August 11, 2009

Federal Court Orders Production of Ombuds Records From IBM

A federal trial court in Oklahoma has ordered IBM to produce files from its Ombuds related to a dispute with a vendor. In 2005, IBM was contracting with two firms for accounting staff, Accounting Principals, Inc. and Pinstripe, Inc. When IBM sought to end the contracts, API and Pinstripe were referred to IBM's Global Procurement Ombudsman -- an objective and impartial office that assists in resolving procurement-related concerns and issues. At the direction of IBM's general counsel, the Ombuds conducted an investigation and submitted a report. IBM initially restored the contacts with API and Pinstripe. Later transferred the work to another vendor, Manpower, Inc.

After filing suit, API and Pinstripe sought to compel production of the report by IBM's Ombuds. IBM objected on the grounds of attorney-client and attorney work product privileges. In evaluating these arguments, the court characterized the role of the IBM Ombuds using the standards enunciated by the American Bar Association:
Generally, an ombudsman works outside of normal line management structures and directly to upper management. An ombudsman is not an advocate for the complainant, nor is his role to defend the corporation he works for. His role is that of an impartial neutral, seeking the best resolution of the dispute.

The court therefore concluded that the the primary purpose for which the documents were created was not anticipation of litigation, but a separate business purpose (fostering more a open, effective, and productive relationship with suppliers). In addition, the court observed that any of the Ombuds documents do not appear to contain communications seeking legal advice. The court therefore ordered IBM to produce most of the materials produced by its Ombuds. IBM did not raise any other legal arguments that would have protected the Ombuds' work. (Accounting Principals, Inc. v. Manpower, Inc., 07-cv-636-TCK-PJC, 2009 U.S. Dist. LEXIS 66428 (N.D. Okla. July 28, 2009) and Pinstripe, Inc. v. Manpower, Inc., 07-cv-620-GKF-PJC, 2009 U.S. Dist. LEXIS 66430 (N.D. Okla. July 28, 2009); Tulsa World; see also summary at Mayer Brown.)

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