United States: D.C. Circuit Upholds Broad Protection Of Internal Investigation Materials

On August 11, 2015, the U.S. Court of Appeals for the D.C. Circuit reinforced the protected status of internal investigation materials over creative, hard-charging efforts of a plaintiff-whistleblower in a federal False Claims Act case. The court itself summed up the importance of the ruling, explaining: "If allowed to stand, the District Court's rulings 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 a claim of privilege and protection of an internal investigation."

This is the second time that the D.C. Circuit has reversed the district court's orders compelling disclosure of internal investigation material in this same case, In re Kellogg Brown & Root, Inc., et al. Last year, the D.C. Circuit reversed the district court's order requiring KBR to disclose internal investigation materials, finding that the attorney-client privilege and work product doctrine applied to internal investigations if one of the significant purposes of the internal investigation was to obtain or provide legal advice. Undaunted after that decision, the plaintiff-whistleblower aggressively (and creatively) continued to pursue disclosure of the protected material, successfully arguing at the district court that the privilege had been waived. The appeals court again reversed the district court, rejecting waiver arguments that would have undermined the protection of internal investigation materials in related litigation.

The 30(b)(6) Trap. The plaintiff-whistleblower attempted to set a trap for the defendant-company by noticing a Rule 30(b)(6) deposition requiring the testimony of a corporate representative with knowledge about, among other things, an internal investigation of the same alleged conduct at issue in the suit. The corporate representative reviewed internal investigation documents in advance of the deposition, as required to properly prepare to testify, but testified only as to the privileged nature of the materials during the deposition. The plaintiff argued that he was entitled to the documents reviewed pursuant to Fed. R. Evid. 612, requiring production of documents used to refresh a witness's memory. The appellate court rejected the plaintiff's bait-and-switch tactic, finding that the plaintiff cannot defeat privilege by putting privilege documents in issue and then demanding under Rule 612 to see investigatory documents the witness used to prepare. 

The Implied Waiver Argument. The appeals court also rejected the plaintiff-whistleblower's attempt to characterize defendant-company statements about the internal investigation as an implied waiver of privilege. The company referred generally to the fact that an investigation was conducted in a footnote in its motion for summary judgment. The plaintiff argued that the company had put the protected materials at issue, which constituted a waiver. The district court agreed. The appellate court reversed, finding that the statements were of no consequence at all, and that because they were so inconsequential, they could not operate as a waiver of such important privilege and protection.

The Erroneous Work Product Ruling. Finally, the D.C. Circuit vacated the district court's ruling that portions of the internal investigation materials were discoverable "fact" work product due to the "substantial need" exception. The appellate court disagreed and concluded that the district court erroneously applied the work product doctrine. For instance, the court found that the investigator's witness interview summaries were attorney-client privileged communications, while other portions, like the investigator's assessment of a subcontractor's performance, constituted "opinion," and not "fact," work product. (Neither attorney-client communications nor opinion work product are subject to a "substantial need" exception.) Further, because the district court had failed to distinguish between fact work product and opinion work product, the appellate court simply vacated the district court's order without reaching plaintiff's alleged substantial need for the materials.

This latest decision represents a strong reaffirmation of the validity and certainty of the Upjohn privilege which provides that the attorney-client privilege and work product doctrine work hand-in-hand to protect confidential internal investigatory materials. But, the case is also a reminder of the need to protect the confidentiality of internal investigations through use of experienced counsel.

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.

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