In Re: Kellogg Brown & Root, Inc.
94 Fed. R. Serv. 1129, 756 F.3d 754, 410 U.S. App. D.C. 382 (2014)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The attorney-client privilege protects communications made during a corporate internal investigation so long as obtaining or providing legal advice was one of the significant purposes of the communication, even if the investigation was also conducted pursuant to regulatory requirements or company policy.
Facts:
- Harry Barko, an employee of defense contractor KBR, alleged that KBR and its subcontractors defrauded the U.S. government on military contracts in Iraq.
- Pursuant to its Code of Business Conduct, which was overseen by its Law Department, KBR initiated an internal investigation into Barko's allegations.
- The investigation involved interviews with KBR employees conducted by non-attorneys at the direction of KBR's in-house legal department.
- The interviewed employees were instructed not to discuss their interviews without authorization from KBR's General Counsel.
Procedural Posture:
- Harry Barko filed a False Claims Act lawsuit against KBR in the U.S. District Court for the District of Columbia.
- During discovery, Barko moved to compel production of documents related to KBR's internal investigation.
- KBR opposed the motion, asserting the documents were protected by the attorney-client privilege.
- The District Court, after reviewing the documents in camera, granted Barko's motion and ordered KBR to produce the documents, holding the privilege did not apply because the investigation was conducted pursuant to regulatory requirements.
- KBR's requests for the District Court to certify the order for interlocutory appeal and to stay the order were denied.
- KBR, the petitioner, filed a petition for a writ of mandamus with the U.S. Court of Appeals for the D.C. Circuit, seeking to vacate the production order, against Barko, the respondent.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the attorney-client privilege protect from disclosure the materials of a corporate internal investigation when the investigation was conducted not only to obtain legal advice but also to comply with regulatory requirements?
Opinions:
Majority - Kavanaugh, Circuit Judge
Yes. Communications made during a corporate internal investigation are protected by the attorney-client privilege if obtaining or providing legal advice was one of the significant purposes of the investigation. The district court erred by applying a 'but-for' test, which incorrectly required that the communication would not have been made but for the purpose of seeking legal advice. This court rejects that narrow test, as it creates a false dichotomy between a legal purpose and a business or regulatory compliance purpose. Following the principles of Upjohn Co. v. United States, the privilege applies even if the investigation was mandated by regulation, involved in-house counsel without outside lawyers, or used non-attorneys as agents of the lawyers to conduct interviews. The correct test is whether obtaining legal advice was one of the significant purposes, not the sole purpose, of the communication.
Analysis:
This decision significantly clarifies the 'primary purpose' test for attorney-client privilege in the context of corporate internal investigations. By explicitly rejecting the narrow 'but-for' test and adopting the more flexible 'one of the significant purposes' standard, the court provides greater protection and predictability for corporations. This is particularly crucial for businesses in heavily regulated industries, like defense contracting or finance, where internal investigations often serve dual purposes of legal risk assessment and mandatory regulatory compliance. The ruling encourages companies to conduct thorough internal reviews with counsel without fearing that the dual-purpose nature of the investigation will automatically waive the privilege.
