United States ex rel. Barko v. Halliburton Co.

4 F.Supp.3d 162

United States of America ex rel. Harry Barko, Plaintiff–Relator,

v.Halliburton Company et al., Defendants.

CASE NO. 1:05–CV–1276

United States District Court, District of Columbia.

Signed March 11, 2014

Anthony C. Munter, Price Benowitz, LLP, David K. Colapinto, Michael David Kohn, Stephen M. Kohn, Kohn, Kohn & Colapinto, LLP, Washington, DC, for Plaintiff.

Craig D. Margolis, Alden Lewis Atkins, Tirzah S. Lollar, Vinson & Elkins, LLP, John Martin Faust, Law Offices of John M. Faust, PLLC, John Randall Warden, U.S. Department of Justice, Washington, DC, for Defendant.

[Resolving Docs. 151 & 152]

OPINION & ORDER

JAMES S. GWIN, UNITED STATES DISTRICT JUDGE:

In its March 6, 2014 Opinion and Order, the Court granted Plaintiff–Relator Barko's motion to compel the production of 89 documents. The KBR Defendants had withheld the documents on the basis of attorney-client privilege or attorney work-product protection grounds.¹ In ordering the production, the Court found that these documents were ordinary business records and were created to satisfy United States defense contractor requirements. The Court found the documents were not created to obtain or receive legal advice. ²

The KBR Defendants now ask the Court to certify this issue for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) and to stay the March 6 Order pending appellate review.³ In the alternative, the KBR Defendants request that this Court stay its March 6 Order pending the filing and disposition of a petition for writ of mandamus to the U.S. Court of Appeals for the District of Columbia Circuit—or, at a minimum, until the D.C. Circuit rules on an emergency motion to stay pursuant to Federal Rule of Appellate Procedure 8(a).⁴ The KBR Defendants also ask the Court to seal its March 6 Opinion and Order.⁵

KBR's fear of producing the documents is understandable. Before being ordered to produce the documents for in camera review, KBR filed a motion for summary judgment and filed a statement of facts that KBR represented could not be disputed.⁶ But KBR's COBC business documents are replete with contrary evidence. In its motion for summary judgment, KBR makes factual representations directly opposite its own COBC reports.

A. Motion for Certification for Interlocutory Appeal

In granting a request for an interlocutory appeal, a district court must certify that the order involves “a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” ⁷ The Supreme Court in Mohawk Industries, Inc. v. Carpenter said that these conditions are “most likely to be satisfied when a privilege ruling involves a new legal question or is of special consequence.” ⁸

The Court finds that defendants fail to satisfy the high standard required for an interlocutory appeal. “Mere disagreement, even if vehement, with a court's ruling does not establish a substantial ground for difference of opinion sufficientto satisfy the statutory requirements for an interlocutory appeal.” ⁹

First, the KBR Defendants fail to show the order involves a “new legal question or is of special consequence.”¹⁰ The issue of whether the attorney-client privilege or the work product doctrine applies to documents created as part of an internal compliance investigation is not new or novel. ¹¹ Rather, as the Supreme Court stated in Upjohn Co. v. United States, the outcome in any particular circumstance must be determined on a “case-by-case basis” and depends on the particular circumstances of the case. ¹²

Moreover, the issue is not one of “special consequence.” This case concerns discrete issues related to a long-passed KBR contract and the administration of that contract. This Court's finding that the documents were not attorney client privileged or work product privileged was not a close question. But even if the issue had been difficult, attorney client privilege decisions are fact-dependent. Nothing makes review of the privilege decision especially important to other cases. Each attorney-client privilege ruling turns on its own facts. That KBR may be embarrassed by what its own business records show does not make this Court's ruling of “special importance.”

Second, there are not substantial grounds for difference of opinion. The most important documents are memoranda from an investigator to members of KBR's general counsel's office. The investigators prepared the documents to comply with government contractor regulations, specifically the Department of Defense regulation requiring contractors to discover and report improper conduct regarding Government contracts.¹³ Nothing suggests the reports were prepared to obtain legal advice. Instead, the reports were prepared to try to comply with KBR's obligation to report improper conduct to the Department of Defense.

