New Jersey Appellate Court Questions Whether Firm’s Workplace Investigation Docs Are Privileged

Quick Hits

• A New Jersey appellate court ruled that employers may be able to claim privilege over certain law firm investigation documents from an investigation initiated prior to a lawsuit under New Jersey law.
• The court noted that timing of an investigation does not negate privilege if the investigation aims for legal advice or litigation preparation.
• The court stated that raising an affirmative defense may waive privilege over certain relevant documents, but trial courts must conduct a “line-by-line,” “page-by-page” assessment of withheld documents to determine whether information is so “tenuously related” to the affirmative defense that it should not be produced in discovery.

On June 1, 2026, the Superior Court of New Jersey, Appellate Division, in C.S. v. Brick Recycling Company, vacated a trial court’s ruling that none of several documents related to a workplace sexual harassment investigation that an employer-defendant had sought to shield were privileged, and sent the issue back to the trial court for reconsideration. While the court did not make any substantive rulings on whether certain investigation documents are privileged, the decision provided insight into the proper analysis of the issue under New Jersey law.

Background

The issue arises in a lawsuit filed by a former employee of a recycling company under the New Jersey Law Against Discrimination, alleging he was subjected to workplace sexual harassment by a coworker. Before the lawsuit, the company retained an outside law firm to conduct a formal investigation into the former employee’s complaints to the employer.

The employer raised several affirmative defenses, including that it had exercised reasonable care in responding to the harassment complaint. The employer produced the law firm’s final investigation report and nearly 600 other documents but withheld eight items—including notes of the attorney who conducted the investigation concerning meetings with the company’s owner, a draft investigation report, correspondence, and retainer-related materials—claiming attorney-client privilege and work-product protection. The trial court rejected the employer’s claim and ordered production of the documents. The employer’s leave for interlocutory appeal was granted.

Appellate Court’s Findings

The Appellate Division examined the trial court’s ruling following an in camera review of the documents under the Supreme Court of New Jersey’s 1997 “seminal” opinion in Payton v. New Jersey Turnpike Authority. Under Payton, the key question is the purpose of the investigation: if the attorney’s work was done to provide legal advice or prepare for litigation, privilege applies; if it was simply to enforce anti-harassment policy or comply with legal duties, it does not. 

Timing is not dispositive

The Appellate Division found that under Payton, the timing of a lawsuit is not dispositive. The appellate court said the trial court was apparently under the “mistaken impression” that privilege could not be invoked since the law firm started the investigation prior to the filing of the employee’s lawsuit.

“That timing, however, doesn’t mean that a lawsuit was not reasonably anticipated,” the appellate division stated. “… Here, there is a sufficiently close temporal nexus between the claims, the undertaking of the investigation, and the filing of the complaint to regard [the investigating attorney] as acting in a dual role as both investigator and legal adviser to the company.”

Trial court must consider the scope of waiver

The appellate court noted that Payton recognized that an employer has waived privilege when it seeks to rely on an investigation to assert an affirmative defense that it exercised reasonable care. But it said that the waiver is not absolute. Payton requires the trial court, during its in camera review, to consider whether certain documents created or identified in an investigation are “tenuously related” to the affirmative defense. That means “the trial court should be attentive to the potential relevance of the item in either direction: supporting the employer’s defense or weakening it,” the Appellate Division said.

Draft reports deserve heightened protection

The court questioned whether the investigating attorney’s draft investigation report should be disclosed at all, analogizing to the general nondiscoverability of expert draft reports. “At the time of trial, a litigant relies on the finalized version of the report to support a claim or an affirmative defense, not the draft,” the court noted. Although the court rendered “no definitive decision on the subject,” it directed the trial court to reconsider the issue.

Investigation notes are not categorically privileged

However, the court rejected the defendant’s request that it categorically block discovery of the investigation attorney’s meeting notes with the company’s owner. The appellate court found that such notes require “closer line-by-line scrutiny by the trial court” and that while pages consisting of legal advice may be redacted, “non-advisory passages that mention facts that may be relevant to the case” may be produced.

Key Takeaways for Employers

The Appellate Division’s ruling provides valuable insights into the issue of privilege under New Jersey law regarding workplace investigations conducted by outside law firms and the documents generated or identified as part of those investigations. These insights may affect employers’ strategies for responding to complaints, remediating problems, and limiting liability. The ruling raises some key considerations:

• Employers may want to consider engaging an outside law firm early, which may enable an employer to mitigate any alleged workplace harassment, and where a lawsuit is reasonably anticipated, materials from such investigations may be privileged.
• The ruling suggests that draft investigative reports may receive greater protection, meaning employers may want to consider keeping drafts separate and clearly identified as drafts.
• Employers may further want to consider that raising certain affirmative defenses to workplace harassment claims may result in a waiver of privilege under New Jersey law over documents sufficiently related to that defense.
• The decision to disclose or not is a strategic decision employers may want to consider, given the individual facts and circumstances. In this case, the employer voluntarily produced the investigation report and other documents, and the appellate court noted this cooperation.

Ogletree Deakins’ Morristown office and Workplace Investigations and Organizational Assessments Practice Group will continue to monitor developments and will provide updates on the Employment Law, New Jersey, and Workplace Investigations and Organizational Assessments blogs as additional information becomes available.

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