D.C. Circuit Clarified 4 Critical Factors Regarding Attorney-Client Privilege in Corporate Internal Investigations, Finding District Court’s Decision “Irreconcilable with Upjohn”

by Moore & Van Allen PLLC
Contact

In a recent post, we discussed the D.C. Circuit’s consideration of the District Court’s decision in U.S. ex.rel Barko v. Halliburton Co. et al., Case No. 05-01276 (D.D.C. 2014), which provided an alarming perspective on the applicability of the attorney-client privilege and work product doctrine to internal investigations conducted pursuant to government regulatory compliance requirements.  The District Court had ruled that the privilege and work product doctrine did not apply to communications generated during the course of an internal investigation, because the company conducted the investigation pursuant to the compliance requirements imposed on federal defense contractors via federal regulation.  The District Court was sure that its position regarding the inapplicability of the privilege/protection was sound and certainly obvious, declaring that “the question of whether the COBC documents were subject to the attorney-client privilege or the work-product doctrine was not close” and the court was “confident that other courts conducting a similar in camera review would come to the same conclusion.”  In the District Court’s view “KBR’s hope that the Court of Appeals will take this case for interlocutory appeal is fanciful.”  However, the D.C. Circuit did just that in In re: Kellog Brown & Root, Inc., et al., No. 14-5055 (D.C. Cir. June 27, 2014), granting KBR’s writ for mandamus and vacating the District Court’s order to produce the privileged documents.

The District Court had distinguished the internal investigation at issue from the internal investigation in Upjohn Co. v. United States, 449 U.S. 383 (1981), arguing that the compliance investigation in this case “was a routine corporate, and apparently ongoing, compliance investigation required by regulatory law and corporate policy,” unlike the internal investigation in Upjohn which “was conducted only after attorneys from the legal department conferred with outside counsel on whether and how to conduct an internal investigation.”  The D.C. Circuit, however, found that the District Court’s decision was “irreconcilable with Upjohn” and “KBR’s assertion of the privilege in this case is materially indistinguishable from Upjohn’s assertion of the privilege in that case.”

The Court of Appeals clarified the appropriate test for determining whether corporate documents are privileged and the following critical points regarding the applicability of the privilege/protection:

  1. The “but-for” test applied by the District Court is the wrong analysis for attorney-client privilege and it is not the law as articulated by the U.S. Supreme Court or any other Circuit Court.  “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.”
  2. The investigation does not have to be prompted by or involve outside counsel.  “Upjohn does not hold or imply that the involvement of outside counsel is a necessary predicate for the privilege to apply.  On the contrary, the general rule, which this Court has adopted, is that a lawyer’s status as in-house counsel ‘does not dilute the privilege.’”
  3. The fact that an investigation is executed by non-attorneys does not abrogate privilege if it is conducted at the direction of attorneys.  “[C]ommunications made by and to non-attorneys serving as agents of attorneys in internal investigations are routinely protected by the attorney-client privilege.”
  4. Employees do not have to be expressly told that the purpose of an investigation “is to obtain legal advice.”  “[N]othing in Upjohn requires a company to use magic words to its employees in order to gain the benefit of the privilege for an internal investigation. And in any event, here as in Upjohn employees knew that the company’s legal department was conducting an investigation of a sensitive nature and that the information they disclosed would be protected.”

Although the District Court’s decision was not binding on other courts, the D.C. Circuit granted mandamus in this case to head off the “potentially far-reaching consequences” of the ruling which the appellate court believed “threaten[ed] to vastly diminish the attorney-client privilege in the business setting” by “seemingly prevent[ing] any defense contractor from invoking the attorney-client privilege to protect internal investigations undertaken as part of a mandatory compliance program…And because a variety of other federal laws require similar internal controls or compliance programs, many other companies likewise would not be able to assert the privilege to protect the records of their internal investigations.”  The D.C. Circuit noted that the interest in this case “convincingly demonstrates that many organizations are well aware of and deeply concerned about the uncertainty generated by the novelty and breadth of the District Court’s reasoning.”  Accordingly, it granted mandamus given “[t]he novelty of the District Court’s privilege ruling, combined with its potentially broad and destabilizing effects in an important area of law.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Moore & Van Allen PLLC | Attorney Advertising

Written by:

Moore & Van Allen PLLC
Contact
more
less

Moore & Van Allen PLLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.