The Issue

Often, when a company decides to take corrective action concerning a particular product, it is prompted by the results of an internal investigation which finds a defect in the product.[1]  Regarding information obtained during the investigation, the company will seek ways to shield the documents and/or information generated through some form of legal privilege or other available mechanism.  However, this goal can be extremely difficult to achieve since the materials gathered typically fall outside the scope of well-established privileges (attorney-client, work product, etc.). 

Many commentators have urged for the application of what has come to be known as the self-critical analysis privilege.  Simply stated, this privilege prevents disclosure of self-evaluative material where the public interest in maintaining confidentiality outweighs the public's need for discovery.  However, this privilege is not generally accepted and, although it has been applied by some courts, it has been rejected by many others. 

This paper discusses the principal privileges companies can successfully utilize to protect information generated by an internal investigation, how these privileges are applied by the courts, and the dangers of relying solely on the self-critical analysis privilege to shield information generated during the course of an internal investigation.     

Background Information on Privileges

The Supreme Court has long held that "the public …has a right to every man's evidence."  United States v. Bryan, 339 U.S. 323, 331 (1950).  Concerning privileges, the Supreme Court has instructed that they should not be "lightly created nor expansively construed, for they are in derogation of the search for the truth."  United States v. Nixon, 418 U.S. 683, 710 (1974).  In accord with this concern, Federal Rule of Civil Procedure 26(b) states:

"Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(i), (ii), and (iii)."

Pursuant to Rule 26, the primary questions concerning discoverability of any matter are:

(1)           Are the documents and/or other materials protected by privilege?

(2)           If not protected by privilege, are the documents and/or materials relevant to the issues presented in the litigation?

Invariably it is argued that at least some of the information generated by the company's internal investigation is relevant to the issue(s) presented in the litigation.  Thus, it is imperative that the company structure its internal investigation so that the materials are protected by privilege(s) to the greatest extent possible.

PRIVILEGES WHICH MAY SERVE TO SHIELD THE INFORMATION

I.  The Work-Product Privilege

The work-product doctrine was established by the Supreme Court in Hickman v. Taylor, 329 U.S. 495, 511 (1947).  This doctrine, which is now codified by Rule 26(b)(3) of the Federal Rules of Civil Procedure, protects from discovery documents prepared "in anticipation of litigation" or for trial.   However, the doctrine provides only a qualified protection because the party seeking disclosure can overcome this privilege by showing "a substantial need of the materials and an inability to obtain the materials without undue hardship."

Whether a document was prepared "in anticipation of litigation" depends on the nature of the claim and the type of information sought and, therefore, turns on the facts of each case.  Generally, a document is considered to have been prepared "in anticipation of litigation" when the document "can fairly be said to have been prepared or obtained because of the prospect of litigation." U.S. v. Aldman, 134 F.3d 1194, 1202 (2nd Cir. 1998); citing Charles Alan Wright, Arthur R. Miller, and Richard L. Marcus, 8 Federal Practice & Procedure § 2024, at 343 (1994) (emphasis added). 

Documents prepared in the ordinary course of business, or that would have been created in essentially similar form irrespective of litigation, are not protected by the work-product privilege.  This is so because by definition they were not created owning the prospect of litigation.  Id.  See also, Fed.R.Civ.P. 26(b)(3), Advisory Committee's note ("Materials assembled in the ordinary course of business, or pursuant to public requirements unrelated to the litigation, or for other non-litigation purposes are not under the qualified immunity provided by this subdivision") (emphasis added). 

This rule applies even if ordinary course documents help in preparation for litigation, because it cannot be fairly said that they were created "because of" actual or impending litigation.  Id.; citing Wright & Miller § 2024, at 346 ("even though litigation is already a prospect, there is no work-product immunity for documents prepared in the regular course of business rather than for purposes of the litigation").  Accordingly, reports and other materials made in the regular course of business fall outside of work-product protection.

