U.S. v. Illinois Power Company

Full title: UNITED STATES OF AMERICA, Plaintiff, v. ILLINOIS POWER COMPANY, and DYNEGY…

Court: United States District Court, S.D. Illinois

Date published: Apr 24, 2003

Case No. 99-cv-0833-MJR (S.D. Ill. Apr. 24, 2003)

Opinion

Case No. 99-cv-0833-MJR.

April 24, 2003

ORDER

CLIFFORD PROUD, Magistrate Judge

Before the Court is Plaintiff's Motion to Compel Documents Claimed by the Defendants as Privileged. (Doc. 360). The United States is requesting forty-five documents from Defendants' privilege logs. These consist mostly of communications between Defendants and the Utility Air Regulatory Group (UARG), and segments of the Illinois Power Air Waves environmental newsletter.

Background

In its Third Amended Complaint (Doc. 427), the Government sets forth three counts against the Defendants, alleging various violations of the Clean Air Act ("the Act") and the Illinois State Implementation Plan ("SIP"). In the first count, the United States contends that Defendants violated the Prevention of Significant Deterioration ("PSD") regulations of the Environmental Protection Agency and the Act by "undertaking major modifications and/or operating the Baldwin Station facility after the modifications without first obtaining a PSD permit as required by 40 C.F.R. § 52.21(i)(1) and § 52.21(r)(1)." Third Amended Compl. ¶ 64. Count II of the Complaint alleges violations of the New Source Performance Standards ("NSPS"). Specifically, the Government claims that Defendants undertook construction at Baldwin Station without pre-notification to the EPA as required by 40 C.F.R. § 60.7(a)(4), without conducting a performance test within the specified time period as stated in 40 C.F.R. § 60.8, and without conducting the performance test using the methods provided by 40 C.F.R. § 60.48a. See Third Amended Compl. ¶ 75. The United States claims additional violations of the NSPS in the continued failure of the Defendants to comply with the emissions requirements for PM, SO₂, and NO_x as per 40 C.F.R. §§ 60.42a(a), 60.43a(a), and 60.44a(a). See Third Amended Compl. ¶ 76. The Government's Count III sets forth violations of the Illinois SIP for failure to apply or obtain construction or operation permits for the modifications undertaken by the Defendants, as required by 35 IAC §§ 201.142 and 201.143.

Defendants responded to claimed violations of PSD and NSPS in Counts I and II by raising a defense of "fair notice." The Act provides that only pollution sources constructed after the enactment of the regulations must adhere to those regulations; i.e., the Act grandfathers existing sources for their useful life. However, if an existing source is substantially modified, it loses its status as an existing source and would then be forced to comply with the PSD and NSPS. The Act does provide an exemption from this fate, though, for "routine maintenance, repair or replacement." 40 C.F.R. § 51.166(a)(2). In their defense, Defendants allege that the EPA changed its interpretation of the "routine maintenance, repair or replacement" exemptions without giving notice to the power industry of the change. See Responses to the Third Amended Complaint (Doc. 431 at 16).

Plaintiff's Motion to Compel Documents

In its motion before the Court, the United States seeks first various communications Defendants had with UARG. UARG was founded in 1978 by the law firm of Hunton Williams to represent the air environmental interests of the power utility industry. Defendant Illinois Power was a charter member, and remained a member until 1999. (Doc. 370 at 4). UARG served defendants by explaining and analyzing regulatory developments, authoring draft comments to proposed rulemakings, participating in litigation challenging EPA regulations, and participating in administrative proceedings before the EPA. (See Doc. 384 at 6, 10). The Government seeks such documents in order to gain evidence showing that Defendants did have knowledge of the EPA's interpretation of the "routine maintenance, repair, or replacement language." On the other hand, Defendants claim that the documents reflect "quintessential" attorney-client communications, "disclosure of which would necessarily reveal . . . the client's confidential request for legal advice." (Doc. 384 at 6). Defendants also claim that other documents sought represent either protected work product or a claim of common interest.

The United States also seeks two of Defendants' internal Air Waves newsletters, of which Plaintiff has received only redacted versions. These newsletters were disseminated to defendants' station managers and employees in order to explain air regulatory issues and rules. Defendants argue that the documents were confidential, limited to a small group of employees with a particular area of interest, while the United States argues that the employees were never told that such documents were confidential and the documents received "unlimited distribution." (Doc. 384 at 13-14). The United States has since filed a reply brief, modifying its original motion to compel, and now seeks in camera review of the requested documents followed by production of those documents.

Analysis

Attorney-Client Privilege Claims

In deciding issues of attorney-client privilege, the Seventh Circuit has adopted the essential elements laid out by Professor Wigmore:

(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived. WIGMORE, 8 EVIDENCE IN TRIALS AT COMMON LAW § 2292.

