Opinion
No. CIV 96-98 MV/LFG
January 28, 2002
ORDER GRANTING DEFENDANTS MOTION TO UNSEAL DISCLOSURE STATEMENT AND TO COMPEL DISCOVERY
THIS MATTER came before the Court on Defendant Honeywell, Inc.'s (Honeywell) Motion to Unseal Relators Statement of Material Evidence and to Compel Production of Documents and Responses to Deposition Questions, filed as a package on December 21, 2001 [Docs. 88-91].
After careful consideration of the pleadings and attachments, pertinent law, and the United States Amicus Brief, filed January 15, 2002 [Doc. 97], I conclude that Honeywells Motion should be granted for the reasons set out below.
Background
This is a qui tam case brought by Relator Howard Tate (Tate), under 31 U.S.C. § 3730(b)(1). Tate seeks to impose liability on Honeywell for alleged violations of the False Claims Act, 31 U.S.C. § 3729, and various federal acquisition regulations and public laws because of Honeywells purported submission of false statements and false claims to the United States. Although the United States can elect to intervene as a party in qui tam cases, it has declined to do so in this case. Despite the United States decision not to intervene, Tate may proceed, as a private individual acting on behalf of the United States, against Honeywell.
In 1986, the federal False Claims Act was amended to encourage private enforcement suits. A procedure in the Act permits the government an initial opportunity to commence an action should it elect to do so. 31 U.S.C. § 3730(b).
Should Tate be successful with his claims, he will receive a percentage of the proceeds of the action, while the government also receives a share of the proceeds.
This case has been pending for almost six years. Tates First Amended Complaint was filed in March 1996 under seal, but has since been unsealed. [Doc. 4] The government investigated Tates claims for approximately four years before deciding not to intercede in the lawsuit. On March 8, 2001, Tate filed a Second Amended Complaint under seal. [Doc. 60.]
The government again declined to intervene on June 28, 2001. [Doc. 67, under seal.] The Second Amended Complaint was unsealed and served on July 6, 2001, and discovery has been proceeding.
Note Courts recent Order permitting some discovery deadlines to be extended pursuant to a request by Tate [Doc. 102].
Under the False Claims Act, a private party with knowledge of violations of the law initially must serve on the government a copy of the complaint and a written disclosure (Disclosure Statement or Statement) of substantially all material evidence and information the person possesses. 31 U.S.C. § 3730(b); United States, ex rel. Stone v. Rockwell International Corp., 144 F.R.D. 396, 399 (D.Colo. 1992). The statute requires that the complaint remain sealed for at least sixty days while the government determines whether to prosecute the case. The statute does not directly address whether the disclosure statement also is filed under seal or, even if the statute could be read to imply that, whether the disclosure statement must remain under seal with the complaint. The sole reference in the statute to a prohibition against disclosure is directed at the complaint, and in that vein, allows the complaint to be sealed for a specified period of time.
When Judge Vazquez previously entered orders unsealing the First and Second Amended Complaints, she directed that [a]ll other contents of the Courts file in this action filed prior to entry of this order [August 10, 2000] shall remain under seal and not be made public or served upon the defendant. . . . [Doc. 38.] Judge Vazquezs second Order contained similar language although it also provided that either party could later move to unseal additional materials. [Doc. 70.] Pursuant to these Orders, a number of documents have remained under seal, including the original complaint and disclosure statement provided by Tate to the government. This discovery dispute involves Honeywells request to unseal and compel production of the disclosure statement. In addition, Honeywell requests that Tate produce certain documents pertaining to records of communication between Tate and government employees, including government attorneys, and materials Tate received from the government.
Finally, Honeywell asks that Tate be compelled to respond to certain deposition questions asked of him regarding his communications with the government. Tate was instructed by counsel not to respond to those questions. Tate objects to disclosing the requested documents based on a number of asserted privileges and similarly objects to responding to the deposition questions at issue.
Discussion A. Disclosure Statement (Request for Production No. 1):
Honeywell asks that the Disclosure Statement be unsealed and made available because it is critical to its defense, will assist Honeywell in understanding the allegations against it, and enable it to analyze certain defenses that may be available, including whether Tate has standing to sue as the original source of information. Tate argues that the Disclosure Statement may not be discovered because Judge Vazquez ordered it to remain sealed and because it is protected by the attorney-client privilege, work product immunity and/or the joint interest privilege. The United States Amicus Brief raises the same arguments and might be read to include an argument asserting an investigative privilege.
Jurisdiction will be denied over a qui tam action unless the individual bringing the action is the original source of the information. In other words, that individual must have direct and independent knowledge of the information on which the allegations are based and must have voluntarily provided the information to the government before filing the lawsuit. 31 U.S.C. § 3730(e)(4)(B).
