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D.C. Circuit Court Rejects Lower Court’s Restrictive Reach of Upjohn Attorney-Client Privilege

Attorney-client privilege protects against disclosure of internal investigation documents if a significant purpose of the communication is obtaining or providing legal advice, according to the influential D.C. Circuit Court of Appeals,. In Re Kellogg Brown & Root, Inc., et al., No. 14-5055 (D.C. Cir. June 27, 2014).

In this case, the company objected to the district court’s order requiring it to turn over documents related to a prior investigation into alleged fraud.  KBR had conducted the investigation pursuant to its Code of Business Conduct, not as a result of any pending or threatened litigation.   Unfortunately, the district court’s decision offered an interpretation of the U.S. Supreme Court’s Upjohn that would narrow the attorney-client protectionIn Upjohn Co. v. United States449 U.S. 383 (1981), the Court established that the attorney-client privilege protects confidential employee communications made during an organization’s internal investigation led or overseen by lawyers for the business. The district court judge held the attorney-client privilege did not apply because KBR had not proved the investigation “communication would not have been made ‘but for’ the fact that legal advice was sought.” Imposing an “either/or” standard, the court said the privilege did not apply because the investigation was “undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice.”

The Court of Appeals rejected the district court’s attempt to narrow the protections of the attorney-client privilege under Upjohn. It ruled that the attorney-client privilege did apply to the prior fraud investigation documents because:

  • KBR initiated the investigation to gather facts and ensure compliance with the law after being informed of potential misconduct;

  • KBR’s investigation was conducted under the auspices of the KBR’s in-house legal department, acting in its legal capacity (as opposed to a purely business capacity); and

  • Obtaining or providing legal advice was one of the significant purposes of the internal investigation – it need not be the sole or “but for” purpose.

The appeals court rejected the argument that the privilege should not apply because the company had to conduct the investigation to comply with various regulations, whether or not it sought legal advice. That is very important in light of the increasing number of laws and regulations that require organizations to investigate claims and reports alleging improper conduct. The appeals court also ruled the privilege applied regardless of whether the lawyers involved were in-house counsel or outside counsel. It ruled the privilege applied to communications between non-lawyer investigators and others, so long as the investigators were acting at the request of the lawyers. It also ruled the investigators did not have to use any “magic words” to inform interviewees that the investigation was being overseen by lawyers.

Jackson Lewis P.C. © 2020National Law Review, Volume IV, Number 189

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