Line in the Sand: District Court Untangles Boundaries of Legal Advice, Attorneys’ Role in Employee’s Termination Decision

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by Erica M. Clifford, Esq.

The District Court of New Jersey recently weighed in on a thorny discovery dispute, deciding whether written communications exchanged with County Counsel and outside litigation counsel could be subject to discovery in a litigation despite the assertion of attorney/client privilege. In Graham v. Monmouth County Buildings and Grounds, Magistrate Judge Lois Goodman ultimately found that these communications were privileged, but ordered the deposition of a corporate representative to provide testimony as to the identities of the individuals involved in the decision to terminate the plaintiff – whether or not that included counsel – in addition to the factual considerations underlying the decision.

Plaintiff, Luther Graham, was formerly employed by Monmouth County as an electrician with the Buildings and Grounds Department. While still employed, he sued the County, alleging discrimination and failure to promote. Prior to trial, his employment was terminated.  Plaintiff filed a second lawsuit against the County, alleging both discrimination and retaliatory discharge.  County Counsel and the Assistant County Counsel were deposed in connection with the second litigation, because they were identified as having a role in the termination decision. At his deposition, the Assistant County Counsel refused to answer any questions related to communications regarding the termination decision, on the grounds that they were privileged. However, County Counsel testified at his deposition that outside counsel was also involved in the decision to terminate Graham.

At his deposition, outside counsel denied participating in any collective termination decision. The Department Superintendent, County Administrator, and Supervisor of the County’s Office of Professional Standards also denied having a role in Plaintiff’s termination. Graham filed a motion to compel the communications with counsel, arguing that he was entitled to discover the factual grounds for his termination, and the identities of the decision-makers.  The County objected to the production of any email correspondence in which County Counsel, the Assistant County Counsel, and outside counsel were included, over the course of a six month period leading up to Plaintiff’s termination, citing the attorney/client privilege as grounds for withholding the documents.

In analyzing whether the privilege applied to the communications with counsel, Judge Goodman noted that “the privilege only applies to a communication when the attorney is acting as an attorney; it does not apply where an attorney functions in a business or professional role.” 

Following an in camera review, the Court agreed with the County that all of the communications at issue were privileged.  Judge Goodman based her decision on the fact that the communications were exchanged during the pendency of the first litigation (and that there was a related union hearing for which the County attorneys were preparing).  Significantly, the court also determined that the documents did “not provide insight as to who specifically made the business recommendation to terminate Plaintiff and when that decision was made.”

The Court went on to discuss the distinction between express waiver, which occurs with the voluntary disclosure of information to a third party outside of the attorney/client relationship, and implied waiver, when the alleged privileged communications are placed at issue in the litigation.  The Court found that there was no implied waiver, because the County did not put any of its attorneys’ legal advice at issue, and Graham did not argue that he was entitled to the Defendants’ litigation strategy.

Judge Goodman did not end her analysis there, however, and found that the Assistant County Counsel’s refusal to answer any questions related to the termination was an “inappropriate assertion of attorney/client privilege.” She held that in a retaliatory discharge case, the intent of the individuals involved in the termination decision was critical to the plaintiff’s case, and he was entitled to the identities of those individuals, and to the facts upon which the decision-makers allege to have based their decision.

The Court denied the plaintiff’s motion to compel the production of the email communications, but ordered the County to produce a corporate representative to testify as to the identities of those individuals who “contributed to the process that led to the recommendation to terminate Plaintiff,” and to disclose the facts upon which the decision to recommend termination was based. 

Judge Goodman’s analysis in defining the line between providing legal advice and participating in clients’ business decisions offers an important reminder to management-side attorneys.  While attorneys’ communications with their clients may be presumed privileged, the identities of those individuals involved in the decision to terminate an employee are not.  Whether one of the decision-makers is also inside or outside counsel does not bar an employee from making this inquiry.  In-house legal departments and outside counsel should note this critical distinction and be wary of the line in the sand that may transform an attorney into a fact witness by virtue of the substance of the discussion.

Please contact an NFC team member if you have any questions or seek further assistance.

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