Only a few federal courts have published opinions on the question of whether Disclosure Statements, in qui tam cases, must remain confidential or be produced. In Rockwell International Corp., the District Court for the District of Colorado held that the False Claims Act did not prohibit the production of the Statement to a defendant, that the Statement was not protected by the attorney-client privilege or work product doctrine, and furthermore that any regulatory or investigative files privilege had been waived. Rockwell International Corp., 144 F.R.D. at 399-402.
1. False Claims Act does not prohibit disclosure of Statement. The Colorado federal court first reasoned that a statutory prohibition to disclose the Statement would serve no practical purpose and would be obstructive to the efficient prosecution of qui tam cases. Id. at 399.
Once the government makes an election and the case goes forward, fundamental fairness dictates that the plaintiff must disclose to the defendant the factual basis for the suit. At that point, no legitimate reason exists for preserving the confidentiality of the written disclosure statement, since it contains nothing more than the evidence and information which must come to light in any event once the case proceeds. Id.
The Disclosure Statement may well represent the best summary of these facts [supporting the allegations] currently available. Id. at 401. The District Court in the Western District of Kentucky provided similar analysis. In discussing the Disclosure Statement, the court stated a more complete recitation of the facts cannot be found. No other document is more adept at apprising Defendant of the nature of the alleged charges. United States ex rel. Burns v. A. D. Roe Company, Inc.,
904 F. Supp. 592, 593 (W. D. Ky 1995); see also United States ex rel. Robinson v. Northrop Corp., 824 F. Supp. 830, 838-39 (N.D.Ill. 1993) (court ordered production of Disclosure Statement).
I conclude similarly that nothing in the False Claims Act forecloses the disclosure of the Statement at issue, and that indeed, the Statement is critical to a defendants assessment of the underlying allegations and possible defenses. In addition, Tates argument that the Statement should remain sealed since Judge Vazquez ordered that it not be unsealed is unavailing. Clearly, Judge Vazquezs second Order allowed for the possibility that previously sealed documents might be unsealed. [Doc. 70.]
Moreover, the initial confidentiality contemplated by the False Claims Act serves the salutory purpose of protecting the whistle blowers anonymity. This is important, at least initially, while the government undertakes its preliminary investigation and determines whether the claim has merit, and whether it wishes to pursue the claim in a federal court. Also, because a whistle blower is often an insider, or an employee who may be improperly subject to retaliation if the employer knew his identity, the protection of confidentiality is reasonable and necessary. However, in a case like this, where the Relators identity is known as well as the general basis of the claims, the reason for confidentiality no longer exists. A. D. Roe, 904 F. Supp. at 594.
The fact that the government declined to intervene is not a factor in the Courts decision. See Burroughs v. DeNardi Corp., 167 F.R.D. 680, 686 n. 4 (S.D.Cal. 1996) (discussing waiver in a case where work product immunity was found to be applicable, and commenting that it did not matter whether the government intervened.)
Litigation should proceed as any other civil lawsuit in the federal system, under the same broad discovery principles contemplated by federal law. United States v. Procter Gamble Co., 356 U.S. 677, 682, 78 S.Ct. 983, 986-87 (1958); see also Grand, ex rel. United States v. Northrop Corp., 811 F. Supp. 333, 337 (S.D.Ohio 1992) (in discussing production of Disclosure State, court noted general principle that all non-privileged, relevant information is discoverable in accordance with Rule 26(b)(1)). Here, after considering the interests of a defendant to know the allegations and the claims asserted, as compared with the interests of a now public claimant to keep secret his information, the balance should tip in favor of disclosure.
2. Attorney-Client Privilege does not protect Statement from disclosure. While the False Claims Act itself provides no basis for withholding the Disclosure Statement, a privilege, if applicable, could protect the Statement from disclosure. Fed.R.Civ.P. 26(a)(1); A. D. Roe, 904 F. Supp. at 593. The attorney-client privilege applies under certain circumstances, e.g., when the communication relates to a fact of which the attorney was informed for the purpose of securing primarily either a legal opinion or legal services or assistance in a legal proceeding, and such privilege is not waived by the client. Rockwell International Corp., 144 F.R.D. at 399.
In concluding that the attorney-client privilege could not protect the Disclosure Statement, the Colorado federal court reasoned that the communications between the relator and the his counsel in preparing the Statement were not conducted for the purpose of securing legal counsel. Id.
Instead, the relator provided the information to his attorney because the False Claims Act required a written submission be given to the government to proceed with the action. Id. In essence, counsel merely acted as a conduit in taking factual material supplied by the client and relaying that material to the government in the form of the Disclosure Statement. Id. Moreover, the court noted that the False Claims Act does not require that the Statement be prepared by an attorney. It would be inappropriate to permit an assertion of attorney-client privilege as to the Disclosure Statement merely because a client elects to channel the preparation of the Statement through an attorney. Id. at 400.
