United States: Circuit Court Upholds Privilege For Internal Investigation Documents

Last Updated: September 9 2015
Article by Richard A. Nessler

On August 11, 2015, the United States Court of Appeals for the District of Columbia in In Re Kellogg Brown & Root, Inc. 25 granted a writ of mandamus and vacated two district court orders that directed the production of key documents related to an internal  investigation conducted by petition, Kellogg Brown & Root ("KBR"), a defense contractor.  This was the second time that the D.C. Circuit Court of Appeals granted petitioner a writ of mandamus regarding the application of the attorney-client privilege and work product  protection to petitioner's internal investigation documents.26 After vacating the earlier district court order, the case was remanded to the district court to consider "timely asserted other arguments for why these documents are not covered by either the  attorney-client privilege or the work-product protection.27"


The background facts of the case are not in dispute. Harry Barko, who worked for KBR,  filed a False Claims Act complaint in 2005, alleging that KBR defrauded the US  Government by inflating costs and accepting kickbacks in connection with military  contracts in wartime Iraq. Barko sought documents related to a prior KBR internal  investigation into the alleged fraud. KBR asserted that the internal investigation had been  conducted for the purpose of obtaining legal advice and that the internal investigation  documents were protected by the attorney-client privilege.28  However, it was revealed  during a corporate 30(b)(6) deposition of Chris Heinrich, KBR's Vice President (Legal),  that Heinrich reviewed the disputed documents related to KBR's internal investigation in  preparation for the deposition. At the deposition, KBR's attorney instructed Heinrich not  to answer questions about the content of the internal investigation documents on the  basis of the attorney-client privilege and work-product protection. Following the  deposition, KBR moved for summary judgment. In its motion, KBR stated that KBR  performed an internal investigation in accordance with its internal Code of Business  Conduct ("COBC") policy, and concluded that KBR did not violate the Anti-Kickback Act.  On November 20, 2014, the district court ruled that KBR waived privilege when Heinrich  reviewed the internal investigation documents in preparation for his deposition, and KBR's motion that affirmatively referenced the COBC documents created an implied  waiver. On December 17, 2014, the district court issued a separate opinion and order  compelling production of parts of the COBC documents on the alternative basis that they  "are discoverable fact work-product and Barko shows substantial need."29  The Circuit  Court found that the district court erred and vacated both orders.

Waiver in the Context of the 30(b)(6) Deposition.

Barko argued that KBR waived privilege to the COBC documents under FRE 612 by  permitting Heinrich to review the COBC documents prior to the 30(b)(6) deposition. The  Circuit Court rejected Barko's claim. According to the Circuit Court, Rule 612 applies only  where a witness uses a writing to refresh memory. Thus, the Circuit Court stated that  "even if the witness consults a writing while testifying, the adverse party is not entitled to  see it unless the writing influenced the witness's testimony."30  The Court noted that Barko  noticed the deposition to cover the topic of the COBC investigation itself. The Court held  that Barko cannot overcome the privilege by putting the COBC investigation in issue at  the deposition, and then demanding under Rule 612 to see the investigating documents.  According to the Court, "permitting privilege and protection to be so easily defeated  would defy 'reason and experience'."31

Waiver in Context of Placing the COBC Documents "at Issue" in KRB's Motion.

The issue was whether KBR's reference to the COBC investigation in the motion in  support of summary judgment placed the COBC documents "at issue" creating a waiver of  the attorney-client privilege and work-product protection. Although Barko's argument  had some appeal, the Circuit Court found that KBR had not waived privilege as to the  COBC documents by referencing the COBC investigation related to Barko's claim and  statement that it did not report any wrongdoing to the Government based on its internal  investigation. The Court concluded that the context of KBR's statement supported the  conclusion that KBR did not waive the privilege. First, KBR's reference to the COBC  investigation relating to Barko's claim appeared only in a footnote in the motion's  introduction. This fact was significant to the Court because (i) the statement was not in  the argument section of the motion, and (2) generally, courts do not "indulge cursory  arguments made only in a footnote."32  In addition, the Court noted that in the context of  summary judgment, all inferences were to be drawn against KBR at this stage of the  litigation, thus, it was an error for the district court not to view KBR's statements in the  light most favorable to Barko.

Non-Privileged Fact Work-Product.

The Circuit Court also found that the district court erred in requiring disclosure of  portions the of COBC report as fact work-product. Upon review of the compelled  disclosed information, the Circuit Court concluded that the material was attorney-client  privileged and opinion work-product. Accordingly, the Circuit Court concluded that the  compelled production rulings dated November 20, 2014 and December 17, 2014  constituted error, and granted KBR's writ of mandamus.


25 In re: Kellogg Brown & Root, Inc., No. 14-5319 (D.C. Cir. August 11, 2015)

26 See In re: Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014)

27 Id.

28 See Upjohn v. United States, 449 U.S. 383 (1981).

29 United States ex. Rel. Banko v. Halliburton Co., 2014 WL 7212881 (D.D.C. Dec. 27, 2014)

30 Slip. Opn at 10, citing 4 Jack B. Weinstein & Margaret A. Berger, Weinstein's Federal Evidence § 612.04(2)(b)(1) (2d ed. 1997).

31 Slip. Opn at 12.

32 Slip. Opn at 18.

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