ML19242B310
| ML19242B310 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 07/03/1979 |
| From: | Olmstead W NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD) |
| To: | |
| References | |
| NUDOCS 7908080048 | |
| Download: ML19242B310 (9) | |
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TE R A 7.
UNITED STATES OF AMERICA NUCLEAR REGULATORY CC" MISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD
/
In the Matter of
)
)
Docket Nos. 50-329 r;
CONSUMERS POWER COMPANY
)
50-330
)
(Remand Proceeding)
(Midland Plant, Units 1 and 2)
)
NRC STAFF MEMOM.NDUM ON ATTORNEY-CLIENT PRIVILEGE I.
Introduction During the discovery taken in preparation for the evidentiary hearing.hich cominenced on July 2,1979, Intervenor the Dow Chemical Company (hereafter Dow), asserted the attorney-client privilege with respect to legal advice it had received in late 1976 relating to Dow's intent with respect to its contract with Consumers Power Company (hereafter Consumers Power).
The privilege.,as asserted at pages 19, 32 and 66 of the deposition of James F.
Hanes taken at Midland, Michigan on Monday, 'tay 14, 1979.
Mr. Hanes stated tnat Dow had retained outside counsel to write legal opinions regarding Dow's position subsequent to the Court of Appeals rerand and both before and af ter the Dow corporate review.
(Tr. 67-68).
'; hen asked further questions concerning the name of the attorney and other details, Mr. Hanas asserted the dttorney-Client privilege.
The lurpose of this memo is to discuss the e c 2nts cf the attoracy-client privilege, to suggest to the Board that the privilege has been. aived and, in
'he event tne Board believes the recort' needs to be supolerented. tith respect to the ::rivilege issue, to sugg2st the cppr;;r,;te precedure.
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II.
The Attorney-Client PrivileSe.
The case most frequently cited for the essential elements of the attorney-client privilege is U. S. v. United Shoe Fachinery Corp., 89 F.Supp. 357 (1950). At page 358, the Court stated:
(1) The asserted holder of the privilege is or sought to become a client; (2) the person to whom the ccmmunication was made (a) is a me.c.ber of the bar of a court, or his subordinate and (b) in connection with this coanunication is acting as a lawyer; (3) the corunication relates to a fact of shich tne attorney as informed (a) by his client (b) without the presence of 1 rangers (c) for the purpc:a of securing primarily either (i) an opinicn on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the ourpose of co;r.aitting a crime or tort; and (4) the privilege has been (a) claimed and (b) not claived by the client.
The attorney-client privilege pplies to corporations The Meredith case describes two tests developed in the Federal Courts for the application of the attcrney-client privilege to corporations.
T'..o tests have developed in le federal courts.
The first is tne "cuntrol group" test fornula ted in Cin of Philadelohia v. Westinghouse Electric Coro. 210 F. Supp. 483 (E.D.Pa.), mandamus and orchibition denied sub nom., General Electric Co. v. Ki rkcatri ck, 312 F.2d 742 (3rd Cir. 1967), cert. -denied, 372 U.S.
943, 33 S.Ct. 937, 9 L.Ed.2d 969 (1963).
In this test, an employee's statement is not considered a corporate to nunication unless the employee "is in a position to control or even to take a substantial part in a decision about any action '<hich the corporation ey take upon the advice of the attorney, or if he is ar authorized member of a body or group which has that authority [.]"
Id. at 435.
It is the.nast widely used test.
'!irninia Electric & Pow Co. v. Sun Shicouildino s D. D. Co., td F.EDT3'9'730TE. D. '!a. 1975T.
Divers;fi:c : A stries, :nc. v "redi s,572 F.N d 5:6 (i w a, t i-
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The second test is that formulated in 1:arper & Row Publishers, Inc. v. Decker, 423 F.2c 157 I7th Cir.
i9/0), aff'd by an equally divided ccurt, 100 U.S.
348, 91 S.Ct. 479, 27 L.Ed. 2d 433 (1971).
In this test, "an employee of a :orporation, though not a member of its control group, is sufficiently identified with the corporation * *
- where the employee makes the communication at the direction of his superiors in the corporation and where the subject matter upon ihich the attorney's advice is sought by the corporation and dealt with in the communication is the performance by the employee of the duties of his employment."
_I d_. a t 491 -4 92.
Decause of Dou's refusal to allow disccvery on the privilage issue, the existing record does not permit a conclusion as to.;hether tha result would vary depending on wiiich of these two tests v;ere applied.
The privilege, of course, 2njoys iess protection under the "most widely used" "centrol group" test cecause the group from whom the communication can come is more restricted. The Staff's position that the privilege has been <;aived, as discussed below, is not affected by tne choice of the above tests.
