Opinion
C.A. No. PB 12-5616
07-07-2014
RHODE ISLAND ECONOMIC DEVELOPMENT CORPORATION, Plaintiff, v. WELLS FARGO SECURITIES, LLC; BARCLAYS CAPITAL, INC.; FIRST SOUTHWEST COMPANY; STARR INDEMNITY AND LIABILITY COMPANY; CURT SCHILLING; THOMAS ZACCAGNINO; RICHARD WESTER; JENNIFER MACLEAN; ROBERT I. STOLZMAN; ADLER POLLOCK & SHEEHAN, P.C.; MOSES AFONSO RYAN LTD.; ANTONIO AFONSO, JR.; KEITH STOKES; and J. MICHAEL SAUL, Defendants.
For Plaintiff: See attached list For Defendant: See attached list
DECISION
SILVERSTEIN , J. Before the Court for decision is First Southwest Company's Motion to Compel Production of Documents (Motion). First Southwest Company's Motion was joined by Wells Fargo Securities, LLC, Robert I. Stolzman, Adler Pollock & Sheehan, P.C., Antonio Afonso, Jr., Moses Afonso Ryan Ltd., J. Michael Saul, Curt Schilling, Jennifer MacLean, Starr Indemnity and Liability Company, Keith Stokes, Thomas Zaccagnino, and Richard Wester (collectively, Defendants). Defendants assert that the Rhode Island Economic Development Corporation (EDC), the Office of the Governor (OOG), the Department of Administration (DOA), the Department of Revenue (DOR), and the General Treasurer's Office (GTO) are compelled to produce documents that have been classified as privileged by the various offices under the deliberative process privilege.
I
Facts & Travel
As this Court previously stated in its Decision on the Motion to Dismiss: "[t]he basic plot is well-known: 38 Studios, LLC (38 Studios) was induced to move its business to the Ocean State in exchange for a massive financial accommodation; less than two years later, 38 Studios went bankrupt. Much has been written about that plot in the media. Much has been discussed and debated—and continues to be discussed and debated—in the other two branches of government." Rhode Island Econ. Dev. Corp. v. Wells Fargo Sec., LLC, PB-12-5616, 2013 WL 4711306, at *2 (R.I. Super. Aug. 28, 2013). However, what is pertinent to the present Motion before the Court is that Defendants have made various discovery requests, and, in response to those requests, parties have created privilege logs that identify documents that are purportedly privileged for reasons indicated on such logs. One such justification used for classifying documents as privileged is the deliberative process privilege. First Southwest Company filed the Motion on May 2, 2014, seeking production of documents classified as privileged on the privilege logs. All other Defendants later joined First Southwest Company's Motion. Objections to the Motion were made by the EDC, Taft & McShay LLP, the OOG, the DOA, the DOR, the Rhode Island Budget Office, the GTO, and Shivan Subramaniam.
Privileges asserted are Attorney Client, Work Product, Deliberative Process, and Executive among others.
One argument advanced by the Motion is that the deliberative process privilege is inapplicable as asserted. However, it is worth noting that not all of the objecting parties asserted the deliberative process privilege. For example, the privilege log of Shivan Subramaniam dated October 31, 2013, identifies eleven documents and asserts either "Attorney/Client" and/or "Work Product" for all eleven documents. Accordingly, this Decision only pertains to the parties that have asserted the deliberative process privilege. However, the Court will once again take this opportunity to remind all parties, as it did at the hearing on this issue, that: "with respect to the purpose of [] a privilege log, that, among other things, it is necessary in reviewing a privilege log for the party from whom materials are being withheld to be able to make a determination as to whether the privilege properly has been asserted, at least a threshold determination; and also, for the Court to be able to do the same." (Hr'g Tr. 48).
The Court recognizes that some of the objecting parties are actually non-parties to the suit. However, for ease of reference, the Court will not distinguish between objecting parties and objecting non-parties.
II
Standard of Review
The discovery process affords Rhode Island litigants the ability to obtain information "regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action[.]" Super. R. Civ. P. 26(b)(1). To help ensure that a discovering parties' proper Super. R. Civ. P. 26 request is complied with, Super R. Civ. P. 37(a)(2) provides that:
"[i]f a deponent fails to answer a question propounded or submitted under Rules 30 and 31, or a corporation or other entity fails to make a designation under Rule 30(b)(6) or 31(a), or a party fails to answer an interrogatory submitted under Rule 33, or if a party, in response to a request for production or inspection submitted under Rule 34, fails to respond that inspection will be permitted as requested or fails to permit inspection as requested, the discovering party may move for an order compelling an
answer, or a designation, or an order compelling production or inspection in accordance with the request."
