130 F.R.D. 16 | S.D.N.Y. | 1990
After full briefing and oral argument, the Court adopts and approves the Order of Nov. 15, 1989.
So ordered.
Presently before me is a motion by plaintiff for an order precluding disclosure by the State of certain documents claimed to be privileged. For the reasons set forth below, plaintiffs motion is granted in part and denied in part.
BACKGROUND
These two actions, brought pursuant to the federal antitrust laws and the New York Donnelly Act, N.Y.Gen.Bus.L. § 340 et seq., allege that defendants participated in a scheme to rig bids and allocate reinforced concrete construction projects in New York City.
Both actions are the result of a civil investigation conducted by the Attorney General pursuant to § 343 of the Donnelly Act, which paralleled a related investigation by a New York County Grand Jury that expired without returning any indictments. The complaint against defendants Cedar Park Concrete Corporation, et al. {“Cedar Park”) was filed on March 20, 1985; the complaint against Century Maxim Construction Corporation, et al. {“Century Maxim”) was filed on October 22, 1986. Amended complaints were filed in both actions on June 27, 1988. Another lawsuit resulting from the Attorney General’s investigation, State of New York v. Transit Mix Concrete, et al., 84 Civ. 4194 (S.D.N.Y.) is pending before Judge Sprizzo. The allegations of these complaints have also been the subject of two federal criminal prosecutions in this district, United States v. Salerno, 85 Cr. 139(RO) (“the Commission Case”) and United States v. Salerno, 86 Cr. 245(MJL) (“Salerno II”), brought against some of the defendants in these actions.
THE STATUTE OF LIMITATIONS ISSUE
A major issue in Cedar Park and Century Maxim, and in the pending discovery dispute, is the statute of limitations, which has been asserted as a defense in both actions. Plaintiff alleges that the conspiracy charged in the complaints began “at least as early as 1978” and continues to the present. Under federal law, an action must be “commenced within four years after the cause of action accrued.” 15 U.S.C. § 15b. The same four-year statute of limitations applies to an action to recover damages under the Donnelly Act. N.Y.Gen. Bus.L. § 340(5). An action to recover civil penalties under the Donnelly Act must be brought “within three years after the commission of the act upon which it is based.” N.Y.Gen.Bus.L. § 342-a. Accordingly, the Cedar Park action is barred to the extent a cause of action accrued prior to March 20, 1981, for damages, and prior to March 20, 1982, for civil penalties; the Century Maxim action is barred to the extent a cause of action accrued prior to October 22, 1982, for damages, and prior to October 22, 1983, for civil penalties.
Plaintiff seeks to defeat the statute of limitations defense in part by invoking the equitable doctrine of fraudulent concealment, which permits tolling of the statute of limitations if plaintiff proves 1) that the defendant concealed the existence of the cause of action; 2) that plaintiff remained in ignorance of that cause of action until some point within four years of the commencement of the action;
Defendants contend, and I agree, that by pleading fraudulent concealment, plaintiff has placed in issue the question of when the Attorney General acquired, or should have acquired, actual knowledge of plaintiff’s claims.
The State concedes that the Century Maxim defendants are entitled to discovery regarding what the Attorney General knew before October 22,1982 (four years prior to the filing of the complaint). See, e.g., Plaintiff’s June 26, 1989 Memorandum of Law at 11. Plaintiff argues that the claim for civil penalties does not entitle defendants to additional discovery because the statute of limitations for civil penalties runs from the last overt act in furtherance of the conspiracy. Plaintiff’s June 26,1989 Memorandum of Law at 12-13. This contention is vigorously disputed by defendants, who also point out that even if plaintiff is correct as to the law, there will be disputed issues of fact regarding if and when particular defendants participated in, and/or withdrew from the alleged conspiracy. I therefore find that the Century Maxim defendants are entitled to discovery regarding the Attorney General’s knowledge prior to October 22, 1983.
Plaintiff argues that the Cedar Park defendants are not entitled to any discovery regarding the Attorney General’s knowledge because, although the complaint alleges a conspiracy commencing in 1978, the State is seeking damages only for the Jacob Javits Convention Center, for which a contract was awarded in May 1981—less than four years prior to the filing of the complaint (March 20, 1985). I note, however, that in light of the recent Supreme Court decision permitting a state to sue as an indirect purchaser where permitted by state law, California v. Arc America Corp., — U.S. —, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989), the State has announced that it may seek damages under the Donnelly Act as an indirect purchaser for projects awarded prior to the Convention Center. See Plaintiff’s June 26, 1989 Memorandum of Law at 11 n. 11; cf. Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). Accordingly, I reject the argument that the Cedar Park defendants have no right to discovery regarding the Attorney General’s knowledge four years prior to the filing of the complaint. For the reasons stated with respect to the Century Maxim defendants, I also find that in light of plaintiff’s claim for civil penalties, the Cedar Park defendants are entitled to discovery regarding the Attorney General’s knowledge three years prior to the filing of that complaint.
