Oliver Fenceroy v. Gelita USA, Inc., Tom Haire, and Jeff Tolsma

IN THE SUPREME COURT OF IOWA
No. 16–0775
Filed February 23, 2018
OLIVER FENCEROY,
Appellee,
vs.
GELITA USA, INC., TOM HAIRE, and JEFF TOLSMA,
Appellants,
and
BOB KERSBERGEN and JEREMIE KNEIP,
Defendants.
Appeal from the Iowa District Court for Woodbury County,
Jeffrey A. Neary, Judge.
Interlocutory review of a district court order denying a protective
order and permitting discovery into defense counsel’s prelawsuit
investigation. DISTRICT COURT ORDER AFFIRMED AND CASE
REMANDED.
Aaron A. Clark of McGrath North PC LLO, Omaha, Nebraska, for
appellants.
Stanley E. Munger of Munger, Reinschmidt & Denne, LLP,
Sioux City, for appellee.
2
CADY, Chief Justice.
This review presents a significant issue regarding the boundaries
of attorney–client privilege and work-product protection. We must decide
whether plaintiff’s counsel may depose defense counsel and obtain
counsel’s prelawsuit work product. After leaving his job, plaintiff filed an
administrative complaint charging his former employer with race
discrimination. In response to the charge, the employer hired an
attorney to defend the company and investigate the merits of the charge.
The employer filed an administrative position statement wherein it relied
upon the attorney’s investigation to support its Faragher–Ellerth
affirmative defense. In the subsequent civil action, the employer retained
the same attorney and again raised the affirmative defense. The
employer claimed attorney–client privilege and work-product protection
over the investigation and moved for a protective order to prevent plaintiff
from deposing defense counsel and obtaining her investigation notes.
Yet, in its motion for summary judgment, the employer again relied upon
the investigation to support its defense. The district court denied the
protective order, and we granted the employer’s interlocutory appeal.
We conclude the district court did not abuse its discretion by
denying the defendants’ protective order. When an employer raises a
Faragher–Ellerth affirmative defense and relies upon an internal
investigation to support that defense, the employer waives attorney–client
privilege and nonopinion work-product protection over testimony and
documents relating to the investigation. On remand, the employer is
permitted to amend its answer and brief to limit the affirmative defense
to only the period of plaintiff’s employment. If the employer declines to
so amend, it may not claim attorney–client privilege or work-product
3
protection over the 2013 investigation, and plaintiff may depose defense
counsel as well as obtain counsel’s investigation notes.
I. Factual Background and Proceedings.
Oliver Fenceroy, an African-American man, was employed by Gelita
USA, Inc. (Gelita), a maker of gelatin products. He began working at
Gelita’s Sergeant Bluff plant in 1975. In this lawsuit, he alleges he
experienced consistent racial harassment from coemployees and
supervisors throughout his employment. His complaint identified a
number of workplace incidents involving racially disparaging comments
by employees.
Gelita implemented an antiharassment policy that barred
disparate treatment in the workplace on the basis of race. Fenceroy
acknowledged receiving a written memorandum that discussed the
antiharassment policy in August of 2010. Additionally, Fenceroy
attended company trainings in 2011, 2012, and 2013 that discussed
workplace harassment. He also received copies of Gelita’s Code of
Conduct, which contained the company’s antiharassment policy, in 2011
and 2012. Further, Gelita conducted a survey in 2012 that requested
anonymous feedback about potential problems or changes to the
company. Fenceroy received the survey but did not report any
harassment.
Gelita’s antiharassment policy contained detailed reporting
procedures. The policy instructed employees to report any harassment
to their supervisors or to the human resources department. If an
employee is harassed by his or her direct supervisor, the policy permitted
an employee to bypass that individual and report the harassment to the
supervisor’s superior.
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It is undisputed that Fenceroy only made one complaint to Gelita
about racial harassment. In September of 2011, Fenceroy complained to
Gelita’s Vice President of Business Support, Jeff Tolsma, about a rope
tied on the company’s production floor. Fenceroy believed it represented
a noose. Tolsma notified the plant’s production manager, Jeremie Kneip,
of the complaint. The two individuals located the rope and determined it
was not a noose, but rather a loop used to facilitate pulling a scale
downward. Nevertheless, they untied the knot so there was no longer a
loop in the rope.
Fenceroy stopped working for Gelita in March 2013. He filed a
complaint with the Iowa Civil Rights Commission (ICRC) a short time
later. The complaint charged Gelita with race discrimination. Upon
receipt of Fenceroy’s ICRC charge, Gelita retained attorney Ruth
Horvatich and tasked her with developing a strategy to defend the
company during administrative proceedings.
Pursuant to this representation, Horvatich interviewed several
Gelita employees to ascertain the merits of Fenceroy’s complaint. Tolsma
was present for and participated in each interview. A union
representative, John Hoswald, was also present during the employee
interviews. At the end of each interview, Horvatich drafted a witness
statement that summarized the employee’s account and instructed the
employee to sign the document.
Horvatich’s investigation revealed some Gelita employees had made
racially disparaging comments in the workplace. Gelita subsequently
terminated one employee, Bob Kersbergen, and disciplined others,
including Kent Cosgrove, Tom Haire, and Lewis Bergenske. Horvatich
did not participate in any of the disciplinary decisions.
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On May 30, 2013, Gelita filed a position statement with the ICRC
in response to Fenceroy’s discrimination charge. The statement, drafted
by Horvatich, addressed the merits of Fenceroy’s racial harassment
claim. It argued Gelita could not be held vicariously liable for supervisor
harassment because it could assert the Faragher–Ellerth affirmative
defense. Specifically, in discussing the affirmative defense, Gelita
argued,
[T]he Company distributed a valid discrimination and
harassment policy, which contained flexible reporting
procedures and listed individuals that acts of harassment
could be reported to, who were in a position to take
corrective action. The discrimination and harassment policy
also contains detailed procedures relating to the
investigation and resolution of complaints. After learning of
Complainant’s complaint relating to the rope, the Company
took immediate action. The same day of the complaint, the
Company performed an investigation and resolved the
complaint by untying the knot that was in the rope, which
has remained untied since that time. The Company notified
the Complainant of this resolution. Additionally, after the
Complainant filed the charge at issue with the Iowa Civil
Rights Commission, the Company investigated the allegations
of harassment, which resulted in the termination of Mr.
Kersbergen and the discipline of Mr. Haire, Mr. Bergenske,
and Mr. Cosgrove. During his employment, Complainant
only made one report of harassment and unreasonable failed
to report any other allegations to management, despite the
Company’s clear reporting procedures. Thus, it is clear that
the Company exercised reasonable care to prevent
harassment, promptly corrected any harassing behavior, and
the Complainant unreasonably failed to take advantage of
the Company’s clear reporting procedures. As a result, the
Complainant’s allegation of racial harassment fails.
(Emphasis added.) Thus, the statement Gelita filed with the ICRC
signaled it would rely on its investigation into the complaint to help
support the first prong of its affirmative defense that it exercised
reasonable care to prevent and correct harassing behavior.
