Upjohn Warnings: What Corporate Employees Need to Know.

Upjohn Warnings: What Corporate Employees Need to Know An Upjohn

warning serves as a notification that the organization, and not you, controls corporate attorney-client privilege. It provides essential information that you will need to make an informed decision about cooperating.

What Does a Standard Upjohn Warning Include?

While there is no mandate regarding what these warnings should say, most Upjohn warnings typically include a set of standard disclosures. These generally include:

• Identification of the organization as counsel’s client;
• Clarification that the organization owns the privilege;
• Clarification that the organization controls the release of protected communications;
• Warning that the organization could disclose protected communications to third parties; and,
• Advice to seek outside legal counsel.

  What is Upjohn v. United States?

  In Upjohn v. United States (449 U.S. 383 (1981)), the Supreme Court adopted a broad approach to the attorney-client privilege in the context of corporate internal investigations. The court held that the attorney-client privilege covers information that attorneys obtain from employees of the corporations they represent. The privilege belongs to the corporation, allowing it to protect such disclosures from external inquiry and, if the corporation wishes, to waive the privilege and disclose employees’ statements.

  Why does the corporate counsel need to deliver an Upjohn warning?

  While no federal statute prescribes a mandatory Upjohn-warning script, the substance of an Upjohn warning will necessarily convey that the employee being interviewed has no control over corporate attorney-client privilege and is not entitled to its protection. If the employee is to receive the protections of the privilege, the employee will need to engage outside counsel to offer protection under employee’s own attorney-client privilege.

These are critical distinctions, and they have important implications for employees under internal investigation. That is why it is so important to seek advice from an independent attorney as soon as you can.

Can I Pause or Refuse an Internal Interview?

Generally speaking, yes. However, you will need to carefully weigh the benefits against any potential disadvantages. At Spodek Law Group, our attorneys handle matters dealing with internal corporate investigations, and we are able to help our clients make informed decisions on a case-by-case basis.

Should I Have the Upjohn Warning Before the Interview?

Yes. By its very nature, an Upjohn warning should precede any substantive disclosures. If you are at the beginning of the interview, then it is not too late to ask for a clear and unequivocal Upjohn warning.

On the other hand, if the interview has already progressed for some time, you will need to ask yourself whether you can (and should) still ask for the Upjohn warning. While doing so will certainly not be a bad idea, it may look suspicious. For this reason, you will need to consult with your independent legal counsel promptly.

In either case, while refusing to have the interview is often not an option, accepting to pause the interview to obtain independent legal advice is very often something that is not only an option but that also represents your best course of action.

Does a Company Have the Right to Terminate My Employment for Refusing an Internal Interview?

The answer depends on whether you are an at-will employee. Assuming that your employment is at-will, then your employer will generally have the right to terminate your employment. Of course, at-will termination is still subject to statutory, contractual, and public-policy limitations, but this is subject to extensive case law and careful analysis.

Do I Have a Constitutional Right to Refuse the Interview?

Broadly speaking, no. Unless you are a public employee (i.e. an employee of a state or local government), you will not have a constitutional right to refuse an employer’s request for an internal interview. Private employees generally do not have constitutional rights against private employers.

Do I Have a Right to Have Counsel at the Interview?

No general federal rule guarantees private employees’ right to have counsel at their employer’s internal interview. Of course, employment contracts, collective-bargaining agreements, and similar documents can all create additional internal-interview rights, but these rights are not generally guaranteed unless the document specifically says so.

That said, for employees represented by a labor union, “Weingarten rights” provide union-represented employees with the right to request union representation during “investigatory interviews that the employee has a reasonable belief may lead to disciplinary action.”

What Are the Consequences of Refusing to Participate?

While the answer depends on the specific facts at hand, refusing to participate in a lawful internal interview can lead to negative employment consequences. With that said, refusing to participate in a civil proceeding, even though the privilege is not available, generally will not result in similar consequences. This is because, in civil proceedings, “ a witness who invokes the Fifth Amendment privilege against self-incrimination may lead the trier of fact to draw an adverse inference,” but this is rarely the case in private employment contexts.

Is an Upjohn Warning the Same as a Miranda Warning?

