Shell Oil Company and Shell International, E&P, Inc. v. Robert Writt

IN THE SUPREME COURT OF TEXAS
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NO . 13-0552
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SHELL OIL COMPANY AND SHELL INTERNATIONAL, E&P, INC., PETITIONERS,
v.
ROBERT WRITT, RESPONDENT
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS
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Argued November 6, 2014
JUSTICE JOHNSON delivered the opinion of the Court.
In this defamation action we consider whether the providing of a report regarding possible
criminal activity to a government agency was an absolutely privileged communication or a
conditionally privileged one.
Shell Oil Company and Shell International, E&P, Inc. (collectively, Shell) received an inquiry
from the Department of Justice (DOJ) regarding possible violations of the Foreign Corrupt Practices
Act by one of its contractors. Shell met with the DOJ, agreed to perform an internal investigation
and report the results to the DOJ, and then did so. Robert Writt, who was employed by Shell until
his employment was terminated following the investigation, sued Shell for wrongful termination and
for defamation. Writt’s defamation claim was based on Shell’s furnishing the DOJ its report that
contained allegedly defamatory statements about him. Shell asserted that it was absolutely privileged
to provide the report to the DOJ and moved for summary judgment. The trial court granted Shell’s
motion; the court of appeals reversed.
We conclude that Shell’s statements were made preliminarily to a proposed judicial
proceeding and were absolutely privileged. Accordingly, we reverse the judgment of the court of
appeals.
I. Background
In February 2007 a Shell contractor, Vetco Gray, entered into a plea agreement with the DOJ
under which Vetco Gray was criminally convicted and fined $26 million for violating the Foreign
Corrupt Practices Act (FCPA). 15 U.S.C. §§ 78dd-1 to -2 (1998). Vetco 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 deepwater oil and gas
project off the coast of Nigeria. In July 2007, approximately five months after Vetco Gray was
convicted, the DOJ sent Shell a letter notifying it that the DOJ had become aware that Shell engaged
Panalpina “to provide freight forwarding and other services . . . and that certain of those services may
violate the [FCPA].” In its letter, the DOJ requested that Shell meet with it to discuss Shell’s
engagement of Panalpina. Shell complied with the request. At the meeting Shell agreed to conduct
an internal investigation into its dealings with Panalpina and to report its findings to the DOJ, with
the understanding that the report would be treated as confidential. The investigation was to be done
pursuant to a plan approved by the DOJ, and Shell agreed to produce additional documents and
information requested by the DOJ. The DOJ subsequently identified several individuals as potential
witnesses and persons of interest regarding its investigation and requested Shell to produce
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information related to them. One person identified was a Shell employee named Robert Writt.
Writt’s duties as to the Bonga Project included serving as the holder of the contract between Shell
and Vetco Gray and being responsible for approving Vetco Gray’s reimbursement requests.
Shell hired outside counsel and investigators to assist in the investigation. During the course
of the investigation, Writt was interviewed several times about his knowledge of possible illegal
payments made by Panalpina. In February 2009, Shell provided the investigators’ findings and its
report to the DOJ. Among other matters, the report set out that the impetus for it was the meeting
between Shell and DOJ representatives regarding allegations of criminal violations. The report also
contained information, analyses, and conclusions as to Shell’s relationship with, and Writt’s actions
as they related to, Panalpina. The report stated that Writt was aware of “several red flags”
concerning Panalpina’s customs clearance process and that he provided inconsistent information
about his knowledge of Panalpina’s questionable acts. In addition to providing the report to the
DOJ, Shell terminated Writt’s employment. In its termination letter, Shell stated that Writt’s
conduct in connection with the Bonga Project was a “significant, substantial and unacceptable”
violation of Shell’s General Business Principles and Code of Conduct.
Writt sued Shell for defamation and wrongful termination. His defamation claim was based
on allegations that in the report provided to the DOJ, Shell falsely accused him of approving bribery
payments and participating in illegal conduct. Shell sought a traditional summary judgment as to
the defamation claim on the grounds of absolute privilege.
