THE UNITED STATES DISTRICT COURT FOR THE...

THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA )ex rel. Harry Barko, )

)Plaintiff, )

)v. ) Civ. Action No. 1:05-CV-1276 (JSG)

)HALLIBURTON COMPANY, et al., )

)Defendants. )

)

MOTION FOR RECONSIDERATION, TO CERTIFY INTERLOCUTORY APPEALUNDER 28 U.S.C. § 1292(b), AND FOR STAY PENDING INTERLOCUTORY APPEAL

OR MANDAMUS REVIEW

November 21, 2014

Craig D. Margolis (DC Bar No. 454783)Tirzah S. Lollar (DC Bar No. 497295)VINSON & ELKINS LLP2200 Pennsylvania Avenue, N.W., Suite 500-WWashington, D.C. 20037Telephone: 202.639.6500Facsimile: 202.639.6604

John M. Faust (DC Bar No. 433553)Law Office of John M. Faust, PLLC1325 G Street, N.W., Suite 500Washington, D.C. 20005Telephone: 202.449.7707

Attorneys for KBR Defendants

Case 1:05-cv-01276-JSG Document 208 Filed 11/21/14 of 25

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The KBR Defendants (“KBR”) respectfully submit this motion for reconsideration of this

Court’s November 20, 2014 Order [Dkt. 205] (“November 20 Order” or “11/20 Order”)

requiring production of KBR’s complete investigative file—comprising the 89 Code of Business

Conduct (“COBC”) documents sought in Relator’s motion to compel, and which the court of

appeals held were privileged. Alternatively, KBR requests that the Court certify the November

20 Order for interlocutory appeal under 28 U.S.C. § 1292(b), and stay the Order pending

disposition of a petition for leave to appeal and any subsequent appellate proceedings in the U.S.

Court of Appeals for the District of Columbia Circuit. If the Court grants neither of these

requests, KBR moves that the Court stay its November 20 Order pending disposition of a petition

for a writ of mandamus, which KBR will promptly file with the D.C. Circuit.1

If the Court does not enter a stay, KBR asks that at the very least the Court postpone the

deadline for producing the 89 COBC documents until 10 days after the Court rules on this

motion. If the Court denies a stay, KBR will seek an emergency stay from the D.C. Circuit. The

D.C. Circuit’s rules generally require emergency motions to be filed “at least 7 days before the

date by which court action is necessary.” D.C. Cir. R. 27(f) (requiring counsel to satisfy this

deadline or “explain why” it could not be met). The November 25, 2014 deadline this Court has

set for producing the COBC documents makes it physically impossible for KBR to comply with

this instruction. A brief postponement of the production deadline would avoid unnecessarily

interfering with the D.C. Circuit’s standard operating procedures.

Introduction

The D.C. Circuit has already once granted mandamus relief in this case, concluding that

this Court committed “clear legal error” by holding that the 89 COBC documents at issue were

1 Relator’s counsel has informed KBR’s counsel that Relator opposes this motion.


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not protected by attorney-client privilege because the investigations were undertaken to comply

with Department of Defense regulations. In re Kellogg Brown & Root, Inc., 756 F.3d 754, 762

(D.C. Cir. 2014). In its November 20 Order, this Court clearly erred again by holding that

“fairness dictates that [the COBC documents] be produced so that [Relator] be able to examine

the documents to challenge whether the withheld documents actually support the inferences that

KBR attorneys suggested to this Court.” 11/20 Order 23.

In the first instance, KBR contests this Court’s conclusion that KBR’s prior assertions of

indisputably non-privileged facts gave rise to an implied waiver because they implicitly

conveyed the “message” that its COBC documents “show nothing” and “contain no reasonable

grounds to believe a kickback occurred.” Id. at 17. The Court’s implied-waiver determination

squarely conflicts with the D.C. Circuit’s holding in United States v. White, 887 F.2d 267, 271

(D.C. Cir. 1989), that finding implied waiver is inappropriate “[w]here a defendant neither

reveals substantive information, nor prejudices the [opposing party’s] case, nor misleads a court

by relying on an incomplete disclosure.”

The Court’s mistaken belief that KBR has requested an inference relating to its COBC

investigation has nevertheless been expressly disavowed by KBR, which purportedly has put the

COBC documents “at issue.” KBR has made it crystal clear that “it is not ask[ing] th[e] [c]ourt

to draw [such] inference[s].” KBR Position Paper 11 [Dkt. 181] (internal quotation marks

omitted). Today, KBR is reiterating its disavowal of those allegedly requested inferences by

submitting amended summary-judgment filings that omit the language discussed in this Court’s

November 20 Order. As counseled by White, there is no “implied waiver” where, as here, there

is no “prejudice[]”—Relator will not need to respond to or even address KBR’s COBC

investigation in its summary-judgment opposition. White, 887 F.2d at 271. In any event, this


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Court has already suggested its disagreement with the allegedly requested inferences based on its

in camera review of the documents at issue. See, e.g., 3/6/14 Order 2-3 [Dkt. 150] (providing

the Court’s characterization of the COBC documents’ contents). Thus, “fairness” does not

demand that Relator be given access to KBR’s privileged investigation files; rather, Relator

hopes to base his affirmative case against KBR on the COBC documents. 11/20 Order 23.

Considerations of “fairness” cannot “dictate[]” the disclosure of documents to “[en]able . . .

challenge[s]” regarding an issue that is not in dispute. Id. In other words, KBR has made clear

that it will not use the COBC documents as a “sword”; instead, it is Relator who is attempting to

do so. Id. at 8.

