August 12, 2015
For the second time in 14 months, the US Court of Appeals for the DC Circuit has taken the extraordinary step of issuing a writ of mandamus to stop a federal district court from requiring a federal government contractor to produce internal investigation documents that are protected by the attorney-client privilege. Both writs were issued in the same case, a False Claims Act qui tam suit brought by a relator who alleges that the contractor, which assisted the US military in Iraq, defrauded the government. This decision confirms that when an internal investigation is begun and completed by in-house counsel and is in compliance with requirements to establish and protect the attorney-client privilege, the documents remain privileged despite careful collateral uses.
The contractor’s internal investigation had been conducted in accordance with its Code of Business Conduct and overseen by its legal department. Finding that documents relating to the internal investigation were not attorney-client privileged, a DC federal district court compelled production. The contractor filed a petition for writ of mandamus, which the DC Circuit granted in In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014), on the ground that the district court’s document production order conflicted with Upjohn Co. v. United States, 449 U.S. 383 (1991) (holding that confidential employee communications made during an internal investigation led by in-house lawyers are protected under the attorney-client privilege).
On remand, the district court held that the contractor had impliedly waived the attorney-client privilege (and work-product doctrine) for the same internal investigation documents. The district court again compelled their production, the contractor again filed a petition for writ of mandamus, and on August 11, 2015, the DC Circuit again issued a writ of mandamus vacating the document production order. See In re Kellogg Brown & Root, Inc., No. 14-5319 (click here to read the DC Circuit's opinion). The court of appeals held that the district court erred by finding that the contractor waived attorney-client privilege (i) when an in-house attorney reviewed internal investigation documents in preparation for a Rule 30(b)(6) deposition, and (ii) when the contractor supposedly injected the contents of the documents into the merits of the qui tam controversy by referring to the documents in a footnote included in a summary judgment motion.
Importantly, the DC Circuit explained that “[i]f allowed to stand, the District Court’s rulings would ring alarm bells in corporate general counsel offices throughout the country about what kinds of descriptions of investigatory and disclosure practices could be used by an adversary to defeat all claims of privilege and protection of an internal investigation.” Slip op. at 24. “If all it took to defeat the privilege and protection attaching to an internal investigation was to notice a deposition regarding the investigations . . . we would expect to see such attempts to end-run these barriers to discovery in every lawsuit in which a prior internal investigation was conducted . . . .” Ibid.
There are two principal take-aways for in-house counsel:
(1) general counsel should continue to oversee internal investigations (including when outside counsel are engaged to assist) with the expectation that unless waived, the attorney-client privilege will apply to relevant employee communications, and
(2) if a district court orders production of documents reflecting such communications, filing a petition for writ of mandamus under Federal Rule of Appellate Procedure 21 and 28 U.S.C. § 1651 is a viable option for obtaining interlocutory review.