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Waters v. City of Petaluma

Management and HR departments often turn to independent outside investigators when dealing with sensitive or complex personnel investigations. Because the timing, methodologies, and findings of such investigations may be subject to close scrutiny in subsequent litigation, it is appropriate to protect such investigations under the attorney-client privilege to the extent possible. The California First District Court of Appeal recently upheld the attorney-client privilege and attorney work product protections of an impartial attorney-investigator’s report in City of Petaluma v. Superior Court (Cal. App. 1st Dist. June 8, 2016, No. A145437). The protections were upheld even though the engagement letter stated that the attorney-investigator would be performing an impartial fact investigation, but not providing legal advice. The ruling has not been published, but it underscores that credit unions as employers should exercise care in drafting and entering into engagement letters with outside investigators, and ensure that such agreements specifically articulate the privileged nature of the employer-investigator relationship. Further, we recommend additional protective measures to maintain privilege, such as having legal counsel retain the investigator, and/or having investigators direct their reports and findings to counsel, in addition to management or the Board.