Law360: Whistleblower Slams KBR Discovery Stay Bid In Kickback Suit (Jan 5, 2015)
By Rebecca McCray
Law360, New York (January 05, 2015, 5:39 PM ET) — A whistleblower asked a D.C. federal court on Monday to deny Kellogg Brown & Root Services Inc.’s request to stay discovery in a case accusing the company of defrauding the government through its Iraq war subcontracts in an ongoing dispute that has raised questions about attorney-client privilege.
Relator Harry Barko said the motion to stay discovery and district court proceedings by KBR and Halliburton Co. was overly broad and failed to acknowledge numerous discovery requests that fall outside of an earlier administrative stay granted by Court of Appeals for the District of Columbia Circuit, asking the court to permit limited discovery.
“There is no justification or good cause to relieve defendants from responding to discovery seeking and requesting non-privileged facts and documentary evidence,” Barko said. “Defendants have not provided good cause to show why all proceedings must be stayed.”
Barko had accused the company of working with Jordanian subcontractor Daoud & Partners to inflate bills for laundry facilities on Iraq military bases in exchange for kickbacks to certain KBR employees.
Barko noted that KBR’s motion neglected to mention both his second set of interrogatories and third request for document production from KBR, each of which he said “fall outside the scope of the administrative stay.”
Further, Barko said two deposition requests should be allowed to move forward because they have nothing to do with the investigative process that the appeals court’s stay protects.
KBR shot back in a reply Monday that Barko’s request was an attempt to “have his cake and eat it too.”
“Relator asks the court to adopt an unfair and inefficient approach to discovery that
will impose needless costs and burdens on the parties, this court and potential witnesses,” KBR said.
Barko initially sought to prove his claim of government fraud through discovery of certain internal investigatory reports prepared by KBR’s nonlawyer compliance staff under the direction of the legal department. KBR refused, citing attorney-client privilege.
In March, U.S. District Judge James S. Gwin ruled the companies would have to turn over the documents. But the D.C. Circuit ruled in June that Judge Gwin’s decision created “substantial uncertainty” over the scope of attorney-client privilege and found KBR’s documents to be protected.
In September, the D.C. Circuit declined to rehear the case en banc.
On Nov. 10, Judge Gwin ruled that KBR and Halliburton would have to reveal information under a Defense Criminal Investigative Service subpoena after the judge ordered the contractors to hand over the documents to Barko. Judge Gwin said he didn’t buy KBR’s arguments that the documents weren’t connected to the False Claims Act litigation at hand and told the company it had to comply with Barko’s request for access to the documents originally produced at the DCIS’ insistence.
But on Nov. 24, Judge Gwin granted a stay on that order, effectively giving the contractors a reprieve on turning over documents. On Dec. 18, he nixed KBR’s “old arguments” about attorney-client privilege protecting its business-conduct documents, but prevented Barko’s access to witness statements from KBR’s internal monitoring.
Barko is currently waiting to see if the U.S. Supreme Court will take up his petition for writ of certiorari in the case.
Counsel for KBR and Barko did not immediately respond to requests for comment on Monday.
Barko is represented by Michael D. Kohn and David K. Colapinto of Kohn Kohn & Colapinto LLP .
KBR is represented by Craig D. Margolis and Tirzah S. Lollar of Vinson & Elkins LLP and John M. Faust of Law Offices of John M. Faust PLLC.
The case is U.S. ex rel. Barko v. Halliburton Co. et al., case number 1:05-cv-01276, in the U.S. District Court for the District of Columbia.
–Additional reporting by Kat Greene, Khadijah Britton and Erica Teichert. Editing by Katherine Rautenberg.