While Shell’s motion for summary judgment was pending, the DOJ filed an information
charging Shell with conspiracy to violate the FCPA and aiding and abetting the making of false
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books and records. Shell and the DOJ then executed a Deferred Prosecution Agreement—a type of
agreement used by the DOJ when a corporation cooperates with an FCPA investigation. See Robert
J. Sussman & Gregory S. Saikin, Corporate Crimes: The Penalties and the Pendulum, 43 THE
ADVOC. (TEX .) 39, 41-42 (2008). In the Agreement, the DOJ acknowledged that Shell had
(1) cooperated in the DOJ’s investigation, (2) agreed to cooperate in any ongoing investigation, and
(3) agreed to pay a monetary penalty. Shell’s willingness to conduct an internal investigation, admit
misconduct, and cooperate with the investigation was an important factor in the DOJ’s decision to
offer Shell the opportunity to enter into the Deferred Prosecution Agreement. The terms of the
Agreement, which are more favorable than the criminal penalties that could have resulted from an
FCPA prosecution, required Shell to continue to cooperate with the DOJ and other law enforcement
agencies, pay a $30 million criminal fine, and implement an extensive FCPA compliance and
reporting program. The Agreement provides that if Shell fully complies with its terms, then the
criminal charges will be dropped. However, if Shell fails to abide by the Agreement’s terms, the
DOJ will resume the criminal prosecution.
The district court granted Shell’s motion for summary judgment, concluding that Shell was
absolutely privileged to provide the investigative report to the DOJ. Writt’s wrongful termination
claim proceeded to trial and the jury found against him. As a result, the trial court rendered a take-
nothing judgment in favor of Shell. Writt appealed only from the summary judgment on his
defamation claim.
The court of appeals reversed. Writt v. Shell Oil Co., 409 S.W.3d 59, 76 (Tex.
App.—Houston [1st Dist.] 2013). It held that the summary judgment evidence did not conclusively
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establish that at the time Shell provided its report to the DOJ a criminal judicial proceeding against
either Shell or Writt was ongoing, actually contemplated, or under serious consideration by either
the DOJ or Shell. Id. at 76. Therefore, the report was only conditionally, not absolutely, privileged.
Id. The court reasoned that Shell cooperated with the DOJ during an ongoing investigation and
created the report as a part of its own voluntary internal investigation, but that those actions were not
enough to conclusively establish that Shell provided the report under a serious threat of prosecution;
nor was the fact the DOJ eventually initiated a criminal proceeding against Shell conclusive evidence
that such a proceeding was actually contemplated or under serious consideration by the DOJ as of
the time Shell provided the report. Id. at 72.
Shell contends that an absolute privilege extends to the report and the statements in it because
it was furnished to the DOJ preliminarily to a proposed judicial proceeding.1 It argues that the
information contained in its report, including information about Writt, was solicited by the DOJ
during an ongoing FCPA investigation; Shell compiled and provided the report under serious and
good faith contemplation of a judicial proceeding; and those circumstances are sufficient for an
absolute privilege to apply. In the alternative, Shell argues that its statements are absolutely
privileged because they were made as part of a quasi-judicial proceeding.2 Shell also argues that this
Court’s decision in Hurlbut v. Gulf Atlantic Life Insurance Co., 749 S.W.2d 762, 768 (Tex. 1987),
1
Six former United States Attorneys General, M ichael B. M ukasey, Benjamin R. Civiletti, Edwin M eese, III,
Richard L. Thornburgh, W illiam P. Barr, and Alberto R. Gonzales, submitted an amicus curiae letter in support of Shell.
The Chamber of Commerce of the United States of America, the National Association of Manufacturers, and the
American Petroleum Institute submitted an amicus curiae brief in support of Shell.
2
Because we determine that Shell’s providing the report was made preliminarily to a proposed judicial
proceeding, we do not address this contention.
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is consistent with its position because the DOJ essentially told Shell that it was a target of a criminal
investigation and solicited the report and information provided by Shell, whereas in Hurlbut the
alleged defamatory statements were unsolicited statements and not instigated by a government
investigation involving the party making the statement.