Because the Court’s extremely broad disclosure order requiring production of all 89

COBC documents at issue violates the well established rule that “courts ‘must impose a waiver

no broader than needed to ensure the fairness of the proceedings before [them],’” the Court

should reconsider and vacate its disclosure order. In re Lott, 424 F.3d 446, 453 (6th Cir. 2005)

(quoting Bittaker v. Woodford, 331 F.3d 715, 720 (9th Cir. 2003) (en banc) (Kozinski, J.)).

Significantly, the Second Circuit has previously granted mandamus relief in a case where the

district court adopted the same “inexplicable” rationale on which the Court relied here—i.e., that

it would be “unfairly prejudic[ial]” to deny a party “access to . . . privileged information that

might ‘prove the negative’” of a contention that the privilege holder had expressly “renounced.”

In re Sims, 534 F.3d 117, 140 (2d Cir. 2008). Reconsideration is necessary to correct this “clear

legal error.” In re Kellogg Brown & Root, 756 F.3d at 762.

Alternatively, the Court should certify the November 20 Order for interlocutory appeal

under 28 U.S.C. § 1292(b). See Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 110-11 (2009)

(noting that a district court can certify a discovery order denying a privilege claim for


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interlocutory appeal under § 1292(b)). The Court should also stay that Order pending the D.C.

Circuit’s consideration and disposition of an interlocutory appeal under § 1292(b) or a request

for mandamus relief—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) that KBR will file if this Court denies

a stay. Permitting KBR to seek appellate review of this Court’s November 20 Order before it is

required to produce the privileged COBC documents would avoid the potentially grave

consequences of a post-disclosure appellate reversal. Because Relator’s entire litigation strategy

here turns on obtaining the privileged COBC documents, the remedy for an erroneously

compelled disclosure may well be dismissing Relator’s claims with prejudice or disqualifying

Relator’s counsel—remedies that would entail substantial waste of the parties’ and the Court’s

time and resources.

The Court Should Reconsider Its November 20 Order

As this Court’s November 20 Order acknowledges, implied-waiver determinations

depend on “‘considerations of fairness.’” 11/20 Order 9 (quoting John Doe Co. v. United States,

350 F.3d 299, 302 (2d Cir. 2003)). Therefore, it is well established that a “court must impose [an

implied] waiver no broader than needed to ensure the fairness of the proceedings before it.”

Bittaker, 331 F.3d at 720; see also, e.g., In re Lott, 424 F.3d at 453 (“Implied waivers are

consistently construed narrowly. Courts ‘must impose a waiver no broader than needed to

ensure the fairness of the proceedings before it.’” (quoting Bittaker, 331 F.3d at 720)); Scheurer

Hosp. v. Lancaster Pollard & Co., No. 12-CV-11536, 2012 WL 5471135, at *5 (E.D. Mich.

Nov. 9, 2012) (“Where, as here, a waiver of attorney-client privilege is alleged, courts must

impose a waiver (if any) no broader than needed to ensure the fairness of the proceedings before

it.”); United States v. Lewis, 824 F. Supp. 2d 169, 172 (D.D.C. 2011) (disclosure order “must be


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tailored to the specific issues” giving rise to implied waiver); United States v. Marks, 764 F.

Supp. 2d 585, 587 (W.D.N.Y. 2011) (noting that implied waiver was “not unlimited” and was

instead “limited to those issues and matters reasonably relating to the issues posed by the Second

Circuit”); Minnebea Co. v. Papst, 355 F. Supp. 2d 518, 525 (D.D.C. 2005) (refusing to impose

implied waiver broader than “necessary to permit the jury” to evaluate party’s waiver-inducing

claim).

It naturally follows that “the holder of [a] privilege may preserve the confidentiality of

the privileged communications by choosing to abandon the claim that gives rise to the waiver

condition.” Bittaker, 331 F.3d at 721. If a party abandons a claim that would otherwise give rise

to waiver, the party is no longer putting its privileged documents at issue, so fairness does not

require that the other party have access to the documents because the other party no longer has

any need to review the documents in order to rebut the abandoned claim.

Contrary to the Court’s contention, Bittaker’s discussion of claim abandonment is not

limited to “causes of action.” 11/20 Order 22. Bittaker makes clear that the assertion of “‘a

claim or defense’” can give rise to an implied waiver. Bittaker, 331 F.3d at 720 (emphasis

added) (quoting Christopher B. Mueller & Laird C. Kirkpatrick, Evidence: Practice Under the

Rules § 5.30, at 549 (2d ed. 1999)). Although Bittaker refers to “abandon[ing] [a] claim,” 331

F.3d at 721, that is undoubtedly because the privilege holder in that case was a habeas petitioner

asserting an ineffective-assistance-of-counsel claim, see id. at 716-17. There is no reason for

holding that causes of action and defenses can both give rise to implied waiver and that

abandonment of causes of action can avoid such waivers, but abandonment of defenses cannot

do so. And there is nothing in Bittaker (or any other case of which we are aware) suggesting that

to avoid waiver resulting from putting privileged communications “at issue,” a party must


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entirely forfeit any defense whatsoever to a plaintiff’s claims. Cf. 11/20 Order 22 (“Bittaker . . .

would only suggest that KBR can default instead of disclosing the documents it has otherwise

waived privilege over.”). Instead, consistent with the need to construe implied waiver narrowly,

the defendant forgoes only a defense premised on the privileged communications “at issue.”