The court also found that the communications to counsel, under these circumstances, where a Disclosure Statement is being prepared, do not amount to seeking legal advice. Furthermore, there was no expectation that the communications, at that stage, were intended to be kept confidential. Id. at 400. To the contrary, there was a specific intent that the information be disclosed to another the United States. Thus, there was no intent that the communication be kept confidential. The factual data communicated to his attorney was not for counsels eyes only. Id. Accordingly, no expectation of privacy could exist. Id. See A. D. Roe, 904 F. Supp. at 594 (same); United States ex rel. Burroughs v. DeNardi Corp., 167 F.R.D. 680, 683 (S.D.Cal. 1996) (same).
Similar to these courts, I also find that the attorney client privilege does not protect the Statement from disclosure. The cases cited by Tate, involving antitrust and ADEA litigation, do not convince me otherwise. In addition, the unpublished opinions attached by the government to its Amicus Brief, provide little analysis and are less compelling than the more reasoned published opinions on this very topic.
3. Work Product Doctrine does not protect Statement from disclosure. The work product doctrine appears to be Tates strongest argument in support of protecting the Disclosure Statement. However, the party asserting the privilege bears the burden of demonstrating a privilege applies. United States ex rel. OKeefe v. McDonnell Douglas Corp., 918 F. Supp. 1338, 1345-46 (E.D.Mo. 1996). Rule 26 prohibits discovery of matters protected by the work product doctrine. Fed.R.Civ.P. 26(b). The doctrine addresses documents and tangible things . . . prepared in anticipation of litigation or for trial by or for another party or by or for that other partys representative. Fed.R.Civ.P. 26(b)(3). The party compelling production still may be able to obtain the document in question if it can demonstrate a substantial need of the materials in the preparation of the partys case and . . . is unable without undue hardship to obtain the substantial equivalent of the materials by other means. Fed.R.Civ.P. 26(b)(3). Opinion work product, that reveals mental impressions, conclusions, opinions, or legal strategy of an attorney is absolutely or almost always protected from disclosure regardless of a showing of substantial need. Fed.R.Civ.P. 26(b)(3); DeNardi Corp., 167 F.R.D. at 683-84.
After conducting an in camera inspection of the Disclosure Statement in the case at hand, I conclude that the Statement contains no opinion work product and instead, sets forth the factual allegations that the False Claim Act requires be submitted. In applying Rule 26(b)(3), the Court has broad discretion to determine whether factual work product should or should not be disclosed. Rockwell International Corp., 144 F.R.D. at 401. I conclude, similar to the Colorado district court, that where the work product merely consists of a document reciting factual information provided by the client, the necessity for protection from discovery is weak . . . . Id.
Moreover, consistent with the reasoning by several other courts, I find that the Disclosure Statement provides the best summary of the underlying facts available and could assist the defendant to assess whether Tate is the original source. [N]owhere else can Defendant obtain a more detailed summary of its alleged wrongdoing. [N]othing could be more vital to Defendant than to be made completely aware of the allegations against . . . it . . . . A. D. Roe, 904 F. Supp. at 594.
This is especially true, where as here, Honeywell argues in other pleadings that Tate has failed to plead with specificity, and Honeywell contends it is forced to guess at the evidence against it.
While true that Honeywell may be able to obtain the same or similar information from Tate through depositions and written discovery, it appears that some of the questions directed at Tate during his deposition, that concerned these issues, were not answered upon direction of counsel. In any event, the defendant should not be forced to collect the same information through written discovery, when a detailed factual recitation exists in the form of a Disclosure Statement. McDonnell Douglas, 918 F. Supp. at 1346. Compare DeNardi Corp., 167 F.R.D. at 684 (Statement was work product and defendants did not establish a substantial need or undue hardship in obtaining the information elsewhere where the plaintiffs counsel provided the defendants with a 97 page memo written by the plaintiff exhaustively discussing all the claims.)
4. Joint Interest Privilege does not protect Statement for disclosure. Tate argues that the joint interest doctrine should protect the Statement and/or other communications he had with the government from disclosure. Tate explains that the communications he had with the government were designed to further a common interest and that a corresponding privilege has not been waived due to the relationship between Relator and the government.
Only one published qui tam opinion appears to address the joint prosecution privilege. In DeNardi, the California federal court provided dicta to the effect that the joint prosecution privilege might apply to the Disclosure Statement if the work product doctrine were found applicable. DeNardi Corp., 167 F.R.D. at 686. In that case, the court had not had an opportunity to conduct an in camera inspection of the Statement but planned to do so. Id. at 684-85. The court decided that, based on the common interests between the plaintiff and the government, it would not find that the disclosure of the Statement to the government waived the joint prosecution privilege. However, that projected finding would only have mattered if the work product immunity applied to protect the document in the first place. See id. at 686.
