General Motors (“GM”), who faced a very public scandal in 2014 over ignition switch defects, now faces a large class-action multi-district lawsuit on behalf of individuals who suffered injury due to the alleged defect.

When the scandal broke, GM hired outside counsel to investigate the ignition switch defect and GM’s delays in recalling vehicles.  The investigation, completed in 70 days, featured 41 million documents and more than 350 interviews with 230 witnesses.  The report containing the investigation’s conclusions has been named the Valukas Report, after the attorney leading the team that conducted the investigation.  The final Valukas Report and the documents cited in it are currently available to Plaintiffs’ lawyers in the class action litigation In Re: General Motors LLC Ignition Switch Litigation, 14-MD-02543.

Plaintiffs’ counsel moved in the Southern District of New York to obtain the notes, summaries and memoranda prepared by the attorneys who conducted the internal investigation for GM.  Judge Jesse Furman denied the request on the grounds that the requested material constituted privileged attorney-client communications and privileged attorney work product.

Citing Upjohn v. United States, 449 U.S. 383 (1981), the “foundational case on attorney client privilege in the corporate environment,” Judge Furman upheld the tenets that the attorney client privilege in internal investigations exists to protect professional advice from an attorney to those who can act on it, as well as the information conveyed to the attorney that enables her to provide advice.  In the GM case, Judge Furman noted that Upjohn “applies squarely” to the materials requested, noting that the Valukas Report was prepared to give advice on how to handle criminal investigations and civil litigation, the employees were explicitly told the interviews were confidential and conducted to provide legal advice, and the communications between the attorneys and the client were not shared with outside parties.

Judge Furman also cited to last year’s seminal case addressing privilege in internal investigations, In re Kellogg Brown & Root Inc., 756 F.3d 754 (D.C. Cir. 2014).  Under the Kellogg case, the D.C. Circuit articulated a “primary purpose test” to evaluate privilege.  That test held that if the “primary purpose” for an investigation involved providing legal advice to prepare for litigation, then the attorney-client and attorney work product privileges protected attorney notes, memoranda and the like created during the investigation.

Judge Furman’s affirmance of the “primary purpose test” underscores the importance of having experienced counsel conduct confidential internal investigations.  If privilege is breached, as could have occurred in the GM investigation, one can only imagine the damaging information that Plaintiffs’ lawyers could have obtained.  Thus, for GM, experienced white-collar counsel potentially saved the company substantial money by preserving privilege over the investigation.