1 1 1 1 0 1 McGREGOR W. SCOTT United States Attorney KENDALL J. NEWMAN Assistant U.S. Attorney 01 I Street, Suite -0 Sacramento, CA 1 Telephone: ( -1 GREGORY G. KATSAS Acting Assistant Attorney General JOYCE R. BRANDA MICHAEL D. GRANSTON JAY D. MAJORS Attorneys, Department of Justice Civil Division Post Office Box 1 Ben Franklin Station Washington, DC 00 Tel: (0 0-0 Fax: (0 1-00 Attorneys for the United States of America UNITED STATES OF AMERICA ex rel. Hendow, et al. v. Plaintiff, UNIVERSITY OF PHOENIX, Defendant. IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA Case No. S-0-0 GEB DAD UNITED STATES STATEMENT OF INTEREST IN OPPOSITION TO DEFENDANT S REQUEST FOR RECONSIDERATION OF MAGISTRATE JUDGE S RULING DENYING MOTION TO COMPEL PRODUCTION OF PRIVILEGED DOCUMENTS
1 1 1 1 0 1 I. INTRODUCTION The United States opposes Defendant s request for reconsideration of the Magistrate Judge s October, 00 ruling denying Defendant s motion to compel production of documents, because the documents sought by Defendant constitute attorney-client privileged material and attorney work product of the U.S. Department of Justice ( DOJ and U.S. Department of Education ( DoEd Office of General Counsel ( OGC, protected from disclosure under F.R. Civ. P. (b(. The Magistrate Judge s denial of Defendant s motion was entirely correct, and it expressly followed the sound reasoning of the U.S. District Court for the District of Columbia, which quashed a subpoena from Apollo Group, Inc. (Defendant s corporate parent seeking precisely the same documents from the Department of Education for use in a separate but related case. In re Apollo Group, Inc. Securities Litig., Misc. No. 0- (D.D.C., Mem. Opinion (June 0, 00 (the DC Court Proceeding. In that proceeding, the DC Court ruled that the documents at issue constituted classic opinion work-product [of the Government] that are protected from disclosure. Id. at, 1. The court further ruled that this nearly absolute protection 1 had not been waived by the documents having been shared with the Relators, and that the privilege could not be overcome by Apollo s purported showing of need. This court should reach the same result and uphold the Magistrate Judge s ruling. The United States submitted a Statement of Interest on this matter on August, 00, which it incorporates herein by reference. In the instant pleading, the United States responds only to the arguments directly raised in the Defendant s Request. 1 See In re Murphy, 0 F.d, (th Cir. ( Opinion-work product enjoys a nearly absolute immunity and can be discovered only in rare and extraordinary circumstances. -1-
II. BACKGROUND Defendant s document request to the Relators seeks three groups of documents: A. Communications which [Relators] and their counsel have had with the Department of Education ("DOE" about the exact issues presented in this lawsuit. B. Transcripts of depositions of Relators by the DOE dealing with the exact issues presented in this lawsuit. C. Executed statements of witnesses about the exact issues presented in this lawsuit. 1 1 1 1 0 1 The Government s privileges appear to be implicated by Groups A and B above, which the DC Court and the Magistrate Judge properly found to fall within work product protection. A. DC Subpoena Proceeding In 00, as part of discovery in a securities lawsuit pending against it, and seeking various documents that had been withheld from a previous FOIA production, Apollo Group Inc. (the corporate parent of the Defendant served a subpoena upon the Department of Education, seeking material generated by DoEd in connection with an administrative action, called a Program Review, that DoEd undertook as to Defendant beginning in 00, and the Program Review Report ( PRR that the DoEd issued in connection with its review. The DoEd objected to both subpoenas on various grounds. Apollo filed a motion to compel production of the documents subpoenaed from DoEd in the DC Court Proceeding, and DoEd cross-moved to quash the subpoena on various grounds, including the work-product privilege. Apollo and the DoEd then reached an agreement as to a partial The Government does not believe that the third group of documents sought by Defendant in this proceeding overlaps with the documents sought in the other pending proceeding or otherwise impinges upon the Government s privileges. To the extent they do not, the Government takes no position with respect to Defendant s request for those documents. --
