Background
Plaintiff C.S. worked as a truck driver for Brick Recycling Company. In June 2023, he reported to company president Peter DeCenzo that a co-worker, M.R., who served as Corporate Financial Controller, had been making unwanted sexual advances and had accessed his bank records without permission. DeCenzo instructed both employees to have no further contact, but M.R. left an “angry note” on plaintiff’s car.
In August 2023, DeCenzo retained the law firm Ruderman & Roth to investigate plaintiff’s allegations. Attorney Ellen Horn conducted the investigation, ultimately issuing a forty-five-page report in October 2023 that substantiated the harassment claim. Plaintiff resigned while the investigation was ongoing and filed suit under the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -50, alleging sexual harassment and constructive discharge.
During discovery, defendants produced nearly 600 documents — including Horn’s full investigation report — but withheld eight items on privilege grounds, including Horn’s letters to DeCenzo, draft investigation report, interview notes, and retainer agreement. The trial court conducted an in camera review and ordered disclosure of all withheld documents, concluding none were privileged under Payton v. New Jersey Turnpike Authority, 148 N.J. 524 (1997). The Attorney General, the National Employment Lawyers Association, and the Academy of New Jersey Management Attorneys all participated as amici.
The Court’s Holding
The Appellate Division vacated the trial court’s blanket disclosure order and remanded for a more searching, document-by-document and line-by-line in camera review. Writing for the panel, Presiding Judge Sabatino provided significant new guidance on applying the Payton framework — the seminal New Jersey case governing privilege in workplace investigation disputes — in the nearly three decades since it was decided.
The court addressed several critical issues. First, it found the trial court erred in reasoning that privilege could not attach because the investigation began before suit was filed; the panel noted a lawsuit was reasonably anticipated and the temporal nexus was sufficiently close. Second, the court held that because defendants intend to rely on the Horn investigation as an affirmative defense of reasonable remedial action, a waiver analysis is required — but waiver has limits. Under Payton, documents “tenuously related” to the affirmative defense may remain protected. The trial court had not performed this relatedness analysis.
The panel also raised preliminary concerns about disclosure of the draft investigation report, analogizing it to draft expert reports that are generally non-discoverable. It instructed the trial court to reconsider, perform written determinations with stated reasons, and consider redactions of passages reflecting purely legal advice unrelated to the investigation’s findings.
Key Takeaways
- Employers relying on workplace investigations as an affirmative defense in LAD cases must be aware that doing so may waive attorney-client privilege as to investigation-related documents — but the waiver is not blanket. Documents only “tenuously related” to the defense remain potentially protected.
- Trial courts conducting Payton review must evaluate each document page-by-page, considering whether materials could either substantiate the employer’s defense or impeach it. Brief oral rulings on privilege disputes are insufficient.
- Draft investigation reports may receive greater protection from disclosure under the work-product doctrine, by analogy to draft expert reports, a point the court flagged for reconsideration on remand.
Why It Matters
This published decision is the most detailed judicial treatment of the Payton framework since the Supreme Court’s 1997 decision. For management-side employment attorneys, it provides welcome guidance on structuring workplace investigations to preserve privilege — particularly the distinction between an attorney’s investigatory function and legal advisory role. For plaintiff-side practitioners, it confirms that an employer’s reliance on an investigation as a defense opens the door to discovery of related materials, though the scope of disclosure is narrower than the trial court initially ordered.
The Attorney General’s participation highlights the broader public interest at stake: how Payton is applied affects not just private employers but also public entities, which may face additional disclosure obligations under open-records and anti-discrimination statutes. The decision’s emphasis on written, detailed privilege rulings should improve the quality of trial court review in these often high-stakes discovery disputes.