No. An Upjohn warning is a notification that your employer’s internal counsel is (1) the organization’s attorney and not yours; (2) you will not have the benefit of corporate attorney-client privilege; (3) the organization owns the privilege and can waive it with the right to expose your disclosures; and, (4) you are advised to seek independent legal advice. While the information contained in a standard Upjohn warning may protect employees from civil liability, this is true not because it constitutes a constitutional safeguard, but because these warnings are important for corporate attorneys to provide in their internal investigation processes.

This differs from a Miranda warning, which is a constitutional safeguard under the Fifth Amendment limiting governmental compulsion. Miranda warnings apply to custodial interrogation, not necessarily to interviews, and, broadly speaking, in order for a government or governmental-actor to compel a suspect to disclose incriminating information, the suspect must be made aware that (i) they have a right to remain silent, (ii) any statement they make can be used against them in court, (iii) they have a right to counsel, and, (iv) if they cannot afford counsel, one will be appointed.

In contrast, for a public employee, “ Garrity rights” provide a safeguard for employees who have been compelled to provide information under threat of job loss, and the use of those compelled statements in a subsequent criminal prosecution is barred by the Fifth and Fourteenth Amendments under Garrity v. New Jersey, 385 U.S. 493 (1967).

While the term “corporate Miranda” will be commonly used in corporate internal investigations, this term commonly denotes an Upjohn warning, not a distinct constitutional doctrine. Private corporate investigators do not have the governmental authority to arrest and criminally charge employees. They can investigate, but, subject to all applicable law, this is as far as their power goes. Similarly, constitutional protections such as the exclusionary rule also govern only state action and do not protect employees during private internal investigations.

The SEC is a federal civil enforcement agency. Although the SEC works with the Department of Justice in many cases, the SEC itself does not have the authority to impose imprisonment. However, according to Justice Manual § 9-11.151, “A target is a person as to whom the prosecutor’s office has substantial evidence linking the person to the commission of a prosecutable federal offense.”

Are My Interview Answers and Counsel’s Notes Protected?

Are your interview answers and your counsel’s notes protected? If the internal investigation identifies you as a witness, and if you are an un-indicted witness, any information you provide may be protected by corporate attorney-client privilege, unless your employer decides to waive privilege and disclose your statements. However, giving the interview itself doesn’t make your answers and your counsel’s notes privileged.

An Upjohn warning typically should be delivered before the interview. If an Upjohn warning has not been delivered, it will certainly not make your interview answers and your counsel’s notes privileged. If the Upjohn warning is deficient or confusing, it will still not make your interview answers and your counsel’s notes privileged. However, depending on the specific facts involved, it may still leave the privilege under the organization’s control. In United States v. Ruehle, 583 F.3d 600 (9th Cir. 2009), while the court noted that “the presence of an attorney-client relationship was clearly not demonstrated,” the court observed that, “even if such a relationship did not exist, it would be premature to hold that corporate counsel not had control of the privilege.”

Another reason you will need to consult with an experienced counsel is if you believe the interview suggests that you have un-wittingly formed an attorney-client relationship with counsel. As an un-witting participant in an attorney-client relationship, you might be entitled to the protections of the attorney-client privilege, but this relationship can also create additional problems. It would certainly provide a basis for challenging an Upjohn warning, and it would definitely create a problem with respect to your counsel’s potential conflicts.

Is it possible for your interview to avoid attorney-client privilege and work-product protection?

While these are not “legal” protections per se, generally speaking, attorney-client privilege and the work-product doctrine both require a showing of confidentiality and a connection with the representation. An attorney-client relationship requires communication with counsel in confidential confidence with the objective of either obtaining legal advice or providing information for which counsel can provide legal advice.

On the other hand, as Federal Rule of Civil Procedure 26(b)(3) provides, “ a party may not discover... materials prepared in anticipation of litigation or for trial.” Attorney-client communications that are prepared in anticipation of litigation and for trial (i.e., in anticipation of litigation or for trial) may be subject to work-product protection, regardless of whether they satisfy the requirements of the attorney-client privilege.

No federal “Upjohn doctrine” would guarantee an employee his or her right to copies of the notes he or she has taken. It also will not guarantee copies of interview summaries or any recordings that corporate investigators may have taken during the employee’s interview.