Writt does not assert that Shell’s providing the report to the DOJ was not privileged; he
simply urges that the court of appeals was correct in classifying Shell’s communication as being
conditionally privileged. He argues that Shell’s report was provided during an ongoing investigation,
but not as a communication preliminary to a judicial proceeding or as part of a quasi-judicial
proceeding. He further maintains that the court of appeals’ application of Hurlbut is consistent with
the majority rule in other states as to communications made during a criminal investigation, and
observes that the conditional privilege addresses any public policy concerns by protecting Shell from
defamation liability so long as its statements were not false and malicious. Last, he urges that the
summary judgment evidence was insufficient to establish that the DOJ’s process had progressed
from an investigation to a prosecution by the time Shell provided its report.
II. Standard of Review
We review the trial court’s grant of summary judgment de novo. Merriman v. XTO Energy,
Inc., 407 S.W.3d 244, 248 (Tex. 2013). The evidence is viewed in the light most favorable to the
nonmovant. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). In reviewing the record,
we indulge every reasonable inference in favor of the nonmovant, and resolve any doubts in favor
of the nonmovant. Buck v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012).
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The court of appeals noted that the parties did not agree on whether a plaintiff has the burden
to negate absolute privilege as part of proving its cause of action for defamation, or whether absolute
privilege is an affirmative defense where the elements must be proved by a defendant asserting it.
Writt, 409 S.W.3d at 65-66. The court explained that in this case the burden of proof did not matter
because Shell filed a traditional motion for summary judgement and was entitled to summary
judgment only if the evidence conclusively proved that the absolute privilege applies. Id. Shell does
not challenge the standard the court of appeals applied, and on this question we agree with the court
of appeals: whether Shell was entitled to summary judgment in this case depends on whether its
summary judgment evidence conclusively showed it was. The question of whether absolute
privilege must be disproved as part of the plaintiff’s cause of action once it is raised, or whether it
is an affirmative defense, is not an issue we need address.
III. Privileges and Judicial Proceedings
The proper administration of justice requires full and free disclosure of information as to
criminal activity both by the public and by participants in judicial proceedings. James v. Brown, 637
S.W.2d 914, 916-17 (Tex. 1982) (per curiam). In support of this policy, Texas recognizes two
classes of privileges applicable to defamation suits: absolute privilege and conditional or qualified
privilege. Hurlbut, 749 S.W.2d at 768. In Hurlbut we relied heavily on the Restatement (Second)
of Torts in differentiating between the two:
An absolute privilege is more properly thought of as an immunity because it
is based on the personal position or status of the actor. . . . Such immunity, however,
attaches only to a limited and select number of situations which involve the
administration of the functions of the branches of government, such as statements
made during legislative and judicial proceedings . . . .
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Privileges of the second class, the conditional or qualified privilege, are true
privileges because they arise out of the occasion upon which the false statement is
published. . . . The occasions which may give rise to a conditional privilege are
described in the Restatement.
Hurlbut, 749 S.W.2d at 768 (internal citations omitted). We quoted from the Restatement to explain
that “[a] witness is absolutely privileged to publish defamatory matter concerning another in
communications preliminary to a proposed judicial proceeding or as part of a judicial proceeding in
which he is testifying, if it has some relation to the proceeding.” Id. at 767 (quoting RESTATEMENT
(SECOND ) OF TORTS § 588 (1977)); James, 637 S.W.2d at 917 (same); see also RESTATEMENT
(SECOND ) OF TORTS § 587 (1977) (noting that an absolute privilege applies to communications by
potential parties in criminal prosecutions). The test for whether a communication is absolutely
privileged when it occurs before judicial proceedings have begun entails both subjective and
objective components. See RESTATEMENT (SECOND ) OF TORTS § 588 cmt. e (1977) (“As to
communications preliminary to a proposed judicial proceeding, the rule . . . applies only when the
communication has some relation to a proceeding that is actually contemplated in good faith and
under serious consideration by the witness or a possible party to the proceeding.”) (emphasis added).
