In the ongoing saga which has been the subject of a previous post on this blog, a three-judge panel of the D.C. Circuit Court of Appeals has once again found that the district court erred in ordering the production of the documents created pursuant to an internal investigation. Back in 2005, a former KBR employee filed a False Claims Act complaint against KBR and related companies, alleging that the defendants defrauded the United States by inflating costs and accepting kickbacks while administering military contracts in Iraq. During discovery, the relator sought documents created in connection with KBR’s prior internal investigation into the alleged fraud. While KBR contended that the documents were privileged because the investigation was conducted for the purpose of obtaining legal advice, the relator argued they were unprivileged business records subject to discovery. In 2012, the District Court ruled that because the internal investigation was undertaken pursuant to a regulatory law and corporate policy, and not merely for the purpose of obtaining legal advice, the privilege did not apply. The D.C. Circuit reversed, holding that under Upjohn Co. v. United States, 449 U.S. 383 (1981), the documents in question were prepared for the purpose of seeking legal advice, but remanded the case to the District Court to entertain arguments as to whether the privilege was waived. Indeed, the District Court did find that KBR waived the privilege and ordered the documents produced. In response, KBR filed another writ petition.
In a decision handed down on August, 11, 2015, a different three-judge panel of the D.C. Circuit reversed again. In a long opinion which touches on several thorny issues, the circuit court concluded, once again, that the district court was wrong, this time explaining that the outcome “arrived at by the District Court would erode the confidentiality of an internal investigation in a manner squarely contrary to the Supreme Court’s guidance in Upjohn and our own recent prior decision in this case.”