Finally, any warning delivered after an employee has had substantive disclosures to make during the interview will not help clear up any questions about counsel’s role during the interview, including regarding the legal advice that counsel supposedly provided the employee with during the interview.

Who Can Disclose My Interview to the Government?

If the internal investigation has gone well, it may seem unlikely that the organization will waive privilege and expose your interview. Of course, the organization is at liberty to do as it wishes, and, if it wishes, the organization can waive the privilege with respect to your interview and disclose your interview to government authorities.

In federal litigation, Commodity Futures Trading Commission v. Weintraub, 471 U.S. 343 (1985) states: “It is generally accepted that the authority to waive the privilege rests with the corporation’s management.” But, even if the privilege does not allow the organization’s management to keep your disclosures private, this doesn’t necessarily allow the government to disclose your interview to third parties.

For example, Federal Rule of Evidence 502(a) states: “ a voluntary disclosure of a privileged communication under the Rule... is subject to a question of fairness to the party that took the privilege. This means that, while in some cases, a voluntary disclosure may result in waiver of the privilege with respect to all communication on the same subject matter, most often disclosure will only lead to waiver with respect to the specific privileged communication that was disclosed, and only if additional disclosures are necessary for it to be fair to let the other party to the litigation know that they are allowed to request information.”

More often than not, when the government invokes the “ selective waiver” exception, nearly every federal circuit to consider selective waiver has rejected it, with the Eighth Circuit standing almost alone in recognizing it, so a voluntary disclosure to the government will usually waive the privilege as to other parties as well. However, it is important to remember that there is a possibility that you can protect against any waiver that would extend beyond the information that the organization voluntarily disclosed to the government.

While regulators such as the SEC accept confidentiality agreements when disclosure is required, this is by no means an assurance that privilege will be preserved against third parties. However, pursuant to Federal Rule of Evidence 502(d), the court has the power to issue orders “that do not trigger the consequences of a waiver of privilege and work-product protection in other federal or state proceedings.”

Is it possible for you to tell them about your interview? “An employee cannot independently waive the attorney-client privilege asserted by the organization, nor can an employee seek to invoke the privilege on behalf of the organization, even when it is the employee’s own information that is subject to the privilege.”

When the organization discloses the interview to the government, is that enough? The answer depends on the specific material that the organization has disclosed as well as which waiver doctrine has been invoked. If you have concerns about the scope of the organization’s disclosure, it is important that you discuss this with your counsel as well.

Will the Company Pay for My Own Lawyer?

If the company gives you the advice to get your own lawyer, the question is: Is the company willing to pay your lawyer? Generally speaking, the corporate attorney is obligated to give you an Upjohn warning. When this refers to the fact that you are advised to obtain independent legal counsel, you are entitled to get advice from an independent attorney and you can use this as the basis to make the company pay your expenses.

Is this advice a requirement under the ABA Model Rules? The ABA Model Rules of Professional Conduct (Model Rules) govern attorneys who practice in the United States, but only through each state’s adoption and interpretation of the Model Rules as applicable law. The attorneys who represent corporations are subject to various provisions of the Model Rules. ABA Model Rule 1.13(f) is particularly relevant. The rule states, “ When an attorney for an organization has reason to believe that the organization’s interests are not completely aligned with the interests of its constituents, then the attorney should make it clear to the constituent that the representation of the organization is not necessarily same as the constituent’s representation.” This includes cases where the organization’s interests and the constituent’s interests are adverse. It also explicitly allows the attorney to advise the constituent to obtain independent legal advice. ABA Model Rule 4.3 also states, “A lawyer may not encourage a lay person to believe that the lawyer will provide legal advice to the person or that the lawyer has a duty to the person to provide legal advice.” This is another instance of how the corporate attorney must clearly state that, while the attorney can (and should) give an Upjohn warning to a potential client in regard to a potential representation, this is not legal advice.

As a result, the corporate attorney cannot advise the employee about whether or not the company should be entitled to have the interview and what steps that it has to take to protect its representation.