III
Discussion
Defendants argue that the deliberative process privilege is inapplicable because:
"the EDC cannot advance claims that Defendants concealed information from the EDC's Board of Directors (the "Board") while the EDC, its agents, and the State simultaneously withhold documents revealing the information disclosed to the EDC regarding the 38 Studios transaction, and [] the Privilege Logs fail to provide information sufficient to justify the privilege and often contain information that undermines the claim of privilege." First Southwest Company Mem. 3.Defendants also assert that the EDC waived the deliberative process privilege by placing any deliberations that may have taken place at issue.
The parties seeking to utilize the deliberative process privilege argue that the privilege is applicable because of its very purpose, which is to "protect[] the internal deliberations of an agency in order to safeguard the quality of agency decisions." In re Comm'n on Judicial Tenure & Discipline, 670 A.2d 1232, 1235 n.1 (R.I. 1996). Additionally, some of the parties counter Defendants' argument that the privilege was waived by the EDC; arguing that the EDC lacked the ability to waive any governmental offices' deliberative process privilege. Still, other parties (such as the GTO) assert that they had no role in the decision-making process and, accordingly, their conduct has not been placed at issue in the case.
The deliberative process privilege "rests on a policy of affording reasonable security to the decision-making process within a government agency." Texaco Puerto Rico, Inc. v. Dep't of Consumer Affairs, 60 F.3d 867, 884 (1st Cir. 1995). The privilege precludes from disclosure "documents reflecting advisory opinions, recommendations, and deliberations compromising a process by which governmental decisions and policies are formulated." Trentadue v. Integrity Comm., 501 F.3d 1215, 1226 (10th Cir. 2007).
When Rhode Island caselaw provides "little guidance" on discovery issues, Rhode Island courts can "look to the federal courts for assistance." See Fireman's Fund. Ins. Co. v. McAlpine, 120 R.I. 744, 751, 391 A.2d 84, 88 (1978).
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For the deliberative process privilege to apply to a document, courts, including this Court, have looked to see whether the document was both "pre-decisional" and "deliberative." See Heritage Healthcare Servs., Inc. v. Beacon Mut. Ins. Co., et al., PC-02-7016, 2007 WL 1234481, at *14 (R.I. Super. Apr. 17, 2007). "A document is pre-decisional if it is 'prepared in order to assist an agency decisionmaker in arriving at his decision.'" Id. (quoting Nadler v. U.S. Dep't of Justice, 955 F.2d 1479, 1491 (11th Cir. 1992)). Further, a document is "deliberative such that it 'makes recommendations or expresses opinions on legal or policy matters.'" Id. at 15 (quoting Vaughn v. Rosen, 523 F.2d 1136, 173 U.S. App. D.C. 187 (D.C. Cir.1975)).
However, even if a document is both "pre-decisional" and "deliberative," the privilege will not apply when an agency places its deliberations at issue. See In re Methyl Terriary Butyl Ether Prods. Liab. Litig., 898 F. Supp. 2d 603, 608 (S.D.N.Y. 2012) (finding that because the New Jersey Department of Environmental Protection (NJDEP) put at issue their deliberations regarding relative risks and benefits of using a gasoline additive, the NJDEP had waived its deliberative process privilege) (In re MTBE); see also Delphi Corp. v. United States, 276 F.R.D. 81, 85 (S.D.N.Y. 2011) ("Where the deliberative or decisionmaking process is the 'central issue' in the case, the need for the deliberative documents will outweigh the possibility that disclosure will inhibit future candid debate among agency decision-makers.").
Two different approaches have been set forth when dealing with deliberative process documents when deliberations have been determined to be "at issue." One such approach is that the privilege must automatically give way to production since the agency's knowledge and deliberations are central to the claims made. See Dep't of Econ. Dev. v. Arthur Andersen & Co., 139 F.R.D. 295, 299 (S.D.N.Y. 1991). There, the court found that "[w]here the adjudication of fraud claims turns upon issues of knowledge, reliance, and causation, direct evidence of the deliberative process is irreplaceable. The governmental privilege must give way." Id. A second approach has been to conduct a balancing test where relevant factors for the court to consider are "(1) the relevance of the evidence; (2) the availability of other evidence; (3) the government's role in the litigation; and (4) the extent to which disclosure would hinder frank and independent discussion regarding contemplated policies and decisions." In re MTBE, 898 F. Supp. 2d at 607. When conducting this balancing test, the "need for documents . . . will often outweigh the government's interest in candid discussions." Delphi Corp., 276 F.R.D. at 85-86.
