Absolute Immunity From Defamation When Cooperating With Government Investigations? Maybe ‒ Maybe Not

SHELL OIL CO., ET AL. V. ROBERT WRITT, No. 13-0552, 2015 Tex. Lexis 452 (Tex. May 15, 2015)

Most corporate counsel understand that when a governmental entity begins investigating your company's compliance with the laws governing various business activities - environmental, securities, foreign trade, or other regulated matters - timely cooperation can be paramount.

But should you have any other concerns? Should your "antennas be up" for something else?

The recent Texas Supreme Court decision in the Shell case shows the potential for third-party claims such as defamation in connection with statements made in the course of a governmental investigation. The result in that case was favorable for Shell, but the Supreme Court's analysis demonstrates that might not always be the outcome.

Shell was the subject of a Foreign Corrupt Practices Act (FCPA) investigation brought by the U.S. Department of Justice (DOJ). Shell agreed to perform an internal investigation and report the results to the DOJ. The DOJ identified several individuals as potential witnesses and "persons of interest" and requested that Shell produce additional information related to them; one was Shell employee Robert Writt.

Shell's report to the DOJ identified Writt as a bad actor in the FCPA matter. Shell then terminated Writt and "made a deal" with the DOJ to pay a $30 million fine.

Writt in turn sued Shell in Texas for defamation and wrongful termination, claiming Shell's report to the DOJ falsely accused him of approving bribery payments and participating in illegal conduct. A key issue in Writt's defamation claim was whether Shell's statements to the DOJ were protected by an absolute privilege or by a more limited conditional privilege that provided less protection to Shell.

In the trial court, Shell obtained summary judgment on the defamation claim by arguing that its report and the statements in it were absolutely privileged because they were furnished to the DOJ preliminary to a proposed judicial proceeding. The court of appeals reversed, holding that Shell had not conclusively established that a criminal judicial proceeding against Shell or Writt was ongoing, actually contemplated or under serious consideration by either the DOJ or Shell at the time Shell provided its report.

The Texas Supreme Court reversed the court of appeals. It stated that the test for whether a communication occurring before the onset of judicial proceedings is absolutely privileged includes both...