D.C. Circuit Once Again Upholds Privilege Over Internal Investigation Documents

D.C. Circuit Once Again Upholds Privilege Over Internal Investigation Documents

September 28, 2015

In United States ex rel. Barko v. Halliburton Co. et al., a qui tam suit we previously covered here, the District of Columbia Circuit Court of Appeals once again ruled that defense contractor KBR Inc.’s internal investigation documents were privileged, rejecting for the second time the District Court ’s decision to the contrary.

This case arises from a claim by a whistleblower, Harry Barko, a former contract administrator for KBR, that KBR had misappropriated federal funds during the Iraq war. In the course of the litigation, Barko sought production of interviews, reports, and documents that KBR prepared while conducting an internal investigation concerning the same allegations found in Barko’s complaint. District Judge James S. Gwin held in March 2014 that these materials were not protected by the attorney-client privilege because the investigation was required under federal law and had been conducted pursuant to company policy by internal compliance personnel, some of whom were not attorneys. In a June 2014 opinion, the D.C. Circuit granted KBR a writ of mandamus to prevent disclosure of the materials, but also directed the district court to consider additional arguments as to why the documents were not covered by either the attorney-client privilege or the work product doctrine.

On remand, Judge Gwin determined in November 2014 that the materials were not privileged because: 1) KBR had waived the attorney-client privilege protection by putting the contents of its investigations “at issue” during the 30(b)(6) deposition of a KBR witness and in its summary judgment motion; and 2) KBR had waived the attorney-client privilege by allowing its 30(b)(6) representative to use the internal investigation documents to prepare for his deposition.

On August 11, 2015, a three-judge panel of the D.C. Circuit granted KBR’s second petition for a writ of mandamus, rejecting the district court’s reasoning. The panel found that district court’s ruling ran counter to the Supreme Court’s 1981 decision in Upjohn v. United States, the foundational case for privilege in internal investigations. The panel also found that it was Barko who had put the documents at issue in his 30(b)(6) deposition notice, leaving KBR’s designee no choice but to review the documents in preparation. The circuit court also determined that KBR had not waived privilege over the documents by stating in a footnote to its motion for summary judgment that it had conducted an investigation relating to Barko’s claims and found no wrongdoing. That reference, which did not make an argument concerning the contents of the privileged documents, did not put the documents at issue.

The D.C. Circuit’s ruling is critical to privilege determinations in whistleblower claims. If the district court’s view had prevailed, companies would have had to exercise substantially more caution in conducting internal investigations – especially when investigations are required by law. Under the D.C. Circuit’s ruling, materials related to those investigations now retain their privileged character, which allows for more thorough and more effective investigations of allegations of misconduct. 

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