Without a doubt, the deliberations of the EDC are a central issue to the case. The documents which the EDC or members of the EDC Board utilized in their deliberations are necessary for Defendants to defend against the EDC's claims. See Arthur Andersen, 139 F.R.D. at 299. If the parties were able to baldly assert the deliberative process privilege, they may well indeed be able to withhold damaging documents while releasing only favorable documents. Such use of the privilege as a sword rather than a shield was exactly what was contemplated in In re MTBE when it found that:
"Similarly, by asserting a failure to warn cause of action—a claim which can only succeed if NJDEP demonstrates that it would have heeded adequate warnings—NJDEP has placed its own decision-making process "at issue," and the deliberative process must give way. Were this not so, NJDEP could protect from discovery any deliberative process . . . materials that tend to demonstrate NJDEP
would not have heeded better warnings. At the same time, NJDEP could present to a jury any internal communications among NJDEP officials that tend to show the agency would have heeded stronger warnings. This is precisely the inequitable use of privilege "as a sword rather than a shield" that the "at issue" doctrine prevents." In re MTBE, 898 F. Supp. 2d at 610.
Therefore, the Court finds that to the extent that any privilege log claims the deliberative process privilege with respect to matters that were communicated to the EDC, or any member of the EDC Board, including, without limitation, the Governor, or staff of the Governor to the extent that the document was communicated to the Governor, the claim of privilege is inappropriate because it was the decision-making of the EDC that has been placed at issue in this case. Thus, whatever information the EDC or any member of the EDC Board, including the Governor, or the Governor's staff to the extent that the document was communicated to the Governor, had is at the center of this case and the Defendants have demonstrated a need to know what the EDC and the EDC Board members were told. The Court finds that Defendants are entitled to these documents whether it apply the strict rule enunciated in Arthur Andersen, or whether it apply a balancing test as set forth in In re MTBE.
IV
Conclusion
Predicated on the foregoing, all parties are ordered to produce documents that were communicated to the EDC or any members of the EDC Board, including the Governor, or the Governor's staff to the extent that the document was communicated to the Governor, over which the deliberative process privilege had been previously asserted and to which no other privilege attaches.
Prevailing counsel shall present an order consistent herewith which shall be settled after due notice to counsel of record.
RHODE ISLAND SUPERIOR COURT
Decision Addendum Sheet
TITLE OF CASE:
Rhode Island Economic Development Corporation v.
Wells Fargo Securities, LLC, et al.
CASE NO: PB 12-5616
COURT: Providence County Superior Court
JUSTICE/MAGISTRATE: Silverstein, J.
ATTORNEYS:
For Plaintiff: See attached list
For Defendant: See attached list Max Wistow, Esq.
Wistow & Barylick
61 Weybosset Street
Providence, RI 02903-2824
Telephone: (401) 831-2700
Facsimile: (401) 272-9752
mw@wistbar.com
Counsel for Plaintiff
Stephen P. Sheehan, Esq.
Wistow & Barylick
61 Weybosset Street
Providence, RI 02903-2824
Telephone: (401) 831-2700
Facsimile: (401) 272-9752
spsheehan@wistbar.com
Counsel for Plaintiff
Benjamin G. Ledsham, Esq.
Wistow & Barylick
61 Weybosset Street
Providence, RI 02903-2824
Telephone: (401) 831-2700
Facsimile: (401) 272-9752
bledsham@wistbar.com
Counsel for Plaintiff
Robert M. Duffy, Esq.
Duffy & Sweeney, Ltd.
1800 Financial Plaza
Providence, RI 02903
Telephone: (401) 455-0700
Facsimile: (401) 455-0701
rduffy@duffysweeney.com
Counsel for Defendant Wells Fargo Securities, LLC
Byron L. McMasters, Esq.
Duffy & Sweeney, Ltd.
1800 Financial Plaza
Providence, RI 02903
Telephone: (401) 455-0700
Facsimile: (401) 455-0701
bmcmasters@duffysweeney.com
Counsel for Defendant Wells Fargo Securities, LLC
Thomas F. Holt, Jr., Esq.
