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In a per curiam, unpublished decision in In re Fluor Intercontinental, Inc., issued on March 25, 2020, the Fourth Circuit has provided some valuable guidance concerning how companies may avoid waivers of the attorney-client privilege when making disclosures to the government after privileged internal investigations. While the decision is non-precedential even within the Fourth Circuit, it reinforces the legal and policy reasons for allowing such disclosures to occur without mandating waiver of underlying privileged communications.

Fluor Intercontinental, Inc. sought a writ of mandamus from the Fourth Circuit to reverse a district court’s ruling that Fluor had waived the attorney-client privilege when it made disclosures to the government pursuant to the Mandatory Disclosure Rule (48 C.F.R. § 52.203-13) that applies to federal government contractors. The district court’s determination turned on its finding that certain statements in Fluor’s written disclosure constituted “conclusions which only a lawyer is qualified to make.” In granting the writ and vacating the district court’s ruling, the Fourth Circuit held that “the district court’s conclusion was clearly and indisputably incorrect.”

The Fourth Circuit explained that a waiver cannot be inferred “merely because a party’s disclosure covers ‘the same topic’ as that on which it had sought legal advice.” The correct test, rather, is whether “there has been disclosure of protected communications.”

In expounding upon these principles, the court drew a critical distinction between disclosures that “quote[] privileged communications or summarize[] them in substance and format,” and disclosures that “do no more than describe . . . general conclusions about the propriety” of the conduct at issue. Fluor’s disclosures fell into the latter category, and the fact that “Fluor’s statements were based on the advice of counsel” was “clearly and indisputably insufficient to show waiver.”

The court buttressed its ruling on public policy grounds, citing its concern that “the district court’s decision has potentially far-reaching consequences for companies subject to [the Mandatory Disclosure Rule] and other similar disclosure requirements.” The court explained: “We struggle to envision how any company could disclose credible evidence of unlawful activity without also disclosing its conclusions, often based on the advice of its counsel, that such activity has occurred. More likely, companies would err on the side of making vague or incomplete disclosures, a result patently at odds with the policy objectives of the regulatory disclosure regime at issue in this case.”

While the Fourth Circuit’s decision in Fluor arose in the context of the Mandatory Disclosure Rule, its reasoning extends to voluntary corporate disclosures pursuant to the U.S. Department of Justice’s Corporate Enforcement Policies—including, among others, those that relate to the Foreign Corrupt Practices Act and the False Claims Act—which encourage and reward such disclosures, for two reasons. First, the court’s articulation of the correct standard for waiver determinations in the corporate disclosure context was in no way limited to mandatory disclosures. Second, its public-policy rationale referred not only to the Mandatory Disclosure Rule but to “other similar disclosure requirements.” DOJ’s policies strongly encouraging corporate self-reporting are “similar” to the mandatory-disclosure regime that applies to government contractors.

Thus, in either setting, companies disclosing employee wrongdoing to the government based on the results of privileged internal investigations would be well advised to couch those disclosures in terms of “general conclusions” and avoid “quot[ing] privileged communications or summariz[ing] them in substance and format,” There is, of course, a wide gulf between those two extremes, and thus corporate counsel must continue to tread carefully in walking the line between adequate disclosure and waiver of privilege.

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Photo of Stephen M. Byers Stephen M. Byers

Stephen M. Byers is a partner in the firm’s White Collar & Regulatory Enforcement Group and serves on the group’s steering committee. He is also a member of the firm’s Government Contracts Group and E-Discovery & Information Management Group. Mr. Byers’s practice involves…

Stephen M. Byers is a partner in the firm’s White Collar & Regulatory Enforcement Group and serves on the group’s steering committee. He is also a member of the firm’s Government Contracts Group and E-Discovery & Information Management Group. Mr. Byers’s practice involves counseling and representation of corporate and individual clients in all phases of white collar criminal and related civil matters, including: internal corporate investigations; federal grand jury, inspector general, civil enforcement and congressional investigations; and trials and appeals.

Mr. Byers’s practice focuses on matters involving procurement fraud, health care fraud and abuse, trade secrets theft, foreign bribery, computer crimes and cybersecurity, and antitrust conspiracies. He has extensive experience with the federal False Claims Act and qui tam litigation, the Foreign Corrupt Practices Act, the Economic Espionage Act, and the Computer Fraud and Abuse Act. In addition to defense of government investigations and prosecutions, Mr. Byers has represented corporate victims of trade secrets theft, cybercrime, and other offenses. For example, he represented a Fortune 100 U.S. company in parallel civil and criminal proceedings that resulted in a $275 million criminal restitution order against a foreign competitor upon its conviction for trade secrets theft.

Photo of Brian Tully McLaughlin Brian Tully McLaughlin

Brian Tully McLaughlin is a partner in the Government Contracts Group in Washington, D.C. and co-chair of the False Claims Act Practice. Tully’s practice focuses on False Claims Act investigations and litigation, particularly trial and appellate work, as well as litigation of a…

Brian Tully McLaughlin is a partner in the Government Contracts Group in Washington, D.C. and co-chair of the False Claims Act Practice. Tully’s practice focuses on False Claims Act investigations and litigation, particularly trial and appellate work, as well as litigation of a variety of complex claims, disputes, and recovery matters. Tully’s False Claims Act experience spans procurement fraud, healthcare fraud, defense industry fraud, and more. He conducts internal investigations and represents clients in government investigations who are facing fraud or False Claims Act allegations. Tully has successfully litigated False Claims Act cases through trial and appeal, both those brought by whistleblowers / qui tam relators and the Department of Justice alike. He also focuses on affirmative claims recovery matters, analyzing potential claims and changes, counseling clients, and representing government contractors, including subcontractors, in claims and disputes proceedings before administrative boards of contract appeals and the Court of Federal Claims, as well as in international arbitration. His claims recovery experience includes unprecedented damages and fee awards. Tully has appeared and tried cases before judges and juries in federal district courts, state courts, and administrative boards of contract appeals, and he has argued successful appeals before the D.C. Circuit, the Federal Circuit, and the Fourth and Seventh Circuits.