Protecting confidential internal investigations

Protecting Internal Investigations

KBR Case Clarifies Protected Status of Internal Investigations

“Privilege as to the internal investigation report is deemed waived,” the Judge ordered. With those words, everything seemingly changed for the defense contractor, KBR, Inc., and any company, university, government agency, and NGO that had previously relied on the privileged and protected status of an internal investigation report.

In 2005, KBR’s legal team had spent many hours investigating allegations of fraud and kickbacks against the United States that had culminated in a highly confidential and privileged internal investigations report. Almost nine years later, in a False Claims Act lawsuit filed by a former employee, a federal District Judge directed the company to disclose the contents of its privileged internal report.

Why? KBR’s outside legal team had used the internal report to: (a) prepare a company witness for a deposition and (b) had mentioned it in its motion for summary judgment in the False Claims Act case.

With the publication of its latest decisionIn re: Kellogg Brown & Root, Inc. (KBR) – the D.C. Circuit Court overturned the federal District Court Judge, and in the process, clarified and affirmed the protected status of internal investigations documents and reports.

The Court ruled that forcing a company to prepare its corporate representative for a deposition on the topic of its internal investigation report is not a waiver of attorney-client or work-product privileges, and neither is a footnoted reference to the report in the company’s summary judgment moving papers. To find a waiver in these situations would dilute these privileges. Commentators believe that this ruling clarifies the scope of these privileges.

Why This Matters to Businesses and Government Agencies

As recent events have shown, internal investigations and their resulting reports are a growing force in our information society. Whether it’s the deflategate investigation report, the yet to be disclosed Fifa investigative report, or the soon to be completed report that led to the firing of Tim Beckman, head football coach at the University of Illinois, as scandals become more public and social media campaigns take on a life of their own, sophisticated companies, universities, government agencies, and NGO’s need to be able to quickly and confidentially conduct an internal investigation without fear of disclosure.

Here at Castañeda Trial Attorneys, conducting internal investigations is one of the most significant ways we help our clients evaluate and solve their problems. Whether it’s an internal investigation of alleged bribery, kickbacks, embezzlement, fraud, trade secrets theft, mismanagement/harassment, or the leak of highly confidential information, the reports our attorneys prepare are highly sensitive and require absolute confidentiality.

The KBR case reaffirms our ability to conduct internal investigations and draft reports that will guide our clients in maneuvering through complex and highly sensitive areas without a premature disclosure or the possibility of disclosure years later by an opponent in litigation. We want our clients to know that the timing and manner of disclosure of such internal investigation reports continues to remain in their hands.