At the culmination of the administrative proceedings, the ICRC
issued Fenceroy a right to sue. On May 30, 2014, Fenceroy filed a civil
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action in district court against Gelita and four named employees: Bob
Kersbergen, Tom Haire, Jeff Tolsma, and Jeremie Kneip. Fenceroy
alleged the defendants engaged in racial harassment in violation of the
Iowa Civil Rights Act and he was constructively discharged. He also
alleged Kersbergen and Haire engaged in tortious infliction of severe
emotional distress.
Gelita again retained Horvatich to defend the company, as well as
Haire and Tolsma, in the civil action. The defendants filed an answer
that raised a number of affirmative defenses. One defense alleged
Fenceroy “unreasonably failed to take advantage of any preventative or
corrective opportunities provided by Defendant Gelita”; and Gelita
“exercised reasonable care to prevent and promptly correct any harassing
behavior.”
During discovery, defendants produced the witness statements
drafted by Horvatich and signed by the employees during her 2013
investigation. Fenceroy deposed some of the employees Horvatich
interviewed during the investigation. He also deposed Tolsma and
inquired into the nature and scope of the 2013 investigation, as well as
the subsequent disciplinary decisions.
On March 23, 2016, counsel for Fenceroy issued a notice to depose
Horvatich. He also requested Horvatich provide “notes from the
investigation that resulted in Gelita’s Position Statement,” as well as any
“notes from interviews” with Gelita employees.
Defendants moved for a protective order. They asserted Fenceroy’s
discovery request sought privileged information. They claimed the 2013
investigation was solely for the purpose of preparing a defense to
plaintiff’s ICRC charge, and all communications between Gelita and
Horvatich, as well as any notes taken by Horvatich, were done in
7
anticipation of litigation. They further argued the investigation was not
“at issue” in their affirmative defense because it occurred after Fenceroy
left the company and their actions could not have remedied any terms or
conditions of his employment.
In resisting the protective order, Fenceroy asserted the defendants’
impliedly waived any privileges. He claimed the proceedings before the
ICRC revealed Gelita intended to rely on its postcomplaint investigation
by Horvatich to help prove its affirmative defense. More specifically, he
argued the investigation conducted after he left his employment was
relevant to the lawsuit because it could be used in two ways. First, the
investigation could be used to show its reasonableness in preventing
harassing workplace behavior. Second, it could help establish that
Fenceroy should have taken advantage of its response by making his
complaint before he left his employment.
Prior to the hearing on the motion for a protective order,
defendants filed a motion for summary judgment. This motion claimed
defendants were entitled to judgment as a matter of law based on their
Faragher–Ellerth defense. Within its discussion of this defense,
specifically within a subsection titled “Gelita Exercised Reasonable Care
to Prevent and Correct Promptly Any Harassing Behavior,” defendants
asserted that “[e]ven though Plaintiff was no longer with Gelita at the
time of his Complaint, in response to his charge, the Company
investigated his allegations, discharged one employee, and disciplined
three others.”
The district court denied the protective order, finding the
defendants waived attorney–client privilege with respect to the 2013
investigation. It concluded Horvatich’s investigation was a key piece of
evidence in litigating the affirmative defense and Fenceroy “must be
8
permitted to probe the substance of [the investigation] to determine its
sufficiency.” The court further held defendants waived work-product
protection by placing the 2013 investigation at issue. Defendants filed
for, and we granted, interlocutory review.
On review, defendants continue to maintain their Faragher–Ellerth
defense is “based upon Fenceroy’s unreasonable failure to take
advantage of preventative and corrective opportunities” during his
employment. Defendants further allege the investigation cannot be “at
issue” with respect to the affirmative defense because the evidence is “not
necessary” to prevail in their Faragher–Ellerth defense. Fenceroy argues
on review that defendants’ position is contrary to their actions before the
district court. To illustrate, Fenceroy points to defendants’ summary
judgment motion, which referenced the investigation as evidence of
Gelita’s reasonable corrective actions when faced with a harassment
complaint.
II. Standard of Review.
We review district court rulings on discovery matters for abuse of
discretion. Jones v. Univ. of Iowa, 836 N.W.2d 127, 139 (Iowa 2013).
Discovery rulings are “committed to the sound discretion of the trial
court.” State v. Ary, 877 N.W.2d 686, 702 (Iowa 2016). “A district court
abuses its discretion ‘when the grounds underlying a district court order
are clearly untenable or unreasonable.’ ” Sioux Pharm, Inc. v. Eagle
Labs., Inc., 865 N.W.2d 528, 535 (Iowa 2015) (quoting Mediacom Iowa,
L.L.C. v. Inc. City of Spencer, 682 N.W.2d 62, 66 (Iowa 2004)).
III. Analysis.
A. Implied At-Issue Waiver of Attorney–Client Privilege.
1. The Faragher–Ellerth affirmative defense. Our law has long
recognized that employers have a duty to take reasonable measures to
9
investigate and eliminate workplace discrimination. At the same time,
growing attention has focused on workplace discrimination committed by
supervisors and managers, largely due to their authority over
subordinate employees bestowed on them by the employer. See Faragher
v. City of Boca Raton, 524 U.S. 775, 802, 118 S. Ct. 2275, 2290 (1998)
(reasoning that supervisors who engage in workplace harassment are
aided in their agency relationship to the employer). This attention has
made employers vicariously liable for discriminatory harassment by
supervisors and heightened the importance for employers to affirmatively
act to prevent workplace discriminatory conduct and properly respond to
employee claims of workplace discrimination when they arise. See id. at
807–08, 118 S. Ct. at 2292–93; Burlington Indus., Inc. v. Ellerth, 524 U.S.
742, 764–65, 118 S. Ct. 2257, 2270 (1998). It has also led to a two-part
affirmative defense to claims of vicarious liability for employers who
responsibly act to avoid workplace discrimination. Faragher, 524 U.S. at
807, 118 S. Ct. at 2293. This defense allows these employers to escape
vicarious liability for claims that do not involve tangible employment
action. Id.
The two-part defense requires employers to show reasonable care
was exercised to “prevent and correct promptly any . . . harassing
behavior” and to further show the claimant employee “unreasonably
failed to take advantage of any preventive or corrective opportunities
provided by the employer.” Id. This remedial action defense was set out
in two landmark decisions by the United States Supreme Court in 1998,
and is commonly known as the Faragher–Ellerth defense. See id.; Ellerth,
524 U.S. at 765, 118 S. Ct. at 2270. We adopted the defense in
Farmland Foods, Inc. v. Dubuque Human Rights Commission, 672 N.W.2d
733, 744 n.2 (Iowa 2003). The policy behind the affirmative defense is
10
simple and direct. By offering a complete defense to vicarious liability, it
encourages employers to prevent workplace discrimination and
harassment by adopting antidiscrimination policies and complaint
procedures or by taking other suitable action.
In adopting the vicarious liability standard established in Faragher
and Ellerth, we recently clarified that vicarious liability does not replace
the direct negligence theory of employer liability, but rather supplements
the theory with an additional agency-based standard. Haskenhoff v.
