In the Courts

On June 27, 2014, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit” or “Circuit”) vacated the order of the U.S. District Court for the District of Columbia (“District Court”) that directed Kellogg Brown & Root, Inc. (“KBR”) to turn over internal investigation materials and granted KBR's petition for a writ of mandamus. In stating that “the District Court's decision is irreconcilable with Upjohn,” the court concluded that “[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.” In re Kellogg Brown & Root, Inc., No. 14-5055, 2014 WL 2895939, at *1, 4 (D.C. Cir. June 27, 2014). In dissecting and disagreeing with the trial court's reasoning, the D.C. Circuit cited an amicus brief “joined by numerous business and trade associations,” and pointed out that “the District Court's novel approach has the potential to 'work a sea change' in the well-settled rules governing internal corporate investigations.'” Id. at * 8, 7.

In 2005, Harry Barko, a former employee of KBR, filed a False Claims Act complaint against KBR and its related corporate entities, alleging that “KBR and certain subcontractors defrauded the U.S. Government by inflating costs and accepting kickbacks while administering military contracts in wartime Iraq.” Id. at *1. Barko sought discovery of documents related to a prior internal investigation, overseen by the KBR Legal Department under its Code of Business Conduct. The District Court reviewed the documents in camera and concluded that the attorney-client privilege did not apply because, in applying the primary purpose test, the Court determined that “the communication would not have been made 'but for” the fact that legal advice was sought.” Id.