See also United States v. Lawless, 709 F.2d 485, 487 (7^th Cir. 1983); United States v. White, 950 F.2d 426, 430 (7^th Cir. 1991). The burden of establishing these essential elements lies on the party seeking to invoke the privilege. See White, 950 F.2d at 403. The privilege must be established document by document; a blanket claim of privilege will not suffice. See id. While performing this analysis, we must always remember "that because the attorney-client privilege impairs the court's search for the truth, it must be narrowly construed." Smith Kline Beecham Corp., 193 F.R.D. 530, 534 (N.D. Ill. 2000). The basic question that guides any inquiry in this area, though, is this: "does the document in question reveal, directly or indirectly, the substance of a confidential attorney client-communication." See id.

The United States begins its assault on the attorney-client privilege claims of the Defendants by attacking the detail of Defendants' privilege log, making mention of this Court's March 7, 2002 Order (Doc. 285) that "a party who produces an inadequate privilege log runs the risk of having its privilege claims denied." (Doc. 370 at 10). Privilege logs are governed by a standard that requires the description and contents of each document to be "sufficiently detailed to allow the court to determine whether the elements of attorney-client privilege . . . have been established." SmithKline, 193 F.R.D. at 534. However, as has been noted by other courts in ruling on motions substantially similar to the present, "there is a difference between the amount of information required to be supplied on a privilege log and the amount of information necessary to sustain a claim of attorney-client privilege." United States v. Ohio Edison Co., No. 99-1181 at 3 (S.D. Ohio Jan. 6, 2003) (Order denying plaintiff's motion to compel). The former is simply a device to identify documents withheld on privilege grounds, providing enough information to allow a requesting party to make an initial determination of the validity of a privilege claim. See id. Thus, like those other courts, this Order will focus solely on the substantive question of whether defendants have adequately met their burden in asserting privilege.

Facing this substantive question, Defendants first assert that the documents prepared by UARG's counsel, Hunton Williams, reflect legal advice based on confidential communications from UARG's members. Communications from the attorney to the client are privileged only "(1) if it is `shown that the client had a reasonable expectation in the confidentiality of the statement . . .; or (2) if the communications `tend to directly or indirectly reveal a client confidence." IBJ Whitehall Bank Trust Co. v. Cory Assocs., Inc., 1999 WL 617842, at 3 (N.D. Ill.), citing Harper-Wyman Co. v. Connecticut General Life Ins. Co., 1991 WL 62510, at 3 (N.D. Ill.).

The Government argues that because the requested communications do not reflect legal advice to a specific member based on confidential fact scenarios, they are not privileged. However, to obtain privilege, Defendants have to show only that the communications would tend to directly or indirectly reveal a client confidence. No one denies that UARG and its members possessed an expectation of privacy in the information provided by Hunton Williams, so that requirement is met. Production of the documents would, at the very least, reveal the kinds of subjects upon which UARG members sought legal advice. The documents challenged on this ground are privileged.

Connected to Defendants' claims that their communications satisfy the "confidential information test," are the allegations of the United States that this confidentiality was destroyed since some of the requested documents are communications dealing with lobbying activities. It is true that "communications between a lawyer and a client related to lobbying efforts are not necessarily protected by the attorney-client privilege." Robinson v. Texas Automobile Dealers Assoc., ___ F.Supp.2d ___, 2003 WL 1787352, at 9 (E.D. Tex.) However, "communications regarding legal advice or services that otherwise satisfy the elements of privilege do not lose their protection merely because they are given by a lawyer who also performs lobbying services or because the legal advice given relates to legislation that is the subject of lobbying efforts." Id. Despite the many situations where advice characterized as merely political and consequently was not protected, "this is not to say that legal advice loses its protection whenever it is given in the context of lobbying." Id. If a lawyer-lobbyist gives advice "that requires legal analysis of legislation, such as interpretation or application of the legislation to fact scenarios, that is certainly the type of communication that the privilege is meant to protect." Id. See also Weisman v. Fruchtmann, 1986 WL 15669, at 15 (S.D.N.Y.).

The descriptions given Documents 561, 570, and 571, which the Government brings up in its attack here, would seem to be the types of communications that the privilege is meant to protect. Simply because UARG or Hunton Williams, counsel for UARG, may participate in lobbying activities does not mean that documents they produce in communicating with each other are without privilege. There is no reason to believe, contrary to Plaintiff's assumptions, that these documents are not giving advice requiring legal analysis of legislation or litigation. They are therefore privileged.