1 1 1 1 0 1 production to narrow the scope of the dispute. They divided the documents subject to Apollo s subpoena into six categories, of which only one (Category overlaps the instant proceeding: ( All documents communicated to or received from third parties, including witness statements and communications with Apollo or the qui tam relators or their counsel. See United States Statement of Interest, August, 00 ( US SOI, Exh. II at 1-. This Category includes documents in Groups A and B of Defendant s document request to the Relators in this action. As part of the agreement reached in connection with the DC Court Proceeding, DoEd agreed to produce a certain subset of documents in Category in exchange for Apollo s agreement not to pursue production of certain other Categories. Id. at -. Notably, the agreement between DoEd and Apollo expressly barred any argument that DoEd s partial production constituted a subject-matter waiver: Id. at n.1. The parties agree that, in exercising its administrative discretion to produce specific documents, the Department has not waived any applicable privilege(s for those remaining documents, which will not be voluntarily produced. Likewise, by entering into this agreement, Apollo does not waive and expressly reserves the right to seek any documents from the Department in future litigation. Pursuant to applicable privileges, DoEd continued to withhold production of certain Category documents in whole or in part, which it described in a pleading in the DC Court Proceeding as follows (in pertinent part: Three ( documents listed in the Category Privilege log consisting of confidential witness interviews taken by Department attorneys to assist in formulating the strategy of the program review. Forty-three ( documents listed in the Category Privilege log consisting of email communications between and among Department attorneys, qui tam relators counsel and the qui tam relators pertaining to opinions, recommendations, or advice about how to conduct the program review. --
1 1 1 1 0 1 See US SOI Exh. III at -. These documents fall within Groups A and B of the documents sought by Defendant in this motion. B. DC Court Ruling Upholding Work Product Protection For The Subject Documents The DC Court issued its ruling on June 0, 00, denying in its entirety UOP s motion to compel. See US SOI Exh. I at. That Court first held generally that the Program Review itself was conducted in anticipation of litigation. Id. at 1-. The DC Court specifically stated as follows: [DoEd s] Declarations thus establish that the DOE actually anticipated that the UOP Program Review would lead to litigation, and thus meet the work product privilege requirement that the attorney had a subjective belief that litigation was a real possibility. Id. at 1 (citation omitted. [T]he Program Review can fairly be described as an active investigation focusing upon specific events and a specific possible violation by a specific party, and thus in anticipation of litigation. Id. at (citation omitted. [T]o the extent that the OGC lawyers role in the Program Review was as legal advisors protecting their agency clients from the possibility of future litigation, it appears that under all the circumstances, the OGC lawyers prepared documents in anticipation of litigation. Id. (citation omitted. [T]he settlement agreement that ultimately resolved the Program Review short of litigation stated that a settlement was reached in order to resolve the program review and avoid the cost of future litigation, thus indicating that both Apollo and the DOE anticipated that the Program Review would actually have led to litigation if not settled. Id. at. Then, the DC Court examined the specific documents at issue and ruled that the interviews DoEd conducted of the Relators (referred to in Defendant s motion as depositions were protected opinion work product: The Court has already concluded, above, that the Program Review itself was conducted in anticipation of litigation, and Apollo offers no reason to doubt the DOE s assertion that releasing the three witness interview transcripts at issue would reveal the [OGC] attorneys entire This exhibit is paginated in two different ways, due to electronic filing. Page number references herein refer to the numbering at the top of the page thereon. --
1 1 1 1 0 1 plan and strategy for the [DOE] s program review and the anticipated final action based thereon. Id. at. The Court then reached the same conclusion as to the withheld communications between DoEd and the Relators: Id. at. The Court finds [DoEd s] explanation of the contents of the withheld documents sufficient to establish that they would reveal attorney opinions, mental impressions, and strategies in anticipation of litigation. The Court therefore finds that the DOE has properly withheld them pursuant to the attorney work-product privilege... The DC Court further held that the Government s work-product protection was not waived by having shared the subject documents with the Relators. The DC Court noted that: the D.C. Circuit has found that because the work product privilege does not exist to protect a confidential relationship, but rather to promote the adversary system, the mere showing of a voluntary disclosure to a third person should not suffice in itself for waiver of the work product privilege if that disclosure is not inconsistent with maintaining secrecy against opponents. United States v. AT&T, F.d, (D.C. Cir. 0. Id. at. The DC Court stated it can fairly be said that both the DOE and the relators anticipate[d] litigation against a common adversary on the same issue or issues. Id. at 0 (citation omitted. Additionally, the DC Court held that the Defendant s showing of purported need for the subject documents was not relevant, because the documents were classic opinion work-product that are protected from disclosure. Id. at, 1. --