Here, this Court has concluded that KBR implicitly mounted a defense based on the

indisputably non-privileged facts that (1) KBR “abides by [its legal] obligation” to report to the

government when it has “reasonable grounds to believe that a kickback or fraud ha[s] occurred,”

(2) “KBR investigated the alleged kickbacks that are part of [Relator’s] complaint,” and (3)

“after the investigation of the allegations in this case, KBR made no report to the Government

about an alleged kickback or fraud.” 11/20 Order 17; see also 2 Paul R. Rice, Attorney-Client

Privilege in the United States § 9:29 (2013) (explaining that only “the content of the . . .

communication” is protected by attorney-client privilege; “[t]he details of the communication”—

“the who, what, where and why”—are not privileged). Under Bittaker, as well as the basic logic

underlying the implied-waiver doctrine, KBR must be given an opportunity to “preserve the

confidentiality of [its] privileged communications” by withdrawing this alleged defense,

Bittaker, 331 F.3d at 721—a defense that KBR has in fact already expressly disclaimed, see, e.g.,

KBR Position Paper 11.2

A contrary holding would make no sense. The Court’s sole rationale for compelling

disclosure of the COBC documents is that “fairness dictates that all the documents in question be

produced so that [Relator] be able to examine the documents to challenge whether the withheld

documents actually support the inferences that KBR attorneys suggested to this Court.” 11/20

2 Indeed, KBR has never itself suggested that it is advancing a COBC-related “defense.” Unlikean advice-of-counsel defense—the archetypal “at issue” waiver case—here KBR is not relyingon its COBC documents or investigation. Its defense is simple: Relator has not adducedevidence of fraud, and KBR’s claims were not false.


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Order 23; see also id. at 25 (noting that Court’s Rule 30(b)(6) waiver analysis was “effectively

the same as the one the Court has already gone through regarding at-issue waiver”). KBR,

however, has explicitly disclaimed any intent to seek or rely on such inferences. See, e.g., KBR

Position Paper 11. To make what was already clear even clearer, KBR has today submitted

revised summary-judgment filings that excise all language that could even suggest (however

mistakenly) that KBR is seeking any COBC-related inference whatsoever that could give rise to

an implied waiver.

There are thus no requested “inferences” for Relator “to challenge.” 11/20 Order 23.

The issue is entirely moot. Because Relator has absolutely no need “to examine the [COBC]

documents to challenge whether the withheld documents actually support the inferences that

KBR attorneys [allegedly] suggested,” considerations of “fairness” do not “dictate[]” that the

documents be produced. Id. Furthermore, there has never been any “prejudice[]” to Relator. Id.

at 20. Relator has not yet been required to respond to KBR’s summary-judgment motion; this

Court has reviewed the COBC documents in camera and suggested that it does not agree with

the purported inference KBR never intended to request, see, e.g., 3/6/14 Order 2-3; and KBR has

clearly disavowed seeking any such inference. In light of all this, the Court’s production order

violates the basic rule that a “court must impose a waiver no broader than needed to ensure the

fairness of the proceedings before it.” Bittaker, 331 F.3d at 720.

The Court’s decision also conflicts with other cases according parties the opportunity to

avoid implied waivers by withdrawing potentially waiver-producing positions, regardless of

whether those positions might be characterized as “claims,” “defenses,” or something else. For

example, Koumoulis v. Independent Financial Marketing Group, Inc., 295 F.R.D. 28 (E.D.N.Y.

2013), aff’d, --- F. Supp. 2d ---, 2014 WL 223173 (E.D.N.Y. Jan. 21, 2014), recognized that


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defendants could avoid an implied waiver by withdrawing their affirmative defense based on

their internal investigations of the alleged acts of employment discrimination. Id. at 48

(“Defendants would need to choose whether to assert the affirmative defense or the privilege, but

could not preserve both by selectively omitting certain communications.”); see also id. at 42

(“[A] party may withdraw a claim or defense in order to preserve a privilege that would

otherwise be forfeited.” (emphasis added)). Similarly, Verinata Health, Inc. v. Sequenom, Inc.,

No. C 12-865 SI, 2014 WL 2600499, at *3 (N.D. Cal. June 10, 2014), vacated in part on other

grounds, 2014 WL 4076319 (N.D. Cal. Aug. 18, 2014), held that a party could avoid impliedly

waiving privilege over communications between its counsel and the party’s former employee,

whom the party intended to present as “a hybrid fact and expert witness” on patent invalidity, by

“disavow[ing] [its] use” of the former employee’s testimony. Courts also have held that parties

making attorney-disqualification motions supported by privileged documents tendered for in

camera review can avoid privilege waiver by withdrawing the privileged documents and instead

relying solely on non-privileged information to support their motions. See Radware, Ltd. v. A10

Networks, Inc., No. C-13-2021-RMW, 2014 WL 116428, at *3 (N.D. Cal. Jan. 10, 2014)

(offering the party seeking disqualification the choice of either “withdraw[ing] the privileged

documents” or submitting those documents to a subset of the attorneys representing the opposing

party); Oracle Am., Inc. v. Innovative Tech. Distribs., LLC, No. 11-cv-1043-LHK, 2011 WL

2559825, at *2 (N.D. Cal. June 28, 2011) (“Oracle may choose to abandon its request for the

Court to consider the allegedly privileged documents in connection with Oracle's motion to

disqualify counsel and thereby preserve the privilege.”).

