The Yates Memo has many landscape-changing implications for corporate investigations, including the need for enhanced Upjohn warnings and the potential suppression of joint-defense agreements between corporations and their constituents (officers, directors, employees, shareholders). This new terrain exists because in order to receive cooperation credit from the government, companies must investigate and disclose all facts about
Gregory (Greg) R. Jones focuses his practice on health care litigation, False Claims Act defense and class action defense. Greg has represented health care providers, hospitals and physician groups in lawsuits and arbitration matters involving a range of different disputes, including qui tam actions brought under the federal and state false claims acts, antitrust claims, unfair competition and other business torts. He has also represented companies in conjunction with investigations by various government agencies in a wide range of matters. In addition, Greg has experience representing claims in intellectual property matters. Read Gregory Jones' full bio.
The revised cooperation credit rules issued by the US Department of Justice (DOJ) in September 2015 under the Yates Memo require companies to focus on individuals from the outset of an investigation and to disclose all facts about corporate wrongdoers to the government. This new landscape potentially pits the interests of the company against the interests of the corporate constituent (i.e., an officer, director, employee or shareholder) from the get-go. It is also unclear what impact the Yates Memo has on the DOJ’s existing policy concerning joint defense agreements (JDAs), which has traditionally only mandated that a company be able to provide “some relevant facts” to the government. Do the new Yates cooperation credit rules sound the death knell for JDAs between companies and their constituents? Not quite. But JDAs likely will become less common and more complex.
Company-constituent JDAs have long been a valuable tool in corporate investigations and government enforcement litigation. They foster open channels of communication and allow parties to work on a common joint defense. Under a typical JDA, companies, constituents and their counsel can freely share confidential information without the fear of waiving work product or attorney-client privileges. From the company’s perspective, JDAs can play a vital role in corporate investigations because they more readily allow the company to ascertain what happened from their constituents. From the constituent’s perspective, JDAs allow them to learn about what other constituents have disclosed in the context of an investigation and the company’s perspective on potential liability. The keystone of a JDA is a common interest among its parties. Once a party has reason to believe its interests no longer align with the other parties to the JDA, it must withdraw. Nevertheless, any confidential information the withdrawing party received under the JDA must be kept confidential.…
The importance of the Upjohn (or corporate Miranda) warning once again has taken center stage in several pending high-profile cases, including the criminal prosecutions of former Penn State University president Graham Spanier and Retrophin, Inc. CEO Martin Shkreli. In both cases, the entities’ ability to disclose information revealed during privileged communications with those defendants (and thereby earn the coveted cooperation credit or general goodwill with the government) was impacted by the quality of the Upjohn warnings given. Beyond these newsworthy examples, the significance of providing an adequate Upjohn warning when conducting employee interviews has been markedly amplified by the new guidelines issued by the US Department of Justice in September 2015 concerning individual accountability for corporate wrongdoing (the Yates Memo).
Under the Yates Memo, a company can only be eligible for cooperation credit if it discloses all relevant facts about individuals involved in corporate misconduct. In other words, the government now expects companies to affirmatively serve up their bad actors, and to do so with a full factual disclosure. As a practical matter, this will often entail revealing what a culpable corporate constituent (i.e., an officer, director, employee or shareholder) says during an investigatory interview. But a company can only do this if it retains the right to control the attorney-client privilege, which is the basic function of the Upjohn warning. Consequently, in a post-Yates world, a company’s ability to preserve its cooperation credit eligibility not only demands a mindful adherence to the customary Upjohn warning procedure when conducting corporate interviews, but also an enhanced version of the Upjohn warning, which could include:
- Developing a formal script for the Upjohn warning;
- Providing the witness with a written summary of the critical points of the warning;
- Requiring a written acknowledgement; and
- Specifying that the company may unilaterally disclose to the government the content of the interview.
The Yates Memo has many landscape-changing implications for corporate investigations, including the need for enhanced Upjohn warnings and the potential suppression of joint-defense agreements between corporations and their constituents (officers, directors, employees, shareholders). This new terrain exists because in order to receive cooperation credit from the government, companies must investigate and disclose all facts about…
On October 2, 2015, the Supreme Court of the United States denied a petition for writ of certiorari in a case that sought to resolve an apparent circuit split concerning one of the most frequently litigated issues under the False Claims Act (FCA)—the circumstances in which the disclosure of allegations in a government audit or…
On Tuesday, August 11, 2015, in United States ex rel. Barko v. Haliburton et al., the U.S. Court of Appeals for the D.C. Circuit issued an opinion vacating another series of rulings by the United States District Court for the District of Columbia that had required defendant Kellogg Brown & Root, Inc. (KBR) to…
Internal investigations serve a vital corporate function. In many situations, cloaking such investigations in the confidentiality of the attorney-client privilege is paramount. However, the applicability of the privilege to internal investigations is once again the subject of some uncertainty as a result of another series of rulings in United States ex rel. Barko v. Halliburton Company et al.
In June 2014, the U.S. Court of Appeals for the District of Columbia Circuit upheld the privileged status of Kellogg Brown & Root, Inc.’s (KBR’s) internal investigation files regardless of whether the investigation was conducted pursuant to a mandatory or voluntary compliance program. See In re Kellogg Brown & Root, Inc., 756 F.3d 754, 757-760 (D.C. Cir. 2014), cert. denied, 135 S.Ct. 1163 (U.S. 2015). The court held that the attorney-client privilege applies as long as “a significant purpose” of the investigation is to obtain or provide legal advice. 756 F.3d at 760.…