D.C. Circuit Issues Writ of Mandamus and Vacates Document Production Order in Closely Watched Internal Investigations Case
Earlier this year, the U.S. District Court for the District of Columbia held that privilege did not apply to a defense contractor’s internal investigation of alleged fraud because the majority of the work was conducted by non-attorneys, the internal investigation was undertaken in the normal course of business to ensure regulatory compliance, the attorneys in charge were in-house lawyers, and the internal investigation was not conducted to assist with the rendering of legal advice or in anticipation of litigation. On June 27, the U.S. Court of Appeals for the D.C. Circuit granted the contractor’s petition for writ of mandamus and vacated the district court’s document production order.
In its opinion, the Court of Appeals notes that the “District Court’s decision has generated substantial uncertainty about the scope of the attorney-client privilege in the business setting” and concludes that the district court’s decision is irreconcilable with Upjohn Co. v. United States, 449 U.S. 383 (1981): “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….In this case, the District Court denied the protection of the privilege to a company that had conducted just such an internal investigation.” Notably, the court found the contractor’s assertion of privilege in this case indistinguishable from Upjohn. “As in Upjohn, [the contractor] initiated an internal investigation to gather facts and ensure compliance with the law after being informed of potential misconduct. And as in Upjohn, [the contractor’s] investigation was conducted under the auspices of [its] in-house legal department, acting in its legal capacity. The same considerations that led the Court in Upjohn to uphold the corporation’s privilege claims apply here.” The opinion also addresses each of the district court’s reasons for distinguishing Upjohn and concludes that “none of those purported distinctions takes this case out from under Upjohn’s umbrella.”
Though the opinion provides some comfort to any business who conducts internal investigations, the fact that the issue even reached the appellate level provides a sober reminder of what can go wrong if investigations are not structured with privilege in mind. To this end, we have provided some suggestions in our forthcoming article, Ten Fundamentals For Enhancing Corporate Safety Culture While Minimizing Future Litigation Exposure, which will be posted under the “Articles” tab later this month.
