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Recent Order from D.C. District Court Forces Defendants to Produce Results of Internal Investigations Finding Attorney-Client and Attorney Work Product Privileges Not Applicable

Recent Order from D.C. District Court Forces Defendants to Produce Results of Internal Investigations Finding Attorney-Client and Attorney Work Product Privileges Not Applicable

On March 6, a U.S. district court judge, sitting by designation in the District of Columbia, granted a relator's motion to compel and ordered defendants to produce documents constituting the results of the defendants' internal investigations, related to the subject matter of the relator's amended complaint.[1] In discovery, the defendants asserted attorney-client privilege and work product protection in response to relator's requests for "internal audits and investigations" into the alleged misconduct and the related subject matter.[2] The investigations were undertaken by a Director of the Code of Business Conduct ("COBC") and completed by a team of non-lawyers, following receipt of an employee tip about potential misconduct.[3] After the investigations were completed, summary reports were prepared and forwarded to the company's Law Department.

The district court reviewed the summary investigative reports in camera and noted that they were "eye-openers."[4] The court ruled that the reports were not protected by the attorney-client privilege nor the attorney work product doctrine. The court found that the investigations were "undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice."[5] Specifically, the court referred to the Department of Defense regulations that "require contractors to have internal control systems such as [defendants'] COBC program" so that reported instances of alleged misconduct can be investigated and reported.[6] Applying the Upjohn "but for" test used to determine the applicability of the attorney-client privilege, the court concluded that the implementation of these "routine corporate, and apparently ongoing, compliance investigation[s]" were nothing more than the company's implementation of DOD requirements.[7] Accordingly, the court found that the investigative reports "would have been conducted regardless of whether legal advice were sought."[8]

The court also found persuasive that employees interviewed by COBC investigators were never expressly advised that the purpose of these investigations was to obtain "legal advice." The absence of this express notice was, according to the court, further evidence that these reports were not protected under the attorney-client privilege. Finally, the court noted additional characteristics of the investigation that weighed against applying the attorney-client privilege, including that employees were asked to sign confidentiality statements that discussed only potential "adverse business impact" (as opposed to legal implications) if disclosures were made, and that the interviews were conducted by non-attorneys.[9]

Similarly, the court held that these documents were not protected under the work-product doctrine. In its analysis, the court again emphasized the fact that these investigations were conducted "in the ordinary course of business" pursuant to DOD regulatory requirements, and thus these documents were not prepared in anticipation of litigation. The court also highlighted the timing of these investigations, particularly the fact that the investigations were conducted years prior to the unsealing of the qui tam litigation.

In light of the many statutory requirements, such as the Affordable Care Act, that require strong internal and external controls to prevent any potential misconduct, as well as the highly regulated nature of the current business environment overall, this case has troubling implications for industry. The case teaches that entities should consider engaging counsel early in an investigation if there is likely to be a need to protect the results under privilege. Moreover, the work product of the investigation, such as memoranda, reports, and the like, should make clear that they were prepared for counsel to assist in providing legal advice.

Lawyer Contacts

For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at www.jonesday.com.

Theodore T. Chung
Chicago
+1.312.269.4234
[email protected]

Joseph W. Clark
Washington
+1.202.879.3697
[email protected]

John D. Hanify
Boston
+1.617.449.6906
[email protected]

Karen P. Hewitt
San Diego
+1.858.314.1119
[email protected]

J. Andrew Jackson
Washington
+1.202.879.5575
[email protected]

Beong-Soo Kim
Los Angeles
+1.213.243.2503
[email protected]

Jonathan Leiken
Cleveland / New York
+1.216.586.7744 / +1.212.326.3771
[email protected]

Matthew D. Orwig
Dallas / Houston
+1.214.969.5267 / +1.832.239.3798
[email protected]

Heather M. O'Shea
Chicago
+1.312.269.4009
[email protected]

Rebekah N. Plowman
Atlanta
+1.404.581.8240
[email protected]

Stephen G. Sozio
Cleveland
+1.216.586.7201
[email protected]

Heidi A. Wendel
New York
+1.212.326.8322
[email protected]

James R. Wooley
Cleveland
+1.216.586.7345
[email protected]sday.com

Lindsey Lonergan, an associate in the Atlanta Office, assisted in the preparation of this Alert.

Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our "Contact Us" form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.


[1] See United States ex rel. Harry Barko v. Halliburton Company, et al., No. 1:05-CV-1276 (D.D.C. Mar. 6,     2014)(Doc. No. 15).

[2] Id. at 2.

[3] Id. at 3.

[4] Id. at 2.

[5] Id. at 5.

[6] Id. at 5-6.

[7] Id. at 6.

[8] Id. (emphasis added)

[9] Id. at 7.

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