Litigating with (Not Against) the Government: Freedom of Information Act May Compel Disclosure of Attorney Work Product

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1 Litigating with (Not Against) the Government: Freedom of Information Act May Compel Disclosure of Attorney Work Product BY TERRY L. ELLING In Dep t of the Interior v. Klamath Water Users Protective Ass n, 1 the Supreme Court indicated that documents shared by private counsel with the government, including work product shared in confidence in the course of litigation, might be subject to disclosure if requested by an adverse party or other individual under the Freedom of Information Act (FOIA). 2 This article first discusses the courts treatment of the so-called common interest privilege in cases where parties have contested disclosure of shared work product outside of the context of FOIA. It then discusses the Supreme Court s holding in Klamath and its clear signal that shared documents will often fail to fall within the intra- or inter-governmental FOIA exemption. In conclusion, the article offers some suggestions for maximizing the potential for precluding disclosure of work product shared with the government. Although private government contract law practitioners are most accustomed to an adversarial relationship with government counsel, there are frequent occasions when a client and the government have mutual and complementary interests. These situations may involve: An awardee or other friendly intervenor in a bid protest before the Comptroller General or the Court of Federal Claims, where the intervenor and the government share a strong interest in defending the contract evaluation and/or award. A prime contractor involved in a dispute with a subcontractor, where both the prime and the government share the view that neither is liable for the subcontractor s claim. Tort, environmental, employment, or other claims Terry I. Elling is Of Counsel with the Government Contracts Practice Group at Venable, LLP, Washington, D.C. Prior to joining Venable in September 2002, Mr. Elling served in a number of government contracts and litigation assignments with the U.S. Army, including Assistant to the General Counsel (Ethics and Fiscal Policy); Deputy Chief and Branch Chief, U.S. Army Litigation Division; and, Trial Attorney, U.S. Army Contract Appeals Division. where the contractor and the government are named or possible codefendants. Situations involving potential fraud, procurement integrity, or other improper business practices by employees or agents, where a contractor wishes to promptly report the matter, perhaps in hopes of taking advantage of voluntary disclosure programs. The contractor and the government share strong and mutual interests in these settings. Further, the parties and the tribunal greatly benefit if private and government counsel share their opinions, theories, and other work product. Sharing work product and otherwise cooperating in preparing a mutual defense or prosecution serves a number of legitimate goals, such as ensuring that the best decisions are made by both parties as to what claims or defenses to raise; efficient coordination of discovery; determining whether or when to attempt settlement; and how best to organize a case at trial to ensure a coherent presentation and to avoid duplication of effort. It is insufficient, however, for counsel to evaluate whether shared work product will retain its privilege against disclosure based solely on the application of traditional discovery and evidence principles. Counsel must also consider the probability that the federal agency will be obliged to disclose work product documents in the agency s possession if requested by an adverse party or other individual under FOIA. Work Product Privilege and Communications with the Government In determining whether to compel disclosure of material provided by a private party to the government in cases outside of the context of FOIA, the courts have applied traditional work product doctrine analyses. The doctrine s purpose is to promote the adversarial system by protecting the results of an attorney s trial preparations from discovery by opponents under the notion that [p]roper preparation of a client s case demands that [the attorney] assemble information, sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference. 3 The work product doctrine normally shields from disclosure all documents and other items prepared in anticipation of litigation or for trial; the courts are especially obliged to protect documents reflect- Spring 2003, Volume 38, Number 3, The Procurement Lawyer 1 Copyright 2003 Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or