Waiver and the Common Interest Rule

Establishing that the privilege can exist is not the end of the inquiry. Simply because information is transmitted to or from an attorney does not bless that information with the protections of the attorney-client privilege. See SmithKline, 193 F.R.D. at 534. An example is the waiver of privilege which occurs when communications are voluntarily disclosed to third parties. See IBJ Whitehall, 1999 WL 617842 at 3. However, waiver does not result when disclosure is made between parties linked by a common interest. See id. Known as the "joint defense privilege," or alternatively, the "common interest rule," it provides that:

Where two or more persons jointly consult an attorney concerning a mutual concern, "their confidential communications with the attorney, although known to each other, will of course be privileged in a controversy of either or both of the clients with the outside world." Id. (Citing United States v. McPartlin, 595 F.2d 1321, 1336 (7^th Cir. 1979).

This protection is available for any two parties who have a common interest in current or potential litigation. See IBJ Whitehall, 1999 WL 617842 at note 1. Here, this rule is invoked by Defendants to protect document 57 in Defendants' privilege log.

In this matter, the Government claims that the supposed presence of other companies at meetings of UARG destroys confidentiality by the "wide distribution" of the requested documents, or in the alternative, that such companies are not engaged in a joint defense. Despite Plaintiff's claims of a wide distribution, the requested documents were distributed to a defined group of recipients — the member companies of UARG. These companies were likely all concerned with the same issue of how the EPA was interpreting regulations and rulings, and together as UARG sought legal advice on these matters. There was no waiver of privilege through disclosure to third parties because UARG's members were joined in a common interest in current and potential litigation. The documents the Government seeks in making this claim are also therefore privileged.

Privilege Claims for the Airwaves Newsletter

Also at issue here are portions of two issues, Nos. 6 and 7, of Defendants' in-house environmental newsletter, Airwaves. According to Defendants, these newsletters were sent out to plant managers and personnel involved with environmental issues by Defendants' Environmental Affairs Department to keep these employees informed of new regulatory developments. (Doc. 384 at 14). Given this, the attorney-client privilege would not attach, since these documents were distributed to a number of employees and managers, none of whom were attorneys from whom legal advice was being sought. Nor are the redacted portions of these newsletters saved from discovery by the work product doctrine. As previously stated, the work product doctrine requires that to qualify for protection, the document must have been prepared in anticipation of litigation. In-house documents prepared in the ordinary course of business do not meet this requirement. Binks, 709 F.2d at 1118. There is nothing to establish that Airwaves was produced to communicate or gather information relating to litigation, rather it was produced in the ordinary course of business and is therefore unworthy of immunity from discovery.

Work Product Claims

The United States further seeks to attack the privilege claims of the Defendants by asserting that the communications between Defendants and UARG are not attorney work product, and are therefore not protected. The work product doctrine saves documents from otherwise liberal discovery rules by protecting "documents and tangible things . . . prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative." Fed.R.Civ.P. 26(b)(3). In order to fulfill its purpose to "avoid deterring a lawyer's committing his thoughts to paper," the protection offered by the work product doctrine is "distinct from and broader than the attorney-client privilege." IBJ Whitehall, 1999 WL 617842 at 3. Despite its broader coverage, the work product doctrine, unlike the attorney client privilege, is not absolute. Its protection can fall away if the requesting party "is unable without undue hardship to obtain the substantial equivalent of the materials by other means." Fed.R.Civ.P. 26(b)(3). In fact, the work product doctrine lends absolute protection only to documents that would "disclose the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation." IBJ Whitehall, 1999 WL 617842 at 3.

In applying the work product doctrine, the threshold determination is whether the material sought to be protected from discovery was prepared in anticipation of litigation. Binks Manufacturing Co. v. National Presto Industries, Inc., 709 F.2d 1109, 1118 (7^th Cir. 1983). Simply because litigation eventually arises does not bless material prepared by an attorney with immunity from discovery. Rather it must be shown that the material was caused by the anticipation of at least some articulable claim, likely to lead to litigation. See id. at 1119.

Plaintiff's first attack here is that Defendants could not have anticipated litigation prior to contacts between Defendants and the EPA in December, 1998. The documents sought here, 31 and 588, make references to "enforcement initiative" and "possible agency investigation." Given the actions taken by the EPA against several electric utility companies prior to and during 1998, it is hardly unreasonable to believe that these documents were caused by the anticipation of at least some articulable claim EPA had against Defendants, and that such claim was likely to lead to litigation.

The United States strives to preserve its attack against the work product claims of the Defendants by stating that they possess a "substantial need" for these documents. That claim will not succeed here, in light of the disclosure ordered above of the Airwaves newsletter. The Government is not without alternative sources of information on this issue, and therefore cannot show a substantial need for these other requested documents.

Conclusion

For the aforesaid reasons, Plaintiff's Motion to Compel the Production of Documents Claimed by the Defendants as Privileged (Doc. 360) is GRANTED as to the requested portions of the Airwaves newsletter, but DENIED as to the communications between Defendants and UARG.

IT IS SO ORDERED.