A recent ruling in the ongoing General Motors ignition switch litigation is a win for companies facing challenges to what they thought were privileged internal investigations. The Southern District of New York ruled that attorney interview notes from GM’s investigation into its ignition switch issues are protected by the attorney-client privilege and work product doctrines. In re GM LLC Ignition Switch Litig., No. 14-MD-2543 (JMF), 2015 U.S. Dist. LEXIS 5199, at 252 (S.D.N.Y. Jan. 15, 2015) (hereinafter GM). GM had hired outside attorneys to investigate its ignition switch issues. Plaintiffs in a multi-district litigation involving claims for injuries and fatalities allegedly caused by GM’s faulty ignition switch sought the production of notes and memos stemming from counsel’s interviews of witnesses during the course of the investigation. GM withheld the notes on attorney-client privilege and attorney work product grounds.
The district court upheld the privilege, rejecting plaintiffs’ argument that the provision of legal advice had to be the primary purpose – and not just a primary purpose – of the investigation. This rejection of the more restrictive “primary purpose” test represents a welcome change from past precedent. Key factors in the district court’s decision were that outside attorneys were involved in the investigation, that employees were “aware . . . that the purpose of the interviews was to collect information to assist in providing legal advice to the company,” and that the interview notes were not provided to third parties. The court also found the notes were protected by the attorney work product doctrine because “[t]he materials at issue were produced in a situation far from the ‘ordinary course of business.’”
Not all courts apply the same test and not all investigations receive the same protections. In fact, in the case cited by the GM court, In re Kellogg Brown & Root, Inc., the D.C. Court of Appeals had reversed a district court ruling rejecting a claim of privilege and applied the more liberal “primary purpose” test. Despite this, just this past November, on remand, the district court again found that the defendants waived any privilege that might have existed under the more liberal test by putting the results of the investigation in play in the litigation. United States ex rel. Barko v. Halliburton Co., No. 1:05-cv-01276-JSG (D.D.C. Nov. 20, 2014). TheHalliburton defendants have now been ordered to produce documents relating to their internal audits and investigations into potential Code of Business Conduct violations, which unlike inGM were not conducted by attorneys.
The holdings in GM and Halliburton offer helpful guidelines for companies that may be involved in internal investigations and attorneys overseeing them. Companies should:
- engage in-house counsel or outside counsel as soon as an internal investigation becomes necessary
- ensure that attorneys conduct and oversee the investigation, and
- ask that the attorneys establish, in a written or other record, that a primary or significant purpose of the investigation is to offer legal advice.
These steps should at least help establish the existence of a valid privilege. Whether the privilege survives any subsequent challenge is unknown and depends on what is done with investigation materials, particularly whether they are used or shared externally, but at least the foundation has been laid.