Government contractors and other companies subject to internal investigation requirements won some relief from the United States Court of Appeals for the D.C. Circuit last week with a decision that firmly reiterated that Upjohn v. United States does indeed stand for the proposition that confidential employee communications made during a business’s internal investigation led by company lawyers are privileged.
In United States of America ex rel. Harry Barko v. Halliburton Company, et al, defendant Halliburton’s subsidiary, Kellogg, Brown & Root (KBR) filed a petition for writ of mandamus seeking to reverse a district court’s order that KBR produce in discovery, certain reports created as part of internal investigations conducted at the direction of in-house counsel. Over KBR’s objection, the district court had ordered production of the documents, reasoning that because the KBR investigators who prepared the reports were not lawyers, and because the subject investigations were done pursuant to legal requirements and corporate policy, and not solely for the purpose of obtaining legal advice, the reports were not privileged. For more on the trial court’s opinion, see our March 24 Legal Pulse commentary here.
A three-judge panel of the D.C. Circuit disagreed and vacated the district court’s order. In so doing, the panel found that the privilege claim by KBR was “materially indistinguishable” from the assertion of the privilege in the seminal Upjohn case. Specifically, the court of appeals found that because, as in Upjohn, KBR initiated an internal investigation to gather facts and ensure compliance with the law after being informed of potential misconduct, and because the investigation was conducted under the auspices of KBR’s in-house legal department, the privilege applied. In concluding that the KBR case came under “Upjohn’s umbrella,” the court of appeals rejected several of the district court’s reasons for finding otherwise. First, the court of appeals reiterated the general rule that a lawyer’s status as in-house counsel does not dilute the privilege. Second, the court of appeals opined that because the KBR investigations were done at the direction of attorneys, the fact that interviews had been conducted by non-attorney investigators did not undermine the privilege. Third, the court found the fact that KBR did not notify the employees who were interviewed that the purpose of the interviews was to obtain legal advice was irrelevant because Upjohn imposed no such requirement. Finally, the court rejected the idea that because KBR undertook the investigations to comply with Department of Defense regulations, and not solely for the purpose of obtaining legal advice, the privilege did not apply. On this point, the court explained as follows: “In our view, the District Court’s analysis rested on a false dichotomy. So long as obtaining or providing legal advice was one of the significant purposes of the internal investigation, the attorney-client privilege applies, even if there were also other purposes for the investigation and even if the investigation was mandated by regulation rather than simply an exercise of company discretion.”
Thus Upjohn, and its common sense holding, seems to have prevailed once again, with the D.C. Circuit clarifying that an internal investigation, done at the direction of counsel, is privileged, as long as one of the significant purposes of the investigation was to obtain or provide legal advice, regardless of whether the investigation was also done pursuant to a company compliance program required by law.
*Greg Brower and Brett Johnson are partners in the Reno, Nevada and Phoenix, Arizona offices, respectively, of Snell & Wilmer LLP. Mr. Brower was U.S. Attorney for the District of Nevada, 2007-2009, and is a member of WLF’s Legal Policy Advisory Board.