K & L Gates, LLP
State Street Financial Center
One Lincoln Center
Boston, MA 02111-2950
Telephone: (617) 261-3100
Facsimile: (617) 261-3175
Thomas.holt@klgates.com
Counsel for Defendant Wells Fargo Securities, LLC
Gerald J. Petros, Esq.
Hinckley, Allen & Snyder LLP
50 Kennedy Plaza, Suite 1500
Providence, RI 02903
Telephone: (401) 274-2000
Facsimile: (401) 277-9700
GPetros@haslaw.com
Counsel for First Southwest Company
Mitchell R. Edwards, Esq.
Hinckley, Allen & Snyder LLP
50 Kennedy Plaza, Suite 1500
Providence, RI 02903
Telephone: (401) 274-2000
Facsimile: (401) 277-9600
medwards@haslaw.com
Counsel for First Southwest Company
Brian E. Robison, Esq.
Gibson, Dunn & Crutcher LLP
2100 McKinney Avenue, Suite 1100
Dallas, TX 75201-6912
Telephone: (214) 698-3100
Facsimile: (214) 571-2900
brobison@gibsondunn.com
Counsel for Defendant First Southwest Company
Russell H. Falconer, Esq.
Gibson, Dunn & Crutcher LLP
2100 McKinney Avenue, Suite 1100
Dallas, TX 75201-6912
Telephone: (214) 698-3100
Facsimile: (214) 571-2900
rfalconer@gibsondunn.com
Counsel for Defendant First Southwest Company
William M. Dolan, III, Esq.
Brown Rudnick LLP
10 Memorial Boulevard, 10th Floor
Providence, RI 02903
Telephone: (401) 276-2611
Facsimile: (401) 276-2601
wdolan@brownrudnick.com
Counsel for Defendants Robert Stolzman and
Adler, Pollock & Sheehan, P.C.
David P. Martland, Esq.
Silva, Thomas, Martland & Offenberg, Ltd.
1100 Aquidneck Avenue
Middletown, RI 02842
Telephone: (401) 849-6200
Facsimile: (401) 849-1820
dmartland@silvalawgroup.com
Counsel for Defendant Keith Stokes
David A. Grossbaum, Esq.
Hinshaw & Culbertson LLP
321 South Main Street
Providence, RI 02903
Telephone: (401) 751-0842
Facsimile: (401) 751-0072
dgrossbaum@hinshawlaw.com
Counsel for Defendants Antonio Afonso, Jr.
and Moses Afonso Ryan, Ltd.
Samuel C. Bodurtha, Esq.
Hinshaw & Culbertson LLP
321 South Main Street
Providence, RI 02903
Telephone: (401) 751-0842
Facsimile: (401) 751-0072
sbodurtha@hinshawlaw.com
Counsel for Defendants Antonio Afonso, Jr.
and Moses Afonso Ryan, Ltd.
Matthew R. Watson, Esq.
Hinshaw & Culbertson LLP
321 South Main Street
Providence, RI 02903
Telephone: (401) 751-0842
Facsimile: (401) 751-0072
mwatson@hinshawlaw.com
Counsel for Defendants Antonio Afonso, Jr.
and Moses Afonso Ryan, Ltd.
Brooks R. Magratten, Esq.
Pierce Atwood LLP
10 Weybosset Street, Suite 400
Providence, RI 02903
Telephone: (401) 588-5113
Facsimile: (401) 588-5166
bmagratten@pierceatwood.com
Counsel for Defendant Barclays Capital, Inc.
Jeffrey C. Schreck, Esq.
99 Wayland Avenue, Suite 200
Providence, RI 02906
Telephone: (401) 421-9600
Facsimile: (866) 587-1527
JSchreck@msn.com
Counsel for Defendants Richard Wester,
Thomas Zaccagnino, Curt Schilling, and
Jennifer MacLean
Michael F. Connolly, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Telephone: (617) 542-6000
Facsimile: (617) 542-2241
mfconnolly@mintz.com
Counsel for Defendants Richard Wester and
Thomas Zaccagnino
Joseph P. Curtin, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Telephone: (617) 542-6000
Facsimile: (617) 542-2241
jpcurtin@mintz.com
Counsel for Defendants Richard Wester and
Thomas Zaccagnino
A.W. (Chip) Phinney, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Telephone: (617) 542-6000
Facsimile: (617) 542-2241
awphinney@mintz.com
Counsel for Defendants Richard Wester and
Thomas Zaccagnino
Michael P. Duffy, Esq.
