D.C. Circuit Rejects Petition for Rehearing of ‘KBR’ Disclosure Case

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By Michael Greene

Sept. 2 — The U.S. Court of Appeals for the District of Columbia denied a petition for an en banc rehearing of a panel ruling that found that Kellogg Brown & Root was not required to disclose certain documents to a whistle-blower.

In a one-page order, the D.C. Circuit stated simply that not a single member of the court requested a vote on the petition. According to court rules, the court will not vote on whether to rehear the case “en banc unless a judge calls for a vote.”

Stephen M. Kohn, of Kohn, Kohn & Colapinto, LLP, who represents petitioner Harry Barko, said his client plans to appeal to the Supreme Court. Kohn called the decision a “major setback for independent compliance.” He added that it “poses a threat” to employees like Barko who contact compliance departments at companies with “inherent conflicts of interest.”

Jettisoning Precedent

On June 27, resolving a question about the confidentiality of communications with in-house attorneys, a three judge panel of the D.C. Circuit determined that KBR could withhold 89 documents relating to an internal KBR probe because they were protected by attorney-client privilege.

In the July 28 petition for en banc rehearing, Barko contended that the panel invented a new legal test for determining privileges in the corporate setting that conflicts with a long line of precedent. Specifically, he claimed that the panel “jettisoned the 30-year old ‘primary purpose' test in favor of its newly minted ‘one of the significant purposes' standard”.

District Court Order

D.C. Circuit judges Thomas Griffith, Brett Kavanaugh and Sri Srinivasan vacated an order by U.S. District Court for the District of Columbia Judge James Gwin, who ruled in March that attorney-client privilege did not apply because KBR had not conducted its investigation for the “primary purpose” of securing legal advice (12 CARE 353, 3/28/14).

“We are aware of no Supreme Court or court of appeals decision that has adopted a test of this kind in this context,” Kavanaugh wrote. “The District Court's novel approach to the attorney-client privilege would eliminate the attorney-client privilege for numerous communications that are made for both legal and business purpose and that heretofore have been covered by the attorney-client privilege.”

Instead of using the primary purpose test, Gwin should have determined whether obtaining or giving legal advice was “one of the significant purposes” of the internal probe, Kavanaugh wrote. The case offers “no serious dispute” that the transmission of legal advice was a significant purpose of the investigation, he concluded.

Whistle-blower Barko, who brought a False Claims Act lawsuit against KBR, had sought access to information concerning KBR's investigation into whether it and certain subcontractors maintained an inappropriate relationship that involved kickbacks while administering military contracts in Iraq.

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

The order denying the petition for a rehearing is available at http://www.bloomberglaw.com/public/document/In_re_Kellogg_Brown__Root_Inc_et_al_Docket_No_1405055_DC_Cir_Mar_/11.

Barko's petition is available at http://www.bloomberglaw.com/public/document/In_re_Kellogg_Brown__Root_Inc_et_al_Docket_No_1405055_DC_Cir_Mar_/12.