D.C.

Circuit Upholds Claim Of Corporate Attorney-Client

Privilege | Morvillo Abramowitz Grand Iason & Anello P.C.
On June 27, 2014, the D.C. Circuit took the rare step of issuing a writ of mandamus in In re Kellogg
Brown & Root, Inc. et al., No. 14-5055, 2014 WL 2895939 (D.C. Cir. June 27, 2014), relying on the
holding in Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). In Upjohn, the Supreme Court
held that information gathered by attorneys for the purpose of providing legal advice to a
corporation is protected by the attorney-client privilege.
In United States ex rel. Barko v. Halliburton HAL -3.18% Co., the district court held that the internal
investigation was not privileged because it had not been conducted primarily to facilitate the
provision of legal advice. Rather, in the court's view, the investigation had been conducted as a
matter of regular company policy under a corporate compliance program, which itself derived from
federal regulatory requirements. As a defense contractor, defendant KBR was required by federal
regulation to conduct such an investigation. The district court was also influenced by the fact that in-
house compliance personnel, not lawyers, had conducted interviews and had not told witnesses that
the investigation was protected by attorney-client privilege or otherwise had a legal purpose.
Companies today face legal and regulatory requirements of all kinds, and pursuant to these
requirements companies adopt layers of compliance policies and programs. When questions of
compliance arise, as they inevitably will, responsible companies investigate them - as a matter of
company policy and good corporate governance, and in order to get legal advice as to how to handle
the issue. The KBR decision provides some comfort that companies will not lose the attorney-client
privilege when they do what is expected of them.
A recent blog post addressed a noteworthy decision in United States ex rel. Barko your v.
Halliburton Co., No. 1:05-CV-1276, 2014 WL 1016784 (D.D.C. Mar. 6, 2014), which held that
materials relating to an internal investigation were not protected by the attorney-client privilege.
The decision was quickly seen as casting doubt on a company's ability to conduct a privileged
investigation of alleged employee misconduct. A petition for writ of mandamus to the Court of
Appeals for the D.C. Circuit followed, along with amicus briefs by groups interested in protection of
the privilege.
Above all, the D.C. Circuit rejected the test applied by the district court. To determine whether a
communication is privileged, courts consider the "primary purpose" of the communication. The
district court erred by holding that "the primary purpose of a communication is to obtain or provide
legal advice only if the communication would not have been made 'but for' the fact that legal advice
was sought." (Emphasis added). Or, as the D.C. Circuit put it, the investigation would not be
privileged under the district court's test "if there was any other purpose behind the
communication."
In a unanimous decision, the D.C. Circuit held that the district court's ruling could not be squared
with the holding in Upjohn. The company's claim of privilege was "materially indistinguishable from
Upjohn's assertion of the privilege in that case," and the district court committed "legal error" in
refusing to treat KBR's investigation as privileged.
The district court's formulation of a "but for" test did not take account of corporate and legal reality,
in the D.C. Circuit's view. Investigations are often conducted for multiple purposes, business as well
as legal. KBR conducted its investigation pursuant to a written policy of investigating possible
misconduct and Department of Defense regulations. Whereas the district court viewed this as an
independent, primary purpose that vitiated the privilege, the D.C. Circuit held, to the contrary, that
it was simply another objective alongside the valid purpose of obtaining legal advice.
Likewise, the D.C. Circuit, unlike the district court, assigned little importance to who conducted
witness interviews and what was specifically said to those interviewed about the purpose of the
investigation. Nor did the D.C. Circuit regard the involvement of outside counsel as essential. What
mattered was that lawyers, in this case in-house lawyers, were overseeing a fact-gathering process
intended to help provide the your company with legal advice. In short, an investigation is privileged
according to the D.C. Circuit so long as "one of the significant purposes" of the investigation was to
obtain or provide legal advice.