The same principle has been applied to other privileges. For example, courts (including

the D.C. Circuit) have recognized that “a plaintiff may withdraw or formally abandon all claims


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for emotional distress in order to avoid forfeiting his psychotherapist-patient privilege.” In re

Sims, 534 F.3d at 134, 142 (granting mandamus relief where district court violated this

principle); see also Koch v. Cox, 489 F.3d 384, 388 (D.C. Cir. 2007) (holding that district court

erred by ordering disclosure of psychotherapist-patient privileged information where plaintiff

had “withdr[awn] any claim to damages for emotional distress”). Indeed, in granting mandamus

relief, In re Sims derided as “inexplicable” the precise rationale on which the Court relied here—

i.e., that it would be “unfairly prejudic[ial]” to deny a party “access to . . . privileged information

that might ‘prove the negative’” of a contention that the privilege holder had expressly

“renounced.” 534 F.3d at 140; cf. 11/20 Order 23 (“[F]airness dictates that all the documents in

question be produced so that [Relator] be able to examine the documents to challenge whether

the withheld documents actually support the inferences that KBR attorneys suggested to this

Court.”).

Similarly here, KBR’s express disavowal of any reliance on the findings of its COBC

investigations into the allegations at issue eliminates any question of waiver. The Court’s

decision to the contrary conflicts with decisions from other courts and is in no way supported by

the fairness considerations underlying the implied-waiver doctrine. As a result, the Court should

reconsider and vacate its November 20 Order. See National Ctr. for Mfg. Scis. v. Dep’t of

Defense, 199 F.3d 507, 511 (D.C. Cir. 2000) (reconsideration is appropriate to correct “clear

errors of law”).

The Court Should Certify Its Order for Interlocutory Appeal Under 28 U.S.C. § 1292(b)

Alternatively, KBR moves the Court to certify the November 20 Order for immediate

appeal under 28 U.S.C. § 1292(b). The Supreme Court has specifically instructed that where a

privilege ruling rests on “a new legal question or is of special consequence,” “district courts


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should not hesitate to certify an interlocutory appeal [under § 1292(b)].” Mohawk, 558 U.S. at

111 (emphasis added). Section 1292(b) authorizes a district court to certify for interlocutory

appeal—and the court of appeals, in its discretion, to accept—“an order not otherwise

appealable,” if the district court is “of the opinion that such 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.” 28

U.S.C. § 1292(b). The Court’s November 20 Order satisfies each of these requirements and falls

squarely in the category of privilege orders identified by Mohawk as warranting § 1292(b)

certification.

First, the Order involves two controlling questions of law:

(1) Whether the pre-deposition review of COBC documents by KBR’s Federal Rule of

Civil Procedure 30(b)(6) witness, KBR’s questioning of that witness regarding non-privileged

facts, and KBR’s discussion of the COBC documents in its summary-judgment and motion-to-

compel filings provide grounds for holding that KBR waived privilege with respect to the COBC

documents.

(2) Whether this Court erred by requiring disclosure of attorney-client privileged and

work-product protected documents to enable Relator to challenge certain factual inferences

allegedly suggested by KBR, where KBR has expressly disclaimed any intent to seek or rely on

such inferences.

These questions are “controlling” within the meaning of § 1292(b) because if the D.C.

Circuit disagrees with this Court on the answer to either of these questions, the Court’s

disclosure order cannot stand, for the Court expressly rejected Relator’s other waiver claims. See

11/20 Order 6 (“[Relator’s] argument regarding the DCIS subpoena fails . . . .”); see also id. at


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26-29 (rejecting Relator’s crime-fraud argument). Furthermore, given the central role that the

COBC documents are certain to play in Relator’s prosecution of his claims, see infra p. 14, a

post-judgment appellate decision disagreeing with this Court’s disclosure ruling will not be able

to dismiss that ruling as harmless error. Instead, the D.C. Circuit would be required to “vacat[e]

[any] adverse judgment” against KBR and “remand[] for a new trial in which the protected

material and its fruits are excluded from evidence.” Mohawk Indus., 558 U.S. at 109. Although

not a prerequisite for § 1292(b) certification, “[t]here is no doubt that a question is ‘controlling’”

where, as here, “its incorrect disposition would require reversal of a final judgment.” 16 Charles

Alan Wright et al., Federal Practice and Procedure § 3930 (3d ed. 2014). Indeed, given that

Relator apparently hopes to base his case entirely on privileged COBC documents that he should

never have received, it may not be possible fully to exclude the “fruits” of the error from

evidence, leaving the possibility for other more serious post-judgment remedies such as

disqualification of counsel or dismissal with prejudice. See infra pp. 18-19; see also Wright et

al., supra, § 3930 (noting that a question should be viewed as “controlling” where, as here,

“interlocutory reversal might save time for the district court, and time and expense for the

litigants”).

Second, “substantial ground for difference of opinion” exists with respect to each of

these questions. 28 U.S.C. § 1292(b). The Court’s waiver determination rests exclusively on its

conclusion that KBR implicitly requested the inference that KBR’s COBC documents “show

nothing” and “contain no reasonable grounds to believe a kickback occurred.” 11/20 Order 17;

see also id. at 25 (stating that Court’s Rule 30(b)(6) “analysis is effectively the same as the one

the Court has already gone through regarding at-issue waiver”). According to the Court, KBR

impliedly waived privilege by asking Chris Heinrich questions regarding, and then summarizing


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in court filings, the following non-privileged facts: (1) “KBR abides by [its] obligation” to make

reports to the government when it “has reasonable grounds to believe that a kickback or fraud

ha[s] occurred”; (2) “KBR investigated the alleged kickbacks that are part of [Relator’s]

complaint”; and (3) “after the investigation of the allegations in this case, KBR made no report to

the Government about an alleged kickback or fraud.” Id. at 17. Although this Court concluded

otherwise, KBR has a substantial argument that the Court’s decision violates the D.C. Circuit’s

holding in White, 887 F.2d at 271, that finding implied waiver is inappropriate “[w]here a

defendant neither reveals substantive information, nor prejudices the [opposing party’s] case, nor

misleads a court by relying on an incomplete disclosure.”

