High court reverses ruling some feared would undermine corporate forthrightness with DOJ
On Friday, the Texas Supreme Court reversed a ruling by an appellate court allowing a former employee’s defamation suit against Shell Oil to proceed – a 2013 ruling some entities believed left companies open to civil actions for being forthright with federal regulatory agencies.
The ruling stems from a lawsuit brought by Robert Writt, who sued Shell for wrongful termination and defamation.
In February 2007, a Shell contractor named Vetco Gray entered into a plea agreement with the Department of Justice for violating the Foreign Corrupt Practices Act.
Gray pled guilty to paying bribes to Nigerian customs officials through Panalpina, Inc., a freight forwarding and customs clearing company used to import equipment for Shell’s Bonga Project – a deep water oil and gas venture off the coast of Nigeria, court records state.
Writt, the plaintiff in the case, had supervised the project.
After meeting with DOJ, Shell performed and internal investigation and reported the results to the department – a report stating Writt was aware of “several red flags,” court records state.
Shell then fired Writt, who in turn sued alleging the oil giant’s report to the DOJ contained defamatory statements about him.
Shell moved for summary judgment, arguing it was absolutely privileged to furnish the DOJ with its investigation findings, court records state.
The trial court agreed and granted the motion. However, the First Court of Appeals disagreed and reversed the ruling, finding the report was only conditionally, not absolutely, privileged.
“Shell’s providing its report to the DOJ was an absolutely privileged communication,” states the Supreme Court’s May 15 opinion, authored by Justice Phil Johnson.
“We reverse the judgment of the court of appeals and reinstate that of the trial court.”
Justices reasoned the summary judgment evidence is conclusive, showing that when Shell provided its report to the DOJ, it was a target of the DOJ’s investigation and the information in the report related to the DOJ’s inquiry.
The evidence also conclusively shows that when the company provided the report, Shell acted with serious contemplation of the possibility that it might be prosecuted, the opinion states.
The case of Shell oil v. Writt drew the interest of several outside parties, including the world’s largest business federation.
Court records show the U.S. Chamber of Commerce filed two amicus briefs in support of Shell, contending the Frist Court’s decision “discourages good corporate citizenship by imposing new costs on businesses that choose to be candid and forthcoming with regulators about information they uncover in an internal investigation.”
“This decision discourages self-reporting and corporate cooperation with regulatory authorities, thereby undermining the foundation upon which enforcement of the FCPA is built,” states an Aug. 13 U.S. Chamber letter to the high court.
“Absent review by (the Supreme) Court, the decision will severely injure the business community by penalizing businesses for cooperating with state and federal regulatory agencies.”
The U.S. Chamber owns the Southeast Texas Record.
Writt is represented by attorneys Kenneth Hughes and Robert Dubose.
Attorneys Macey Stokes and Michelle Stratton represent Shell.
Texas Supreme Court case No. 13-0552