Gingrich v. Sandia Corporation

• Decision Date: 15 June 2007
• Docket Number: No. 25,955.,No. 25,956.,25,955.,25,956.
• Citation: Gingrich v. Sandia Corporation, 165 P.3d 1135, 2007 NMCA 101, 142 N.M. 359 (N.M. App. 2007)
• Parties: Patricia GINGRICH, Plaintiff-Appellee, v. SANDIA CORPORATION, Lockheed Martin Corporation, C. Paul Robinson, and John Does 1-5., Defendants-Appellants.
• Court: Court of Appeals of New Mexico

165 P.3d 1135

2007 NMCA 101

Patricia GINGRICH, Plaintiff-Appellee, v.SANDIA CORPORATION, Lockheed Martin Corporation, C. Paul Robinson, and John Does 1-5., Defendants-Appellants.

No. 25,955.

No. 25,956.

Court of Appeals of New Mexico.

June 15, 2007.

Certiorari Denied, July 30, 2007.

Freedman Boyd Daniels Hollander & Goldberg, P.A., John W. Boyd, Martha E. Mulvany, Albuquerque, NM, for Appellee.

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Charles A. Armgardt, Albuquerque, NM, for Appellants.

Rodey, Dickason, Sloan, Akin & Robb, P.A., Charles K. Purcell, Albuquerque, NM, for Non-PartyAppellantNorman Bay.

OPINION

ALARID, Judge.

{1}Defendants-AppellantsSandia Corporation, Lockheed Martin Corporation, and C. Paul Robinson(collectively, Sandia) and Non-Party attorney Norman Bay(Bay) filed interlocutory appeals from an order of the district court compelling production of materials for which the Appellants have asserted attorney-client privilege and work product immunity.The district court ordered various materials produced after finding that Sandia, in defense of a suit brought by Plaintiff-AppelleePatricia Gingrich, had waived the attorney-client privilege with respect to an investigative report produced by Bay and relied upon by Sandia to defend this case.In that order compelling discovery, the district court certified the issues raised therein for appeal after making the requisite findings.SeeNMSA 1978, § 39-3-4(A)(1999)(permitting appellate review of an interlocutory district court order where the order "does not practically dispose of the merits of the action," and the district court believes that the order "involves a controlling question of law as to which there is a substantial ground for difference of opinion," and that "an immediate appeal from this order [or decision] may materially advance the ultimate termination of the litigation").Sandia and Bay filed separate interlocutory appeals in this Court, which we granted and consolidated.The district court has stayed all further proceedings pending the resolution of this appeal.Requests for oral argument are hereby denied.For the reasons stated herein, we affirm the order of the district court, except to the extent that it required production of that portion of Bay's work product that was not communicated to Sandia.

FACTS AND PROCEDURAL BACKGROUND

{2} The facts relevant to this appeal are not in dispute.Bay was retained by Sandia to investigate allegations by two internal Sandia Ethics Office investigators who claimed that their work was being impeded and that they were being retaliated against by Sandia managers as a result of their investigations.Sandia was notified of the investigators' allegations by way of a letter sent to Sandia management by a local attorney, captioned "Re: Employment discrimination—Pat O'Neill and Mark Ludwig."The letter relayed several of the investigators' accusations, including that Sandia managers had interfered with their investigative efforts, that they had suffered retaliatory adverse employment actions, and that they had been subjected to "potentially slanderous statements and libelous writings" and a "hostile work environment."The letter requested that Sandia "reverse certain improperly motivated management initiatives against these two investigators."In closing, the letter also encouraged Sandia to "avoid a serious legal mistake" by taking steps to ensure that the investigators were being treated lawfully.

{3} After receiving this letter, and after realizing that any such investigation would normally have been conducted by the investigators themselves, Sandia retained Bay, a former federal attorney and currently a professor of law at the University of New Mexico, to conduct an investigation into the investigators' accusations.The letter memorializing Bay's engagement, sent by Lawrence Greher, Senior Attorney for Sandia, instructed Bay to conduct an inquiry into the investigators' allegations that they were:

(1) being prevented from fully and faithfully carrying out their assigned duties as security investigators and (2) being retaliated against because of their past or ongoing efforts to ferret out possible fraud, waste [or] abuse at Sandia.

