A corporation engages in an internal investigation, and the results are handed to its lawyers.  It would appear that the communications surrounding the investigation would be protected by attorney-client and/or work product privilege – correct?  Not so easily, according to a wave of recent cases which have clarified the scope of the attorney-client and work-product privileges in the context of internal corporate investigations.  While the Supreme Court decision in Upjohn Co. v. U.S., 449 U.S. 383, 394 (1981), confirmed that the scope of the attorney-client privilege extended to the internal corporate investigation context, the recent case law demonstrates that courts are not willing to push Upjohn to its limits.

Where the strict conditions in Upjohn are satisfied, courts are likely to find corporate communications in the internal investigation context privileged.  In In re General Motors LLC Ignition Switch Litigation, 2015 WL 221057 (S.D.N.Y. Jan. 15, 2015), the Southern District of New York considered whether documents related to an internal investigation of GM-branded vehicle recalls which was conducted at the behest of General Motors LLC’s outside counsel were protected from discovery.  The court found the circumstances essentially identical to those in Upjohn, where the Supreme Court held that documentation and communications by corporate employees who provided information directly to counsel as part of an internal investigation directed by counsel and for the purpose of enabling counsel to render legal advice were protected by the attorney-client privilege. 

The General Motors court held that, because the investigation was conducted as a result of the pursuit of legal advice at the direction of counsel; because those interviewed as part of the investigation were told the purpose was to assist counsel in rendering legal advice and as such the content of the interviews was to remain confidential; and because the communications underlying the report were not shared with third parties, the attorney-client privilege attached to protect dissemination of the documents.

The documents were also held to be subject to the work-product doctrine.  The district court found that General Motors LLC demonstrated the documents were created “in anticipation of litigation” in light of a pending DOJ investigation and other threatened litigation.  Moreover, the court held that the investigative materials would not have been created in the same form had there been no anticipated litigation.  In so finding, the court relied upon statements given to witnesses “that the purpose of the interviews was to gather information to assist in providing legal counsel.”

But to the extent the circumstances surrounding the internal investigation diverge from those in Upjohn, courts appear unwilling to stretch the scope of its protection.  Thus, for example, where the internal investigation would have been conducted regardless of impending litigation, one court has found that documents relating to such an investigation are not protected by the attorney-client privilege.  In Chevron Midstream Pipelines LLC v. Settoon Towing LLC, 2015 WL 65357 (E.D. La. Jan. 5, 2015), a maritime accident between plaintiff’s and defendant’s vessels led to one death, many injuries, and extensive property damage.  Following the incident, Chevron’s in-house lawyers initiated a “Root Cause Analysis” investigation to examine the accident and collect information necessary for the in-house counsel to provide proper guidance.  The investigation was deemed “legally chartered” so that the documents surrounding the investigation were marked “highly confidential” and were maintained in the strictest confidence.  Litigation ensued and Settoon moved for production of the Root Cause Analysis and related documents. 

The U.S. District Court for the Eastern District of Louisiana held that the majority of the documents were not protected by the attorney-client privilege because “they were sent to non-lawyers in the company and, while [its in-house counsel] stated … that he kept information related to the RCA investigation in the ‘strictest’ of confidence, he did not (and likely cannot) say the same thing about the various non-lawyers who received the subject documents.”

As to the work-product doctrine, the court held that Chevron failed to establish that the “primary motivating factor” in the creation of the internal report was to aid in possible future litigation.  In reaching this conclusion, the court was persuaded by testimony of Chevron employees and internal corporate documents stating that RCA reports were routinely prepared following near-accidents and accidents.  As such, the court held that, while the investigation “was conducted in part to aid in preparation for litigation, it was not primarily motivated by that concern.”  That the RCA was labeled “legally chartered” did not prove persuasive, as the court found that the report would have been created “regardless of the possibility of litigation.”  As such, the work-product privilege was held inapplicable.

Corporate investigation communications and documents were deemed similarly devoid of attorney-client or work product privilege in Wultz v. Bank of China Limited, 2015 WL 362667 (S.D.N.Y. Jan. 21, 2015), where an investigation of potential terrorist-related account activity was conducted by the defendant bank.  The investigation followed a demand letter sent by plaintiffs’ counsel, but the investigation was admittedly not directed by defendant’s counsel.  And yet, defendant claimed that documentation surrounding the investigation was privileged because the non-lawyer employee who led the investigation did so “with the expectation” that the bank’s counsel would use the information to counsel its client.  The court summarily held that such personal expectation alone – absent any corroborating evidence of counsel’s requests – was insufficient to support a claim of attorney-client privilege.  To this end, the court cited Second Circuit case law stating that the privilege “protects communications between a client and an attorney, not communications that prove important to an attorney’s legal advice to a client.”  Wultz, 2015 WL 362667 (quoting U.S. v. Ackert,  169 F.3d 136, 139 (2d Cir. 1999).

The Wultz court similarly found the work product doctrine unavailing because the bank was unable to demonstrate that the investigation was intended to aid counsel in preparation for litigation.  Even though the bank contended that the investigation was conducted because of the demand letter, the operative consideration was whether the same report would have resulted if the demand letter had been sent but no litigation was threatened.  Viewed in this light, the court was not satisfied that the bank had demonstrated that the investigative materials “would not have been created in essentially similar form irrespective of the litigation.”  Indeed, the court surmised that, had it learned that terrorist activity was being conducted through its accounts, even in the absence of anticipated litigation, the bank would have conducted a similar internal inquiry to evaluate whether it should close those accounts and report its findings to the regulatory authorities, or to educate its employees about certain risks. 

The recent case law demonstrates the extent to which courts are continuing to remain faithful to the guidance articulated in Upjohn nearly twenty five years ago but are reluctant to broadly apply the attorney-client and work-product privilege in the internal corporate investigation context.  Where a corporation is unable to demonstrate that its counsel specifically directed an investigation for the express purpose of enabling it to assist with a pending or threatened litigation, documentation surrounding the investigation is likely to be deemed discoverable.