New Rule Creates Privilege Risk for Investigative Reports in Minnesota
January 12, 2022
Under a test recently adopted by the Minnesota Supreme Court, investigative reports—which often contain highly sensitive and confidential information about the investigated organization—may be unexpectedly stripped of their privileged status absent proper precautions by counsel. In In re Polaris the Minnesota Supreme Court adopted the "predominant purpose" test dictating that attorney-client communications are privileged only if the predominant purpose is to seek or render legal advice. In re Polaris, Inc.,__N.W.2d__, No. A20-0427, 2021 WL 5913633 (Minn. Dec. 15, 2021).
Communications made for mixed purposes, like providing business advice, are not privileged in their entirety and potentially could be disclosed in future government enforcement actions or related litigation. Id. at 13. Although this new test affects all attorney-client communications, it significantly impacts the privileged nature of investigative reports, which may be subject to full or partial disclosure absent appropriate precautions.
In April 2016, Polaris recalled thousands of four-wheelers due to a potential fire hazard. The following month, the U.S. Consumer Product Safety Commission (CPSC) launched an investigation into whether Polaris complied with the Consumer Product Safety Act’s requirement that companies immediately report certain product defects and risks to the commission. Id. at 4. The CPSC also notified Polaris that it may be subject to an enforcement action and litigation. Id. In response, Polaris retained one of the CPSC's former general counsel as independent outside counsel to conduct an audit of its safety processes and policies. Id. Counsel conducted an investigation and provided Polaris with a 32-page report entitled "Embracing Safety As a Business Priority," marked on each page as "PRIVILEGED AND CONFIDENTIAL: Protected by Attorney Client Privilege and Attorney Work Product." Id.
Polaris was later sued by a plaintiff alleging he was injured while using one of the recalled vehicles. During discovery, Polaris produced a copy of the report, which it later sought to claw back as an inadvertently produced privileged document. A special master denied the claw-back motion after determining the report’s predominant purpose was business in nature as an "operational audit," and that only certain portions containing legal opinions could be redacted for privilege. The district court affirmed, and the Minnesota Court of Appeals subsequently denied Polaris’ writ of prohibition.
On appeal, the Minnesota Supreme Court joined the "general agreement among courts that the attorney-client privilege applies only if the primary or predominant purpose of the consultation is to seek legal advice." Id. at 12. According to the court, this approach ensures clients do not hide business and operational communications behind the veil of privilege. Rather than grant a blanket privilege, the court held that the portions of investigative reports containing legal advice may be redacted. Id. at 14.
Determining a report's primary purpose is "highly fact specific" and includes considerations of the communication’s purpose, content, context, and recipients, as well as whether legal advice permeates the document or whether privileged matters can be redacted. Id. at 17.
The subjective nature of this analysis is demonstrated by the Polaris court, which unanimously adopted the predominant purpose test but split with a 5-2 vote on how the test applied to the report. The dissent found the predominant purpose of the report was legal in nature because Polaris sought advice in the context of an investigation by the CPSC and notice of reasonably anticipated litigation, among other relevant factors. But the majority found the report was largely business-focused and remanded the case for a determination of which portions of the report should be redacted as legal advice.
In light of Polaris, attorneys should consider the following when preparing investigative reports:
- Words matter. The court put great weight on the use of the term "business" in the report’s title, as well as references to corporate "culture" and other operational terms. Id. at 20. ("Tellingly, the title of the report here is 'Embracing Safety as a Business Priority.'") (emphasis added by the court). Counsel drafting reports should make the legal nature of the advice clear in the report’s title and take care to avoid using unnecessary terms or phrases that suggest a non-legal purpose.
- Include context. Both the Polaris majority and dissenting opinions list the context of the report as a major factor to consider when determining its predominant purpose—with the dissent giving context extensive weight. Id. at D-12 ("Context is key in applying the predominant purpose test."). Counsel drafting reports should describe the context in which they were retained within the four corners of the report with an eye towards maintaining privilege in any future judicial review.
- Appropriately scope. Although the Polaris report was created in response to a CSPC investigation, the court emphasized that investigating counsel "did not represent Polaris regarding the recall or any investigation by government regulators." Id. at 20-21. Counsel drafting investigative reports should be careful to describe the scope and purpose of their investigation in a way that highlights its legal nature to increase the likelihood that it is protected by privilege.
- Consider alternatives to written reports. The Polaris opinion makes clear that determining the predominant purpose of a report is a murky analysis. Given this uncertainty, counsel conducting investigations should consider whether a written report is necessary to appropriately communicate their investigative findings and consider alternate means of communicating them to the client. If a report is necessary, counsel should discuss the risks and benefits of a written report with the client in advance.
We Can Help
Maslon’s Investigations and Labor & Employment attorneys are available to advise your company on precautions to take or other concerns regarding investigative reports in light of the court ruling.