In Re: Western States Wholesale Natural Gas Antitrust Litigation (MDL 1566)
2:03-cv-01431
D. Nev.May 5, 2016Background
- Plaintiffs in the MDL allege Defendants (including Dynegy) conspired to fix natural gas prices (2000–2002) by misreporting trades to industry publications.
- After federal investigations (DOJ task force, FERC, CFTC) and a grand jury subpoena, Dynegy retained outside counsel to conduct an internal investigation; counsel interviewed employees and produced interview summaries and analytical reports.
- Plaintiffs sought production of those internal investigation materials, arguing they are ordinary-business records or, at most, fact work product subject to discovery upon a showing of substantial need; Plaintiffs also argued disclosure to federal agencies waived protections.
- Dynegy asserted attorney-client privilege and work-product protection for the materials, contending the investigation was done at counsel’s direction in anticipation of litigation and that production to the government was coerced (citing DOJ cooperation policies) and therefore did not waive privilege.
- At oral argument Dynegy conceded all disputed documents had been produced to the CFTC; the court evaluated whether that disclosure waived attorney-client privilege and/or work-product protection.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether disclosure to federal agencies waived attorney-client privilege | Disclosure to government was voluntary and waives privilege; Plaintiffs now entitled to materials | Disclosure was coerced by DOJ task force/subpoenas and thus did not waive privilege | Waiver: court held Dynegy waived attorney-client privilege for materials produced to federal agencies |
| Whether disclosure to federal agencies waived work-product protection | Work product was prepared for business and should be producible; or waiver via production | Work product protection remains because disclosure did not substantially increase adversaries’ opportunities | No waiver: court held work-product protection survived production to government |
| Whether materials qualify as work product / attorney-prepared in anticipation of litigation | Materials are factual business records, not prepared because of litigation | Materials were prepared by/at direction of counsel because of government investigations and anticipated litigation | Court found materials were prepared "because of" anticipated litigation and qualify for work-product protection |
| Whether Plaintiffs have shown substantial need for protected fact work product | Plaintiffs say they need the documents for trial and cannot obtain equivalent information without undue burden | Dynegy says witnesses are identified and Plaintiffs can obtain facts via depositions and other produced documents | Plaintiffs failed to show substantial need/undue hardship; work product need not be produced |
Key Cases Cited
- Upjohn v. United States, 449 U.S. 383 (U.S. 1981) (articulates scope and purpose of attorney-client privilege)
- United States v. Nobles, 422 U.S. 225 (U.S. 1975) (work-product doctrine protects attorney mental impressions)
- In re Grand Jury Subpoena, 357 F.3d 900 (9th Cir. 2004) (applies "because of" test for work-product to dual-purpose investigative materials)
- In re Pacific Pictures Corp., 679 F.3d 1121 (9th Cir. 2012) (rejects selective waiver of attorney-client privilege)
- Transamerica Computer Co. v. Int'l Bus. Machs. Corp., 573 F.2d 646 (9th Cir. 1978) (distinguishes waiver rules for work product vs. attorney-client privilege)
- United States v. de la Jara, 973 F.2d 746 (9th Cir. 1992) (involuntary disclosures do not automatically waive privilege)