By Pamela J. Bethel
About a year ago, we wrote in this space in support of a ruling by the U.S. Court of Appeals for the D.C. Circuit that permitted companies to assert attorney-client privilege for internal documents created in the course of a bona fide investigation by in-house counsel.
In this case, Kellogg Brown & Root Services Inc. and a whistleblower named Harry Barko tussled, and continue to tussle, over document discovery. Barko had filed a False Claims Act case against KBR, asserting that KBR had overbilled the U.S. government for subpar work by Iraqi subcontractors.
Last year, U.S. District Judge James Gwin of the Northern District of Ohio, sitting by designation in the U.S. District Court for the District of Columbia, had ordered the disclosure to Barko of 89 documents from KBR’s internal investigation of Barko’s allegations and had rejected KBR’s attorney-client privilege claim for the documents. A three-judge panel of the D.C. Circuit reversed the district judge and found that the documents were in fact privileged. That was the ruling that we supported in this space.
After that appeals panel ruling, the whistleblower went ahead and sought the documents again, this time claiming that any privilege for the documents had been waived by KBR because it permitted an in-house lawyer to review documents from the internal investigation before his deposition and because it referred to the outcome of the investigation in a motion for summary judgment. Judge Gwin again granted discovery and found that privilege did not apply, but KBR sought mandamus and prevailed again in the same appeals court, this time before a different three-judge panel.
The new three-judge panel ruled on August 11, 2015, that KBR had not waived its privilege, and it granted the mandamus that KBR had sought, finding that Judge Gwin had committed “clear and indisputable error.”
The error was clear and indisputable, the panel wrote, “because the outcomes arrived at by the District Court would erode the confidentiality of an internal investigation in a manner squarely contrary to the Supreme Court’s guidance in Upjohn and our own recent prior decision in this case.” In Upjohn Co. v. United States, a landmark 1981 ruling, the U.S. Supreme Court held that investigational work by in-house lawyers is entitled to protection under the attorney-client privilege.
As the appeals court wrote, if the District Court’s rulings were allowed to stand, they “would ring alarm bells in corporate general counsel offices throughout the country about what kinds of descriptions of investigatory and disclosure practices could be used by an adversary to defeat all claims of privilege and protection of an internal investigation. . . . These alarm bells would be well founded. If all it took to defeat the privilege and protection attaching to an internal investigation was to notice a deposition regarding the investigations (and the privilege and protection attaching them), we would expect to see such attempts to end-run these barriers to discovery in every lawsuit in which a prior internal investigation was conducted relating to the claims.”
We agree. The appeals court appropriately upheld the privilege here and gave internal investigations the protection to which they should be entitled.