Court Analyzes Protections for Materials Generated During an Internal Corporate Investigation: Part II

September 2, 2009

Last week’s “Privilege Point” explained that a court rejected Microtune’s attorney-client privilege claim for materials generated during an internal corporate investigation conducted by Andrews Kurth and its forensic accountant Grant Thornton. SEC v. Microtune, Inc., No. 3-08-CV-1105-B, 2009 U.S. Dist. LEXIS 47091 (N.D. Tex. June 4, 2009). In denying the privilege claim, the court pointed to what it called a “stunning lack of evidence” in declarations by an Andrews Kurth lawyer and the Audit Committee’s head. Id. at *14.

The court then turned to Microtune’s work product claim. The court first held that the work product doctrine only protected documents prepared “to aid in possible future litigation.” Id. at *19. An increasing number of courts take a broader view, protecting documents prepared “because of” the litigation even if they would not be used to “aid” in that litigation. In analyzing Microtune’s work product claim, the court quoted from a declaration filed by the head of Microtune’s Audit Committee — who claimed that the company anticipated government investigations and possible civil litigation when it hired Andrews Kurth to conduct the internal corporate investigation. But the court rejected what it called “this self-serving testimony,” and instead pointed to deposition testimony by the Andrews Kurth lawyer who conducted the investigation. Id. at *22. The court noted that “[w]hen asked at his deposition to explain the purpose of the investigation” the Andrews Kurth lawyer “never mentioned that preparing for litigation was a purpose of the investigation, much less the primary motivating purpose.” Id. at *22-23. Instead, the Andrews Kurth lawyer mentioned several other essentially business reasons why the company conducted the internal investigation. The court rejected Microtune’s work product claim.

Companies and their lawyers hoping to protect as privileged and as work product communications and materials relating to internal corporate investigations must lay the groundwork for both protections at the beginning, and be prepared to provide evidence that the investigation was primarily motivated by the need for legal advice, and primarily motivated by anticipated litigation.