A recent decision by the U.S. Court of Appeals for the District of Columbia highlights the value of conducting internal investigations under the protection of the attorney-client privilege and work product doctrine.
Reaffirming Protections for Internal Investigations
In In re Kellogg Brown & Root, Inc., et al., No. 14-5319 (D.C. Cir. August 11, 2015), the Court reversed a district court’s ruling that KBR waived these protections by using materials created in the course of a privileged investigation, both to prepare a witness for deposition and then by noting that the investigation had occurred in a motion filed in a civil lawsuit based on overlapping facts and issues. Recognizing the potentially significant impact of the district court’s ruling, the Court stated that the decision would “ring alarm bells in corporate general counsel offices throughout the county 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.” Upholding the privileged nature of confidential employee communications and documents created during an internal investigation led by lawyers for the company, the Court held that the lower court’s decision ran “contrary to precedent by injecting uncertainty into application of attorney-client privilege and work product protection to internal investigations.”
The In re Kellogg Brown & Root, Inc. opinion is significant for two reasons. First, it reaffirms the validity of the principles set forth by the Supreme Court in Upjohn Co. v. United States, 449 U.S. 383 (1981) that enable internal investigations to be effectively conducted under the protection of attorney-client privilege and work product. Companies rely upon internal investigations with ever-increasing frequency as a critical component of corporate compliance and ethics programs. The KBR opinion assures that the protections of attorney-client privilege and the work product doctrine in the context of internal investigations remain strong and are not easily overcome. Second, the decision can be used as influential persuasive precedent in jurisdictions throughout the country because the Court of Appeals for the District of Columbia is regarded as one of the most important federal appellate courts.
In re Kellogg Brown & Root, Inc. involves a civil False Claims Act lawsuit where the plaintiff alleged that KBR and certain subcontractors defrauded the U.S. government by inflating costs and accepting kickbacks while administering military contracts in wartime Iraq. KBR had conducted an internal investigation into the alleged fraud pursuant to its Code of Business Conduct. The plaintiff’s counsel noticed a deposition on the topic of the internal investigation. In response, KBR designated a representative to testify about the internal investigation and provided its representative with privileged documents related to the internal investigation to prepare for the deposition. In court filings, KBR cited portions of the corporate representative’s deposition testimony in support of its motion for summary judgment.
The district court held that KBR waived the protection of both privilege and work product by providing the documents to the corporate representative and citing excerpts of the deposition in court filings. The issue on appeal was whether the company’s use of documents relating to its internal investigation, both in preparing a witness for deposition and by noting the mere fact that the investigation had occurred in a motion filed in a civil False Claims Act case, waived the privilege and work product protection.