In Re: Kellogg Brown & Root, Inc.

756 F.3d 754, 410 U.S. App. D.C. 382, 94 Fed. R. Serv. 1129, 38 I.E.R. Cas. (BNA) 1109, 2014 WL 2895939, 2014 U.S. App. LEXIS 12115
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 27, 2014
Docket14-5055
StatusPublished
Cited by125 cases

This text of 756 F.3d 754 (In Re: Kellogg Brown & Root, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re: Kellogg Brown & Root, Inc., 756 F.3d 754, 410 U.S. App. D.C. 382, 94 Fed. R. Serv. 1129, 38 I.E.R. Cas. (BNA) 1109, 2014 WL 2895939, 2014 U.S. App. LEXIS 12115 (D.C. Cir. 2014).

Opinion

Opinion for the Court filed by Circuit Judge KAVANAUGH.

*756 KAVANAUGH, Circuit Judge:

More than three decades ago, the Supreme Court held that the attorney-client privilege protects confidential employee communications made during a business’s internal investigation led by company lawyers. See Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). In this case, the District Court denied the protection of the privilege to a company that had conducted just such an internal investigation. The District Court’s decision has generated substantial uncertainty about the scope of the attorney-client privilege in the business setting. We conclude that the District Court’s decision is irreconcilable with Upjohn. We therefore grant KBR’s petition for a writ of mandamus and vacate the District Court’s March 6 document production order.

I

Harry Barko worked for KBR, a defense contractor. In 2005, he filed a False Claims Act complaint against KBR and KBR-related corporate entities, whom we will collectively refer to as KBR. In essence, Barko alleged that KBR and certain subcontractors defrauded the U.S. Government by inflating costs and accepting kickbacks while administering military contracts in wartime Iraq. During discovery, Barko sought documents related to KBR’s prior internal investigation into the alleged fraud. KBR had conducted that internal investigation pursuant to its Code of Business Conduct, which is overseen by the company’s Law Department.

KBR 'argued that the internal investigation had been conducted for the purpose of obtaining legal advice and that the internal investigation documents therefore were protected by the attorney-client privilege. Barko responded that the internal investigation documents were unprivileged business records that he was entitled to discover. See generally Fed.R.Civ.P. 26(b)(1).

After reviewing the disputed documents in camera, the District Court determined that the attorney-client privilege protection did not apply because, among other reasons, KBR had not shown that “the communication would not have been made ‘but for’ the fact that legal advice was sought.” United States ex rel. Barko v. Halliburton Co., No. 1:05-cv-1276, — F.3d —, —, 2014 WL 1016784, at *2 (D.D.C. Mar. 6, 2014) (quoting United States v. ISS Marine Services, Inc., 905 F.Supp.2d 121, 128 (D.D.C.2012)). KBR’s internal investigation, the court concluded, was “undertaken pursuant to regulatory law and corporate. policy rather than for the purpose of obtaining legal advice.” Id. at-, 2014 WL 1016784, at *3.

KBR vehemently opposed the ruling. The company asked the District Court to certify the privilege question to this Court for interlocutory appeal and to stay its order pending a petition for mandamus in this Court. The District Court denied those requests and ordered KBR to produce the disputed documents to Barko within a matter of days. See United States ex rel. Barko v. Halliburton Co., No. 1:05-cv-1276, 2014 WL 929430 (D.D.C. Mar. 11, 2014). KBR promptly filed a petition for a writ of mandamus in this Court. A number of business organizations and trade associations also objected to the District Court’s decision and filed an amicus brief in support of KBR. We stayed the District Court’s document production order and held oral argument on the mandamus petition.

The threshold question is whether the District Court’s privilege ruling constituted legal error. If not, mandamus is of course inappropriate. If the District Court’s ruling was erroneous, the remain *757 ing question is whether that error is the kind that justifies mandamus. See Cheney v. U.S. District Court for the District of Columbia, 542 U.S. 367, 380-81, 124 S.Ct. 2576, 159 L.Ed.2d 459 (2004). We address those questions in turn.

II

We first consider whether the District Court’s privilege ruling was legally erroneous. We conclude that it was.

Federal Rule of Evidence 501 provides that claims of privilege in federal courts are governed by the “common law — as interpreted by United States courts in the light of reason and experience.” Fed. R.Evid. 501. The attorney-client privilege is the “oldest of the privileges for confidential communications known to the common law.” Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). As relevant here, the privilege applies to a confidential communication between attorney and client if that communication was made for the purpose of obtaining or providing legal advice to the client. See 1 Restatement (Third) Of The Law Governing Lawyers §§ 68-72 (2000); In re Grand Jury, 475 F.3d 1299, 1304 (D.C.Cir.2007); In re Lindsey, 158 F.3d 1263, 1270 (D.C.Cir.1998); In re Sealed Case, 737 F.2d 94, 98-99 (D.C.Cir.1984); see also Fisher v. United States, 425 U.S. 391, 403, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976) (“Confidential disclosures by a client to an attorney made in order to obtain legal assistance are privileged.”).

In Upjohn, the Supreme Court held that the attorney-client privilege applies to corporations. The Court explained that the attorney-client privilege for business organizations was essential in light of “the vast and complicated array of regulatory legislation confronting the modern corporation,” which required corporations to “constantly go to lawyers to find out how to obey the law, ... particularly since compliance with the law in this area is hardly an instinctive matter.” 449 U.S. at 392, 101 S.Ct. 677 (internal quotation marks and citation omitted). The Court stated, moreover, that the attorney-client privilege “exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.” Id. at 390, 101 S.Ct. 677. That is so, the Court said, because the “first step in the resolution of any legal problem is ascertaining the factual background and sifting through the facts with an eye to the legally relevant.” Id. at 390-91, 101 S.Ct. 677. In Upjohn,

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756 F.3d 754, 410 U.S. App. D.C. 382, 94 Fed. R. Serv. 1129, 38 I.E.R. Cas. (BNA) 1109, 2014 WL 2895939, 2014 U.S. App. LEXIS 12115, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-kellogg-brown-root-inc-cadc-2014.