III.
Waiver t is the Staff's view that tN privilege has be - aived.
The ecved shcas that Dow sougnt advice from outside counsel (Mr. '.lessel and another ennamed counsel) with respect to :ts legal obligations ccncerning its contract with Consumers Power (see pp.19, 32 and 66-70 of tne lanes deposition).
As to advice on this subject from Mr. '.lessel, Dow has '.;aived the privilege (see the deposition of Milton R. Wessel,'clashington, D. C.,'oay 16 and 17, 1979, the eight cage draf t pleading (" Action for Declaratory Judcnent") prepared by r. '..cssel and referred to at pp. 26-27 of his deposition, and Mr..l2ssel's letter to "r.
. t; __ Led Sapt=~bar 15, 1975).
As to 3dvice on the s ?me ?lbject, Co',' h ?.s t ;:.rt 21 t':e cri v il ece a s :: cth2r cuiside cou uel, 7
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Dow also waived the privilege as to advice on this same subject with respect to in-house counsel James F. Hanes and Leslie F. "ute (see depositions of "ay 14 and 15,1979, June 5 and 6,1979, the Nu te notes, and Mr. Nute's note to J. Temple dated August 5,1976).
With respect to the attorney-client privilege, the cases make no distinction between in-house and outside counsel.
See Burlinoton Industries v. Exxon Corporation, E5 F.R.D. 26 at 36-7 (1974) and United States v. United Shoe Machinery _ Cor: oration, 39 F.Supp. 357 at 360 (1950). A point of clarification must be made.
The attorner-client privilege is usually couched in terms of confidential communications from the client to the attorney.
Here the privilege is claimed with respect to a currunication from the attorney to the client.
The privilege extends to attorney to client communications "
.cnly to the extent that they reveal confidential information comunicated by the client to the la,;jer" 1/
Thus, Dew can only claim the privilege as to legal advice from unnamed outside counsel to the extent that the legal advice included confidential information Dow conveyed in seeking legal advice concerning its contract with Consumers Pcwer.
The privilege has been waived, however, as to that subject matter when Dow did not assert the privilege as to advice frc, three of its other counsel cn the same subject. Wigmore, Evidence Section 2327 discusses waiver of the attorney-client privilege as follows:
1/ United States v.
International Business Machines Corporation, 66 F.R.D.
206, 2T2 T 974).
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. A privileged person would seldom be found to claive, if his intention not to abandon could alone control the situation.
There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. lie cannot be allowed, after disclosing as much as he pleases, to withhold the remainder.
He may elect to withhold or to disclose, but af ter a certain poirt his election nust remain final.
It is the Staff's view since Dow has waived the privilege as to information it conveyed to three of its counsel in seeking legal advice, it has aaived the privilege as to information conveyed to a fourth counsel when seeking legal advice on the same subject matter.
IV.
.P_ ro c e d u re If this Eoard is satisfied that Dow has waived the attorney-client privilege as to outside counsel other than Mr. Wessel, this issue is resolved.
If this 30ard is not satisfied in that regard, the Staff suggests that the record should ce de< eloped to determine facts relevant to the existence and waiver of the privilege.
The Staff has been precluded from developing that record because of Dow's refusal to answer more than preliminary questions with respect to advice from outside counsel other than Mr. Wessel.
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)s In ':orthern States i'ower Company (Monticellc Nuclear Genera;ing Plant, Unit 1),
Al.AB-10, 4 AEC 390 at 392-3 (1970), the Appeal Board addressed, at length, the procedures to be followed when a pa. ty asserts pr;vilege in adjudicatory proceedings. As relevant to current rules of practice, Monticello would first require this Board to determine whether the inforation is of a type gcrarally dis-coverable.1/ The record shows the legal advice to be relevant and therefore discoverable unless privileged.2/
Cnce reic'. zcy has been detencined A Licensing Boted cust, consistant with our acijudicatory process, deter ~.ine ini ti ally..hether the data soucht fall withia a properly privileged category, and must do this vithout f2rcing a designed to protect.0/y thing the privilege is disclosure of the ver
[ Footnote 6:
Courts as well as regulatory agencies have adopted in camera inspection as the procedure for accommodating claims of privilege tith the demand for production.
The procedure permits the deciding body to consider the pri'ilege sitneut initially forcing disclosure.
The Coc7,ission's rule c. gainst ex parte cc munications
(;0 C.F.R. Sections 2.719 and 2.730) does not apply to such an in camara procedure, followed by courts and agencies to deal with privilege controversies under similar circumstances.
