ML19309C468
| ML19309C468 | |
| Person / Time | |
|---|---|
| Site: | South Texas, Comanche Peak  |
| Issue date: | 03/06/1980 |
| From: | Ahearn C DEBEVOISE & LIBERMAN, TEXAS UTILITIES ELECTRIC CO. (TU ELECTRIC) |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| NUDOCS 8004080638 | |
| Download: ML19309C468 (30) | |
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e .
@ g UNITED STATES OF AMERICA -
To hl NUCLEAR REGULATORY COMMISSION I
MAR 71980> #G BEFORE THE ATOMIC SAFETY AND LICENSING BOQD0fficeof theSeq '
Ync &'
In the Matter of )
HOUSTON LIGHTING AND POWER CO., ) Docket Nos. 50-448A
_e t _al . ) 50-449A (South Texas Project, Units 1 )
and 2) )
)
TEXAS UTILITIES GENERATING ) Docket Nos. 50-445A COMPANY ) 50-446A
)
(Comanche Peak Sceam F,lectric )
Station, Units 1 and 2) )
TEXAS UTILITIES GENERATING COMPANY'S OPPOSITION TO JOINT MOTION OF THE DEPARTMENT OF JUSTICE AND THE NUCLEAR REGULATORY COMMISSION TO REMOVE PROTECTION OF SETTLEMENT DISCUSSIONS AND TO REQUIRE PRODUCTION OF SETTLEMENT DOCUMENTS On February 28, 1980, the Department of Justice and the Nuclear Regulatory Commission Staff ("Movants ") filed their
" Joint Motion. . . For Modification of Board's Order Regarding Protection Of Settlement Discussions And For An Order To Compel Production Of Certain Documents And Testimony. " Texas Utilities Generating Company ("TUGCO") opposes this motion, believing it to be ill-founded in both the law and on the particular facts of this case, and requests that the Board deny it.
During the June 1,1979 prehearing conference , counsel for TUGCO ftated TUGCO's position in regard to the necessity for confidentiality of settlement discussions as follows:
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8004080 (
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Mr. Sampels: My point is: If this is a temporary or unwitting or mistaken protection, I am going to so advise my client and we are not going to generate any documents, we are not going to have any such discussions. Because I think settlement discussions, by their very nature, done in a fishbowl, aren't settlement discussions; you might as well forget i about it. And I think, really, I frankly find it
( absurd to suggest that this is a temporary condition, that suddenly, two weeks from now or a month from now, you will find that the order didn't really mean what it said, and we are really going to have turn all these documents over, to the extent there are any, to the world. I find that incredibly inconsistent with the encouragement of settlement discussions and the promotion of a public policy to settle, not litigate, controversies. (Tr. at 366-67)
The Board later ruled at this prehearing conference that it would adhere to its April 16, 1979 and May 7, 1979 orders preserving the confidentiality of such settlement documents The Board's ruling was made with full knowledge that TUGCO would not participate in a settlement process unless it could rely upon the continued confidentiality of discussions and documents generated for settlement purposes that was granted by the Board's two previous orders. The Board's ruling at this conference (Tr. at p. 389) reaffirmed the two previous orders, and TUGCO relied upon this as a basis for pursuing settlement negotiations.
In light of this reliance on the continued confidentiality of settlement matters as a precondition for entering into those matters, TUGCO does not see any basis for the Board to even consider a retroactive modification of that policy.
It is essential that two points be borne in mind when considering this motion. The first is that neither TUGCO nor
ang of its witnesses, fact or expert, will rely either directly or indirectly on any of the documents developed during these settlement negotiations for their testimony at the hearing in this proceeding. The second is that none of the documents generated pursuant to the settlement discussions will be introduced at the hearing. To the extent that Movants base their motion on the contention that the settlement discussions or the documents generated pursuant thereto will in any way influence any TUGCO personnel (see motion at pages 2 and 16) , it is totally unfounded.
TUGCO emphasizes that it has no intention of introducing or relying on studies or other documents for which the settlement privilege has been invoked. Moreover, TUGCO believes it has faithfully adhered to the Board's order in this regard, since documents for which the " settlement privilege" was claimed were those " generated after the district court trial and solely in connection with settlement negotiations." (Board Order of May 7, 1979, page 2). TUGCO is not attempting to shield any documents in existence before the settlement negotiations began. All documents for which TUGCO has claimed this privilege were generated solely for the purpose of settlement and not for any use or purpose apart from those negotiations.
