On August 11, 2015, the U.S. Court of Appeals for the District of Columbia Circuit issued its second writ of mandamus in the same action to vacate the District Court’s order requiring the disclosure of privileged materials. The decision came in In re Kellogg, Brown & Root, Inc., No. 14-5319, where plaintiff and whistleblower Harry Barko alleged that the defendant defense contractor falsely billed and paid kickbacks related to Iraq War subcontracts. Previously, the District Court ordered that KBR must turn over 89 reports created in KBR’s internal investigation of possible False Claims Act violations. In June 2014, the D.C. Circuit issued its first writ of mandamus, reversing the District Court’s order. In that opinion, the D.C. Circuit held that because providing legal advice was one reason the investigation reports were created, attorney-client privilege protected their disclosure even if the company had additional, overlapping reasons to create the reports, such as complying with regulatory mandates.
In this case, the plaintiff argued that KBR waived the privilege covering the reports when its in-house attorney reviewed them in preparation for his Rule 30(b)(6) deposition. After the District Court ordered disclosure, the D.C. Circuit again vacated the lower court’s order, noting that the attorney had no choice but to review documents related to the internal investigation in order to prepare adequately for his deposition. The D.C. Circuit further noted that if questioning deponents on facts related to an assertion of a privilege would entitle an adversary to production of the privileged materials, “the attorney client privilege and work product protection would mean nothing at all.”
The Circuit Court recognized that “… 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 all claims of privilege and protection of an internal investigation.” The D.C. Circuit opinion restores certainty that attorneys may protect the confidentiality of communications made in the course of an internal investigation.
While the D.C. Circuit vacated the disclosure order in full, it did signal that not all materials created in an internal investigation are necessarily afforded the same level of protection. In particular, the Circuit Court analyzed communications from investigators, working at the direction of in-house counsel, to in-house attorneys. Because the investigators step into the shoes of the attorney for privilege purposes, the D.C. Circuit held that such communications are essentially attorney-to-attorney communications—not attorney-client communications—and their protection from disclosure is governed by the attorney work product doctrine. Unlike attorney-client communications, non-opinion work-product is subject to exceptions upon a showing of “substantial need” and “undue hardship.” Still, the D.C. Circuit opinion offers important clarity on the scope of attorney-client privilege, and allows attorneys to conduct internal investigations with their reports remaining non-discoverable when the appropriate steps are taken.