NC Supreme Court: Employers Can’t Avoid Disclosure Obligations by Laundering Internal Investigations Through Outside Counsel
Summary by Sam McGee, Legal Affairs Counsel
Opinion filed: Aug. 19, 2022
Attorney for the case: James P. Cooney, III
Amicus brief writers: Paul Smith, Laura Wetsch and Narendra Ghosh
North Carolina Supreme Court No. 219A21
The North Carolina Supreme Court issued an opinion last week addressing employers’ obligation to disclose communications with outside counsel related to investigations into alleged sexual harassment. The employer in question was required under its own policies to investigate any complaint of sexual harassment, and when a complaint was raised, chose to retain a law firm to conduct the investigation. It then sought to avoid disclosing any communications with counsel regarding the investigation by asserting attorney-client privilege. The trial court reviewed each of the communications at issue, and required disclosure of certain documents the “primary purpose” of which was not seeking or providing legal advice. The employer appealed to the North Carolina Supreme Court.
NCAJ filed an amicus brief, arguing that the trial court applied the correct standard, and that employers should not be permitted to avoid their disclosure obligations by laundering an internal business investigation through outside counsel. In a unanimous, per curiam decision, the Supreme Court affirmed several significant points with regard to the attorney-client privilege, all of which were argued in the NCAJ brief:
- The privilege applies identically to communications with in-house and outside counsel;
- Conducting sexual harassment/discrimination investigations is a regular part of doing business, and does not necessarily amount to seeking or providing legal advice; and
- Where communications mix legal and business advice, courts look to the “primary purpose” of the communication.
Consistent with the contentions of the NCAJ brief, the Supreme Court held that the trial court properly applied these legal principles. Accordingly, the decision of the trial court was affirmed.