Homeland Energy Sols., LLC, 897 N.W.2d 553, 574 (Iowa 2017). In this
case, plaintiff has alleged harassment by both supervisory and
nonsupervisory employees. Consequently, defendants have properly
raised the Faragher–Ellerth affirmative defense in regard to the claims of
vicarious liability for supervisor harassment.
2. Waiver of attorney–client privilege through the Faragher–Ellerth
affirmative defense. In Iowa, affirmative defenses are raised in
responsive pleadings in a lawsuit. The evidence to support a defense is
then presented at trial or summary adjudication. While part of the focus
of the Faragher–Ellerth affirmative defense is on the reasonableness of
the plaintiff’s conduct in utilizing complaint procedures to avoid harm,
equal focus is on the conduct of the employer in preventing and
responding to incidents of harassment. This evidence can include the
actions of the employer in establishing and maintaining
antidiscrimination policies and complaint procedures, past conduct by
the employer in responding to complaints, and evidence of employer
conduct in responding to the specific allegations articulated by the
plaintiff in the pending legal proceeding. As a result, an employer’s
investigation into a harassment complaint that subsequently results in a
lawsuit can become the centerpiece of the affirmative defense. Moreover,
11
those who assist the employer in the investigation can become important
supporting witnesses. Thus, the issue we confront in this case surfaces
when, as in this case, an employer uses an attorney to conduct an
investigation into a complaint, and the investigation gathered relevant
evidence sought to be used by the employer to support the Faragher–
Ellerth affirmative defense in a subsequent lawsuit.
Our law recognizes that a “confidential communication between an
attorney and the attorney’s client is absolutely privileged from disclosure
against the will of the client.” Shook v. City of Davenport, 497 N.W.2d
883, 886 (Iowa 1993), abrogated on other grounds by Wells Dairy, Inc. v.
Am. Indus. Refrigeration, Inc., 690 N.W.2d 38, 48 (Iowa 2004). At the
same time, a basic component of a fair trial requires that when a party
injects a legal issue into a lawsuit, the opposing party is entitled to
discover the relevant evidence concerning the issue. Squealer Feeds v.
Pickering, 530 N.W.2d 678, 684 (Iowa 1995), abrogated on other grounds
by Wells Dairy, 690 N.W.2d at 48. When these two venerable legal
principles come face to face because relevant information concerning an
issue injected into a lawsuit by a party includes communications
between that party and his or her attorney, we have concluded that the
party who injects the issue into the heart of a lawsuit impliedly waives
the attorney–client privilege. Id. The outcome is derived from basic
fairness and requires the party injecting the issue into the lawsuit to
decide if the privileged information is important enough to the lawsuit to
waive the privilege. These two legal principles come face to face in this
case.
We have confronted the clash of these two doctrines in prior cases,
but never in regard to the Faragher–Ellerth defense. Courts in other
jurisdictions, however, have held that when a defendant asserts the
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Faragher–Ellerth defense and then relies on an internal investigation to
support the defense, it waives attorney–client privilege over the
investigation. See, e.g., Angelone v. Xerox Corp., No. 09–CV–6019, 2011
WL 4473534, at *2 (W.D.N.Y. Sept. 26, 2011) (“[W]hen a Title VII
defendant affirmatively invokes a Faragher–Ellerth defense that is
premised, in whole in or part, on the results of an internal investigation,
the defendant waives the attorney-client privilege and work product
protections for not only the report itself, but for all documents, witness
interviews, notes and memoranda created as part of and in furtherance
of the investigation.”); Treat v. Tom Kelley Buick Pontiac GMC, Inc.,
No. 1:08–CV–173, 2009 WL 1543651, at *12 (N.D. Ind. June 2, 2009)
(“[A] defendant may also waive the attorney-client privilege if it asserts its
investigation as part of its defense.”); EEOC v. Outback Steakhouse of
Fla., Inc., 251 F.R.D. 603, 612 (D. Colo. 2008) (“The Court agrees that to
the extent that Defendants have asserted the Faragher/Ellerth affirmative
defense, they have waived the protections of the attorney-client privilege
and work product doctrine regarding investigations into complaints made
by female employees.”); Walker v. County of Contra Costa, 227 F.R.D.
529, 535 (N.D. Cal. 2005) (“If Defendants assert as an affirmative defense
the adequacy of their pre-litigation investigation into Walker’s claims of
discrimination, then they waive the attorney-client privilege and the work
product doctrine with respect to documents reflecting that
investigation.”).
This line of cases stems from the seminal case of Harding v. Dana
Transport, Inc., 914 F. Supp. 1084, 1096 (D.N.J. 1996). In Harding, two
female employees brought administrative complaints against their
employer, Dana, alleging sex discrimination. Id. at 1087. Dana
subsequently retained an attorney, who conducted an investigation for
13
the purpose of formulating a response. Id. at 1088. The attorney
interviewed the company’s president, controller, and two managers. Id.
Dana then relied on this investigation as part of its affirmative defense in
the administrative proceedings, as well as the subsequent lawsuit. Id.
When plaintiffs’ counsel sought to depose the attorney about the
investigation, Dana argued the information was privileged because “it did
not assert reliance on the advice of counsel as an affirmative defense,”
but rather “merely intend[ed] to offer the fact that [their attorney] did
conduct an investigation.” Id. at 1096. The court concluded Dana
waived attorney–client privilege. Id.
Discovery of the content of the investigation is relevant
to much more than the state of mind of Dana. Rather, the
investigation, itself, provides a defense to liability. As
previously reviewed, Title VII permits employer liability which
employers may refute by proving that they reasonably and
sufficiently investigated the allegations of discrimination.
Dana has attempted to utilize the results of Mr. Bowe’s
investigation both as a defense to liability under Title VII and
as an aspect of its preparation for the sexual discrimination
trial itself. By asking Mr. Bowe to serve multiple duties, the
defendants have fused the roles of internal investigator and
legal advisor. Consequently, Dana cannot now argue that its
own process is shielded from discovery. Consistent with the
doctrine of fairness, the plaintiffs must be permitted to probe
the substance of Dana’s alleged investigation to determine its
sufficiency. Without having evidence of the actual content of
the investigation, neither the plaintiffs nor the fact-finder at
trial can discern its adequacy.
Id. (citation omitted). Consequently, the court found the employer could
not avoid discovery by arguing that the relevance of the investigation was
not its content, but that it was conducted. Id. Instead, the court found
that the adequacy or reasonableness of the investigation was the relevant
fact injected into the lawsuit by the defendant, which made the content
of the investigation relevant. Id.
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We agree that an employer who relies on a presuit investigation to
support a Faragher–Ellerth affirmative defense waives attorney–client
privilege when the investigation is conducted by an attorney. Normally,
the process of an investigation into a complaint is at issue when the
Faragher–Ellerth defense is asserted, “including what the employer knew
of the employee’s complaints and when.” Musa-Muaremi v. Florists’
Transworld Delivery, Inc., 270 F.R.D. 312, 319 (N.D. Ill. 2010). When an
employer affirmatively relies on the reasonableness of its investigation to
support the defense, “[t]he only way that Plaintiff, or the finder of fact,
can determine the reasonableness of the Defendant’s investigation is
through full disclosure of the contents” of the investigation. Id. (quoting
Brownell v. Roadway Package Sys., Inc., 185 F.R.D. 19, 25 (N.D.N.Y.
