Equal Emp't Opportunity Comm'n v. BDO USA, L.L.P.

• Decision Date: 16 November 2017
• Docket Number: No. 16-20314,16-20314
• Citation: 876 F.3d 690
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff–Appellant v. BDO USA, L.L.P., Defendant–Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

876 F.3d 690

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff–Appellant

v.BDO USA, L.L.P., Defendant–Appellee

No. 16-20314

United States Court of Appeals, Fifth Circuit.

November 16, 2017

Susan L. Starr, Esq., U.S. Equal Employment Opportunity Commission, Office of General Counsel/Appellate Services, Washington, DC, for Plaintiff–Appellant.

Rachel Cowen, Counsel, DLA Piper, L.L.P. (US), Chicago, IL, Ileana Margarita Blanco, Esq., DLA Piper, L.L.P. (US), Houston, TX, for Defendant–Appellee.

Before STEWART, Chief Judge, and KING and DENNIS, Circuit Judges.

CARL E. STEWART, Chief Judge:

IT IS ORDERED that our prior panel opinion, EEOC v. BDO USA, L.L.P. , 856 F.3d 356 (5th Cir. 2017), is WITHDRAWN, and the following opinion is SUBSTITUTED therefor.

During the course of an employment discrimination investigation, the Equal Employment Opportunity Commission ("EEOC") brought a subpoena enforcement action against BDO USA, L.L.P. ("BDO") in federal district court. The EEOC sought production of information relating to the investigation and asserted that BDO's privilege log failed to establish that the attorney-client privilege protected the company's withheld documents. The district court held that the log was sufficient and also granted BDO's request for a protective order. For the reasons that follow, we VACATE and REMAND.

I. BACKGROUND

BDO, a financial and consulting services firm, hired Hang Bower as a Human Resources ("HR") Manager in 2007. Bower, an Asian–American female, was eventually promoted to Chief Human Resources Officer, the company's highest-ranking HR position. While at BDO, Bower was responsible for investigating discrimination complaints and communicated with both in-house and outside counsel. Bower resigned from her employment with BDO on January 15, 2014.

On July 9, 2014, Bower filed a charge with the EEOC, alleging that BDO violated Title VII and the Equal Pay Act by subjecting her and other female employees to gender discrimination, retaliation, and a hostile work environment. Bower claimed, inter alia , that: (1) as a result of her efforts to assure compliance with company policies, BDO removed her from leadership meetings, decreased her job responsibilities, reprimanded her, and ordered her to stop investigating certain employees; (2) in retaliation for her "expressed determination" to investigate male managers and a male partner, she was stripped of her investigatory authority and removed from the Chief Compliance Officer position; (3) top corporate management shielded a male manager accused of discrimination and blocked an appropriate investigation; (4) BDO fired or constructively discharged female employees who complained about mistreatment; and (5) BDO discriminated against non-white employees. On August 18, 2014, BDO filed a position statement in response to Bower's charge, providing additional information, denying the allegations, and arguing that the charge should be dismissed for lack of probable cause.

Between October 2014 and June 2015, the EEOC issued three Requests for Information ("RFIs") to BDO, seeking details related to the individual and class-wide claims in Bower's charge. In December 2014, BDO filed another position statement that outlined BDO's investigation policy and rejected Bower's allegations that the company blocked her attempts to investigate discrimination claims. BDO, however, objected to providing other information it believed was "far beyond the scope of Bower's individual charge." BDO also alleged that the EEOC was eliciting—and Bower was revealing—attorney-client privileged communications between Bower and BDO's in-house and outside counsel. In June 2015, BDO stated that it could not provide any additional information until the matter was "transferred to a new investigator who ha[d] not been tainted by reviewing, or eliciting, privileged information."

On July 14, 2015, the EEOC issued a subpoena to BDO, seeking documents and information relating to the investigation. In response, BDO provided some, but not all, of the requested information and created a privilege log cataloging withheld documents as to which it asserted attorney-client privilege. The 278 entries in the log's final version referenced "confidential" emails, memoranda, and other documents, and included communications between (1) Bower and in-house and outside counsel, (2) other BDO employees and in-house and outside counsel, (3) non-attorney employees with counsel courtesy copied, and (4) non-attorney employees regarding legal advice (but not involving any attorneys).