1 1 1 1 0 1 III. THE MAGISTRATE JUDGE S RULING Defendant herein then sought to obtain these same documents via document requests to the Relators in this action. After Relators declined to produce these documents on the grounds of workproduct protection and other privileges, Defendant moved to compel production. On August, 00, the Magistrate Judge denied that motion. In ruling that work-product protection applied, the Magistrate Judge expressly adopted the findings of the DC Court: Def. Req. Exh. B at. for the reasons set forth by Judge Kollar-Kotelly in the detailed memorandum and order published as In re: Apollo Group, Inc. Securities Litigation, 1 FRD 1 (D.C. District Court 00, I find that the work product privilege applies to the documents that are the subject of this motion. The Magistrate Judge also rejected Defendant s argument that its putative showing of need (i.e., to attack the methods by which DoEd s Program Review was conducted should overcome that work-product protection, in part on the grounds that that argument had been rejected by the DC Court. Id. at. The Magistrate Judge further ruled that the Defendant s arguments based on a purported need for these documents failed because Defendant was already in possession of sufficient other documents with which to attack the Program Review and the PRR, from prior partial productions by DoEd. The Magistrate Judge stated that: Def. Req. Exh. B at. There is no critical or substantial need for additional evidence of relators involvement in the report process to allow defendants the ability to challenge the admissibility of that report. The challenge to the admission of the report on reliability grounds should not become a trial within a trial regarding the report itself. This exhibit is paginated in two different ways, due to electronic filing. Page number references herein refer to the numbering on the transcript itself. --
IV. ARGUMENT A. The Magistrate Judge Correctly Ruled That Defendant s Arguments Based On Putative Need For The Documents At Issue Is Not A Basis For Overcoming Work- Product Protection In its Request, Defendant appears to argue both that the Magistrate Judge failed to evaluate 1 1 1 1 0 1 Defendant s putative need for the documents at issue and that the Magistrate Judge did evaluate Defendant s need for the documents, but according to the wrong standard. Def. Req. at -. Neither of these arguments is correct. The transcript of the Magistrate Judge s ruling makes clear that he considered Defendant s need-based arguments carefully, and rejected them on the grounds that Defendant already possesses sufficient documents that it could use for the same purpose: Def. Req. Exh. B at -. even if the sought after documents have some relevance given plaintiffs stated intention to offer the report into evidence in this case, pursuant to Federal Rule of Evidence 0(, defendants have not demonstrated to this Court that there is a critical or substantial need for the documents they seek in order to contest the admissibility of the report sufficient to outweigh the work product protection applicable to those documents.... Here, plaintiffs and the government readily concede that the relators did play a role in focusing the Department of Education investigation. If that is sufficient to find the report unreliable, and therefore inadmissible, evidence of the relators and their counsel s involvement in that process is already available to the defendants. Moreover, the Ninth Circuit has indicated that Defendant s claims of need should, if anything, have been evaluated according to an even stricter standard. That court has held that opinion work product is not subject to discovery except when mental impressions are at issue in a case and the need for the material is compelling. Holmgren v. State Farm Mut. Auto. Ins. Co., F.d, (th Cir. (emphasis in original. In that case, the court found that counsel s mental impressions might be discoverable in insurance bad-faith litigation, where they are an actual element of the cause --
1 1 1 1 0 1 of action, but obviously no such situation exists in this case. Id.; see also Upjohn v. United States, U.S., 00-0 (1 (noting that some courts preclude discovery of opinion materials altogether; In re Murphy, 0 F.d at ( Opinion-work product enjoys a nearly absolute immunity and can be discovered only in rare and extraordinary circumstances. Defendant s further argument that the Magistrate Judge s ruling somehow denies Defendant its due process rights, Def. Req. at, is untenable. Work-product protection has been recognized for decades. See Hickman v. Taylor, U.S., 0- (. The privilege is intended to protect the adversarial trial process by insulating the attorney s preparations from scrutiny. See Jordan v. United States Dep t of Justice, 1 F.d, (D.C. Cir. (en banc. Defendant cites no case law to support the notion that the proper exercise of this protection violates due process, and there is no reason for this Court to break new ground in that regard. In any event, the Magistrate Judge found that the Defendant has enough information with which to attack the PRR if it so chooses, so in fact its rights are not constrained. B. The Magistrate Judge Correctly Found That The Documents At Issue Are Subject To Work-Product Protection Defendant contends that because certain documents voluntarily produced by DoEd do not appear to be opinion work product, the documents withheld from production must not be opinion work product either. Def. Req. at. This is a non sequitur; the contents of documents that were produced simply says nothing about the documents that were not. To the contrary, the logical assumption is that at least one reason DoEd exercised its discretionary authority to produce these documents is because they involved only fact, rather than opinion, work product. Of course, fact --