2 ing an attorney s or other representative s opinions, legal theories, and conclusions. 4 When examining whether an exchange of material between parties is privileged, tribunals focus on whether the parties interests in the litigation are sufficiently similar and whether the information was transferred with an expectation of confidence. This variant of the work product doctrine is variously referred to as the common interest, joint defense, or joint prosecutorial privilege. 5 A party asserting the common interest work product privilege must show that (1) communications were made in the course of a common litigation effort; (2) the communications were intended to further this effort; and (3) the communications were made in confidence and the privilege was not waived. 6 For the common interest work product privilege to apply, the parties need only have sufficient common motives and interests in the litigation; precise identity of interests is unnecessary, and the entities need not be coparties in the same action. 7 An attorney s disclosure of work product to a third party may, however, result in waiver of the privilege if the disclosure itself enables an adversary to gain access to the information. 8 In addition, a court may decline to invoke the privilege where the private party and the government did not share common interests at the time documents were exchanged. 9 The courts have found the common interest privilege applicable to work product in a number of situations. For example, information provided to the United States by the plaintiff in a private antitrust action, when the government was prosecuting a separate antitrust action against the same defendant, was found to remain privileged where the United States and the private plaintiff shared common prosecutorial interests and the information was exchanged on the understanding that it would remain confidential. 10 Similarly, documents provided to the government by the relator in a qui tam case under the False Claims Act 11 have been determined to be protected from disclosure to the defendant. 12 Although the outcome of a dispute over privilege is uncertain and fact-specific, the common interest privilege otherwise provides a solid basis for counsel seeking to protect from disclosure information shared with another party in confidence. Moreover, counsel can take a number of steps to strengthen subsequent privilege claims, such as entering into an express common defense agreement with government counsel wherein the parties memorialize the nature of such information and express their understanding that exchanged documents will be kept in confidence. Recent examination of the issue of disclosure of documents in the government s possession under FOIA, however, signals substantial concerns for private counsel who may be considering sharing documents in the course of a cooperative litigation effort. The Freedom of Information Act FOIA mandates that, upon request, a federal agency must disclose records in its possession. 13 Although a number of exemptions provide lawful bases for an agency to withhold documents, in view of FOIA s broad policy of disclosure, these exemptions are construed narrowly. 14 Of greatest relevance to litigators is Exemption 5, which shields the disclosure of inter-agency or intra-agency memorandums or letters that would not be available by law to a party other than an agency in litigation with the agency. 15 The Supreme Court has previously interpreted the second condition of Exemption 5 (that the documents must be unavailable by law to a party in litigation with the agency) to include existing civil and criminal discovery privileges such as the attorney client, attorney work product, and deliberative process privileges. 16 Prior to the Klamath decision, however, the Supreme Court had not considered the first element of Exemption 5 (that the documents be inter-agency or intra-agency in nature). Several federal appellate courts examining the issue had adopted a functional test under which documents originating outside of the government may qualify as inter- or intra-governmental where the private provider of the document and the government have a sufficiently direct relationship. 17 In Klamath, the Supreme Court clarified its views with respect to the first condition in a manner that is of concern to any attorney considering sharing work product with the government. The Klamath Decision and Disclosure of Information Under FOIA Background. The Klamath case arose from two related proceedings. The first involved consultations with respect to long-term water use planning undertaken by the Department of Interior s Bureau of Reclamation to provide for allocation of water among competing users. Incident to this planning effort, the Bureau invited several affected Native American tribes, including the Klamath, to consult with it. The Bureau and the tribes executed a memorandum of understanding recognizing the unique legal relationship between the government and the tribes. 18 The second proceeding involved claims made on the Klamath tribe s behalf in an Oregon state court adjudication of water rights filed by the Interior Department s Bureau of Indian Affairs (BIA). BIA has a statutory responsibility to administer land and water held in trust for Native American tribes. 19 The Klamath tribe and BIA exchanged memoranda concerning the claims and other matters. 20 Against this backdrop, a nonprofit association of other water users, the Klamath Water Users Protective Association, filed a series of FOIA requests seeking access to communications exchanged between the Interior Department and the tribes. The Department invoked Exemp- 2 The Procurement Lawyer, Spring 2003, Volume 38, Number 3 Copyright 2003 Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or