With respect to Heinrich’s deposition testimony, the Court’s analysis of this issue is not

only “effectively the same as,” and thus rises or falls with, the Court’s flawed at-issue waiver

analysis, 11/20 Order 25; it also disregards KBR’s careful efforts to protect privilege at the

deposition. KBR consistently objected when Relator’s counsel posed questions implicating

privileged information. See, e.g., Heinrich Dep. 54:2-21, 57:18-58:2, 87:1-15, 109:5-20,

110:11-22, 116:14-117:10 (Ex. A). KBR counsel took extra steps specifically to avoid waiver at

this deposition by instructing Heinrich not to answer questions even as to privileged aspects of

the COBC investigation that were already known to Relator through his own personal

involvement. Id. at 58:3-15; see also Heinrich Dep. Errata Sheet 1 (Ex. B). Questions posed to

Heinrich by KBR counsel were limited to addressing KBR’s general policies and procedures,

and the non-privileged facts of this case. See, e.g., Heinrich Dep. 120-156 (describing KBR’s

general COBC and non-COBC audit practices and reporting requirements under the Federal

Acquisition Regulation (“FAR”)); 161-165 (describing non-privileged factual circumstances

relating to the COBC tips, the existence of investigation, and the absence of self-reporting


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pursuant to the FAR). Furthermore, Heinrich’s review of the COBC files prior to his deposition

was not done for the purpose of providing testimony about privileged materials contained

therein, as was made abundantly clear at the deposition. Id. at 75:6-76:6 (“[W]e would not

concede that [any review of COBC documents] was for the purpose of refreshing recollection so

that he could testify because we have always consistently taken the position that those reports are

subject to the company’s attorney-client privilege and attorney work product…. [W]e’re also not

going to concede that he reviewed it for the purpose of his testimony here today.”).

As explained above in the section requesting reconsideration, see supra pp. 4-9, the

second controlling question of law raised by the Court’s November 20 Order is also

substantial—and, indeed, dispositive. Contrary to this Court’s decision, considerations of

“fairness” simply cannot “dictate[]” the disclosure of documents to “[en]able” Relator “to

challenge . . . inferences” that KBR does not seek and has expressly disclaimed. 11/20 Order 23.

At a minimum, the inconsistency between this Court’s November 20 Order and the above-cited

case law permitting parties to avoid implied waivers by withdrawing allegedly waiver-producing

positions warrants § 1292(b) certification. See, e.g., APCC Servs., Inc. v. Sprint Commc’ns Co.,

L.P., 297 F. Supp. 2d 90, 97-98 (D.D.C. 2003) (“A substantial ground for dispute . . . exists

where a court’s challenged decision conflicts with decisions of several other courts.”); 2 Fed.

Proc., L. Ed. § 3:218 (2014) (substantial ground for difference of opinion exists where courts

“are in dispute on the question and the court of appeals of the circuit has not spoken on the

point”); accord City Stores Co. v. Lerner Shops of D.C., Inc., 410 F.2d 1010, 1012 (D.C. Cir.

1969).

Significantly, the Court’s resolution of the two substantial, controlling questions of law

presented by the Court’s November 20 Order is both novel and “of special consequence.”


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Mohawk Indus., 558 U.S. at 110-11. A wide range of legal contentions—from Faragher/Ellerth

affirmative defenses in employment-discrimination cases, see Koumoulis, 295 F.R.D. at 41, to

“claims for emotional distress,” In re Sims, 534 F.3d at 134—might give rise to implied privilege

waivers. Parties will be unable to count on privilege protection if courts too readily find that

parties have made waiver-producing contentions, and then do not afford the parties an

opportunity to withdraw the contentions to avoid waiver. The uncertainty that this Court’s

decision threatens to create is untenable, for as the Supreme Court has recognized, “[a]n

uncertain privilege . . . is little better than no privilege at all.” Upjohn Co. v. United States, 449

U.S. 383, 393 (1981).

Third, unlike more routine discovery disputes, resolution of the current privilege issue

would “materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).

Relator has deliberately chosen to forgo meaningful fact discovery in favor of pursuing KBR’s

privileged COBC documents. He has conducted only three depositions, two of which were of

Federal Rule of Civil Procedure 30(b)(6) witnesses designated by KBR, and he admitted at his

own deposition that he has virtually no evidence to support his allegations. Ex. 1, Mot. for

Summ. J. (Mr. Barko’s Admitted Lack of Personal Knowledge) [Dkt. 136-2]. Rather than

building his own case, Relator is hoping to build his case entirely based on KBR’s COBC

investigations. Because Relator’s case turns in large measure on whether KBR’s COBC

documents are subject to disclosure, obtaining prompt appellate review of this issue will

materially advance the resolution of this litigation. Courts in this Circuit have found that an

issue satisfies the “material advancement” prong where reversal of the district court’s resolution

of a privilege issue after trial would require “the parties . . . to undertake another round of

discovery.” Howard v. Office of Chief Admin. Officer of U.S. House of Representatives, 840 F.


