You may recall that, back in July 2014, we advised that the D.C. Circuit Court of Appeals had overturned a D.C. District Court decision in a False Claims Act case that required the results of an internal investigation, which the investigating company had asserted were protected by the attorney-client privilege, to be turned over to the whistleblower’s counsel.
The trial court had supported its decision against the application of the privilege by, among other things, pointing out that the employees that had been interviewed—by non-attorneys—had not been told that the interview was being conducted for the purpose of obtaining or providing legal advice. The D.C. Circuit, in In re Kellogg Brown & Root, Inc., 756 F 3d 754 (DC Cir. 2014), overturned the ruling and supported the assertion of the privilege. Among other things, it found that if one of the company’s significant purposes for conducting the investigation was to obtain or provide legal advice, that no “magic words” needed be used by the interviewer, and that an actual attorney did not have to conduct the investigation, as long as counsel was at least overseeing the investigation.
Fast forward to September of 2015, for Round 2. When the case was sent back to the District Court, it again denied the assertion of the privilege, this time finding that the documents were fair game because the company had “impliedly” waived the attorney-client privilege by a) the corporate designee for a deposition in the case reviewing the documents during deposition preparation and b) by referring to the documents in a summary judgment filing. In the face of this second bite at the apple, the D.C. Circuit, in In re Kellogg Brown & Root, Inc. No. 14-5319 (DC Cir. Aug. 11, 2015) again overturned the lower court, largely because in these actions the company had not intended to make an “unconditional disclosure” of the results of the investigation.
It is clear that, in its two holdings, the D.C Circuit has communicated that legitimate assertions of the attorney-client privilege in the context of an internal investigation should withstand challenge, however, it is also abundantly clear that pitfalls abound in this area, and that the preservation of the privilege requires that a strategy for conducting such investigations be devised in advance and closely followed. In that regard, the following suggestions may prove helpful:
- While the KBR cases show that, at least in the DC Circuit, it is not necessary that an attorney personally conduct each aspect of the investigation, at a minimum the non-lawyers that are participating should be acting at the direction of and with the advice of counsel, essentially as the “agents” of counsel, to support the position that one of the “significant purposes” of the investigation is to provide or obtain legal advice;
- Perform a check-up of your company’s written policies related to internal investigations and update them to reflect the current state of the law, and include a requirement to memorialize that the purpose of the investigation is obtaining legal advice (as opposed to for routine business purposes), and document the intent, through minutes of a meeting, an internal memorandum, or otherwise;
- If you are conducting the investigation through “in-house” counsel, ensure that your investigators are mindful of, and deliver the warnings required, under Upjohn Co. v. United States, 449 U.S. 383 (1981); and
- Indicate on documents that are generated in the investigation that they are “Privileged and Confidential,” and limit their distribution to the largest extent possible.
Internal investigations, whether for compliance, regulatory or other purposes, are a fact of corporate life. Ideally, your company should be able to conduct its investigations without the fear of the resulting interviews and information being subject to a subsequent request for their discovery in the context of a False Claims Act or similar court case. While it would be impossible, from a practical perspective, to ensure with 100 percent certainty that such investigation results will not be challenged as discoverable, if prudent steps are undertaken in advance, and policies put in place and uniformly followed, those challenges should fail and the privilege of that information should be preserved as a result.
About the Author: Paul Mengel is counsel with PilieroMazza and leads the Litigation Group. He can be reached at pmengel@pilieromazza.com.