Sixth Circuit Strengthens Critical Protections for Corporate Internal Investigations

Summary

On October 3, 2025, in a decision described by Bloomberg as a “major victory” for FirstEnergy, the U.S. Court of Appeals for the Sixth Circuit overturned a district court order that would have allowed securities class action plaintiffs to obtain discovery into FirstEnergy’s internal investigations conducted by outside counsel following accusations of senior executives’ involvement in political corruption. The Sixth Circuit reaffirmed that internal investigations led by outside counsel are protected by both the attorney-client privilege and the work-product doctrine. It rejected arguments that later business uses of the results of an investigation undermine privilege. It further joined other circuits in holding that disclosures to auditors do not waive protection so long as the auditor relationship remains non-adversarial. S&C represents FirstEnergy in the litigation and appellate proceedings.

Background

Factual Background. On July 21, 2020, Ohio House of Representatives Speaker Larry Householder was arrested and charged with accepting payments from an Ohio utility holding company (understood to be FirstEnergy) in exchange for legislative support. The same day, the U.S. Department of Justice issued subpoenas to FirstEnergy. Within weeks, FirstEnergy faced multiple federal and state investigations and civil lawsuits.

In response, FirstEnergy and its Board of Directors engaged outside counsel (Jones Day and Squire Patton Boggs LLP, respectively) to conduct internal investigations and advise the company.

Motion to Compel. During discovery in the ensuing securities class action, plaintiffs moved to compel discovery related to those investigations. Plaintiffs claimed that the investigations were primarily for “business purposes,” such as addressing human resource issues, managing auditors, and restoring lender confidence.

The special master granted the motion to compel, ordering broad disclosure, concluding that the investigations were primarily for “business purposes and human resources purposes.” The district court ordered the discovery to go forward, finding that the internal investigations were not intended to provide the Company with legal advice or to prepare for litigation.

Mandamus Petition and Amicus Support. FirstEnergy petitioned for mandamus relief in the Sixth Circuit. The petition attracted substantial support: 39 law firms, 11 corporate law and ethics scholars, and four legal and business groups submitted amicus briefs urging reversal.

The Sixth Circuit’s Decision

In its October 3, 2025 decision, the Sixth Circuit granted FirstEnergy’s petition and vacated the district court’s order.[1] It held that the internal investigations were protected by both the attorney-client privilege and the work-product doctrine, and that no waiver had occurred.

Attorney-Client Privilege. Relying on Upjohn Co. v. United States, 449 U.S. 383 (1981), the Sixth Circuit reaffirmed that privilege applies when a corporation seeks legal advice regarding potential criminal or civil liability. The Court found that, as in Upjohn, FirstEnergy and its Board “hired lawyers to secure legal advice through internal investigations into the company’s criminal and civil wrongdoing.”[2]

The opinion emphasized that FirstEnergy’s outside counsel examined “what acts occurred, whether those acts were illegal, and what criminal and civil consequences might ensue.”[3] The Court rejected plaintiffs’ contention that concurrent “business purposes” defeated privilege, noting that “it will be the rare company that will not also have business purposes for seeking essential legal advice” when facing serious allegations.[4]

Work-Product Doctrine. The Sixth Circuit held that the work-product doctrine independently protected the internal investigations.[5] As the Court explained, the doctrine applies when documents are created “because of a party’s reasonable anticipation of litigation.”[6] The “onslaught of legal and regulatory action” confronting FirstEnergy “leaves no question” that the investigations were conducted in anticipation of litigation.[7]

No Waiver of Protection. The Court rejected arguments that FirstEnergy waived protection through disclosures in a deferred prosecution agreement (DPA) or during civil litigation.[8] The disclosed information consisted of non-privileged facts or high-level conclusions, not the substance of attorneys’ advice.[9] Likewise, sharing materials with FirstEnergy’s independent auditor, PwC, did not constitute waiver. The Court reaffirmed that only disclosures to an adversary result in waiver, and PwC’s audit work—conducted to prepare SEC filings—did not place it in an adversarial position.[10]   

Implications

The Sixth Circuit’s decision strengthens and clarifies the standard for attorney-client privilege and work-product protections for internal investigations. Appellate decisions on these issues are relatively scarce because of the high bar for obtaining immediate appeal of discovery orders concerning corporate internal investigations. Thus, while this decision is binding only within the Sixth Circuit, it may prove to be highly influential in other circuits. It therefore provides important guidance for U.S. companies that conduct internal investigations:

• The Sixth Circuit recognized that corporate investigations often serve overlapping legal and business objectives. So long as the company “primarily sought and received legal advice from its attorneys,” privilege remains intact. Similarly, when legal and regulatory actions create an expectation of government investigations, litigation, and other proceedings, the company’s internal investigation should presumptively be entitled to work-product protection.
• Because in-house counsel often wear multiple “hats” as both legal advisors and business advisors, it can sometimes be challenging to demonstrate that the advice sought from in-house counsel is legal in nature. Engaging outside counsel—who are more likely to be engaged solely for legal advice—early helps establish that the investigation’s primary purpose is legal.  
• When summarizing investigation results to regulators, investors, or auditors, ensure that only factual or high-level findings are shared to avoid claims of waiver. 

The Sixth Circuit’s treatment of PwC underscores that companies should maintain a collaborative and non-adversarial relationship with their auditors that preserves work-product protection over materials shared with auditors.