1999)). In order to adequately challenge a Faragher–Ellerth affirmative
defense, plaintiff must be permitted to probe the nature and scope of the
relied upon investigation. It would be fundamentally unfair to allow an
employer to shield material facts from discovery simply by hiring the
same attorney who conducted a presuit investigation to represent the
employer in the subsequent civil action.
The key element behind this authority is that the Faragher–Ellerth
defense must not only be pled, but the employer must then rely on the
attorney’s investigation into plaintiff’s discrimination allegations in
proving the defense. When the reasonableness of the investigation into
the allegations is relied upon as a defense, the contents of the
investigation are placed into issue and become subject to disclosure.
3. Merits. Here, Gelita expressly relied on Horvatich’s
investigation to support its Faragher–Ellerth affirmative defense in its
ICRC position statement. In the civil action, defendants raised the
affirmative defense in their answer. When moving for a protective order,
15
defendants argued the investigation could not be at issue, as Fenceroy
had already left his position. Yet, in their motion for summary judgment,
within a subsection entitled “Gelita Exercised Reasonable Care to Prevent
and Correct Promptly Any Harassing Behavior,” defendants argued that
“[e]ven though Plaintiff was no longer with Gelita at the time of his
Complaint, in response to his charge, the Company investigated his
allegations, discharged one employee, and disciplined three others.”
On appellate review, defendants continue to maintain they are not
relying on the Horvatich investigation. They assert their affirmative
defense is not related to the actions Gelita took in response to Fenceroy’s
complaint. Instead, defendants argue their defense is that Gelita
maintained a workplace reporting procedure and training process to
prevent and correct workplace harassment and that Fenceroy
unreasonably used the procedure to correct the alleged harassment
before he left his employment.
Defendants primarily rely on Treat, to support their position. In
Treat, three plaintiffs brought suit against their employer, Kelley, alleging
sex discrimination in violation of Title VII. 2009 WL 1543651, at *1.
During discovery, plaintiffs requested a number of documents, including
notes taken by Kelley’s counsel in response to plaintiffs’ administrative
charge, drafts of counsel’s administrative position statements and legal
memoranda, and emails and faxes between counsel and employees sent
in preparation of Kelley’s administrative position statement. Id. at *1–2.
Plaintiffs argued Kelley raised the Faragher–Ellerth affirmative defense
and, as such, waived all privilege over the presuit investigation. Id. at
*12. However, the court concluded “it ha[d] been fleshed out during the
discovery process that Kelley’s defense is not that it acted reasonably
upon learning of the Plaintiffs’ complaints, but rather that the Plaintiffs
16
did not take advantage of Kelley’s policies in reporting harassment and
discrimination.” Id. at *13. Because the company was “not actually
relying on the adequacy of any investigation to support an affirmative
defense, Kelley has not placed outside counsel's investigation at issue.”
Id.
The critical point in Treat was the existence of a trial court record
to show the employer took a position that the Faragher–Ellerth defense
would only be supported by evidence that it had antidiscrimination
policies and reporting procedures in place at the time of the alleged
discriminatory conduct and that the plaintiffs failed to take advantage of
the procedures. The employer in Treat made it clear that it would not
offer any evidence of its actions after the plaintiffs made their complaints.
Treat underscores that an employer does not impliedly waive an
attorney–client privilege merely by using an attorney to investigate a
complaint of workplace discrimination but, rather, by subsequently
relying on the investigation to prove a Faragher–Ellerth defense asserted
in a lawsuit. In this case, as in Harding, Gelita clearly relied on the
investigation as proof of its affirmative defense during the administrative
proceeding. Additionally, unlike in Treat, defendants relied on the
investigation as proof of their affirmative defense during summary
judgment proceedings.
Importantly, contrary to defendants’ assertion on appeal, corrective
measures taken by an employer in response to a complaint by an
employee made after the employee has left the employment may be
relevant to the reasonableness of care exercised by an employer to prove
a Faragher–Ellerth defense. The Faragher–Ellerth defense was crafted in
order to provide a complete defense to vicarious liability for employers
who have demonstrated a commitment to abiding by antidiscrimination
17
statutes. Through this defense, employers have an opportunity to
demonstrate they are the type of employer that takes discrimination
seriously and affirmatively works to prevent and correct it. Generally, if
an employee fails to notify the employer of wrongdoing, courts have
found that such failure, coupled with adequate preventative policies, is
sufficient to prevail in the defense. Faragher, 524 U.S. at 807–08, 118
S. Ct. at 2293.
However, defendants conflate what is necessary to prevail in the
defense in certain instances with what is relevant to the defense. All
evidence relating to an employer’s steps to prevent and correct
harassment goes toward proving that they are the type of company that
deserves a complete defense to vicarious liability. Parties can, and
frequently do, bolster their positions with evidence beyond what is
minimally necessary to succeed. The rules of discovery reach all offered
evidence, not merely the minimum evidence necessary to prevail on a
claim or affirmative defense. Here, defendants bolstered their affirmative
defense beyond what was necessary, in an effort to conclusively prove
they are the type of company that deserves a complete defense to
liability. This choice was entirely their own. If defendants wish to use
Horvatich’s investigation as evidence of their commitment to abiding by
antidiscrimination statutes, plaintiff may not be kept from disputing that
evidence, especially at the summary judgment stage.
The critical question presented when discovery of an attorney
investigation is sought in a lawsuit based on workplace discrimination is
whether the employer intends to rely on the investigation as evidence to
help prove the Faragher–Ellerth defense. When confronted with a
discovery request, the employer controls the outcome of the waiver issue.
The employer may decide to simply refrain from referencing the
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investigation in the civil action, in which case it will remain confidential.
Or, the employer may choose to explicitly cabin its defense to the period
of plaintiff’s employment, in which case any reference to the investigation
will be met with a relevance objection rather than a notice for deposition.
Of course, the employer may also choose to offer the investigation as
evidence of its proper corrective actions and waive any privilege over the
investigation. The employer’s decision must be clear because it will
become the basis for the court’s ruling.
Defendants plainly relied on Horvatich’s investigation to support
their affirmative defense in their motion for summary judgment. The
district court, therefore, did not abuse its discretion in finding
defendants waived attorney–client privilege over the investigation.
Our law permits a party who has waived attorney–client privilege to
retract the waiver and reinstate the privilege. See Squealer Feeds, 530
N.W.2d at 685. On appellate review, we are reviewing the district court’s
decision based on the record made before the court. Defendants’
position on appeal that the investigation is not “at issue” with respect to
the Faragher–Ellerth defense is consistent with their position before the
district court. But, this position is not a clear declaration by the
employer that an investigation into a complaint will not be relied upon to
help prove the Faragher–Ellerth defense. Instead, it is a legal assertion,
not entirely correct, that the investigation would not be relevant to the
Faragher–Ellerth defense. If defendants wish to retract their waiver, they
may make a new record before the district court that clearly and
unequivocally establishes the investigation will not be used to support
the defense.