Due to its limitations, the work-product doctrine is often of little help to the company that has generated materials as part of a routine internal investigation.  However, in the hands of an attorney familiar with the privilege, it can be used to structure the internal investigation in such a manner that at least some of the information generated "can fairly be said to have been created" because of actual or impending litigation.

II.  The Self-Critical Analysis Privilege

a.             Background

The self-critical analysis privilege prevents disclosure of self-evaluative material when the public interest in maintaining confidentiality outweighs the public's need for discovery.  Patricia L. Andel, Inapplicability of the Self-Critical Analysis Privilege to the Drug and Medical Device Industry, 34 San Diego L. Rev. 93 (1997).  More specifically, the privilege

Protects an organization or individual from the Hobson’s choice of aggressively investigating accidents or possible regulatory violations, ascertaining the causes and results, and correcting any violations or dangerous conditions, but thereby creating a self-incriminating record that may be evidence of liability, or deliberately avoiding making a record on the subject (and possibly leaving the public exposed to danger) in order to lessen the risk of civil liability.  The self-critical analysis privilege is analogous to, and based on the same public policy considerations as, Rule 407, Federal Rules of Evidence, which excludes evidence of subsequent remedial measures.”  Reichhold Chemicals, Inc. v. Textron, Inc., 157 F.R.D. 522, 524 (N.D.Fla. 1994).

Proponents of the privilege argue that without it (a dynamic intended to encourage candid self-evaluations and appraisals of problems in order to implement change and encourage subsequent remedial measures), a “chilling effect“ on such self-analysis would result.  See e.g., In re Air Crash near Cali, Columbia on December 20, 1995, 959 F. Supp. 1529, 1533, (S. D. Fla. 1997).  Additionally, it is argued that it may be unfair for a court to require a party to turn over to an opposing litigant self-damning assessments that the government has required it to prepare.  Dowling v. American Hawaii Cruises, Inc., 971 F.2d 423 (9^th Cir. 1992).

The self-critical analysis privilege originated over thirty-five years ago in Bredice v. Doctors Hospital, Inc., 50 F.R.D. 249 (D.C. 1970).  In Bredice, the plaintiff, the administratrix of a decedent's estate, filed a medical malpractice action against the hospital that treated the deceased.  In discovery, the plaintiff sought information and reports generated by the hospital's staff committee meetings, specifically, (1) minutes and reports of any board or committee of Doctors Hospital or its staff concerning the death of the decedent, and (2) reports, statements, or memoranda, including reports to the malpractice carrier, reduced to writing, pertaining to the deceased or his treatment, no matter when or to whom or by whom made.  Id. 

According to the court, the sole purpose of the "committee meetings" was to improve the care and treatment of hospital patients through a "thorough review and analysis of the clinical work done in the hospital", with specific regard to "deaths, unimproved cases, infections, complications, errors in diagnosis, and results of treatments of patients in the hospital."  Id. at 250.  These meetings were "essential to the continued improvement in the care and treatment of patients."  Id.  More important, "to subject these discussions and deliberations to the discovery process…would result in terminating such deliberations."  Id.  Based on these "overwhelming public interest" concerns, the court ruled that the information exchanged in the committee meetings was entitled to a qualified privilege.  Id. at 251.      

Since Bredice, "many courts have applied, and most states have codified the common-law privilege enunciated in Bredice to protect medical peer review documentation.  Patricia L. Andel, Inapplicability of the Self-Critical Analysis Privilege to the Drug and Medical Device Industry at 105-06.  However, despite its origins in Bredice over thirty-five years ago, most courts have refused to apply the self-critical analysis privilege beyond the medical peer review context.

