Quirky Question # 155, Privilege Issues
Quirky Question # 155
A class action discrimination lawsuit was filed against our company. The proposed class included all African American employees who were employed during a specified time period. This group includes our former Vice President of Human Resources. We learned recently that the plaintiffs’ lawyers have met on several occasions with our former VP of HR. This troubles us since he was involved in numerous attorney-client privileged communications, both with in-house and outside counsel. Moreover, the early discovery that plaintiffs’ counsel served suggests that they have seen any number of documents that we generated to help us evaluate our workforce, our staff reductions, and whether there was any evidence of discrimination in our treatment of employees. Is it legit for the plaintiffs’ law firm to meet with our former VP of HR, even if he is in the protected class they are trying to represent?
Disappointingly, the problem you describe is not as rare as it should be. There are times when one of your former employees, including someone who has been privy to attorney-client communications, also is a member of a protected class. When a class action is commenced that encompasses that former employee, the stakes are raised.
In most instances, your former employee will respect the fact that the information to which he/she had access was privileged. They will understand that the privilege belongs to the corporation and requires that confidentiality be maintained. In some situations, however, your former employee may not be quite so respectful of his/her obligations to your company and may not maintain the confidentiality mandated by the attorney-client privilege. When a former employee like that meets an attorney willing to exploit the privileged information for that employee or for a class of similarly situated employees, you have a problem.
The facts you set forth would appear to demonstrate that you are confronting just that type of situation. As you noted, the “early discovery that plaintiff’s counsel served suggests that they have seen any number of documents [you] generated to help [you] evaluate [your] workforce . . . and whether there was any evidence of discrimination in [your] treatment of employees.” In short, it would seem that there may have been disclosure both of oral communications and privileged documents.
Even assuming the worst – that privileged oral communications and documents have been shared – does not mean, however, that you are without remedies. A recent decision from the federal District Court in Minnesota illustrates just how seriously and thoughtfully courts consider this situation.
In Gifford v. Target Corporation, Civil No. 10-1194 (ADM/RLE) (July 13, 2010), Judge Ann Montgomery ruled on a motion to disqualify plaintiffs’ counsel and dismiss the plaintiffs’ class action Fair Labor Standards Act (FLSA) lawsuit. Defendant’s motion was grounded on the fact that a person identified only as “Jane Doe” in the opinion, who worked for Target as a “psychologist” and “senior manager”, had extensive contact with plaintiffs’ counsel. In her interaction with plaintiffs’ counsel, Doe shared oral and written privileged communications she had had with Target’s in-house and outside counsel.
Before her own Target career came to an end, Doe oversaw the design and implementation of corporate-wide employee development programs, worked in performance management and organizational development, and managed a Talent Assessment and Insights team. Doe and Target presented differing perspectives on the extent of her interaction with in-house and outside counsel Doe minimized the contacts, arguing that she did not have “reason to seek legal advice from any lawyer.” Target, in contrast, pointed out that in a three-year period, she had had nearly 200 separate communications with one of Target’s outside counsel, to say nothing of her interaction with in-house counsel.
Doe’s retention of counsel to explore potential claims against Target coincided with an entirely separate individual, Linda Gifford, contacting the same counsel to explore her own claims against Target. Ms. Gifford initially met with plaintiff’s counsel regarding employment discrimination and retaliation claims. Over the course of her meetings with her lawyers, however, the focus of their dialogue shifted from an individual discrimination claim to a potential class action FLSA claim.
During the course of Doe’s conversations with plaintiff’s counsel, she revealed privileged communications and shared privileged documents. Doe’s counsel stated that she immediately apprised Doe not to share privileged communications and segregated the privileged materials Doe had provided. Nevertheless, the day after Doe’s provision of the privileged documents to her counsel, her lawyers posted a website announcement stating that the law firm was investigating a potential class action FLSA action against Target regarding the misclassification of store managers and assistant managers. Apparently, Doe was quite knowledgeable about, and had been involved in, the selection process for store managers and assistant managers.
Suffice it to state that the two potential lawsuits against Target – Gifford’s FLSA class action and Doe’s discrimination and retaliation lawsuit –proceeded on parallel tracks. Both Doe and the Gifford plaintiffs were represented by the same law firm. During the course of the communications between the law firm representing Doe and the Gifford plaintiffs, and Target’s counsel, it became apparent that information from Doe was affecting the plaintiffs’ firm’s assessment of Gifford’s potential claims. Compounding the problem, the plaintiffs’ law firm revealed that they had been provided privileged information but refused to return it, ostensibly because they were going to hold it for an in camera inspection by the judge since the documents “would likely constitute evidence of fraud.”
The discussions between the plaintiffs’ law firm and Target’s outside counsel proceeded. At some point, the plaintiffs’ law firm acknowledged that it had interviewed Doe as a fact witness in connection with Gifford’s potential FLSA class action, though it emphasized that it did not explore, and Doe did not reveal, privileged communications. Not long thereafter, Target informed plaintiffs’ law firm that if it brought suit against Target alleging FLSA violations, the firm would seek the dismissal of the lawsuit and the disqualification of counsel, based on their receipt of the privileged information from Doe.