15

Supp. 2d 52, 57 (D.D.C. 2012). By contrast, as explained below, see infra pp. 18-19, postponing

appellate review here raises the possibility of later litigation to determine the “fruits” of

erroneously compelled disclosures. See Mohawk, 558 U.S. at 109. As discussed below, see

infra pp. 18-19, this will be no small feat given all the indications that Relator’s plan throughout

the litigation has been to build his entire case based on the COBC documents, should he find a

way to obtain them. Indeed, by inviting error, Relator may find himself on post-judgment review

facing counsel disqualification or even dismissal with prejudice should there be no other

adequate means of excising the “taint” of the erroneous disclosure.

* * *

For these reasons, this Court should certify its November 20 Order for interlocutory

appeal under 28 U.S.C. § 1292(b).

This Court Should Stay the November 20 Order Pending Interlocutory Appeal orMandamus Review

Whether or not this Court certifies its November 20 Order for immediate appeal under

§ 1292(b), it should stay that Order to allow the KBR Defendants to once again pursue

immediate appellate review, either under § 1292(b) or through a mandamus petition. Under

almost identical circumstances, the D.C. Circuit stayed this Court’s disclosure order in the prior

mandamus proceedings. Order, In re Kellogg Brown & Root, Inc., No. 14-5055 (D.C. Cir. Mar.

28, 2014). No reason exists for this Court not to issue a similar stay now.

I. Legal Standard

In determining whether to grant a stay pending appeal, the Court considers four factors:

“(1) whether the stay applicant has made a strong showing that he is likely to succeed on the

merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance

of the stay will substantially injure the other parties interested in the proceeding; and (4) where


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the public interest lies.” Nken v. Holder, 556 U.S. 418, 434 (2009) (internal quotation marks and

citation omitted); see also Washington Metro. Area Transit Comm’n v. Holiday Tours, Inc., 559

F.2d 841, 842-43 & n.1 (D.C. Cir. 1977); D.C. Cir. Rule 8(a)(1). The “[p]robability of success”

element “is inversely proportional to the degree of irreparable injury evidenced.” Cuomo v. U.S.

Nuclear Reg. Comm’n, 772 F.2d 972, 974 (D.C. Cir. 1985) (per curiam). “A stay may be

granted with either a high probability of success and some injury, or vice versa.” Id.

In the D.C. Circuit, the “four factors have typically been evaluated on a sliding scale,”

Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288, 1291 (D.C. Cir. 2009) (internal quotation

marks omitted), under which “[a] district court must balance the strengths of the requesting

party’s arguments in each of the four required areas,” such that “[i]f the showing in one area is

particularly strong, an injunction may issue even if the showings in other areas are rather weak,”

Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C. Cir. 2006) (internal

quotation marks omitted).3 Recently, the U.S. Courts of Appeals have divided about whether

Winter v. Natural Res. Defense Council, Inc., 555 U.S. 7 (2008), “preclude[s] continuing

adherence to the sliding-scale approach.” Sherley v. Sebelius, 644 F.3d 388, 392-93 (D.C. Cir.

2011) (discussing circuit split). Although individual members of the D.C. Circuit have expressed

the view, in separate writings, that “a movant cannot obtain a preliminary injunction without

showing both a likelihood of success and a likelihood of irreparable harm,” Davis, 571 F.3d at

1296 (Kavanaugh and Henderson, JJ., concurring), the D.C. Circuit itself has not resolved the

issue, Sherley, 644 F.3d at 393. As such, and given this Circuit’s longstanding adherence to the

3 Although Davis and England involved requests for injunctive relief, no material differenceexists between the factors considered in determining whether to grant an injunction and thefactors considered in determining whether to grant a stay. See Washington Metro., 559 F.2d at842 n.1; see also Nken, 556 U.S. at 434 (noting the “substantial overlap” between the twoinquiries).


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sliding scale analysis, district courts in this Circuit continue to apply the “more lenient sliding

scale standard” in assessing claims for a stay or injunctive relief. See, e.g., Elec. Privacy Info.

Ctr. v. Dep’t of Justice, 15 F. Supp. 3d 32, 38 n.2 (D.D.C. Feb. 11, 2014); Kingman Park Civic

Ass’n v. Gray, 956 F. Supp. 2d 230, 241 (D.D.C. 2013) (noting “absen[ce] [of] . . . clear

guidance from the Court of Appeals” on this question). In any event, this Court need not resolve

the issue here, because KBR’s showing independently satisfies each of the four factors.

II. A Stay Is Necessary to Prevent Irreparable Harm

The D.C. Circuit’s mandamus decision reaffirmed this Circuit’s longstanding position

that compelled disclosure of privileged information is “irreparable.” United States v. Philip

Morris Inc., 314 F.3d 612, 621-23 (D.C. Cir. 2003) (observing that “the general injury caused by

the breach of the attorney-client privilege and the harm resulting from the disclosure of

privileged documents to an adverse party is clear”), abrogated on other grounds by Mohawk, 558

U.S. 100; see also In re Kellogg Brown & Root, 756 F.3d at 760-62.4 As the Court explained,

“post-release review of a ruling that documents are unprivileged is often inadequate to vindicate

a privilege the very purpose of which is to prevent the release of those confidential documents.”

