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March 10, 2016Download PDF

Pay Heed to Payton

When established case law lies fallow, many times it becomes forgotten. Then, when it becomes applicable, parties fail to abide by its constructs. Such could be the case with Payton v. New Jersey Turnpike Authority, 148 N.J. 524 (1997).

Payton sued the Turnpike Authority for sexual harassment, alleging that her supervisors harassed her and failed to respond adequately to her complaints. Prior to the lawsuit, the Authority had conducted an internal investigation. As a result thereof, Payton’s claims were considered valid and the supervisors charged with the harassment were disciplined. In response to Payton’s lawsuit, the Authority raised the investigation and subsequent disciplinary action as an affirmative defense.

In furtherance of her lawsuit, Payton sought discovery from the Authority, including the Authority’s internal investigation. The Authority had indicated that the initial findings had been made by the Equal Employment Opportunity Officer, who prepared the final investigative report in conjunction with the in-house counsel. The Authority sought to have all aspects of the internal investigation protected from discovery. One of the Authority’s arguments was that the entire investigatory process was protected by the attorney-client privilege since the Authority’s in-house counsel participated in the investigation.

While the Supreme Court did not dispose of the matter, but remanded issue to the trial court to resolve, it did provide guidance as to the applicability of the attorney-client privilege to the investigation and documents sought through discovery:

While an organization or corporation like defendant can be a ‘client’ for purposes of the privilege (citations omitted), a fine line exists between an attorney who provides legal services or advice to an organization and one who performs essentially nonlegal duties. An attorney who is not performing legal services or providing legal advice in some form does not qualify as a “lawyer” for purposes of the privilege. Thus, when an attorney conducts an investigation not for the purpose of preparing for litigation or providing legal advice, but rather for some other purpose, the privilege is inapplicable. (Citations omitted). That result obtains even where litigation may eventually arise from the subject of an attorney’s activities.
To complete the “road map” for the trial court, the Supreme Court held:

The key issue regarding the applicability of the privilege in this case is the purpose of the various components of the investigation that defendant initiated into plaintiff’s allegations of sexual harassment. If the purpose was to provide legal advice or to prepare for litigation, then the privilege applies. However, if the purpose was simply to enforce defendant’s anti-harassment policy or to comply with its legal duty to investigate and to remedy the allegations, then the privilege does not apply.
Since Payton, harassment and discrimination complaints have proliferated, spawning a plethora of anti-harassment policies, internal investigations, and lawsuits. Employers retain the service of legal professionals, either through in-house counsel or outside attorneys, to defend them in these matters. Legal professionals and employers must remember the admonitions of Payton and avoid any involvement in internal investigations unless it is to provide legal advice or to prepare for litigation. Otherwise, both the professional and the case will be compromised.