The fact that a formal proceeding does not eventually occur will not cause a communication to lose
its absolutely privileged status; however, it remains that the possibility of a proceeding must have
been a serious consideration at the time the communication was made. See id. (“The bare possibility
that the proceeding might be instituted is not to be used as a cloak to provide immunity for
defamation when the possibility is not seriously considered.”); see also United States v. Baggot, 463
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U.S. 476, 484 (1983) (“The words ‘preliminary to’ necessarily refer to judicial proceedings not yet
in existence, where, for example, a claim is under study.”).
In Texas, the absolute privilege is also extended to quasi-judicial proceedings and other
limited instances in which the benefit of the communication to the general public outweighs the
potential harm to an individual. Bird v. W.C.W., 868 S.W.2d 767, 771 (Tex. 1994); see also Reagan
v. Guardian Life Ins. Co., 166 S.W.2d 909, 913 (Tex. 1942) (“The rule is one of public policy. It
is founded on the theory that the good it accomplishes in protecting the rights of the general public
outweighs any wrong or injury which may result to a particular individual.”). While abuse of the
absolute privilege is possible, it is limited because the speaker will generally still be subject to the
risk of criminal prosecution for perjury or obstruction of justice. See, e.g., TEX . PENAL CODE ch. 37
(“Perjury and Other Falsification”); 18 U.S.C. § 1505 (“Obstruction of proceedings before
departments, agencies, and committees”).
Not all communications to public officials are absolutely privileged, but may yet warrant
protection as being conditionally privileged:
An occasion makes a publication conditionally privileged if the circumstances induce
a correct or reasonable belief that
(a) there is information that affects a sufficiently important public interest, and
(b) the public interest requires the communication of the defamatory matter to a
public officer or a private citizen who is authorized or privileged to take action if the
defamatory matter is true.
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Hurlbut, 749 S.W.2d at 768 (quoting RESTATEMENT (SECOND ) OF TORTS § 598 (1977)). This
privilege is lost if abused, such as when the statement is made with malice and with knowledge of
its falsity. Id.
IV. Discussion
Shell argues that its report was absolutely privileged because it furnished the report in serious
contemplation of a judicial proceeding, not on the bare possibility that such a proceeding might
occur. See id. at 767-68; RESTATEMENT (SECOND ) OF TORTS § 588 cmt. c, e (1977). It says the
furnishing of the report must be viewed in the context of the DOJ’s notifying Shell that it was a
target of an investigation for FCPA violations as a follow-on to Vetco Gray’s guilty plea, the fact
that Shell’s investigation and report were pursuant to that notification, and Shell’s knowledge when
it provided the report to the DOJ that the contents of the report were not favorable to it as regards
the FCPA, including the statements about Writt. Shell maintains that those facts are conclusively
established by the record and thus the context of its reporting to the DOJ distinguishes this case from
Hurlbut, in which the defamatory communications to a prosecuting authority were not by the target
of an investigation. Shell further argues that the court of appeals incorrectly determined Shell’s
statements were not absolutely privileged because the court found that the evidence did not establish
that the DOJ filed, proposed to file, or had gathered enough information to file criminal charges
against Shell at the time Shell provided its report. Shell contends that no Texas court, including this
Court in Hurlbut, has held that sufficient information to file criminal charges must have been
accumulated by the government before a communication will be absolutely privileged. It asserts that
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the only court to mention such a standard did so in dictum. See San Antonio Credit Union v.
O’Connor, 115 S.W.3d 82, 99 (Tex. App.—San Antonio 2003, pet. denied).
In support of its assertions, Shell first says there is no dispute about its status being that of
a party to an investigation into criminal activity with the possibility of an ensuing criminal
proceeding: it knew Vetco Gray had pled guilty to using Panalpina’s services, the DOJ had the
information from that prosecution before it contacted Shell, and no reasonable conclusion can be
drawn from the DOJ’s July 2007 letter other than that Shell was a target of an FCPA investigation.