- See, e. g.,
'.'.'e s t i n c ho u s e El ec t r i c Co r o o ra t i c o v. C i ty_
of Burlinoton, 358 Lsic - apparently snould be 351]
F.2, 762, 766 (D.C. Cir. 1965)].3/
~~l/ Rule 2.741, as discussed in 'Onticello (1970) recuired a showing of good cause.
That requirement has been eliminated.
l/ See Rules of ?octice, Secticn 2.N0(b) - 2%e of Disco'.Ory.
3/ 'hrthern S ta tcs Pcv.e r Cccany ;'Onticello L: lear Gerenti ^g P' ant, Unit
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17, tiAS-10, a AEC 390 at 392-? (i970).
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iu s There is at least one alternative to the Board itself considering this issue in cayera.
In the Toledo Edison Company, et al (Davis-Besse ':uclear ros,er Station), ALAB-300, 2 t'RC 7t2 (1975) the Appeal Board approved the Licensing Board's reference of a claim of privilege to a "special master", to be heard i n_ c ante ra.
V.
C;nclusion The existing record shows that Do.v's claim of privilege as to legal advice from outside counsel other than Mr. '.-lessel has been.vaived.
In the event the Board determines the record needs to be supplemented with respect to this issue, further proceedings should be neld in camera.
Res pec t f ul lyj ubmi t ted,
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,,=--l,",i 7 c, siilliam J. Cic:s tead Counsel for.,RC S ta f f ated at Bethesda, Maryland
.his 3rd day of July,1979 L. q 4
UNITED STATES OF o" ERICA NUCLEAR REGULATORY C^" MISSION BEFORE THE ATOMIC SAFETY AND LICENSING ECARD In the Matter of
)
)
CCNSUMERS POWER COMPANY
)
Docket Nos. 50-329
)
50-330 (Midland Plant, Units 1 and 2)
)
(Remand Proceeding)
CERTIFICATE OF SERVICE I nereby certify that copies of "NRC STAFF ME"lRAhbuM ON ATTORNEY-CLIENT PRIVILEGE" dated July 3,1979 in the above-captioned proceeding, have been scrved on the following, by deposit in the United States mall, first class, or as indicated by an asterisk through deposit in the Nucicar Regulatory Com.aission's
. iternal. nail system, this 5th day of July, 1979.
(This docunent was handed to
- he Board and those parties who were present at the evidentiary nearing on July 3,1379. )
- Marshall E. Miller, Esq.
Ms. Mary Sincla i r Atomic Safety and Licensing Board 5711 Su~merset Street U. S. Nuclear Regulatory Commission Midland, Michigan 43640
..ashington, D. C.
20555 Ha rold F. Reis, Esq.
Dr. J. Venn Leeds, Jr.
Robert Lo..anstein, Esq.
Atamic Safety and Licensing Board Lowenstein, Newman, Reis and 10807 Atwell Axelrad Houston, Texas 77096 1025 Connecticut Avenue Washington, D. C.
20036
- Dr. Ermeth A. Luebke Atomic Safety and Licensing Board Gerald Charnoff, Esq.
U. S. Nuclear Regulatory Commission Shaw, Pittnan, Potts & Trowbridge Washington, D. C.
20555 1300 M Street, N.W.
'!a shing ton, D. C.
20036 Judd L. Sacon, Esq.
Legal Department Mr. 5teve Gadler Consumers Power Company 2120 Carter Avenue 212 West Michigan Avenue St. Paul, Minnesota 55108 Jackson, Michigan 49201 Grant J. Merritt, Esq.
- Eocketing and Service Section Tncepson, Nielsen, Klaverkamp Office of the Secretary
& James U. S..uclear Regulatory Ccn:nission 50 S. Eighth Street
'la s hi nnton, D. C.
20555 Minneapol i s, " inn.
55402
' k 'b r,r hU.
i Michael I. Miller, Esq.
R. L. Davis, Esq.
Ronald G. Zamarin, Esq.
J. E. Dicks, Esq.
Martha E. Gibbs, Esq.
L. F.
1ute, Esq.
Caryl A. Bartelan, Esq.
The Dow Chemical Company Isham, Lincoln & Beale Legal Dept., 47 Sldg.
One First flational Plaza
idland, Michigan 48640 42nd Floor Chicago, Illinois 60603
- /.tamic Safety and Licensing Board Panel U.S. !tuclear Regulatory Conmission Washington, D. C.
20555
- Atomic Safety and Licensing Appeal Panel U.S.
!uclee >- Regula tory Conmission Washington, D. C.
20555
';illia,n C. Potter, Jr.
Fiscner, Franklin, Ford, Simon & Hogg 1700 Guardian Building vetroit, aicnigan 43226 Myron M. Cherry, Esq.
1 IBM Plaza Chicago, Illinois 60611 William J. Olmstead Counsel for 1RC Staff i
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