The self-critical analysis privilege and environmental audit reports.

• Author: Gish, Peter A.

1. Introduction II. Evolution of the Self-Critical Analysis Privilege

   1. Privileges in Federal Practice

   2. Principles, Policy Rationales, and Elements of the Privilege

   3. Limits to Application of the Privilege III. Compliance Audit Reports as Self-Evaluative Material

   1. The Form and Function of Environmental Compliance

      Audits

   2. Qualification of Audit Reports as Self-Evaluative Material

   3. Minimizing the Risk of Discovery of Self-Evaluative Material IV. Conclusion

1. Introduction

   Over the past two decades, several federal courts have recognized a qualified privilege(1) which shields certain institutional self-evaluations from discovery.(2) Commentators remarking on this development have suggested that this privilege might extend protection to environmental audit reports.(3) This suggestion has generated significant interest among attorneys representing businesses subject to environmental laws because of the increased emphasis lawmakers and regulators place on environmental auditing.(4)

   Recent trends in evidentiary law, however, suggest t]hat federal courts will not extend the scope of the privilege to include materials not previously recognized.(5) As a consequence, corporations and other organizations undertaking environmental audits should be particularly careful to adequately protect audit results.(6) Part II of this article briefly overviews privileges in federal practice and then reviews the evolution of the self-critical analysis privilege with a particular focus on the principles and policy rationales which have led to the protection of certain types of self-evaluative material.(7) The section then analyzes applications of the privilege and examines the increasing reluctance among the federal judiciary to recognize the privilege. Part III discusses environmental auditing and whether the reports produced as a result of such audits constitute the type of self-evaluative material which the privilege was designed to protect. The article concludes that federal courts, balancing the well established policy of ensuring full and complete disclosure of all relevant facts in litigation against the competing and less established policy of shielding certain institutional self-evaluations from discovery, are unlikely to afford protection under the self-critical analysis privilege to environmental audit reports.(8)

2. Evolution of the Self-Critical Analysis Privilege(9)

   1. Privileges in Federal Practice

      The Federal Rules of Civil Procedure (FRCP), which govern civil litigation in the federal courts,(10) establish a strong bias in favor of candid and complete discovery of all relevant information which is not privileged.(11) Parties to litigation are provided with numerous devices for obtaining information from adversaries.(12) Even information not admissible at trial may be discoverable if it might lead to the discovery of admissible evidence.(13) The FRCP thus embody the often quoted maxim that "the public has a right to every [person's] evidence."(14) This policy creates a presumption that exceptions to the liberal discovery rules are unusual and to be discouraged.(15) Consequently, claims that information sought in discovery is privileged receive cautious treatment from courts, which narrowly construe the claimed privilege.(16)

      Whether or not something is privileged from discovery depends on whether or not it is privileged under the Federal Rules of Evidence (FRE) for purposes of admissibility.(17) The language of FRE 501 reflects Congress, intent that the law of privileges be flexible rather than rigid.(18) The rule explicitly states that privileges are to "be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience."(19) In deciding to recognize an evolving privilege such as that of self-critical analysis, district judges must consider the competing policy considerations affecting the law of privileges generally.(20) Courts must balance the public policy of ensuring full and complete disclosure of all relevant facts against the public's interest in maintaining the confidentiality of material claimed as privileged.(21) In weighing these factors, the scale is tipped slightly because the creation of new privileges in federal practice is generally discouraged.(22)

      Moreover, some claims of privilege may be governed by state law, even though the case is brought in federal court.(23) Several states have enacted laws shielding institutional self-evaluations from discovery.(24) Oregon recently passed a law which specifically establishes a privilege of self-critical analysis for environmental audit reports.(25) Therefore, should a party sue a foreign corporation in federal court under diversity jurisdiction, the judge must carefully consider whether state law controls a claimed privilege.

   2. Principles, Policy Rationales, and Elements of the Privilege

      Courts and commentators agree that the most widely accepted formulation of the self-critical analysis privilege first occurred in the context of a medical malpractice suit, Bredice v. Doctors Hospital, Inc.(26) In that case the plaintiff sought copies of the minutes and reports of confidential staff meetings conducted by the defendant hospital.(27) The meetings, which involved candid, self-evaluative dialogue among the hospital staff, were aimed at improving the standard of health care provided by the hospital.(28) The district court refused to allow discovery of the documents on grounds of public policy.(29) According to the court, confidentiality was essential to the proper functioning of the meetings, which in turn were essential to continuing improvements in health care.(30) Permitting discovery of the committee's deliberations, absent a showing of exceptional need,(31) would have the effect of terminating constructive dialogue.(32) The court thus concluded that there was an "overwhelming public interest" in maintaining the confidentiality of the meetings so that the "flow of ideas and advice [could] continue unimpeded."(33)

      Following Bredice, the privilege has been extended to three additional types of institutional self-evaluations: employee personnel files,(34) university faculty reviews,(35) and documents submitted to the government pursuant to Title VII of the Civil Rights Act of 1964.(36) The rationale for shielding these materials roughly parallels that articulated in Bredice: the public interest in encouraging candid institutional self-evaluations outweighs the policy concern of ensuring complete disclosure of all information relevant to the litigation.(37) These courts accepted the general premise in Bredice that disclosure of these materials would have a dampening or "chilling" effect on the self-evaluation process.(38)

      These cases indicate essentially four criteria which control application of the privilege.(39) First, the material sought must be the result of a self-critical analysis or evaluation undertaken by the organization.(40) Generally, the highest levels of management will commission the analysis or valuation(41) with the specific purpose of reviewing past practices to improve future operations.(42) Purely investigatory evaluations and investigations conducted in the normal course of business have not qualified under the privilege.(43) This suggests that whether the "self-critical" requirement is met depends on how harshly and adversely the investigators judge the organization. Honest and forthright evaluations more clearly justify extending the privilege due to the organization's increased vulnerability to disclosure.(44)

      Second, there must be an expectation of privacy among participants in the evaluation process.(45) Confidentiality must be maintained not only during the performance of the evaluation, but also by the organization after issuance of the evaluation's conclusions.(46) Failure to maintain the confidentiality of self-evaluative materials destroys the claim of privilege.(47)

      Third, there must be a strong public interest in maintaining the free flow of information among participants in the evaluation process.(48) Whether the public interest in preserving the flow of information is sufficiently compelling will depend on how the court characterizes the perceived benefit to society. Information exchanges leading to improvements in health care,(49) the elimination of discriminatory employment practices,(50) and increased public safety(51) have all qualified for protection under the privilege. Presumably, other types of socially useful information exchanges would also qualify under this standard.(52)

      Fourth, there must be a threat that allowing discovery would result in the flow of information being diminished or stopped completely.(53) This requirement is premised on the assumption that preventing disclosure encourages candor, and that candor is essential to the self-evaluation process.(54) In theory, participants in institutional self-evaluations will not volunteer information if they know that their statements could be used against them.(55) The potential for disclosure could also affect the institutional decision to undertake a critical self-analysis in the first place.(56) Even where the above criteria are satisfied, an organization's self-critical analyses or evaluations may still be discoverable.(57) A showing of exeptional necessity by the party seeking the information may be sufficient to compel production.(58) For example, reports otherwise protected under the self-critical analysis privilege will still be discoverable if the moving party needs the information to prove an essential element of its case.(59)

      In employment discrimination cases, several courts have used a different set of criteria for determining whether the self-critical analysis privilege should apply.(60) First, the materials to be protected must have been prepared for mandatory governmental reports.(61) Second, only subjective, evaluative materials qualify for...