Next, Shell says the evidence is conclusive that its cooperation in the investigation and its report to
the DOJ resulted from the DOJ’s solicitation and “invitation” to discuss its activities in light of the
FCPA. Shell asserts that the evidence shows there is no doubt about its seriously contemplating the
possibility of an FCPA criminal proceeding when it furnished the report to the DOJ, given the fact
that it was a target of the DOJ’s investigation and the undisputed facts that its self investigation
(1) took over eighteen months, (2) involved both outside and inside counsel as well as forensic
consultants, (3) cost over $10 million, and (4) recommended disciplinary actions for staff members
as a result of Shell’s dealings with Vetco Gray and Panalpina. Shell says that in Writt’s response
to its motion for summary judgment he agrees that Shell provided its report to the DOJ during an
ongoing FCPA investigation, which demonstrates that Shell was seriously contemplating the
possibility of a criminal proceeding. Writt’s response said that Shell’s report described him as a
participant in illegal conduct, and stated that he had approved payments knowing that the payments
were facilitating bribes. Shell, while not in agreement with all that Writt says, notes that no
reasonable doubt exists that all of those actions would be attributable to Shell in an FCPA
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prosecution—and Shell and its lawyers knew it. Third, Shell argues that the dramatic increase in
FCPA prosecutions and penalties assessed against corporations in the past decade, the DOJ’s
invitation to discuss Panalpina’s “possibly illegal” activities in light of the previous successful
prosecution of Vetco Gray for its activities including those related to Panalpina, and the facts Shell
discovered during its internal investigation are conclusive of the fact that its contemplation of a
possible criminal prosecution was reasonable as of the time it provided the report to the DOJ.
We agree with Shell. To begin with, the principles we espoused in Hurlbut control here, but
the communications and circumstances in Hurlbut differ from those surrounding Shell’s providing
its report to the DOJ.
In Hurlbut, C. Daniel Hurlbut and A.C. Hovater (sometimes collectively referred to as
Hurlbut), were licensed insurance agents who formed an insurance agency to market a group
insurance policy for which Gulf Atlantic Insurance Company was to obtain regulatory approval and
then underwrite. Hurlbut, 749 S.W.2d at 763. Gulf never obtained approval for the policy, although
its representatives encouraged Hurlbut to proceed with selling it. Id. at 763-64. Because state
approval of the policy was never obtained by Gulf, Hurlbut was never furnished a master exemplar
policy to present to prospective clients. Id. Wayne Holder, city attorney for one of Hurlbut’s
prospective municipal clients, questioned Hurlbut’s inability to produce an exemplar policy. Gulf
Atlantic Life Ins. Co. v. Hurlbut, 696 S.W.2d 83, 89-90 (Tex. App.—Dallas 1985), rev’d, 749
S.W.2d 762 (Tex. 1987) [hereinafter the court of appeal’s decision is referred to as Gulf Atlantic].
Hurlbut referred Holder to Gulf for confirmation of the existence of the policy and for assurance that
Gulf was underwriting it. Id. at 89. Holder called William Barnes, the president of Gulf, who told
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Holder that Gulf was not underwriting such a policy. Id. That prompted Holder to contact the Texas
Attorney General who assigned Assistant Attorney General Bill Flanary to investigate Hurlbut and
the agency. Id. at 89-90. Flanary met with Barnes, who said that Gulf was not involved with
Hurlbut or the policy. Id. at 90. After the meeting with Barnes, and upon further investigation,
Flanary became convinced that Hurlbut was selling insurance illegally. Id. A meeting was arranged
between Hurlbut and representatives of Gulf, including Barnes, ostensibly to resolve questions about
the group policy program. Hurlbut, 749 S.W.2d at 764. Unknown to Hurlbut and Hovater, Flanary
was also invited to the meeting. Id.
At the meeting, Barnes repeated what he had earlier said to Flanary about Hurlbut not being
authorized by Gulf to market the group policy and that Gulf was not involved with the policy. Id.