I. BACKGROUND On January 15, 1979 the NRC staff filed and served its
" Initial Interrogatories And Request For Production Of Documents Propounded To Houston Lighting & Power Company And Texas Utilities
. . Generating Company." After receiving an extension of time, on January 31, 1979, Houston Lighting & Power Company responded to these Interrogatories and Request for Production of Documents by filing its ". . . Objections And Answers To . . . Staff's Initial Interrogatories. . ." on February 19, 1979, and its " Objections And Motion For Protective Order Regarding Discovery Requests From NRC Staff" on February 22, 1979. In its February 19, 1979 objections, HL&P specifically objected to Staff's Interrogatory No. 6 (e) stating, in relevant part:
HL&P objects to producing any documents related to preparation for litigation or evaluation of ,
settlement proposals because these documents are privileged, and they are not relevant to the issues in this case. (Objection at page 8)
Houston amplified this objection in its February 22, 1979 Objections, stating that the documents were not calculated to lead to relevant evidence and that they were protected from discovery by the policies underlying Federal Rule of Evidence 408 and 10 CFR S2.759.
Such policies, and the necessary extension of those policies resulting in denial of production of this type, has been recognized in NRC antitrust proceedings . See Florida Power & Light Company (St. Lucie Plant, Unit No. 2) Docket No. 50-389A, 9 NRC [164, 183-84) (Memorandum and Order on Discovery, February 9, 1979) (slip. op. at 36-38) .
(Objections at page 3) .
On March 5, 1979 TUGCO filed similar objections to the Staff's Interrogatories and specifically joined in HL&P's February 22, 1979 Objections to staff Interrogatory No. 6 (e) . (TUGCO Objections at page 3, fn. 2).
On March 23, 1979 the staff filed a motion to compel further answers by HL&P, and Houston responded on April 11, 1979. On
April 16, 1979 this Board entered its " Order Concerning Staff Motion To Compel Further Answers By Houston Lighting And Power Company", stating in relevant part:
However, HL&P's objection is sustained as to work product involving non-testifying outside consultants used by it in preparing for trial, in accordance with our ruling at the March 20, 1979 prehearing conference (Tr. 183-85). This ruling applies to work product involved in document requests contained in Staff interrogatories 1(d),
1(e) and 33(c). The same rule shall aoply to documents generated by HL&P and other carties solely as part of negotiations to settle this proceeding. We encourage settlement negotiations and will orotect the efforts of parties toward that end. (10 CFR S2.759) (emphasis added) .
4 On April 19, 1979, the Staff filed a motion asking the Board to reconsider its ruling. HL&P filed its response to this Motion for Reconsideration on April 30, 1979. On May 7, 1979 the Board stated that it would adhere "to its ruling protecting documents generated after the District Court trial and solely in connection with settlement negotiations, as necessary to encourage and protect settlement negotiations." (Order at page 2).
The entire matter was brought up once again at the June 1, 1979 prehearing conference and was thoroughly discussed by all the parties (Tr. at pages 334-89) . Both HL&P counsel (Tr. at pages 334-36 and 361-62) and TUGCO counsel (Tr. at pages 364-65, 366-67, and 385) stated their reasons for opposition to any modification in the Board's previous two orders. The Movants there attempted to convince the Board to modify or fevoke its previous order in order to allow discovery of settlement discussions and documents. After reviewing its previous Orders, s
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, , the Board reaffirmed them and held that neither a listing nor a description of the documents or the participants involved in settlement negotiations would be required insofar as they were subsequent to the date of the district court decision and so long as they were related solely to settlement negotiations (Tr. at
~
page 389).
II. THE MOVANT'S MOTION SHOULD BE DENIED FOR FOUR REASONS The Movants seek "to obtain any documents which assess the technical feasibility and/or cost of electrical interconnections between TIS /ERCOT and SWPP and to compel testimony about these documents which may relate to part or all of the anticipated testimony of these potential witnesses". (Motion, p. 2) . The TU Companies oppose the motion to the extent that documents included within this broad category arose solely in connection with settlement efforts in this case. The motion should be denied for four reasons.