B. Work Product. Although the district court did not abuse its
discretion with respect to waiver of attorney–client privilege, the issue
19
remains whether plaintiff may discover Horvatich’s work product from
the 2013 investigation.
Parties may only discover “documents and tangible things” that
were prepared by another party “in anticipation of litigation or for trial,”
if the requesting party demonstrates a “substantial need of the materials”
and is “unable without undue hardship to obtain the substantial
equivalent of the materials by other means.” Iowa R. Civ. P. 1.503(3).
However, courts must protect against disclosing “mental impressions,
conclusions, opinions, or legal theories of an attorney.” Id. Iowa work-
product protection “resembles Federal Rule of Civil Procedure 26(b)(3),
‘and the history and cases under the federal rule provide guidance in
interpreting the Iowa counterpart.’ ” Iowa Ins. Inst. v. Core Grp. of Iowa
Ass’n for Justice, 867 N.W.2d 58, 70 (Iowa 2015) (quoting Ashmead v.
Harris, 336 N.W.2d 197, 199 (Iowa 1983), abrogated on other grounds by
Wells Dairy, 690 N.W.2d at 48). Although we have not yet considered
implied waiver of work-product protection, we have previously assessed
subject matter waiver of work-product protection. See Exotica
Botanicals, Inc. v. Terra Int’l, Inc., 612 N.W.2d at 801, 807–09 (Iowa 2000)
(concluding specific content of attorney’s testimony did not amount to
waiver of work-product protection).
Courts in other jurisdictions that have adopted the implied
at-issue waiver standard within the Faragher–Ellerth context have also
concluded a party waives work-product protection over investigation
documents if the party relies on the investigation to support its
affirmative defense. See, e.g., Koss v. Palmer Water Dep’t, 977
F. Supp. 2d 28, 31 (D. Mass. 2013) (“Defendants’ affirmative defense
waives the attorney-client privilege and work-product protection for the
bulk of the documents submitted for in camera review . . . .”); Reitz v.
20
City of Mt. Juliet, 680 F. Supp. 2d 888, 894 (M.D. Tenn. 2010)
(concluding “the City waived its privilege and work-product protection
not by disclosing Berexa’s report, but by making tactical use of it in this
litigation” in support of a Faragher–Ellerth affirmative defense); McGrath
v. Nassau Cty. Health Care Corp., 204 F.R.D. 240, 246 (E.D.N.Y. 2001)
(“[W]hile the Court finds the waiver of some core work product difficult to
sustain, it agrees that NHCC’s invocation of the Faragher–Ellerth defense
has waived the work product privilege under the facts of this case. By
weighing fairness concerns against the purpose of the work product
privilege, the Court finds that it would be unjust to allow NHCC to invoke
the Faragher–Ellerth defense under these facts while allowing it to protect
the very documents it relies on to assert that defense.”).
We agree that when a party places an investigation at issue by
relying upon it in support of the Faragher–Ellerth affirmative defense, any
nonopinion work-product protection over that investigation is necessarily
waived. Like attorney–client privilege, a party may not use work-product
protection to shield documents from discovery while at the same time
relying upon those same documents to support their claim. This is
especially true in the context of the Faragher–Ellerth affirmative defense.
An employer may not point to the thoroughness of an investigation to
demonstrate compliance with the ICRA while at the same time shield the
plaintiff from disputing the investigation’s thoroughness.
Of course, an attorney–investigator’s mental impressions,
conclusions, opinions, and legal theories remain sheltered from
discovery. Although an employer opens the door to discovery of the facts
and process of its investigation by relying upon it in support of its
affirmative defense, opinion work product is not germane to the objective
reasonableness of an employer’s investigation. See Reitz, 680
21
F. Supp. 2d at 895 (“Sections of the interview memoranda that reflect the
lawyers’ mental impressions, opinions, conclusions, judgments, or legal
theories are not relevant to the plaintiff’s remaining retaliation claim, nor
will they lead to the discovery of relevant information. This ‘opinion’ work
product has no bearing on the issues of Reitz’s work performance, the
discipline she faced before filing her internal complaint, or any other
aspect of Reitz’s current case.”). We therefore find the district court did
not abuse its discretion in concluding defendants waived work-product
protection over Horvatich’s investigation notes. Unless defendants
retract their waiver, they must produce all of Horvatich’s nonopinion
work product that resulted in the ICRC position statement.
C. Third-Party Waiver. Plaintiff argues that even if defendants
did not waive attorney–client privilege over the contents of the
investigation by raising the affirmative defense, they nevertheless waived
privilege over the desired information by conducting employee interviews
in the presence of a third party.
1. Error preservation. As an initial matter, the defendants contest
whether this issue is preserved for appeal. Generally, an issue is not
preserved unless “a party raises an issue and the district court rules on
it.” State ex rel. Miller v. Vertrue, Inc., 834 N.W.2d 12, 20 (Iowa 2013).
Here, plaintiff argued in his resistance to defendants’ motion for
protective order:
By conducting the investigation in the presence of a third
party who was not representing Gelita but was actually an
adversary to Gelita’s interests, Gelita waived and is estopped
from claiming attorney-client and work product privileges
apply to her communications with them. Ms. Horvatich’s
thought processes and communications were revealed to the
third party by her actions, questions and deeds at the time
of her investigation on behalf of Gelita. To the extent there
was a privilege, Gelita waived it by the presence of the union.
22
Plaintiff plainly raised the issue at the district court level. However, the
district court did not rule on the third-party waiver issue, as it concluded
the affirmative defense waived attorney–client privilege and work-product
protections. Nevertheless, “a successful party need not cross-appeal to
preserve error on a ground urged but ignored or rejected by the district
court.” Venard v. Winter, 524 N.W.2d 163, 165 (Iowa 1994). Thus,
plaintiff sufficiently preserved the issue of whether the presence of the
union representative waived privilege over the investigation.
2. Merits. Communications that could be cloaked by privilege may
nevertheless be discoverable if made in the presence of, or disclosed to, a
third party. See State v. Romeo, 542 N.W.2d 543, 548 (Iowa 1996).
However, when the presence of a third party is “essential for the
rendition of a legal opinion, the presence of such persons at
attorney-client conferences does not destroy privilege otherwise existing.”
Tausz v. Clarion–Goldfield Cmty. Sch. Dist., 569 N.W.2d 125, 127 (Iowa
1997).
Plaintiff asks that we go well beyond the parameters of third-party
waiver and conclude a third party’s presence during investigatory
interviews waives privilege over the whole of the investigation. This we
decline to do. Horvatich conducted several employee interviews as part
of her investigation into the merits of plaintiff’s administrative charge. In
each interview, she was joined by Tolsma and union representative
Hoswald. There is no evidence in the record to demonstrate Hoswald
was privy to any internal decision-making or communications about the
direction or disposition of the investigation. As such, the only
communications that could potentially be discoverable are statements
made in Hoswald’s presence during employee interviews.