Flanary asked Hurlbut and Hovater to accompany him to the Dallas Attorney General’s office where
they gave statements and provided information about their activities related to the group policy. Id.
At one point Flanary became suspicious about Gulf’s position and voiced his thoughts to Barnes that
the investigation might be targeting the wrong persons—that Gulf might be the more proper target.
See Gulf Atlantic, 696 S.W.2d at 106 (Akin, J., dissenting). Once Flanary voiced that concern,
Barnes and Gulf representatives stopped communicating with authorities about the matter. Id.
After that, life did not go well for Hurlbut and Hovater. Their assets were seized and
liquidated, they were indicted, and their insurance agent licenses were revoked. Hurlbut, 749
S.W.2d at 764. Eventually they sued Gulf, its corporate parent, and several corporate officers on
various theories including business disparagement. Id. The jury found for Hurlbut and Hovater and
the trial court rendered judgment for them. Id. at 763. The court of appeals reversed. Gulf Atlantic,
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696 S.W.2d at 83. As relevant to the matter now before us, the court of appeals concluded that false
statements made by Gulf’s president to the assistant attorney general during the meeting where
Hurlbut was present were absolutely privileged because the evidence conclusively established that
the statements were made to a public official or were made in the course of a judicial or quasi-
judicial proceeding. Id. at 100.
In reviewing the privilege issue we looked to the Restatement (Second) of Torts dealing with
privileges. Hurlbut, 749 S.W.2d at 767-68. We particularly referenced Section 588, addressing the
absolute privilege related to testimony of a witness in a judicial proceeding, and Section 598,
addressing the conditional privilege available to persons communicating information of public
interest to a public officer or private citizen authorized to take action if the information is true. Id.
We concluded that the communications made by Gulf’s president to the assistant attorney general
were more like statements described in Section 598 than those addressed by Section 588, and thus
were conditionally, not absolutely, privileged. Id.
After we decided Hurlbut, several courts have considered how Texas law applies with regard
to the absolute privilege. See, e.g., Shanks v. AlliedSignal, Inc., 169 F.3d 988, 994 (5th Cir. 1999)
(concluding that Texas courts have yet to extend the absolute privilege to unsolicited
communications made preliminary to a judicial proceeding). For instance, the federal district court
in Clemens v. McNamee concluded that statements by Brian McNamee, a witness in an investigation
into the distribution of illegal substances and money laundering, were absolutely privileged.
Clemens v. McNamee, 608 F. Supp. 2d 811, 824-25 (S.D. Tex. 2009). During the course of the
investigation, McNamee was told by the Assistant United States Attorney, FBI agents, and IRS
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agents conducting the investigation that his status as a witness would be reconsidered if he failed to
cooperate with the investigation, which included being interviewed by the Mitchell Commission.
Id. at 824. All of McNamee’s interviews with the Mitchell Commission were arranged and attended
by Assistant United States Attorneys or other government agents. Id. Although McNamee
cooperated with the investigation and offered information voluntarily, he was for all practical
purposes compelled to make his statements to the commission. Id. at 825. The court concluded that
to classify McNamee’s statements as only conditionally privileged would have caused great harm
to the administration of government and the government’s ability to ensure justice was served. Id.
at 825-26.
In this case, the facts and circumstances surrounding Shell’s communications are more
analogous to those in Clemens than those in Hurlbut. The summary judgment evidence establishes
that at all relevant times, Shell was a target of the DOJ’s investigation, while Gulf was not a target
of the investigation when its president made the allegedly defamatory statements that Gulf had not
authorized Hurlbut to sell the group policies in question and that Gulf was not underwriting the
policies. The difference between Shell’s status and that of Gulf are brought into clearer focus by the
fact that after Gulf’s president was told by the assistant attorney general investigating the case that
the investigation might need to include Gulf as well as Hurlbut, Gulf’s communications to the
prosecuting authorities stopped. See Gulf Atlantic, 696 S.W.2d at 106 (Akin, J., dissenting).