3 tion 5 to withhold a number of documents. 21 The Association filed suit to compel release of the documents. The district court granted summary judgment for the government, finding that the Klamath tribe was acting as a consultant to the Department in furtherance of BIA s fiduciary obligations with respect to the tribe s rights to water assets held in trust, and that the documents were therefore protected under the deliberative process privilege or as work product. 22 The United States Court of Appeals for the Ninth Circuit reversed, however, finding that the documents were not exempt from disclosure. The court held that the fact that the tribes had a direct interest in the outcome of both the water-use planning process and the state court adjudication precluded application of Exemption 5, and that to hold otherwise would extend Exemption 5 to shield what amounts to ex parte communications in contested proceedings between the Tribes and the Department. 23 In dissent, Judge Hawkins indicated that Exemption 5 should be applied to provide a basis for withholding documents as long as the relationship between the private party and the government remains consultative and does not become adversarial. 24 The Supreme Court s decision. In writing for a unanimous Court, Justice Souter affirmed the Ninth Circuit s decision. Justice Souter initially noted that although the department had special statutory and regulatory responsibilities to the Klamath tribe, it was not acting as the tribe s counsel in either proceeding, and had actually asserted claims on behalf of other tribes and on its own behalf in the Oregon state court proceedings. 25 Although the Court apparently accepted the functional or consultant test to determine whether a document prepared by a private party qualifies under Exemption 5, 26 it proceeded to indicate that only an extra-governmental source that... does not represent an interest of its own, or the interest of any other client, when it advises the agency will fall within Exemption Further, the Court found that the Department s contention that the full and frank communication with the tribe necessary to fulfill its fiduciary obligations was insufficient to justify nondisclosure, absent a showing that the tribe was acting only in furtherance of governmental interests such that the documents could be viewed as intra-governmental in nature. 28 With respect to those documents the tribe provided in consulting with the Bureau of Reclamation in the course of water-use plan consultations, the Court found that the documents function is quite apparently to support the tribal claims that were adverse to other water users. 29 As for documents the tribe provided in the course of the Oregon state court proceeding, the Court similarly noted that the documents purpose was to advance the tribe s claims over others. 30 The Court concluded that even if there were no rival claims at issue in the Oregon case, BIA, in its fiduciary role, was obliged to take the position that the government believes to be in the tribe s best interest, which is not necessarily the position the tribe would prefer. 31 Klamath s implications. With the Klamath decision, the Supreme Court has signaled a restrictive interpretation of the circumstances in which Exemption 5 can be successfully invoked by the government. To qualify under the exemption, a contractor or other extra-governmental source of information must, in effect, be shown to have been acting as the government s agent, with no significant independent interest. This approach is substantially different from that which a court would otherwise take in considering a claim under the common defense privilege, where it need only be shown that the government and the private party share a common interest with respect to litigation. The Court s holding is particularly troublesome with regard to the attorney work product privilege. The other discovery privileges (e.g., the deliberative process and attorney client privileges) embraced by Exemption 5 are quite narrow in their scope and application, in recognition of the courts traditional reluctance to deny access to potentially relevant information. The common defense work product privilege, in contrast, is relatively broad in scope in furtherance of its purpose of encouraging an open and candid exchange between parties on the same side of an actual or potential lawsuit. It should be expected that following Klamath the courts will find Exemption 5 inapplicable to many situations in which a document originates or is shared outside government circles. In Merit Energy Company v. Department of the Interior, 32 the Minerals Management Service redacted information from a FOIA response to a request for documents used in determining royalty payments to the Jicarilla Apache tribe on the basis, inter alia, that the redacted information was subject to the deliberative process privilege. The district court rejected the government s argument, noting that the redacted material was comprised of information exchanged between the department and the tribe and, accordingly, was not inter/intragovernmental in nature. 