23
During discovery, defendants produced all of the investigation’s
witness statements. As well, plaintiff had the opportunity to depose
employees who were interviewed and inquire into the nature and content
of their interviews. Accordingly, we need not reach the question of
whether the presence of a union representative during an internal
investigation waives attorney–client privilege, as defendants have not
claimed privilege over any communications made in the union
representative’s presence.
D. Subject Matter Waiver. Plaintiff further argues, for the first
time on appeal, that even if defendants did not waive attorney–client
privilege, employee depositions revealed “Ms. Horvatich’s thought process
and communications” during the investigation, and as such, the
employee testimony amounts to a subject matter waiver of the contents
of the investigation. Because plaintiff did not raise this issue to the
district court, it has not been preserved for our review.
IV. Conclusion.
We affirm the district court order denying defendants’ protective
order. The case is remanded to the district court for further proceedings
consistent with this opinion.
DISTRICT COURT ORDER AFFIRMED AND CASE REMANDED.
All justices concur except Waterman, Mansfield, and Zager, JJ.,
who dissent.
24
#16–0775, Fenceroy v. Gelita USA, Inc.
WATERMAN, Justice (dissenting).
I respectfully dissent and would hold the district court abused its
discretion by compelling the deposition of Gelita’s trial counsel Ruth
Horvatich and production of her notes prepared in anticipation of
litigation.
First, Gelita never waived its attorney–client privilege or work-
product protection by pleading or arguing the Faragher–Ellerth defense in
district court. That defense was based solely on Mr. Fenceroy’s failure to
use Gelita’s reporting procedures during his employment, before he
retired and filed his discrimination complaint. The majority, contrary to
precedent, finds that Gelita impliedly waived the confidentiality of its
lawyer’s private notes and client communications by including this
sentence in its lengthy brief supporting its motion for summary
judgment: “Even though Plaintiff was no longer with Gelita at the time of
his Complaint, in response to his charge, the Company investigated his
allegations, discharged one employee, and disciplined three others.” I
disagree that sentence constitutes an implied waiver. Gelita never relied
on confidential attorney–client communications in asserting its defenses.
Gelita was not using the attorney–client privilege as both a sword and
shield and never blocked proper discovery into a matter it placed at
issue.
Second, even if it was a waiver, Gelita clearly has retracted it. The
majority questions that a retraction has occurred but allows Gelita the
opportunity to retract the waiver on remand. I think this is unnecessary
based on a fair reading of the record and Gelita’s appellate briefs.
Third, the majority also misses the opportunity to adopt the
showing required under Shelton v. American Motors Corp., 805 F.2d
25
1323, 1327 (8th Cir. 1986), and confirm that compelling depositions of
opposing trial counsel during litigation should be a rare last resort, even
when information might be obtained that is not subject to a privilege.
This aspect of the court’s ruling could lead to a flurry of depositions of
opposing counsel and a corresponding decline in civility in the Iowa bar.
Frequently, both plaintiff’s counsel and defendant’s counsel have various
nonprivileged interactions with others in the course of working on a case.
The majority leaves the door open to each side deposing the other on
these interactions. I would not do this. Fenceroy is not entitled to
depose Gelita’s trial attorney Horvatich under Shelton.
I. Gelita Never Impliedly Waived Its Attorney–Client Privilege
or Work-Product Protection.
The majority makes it too easy to find an implied waiver of the
attorney–client privilege and work-product doctrine. There was no such
waiver here. Gelita never listed attorney Horvatich as a witness. See
Squealer Feeds v. Pickering, 530 N.W.2d 678, 684–85 (Iowa 1995),
abrogated on other grounds by Wells Dairy, Inc. v. Am. Indus.
Refrigeration, Inc., 690 N.W.2d 38, 48 (Iowa 2004). Gelita never disclosed
any privileged communications from Horvatich in responding to
Fenceroy’s claims. See Miller v. Cont’l Ins., 392 N.W.2d 500, 504–05
(Iowa 1986). Nor did Gelita rely on Horvatich’s 2013 investigation to
support its Faragher–Ellerth defense. Rather, Gelita made clear this
defense is based on Fenceroy’s failure to utilize Gelita’s complaint and
antidiscrimination reporting policy and procedures. It is undisputed that
Fenceroy’s employment ended before he filed his discrimination
complaint. Gelita did not place Horvatich’s legal advice at issue through
fleeting references to her investigation conducted after Fenceroy retired
and the subsequent termination or discipline of several employees. The
26
cases relied on by the majority are distinguishable for that reason—in
the cases finding an implied waiver, the employer was relying on the
reasonableness of its counsel’s investigation conducted while the plaintiff
was still employed. Not so here.
The majority primarily relies on Harding v. Dana Transport, Inc.,
914 F. Supp. 1084 (D.N.J. 1996), while Gelita relies on cases such as
Treat v. Tom Kelley Buick Pontiac GMC, Inc., No. 1:08–CV–173, 2009 WL
1543651 (N.D. Ind. June 2, 2009). Treat is on point while Harding is
not.
In Harding, two employees filed an administrative complaint
alleging sexual discrimination; one employee filed her complaint while
still employed, unlike Fenceroy. 914 F. Supp. at 1087 & n.2. The
employer hired outside counsel to investigate their allegations. Id. at
1088. The employees later resigned and filed a Title VII claim. Id. at
1087 & n.2. In the Title VII lawsuit, the employer’s counsel admitted
that he intended to use the investigation as evidence the employer acted
reasonably. Id. at 1088. The defense attorney stated,
Dana is not submitting any of the specifics of [the attorney’s]
investigation as a basis of defense in this matter. Dana
merely intends to offer the fact that [the attorney] did
conduct an investigation as part of his representation of
Dana in response to allegations filed with the Division on
Civil Rights. Whether this investigation, coupled with other
actions taken on behalf of Dana in the context of the facts in
this case, constitutes evidence of reasonable conduct on the
part of Dana is a jury question, but does not compel
disclosure of the specifics of [the attorney’s] investigation.
Id. at 1093 (emphasis added). The Harding court concluded the
employer had put counsel’s investigation at issue, waiving its attorney–
27
client privilege. Id. at 1096. Other decisions relied on by the majority
are distinguishable for the same reasons. 1
By contrast, in Treat, three employees filed an administrative
complaint after their employment ended, as did Fenceroy. 2009 WL
1543651, at *1, *13. The employer hired outside counsel to conduct an
investigation. Id. at *6. The employer used the attorney’s investigation
during the EEOC proceeding but did not rely on the investigation in
district court. Id. at *7, *13. The Treat court distinguished Harding and
found that the investigation was not put at issue and was not
discoverable. Id. at *12–13. The Treat court reasoned,
[I]t has been fleshed out during the discovery process that
Kelley’s defense is not that it acted reasonably upon learning
of the Plaintiffs’ complaints, but rather that the Plaintiffs did
not take advantage of Kelley’s policies in reporting
harassment and discrimination. In other words, because the
Plaintiffs allegedly did not report their complaints during
their employment, there is no internal investigation of any
complaints to rely upon; the only investigation (conducted by
outside counsel) was for the purpose of preparing for
litigation, once the EEOC charges were filed. . . . Thus,
because Kelley is not actually relying on the adequacy of any
investigation to support an affirmative defense, Kelley has not
placed outside counsel’s investigation at issue.