In general, the fact that company attorney-client privilege (as a result of an Upjohn warning) does not cover employees’ disclosures doesn’t necessarily make it mandatory that the company advances the employee’s expenses. However, under the Delaware General Corporation Law (DGCL), it is possible that a company may advance defense expenses for the benefit of its constituent in criminal prosecution prior to the final disposition of the case. DGCL § 145(e) provides: “ a corporation may advance reimbursement of expenses incurred by an officer or director in defending, or indemnifying itself or the corporation in any proceeding in which he or she is made a party on behalf of the corporation.” It allows this as long as the corporation believes that the officer or director has “acted in good faith and in a manner that they reasonably believe to be in the best interests of the corporation, and is entitled to indemnification.” The employee must also undertake to repay the expenses if the employee has not in fact fulfilled the requirements of indemnification.

Indemnification and advancement of defense expenses are two separate rights. If your company’s bylaws, an indemnification agreement, or an employment agreement makes the company pay, then you will be able to demand that the company pays for your expenses.

If you are facing a potential criminal proceeding, you will need to make sure that your counsel has the required experience in federal criminal defense. If you need defense representation, it’s also possible to engage an attorney who will represent you and the organization. ABA Model Rule 1.13(g) states, “An attorney may represent both the organization and the constituent.... provided that the representation is consistent with the Rules...., particularly Rule 1.7.” Rule 1.7 generally requires that attorneys obtain informed consent to conduct dual representations. If the employee believes that the attorneys represent the employee as well as the company, then the attorney’s ability to avoid conflicts will be important. This generally requires the attorneys to obtain informed consent in writing, as confirmed by a separate letter.

Must I Keep the Interview Confidential Afterward?

As we discussed, Upjohn warnings should instruct employees to maintain confidentiality. With that said, such restrictions are not always enforceable.

While not exhaustive, these restrictions generally do not apply (i) when an employee files a whistleblower complaint; (ii) when an employee has statutory or contractual rights to discuss internal matters; or (iii) when an employee is subpoenaed in civil or criminal proceedings. For example, under Section 21F-17(a) of the Securities Exchange Act, it is unlawful for companies and other entities to take action “to impede an individual from communicating directly with the Securities and Exchange Commission staff about possible securities law violations.” As the SEC has noted, this includes “establishing, enforcing, or treating as enforceable confidentiality agreements or provisions of a similar nature that would prohibit or deter employees from making complaints to the SEC.” Similarly, Section 7 of the National Labor Relations Act protects “concerted activity, including participating in a collective bargaining agreement,” which can include discussing workplace investigations with other employees. The National Labor Relations Board has affirmed the applicability of Section 7 to employees participating in corporate internal investigations, including with regard to the obligation to maintain confidentiality. When an employer-initiated internal investigation has a high probability of leading to litigation, employers’ employees will have to preserve all potentially relevant electronically stored information (ESI). For instance, in federal civil litigation, Federal Rule 37(e) makes failure to preserve ESI a matter with serious consequences, potentially leading to an adverse inference. The federal court may also compel the party to disclose all relevant documents stored on an employee’s computer, mobile device, or in a cloud-based server.

When preserving documents for litigation purposes, generally speaking, preserving documents in their native format is important. Printed copies typically do not contain metadata, like author name, date of creation and modification, size, and other information.

The fact that an organization has a preservation obligation does not mean that an organization’s employees have no right to privacy or that an employer can seek to access documents and information not otherwise available. Companies can enforce documentation-preservation obligations without expanding their access to employees’ information.

Although most whistleblower statutes prohibit an employer from discriminating against an employee for making a protected disclosure, they differ in several important respects, including with regard to: (i) what conduct is covered; (ii) which reporting channels are available; (iii) deadlines for reporting; (iv) employees’ eligibility to file whistleblower complaints; (v) available remedies for violations; (vi) required disclosures of information; and (vii) applicable exceptions.

For example, while many whistleblower laws only allow for protection of external reports, certain provisions such as Section 806 of the Sarbanes-Oxley Act can provide protection for employees who make internal reports for violating securities laws and other statutes.

Speak With a Federal Defense Lawyer

If you are dealing with any part of what this article describes, the next step is a conversation with a lawyer who handles these cases. Spodek Law Group is a second generation criminal defense firm practicing since 1976, representing clients nationwide from offices in New York, Brooklyn, Queens and Los Angeles. Call 212-300-5196 to speak with our team.