At the end of the investigation, the investigator drafted a final memorandum and submitted it to the General Counsel's office. But the memorandum does not request legal advice, and it does not identify possible legal issues for further review. Instead, the memorandum was created to help KBR decide whether it needed to report kickbacks or contractor fraud to the United States.

Other documents include e-mails asking for updates on investigations of certain cases and e-mails discussing hotline calls.

In none of the documents is legal advice requested or offered. Because no legal advice was requested or offered, the Court concluded that the primary purpose of the investigations was to comply with federal defense contractor regulations, not to secure legal advice. The Court is confident that other courts conducting a similar in camera review would come to the same conclusion.

The KBR Defendants represent that two other federal courts found other COBC investigation documents were privileged. However, this is not the case.

The Federal Court of Claims order did not hold that COBC investigation documents are always privileged. Rather, that court both granted in part but also denied in part the KBR Defendants' motion for a protective order. The Federal Court of Claims held that the KBR Defendants failed to establish that the attorney-client privilege or the work product privilege applied to some of the documents at issue. Consistent with this Court's ruling, the Federal Court of Claims ordered the production of documents produced for “purposes of compliance.” ¹⁴

KBR also mis-characterizes the other case that it relies upon.¹⁵Mazon was a criminal case where a criminal defendant subpoenaed KBR records. In response to the subpoena, KBR argued Mazon's document requests: “are duplicative of material previously provided by KBR to the government and made available to Mazon in discovery, and are otherwise unreasonable and oppressive. Moreover, Mazon has made no showing of relevance, specificity, or admissibility of the documents he seeks.” ¹⁶ KBR additionally argued that the burden of production outweighed any relevance in light of the “substantial volume of documents previously produced by KBR and provided to [Mazon].”

While KBR offered an additional throwaway argument that some documents might be privileged, KBR mostly said it had already produced the documents and the criminal defendant should get the documents from the prosecutor. Apparently Mazon filed no opposition to KBR's motion to quash. The district court's one page order gives no indication it dealt with the same issue presented to this Court. More important, attorney-client privilege determinations rise and fall upon the specific documents and the circumstances of the documents production.

Finally, the Court finds that if the interlocutory appeal is permitted, it would prolong rather than hasten the termination of the litigation. If the Court of Appeals disagrees with Court's order, it can “remedy the improper disclosure of privileged material in the same way they remedy a host of other erroneous evidentiary rulings: by vacating an adverse judgment and remanding for a new trial in which the protected material and its fruits are excluded from evidence.” ¹⁷ To pause litigation so close to the end of discovery and so near the deadline for summary judgment briefing would waste judicial resources.

II

In addition, a substantial question exists whether KBR waived any attorney-client privilege claims or work-product protection when KBR put the contents of the COBC investigation at issue.

KBR filed its motion for summary judgment before this Court ordered the COBC documents be produced for in camera inspection. With the motion, KBR attached a “statement of material facts as to which there is no genuine dispute.” Neither the motion for summary judgment nor the statement of undisputed material facts fairly reflect the evidence produced or the findings of KBR's own internal investigation.

But more important to the waiver issue, the KBR Defendants themselves put the COBC documents at issue when they argued that the COBC documents showed no evidence of improper conduct. With the KBR Defendants' motion for summary judgment, the Defendants said,

When a COBC investigation reveals reasonable grounds to believe that a violation of 41 U.S.C. §§ 51–58 (the “Anti–Kickback Act”) may have occurred requiring disclosure to the government under FAR 52.203–7, KBR makes such disclosures.... [W]ith respect to the allegations raised by Mr. Barko, KBR represents that KBR did perform COBC investigations related to D & P and Mr. Gerlach, and made no reports to the Government following those investigations.¹⁸

“Courts need not allow a claim of [attorney-client or work-product] privilege when the party claiming the privilege seeks to use it in a way that is not consistent with the purpose of the privilege.” ¹⁹

The KBR Defendants represented that 1) as a matter of policy, KBR reports possible violations of law when a COBC investigation discovers reasonable grounds to believe...