Id. at *13 (emphasis added). That is what we have here.
Other courts have likewise rejected implied waiver claims under
the Faragher-Ellerth defense when, as here, the employer confirms it is
1See Angelone v. Xerox Corp., No. 09–CV–6019, 2011 WL 4473534, at *1–3
(W.D.N.Y. Sept. 26, 2011) (concluding that documents relating to internal investigation
completed before employee filed an administrative complaint were discoverable because
employer invoked the Faragher–Ellerth defense, but recognizing that documents created
after the conclusion of the internal investigation were not discoverable as long as the
company does “not refer to or rely on these . . . documents or the adequacy of [the later]
investigation”); Walker v. County of Contra Costa, 227 F.R.D. 529, 535 (N.D. Cal. 2005)
(finding that the employer intended to rely on attorney’s investigation as a defense and
therefore “must turn over [the attorney’s] report as it pertains to the pre-litigation
investigation into [the employee’s] claim of discrimination”).
28
not relying on the lawyer’s investigation but rather the employee’s failure
to use the employer’s complaint procedures. See, e.g., Robinson v.
Vineyard Vines, LLC, 15 Civ. 4972 (VB)(JCM), 2016 WL 845283, at *5
(S.D.N.Y. Mar. 4, 2016) (“Given these representations by Defendants’
counsel, I find that Defendants have not waived any privilege as to the
Investigative Documents by asserting the [Faragher–Ellerth] Defense.”);
Geller v. N. Shore Long Island Jewish Health Sys., No. CV 10–
170(ADS)(ETB), 2011 WL 5507572, at *4 (E.D.N.Y. Nov. 9, 2011) (denying
motion to compel because “defendants’ counsel has affirmatively
represented to the Court that defendants have no intention of ‘using the
investigation to avoid liability’ ”); City of Petaluma v. Super. Ct., 204
Cal. Rptr. 3d 196, 201–02, 207 (Ct. App. 2016) (holding there was no
waiver of attorney–client privilege or work-product protection when the
employer was not relying on the postemployment investigation but
instead was arguing that the employee “unreasonably failed to take
advantage of any preventative or corrective opportunities”); see also
McGrath v. Nassau Cty. Health Care Corp., 204 F.R.D. 240, 244–45
(E.D.N.Y. 2001) (rejecting the argument “that employers put any post-
harassment investigation conducted at issue simply by invoking the
Faragher–Ellerth defense” because the proposition “would eviscerate both
the attorney-client privilege and the work product doctrine” while
concluding that this employer did put the sufficiency of its investigation
at issue); cf. EEOC v. Rose Casual Dining, L.P., No. Civ.A. 02–7485, 2004
WL 231287, at *3–4 (E.D. Pa. Jan. 23, 2004) (concluding that plaintiff
was entitled to documents related to the employer’s internal investigation
because the employer “raised the reasonableness of its internal
investigation as an affirmative defense to [p]laintiff’s allegations” but
29
denying plaintiff’s motion to compel documents generated from second
investigation that began only after the plaintiff had been terminated).
As the great weight of authority shows, the majority errs by
concluding Gelita waived its attorney–client privilege and work-product
protection merely by pleading the Faragher–Ellerth defense and referring
to its postemployment investigation in the agency proceedings and
summary judgment filings. In Exotica Botanicals, Inc. v. Terra
International, Inc., we held that a lawyer’s general testimony regarding
his investigation in prior litigation and related communications with an
adverse party did not waive work-product protection. 612 N.W.2d 801,
809 (Iowa 2000). We concluded the district court abused its discretion
by compelling production of documents constituting work product. Id.
We emphasized the adverse consequences that would result if courts
could find a waiver of work-product protections merely because the
lawyer “discuss[ed] the general nature of . . . information” relevant to
liability with an opposing party:
It was [attorney] Kalafut’s duty to communicate with
Du Pont regarding the Benlate claims and to evaluate Terra’s
liability in the matter. But to say that Kalafut waived his
work product privilege concerning information that might
potentially absolve Terra of liability, simply by discussing the
general nature of that information with Du Pont, would
mean that an attorney could never discuss the positive
aspects of his or her case with opposing counsel for fear that
such discussion would amount to a waiver of the work
product privilege as to all documents supporting that
position. If this were the case, settlement negotiations and
communication between the parties in general would break
down. Such a result would be inconsistent with a
commonsense application of the work product doctrine and
certainly inconsistent with the goal of resolving cases in a
timely manner.
Id.
30
The majority’s decision today conflicts with Exotica Botanicals.
Iowa lawyers should not have to worry that they will waive privilege or
work-product protections simply by general references to their
investigation or their client’s position.
II. Gelita Already Retracted Any Alleged Waiver.
The majority correctly acknowledges that a party who waived the
attorney–client privilege by asserting a particular defense can retract the
waiver. See Squealer Feeds, 530 N.W.2d at 685. In Squealer Feeds, an
employee alleged the workers’ compensation insurer acted in bad faith.
Id. at 680, 683. The defendant asserted a defense of the advice of
counsel from the attorney who defended the workers’ compensation
claim and listed that attorney as an expert witness for trial. See id. at
680–81. We held the defendant thereby waived the attorney–client
privilege as to his advice on that issue, but we also made clear the
defendant could undo the waiver by withdrawing the lawyer as a trial
witness. Id. at 684–85 (noting a withdrawal of the witness designation
would “reestablish the attorney–client privilege”). Gelita never listed its
outside counsel, Horvatich, as a witness. In any event, Gelita has clearly
retracted any implied waiver.
In its opening brief on appeal, Gelita confirmed that it was not
relying on its attorney’s investigation to support a Faragher–Ellerth
defense:
In this case, the Faragher–Ellerth defense is based on
Fenceroy’s unreasonable failure to take advantage of
preventative and corrective opportunities available during
his employment. Defendants are not relying upon any
investigation conducted by defense counsel after Fenceroy
filed his discrimination charge. Those complaints were not
made by Fenceroy during his employment and therefore, the
adequacy of that investigation and remedial action
undertaken by the Company are not “at issue” nor are they
part of Gelita’s Faragher–Ellerth affirmative defense.
31
Appellants’ Final Br. 14. Gelita made the same point in its reply brief:
Defendants’ Faragher–Ellerth defense is not that it conducted
a reasonable investigation after receiving the ICRC charge,
but that Plaintiff failed to report the alleged conduct during
his employment and thus failed to take advantage of the
Company’s policies on reporting harassment and
discrimination. Any investigation and remedial response
undertaken after Complainant left his employment and filed
his ICRC charge is simply not necessary to Defendant’s
Faragher–Ellerth defense and, as such, is not at issue.
Appellants’ Final Reply Br. 2–3. Because Gelita has already withdrawn
any alleged implied waiver, the district court on remand should grant
Gelita’s motion for protective order. The majority seemingly agrees in
principle, but wants Gelita to put its withdrawal on the record when this
case returns to district court. I do not think that is needed, although in
the long run it should not make a difference.