Plaintiff contends that because the Attorney General’s knowledge after March 20, 1982 is irrelevant to the Cedar Park action, any transcripts or documents after this date that are disclosed to the Century Maxim defendants should not be disclosed to the Cedar Park defendants. Plaintiff’s June 26, 1989 Memorandum of Law at 2, 11-14. I agree with defendants that in light of the close relationship between the cases as a whole, this restriction would unnecessarily interfere with counsel’s ability to prepare and present a joint defense. See Defendants’ August 4, 1989 Memorandum of Law at 22-25. Accordingly, the disclosures directed in this Opinion shall be made to all defendants in Cedar Park and Century Maxim.
PLAINTIFF’S ASSERTIONS OF PRIVILEGE
Defendants’ discovery began on April 15, 1988, with the service of interrogatories and a document request by the Cedar Park
Claim of privilege were asserted for the following categories of documents:
(1) Grand Jury materials claimed to be privileged under N.Y.Crim.Proc.L. § 190.25. This claim of privilege is not currently in dispute because defendants do not seek discovery of Grand Jury materials at this time. See Defendants’ December 5, 1988 Memorandum of Law at 8.
(2) Internal memoranda and “work papers” pertaining to the concrete investigation prepared by attorneys, investigators and other employees of the Attorney General, which have been withheld on an assertion of “executive privilege,” § 343, attorney-client privilege and workproduct.
(3) Correspondence sent and/or received by employees of the Attorney General pertaining to the concrete investigation.
(4) Original subpoenas issued for documents and/or testimony during the concrete investigation. This claim of privilege is not in dispute because defendants do not seek production of these subpoenas.
(5) Transcripts of testimony taken under oath during the concrete investigation and claimed to be privileged pursuant to § 343. See Plaintiff’s First Privilege List, Item 10.
(6) Documents produced in response to subpoenas and claimed to be privileged under § 343. See Plaintiff’s First Privilege List, Item 12. Plaintiff subsequently waived its asserted privilege with respect to these documents and has made them available for inspection by defendants.
DISCUSSION
N.Y.Gen.Bus.L. § 343/Executive Privilege/Informer’s Privilege
Plaintiff asserts that all § 343 investigatory materials (including documents, attorney work papers, transcripts, internal memoranda and correspondence) are protected by an “executive privilege” or “public interest” privilege embodied in § 343 of the Donnelly Act.
Section 343 authorizes the Attorney General to conduct an “investigation” or “inquiry” into possible violations of the Donnelly Act and sets forth the procedures available to the Attorney General to compel
Assuming arguendo that § 343 creates a statutory state law privilege,
The State’s assertion of the informer’s privilege has been troubling in a number of respects. First, despite the well-established obligation of the court to consider and balance the above factors on a case-by-case and document-by-document basis, the State initially provided no specific information regarding the “informers” in this case. For example, the State provided no information regarding whether any or all of the informers provided information pursuant to a promise of confidentiality, the nature of the information provided, or whether the identity of any informer had already been disclosed.
At a conference on April 19, 1989, I advised the Attorney General that the State’s presentation was inadequate. I observed in particular that in a number of the cases cited by plaintiff,
A review of the September 25, 1989 submission reflects that the June 26, 1989 sworn statement of Assistant Attorney General Hubbard seriously misrepresented the “assurances” given to those witnesses who testified in the concrete investigation. Not one of the witnesses was told that his testimony would not be disclosed. Indeed, with only a few exceptions, the subject of confidentiality was never even discussed. Of the thirty witnesses who testified, only four were told that the proceeding was “confidential.” Moreover, in those four instances the issue of confidentiality arose solely in the context of an admonition that the witness (and his counsel) were prohibited from disclosing anything heard or learned during the examination without the prior written consent of the Attorney General. Notably, at least six other witnesses sought and obtained a waiver of the “silence directive” based upon a New York court decision holding § 343 unconstitutional insofar as it prohibited disclosure by a witness. See supra note 5. Moreover, based upon a comparison of the list of § 343 witnesses and plaintiff’s description of persons with knowledge of the State’s
In light of the State’s failure to provide adequate support for its assertion of privilege, its failure to address specifically the relevant factors identified in the case law, and, most importantly, the Attorney General’s affirmative misrepresentation of the facts regarding the crucial factor of assurances of confidentiality, the State’s application to withhold the disputed documents on the basis of § 343 could properly be rejected in its entirety without further analysis. See Defendants’ August 4, 1989 Memorandum of Law at 2-9. On the other hand, I am reluctant to risk possible prejudice to the public on account of the Attorney General’s failure to substantiate his claims of privilege. Accordingly, rulings will be made at this time only with respect to those witnesses as to whom sufficient information exists to weigh the relevant factors, and the State will be required to submit additional information regarding the other witnesses.
