On March 6, 2014, the United States District Court for the District of Columbia issued a ruling that challenged traditional norms regarding the applicability of the attorney-client privilege and work-product doctrine to certain materials generated during internal investigations.
In U.S. ex rel. Harry Barko v. Halliburton Co., et al., No. 1:05-CV-1276, (D.D.C. March 6, 2014), the court addressed Plaintiff Harry Barko’s (“Barko”) motion to compel the defendants1 to produce documents related to the defendants’ Code of Business Conduct investigations. Specifically, Barko sought information regarding the findings from the defendants’ internal audits and investigations in connection with alleged abuse of government contracts. Barko filed the motion after the defendants withheld certain responsive documents on claims of attorney-client privilege and work-product doctrine. The court ordered the defendants to produce the documents for the court’s review, which revealed damaging information tending to support the allegations of the defendants’ widespread misconduct.
In analyzing the defendants’ argument in favor of non-disclosure, the court began by noting the purpose and general scope of the attorney-client privilege. The court explained that the privilege will not apply unless the communication is “for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding.” (Emphasis in original.) To demonstrate the “primary purpose” of a communication, the party invoking the privilege must show that “the communication would not have been made ‘but for’ the fact that legal advice was sought.” In other words, the party must show that the only reason for the communication was to seek legal advice.
Because the communications at issue were made by the defendants as corporations, as opposed to “natural persons,” the court further noted that the application of the privilege does not change “as long as the communications…were made by company employees to counsel for the company acting as such, at the direction of corporate superiors in order to secure legal advice from counsel.” Here, the court ruled that the defendants failed to demonstrate that the attorney-client privilege applied to the Code of Business Conduct documents. Critically, the defendants’ investigations were mandated by and conducted pursuant to Department of Defense regulatory law and the defendants’ own corporate policy – not for the primary purpose of obtaining legal advice.
Several other factors influenced the court’s decision. For example, the defendants did not inform the interviewed employees that the purpose of the interviews was to help the defendants obtain legal advice. The confidentiality agreements signed by the employees were likewise silent regarding obtaining legal advice. Rather, the agreements emphasized the “sensitive” nature of the review and potential business implications. Additionally, a non-attorney conducted the interviews, which the court found prevented the interviewees from inferring the legal nature of the inquiry.
The defendants’ work-product claims met a similar fate. The court explained that a document constitutes work-product if “in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.” (Emphasis added.) To satisfy the “because of” test, “the lawyer must at least have had a subjective belief that litigation was a real possibility, and that belief have been objectively reasonable.” Critically, documents prepared for more than one purpose are viewed with more scrutiny because work-product protection does not apply to documents prepared by attorneys in the ordinary course of business or for non-litigation purposes.
Again, the government-mandated nature of the investigation undercut the defendants’ assertion of work-product. Moreover, the court found that the defendants conducted the internal investigation in the ordinary course of business and irrespective of the likelihood of litigation. The timing of the investigation also harmed the defendants’ assertions because the investigation was conducted from 2004 to 2006, but the complaint in the litigation was not made public until 2009. The court also re-emphasized the non-attorneys’ role in conducting the interviews, which further undercut the defendants’ argument that the documents were prepared in anticipation of litigation. For those reasons, Barko fully prevailed on his motion to compel.
The District of D.C.’s opinion suggests that corporations and defense counsel should review and, potentially, reevaluate the way in which they conduct internal investigations. In hindsight, the defendants certainly could have avoided some missteps, such as having non-attorneys preside over the interviews; however, courts may continue to emphasize the government-mandated nature of the investigation in future cases. The impact of the court’s opinion may have broader implications and could prove instructive when conducting environmental audits or other internal corporate investigations.