United States: Whew! That Was Close – D.C. Circuit Reaffirms Application Of Attorney-Client Privilege And Attorney Work Product Doctrine In Internal Investigations

On August 11, 2015, the U.S. Court of Appeals for the D.C. Circuit issued a writ of mandamus supporting the robust applicability of the attorney-client privilege and attorney work product doctrines in the context of False Claims Act ("FCA") investigations conducted under the direction of corporate and outside counsel. This marks a continuation of its repudiation of a 2014 lower-court decision that significantly eroded these privileges. Interpreting the scope of the privileges in the context of internal investigations of potential FCA violations is especially tricky because of the unique roles played by the parties (the Government as a potential plaintiff, the relator as a bounty hunter, and the corporation-as-defendant). This latest ruling from the D.C. Circuit, in a case arising out of wartime contracts in Iraq run by Kellogg, Brown & Root, Inc. ("KBR")(formerly part of Halliburton), is a breath of fresh air for companies doing business with the Federal Government. The ruling from the Court of Appeals also sends a signal to the trial court that an overly narrow view of the attorney-client privilege and attorney work product doctrine creates unacceptable uncertainty that will ultimately be rejected on appeal.

Background

This is the second time the D.C. Circuit issued a writ of mandamus in the KBR case. The D.C. Circuit's first mandamus ruling rejected the district court's overly narrow holding that materials prepared in an internal investigation overseen by non-attorneys in a corporation's law department, to determine the existence of potential violations of the False Claims Act, were not privileged because they were "undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice." U.S. ex rel. Barko v. Halliburton Co., 37 F. Supp. 3d 1, 5 (D.D.C. 2014).

KBR appealed the 2014 ruling to the D.C. Circuit on a petition for a writ of mandamus (Latin for "command"). A writ of mandamus is a pre- or mid-trial appeal seeking to correct a trial court's decision on a specific legal issue by commanding that trial court to reach a different ruling that is better supported by the law. The D.C. Circuit granted the writ, holding that the materials were privileged attorney-client communications or privileged attorney work product (as those privileges have long been interpreted). But the D.C. Circuit also left room for the district court to determine whether the privileges might not apply for some other reason.

On remand, the district court found that the same materials were, notwithstanding the D.C. Circuit's mandamus ruling, subject to an implied waiver. The district court justified this finding on two grounds: (1) KBR waived attorney-client privilege and work product protection by allowing a witness to review the privileged documents in preparation for his deposition, and (2) KBR waived the attorney-client privilege and work product protection by putting the documents "at issue" in the litigation. KBR again appealed to the D.C. Circuit on another petition for a writ of mandamus, which resulted in the latest ruling (and the latest reversal from the D.C. Circuit).

D.C. Circuit Finds Attorney-Client Privilege and Work Product Protection, Again

Following its earlier precedent from 2014, the D.C. Circuit upheld the attorney-client privilege and attorney work product doctrine, and granted a writ of mandamus in KBR's favor. With regard to the first issue—whether the privilege was waived by allowing a witness to review privileged documents in advance of his deposition—the Court held that the mere review of a document in advance of a deposition does not waive the privileges that apply to that document. The Court explained,

[Plaintiff] cannot "overcome the privilege by putting [documents arising out of the internal investigation] in issue" at the deposition, and then demanding under Rule 612 [of the Federal Rules of Evidence, which permits an adverse party to use a writing that the witness used to refresh his or her recollection] to see the investigatory documents the witness used to prepare. Allowing privilege and protection to be so easily defeated would defy "reason and experience."

Slip Op. at 12.

With regard to the second issue—whether the privilege was waived by putting the documents "at issue" in the litigation—the district court held that "KBR injected the [internal investigation document] contents into the litigation by itself soliciting" the deposition testimony on these exact issues. Slip Op. at 14. The district court had held that KBR was "creat[ing] an implied waiver by 'actively' seeking 'a positive inference in its favor based on what KBR claims the documents show." Id. But the Court of Appeals rejected this view and found that "KBR neither directly stated that the [internal] investigation had revealed no wrongdoing nor sought any specific relief because of the results of the investigation." Id. at 17.

The D.C. Circuit also cautioned that not everything in an internal investigation is attorney-client privileged but that the work of non-attorneys acting at the direction of in-house counsel may be protected by the opinion work product doctrine as long as it is prepared in anticipation of litigation. Slip Op. at 19. This means work product created by non-attorneys is discoverable if it does not summarize a privileged communication with an employee and the opposing side demonstrates "substantial need." Id. The Court emphasized that "there is nothing to be gained by sloppily insisting on both [the attorney-client privilege and work product doctrine] or by failing to distinguish between them. Id. at 21.

Lessons for Corporate Counsel

The D.C. Circuit's latest mandamus ruling in the KBR case comes as a welcome relief to government contractors, health care entities, and financial institutions. Oftentimes, the investigation of potential FCA violations can be just as costly as the litigation that follows. Having strong, clear guidance on the application of the attorney-client privilege and attorney work product doctrine will provide needed certainty for companies conducting those investigations. Maybe more importantly, the recent D.C. Circuit decision helps return some normalcy to this case law, calming down the tempest generated by the lower court in its prior, overly restrictive interpretations.

Although the D.C. Circuit has attempted to insert some clarity and predictability in the case law, it is important to keep in mind that courts in most jurisdictions have not reached a consensus regarding the application of the attorney-client privilege and work product doctrines in internal investigations. Most jurisdictions treat privilege issues as a factually intense question, the resolution of which varies from case-to-case. Corporate counsel should continue to carefully document and supervise internal investigations by getting involved early in the assessment and investigation of any allegations and retaining outside counsel when feasible. In addition, corporate counsel should oversee compliance functions and should include language in internal communications and policies stating that internal investigations are conducted for the purpose of obtaining legal advice.

Additionally, when a company uses non-attorneys to conduct interviews, in-house attorneys should always supervise, provide direction on the interviews and document reviews, and document the non-attorneys' actions to show they were taken at the direction of legal counsel in order to provide legal advice to the company and to defend the company against possible litigation. Along the same lines, investigation reports and materials should clearly be marked as attorney-client privilege communications and attorney work product. Investigation reports should also contain a summary of legal issues to be examined.

It is also critical that investigators, whether attorneys or not, issue "Upjohn warnings" to all interview subjects and clearly explain that the interviewers are acting at the direction of legal counsel, that the contents of the interview will be shared with legal counsel, and that the purpose of the interview is to gather information to provide legal advice to the company and defend against possible litigation.

Lastly, companies must avoid public statements (such as in pleadings) that an internal investigation revealed no wrongdoing to avoid any potential privilege waiver issues.

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
Events from this Firm
24 Oct 2017, Seminar, Los Angeles, United States

Presented by The American Bar Association White Collar Crime Committee.

24 Oct 2017, Conference, Los Angeles, United States

Corporate transactions are not just in the domain of M&A corporate attorneys. This program will cover the important role of employment and benefits counsel in shaping mergers and acquisitions. The presenters will provide practical guidance on conducting due diligence of labor, employment, employee benefits and executive compensation arrangements of target companies.

25 Oct 2017, Business Breakfast, New York, United States

Please join us for a complimentary breakfast program and networking with private equity investment banking professionals to discuss private equity activity and prospective deal flow opportunities in the technology industry.

 
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.

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.