In fact, the privilege is not generally accepted.  Indeed, although it "has been applied by some courts, it has been rejected by many others, and it is neither widely recognized nor firmly established in federal common law."  Abdallah v. Coca-Cola Co., 2000 WL 33249254 at 5 (N.D.Ga. Jan. 25, 2000) (citing Dowling at 425-26).  In fact, very few circuit courts of appeals have directly addressed the self-critical analysis privilege.  Abdallah at 5.  Moreover, many times circuit courts have avoided analyzing the privilege altogether, by finding the documents to be protected upon some other basis.  Id; citing Holt v. KMI Continental, Inc., 94 F.3d 123, 134, (2^nd Cir. 1996); Lacloair v. City of St. Paul, 187 F.3d 824, 828-29 (8^th Cir. 1999).  In addressing these issues, one commentator has written that despite its origins in Bredice nearly thirty-five years ago, the evolution of the privilege:

[H]as been impeded by two competing societal interests:  a general policy favoring the free flow of information and the litigant's right to liberal discovery.  These opposing interests have led to inconsistent applications of the privilege by the courts, which must balance the equities in each particular case before applying the privilege.  The growing trend by the court is to construe the self-critical analysis privilege narrowly either by severely limiting its application or by questioning its existence and refusing to apply the privilege at all.  Such judicial disfavor has resulted in an inconsistent case-by-case approach, leading to unpredictable outcomes for corporations relying on privilege to maintain the confidentiality of their self-analytical documents.  Patricia L. Andel, Inapplicability of the Self-Critical Analysis Privilege to the Drug and Medical Device Industry (34 San Diego L. Rev. 93).

However, when the privilege has been approved, the rationale for protecting self-analytical materials from disclosure is the same in every case:  The public's interest in encouraging candid institutional self-analysis outweighs the public's concern of insuring complete disclosure of all irrelevant information to a litigant.  See, e.g., New York Stock Exch. v. Sloan, 22 Fed. R. Serv. 2d. (Callaghan) 500, 504 (S.D.N.Y. 1976) ("[T]he common theme linking all these cases is that, in each, the policies in favor of confidentiality—protecting individual's expectations of privacy and/or promoting free communication of candid evaluations and criticisms within an organization—have been deemed strong enough to justify restrictions on liberal pre-trial discovery.").   

b.             Application of the self-critical analysis privilege

Courts that allow the privilege generally require four criteria before applying it: 

1.             The information sought to be protected must result from self-critical analysis performed by the party claiming the privilege;

2.             The free flow of this type of information must advance a strong public interest;

3.             The information sought must result from the type of analysis that would be curtailed if discovery were allowed; and

4.             The document sought to be protected was prepared with the expectation that it would be kept confidential, and in fact has remained so. 

In re Air Crash near Cali, Columbia on December 20^th, 1995 at 1532.

Unfortunately, this "balancing test" has not been consistently applied by trial courts, resulting in widely conflicting decisions and inconsistent applications of the privilege.  This problem is due, in part, to the fact that privileges are "narrowly construed."  Accordingly, although the Federal Rules of Evidence encourage courts to remain flexible in developing the law of privileges on a case-by-case basis, privileges are generally disfavored and extended cautiously because they frustrate the truth-finding process by impeding the discovery of relevant information.  United States v. Nixon, 418 U.S. 683, 710, 713 (1974).

Moreover, even if the "balancing test" criteria are met, many courts have applied the following additional standards:

1.             To be privileged, the materials must have been prepared from mandatory government reports;

2.             Any privilege extends only to the subjective, evaluative materials;

3.             It does not extend to objective data in the same report; and

4.             Discovery has been denied only where the policy favoring exclusion has clearly outweighed the plaintiff's need.  Roberts v. Carrier Corp., et al., 107 F.R.D. 678, 684 (N.D. Ind. 1985). 

The Roberts case provides an in-depth analysis of these issues.  In Roberts, the plaintiff brought an action for injuries suffered in a house fire allegedly caused by a furnace manufactured by the defendant.  The plaintiff sought discovery relating to the manufacture of the furnace and its component parts.   Specifically, the plaintiff requested:

Any communication with any governmental entity regarding Essex control valve #242.  This specifically includes any investigation by the Consumer Product Safety Commission.  Any documents produced to that governmental entity, including the Consumer Product Safety Commission.  Id. at 681. 

