Daily Blast July 1, 2016

Litigators should take note of a recent Court of Appeal decision regarding attorney-client and work product privileges. In City of Petaluma v. The Superior Court of Sonoma County (Jun. 30, 2016, A145437) __ Cal.App.4th __, the First Appellate District, Division Three (San Francisco) held that a party retaining outside counsel for a limited factual investigation created an attorney-client relationship, even though counsel was specifically directed not to provide legal advice as to which course of action to take.

The plaintiff, while on leave from her job as a firefighter and paramedic for the City of Petaluma (City), filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission, alleging sexual harassment and retaliation. (Slip opn., p. 2.) The City Attorney, concluding that the plaintiff was exhausting administrative remedies prior to filing suit, retained outside counsel (Oppenheimer) to investigate the plaintiff’s EEOC charge. (Id. at p. 3.) The City and Oppenheimer signed a retention agreement, which called on Oppenheimer to investigate and prepare a report of her findings. (Ibid.) The agreement specified that it created an attorney-client relationship, but also stated that no legal advice was to be rendered as to what action to take based on the results of the investigation. (Id. at pp. 3-4.)

The plaintiff subsequently filed suit under the Fair Employment and Housing Act alleging various discrimination and harassment causes of action. (Slip opn., p. 4.) The City denied all allegations, and asserted an affirmative defense based on the avoidable consequences doctrine, which allows an employer to escape liability for damages “the employee more likely than not could have prevented with reasonable effort and without undue risk . . . by taking advantage of the employer’s internal complaint procedures. . . .” (Ibid.) In discovery, the plaintiff sought Oppenheimer’s report. The City objected on the grounds of the attorney-client privilege and the work product doctrine. (Id. at pp. 4-5.) The plaintiff moved to compel production, which the trial court granted, reasoning that because no legal advice was sought from Oppenheimer, the report was not subject to the attorney-client or work product privileges. The court also concluded the City waived any privilege by asserting an avoidable consequences defense. (Id. at p. 5.)

The Court of Appeal issued a writ of mandate. (Slip opn., p. 13.) The court held that Oppenheimer’s report was protected by both the attorney-client privilege and the work product doctrine. (Id. at p. 11.) While Oppenheimer did not render legal advice, the court stated that “an attorney-client relationship may exist when an attorney provides a legal service without also providing advice. The rendering of legal advice is not required for the privilege to apply.” (Id. at p. 9.) Because the City retained Oppenheimer to provide a legal service based on her expertise, an attorney-client relationship was created, and her investigative report was protected. (Id. at pp. 9-10.) The court also concluded “that an employer does not waive any applicable privileges associated with an investigation conducted after the employee leaves his or her employment when the employer asserts an avoidable consequences defense.” (Id. at p. 11, original italics.)