Taking Statements During Internal Investigations: Garrity and the Fifth Amendment May Prevent Use in Subsequent Legal ProceedingsOn October 22, 2018 by Schnader in Criminal Defense
In the wake of a recent trial decision in U.S. v. Connolly,[i] companies should consider taking extra precautions when conducting employee interviews during an internal investigation. Such safeguards may be especially important when governmental investigations could be perceived to have an influence over the internal investigations of a private employer. Once an investigation becomes sufficiently “federalized,” the employer may be responsible for identifying the Fifth Amendment rights of employees and their statements could become inadmissible at trial.
These developments raise issues that were first addressed in the 1967 Supreme Court decision, Garrity v. New Jersey.[ii] Garrity established that the Fifth Amendment’s privilege against self-incrimination applied to the action of the federal government and consequently the statements of public employees, both federal and state. In Garrity, police officers were pressured into giving statements to be used against them in a criminal trial. The threat was simple; if they did not cooperate and give statements, they faced the loss of their jobs. The Supreme Court held that the Fifth Amendment applied when a public employer functionally coerces its employee into giving a “voluntary” statement when the public employer threatens the employee with the loss of his/her job. This protection for public employees extends to private employees only when the private entity’s actions are found to be “fairly attributable to the government by virtue of the fact that there is a sufficiently close nexus between the State and the challenged action of the private entity.”[iii] In essence, either the court deems the private entity’s choice effectively a choice of the government, or the private entity is exercising powers normally the exclusive prerogative of the government.[iv]
The questions presented by U.S. v. Connolly also relate to the Thompson Memorandum issued by the Department of Justice in 2003.[v] The Thompson Memorandum sets out factors for charging corporations with criminal liability, including a consideration of the willingness to cooperate with federal investigations. Subsequent federal court decisions found investigatory actions of defendant corporations attributable to the government based on their full and zealous cooperation with the Thompson Memorandum.[vi] In Connolly, the Court reviewed evidence that may result in dismissal of the case based on allegedly compelled testimony of an employee. The private employer in this case underwent an internal investigation allegedly at the behest of the Commodity Futures Trading Commission. Therefore, the Court may now consider barring the statements elicited by the third party investigator under Garrity, citing Fifth Amendment protections. Clearly, private entities may find themselves in a difficult situation: attempting to ensure compliance with federal regulators, but also attempting to preserve the increasingly necessary distinction between private and public action, which allows for divergent legal claims, remedies, and defenses.
Accordingly, private employers conducting an internal investigation may want to consider the following issues, seeking to balance the need to satisfy governmental regulators against the company’s need to conduct a thorough and independent review.
- Concurrent Investigations: Companies undergoing an internal investigation concurrently with an external government investigation should: (1) prepare an investigation plan that specifies the scope of the investigation, the purpose of the investigation, and its independence from any government investigations; (2) identify all relevant employees, the positions held, whether those positions are union or non-union positions, and their respective duties; (3) select a company representative or outside legal counsel who will be tasked with communicating with and responding to governmental investigators; and (4) determine early on whether any report of the internal investigation will be voluntarily and publicly disclosed.
- Contact with Governmental Investigators: Ensure clear documentation in a memorandum to the file of any contact with state or federal investigators during the company’s internal investigation. Ensure that the memorandum includes specifics, which would later be useful and illustrative in litigation such as, the time and date of the contact, and a concise but encapsulating summary of the conversation.
- Employee Rights During Interviews: When conducting employee interviews, ensure that the interviewer verbally provides requisite warnings, including Upjohn and Garrity warnings if appropriate. In addition, provide written confirmation forms for interviewees to fill out prior to the start of the interview to confirm their understandings of their rights respective to the interview, their status or role during the investigation, and their employment information. If a written confirmation form is not used, document the specific language of the warning provided and the date and time of the warning in the memorandum of the interview.
- Remain Wary of Economic Threats: Generally Garrity and its related cases apply in instances where an employee is between a rock and hard place, concerning their actual state of employment. Yet, recent cases suggest adverse economic consequences may also provoke Garrity. Adverse economic consequences, such as suspension without pay, can be legitimate avenues of resolution in an internal investigation. However, it is important to remain wary of any possible appearance of government influence. Some employer actions may be perceived to be at the behest of the government or serve as the mode of conveyance for a threat by the government. Along with the suggestions above, if such a sanction becomes possible or is threatened, any relevant documents should be preserved in preparation of litigation.
- Compliance with Regulations: Ensuring compliance with federal regulations is not equal to ensuring compliance with governmental memoranda. Compliance with federal regulations is a matter of law, required to sustain healthy business practices. However, compliance with governmental memoranda is arguably discretionary. Therefore, a court could read unreserved compliance with the Thompson Memorandum, for example, as actions fully attributable to the government. Ensure that public entities remain separate in these ways from the internal decision making process of the creation, implementation, and effectuation of company policies when conducting internal investigations or preparing for litigation.
Historically, courts have been reluctant to apply the Fifth Amendment in such a way that may interfere with the actions of a private employer. However, as the recent Connelly case illustrates, courts are willing to consider Fifth Amendment protections when the employer appears to have become an arm of the government. Accordingly, companies should take precautions when conducting internal investigations concurrent to official governmental investigations to ensure that their inquiries are independent, thorough, and afford the appropriate protections to employees.
[i] This federal trial, case number 1:16-cr-00370, is pending in the U.S. District Court, Southern District of New York.
[ii] Garrity v. New Jersey, 385 U.S. 493 (1967).
[iii] D.L. Cromwell Investments, Inc. v. NASD Regulation, Inc., 279 F.3d 155, 161 (2d Cir. 2002).
[v] DOJ, Mem. Princples of Federal Prosecution of Business Organizations (2003), https://www.americanbar.org/content/dam/aba/migrated/poladv/priorities/privilegewaiver/2003jan20_privwaiv_dojthomp.authcheckdam.pdf.
[vi] U.S. v. Stein, 440 F. Supp.2d 315 (S.D.N.Y 2006).