{4} Sandia further instructed Bay to conduct a "complete, thorough, and comprehensive investigation into the allegations," to treat his investigation as "attorney-client privileged to the fullest extent possible," and to submit a "comprehensive report on [his] findings to C. Paul Robinson, Sandia's President and Laboratory Director."In addition to submitting a written report containing the results of his investigation, Bay was directed to "advise [Sandia's in-house counsel] from time to time concerning, in general terms, the progress being made in completing [his] investigation."

{5} Bay began his investigation in August 2002, culminating in the submission of a 221-page "Report of Independent Investigation"(the Report) to Robinson in June 2003.Plaintiff was one of several Sandia employees whose conduct, according to the Report, "merited scrutiny."Plaintiff was disciplined later that month, and approximately one year later, she terminated her employment with Sandia.Plaintiff subsequently filed a complaint in district court challenging the disciplinary actions taken by Sandia, and alleging that the Report contained false allegations of wrongdoing by Plaintiff.Specifically, and more germane to this appeal, Plaintiff alleged that Sandia managers knew that the Report's conclusions which criticized Plaintiff's conduct were incorrect, but nevertheless chose to discipline her in order to placate members of Congress responsible for oversight of the laboratory.Sandia's response denied Plaintiff's allegations that the Report was a sham, and more particularly, stated that the Report provided an objective, reasonable belief that any action taken against Plaintiff was justified.

{6}The district court found that waiver of both the attorney-client privilege and work product immunity had occurred as a result of Sandia's disclosure of the Report prior to and during this litigation, and by Sandia's direct use of the Report in defending against Plaintiff's claim that she was demoted, and constructively discharged, without cause.In determining the scope of the waiver resulting from Sandia's disclosure and use of the Report, the district court ordered that the following additional materials be disclosed as well: (1) communications between Bay, Sandia lawyers, and Sandia representatives regarding Plaintiff and the Report; (2) work product materials prepared by Sandia's in-house counsel and communicated to non-legal representatives of Sandia; and (3) all materials prepared or compiled by Bay relating to the Report.

{7} Sandia and Bay request that we reverse the district court's order and uphold Sandia's assertions of attorney-client privilege and work product immunity.For the reasons stated herein, we affirm the district court's order with respect to Sandia's in-house communications and work product, but reverse insofar as it compels Bay to produce attorney work product materials that were not communicated to Sandia.

APPLICABILITY OF ATTORNEY-CLIENT PRIVILEGE AND WORK PRODUCT IMMUNITY

{8}We first address Plaintiff's contention that the district court erroneously concluded that the Report, prior to its disclosure and use in this litigation, was protected by the attorney-client privilege and that Bay's investigation was entitled to work product immunity.Plaintiff advances this argument as an alternative ground for affirmance, and takes the position that if the aforementioned protections do not apply to Bay's work and investigation, then the district court was correct to order their production.We review decisions regarding the initial applicability of the attorney-client privilege and work product immunity for abuse of discretion.SeeHartman v. Texaco Inc.,1997-NMCA-032, ¶ 20, 123 N.M. 220, 937 P.2d 979.

{9} The rule guiding application of work product immunity in New Mexico is Rule 1-026(B)(4) NMRA, which provides that the immunity extends to "documents and tangible things ... prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including the other party's attorney, consultant, surety, indemnitor, insurer or agent)."The district court found that "Norman Bay was retained to perform and did perform legal services for Sandia Corporation in investigating the subjects covered by the ... Report ... and in creating the [Report].His work was in anticipation of litigation by the [two] Sandia investigators[.]"The court therefore concluded that the "Report was protected at the outset by the attorney-client privilege and the work product doctrine."

{10}Plaintiff argues that Bay was not acting as an attorney when conducting his investigation, but instead as an "independent investigator" who was charged only with "finding facts and reporting back."Relying on this characterization, Plaintiff further submits that "[w]hen an attorney is acting as an investigator, rather than as a lawyer rendering legal advice or assistance, the lawyer's activities are not covered by the privilege."We disagree.The facts recited above demonstrate Sandia's cognizance of the legal nature of the investigators' accusations, as well as Sandia's awareness that the allegations raised matters that could result in direct or vicarious liability on the part of Sandia for retaliation, fraud, and other illegal actions taken by its employees.We also reference Sandia's engagement letter to Bay, which made clear that "[o]f key interest to Sandia ... is whether such retaliation, and/or fraud, waste or abuse exists, and, if so, whether it is being allowed to go uncorrected[,]" and expressed Sandia's awareness that the investigators' allegations "contain[ed] the implicit and explicit threat of litigation, either by [the two...