In re Kellogg Brown & Root, 756 F.3d at 761; accord id. (“[A]ppeal after final judgment will

come too late because the privileged communications will already have been disclosed pursuant

to the district court’s order.”). The D.C. Circuit concluded that this concern warranted both a

4 Other circuits agree. See, e.g., United States v. Punn, 737 F.3d 1, 11 (2d Cir. 2013)(“[S]ubpoenas directed to attorneys . . . often present potentially irreparable disclosures ofprivilege . . . .”); Hernandez v. Tanninen, 604 F.3d 1095, 1101 (9th Cir. 2010) (noting the“‘irreparable harm a party likely will suffer if erroneously required to disclose privilegedmaterials or communications’” (quoting Admiral Ins. Co. v. U.S. Dist. Ct. for the Dist. of Ariz.,881 F.2d 1486, 1491 (9th Cir. 1989))); In re Prof’ls Direct Ins. Co., 578 F.3d 432, 438 (6th Cir.2009) (“[A]n erroneous forced disclosure of confidential information could not be adequatelyremedied on direct appeal because a court cannot restore confidentiality to documents after theyare disclosed.”); Sporck v. Peil, 759 F.2d 312, 314 (3d Cir. 1985) (“[T]he harm caused byidentifying the [assertedly privileged] documents would be irreparable.”).


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stay and mandamus relief in the prior mandamus proceedings. See id. at 756. The same

considerations definitively establish that a stay is necessary to prevent irreparable harm here.

The harm of compelling disclosure before the D.C. Circuit has had an opportunity to

review this Court’s Order would be particularly pronounced in this case because Relator has

done virtually no investigative work and concededly has virtually no evidence to support his

claims. See supra p. 14. Therefore, if KBR is forced to disclose its assertedly privileged

documents and the D.C. Circuit then holds that disclosure of those documents should not have

been compelled, it will be difficult, if not impossible, “to unscramble the effects of the

[erroneously compelled] disclosure,” for Relator’s litigation strategy hinges on obtaining

disclosure of the COBC documents. Chase Manhattan Bank, N.A. v. Turner & Newall, PLC,

964 F.2d 159, 165 (2d Cir. 1992); see also Mohawk, 558 U.S. at 109 (requiring that the “fruits”

of erroneously compelled disclosures be excluded from evidence). Prematurely compelling

disclosure before the D.C. Circuit has ruled thus harms KBR by setting the foundation for

further, costly litigation over what constitutes the excludable fruit of the disclosure.

Indeed, given Relator’s virtual failure to conduct any independent investigation and his

conceded dearth of evidence to support his claims, Relator’s entire case is likely to be tainted by

any erroneously compelled disclosure. While the Court ruled that Relator and his counsel may

not share the compelled COBC documents with any third party, the Court is permitting them to

use the documents to oppose KBR’s motion for summary judgment, to conduct discovery, and at

trial. 11/20/14 Scheduling Order 1-2 [Dkt. 206]. Taken together, these are no limitations at all.

Relator presumably would use the privileged materials as a “road map” in preparing his case, for

example in choosing and deposing witnesses (who likely will be tainted when they answer

questions from Relator’s counsel premised on information obtained from the COBC documents)


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or in selecting information and arguments to present to the jury that Relator and his counsel learn

as discovery fruits from the privileged documents. Therefore, the appropriate remedy for an

erroneously compelled disclosure may well be dismissing Relator’s claims with prejudice, or at

least disqualifying Relator’s counsel. Cf. Chase Manhattan, 964 F.2d at 165 (noting that

“attorneys cannot unlearn what has been disclosed to them in discovery,” and that disclosures

“may alert adversary counsel to evidentiary leads or give insights regarding various claims and

defenses”); Maldonado v. N.J. ex rel. Admin. Office of the Cts.-Prob. Div., 225 F.R.D. 120, 141

(D.N.J. 2004) (mandating disqualification of counsel to remedy “substantial taint” resulting from

counsel’s review of privileged document). The Court can avoid the need for such a remedy,

which would entail a substantial waste of the parties’ and the Court’s time and resources, by

certifying an interlocutory appeal of its disclosure order under § 1292(b) and staying that order

pending appellate review.

III. KBR Has a Substantial Likelihood of Success on the Merits

To find a “strong showing” of likely success on the merits sufficient to justify a stay

pending appeal, Nken, 556 U.S. at 434, a district court need not conclude that its ruling is

probably wrong. While a movant must show more than a mere possibility of success, id., it

suffices to show that “serious legal questions” present “a fair ground of litigation,” Population

Inst. v. McPherson, 797 F.2d 1062, 1078 (D.C. Cir. 1986). As explained above, see supra pp.

11-14, such “serious legal questions” exist here. Most importantly, the Court’s implied-waiver

determination is inconsistent with the D.C. Circuit’s decision in White, and its disclosure order

also cannot be squared with implied-waiver case law from other courts or the well established

principle that “court[s] must impose a waiver no broader than needed to ensure the fairness of the

proceedings before [them],” Bittaker, 331 F.3d at 720.