III. Fenceroy Failed to Show He Was Entitled to Depose
Gelita’s Trial Counsel.
The majority opens the door to compelling the depositions of
opposing counsel in pending lawsuits. Compelled depositions of
opposing counsel have long been disfavored. See Hickman v. Taylor, 329
U.S. 495, 511–13, 67 S. Ct. 385, 393–95 (1947). We previously allowed a
deposition of plaintiffs’ counsel only after the plaintiffs waived attorney–
client privilege by testifying about their reliance on his specific legal
advice to them on the statute of limitations. Miller, 392 N.W.2d at 505.
We framed the issue as “whether plaintiffs may disclose a privileged
attorney communication . . . and then invoke a privilege to prevent
disclosure of other communications by the attorney about the same
matter.” Id. at 504. We concluded the “voluntary disclosure of the
content of a privileged communication constitutes waiver as to all other
communications on the same subject.” Id. at 504–05. That is not what
32
Gelita did. Gelita disclosed no privileged communications by Horvatich
to support its Faragher–Ellerth defense. Miller is inapposite.
Two years after Miller, the United States Court of Appeals for the
Eighth Circuit in Shelton addressed the circumstances under which the
district court may compel the deposition of the opposing party’s trial
counsel. 805 F.2d at 1327. The Shelton court required a showing that
(1) no other means exist to obtain the information than to
depose opposing counsel; (2) the information sought is
relevant and nonprivileged [or the privilege has been waived];
and (3) the information is crucial to the preparation of the
case.
Id. (citation omitted). We should follow Shelton, and I would adopt it
now. Because Fenceroy cannot satisfy this test, the district court abused
its discretion by compelling the deposition of Horvatich.
The Shelton rule has been widely adopted by state and federal
courts as the standard for determining whether a litigant may compel the
deposition of opposing trial counsel. Id.; Nationwide Mut. Ins. v. Home
Ins., 278 F.3d 621, 628 (6th Cir. 2002); Thiessen v. Gen. Elec. Capital
Corp., 267 F.3d 1095, 1112 & n.15 (10th Cir. 2001) (citing Boughton v.
Cotter Corp., 65 F.3d 823, 830 (10th Cir. 1995)); 3M Co. v. Engle, 328
S.W.3d 184, 188 & n.15 (Ky. 2010) (citing McMurry v. Eckert, 833 S.W.2d
828, 830 (Ky. 1992)); Club Vista Fin. Servs. v. Eighth Judicial Dist. Ct.,
276 P.3d 246, 250 (Nev. 2012) (en banc); Estate of Mikulski v. Cleveland
Elec. Illuminating Co., No. 96748, 2012 WL 504505, at *4 (Ohio Ct. App.
Feb. 16, 2012); Voorhees Cattle Co., LLP v. Dakota Feeding Co., LLC, 868
N.W.2d 399, 407 (S.D. 2015).
The parties briefed and argued Shelton here. Yet the majority,
without expressly accepting or rejecting Shelton, declines to address the
showing required to depose a party-opponent’s trial counsel during a
33
lawsuit. The majority assumes Gelita will reconfirm its retraction of any
alleged reliance on Horvatich’s investigation when the case returns to
district court and that the district court will then preclude her
deposition. Presumably so. The problem is that the majority today is
affirming the district court’s order compelling Horvatich’s deposition
based on the existing district court record. The majority thereby blesses
the overly aggressive practice of compelling the deposition of opposing
trial counsel without a proper showing of necessity.
Fenceroy cannot meet any of the three Shelton requirements.
First, Gelita already provided Fenceroy with the statements taken from
the witnesses Horvatich interviewed, and Fenceroy deposed those
witnesses. Fenceroy could explore why Gelita terminated one employee
and disciplined others by deposing the decisionmaker, Jeff Tolsma,
Gelita’s Vice President of Business Support. Fenceroy has not shown
why those sources of information are inadequate, much less
demonstrated that a deposition of Horvatich is his only means to obtain
discovery on Gelita’s investigation and resulting actions. A mere
allegation of need is insufficient. Cf. Iowa R. Civ. P. 1.503(3); Squealer
Feeds, 530 N.W.2d at 688–89 (requiring party seeking work product to
demonstrate the information could not be obtained by reviewing records
already produced, depositions of the company decision-maker, or other
nonprivileged sources). Second, Horvatich’s communications remain
privileged, with any alleged implied waiver retracted. Third, Fenceroy
has not shown that Horvatich’s testimony is crucial or even relevant to
his case.
I fear that the majority’s failure to clarify the showing required to
depose opposing trial counsel could lead to increasingly aggressive
litigation tactics that undermine the professionalism and civility of our
34
trial bar and needlessly increase the costs and burdens of pretrial
discovery.
Going forward, I also fear today’s decision will have a chilling effect
on the routine practice of retaining outside counsel to investigate
discrimination claims. If the employer’s lawyer can be deposed by
plaintiff merely because the employer pleads a Faragher–Ellerth defense,
will two different law firms have to be retained—one to investigate and
the other to try the case? Will employers limit what they tell their lawyer
who may be compelled to testify by the litigation adversary? Or will some
employers be reluctant to retain a lawyer who might be compelled to
provide adverse testimony? Will such employers lose the benefit of
sound legal advice that would otherwise help them improve compliance
with employment laws?
Our legal system venerates the attorney–client privilege for vitally
important reasons:
The attorney–client privilege is the oldest of the privileges for
confidential communications known to the common law. Its
purpose is to encourage full and frank communication
between attorneys and their clients and thereby promote
broader public interests in the observance of law and
administration of justice. The privilege recognizes that
sound legal advice or advocacy serves public ends and that
such advice or advocacy depends upon the lawyer’s being
fully informed by the client.
Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S. Ct. 677, 682
(1981) (citation omitted). Discouraging use of lawyers will undermine the
primary purpose of our civil rights laws—to avoid discrimination in the
workplace. See Faragher v. City of Boca Raton, 524 U.S. 775, 805–06,
118 S. Ct. 2275, 2292 (1998) (“Although Title VII seeks ‘to make persons
whole for injuries suffered on account of unlawful employment
discrimination,’ its ‘primary objective,’ like that of any statute meant to
35
influence primary conduct, is not to provide redress but to avoid harm.”
(quoting Albermarle Paper Co. v. Moody, 422 U.S. 405, 417–18, 95 S. Ct.
2362, 2371–72 (1975))); cf. Haskenhoff v. Homeland Energy Sols., LLC,
897 N.W.2d 553, 578 (Iowa 2017) (“Employers would lose a key incentive
to take corrective action if they were automatically liable for harassment
whether or not they put a stop to it.”). We should encourage employers
to retain counsel to investigate, prevent, and help remedy discrimination.
The majority today instead discourages the use of employment lawyers
by allowing adverse litigants to easily invade the confidentiality so
important to the attorney–client relationship.
For these reasons, I respectfully dissent.
Mansfield and Zager, JJ., join this dissent.