1 1 1 1 0 1 work product is deserving of protection as well, but in this instance the DoEd made a discretionary decision to produce that material in order to reduce its area of dispute with Apollo. This Court should also reject Defendant s attempt to argue that the United States has shifted its position as to whether the Program Review was conducted in anticipation of litigation. This argument was squarely rejected by the DC Court. The Program Review here an investigation by Department attorneys and staff into specific allegations of school misconduct was performed in anticipation of a possible administrative action brought by the Department and the litigation that in fact resulted when Apollo contested the report. Cf. Feshbach v. SEC, F. Supp. d, (N.D. Cal. (work product protection applies where administrative examination was based upon a suspicion of specific wrongdoing and represented an effort to obtain evidence and to build a case against the suspected wrongdoer, citing SafeCard Servs. v. SEC, F.d, (D.C. Cir. 1. As the DC Court ruled, [DoEd s] Declarations thus constitute strong evidence that the UOP Program Review was significantly different from ordinary DOE program reviews because it arose out of qui tam allegations and was directed and overseen by OGC attorneys who were intimately involved in designing and implementing the review process. See US SOI Exh. I at 1-1. The DC Court found that the Program Review satisfied a two-part test articulated in In re Sealed Case, 1 F.d at : [DoEd s] Declarations thus establish that the DOE actually anticipated that the UOP Program Review would lead to litigation, and thus meet the work product privilege requirement that the attorney had a subjective belief that litigation was a real possibility. [DoEd s] Declarations thus establish that the DOE actually anticipated that the UOP Program Review would lead to litigation, and thus meet the work Defendant suggests that this Court should review a sample of the documents at issue in camera. Def. Req. at. The United States certainly has no objection to this Court reviewing any or all of the subject documents, but it submits that the comprehensive rulings by the DC Court and the Magistrate Judge render such a review unnecessary. --
1 1 1 1 0 1 product privilege requirement that the attorney had a subjective belief that litigation was a real possibility. Id. at 1. As for the second element of the test that that belief have been objectively reasonable the DC Court extensively analyzed relevant case law and determined that the Program Review can fairly be described as an active investigation focusing upon specific events and a specific possible violation by a specific party, and thus in anticipation of litigation. Id. at (citing Safecard Servs., F.d at. See also Feshbach, F. Supp. d at ; cf. EEOC v. Lutheran Soc. Services, F.d, - (D.C. Cir. (organization undertook internal investigation because it genuinely feared litigation and not as an investigation in the ordinary course of business... looking into whether the organization was complying with the relevant laws. The DC Court also correctly rejected Defendant s claim that the Government has taken inconsistent positions as to whether the Program Review was undertaken in anticipation of litigation, because the DoEd at one time described the Program Review as routine monitoring. As the DC Court explained, Apollo s reference to the DOE s routine monitoring statement is taken out of context, because the statement was made by the DOE s FOIA Officer in the context of third party requests for a copy of the Report and did not relate to the documents underlying the Report, which Apollo now seeks in the Amended Subpoena.... In short, the Court finds that an out-of-context statement by Apollo s FOIA Officer simply does not cast doubt upon [DoEd s] averments that the UOP Program Review was not a matter of routine monitoring. See US SOI Exh. I at 1 (citation omitted. In the instant request, Defendant is attempting to resurrect the same out-of-context argument to create the false illusion of a change in position, when in fact the Government has consistently treated the Program Review as a proceeding in anticipation of litigation from its very outset. V. CONCLUSION --
For all the foregoing reasons, the Government submits that the Defendant s Request for Reconsideration should be denied. 1 1 1 1 0 1 DATED: November, 00 McGREGOR W. SCOTT United States Attorney By: /s/ KENDALL J. NEWMAN KENDALL J. NEWMAN Assistant U.S. Attorney Counsel for the United States --