In the meantime, Doe resolved her claims against Target. She then provided all Target documents in her possession to her counsel for return to Target, including both privileged and non-privileged information. These documents allegedly were quickly inspected by her law firm and then returned to Target.
Within approximately six weeks, the plaintiffs’ law firm (now representing just Gifford and her fellow class members) wrote a letter to Target captioned “ETL (Executive Team Leader) FLSA Wage and Hour Litigation.” The letter requested Target to produce certain documents for the firm’s “pre-litigation investigation.” Target maintained that the categories of material could not have been known to the law firm but for Doe’s disclosure of privileged information. The Gifford lawsuit was filed on April 7, 2010. Target moved to disqualify and dismiss eight days later.
The Judge began her analysis by pointing out that attorney disqualification is committed to the Court’s discretion and that the issue involved balancing the interests of the attorneys, the clients, and the public. The Court stressed the importance of considering: a) the parties’ right to choose their own counsel; b) the opposing parties’ rights to ensure that the trial will not implicate the risk that confidential information has been used against it; and c) the public’s confidence in the legal profession and the need to ensure the integrity of judicial proceedings.
With these principles in mind, the Court disqualified the plaintiffs’ law firm. The Court found that “conduct has occurred that taints these proceedings and, if left unremedied, potentially undermines public confidence in the legal profession.” In reaching this conclusion, the Court focused on several factors.
First, the Court felt the temporal proximity of all of the meetings and communications, both between plaintiffs’ counsel and Gifford, and plaintiffs’ counsel and Doe, raised suspicion. Second, at the time plaintiffs’ counsel first met with Doe, she was still employed by Target. Third, although the plaintiffs’ firm tried to minimize the significance of Doe’s role within Target, the Court rejected their arguments, concluding that Doe was an executive with significant responsibilities for the human resources function who had been privy to numerous privileged communications. Fourth, the Court found that given Doe’s lack of legal training and lack of sophistication as to the scope of the attorney-client privilege, plaintiffs’ counsel should have had a heightened sensitivity with respect to gathering information from her. Fifth, the Court was troubled by the fact that the plaintiffs’ law firm had received documents that clearly were privileged and had not returned them immediately to Target. Sixth, the Court also was concerned about the fact that plaintiffs’ counsel did review these documents, if only in a cursory manner. Seventh, the Court was uneasy about the fact that despite all of the above facts, the plaintiffs’ firm specifically interviewed Doe about information pertinent to the potential FLSA class action.
As referenced above, this analysis led the Court to conclude that there were serious doubts as to whether the case could proceed “without the threat of a ‘continuing taint on the litigation and trial.’” Under these facts, the importance of maintaining the integrity of the judicial process and the public confidence in the judicial system outweighed the Gifford plaintiffs’ right to counsel of their own choosing.
Although the Court disqualified the plaintiffs’ law firm, it did not dismiss the FLSA lawsuit. Similarly, the Court did not disqualify a separate law firm that had not engaged in the conduct described above. However, the Court did order the other law firm to submit an affidavit describing in considerable detail its interaction with Doe (if any) and the extent to which it may have been affected by exposure or access to the information Doe provided co-counsel. This affidavit was to include information regarding their direct contact with Doe, their access to any Doe-provided privileged information, and their communications (oral and written) with Doe’s disqualified counsel that related to the privileged communications.
The Gifford decision, and an earlier decision from the federal District Court in Minnesota, Arnold v. Cargill, Inc., Civ. No. 01-2086, 2004 WL 2203410 (D. Minn. September 24, 2004) which involved an even more egregious disregard of the attorney-client relationship, demonstrate that defendants are not without remedies when confronting situations of this kind. Particularly where the individual sharing information with the plaintiff’s counsel is a corporate executive or senior manager who had routine access to privileged communications, courts are justifiably protective of the attorney-client relationship.
From a practical perspective, these cases also suggest that when conducting the separation meeting or exit interview of an executive who had regular or even occasional access to privileged communications (whether oral or written), particular care should be given to: a) determining the extent to which the departing employee had access to this type of information; b) insisting on a return of any documents (in hard copy or electronic form), with a particular emphasis on privileged materials the employee may have retained; and c) reminding the departing employee of his/her responsibilities to maintain the confidentiality of company data in general and privileged communication in particular. When a company is concerned about the prospect of litigation with the about-to-be ex-employee, it is imperative to ensure that the exiting employee understands his/her post-termination obligations to his/her employer.
As you can see from the discussion above, if your suspicions are confirmed and your former employee has shared privileged information with his counsel, there are a number of avenues you may be able to pursue. There may be some complicating variables since your ex-employee is actually a member of the protected class in the discrimination litigation, and is entitled to retain counsel, but that factor should not diminish the sanctity of the attorney-client privilege and your legitimate interest in protecting privileged data.