Peabody & Arnold LLP
Federal Reserve Plaza
600 Atlantic Avenue
Boston, MA 02210-2261
Telephone: (617) 951-2100
Facsimile: (617) 951-2125
mduffy@peabodyarnold.com
Counsel for Defendant Starr Indemnity
and Liability Co.
Frederick E. Connelly, Jr., Esq.
Peabody & Arnold LLP
Federal Reserve Plaza
600 Atlantic Avenue
Boston, MA 02210-2261
Telephone: (617) 951-2100
Facsimile: (617) 951-2125
fconnelly@peabodyarnold.com
Counsel for Defendant Starr Indemnity
and Liability Co.
Christopher R. Conroy, Esq.
Peabody & Arnold LLP
Federal Reserve Plaza
600 Atlantic Avenue
Boston, MA 02210-2261
Telephone: (617) 951-2100
Facsimile: (617) 951-2125
cconroy@peabodyarnold.com
Counsel for Defendant Starr Indemnity
and Liability Co.
Bruce W. Gladstone, Esq.
Cameron & Mittleman LLP
301 Promenade Street
Providence, RI 02908
Telephone: (401) 331-5700
Facsimile: (401) 331-5787
bgladstone@cm-law.com
Counsel for Defendant J. Michael Saul
Mark A. Berthiaume, Esq. Greenberg Traurig One International Place, 20th Floor Boston, MA 02111 Telephone: (617) 310-6000 Facsimile: (617) 310-6001 berthiaumem@gtlaw.com Counsel for Defendant Jennifer MacLean Jonathan Bell, Esq. Greenberg Traurig One International Place, 20th Floor Boston, MA 02111 Telephone: (617) 310-6000 Facsimile: (617) 310-6001 bellj@gtlaw.com Counsel for Defendant Jennifer MacLean Timothy E. Maguire, Esq. Greenberg Traurig One International Place, 20th Floor Boston, MA 02111 Telephone: (617) 310-6000 Facsimile: (617) 310-6001 maguiret@gtlaw.com Counsel for Defendant Jennifer MacLean Carl E. Metzger, Esq. Goodwin Procter LLP One Exchange Place Boston, MA 02109 Telephone: (617) 570-1000 Facsimile: (617) 523-1231 cmetzger@goodwinprocter.com Counsel for Defendant Curt Schilling Sarah Heaton Concannon, Esq. Goodwin Procter LLP One Exchange Place Boston, MA 02109 Telephone: (617) 570-1000 Facsimile: (617) 523-1231 sconcannon@goodwinprocter.com Counsel for Defendant Curt Schilling 15 Josh L. Launer, Esq. Goodwin Procter LLP One Exchange Place Boston, MA 02109 Telephone: (617) 570-1000 Facsimile: (617) 523-1231 jlauner@goodwinprocter.com Counsel for Defendant Curt Schilling Thomas E. Duncombe, Esq. Goodwin Procter LLP One Exchange Place Boston, MA 02109 tduncombe@goodwinprocter.com Counsel for Defendant Curt Schilling Claire Richards, Esq. Anita Flax, Esq. 82 Smith Street, Room 119 Providence, RI 02903 Telephone: (401) 222-8114 Claire.richards@governor.ri.gov Anita.flax@governor.ri.gov Counsel for the Office of the Governor Raymond Marcaccio, Esq. Oliverio & Marcaccio LLP 55 Dorrance Street, Suite 400 Providence, RI 02903 Telephone: (401) 861-2900 ram@om-rilaw.com Counsel for the General Treasurer's Office Joseph D. Whalen, Esq. Matthew H. Parker, Esq. Whelan, Kinder & Siket LLP 30 Kennedy Plaza, Suite 402 Providence, RI 02903 Telephone: (401) 270-4500 jwhelan@whelankindersiket.com mparker@whelankindersiket.com Counsel for Shivan Subramanian Robert D. Murray, Esq. 21 Garden City Drive Cranston, RI 02920 16 Telephone: (401) 946-3800 Counsel for Taft & McSally LLP Michael D. Mitchell, Esq. Division of Legal Services Department of Administration One Capitol Hill Providence, RI 02908 Telephone: (401)222-8339 Michael.mitchell@admin.ri.gov Counsel for Rhode Island Department of Administration, Rhode Island Department of Revenue and Rhode Island Budget Office