

• Thus, must demonstrate that the document would not have been prepared had there not been a threat of litigation

• But note: The identity of the employees who are interviewed by counsel may not be entitled to work product protection

Investigations – Privileged? Work Product?

•Whether the investigation itself is privileged is unclear

• Labeling it “privileged” or “work product” is not enough

•Depends on type/context

•Threatened litigation

•Mandated by policy

•Mandated by law

What is the purpose of the lawyer’s investigation?

Duran v. Andrew, No. 09-730, 2010 WL 1418344, at **10-14 (D. D.C. April 5, 2010)

Compelling production of documents when employer’s motive in investigation included business purposes such as determining whether plaintiff should continue to be employed

Is counsel acting in a legal capacity?

In re Vioxx Prod. Liab. Litig.,

501 F. Supp. 2d 789, 797 (E.D. La. 2007)

“It is often difficult to apply the attorney-client privilege in the corporate context to communications between in-house corporate counsel and those who personify the corporate entity because modern corporate counsel have become involved in all facets of the enterprises for which they work. . . . ‘As a result, courts require a clear showing that the attorney was acting in his professional legal capacity before cloaking documents in the privilege’s protection.’”

Work Product Doctrine -Traps

Long v. Anderson Univ.,

204 F.R.D. 129, 137-38 (S.D. Ind. 2001)

Compelling production of investigative materials because they were created in accordance with harassment policy, not “in anticipation of litigation”

Privileged or Work Product? Practice Tips

• Have HR/ER involve counsel early• At least for “serious” matters

• Determine whether investigation should or can be protected• Is litigation threatened? • Do allegations suggest significant legal or other exposure?• Or, are factual contents of investigation likely to be needed for

defense of resulting actions?

• Consider whether law or policy mandate the investigation • If so, consider two reports:

• Factual investigation report (non-privileged); and• Legal advice memo prepared in anticipation of litigation

Practice Tips (cont’d)

• State you “were engaged by the Company to conduct an investigation in my capacity as the Company’s employment law counsel”

• Investigations motivated by anything other than legal compliance may not be privileged

• State in the report that the investigation “was conducted solely for the purpose of providing legal advice to the company on compliance with applicable employment laws”

• Ensure recipients of investigation know to keep the report confidential

Practice Tips (cont’d)• Ensure that communications to/from HR/ER (and others)

clearly show that purpose of communication is to obtain/provide legal advice

• Avoid HR/ER knee-jerk reaction to always “grab” the privilege anytime an investigation ensues

• At conclusion of a privileged investigation, consider whether it should continue to be designated as such

• Always assume that factual portion of investigation may be discoverable

• Any reports or documents should be drafted with this in mind

“UpjohnWarning”Corporate Miranda Warning

“In dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.”— MRPC 1.13(f)

“Upjohn Warning”

• Lawyer represents the Company, not interviewee

• Investigation is to gather information needed to provide legal advice to the Company

• Conversation is privileged

• Privilege is between the Company and its lawyers

• Company may decide to share with others without the interviewee’s permission

• Interviewee must keep the conversation confidential

Failure to give an Upjohn Warning

• Interviewee may claim breach of attorney-client privilege

• Key evidence may be inadmissible

• Possible malpractice claim – by interviewee against lawyer!

Failure to give an Upjohn Warning

U.S. v. Ruehle, 583 F.3d 600 (9th Cir. 2009)

• Counsel interviewed CFO, and company later turned over the interview to the US Attorney

• Dispute over warnings and dual representation

• CFO moved to suppress statement

• In absence of documents memorializing warning, the court referred counsel to disciplinary authorities for failing to obtain a written waiver of the conflict and failing to advise the CFO to get separate counsel (GULP!)