I find that the defendants’ need to meet the State’s allegations of fraudulent concealment outweighs the public interest in preserving the anonymity of those witnesses who appeared prior to October 22, 1983. There is clearly no reasonable alternative discovery available to defendants regarding the crucial issue of what the Attorney General knew, or should with due diligence have learned, prior to the relevant statute of limitations periods for damages and civil penalties. As noted above, none of these witnesses was given explicit assurances of confidentiality to obtain their information. There is little, if any, likelihood of retaliation against the witnesses who testified prior to October 22, 1983, since, apart from defendant Chattin and the deceased Mr. Palmieri (as to whom the privilege has also been waived) none of these witnesses has been identified by the State as a person who has provided information supportive of its allegations.
I further find that the privilege has been waived as to those witnesses who are defendants in these actions, who testified in Salerno II, and who have brought related private antitrust actions. Moreover, since each of these witnesses has been identified by the Attorney General as a person with knowledge of the State’s allegations, and is therefore a likely witness for plaintiff,
The State is directed to produce the above described transcripts of these witnesses to defendants no later than November 27, 1989. The State is further directed to submit to the court no later than November 27, 1989, the entire testimony of all other witnesses for in camera review, as well as a statement regarding whether the identity of any witness has previously been disclosed by the State, the witness, or others.
Finally, with respect to the § 343 documents that the Attorney General has agreed to produce, plaintiff is directed to
Workproduct
Plaintiff has withheld all correspondence, memoranda and attorney “workpapers” pertaining to the § 343 investigation as workproduct or trial preparation materials under Fed.R.Civ.P. 26(b)(3). Defendants contend that plaintiff has not met its burden of showing that these documents were “prepared in anticipation of litigation.” Fed.R.Civ.P. 26(b)(3). Defendants assert that such a claim is “untenable” with respect to documents prepared prior to June 1983 in light of the allegation in the complaints that plaintiff first learned on June 16, 1983, that claims “might exist.” Defendants argue that “if the plaintiff lacked knowledge that it even had a claim against the defendants until June 16, 1983, the vast bulk of materials which were generated prior to that date could hardly be said to have been generated ‘in pending or impending litigation.’ ” Defendants’ December 5, 1988 Memorandum of Law at 15. I find it unnecessary to reach this issue because I agree with defendants that even if the withheld documents are found to be trial preparation materials, defendants have “substantial need” of the materials in order to meet plaintiff’s claims of fraudulent concealment and are unable to obtain the substantial equivalent of these materials by other means. Fed.R.Civ.P. 26(b)(3).
As noted above, plaintiff has placed in issue the extent of its knowledge and its due diligence prior to March 20, 1982 in Cedar Park and prior to October 22, 1983 in Century Maxim. The best and virtually exclusive source of this information is the documents received and prepared by the Attorney General prior to these dates. Accordingly, plaintiff is directed to produce no later than November 27, 1989, all correspondence, memoranda or workpapers in its possession prepared or received prior to October 22, 1983. To date, plaintiff has submitted to defendants an itemized list of withheld memoranda through February 1985. Plaintiff has submitted in camera a list of correspondence prior to October 22, 1986. Neither the defendants nor the court has received an itemized list of workpapers. Plaintiff is directed to provide to defendants a list of all correspondence pri- or to October 22, 1983 and to prepare and submit to the court and defendants an itemized list of workpapers for the period prior to October 22, 1983.
Pursuant to Fed.R.Civ.P. 26(b)(3), plaintiff may at this time, and without prejudice to a further application by defendants, withhold or redact those portions of these documents that contain the “mental impressions, conclusions, opinions, or legal theories” of the Attorney General. Plaintiff is directed to submit for in camera review by the court copies of any documents withheld on this basis, as well as copies of any redacted document highlighting the redactions;
Any objections to this Opinion and Order must be submitted to Judge Sand no later than November 28, 1989. Fed.R.Civ.P. 72(a).
SO ORDERED.
. Although the Attorney General acknowledges that a "formal" investigation of the concrete industry was commenced on July 27, 1982, the complaints assert that "admissible evidence" was first “uncovered” on June 16, 1983 {see Amended Complaints ¶ 47(d)); that plaintiff did
. Plaintiffs First and Second Privilege Lists are also annexed to Defendants’ December 5, 1988 Memorandum of Law in Opposition to Plaintiffs Motion to Preclude Discovery.
