Courts frequently face a common scenario: an in-house lawyer investigates alleged employee misconduct, and prepares a report that the company relies on in firing the employee. Do such reports deserve privilege protection, and what happens if the employer produces a redacted version of such a report to justify the firing?

In Maiurano v. Cantor Fitzgerald Securities, No. 19 Civ. 10042 (KPF), 2021 U.S. Dist. LEXIS 207746 (S.D.N.Y. Oct. 27, 2021), Cantor Fitzgerald's Deputy General Counsel investigated an employee's alleged financial transaction improprieties. Cantor Fitzgerald fired the employee, who then sued the company. Cantor Fitzgerald produced its lawyer's investigation report, but "redacted the entire sections entitled 'Conclusion' and 'Observations and Recommendations.'" Id. at *2. Not surprisingly, plaintiff argued that Cantor Fitzgerald waived its privilege by "producing the redacted version of the Memorandum and relying on it as a basis for Plaintiff's termination." Id. at *3. The court first said it "has little difficulty finding" that the redacted portions of the Memorandum deserved privilege protection. Id. at *5. More significantly, the court then accepted Cantor Fitzgerald's argument "that its decision to terminate Plaintiff was 'based, only in part, on the factual findings of the [Memorandum], all of which have been disclosed to Plaintiff.'" Id. at *7 (alteration in original). The court ultimately denied plaintiff's waiver argument, emphasizing that Cantor Fitzgerald "further states that it will not rely 'on the privileged portions of the [Memorandum] as the basis for terminating [Plaintiff's] employment, which will be presented through objective proof of [Plaintiff's] misconduct.'" Id. (alterations in original).

This helpful case provides a useful roadmap for companies finding themselves in the same situation.