Here, I already have determined that the work product doctrine does not protect the Statement from being disclosed. Moreover, a joint interest argument is less convincing when the United States has declined to intervene and prosecute the case. It is true that if Tate succeeds in his claim, the United States will reap a benefit, and therefore, may have a contingent interest. However, the possibility of a joint benefit is a tenuous basis on which to assert a privilege. Accordingly, I decline to find that the joint prosecution privilege applies.
5. Regulatory and/or investigative privilege does not protect Statement for disclosure.
To the extent that the United States asserts this privilege in its Amicus Brief, I find such privilege to be qualified and that production of the Statement is required in the interests of justice and outweighs any competing interests. See Rockwell International Corp., 144 F.R.D. at 402. Again, the Disclosure Statement merely appears to recite the underlying facts, nothing that needs to be maintained under a cloak of confidentiality at this stage of the proceedings. Indeed, no privilege protects the disclosure of facts. RTC v. Dabney, 73 F.3d 262, 266 (10th Cir. 1995).
B. Notes of Communications regarding Honeywell between Tate and government personnel and documents received by Tate from the government (Request for Production Nos. 2 3):Tate essentially raises the same arguments as were addressed above regarding privileges that might protect the production of these requested materials. For the same reasons explained above, the Court declines to find that the requested materials are protected by the work product doctrine, attorney-client privilege or the joint prosecution privilege. Tate is directed to produce these documents.
C. Tates Deposition Testimony:
On October 30, 2001, Tate was deposed by Honeywell. Tate was asked if he made submissions with supporting factual bases to the government before filing his First Amended Complaint in March 1996. He was instructed by his attorney to answer yes or no, but to give no further explanation. On one occasion, Tate began to testify about the what he told the government regarding the basis of the allegations as to Count 3 of his Second Amended Complaint, but was instructed not to discuss anything he told the government. When asked if the government provided him with any documents in connection with its investigation, Tate was not allowed to answer. Tate also was instructed not to answer whether the government told him why it elected not to intervene.
Tates counsel contends that her objections are proper based on attorney-client privilege, the work product doctrine and joint interest privilege. It is noteworthy that Tates attorney did not follow up by filing a Motion for Protective Order with respect to these questions. Although it is generally inappropriate to instruct a deponent not to answer, such instruction is allowed when necessary to preserve a privilege. Fed.R.Civ.P. 30(d)(1).
However, the person asserting the privilege is obligated to file an immediate motion with the Court for a protective order, justifying asserting of the privilege for each question asked. It is improper to direct a witness not to answer unless a motion for protective order promptly follows, since such lack of action force[s] the Plaintiff to file a motion to compel and thus put the burden on the Plaintiff to justify that motion. Furniture World, Inc. v. D. A. V. Thrift Stores, Inc., 168 F.R.D. 61, 63 (D. N. M 1996) (citing American Hangar, Inc. v. Basic Line, Inc., 105 F.R.D. 173 (D. Mass. 1985)); Nutmeg Ins. Co. v. Atwell, Vogel Sterling, 120 F.R.D. 504 (W.D.La. 1988) (Even in the case of an instruction not to answer based on privilege, the party who instructs the witness not to answer should immediately seek a protective order.)
Because the Court already has set forth its reasoning as to why documents similar to the communications at issue are not protected by a privilege or the work product doctrine, Tate again will be directed to respond to the questions asked at his deposition that Honeywell identified in its Motion and accompanying brief. Honeywell may elect to request Tate to respond to the questions in full through written discovery or may reconvene the deposition.
Conclusion
In keeping with the principle that broad, liberal discovery is the rule in federal court, United States v. Procter Gamble Co., 356 U.S. at 682, 78 S.Ct. at 986-87, and for the specific reasons explained above, the Disclosure Statement will be unsealed and produced, the requested documents will be produced, and Tate will be directed to respond to the deposition questions identified by Honeywell.
IT IS THEREFORE ORDERED that Honeywells Motion to Unseal Relators Statement of Material Evidence and to Compel Production of Documents and Responses to Deposition Questions [Doc. 88] is GRANTED; and that a) the Disclosure Statement, originally filed under seal, will be unsealed in the court file and that Tate will produce a copy of the Disclosure Statement to counsel for Defendant, within ten days of the entry date of this Order; b) the documents and materials that are the subject of Request for Production Nos. 2 and 3 will be produced to Defendant within twenty days of the entry date of this Order; and c) Honeywell will be permitted to serve written discovery on Tate in order to obtain answers to the deposition questions that Honeywell identified in its Motion, or Honeywell will be permitted to reconvene Tates deposition as to the specific questions and related topics.