Judge Chucks Protective Order for Halliburton

WASHINGTON (CN) - A federal judge threw out protective orders shielding Halliburton from disclosing information about its operations as it faces claims that it overcharged the U.S. military.

Henry Barko sued the oil giant and its former subsidiary, KBR, previously known as Kellogg Brown & Root, in 2005 on behalf of the government.

After administering contracts for KBR for a year, Barko allegedly learned that the companies were inflating the construction costs of laundry rooms in at least three U.S. military bases in Iraq.

KBR's subcontractors, Daoud & Partners and Eamar, are also named as defendants.

As the False Claims Act case proceeded to limited discovery in 2010, U.S. District Judge Emmet Sullivan agreed to give the contractors a protective order covering documents that could disclose trade secrets.

U.S. District Court Judge James Gwin, who took over the Washington, D.C., case by designation from his court in Cleveland, vacated that protective order Monday.

"A court must tailor a protective order so that it restricts access no more than necessary," Gwin wrote.

"Here, the parties have failed to show that disclosure of particular information would cause serious harm," he added.

Though courts can limit public disclosure of information that is trade secret, Gwin noted that "the showing required to seal documents is great and approval for sealing documents will seldom be given."

"A party's belief is not enough to show that public disclosure of any information might cause serious harm," he added. "Nor is the protective order sufficiently narrow when any party can restrict any document."

In the same opinion, Gwin refused to dismiss the claims against KBR, Halliburton and Daoud.

"Although KBR attempts to put a more positive spin on the allegations, Barko gives sufficient facts to survive a motion to dismiss," Gwin wrote. "Because his claims are plausible, they will not be dismissed."

Barko claims that the contract structure gives KBR incentives to increase the cost of operations "because the contract provides KBR with an award of 3 percent of all costs." He also says that KBR manipulated the process to ensure that Daoud "was either the only bidder or the lowest bidder on numerous projects."

Barko also provided a detailed accounting to change orders that increased the value of the contracts.

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