United States: D.C. Circuit Expresses Skepticism Of Novel Attorney-Client Privilege Ruling Regarding Government Contractor Investigations

The U.S. District Court for the District of Columbia's recent rejection of privilege claims in U.S. ex rel. Barko v. Halliburton, Case No. 1:05-CV-1276, has garnered widespread attention for its potential impact on government contractors. In an oral argument yesterday on KBR's mandamus petition to the U.S. Court of Appeals for the District of Columbia Circuit, all three judges on the D.C. Circuit panel expressed skepticism of the District Court's legal reasoning. Procedural hurdles and case-specific facts may, however, prevent the D.C. Circuit from reaching the merits of the privilege issues.

The District Court's Novel Privilege Ruling

In the Barko case, the District Court ordered Kellogg Brown & Root ("KBR") to produce to the qui tam relator documents the company generated during an investigation of potential False Claims Act violations. In a novel ruling, the District Court concluded that the documents KBR generated during its Code of Business Conduct ("COBC") investigation were not protected by the attorney-client privilege or the work product doctrine because the COBC investigation was a "compliance investigation" undertaken pursuant to "regulatory law" and "corporate policy."

The District Court explained that, in order for a communication to be protected by the attorney-client privilege, the party invoking the privilege had to show that the communication was "primarily" for the purpose of obtaining legal advice, legal services, or assistance in a legal proceeding. Relying solely on a single district court opinion that had not been the subject of appellate review, the District Court held that, under this "primary purpose" test, the party invoking the privilege bears the burden of showing "the communication would not have been made 'but for' the fact that legal advice was sought." The District Court concluded that KBR had not met this burden because Department of Defense contracting regulations require contractors to have internal control systems such as KBR's COBC program, and thus "the COBC investigations were undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice." The court ruled that the COBC investigative materials did not meet the "but for" test because the regulatory requirements and KBR's corporate policy would have required the COBC investigation to take place regardless of whether legal advice had been sought. The District Court likewise rejected KBR's assertion that the work product doctrine protected the documents, because KBR would have conducted the COBC investigation due to government regulations that required it to do so "irrespective of the prospect of litigation."

The District Court's opinion understandably sent shock waves through the government contracting industry. If read literally, the District Court's reliance on the "but for" test could call into question the application of privilege to virtually any internal investigation conducted as part of a compliance program that was intended to comply with the Federal Acquisition Regulation (FAR) requirements, including the FAR Mandatory Disclosure requirement. When faced with even the possibility that the Barko "but for test" could exclude sensitive investigative materials from the protections of the attorney-client privilege and work product doctrine, government contractors could be discouraged from generating such materials in the course of their investigations. This could hinder the effectiveness of internal investigations or, worse, create a disincentive for government contractors to initiate investigations in the first place. The effect of all of this could be the very opposite of the culture of compliance and disclosure that the FAR's provisions regarding internal controls and mandatory disclosure were intended to promote.

The D.C. Circuit's Skepticism at Oral Argument

KBR filed a petition for a writ of mandamus with the D.C. Circuit seeking relief from the District Court's order. The U.S. Chamber of Commerce, the National Association of Manufacturers, and other associations filed an amicus curiae brief in support of KBR's position.

On May 7, 2014, a panel of the D.C. Circuit held an oral argument on KBR's mandamus petition and expressed skepticism of the District Court's reasoning. In a series of insightful questions worthy of a U.S. Supreme Court oral argument, all three judges – Thomas Griffith, Brett Kavanaugh, and Sri Srinivasan – signaled concern regarding both the legal foundation of the District Court's decision and its potential implications.

Judge Kavanaugh pointed out that both the "primary purpose" test and the "but for" test pose problems because there are almost always multiple purposes for a corporate internal investigation. Judge Kavanaugh appeared to reject the idea that either compliance with a regulatory requirement or obtaining legal advice could necessarily be deemed the "primary purpose" of an investigation, as the two purposes can (and often do) overlap. Perhaps tipping his hand and indicating that the panel would apply a different legal test from the one the District Court applied, Judge Kavanaugh noted that it was important that the panel "get the semantics right" if it were to publish an opinion addressing the attorney-client privilege test.

Judge Griffith further advanced Judge Kavanaugh's criticism of the notion that the application of the attorney-client privilege should turn on identifying a single primary purpose of an investigation. Judge Griffith pointed out that an effort to comply with the FAR requirements (such as the FAR Mandatory Disclosure requirement) could itself be an effort to obtain legal advice, as such disclosure decisions may inherently involve legal determinations.

Judge Srinivisan similarly highlighted the illogical nature of the District Court's test. He pointed out that, if a government contractor had a process for internal complaints and investigations before the FAR requirements came along, then perhaps the primary purpose of an investigation would be obtaining legal advice. But if a different government contractor developed a similar process for internal complaints and investigations only after the FAR requirements were adopted, one could say that the primary purpose of an investigation by that contractor was regulatory compliance rather than legal advice.

Plaintiff's counsel appeared to distance himself from the District Court's "but for" test, arguing that the District Court did not adopt a "per se" rule and did not predicate its decision on the regulatory requirement. Plaintiff's counsel instead characterized the District Court opinion as focusing on the particular documents in question to determine whether they were related to a request for legal advice. This line of argument got little traction, as the D.C. Circuit panel continued to express concern regarding the potential implications of the District Court's line of reasoning.

The panel also focused some of its attention on hurdles presented by the particular procedural mechanism by which KBR is seeking to overturn the District Court's decision. The panel challenged KBR's counsel on the nature of KBR's injury and on whether that injury could be addressed only through the extraordinary relief of mandamus rather than through appeal of a final judgment. The panel did not express views regarding whether the particular documents in question would likely be privileged under a different test than the one applied by the District Court.

Conclusion

The oral argument on KBR's petition for mandamus sent a signal that the District Court's legal reasoning in Barko is not likely to win the approval of the D.C. Circuit. To the contrary, it appears likely that if the panel addresses the District Court's rationale, the result will be a test that is more protective of the attorney-client privilege in the context of internal investigations by government contractors. Nonetheless, because there are procedural hurdles to obtaining mandamus relief, it remains unclear whether help is on the way for government contractors and, if so, what form it will take.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions