KBR Inc. took a hit in an ongoing False Claims Act suit from the federal government Thursday when a Texas federal judge ordered the company to hand over an internal investigation report on alleged kickbacks at the center of the case on the grounds it had waived attorney-client privilege of the document.
Obliging the government’s midtrial request to compel the report, U.S. District Judge Marcia A. Crone ruled shortly before closing arguments in the case that protection for the report had been waived nine years before when one KBR employee transmitted it to another, an attorney for KBR confirmed to Law360 in an interview.
Although Judge Crone compelled production of the report, a subsequent order on the matter does not contain an explanation for her decision.
KBR’s attorney, Tirzah S. Lollar of Vinson & Elkins LLP pointed out that Judge Crone ruled “on grounds other than what the government argued” and said, “we respectfully disagree with that ruling.”
The government’s FCA case alleges Eagle Global Logistics employees Kevin Smoot and Thomas Kessner bribed KBR’s Robert Bennett for better subcontract terms under the company’s massive Logistics Civil Augmentation Program III contract, which the government spent $38 billion on over 10 years.
Bennett pled guilty to accepting illegal gratuities from EGL, a point the government has cited as evidence he violated the Anti-Kickback Act. The alleged violations, the government argues, should be imputed to the contractor.
In its last-minute motion, the government argued that KBR waived privilege of the investigation when it used the document at trial this week to claim that it had disciplined Bennett for his conduct as a result of KBR’s “zero tolerance” policy. That testimony, the government claimed, put the document squarely in play.
The company shot back against the motion in a Thursday trial brief, saying the testimony did not refer to any of the privileged information; rather, it simply mentioned the fact that the company disciplined the employee as a result of its findings.
Following the close of trial Thursday, Judge Crone ordered the parties to file post-trial briefings by Aug. 14, at which point she will take the case under advisement.
The government is represented by Michael W. Lockhart, Glenn P. Harris, Benjamin C. Mizer, John M. Bales, Michael D. Granston, Judith Rabinowitz, Kelley C. Hauser and Samuel J. Buffone of the U.S. Department of Justice.
KBR is represented by Tirzah S. Lollar and Christine N. Roushdy of Vinson & Elkins LLP and Patricia D. Chamblin of MehaffyWeber PC.
SOURCE: LAW 360