On December 10, 2015, the EEOC filed a subpoena enforcement action in federal district court. According to the EEOC, BDO's refusal to comply with the subpoena had "delayed and hampered the investigation," and the privilege log BDO submitted contained various deficiencies: certain entries "lack[ed] sufficient detail and specificity," were "simply incomplete," and/or appeared to reference communications that were not exchanged with or copied to an attorney, or that appeared only to courtesy copy counsel. On February 4, 2016, BDO filed its response, which included a request for a protective order enjoining the EEOC from questioning Bower and BDO employees regarding their conversations with BDO's counsel, and requiring the EEOC to return or destroy evidence of witness interviews and other documents that memorialized the privileged conversations.

On February 9, 2016, the magistrate judge presided over the show cause hearing. She rejected the EEOC's contention that communications BDO claimed were privileged were not protected and stated that the EEOC had not "made a sufficient showing" that the privilege log reflected "an improperly claimed privilege." Ultimately, the magistrate judge denied the EEOC's request to enforce the subpoena and for an in camera review of the documents, explaining: "I am not going to look through 278 documents. I decline to do that. The privilege log seems adequate." The magistrate judge also granted BDO the protective relief it requested, stating that it was "not Ms. Bower's job to decide what's attorney-client [privilege]" and that "anything that comes out of [BDO's] lawyer's mouth is legal advice."

The EEOC filed objections to the magistrate judge's order in the district court, arguing that the decision was based "on incorrect interpretations of the facts and the applicable law." The EEOC appended to its objections Bower's declaration, which stated, inter alia , that many of the communications she exchanged with BDO's counsel were for the purpose of seeking or imparting business, not legal, advice regarding officer investigations and how to carry out her HR duties. Similarly, Bower maintained that emails exchanged between her and other non-attorneys pertaining to these investigations were made for the primary purpose of conveying business directives or factual information. Bower further claimed that, in order to protect communications from disclosure in future legal proceedings, BDO required her to forward to or courtesy copy in-house counsel on virtually all communications pertaining to employee investigations and to include in HR-related emails a false designation that the communication was prepared "at the request of legal counsel."¹

BDO filed an opposition to the EEOC's objections, arguing that they should be overruled and that the district court did not have discretion to consider Bower's declaration. On March 21, 2016, the district court summarily affirmed the magistrate judge's order. The EEOC timely appealed, seeking that (1) the question of whether the attorney-client privilege is available to the withheld documents on BDO's privilege log be remanded to the district court and (2) the protective order be reversed and remanded.

II. DISCUSSION

A. Privilege Log

We begin with the question of whether the district court erred when it accepted BDO's claim of attorney-client privilege based on the privilege log.

1. Legal Standards

"The application of the attorney-client privilege is a ‘question of fact, to be determined in the light of the purpose of the privilege and guided by judicial precedents.’ " In re Auclair, 961 F.2d 65, 68 (5th Cir. 1992) (quoting Hodges, Grant & Kaufmann v. United States , 768 F.2d 719, 721 (5th Cir. 1985) ); see also Upjohn Co. v. United States , 449 U.S. 383, 396, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). "The clearly erroneous standard of review applies to the district court's factual findings." King v. Univ. Healthcare Sys., L.C. , 645 F.3d 713, 721 (5th Cir. 2011) (quoting United States v. Neal , 27 F.3d 1035, 1048 (5th Cir. 1994) ). We review de novo the district court's application of the controlling legal standards. See id. ; In re Avantel, S.A. , 343 F.3d 311, 318 (5th Cir. 2003).

"The attorney-client privilege limits the normally broad disclosure requirements of Federal Rule of Civil Procedure 26...." SmithKline Beecham Corp. v. Apotex Corp. , 232 F.R.D. 467, 472 (E.D. Pa. 2005). For a communication to be protected under the privilege, the proponent "must prove: (1) that he made a confidential communication; (2) to a lawyer or his subordinate; (3) for the primary purpose of securing either a legal opinion or legal services, or assistance in some legal proceeding." United States v. Robinson , 121 F.3d 971, 974 (5th Cir. 1997). Determining the applicability of the privilege is a "highly fact-specific" inquiry, and the party asserting the privilege bears the burden of proof. Stoffels v. SBC Commc'ns, Inc. , 263 F.R.D. 406, 411 (W.D. Tex. 2009) (citing United States v. Kelly , 569 F.2d 928, 938 (5th Cir. 1978) ); see also Hodges , 768 F.2d at 721. "Once the privilege has been established, the burden shifts to the other party to prove any applicable exceptions." Perkins v. Gregg Cty. , 891 F.Supp. 361, 363 (E.D. Tex. 1995) (citation omitted). Ambiguities as to whether the elements of a privilege claim have been met are construed against the proponent. See Scholtisek v. Eldre Corp. , 441...