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Even if the Court does not certify an interlocutory appeal under § 1292(b), KBR has a

substantial likelihood of obtaining mandamus relief. This Court’s November 20 Order satisfies

all the preconditions for mandamus. The D.C. Circuit has made clear that “the first condition for

mandamus—no other adequate means to obtain relief—will often be satisfied” in privilege cases

such as this one because post-disclosure appellate review “come[s] too late”—“the cat is

[already] out of the bag.” In re Kellogg Brown & Root, 756 F.3d at 761 (internal quotation

marks omitted). KBR’s “right to the issuance of the writ is ‘clear and indisputable’” because the

Court’s November 20 “privilege ruling constitutes a clear legal error.” Id. at 762 (quoting

Cheney v. U.S. Dist. Ct. for D.C., 542 U.S. 367, 381 (2004)); see also supra pp. 4-14. Finally,

“‘the writ is appropriate under the circumstances’” because the Court’s “novel[]” decision

threatens to have “broad and destabilizing effects in [the] important area of [privilege] law.” In

re Kellogg Brown & Root, 756 F.3d at 762-63 (quoting Cheney, 542 U.S. at 381); see also supra

pp. 13-14.

IV. A Stay Will Not Significantly Harm Relator

The only potential harm to Relator from a stay of this Court’s discovery Order would be

the possibility of a delay in the schedule set by this Court—in particular, a possible short delay in

Relator’s summary-judgment deadline. As a threshold matter, it bears emphasis that Relator’s

complaint in this case was filed in 2005 and unsealed on January 12, 2009, and almost six years

have passed since the unsealing as preliminary proceedings and initial discovery have been

conducted. Notably, Relator himself previously sought a “stay of deadlines” in this case to

permit appellate review of privilege issues regarding the very documents at issue here. Rel.’s

Mot. to Modify July 8, 2014 Order 1 [Dkt. 173] (requesting stay to permit Relator to seek

certiorari review of the D.C. Circuit’s mandamus petition). Given this request, Relator cannot


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now argue that he would be harmed by a brief stay while KBR seeks appellate review of the

Court’s November 20 Order.

In the prior mandamus proceedings, less than four months elapsed between the filing of

KBR’s mandamus petition and the issuance of the D.C. Circuit’s opinion. A similar, brief delay

here will be insignificant in the context of this case’s overall progress. Moreover, in granting a

stay pending appeal of a prior attorney-client privilege ruling, the D.C. Circuit has squarely held

that “[a] mere assertion of delay does not constitute substantial harm” sufficient to bar a stay.

Philip Morris, 314 F.3d at 622. In addition, any such delay can readily “be minimized by [the

D.C. Circuit’s] expedition in hearing” KBR’s request for appellate relief, id.—expedition that the

D.C. Circuit already demonstrated in ruling on the prior mandamus petition. If the stay is

granted, KBR will seek expedited review from the D.C. Circuit.

V. The Public Interest Favors Granting a Stay

Because “the attorney-client privilege is an ‘institutionally significant status or

relationship’ with deep roots in our nation’s adversary system,” the D.C. Circuit has expressly

held that the public interest favors a stay pending appeal of an attorney-client privilege ruling.

Philip Morris, 314 F.3d at 622 (quoting In re Ford Motor Co., 110 F.3d 954, 960 (3d Cir.

1997)). As the D.C. Circuit has explained, “granting a stay to allow [a party] to defend its claim

of privilege” before an appellate court “advances ‘broader public interests in the observance of

law and administration of justice.’” Id. (quoting Upjohn, 449 U.S. at 389).

The reasoning and result of Philip Morris strongly support granting a stay here. KBR’s

claim that the documents in question are subject to the attorney-client privilege and work-

product protection implicates the same “institutionally significant status or relationship”

fundamental to “our nation’s adversary system” that advances “broader public interests” beyond


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the effects on the particular parties to this litigation. Id. (internal quotation marks omitted).

Sound legal “advice or advocacy depends upon the lawyer’s being fully informed by the client,”

but clients will hesitate “‘to make full disclosure to their attorneys’” if their communications

might be handed over to their adversaries. Upjohn, 449 U.S. at 389 (quoting Fisher v. United

States, 425 U.S. 391, 403 (1976)). As a result, requiring KBR to disclose the documents at issue

in this case before obtaining appellate review would harm the same public interests “in the

observance of law and administration of justice” that the D.C. Circuit found to warrant a stay in

Philip Morris, as well as in the prior mandamus proceedings in this very case. Philip Morris,

314 F.3d at 622 (internal quotation marks omitted); see also In re Kellogg Brown & Root, 756

F.3d at 756.

Conclusion

For the foregoing reasons, KBR respectfully requests that the Court (1) reconsider and

vacate its November 20 Order; (2) certify that Order for discretionary appeal under 28 U.S.C.

§ 1292(b) and stay the Order pending disposition of that appeal; or (3) stay the November 20

Order pending the filing and disposition of a petition for writ of mandamus—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). At the very least, KBR asks that the Court postpone the deadline for

producing the 89 COBC documents until 10 days after the Court rules on this motion.


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Respectfully submitted this 21st day of November, 2014,

/s/ Craig MargolisCraig D. Margolis (DC Bar No. 454783)Tirzah S. Lollar (DC Bar No. 497295)VINSON & ELKINS LLP2200 Pennsylvania Avenue, N.W., Suite 500-WWashington, D.C. 20037Telephone: 202.639.6500Facsimile: 202.639.6604

John M. Faust (DC Bar No. 433553)Law Office of John M. Faust, PLLC1325 G Street, N.W., Suite 500Washington, D.C. 20005Telephone: 202.449.7707

Attorneys for KBR Defendants


CERTIFICATE OF SERVICE

I hereby certify that on this 21st day of November, 2014, I filed the foregoing motion

using the Court’s CM/ECF system, which will send notification of such filing to all counsel of

record.

/s/ Craig D. MargolisAttorney for KBR Defendants


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