. To the extent plaintiff now seeks to assert that the § 343 transcripts are protected by the work-product rule (see Plaintiffs August 17, 1989 Reply Memorandum of Law at 11), I find that the Attorney General waived his right to claim such a privilege by failing to assert it in plaintiffs responses to defendants’ discovery requests. See Local Civil Rule 46(e)(1).
. Plaintiff has disclaimed any reliance on broader common law concepts of executive privilege, such as the "deliberative process” or “pre-decisional” privilege described in Mobil Oil Corp. v. Department of Energy, 520 F.Supp. 414 (N.D.N.Y.1981). See Plaintiff’s December 19, 1988 Reply Memorandum of Law at 20; Transcript of April 19, 1989 conference (annexed as Exhibit E to Defendants’ August 4, 1989 Memorandum of Law) at 115.
. Plaintiff has cited no case holding that § 343 embodies a "privilege” that permits the Attorney General to withhold disclosure of § 343 materials in a civil action commenced as a result of the § 343 inquiry. Indeed, in State v. Master Plumbers Ass'n of City of Syracuse, 47 Misc.2d 187, 262 N.Y.S.2d 323 (Sup.Ct.1965), then Supreme Court Justice Richard J. Cardamone rejected plaintiffs position, observing that "[t]he argument advanced by the Attorney General that he is not subject to disclosure * * * because the Statute (General Business Law, § 343) prohibits him from releasing any information without obtaining his own permission appears to this Court to be specious.” 47 Misc.2d at 195, 262 N.Y.S.2d at 330. It is also not clear that the “silence directive” itself is designed to protect informers. A virtually identical provision in the Martin Act, N.Y.Gen.Bus.L. § 352(5), has been held to be for the protection of the innocent subjects of the investigation. See In re MacNamara, 128 Misc. 84, 90, 218 N.Y.S. 57, 62-63 (Sup.Ct.), aff’d, 218 A.D. 822, 218 N.Y.S. 811 (1st Dep’t 1926). I also note that § 343 has been declared unconstitutional insofar as it imposes a "silence directive” on witnesses examined by the Attorney General. See LaRossa, Axenfeld & Mitchell v. Abrams, 62 N.Y.2d 583, 586 n. 1, 479 N.Y.S.2d 181, 182 n. 1, 468 N.E.2d 19, 20 n. 1 (1984).
. At the April 19, 1989 conference, plaintiffs counsel stated that the asserted privilege under § 343 is "tantamount to an informant’s privilege.” Tr. at 118; see also Plaintiffs November 14, 1988 Memorandum of Law at 8-11; Plaintiffs December 19, 1988 Reply Memorandum of Law at 20-21; Plaintiff’s June 26, 1989 Memorandum of Law at 5-6.
. See e.g., Cullen v. Margiotta, 811 F.2d 698, 714 (2d Cir.), cert. denied, 483 U.S. 1021, 107 S.Ct. 3266, 97 L.Ed.2d 764 (1987); Brown v. Matias, 102 F.R.D. 580, 582 (S.D.N.Y.1984); Cirale v. 80 Pine Street Corp., 35 N.Y.2d 113, 117, 359 N.Y.S.2d 1, 4, 316 N.E.2d 301, 303 (1974).
. Indeed, the State itself has publicly revealed that defendant Chattin testified in the § 343 investigation. See Affidavit of Assistant Attorney General Alice Mclnerney (submitted in Salerno II), annexed as Exhibit C to the June 26, 1989 affidavit of Assistant Attorney General Hubbard.
. Cf. Westinghouse Electric Corp. v. City of Burlington, 351 F.2d 762, 770-71 (D.C.Cir.1965) (persons providing information to the Justice Department who subsequently became plaintiffs in antitrust case waived informer’s privilege).
. A number of courts have held that the names of the government’s trial witnesses and their prior statements must be provided at some point in the litigation. See, e.g., United States v. Maryland Shipbuilding & Drydock Co., 51 F.R.D. 159, 161 (D.Md.1970).
. Plaintiffs assertion of a § 343/informer’s privilege for correspondence, internal memoranda and attorney workpapers is addressed infra at note 12.
. Plaintiff has also asserted the § 343/informer’s privilege with respect to correspondence, internal memoranda and attorney workpapers. To the extent disclosure of these documents as directed in this Opinion and Order would reveal the identity of any informer other than those who testified in the § 343 investigation, or those whose identity has already been revealed, plaintiff may make a supplemental presentation no later than November 27, 1989.
. Plaintiff has claimed attorney-client privilege for only one document (a memorandum dated April 18, 1984), which I find has properly been withheld as workproduct. It is therefore unnecessary to reach the question of attorney-client privilege.