33 Moreover, at least one court has ruled that a report originally prepared for a government agency by an outside consultant was properly withheld from disclosure under FOIA under Exemption 5 as an intergovernmental communication, even though the report was subsequently provided by a government attorney to an attorney for nongovernmental parties with whom the government shared a common litigation interest. 34 Considerations for Government Contractors After Klamath Counsel for government contractors and other private entities must be cautious in sharing information with the government in the course of actual or threatened litigation. The Klamath decision plainly indicates that the gov- Spring 2003, Volume 38, Number 3, The Procurement Lawyer 3 Copyright 2003 Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or

4 ernment may be obliged to produce to any FOIA requester material provided by a private counsel, even if the documents are otherwise protected by the common interest work product privilege. Thus, counsel must carefully assess the benefit of providing his or her work product to the government against the risk that the documents will be disclosed to any adversary who files a proper request for the documents under FOIA. If confronted with the actual or potential disclosure of work product that counsel has shared with government counsel, it may still be possible to prevent disclosure. Exemption 5 may remain available as a basis for withholding in appropriate, albeit limited, circumstances where a contractor can establish that it was acting as the government s agent or consultant under the functional test. In light of the Supreme Court s rejection of Exemption 5 in the context of the fiduciary relationship between the government and the Klamath tribe, however, counsel will have to establish a compelling relationship between the government s and the consultant/contractor s interests to prevent disclosure. Such a strict convergence of interests is unlikely to be present in most bid protests and contract disputes, where the government and the contractor will almost invariably have some independent interests. Other FOIA exemptions may provide a basis for withholding in appropriate circumstances. For example, Exemption 1 35 protects properly classified national security information from disclosure. Exemption 3 36 may apply if releasing the documents would violate a specific statutory prohibition against release. Exemption 4 37 is available to preclude disclosure of documents that contain proprietary or trade secret information. Unfortunately, FOIA s exemptions provide only limited protection to a contractor or other party with a legitimate interest in collaborating with the government in prosecuting or defending a case. Moreover, a contractor may have to pursue a reverse-foia suit against the government to forestall disclosure if the government declines to invoke an exemption 38 in the course of responding to a particular request. 39 Ultimately, only legislation amending Exemption 5 to clarify that the exemption applies to all work product material that would otherwise be considered privileged under the common defense doctrine, regardless of the source from which the government obtained the material, will enable private counsel to share work product with the government without undue fear that such documents will be subject to release under FOIA. PL Endnotes U.S. 1 (2001) 2. 5 U.S.C Hickman v. Taylor, 329 U.S. 495, 511 (1947). 4. FED. R. CIV. PROC. 26(b)(3); see generally Hickman v. Taylor, 329 U.S. 495, (1947). Because of the work product doctrine s purpose of promoting the adversarial system by permitting counsel to develop their theories, conclusions, and impressions without undue fear of forced disclosure, it is perforce broader in its reach than the attorney-client privilege from which it is derived. The attorney-client privilege, intended only to shield confidential discussions between counsel and their clients, is significantly more limited in scope and much more likely to be waived if the communications are revealed to a third party. See Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); United States v. Am.Tel. & Tel. Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980). This note focuses on the work product doctrine privilege. 