Practice Tips

Provide an “Upjohn Warning” at the beginning of each investigatory interview conducted by a lawyer:

• You represent the Company and not the individual employee you’re meeting with

• Discussions may be privileged but the Company owns the privilege (not the employee) and may disclose the employee’s comments to others

• Explain that purpose for the interview is to assist you in providing legal advice to the Company on compliance with applicable employment laws

Practice Tips-cont’d

• If it appears that the employee to be interviewed may be a target of the investigation, you should further state that:

• There may be conflicting interests between the Company and the employee and that the employee may face personal liability

• The employee should consider exercising the right to retain his/her own legal counsel

• At a minimum, the interview notes should reflect that the warning was given

Accepting information on a “strictly confidential” basis• Privilege may not apply, so you may be a witness

• Disclosure, investigative follow-up or remedial action may be required by law (e.g., SOX, sexual harassment laws, OSHA, safety regulations, etc.)

• Your knowledge will be imputed to the Company

• You may end up as an investigative target, named civil defendant, or even a criminal defendant, if you don’t act upon the information

• Rules require you to act in the Company’s best interests

Investigation Best Practices to Maintain Privilege

• Maintain litigation/claim files separately – mark them privileged and confidential and store in a secure location

• Limit dissemination of information among decision making group

• Label your notes with your name and title

• Retain consultants via counsel

• Never present report to “non-client” or risk waiving the privilege

• Store report in a password protected fashion

Investigation Best Practices for Documentation • Take detailed/accurate notes

• Date/time/place

• Name/title

• Include all facts

• Handwritten/typed?

• Written report?

• Who is your audience

• How extensive does the report need to be?

• Will the report be discoverable?

Investigation Best Practices for Documentation • What to Include in a Written Report?

• Name of investigator • Date started/completed • Brief description of the scope of the investigation • Summary of the allegations • List of witnesses interviewed (with dates of interview(s),

including follow ups) • List of documents/materials reviewed • Findings of Fact (not legal conclusions, unless privileged and for that

purpose) • Recommendations?

• specifically directed • Risk of including recommendations in report

International Considerations

• Choice of Investigator: Understand local market/culture to determine whether to use a lawyer v. non-lawyer as an investigator

• Privilege: In some countries, privilege will not apply to in-house/outside counsel • Consider whether to run communications through U.S outside

counsel for maximum protection within the U.S.

• Information/Data Gathering • Email/device search may be restricted under some countries’

laws • Some countries require explicit consent • Check to see if employees have explicitly informed of the

Company’s data collection, use and transfer

International Considerations

• Interviews:

• In the U.S. we give warnings to witnesses (especially the accused) about not retaliating against employees

• Retaliation is legal and sometimes common in certain countries

• How to handle in a cross-border investigation (e.g., victim is in U.S., accused is outside of U.S.)

• Formal handwritten signed statements are sometimes expected (e.g., China), this takes priority over privilege concerns

• Discipline Resulting from Investigation:

• Do specific procedures apply before discipline/termination can be imposed?

Questions?

Ogletree Deakins is one of the largest labor

and employment law firms representing

management in all types of employment-

related legal matters.

The firm has more than 850 attorneys

located in 53 offices across the United States

and in Europe, Canada, and Mexico.

We represent a diverse range of clients, from

small businesses to Fortune 50 companies.

About the Firm

Atlanta

Austin

Berlin

Birmingham

Boston

Charleston

Charlotte

Chicago

Cleveland

Columbia

Dallas

Denver

Detroit (Metro)

Greenville

Houston

Indianapolis

Jackson

Kansas City

Las Vegas

London

Los Angeles

Memphis

Mexico City

Miami

Milwaukee

Minneapolis

Morristown

Nashville

New Orleans

New York City

Oklahoma City

Orange County

Paris

Philadelphia

Phoenix

Pittsburgh

Portland (ME)

Portland (OR)

Raleigh

Richmond

Sacramento

San Antonio

San Diego

San Francisco

Seattle

St. Louis

St. Thomas

Stamford

Tampa

Toronto

Torrance

Tucson

Washington, D.C.

Our 53 Offices

Thank you!