Further, when the DOJ’s leverage over Shell vis-à-vis the FCPA and its somewhat draconian
potential penalties are considered, it is manifest that Shell was, practically speaking, compelled to
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undertake its internal investigation and report its findings to the DOJ, just as McNamee was,
practically speaking, compelled to cooperate. See Clemens, 608 F. Supp. 2d at 825.
Over the course of the last decade, FCPA enforcement actions have increased dramatically.
Compare FCPA and Related Enforcement Actions, U.S. D E P ’ T OF J U ST ICE ,
http://www.justice.gov/criminal/fraud/fcpa/cases/2014.html (last visited May 1, 2015), with FCPA
and Related Enforcement Actions, U.S. DEP’T OF JUSTICE,
http://www.justice.gov/criminal/fraud/fcpa/cases/2004.html (last visited May 1, 2015). See 2013
Year-End FCPA Update, GIBSON , DUNN & CRUTCHER LLP, 1-5 (Jan. 6, 2014),
http://www.gibsondunn.com/publications/Documents/2013-Year-End-FCPA-Update.pdf. The DOJ
made enforcement of the FCPA a priority in the post-Enron and Sarbanes-Oxley era, beginning in
2003. Michael B. Bixby, The Lion Awakens: The Foreign Corrupt Practices Act–1997 to 2010, 12
SAN DIEGO INT ’L L.J. 89, 104 (2010). In 2007, the year the DOJ informed Shell of its investigation,
FCPA enforcement actions more than doubled from the previous year. Id. By 2010, the year Shell
and the DOJ entered into their Deferred Prosecution Agreement, FCPA enforcement had again more
than doubled from 2007. Id. at 105. The largest FCPA resolution, including fines, penalties,
disgorgement, and interest, occurred in 2008, topping $800 million, and the average fines from 2009
to 2010 increased from over $58 million to more than $81 million. Id. at 106. From the time Shell
was first contacted by the DOJ to the time it provided its report to the DOJ, FCPA compliance was
of great concern for U.S. businesses operating overseas and potential violations were not taken
lightly. Moreover, businesses that chose not to cooperate were subjected to substantially greater
punishments if a DOJ prosecution was successful. See Joel Androphy & Ashley Gargour, The
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Intersection of the Dodd-Frank Act and the Foreign Corrupt Practices Act: What All Practitioners,
Whistleblowers, Defendants, and Corporations Need to Know, 45 TEX . J. BUS. L. 129, 138 (2013)
(“Knowing all the consequences that accompany FCPA litigation, many companies choose to be
proactive and self-report to the DOJ and SEC to take advantage of any leniency that the government
might offer.”). Federal prosecutors and the U.S. Sentencing Guidelines “place a high premium on
self-reporting, along with cooperation and remedial efforts, in determining the appropriate resolution
of FCPA matter.” U.S. DEP ’T OF JUSTICE & U.S. SECURITIES AND EXCHANGE COMM ’N , A
RESOURCE GUIDE TO THE U.S. FOREIGN CORRUPT PRACTICES ACT , 54 (2012), available at
http://www.justice.gov/criminal/fraud/fcpa/guidance/guide.pdf. “Specifically, prosecutors consider
whether the company made a voluntary and timely disclosure as well as the company’s willingness
to provide relevant information and evidence and identify relevant actors inside and outside the
company, including senior executives.” Id.
In sum, the summary judgment evidence is conclusive that when Shell provided its internal
investigation report to the DOJ, Shell was a target of the DOJ’s investigation and the information
in the report related to the DOJ’s inquiry. The evidence is also conclusive that when it provided the
report, Shell acted with serious contemplation of the possibility that it might be prosecuted.
Despite Writt’s admonition that a decision in favor of Shell would mandate overruling
Hurlbut, the case before us and Hurlbut are different; we need not and do not overrule it.
V. Conclusion
Shell’s providing its report to the DOJ was an absolutely privileged communication. We
reverse the judgment of the court of appeals and reinstate that of the trial court.
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________________________________________
Phil Johnson
Justice
OPINION DELIVERED: May 15, 2015
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