The defendant objected to the request on the grounds that it had an absolute privilege against disclosure under the Consumer Product Safety Act (“CPSA”, 15 U.S.C § 2055) for any information given to the Consumer Product Safety Commission ("CPSC"), as well as a common law privilege against the disclosure of critical self-analysis.[2]  Id. at 681.  The defendant claimed that because the CPSA requires manufacturers to produce information to the CPSC concerning dangerous products, this information was clearly protected from disclosure pursuant to the privilege against self-critical analysis.  

After reviewing the requirements of the critical self-analysis privilege, and reviewing the relevant policy implications, the court agreed, stating that "given the need to encourage frankness in evaluations submitted to the CPSC,… the court does recognize that Hamilton is entitled to assert the privilege over that portion of the documents which was prepared for the CPSC and which contain self-critical analysis.”  Id. at 685.   The court granted the plaintiff’s motion to compel, but denied it as to those parts of the documents prepared for the submission to the CPSC, which contained subjective self-critical analysis.  However, the privilege only protected self-evaluations made as part of the process of reporting to the CPSC, i.e., documents not generated for the CPSC were not protected.  Moreover, only subjective materials were protected, not objective data.

To the contrary, a number of other courts analyzing this same issue have held that mandatory government reports are not protected by the self-critical analysis privilege.  For example, in Lawson v. Fisher-Price, Inc., 191 F.R.D. 381 (D. Vt. 1999), the plaintiff filed a products liability action against a manufacturer seeking materials that the manufacturer prepared as part of a Consumer Product Safety Commission request.  The manufacturer asserted that the materials were protected by the self-critical analysis privilege. 

After analyzing the materials sought to be protected, the district court ruled that the CPSC's ability to retrieve accurate reporting of information would not be undercut by subsequent disclosure of some of that material in litigation, as the reporting of certain information about potential product defects was mandated by law.  Id. at 386.  In other words, if the purpose of the privilege was to foster critical self-analysis in order to cure and prevent products defects, that purpose was not being served if the materials were required to be produced by law.

c.             Miscellaneous concerns associated with the self-critical analysis privilege

As previously stated, a number of courts have rejected the self-critical analysis privilege.  One of the major concerns is that a privilege must promote sufficiently important interests to outweigh the need for probative evidence.  See, e.g., University of Pennsylvania v. EEOC, 493 U.S. 182, 189 (1990).  Many believe that the self-critical analysis privilege simply fails to meet that requirement. 

Even the Supreme Court has stated it is “especially reluctant to recognize a privilege in an area where it appears that Congress has considered the relevant competing concerns but has not provided the privilege itself." Id. at 189.  Following this reasoning, a number of state courts have rejected privileges simply because the state legislature has yet to adopt the privilege.  Indeed, in many states, courts are forbidden from adopting new privileges by judicial decision.  See e.g., Southern Bell Telephone & Telegraph Co. v. Beard, 597 So.2d 873, 876 (Fla. 1^st DCA 1992).  Thus, while under the Federal Rules new privileges can be recognized by judicial decision, this may not be the case in the state court where a plaintiff brings suit.

Conclusion

As the foregoing demonstrates, neither state nor federal courts have consistently applied the self-critical analysis privilege.  Moreover, even where the privilege is accepted, the circumstances required in order to invoke the privilege vary from one jurisdiction to another.  Therefore, rather than rely on the inconsistent application of this privilege for protection, corporations should structure internal investigations around a more settled privilege, such as the work-product privilege.  In practice, this may mean hiring legal counsel to conduct and structure internal investigations, as they may be in a better position to independently assess the situation and structure the investigation accordingly.