5. The term common interest privilege is used in this article to refer to this variation of the work product privilege. 6. United States ex rel. Burroughs v. DeNardi Corp., 167 F.R.D. 680, 685 (S.D. Cal. 1996) (citing United States v. Bay State Ambulance & Hospital Rental Serv., 874 F.2d 20, 28 (1st Cir. 1989); and Waller v. Financial Corp. of America, 828 F.2d 579 (9th Cir. 1987)). 7. Id., citing, inter alia, In re Grand Jury Subpoenas, 902 F.2d 244, 249 (4th Cir. 1990) (common interest privilege was not limited to criminal codefendants, because all persons with a common interest in litigation should be free to communicate with their attorneys and with each other in order to more effectively prosecute or defend claims). 8. See Am.Tel. & Tel., 642 F.2d at See Information Resources v. Dun & Bradstreet Co., 999 F. Supp. 591 (S.D.N.Y. 1998) (plaintiff in private antitrust action waived work product privilege with respect to documents provided to government when, at time documents were provided, plaintiff and the government were neither adversaries nor allies ); see also United States v. Mass. Inst. of Tech., 129 F.3d 681, 687 (3d Cir. 1997) (Massachusetts Institute of Technology (MIT) unable to invoke common interest privilege in action by Internal Revenue Service to enforce an administrative subpoena for information MIT furnished to Defense Contract Audit Agency (DCAA) in course of performing government contracts, notwithstanding that DCAA regulations afford confidential treatment to such information; court held that MIT and DCAA did not share common interests with respect to potential litigative uses of the information). 10. Id U.S.C United States ex rel. Purcell v. MWI Corp., 209 F.R.D. 21 (D.D.C. 2002); United States ex rel. Burroughs v. DeNardi Corp., 167 F.R.D. 680 (S.D. Cal. 1996) U.S.C See U.S. Dep t of Justice v. Tax Analysts, 492 U.S. 136, 151 (1989) U.S.C. 552(b)(5). 16. See generally United States v. Weber Aircraft Co., 465 U.S. 792, (1984); NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 148 (1975). 17. See Hoover v. Dep t of Interior, 611 F.2d 1132, (5th Cir. 1980) (applying Exemption 5 to withhold property value opinions of outside consultants hired by government); Soucie v. David, 448 F.2d 1067, (D.C. Cir. 1971) (explaining criteria to be applied in determining whether outside expert report evaluating government program for development of a supersonic transport aircraft might fall within Exemption 5 on the basis of the deliberative process privilege). 18. U.S. Dep t of the Interior v. Klamath Water Users Protective Ass n, 532 U.S. 1, 8 (2001) U.S.C. 1a, 25 C.F.R. pts Klamath, 532 U.S. at Id. at The Procurement Lawyer, Spring 2003, Volume 38, Number 3 Copyright 2003 Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or

5 22. See Klamath Water Users Protective Ass n v. Dep t of Interior, 189 F.3d 1034, 1036 (9th Cir. 1999). 23. Id. at Id. at U.S. Dep t of the Interior v. Klamath Water Users Protective Ass n, 532 U.S. 1, 9 10 (2001). 26. Id. at Id. at Id. at ( The Department seems to be saying that intraagency is a purely conclusory term, just a label to be placed on any document the Government would find it valuable to keep confidential ). 29. Id. at Id. 31. Id., citing Restatement (Second) of Trusts 176, cmt. a (1957) ( It is the duty of the trustee to exercise such care and skill to preserve the trust property as a man of ordinary prudence would exercise in dealing with his own property... ) F. Supp. 2d 1184 (D. Colo. 2001). 33. Id. at , citing Dep t of the Interior v. Klamath Water Users Protective Ass n, 532 U.S. 1 (2001). 34. See Progressive Alliance et al. v. Bureau of Indian Affairs, 2002 U.S. Dist. LEXIS (D.N.M. 2002) at * See also Tigue et al. v. United States, 312 F.3d 70, (2d Cir. 2002) (Memorandum provided to Internal Revenue Service task force by United States Attorney s office containing opinions and recommendations of independent panel with respect to criminal investigations properly withheld under Exemption 5 as intergovernmental communications, notwithstanding that task force that prepared the memorandum consisted of outside consultants) U.S.C. 552(b)(1) U.S.C. 552(b)(3) U.S.C. 552(b)(4). 38. See Chrysler Corp. v. Brown, 441 U.S. 281, (1979) (although a party other than the requester of the information may not file suit under FOIA to enjoin agency release of documents, the party may file suit for nonmonetary relief under the Administrative Procedure Act (5 U.S.C ) challenging the agency release decision as arbitrary, capricious, or contrary to law). 39. In addition, counsel may make various other, traditional motions in limine to seek to avoid actual introduction of documents at trial. Prevailing on such a motion often will amount to a pyrrhic victory, however, as the opposing party will have otherwise had use of the documents in framing discovery and otherwise prosecuting its case. Spring 2003, Volume 38, Number 3, The Procurement Lawyer 5 Copyright 2003 Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or