756 F.3d 754 (D.C. Cir. 2014)
Harry Barko worked for KBR, a defense contractor.1 In 2005, he filed a False Claims Act complaint against KBR and KBR-related corporate entities.2 Barko alleged that KBR and subcontractors defrauded the U.S. Government by inflating costs and accepting kickbacks while administering military contracts in wartime Iraq.3
During discovery, Barko sought documents related to KBR’s prior internal investigation into the alleged fraud.4 KBR had conducted that internal investigation pursuant to its Code of Business Conduct, which is overseen by the company’s Law Department.5 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.6 Barko responded that the internal investigation documents were unprivileged business records that he was entitled to discover.7
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.8 The District Court concluded that KBR’s internal investigation was undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice.9 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.10 The District Court denied those requests and ordered KBR to produce the disputed documents to Barko within a matter of days.11
KBR promptly filed a petition for a writ of mandamus in this Court.12 Numerous business organizations and trade associations also objected to the District Court’s decision and filed an amicus brief in support of KBR.13 The Court of Appeals stayed the District Court’s document production order and held oral argument on the mandamus petition.14
Whether the District Court’s privilege ruling constituted legal error?15
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.16 The attorney-client privilege applies to a confidential communication between attorney and client if that communication was made for the purpose of obtaining or providing legal advice.17 In Upjohn the Supreme Court held that the privilege applies to corporations and protects communications made during an attorney-led internal investigation undertaken to ensure compliance with the law.18
Yes. The established facts demonstrate that KBR conducted its internal investigation pursuant to the Code of Business Conduct overseen by the Law Department after learning of potential misconduct involving inflated costs and kickbacks on military contracts in Iraq. Harry Barko sought the investigation documents during discovery in his False Claims Act case. The District Court reviewed them in camera before concluding that the but-for test was not satisfied because the investigation served regulatory and corporate policy purposes.
The District Court therefore applied an incorrect legal standard that would require legal advice to be the sole purpose rather than one of the significant purposes.19 Under the proper formulation of the primary purpose test, obtaining or providing legal advice qualifies as one significant purpose when the Law Department oversees the investigation even if regulatory compliance is also a purpose.20 The facts establish that the investigation was materially indistinguishable from the Upjohn investigation because it was initiated to gather facts and ensure compliance under the direction of company lawyers.21
The District Court’s privilege ruling constituted legal error.22
Whether that error justifies a writ of mandamus?23
Mandamus requires that the petitioner have no other adequate means to obtain relief, that the right to the writ be clear and indisputable, and that the writ be appropriate under the circumstances.24 In attorney-client privilege cases interlocutory appeal is unavailable absent certification and post-judgment appeal comes too late because the privileged materials will already have been disclosed.25
Yes. The established facts show that the District Court denied KBR’s request to certify the privilege question for interlocutory appeal and ordered production within days. Appeal after final judgment would be inadequate because the documents would already have been produced to Barko.26 The legal error is clear because the District Court employed a but-for test that contradicts Upjohn and longstanding privilege doctrine.27
The circumstances make mandamus appropriate because the ruling would prevent defense contractors and other regulated companies from protecting internal investigation materials and because numerous business organizations filed an amicus brief highlighting the destabilizing effects.28 The Court of Appeals stayed the production order and heard argument before granting relief.
The error justifies a writ of mandamus.29