First, the TU Companies represent that all of the documents sought to be protected from discovery were generated solely in connection with settlement efforts in this case. Moreover, the documents were generated in direct reliance upon this Board's orders on April 19, May 7, and June 1, 1979, where the Board specifically directed that the documents now sought to be produced are not proper subjects for discovery. Moreover, it is not presently anticipated that any of the documents sought to be produced will be offered as evidence in this case by l
any party, for to do so would violate not only this Board's order with respect to discoverability, but would also violate the con-fidentiality agreements the TU Companies have with the various p arties . Since the documents are not admissible in evidence under the Commission's rule 10 CFR 2.740 or under Rule 26 (a) of the Federal Rules of Civil Procedure or under Rule 408 of the Federal ,
Rules of Evidence, discovery thereof is precluded.
Second, all parties to this case, including Movants, have specifically recognized the scope and propriety of the Board's order precluding discovery of documents generated solely in connection with settlement efforts. On the face of their motion itself, Movants admit that counsel for TU and HL&P have occasionally instructed deponents not to answer specific questions which call for discovery of documents here sought. Those instructions have been strictly limited to matters squarely within the Board's orders and have not precluded discovery of matters not involving settlement ef forts. Indeed, Movants refer to several instances where such instructions were given during the course of depositions in their Appendix A.
Not one time during the course of these numerous depositions have Movants sought Board clarification of the scope of its orders until last Friday. Indeed, Mr. Blume, for the NRC Staff, specifically stated to this Board that "if they [the documents here sought} are produced specifically for settlement discussion, and if they are produced recently, they should be -- their confidentiality should be protected." (Tr. at p . 352). Thus, the filing of this motion on the eve of the close of factual discovery is simply a calculated effort to obtain yet another delay in the proceedings.
Third, prehaps most importantly, the current motion was filed at an extremely critical time in settlement negotiations.
Discussions are ongoing currently between and among parties to this proceeding, and such discussions, TU believes, are sincere and meaningful efforts to resolve the differences amicably without litigation.
Granting the relief sought by the Department and the Staff at this time would undoubtedly have a seriously adverse " chilling" effect upon those discussions if not result in a complete termination of such discussions. The strong policy favoring settlement as embodied not only in the Commission's Rules (10 CFR SS 2.740 and 2.759), the Federal Rules of Evidence, Rule 408, the Federal Rules of Civil Procedure, Rule 26 (a), but also in the Board's efforts to strengthen that policy as reflected in its orders referred to above, would therefore be seriously undermined, if not irrevocably altered.
Fourth, there can be no question that the law of this case is now, and has been since April 16, 1979, that documents generated solely for the purpose of settlement negotiations are shielded from discovery. In direct reliance upon the Board's orders, the parties are seeking to resolve this controversy by agreement rather than by litigation. That reliance was specifi-cally brought to the Board's attention on June 1, 1979 by counsel for TUGCO in the passage quoted above at page 2.
In summary, the strong public policy favoring settlement without litigation can only be achieved in an atmosphere free from a fear of later disclosure.
_9 t
III. FEDERAL RULE OF EVIDENCE 408 AND PROTECTION OF SETTLEMENT NEGOTIATIONS FROM DISCLOSURE TUGCO asserts that the issues involved in this motion are controlled by the policy underlying Federal Ryle of Evidence No. 408, which in its entirety reads:
RULE 408. Compromise and Offers to Compromise Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. (emphasis added) .
Pub. L.93-595, S 1, Jan. 2, 1975, 88 Stat. 1933.
The fact that the rule uses the word " compromise" rather than " settlement" is inconsequential. The Senate report used the word settlement rather than compromise when discussing Rule 408. See Senate Report No. 93-1277, 93d Cong., 2d Sess.
10 (1974), U.S. Code Cong. & Admin. News 1974, p. 7051. "It is clear that evidence relating to settlement negotiations is treated the same as compromise negotiations under Fed. R. Ev. 408."
Burns v. City of Des Peres, 534 F.2d 103, 112 n.9, (8th Cir.),
cert. denied 492 U.S. 861 (1976), and additional cases cited I
there and in the accompanying text. An NRC Board has specifically adopted the policy underlying FRE 408 to prevent both the admission and discovery of conduct and statements made in the course of settlement negotiations in a recent decision. See Florida Power &
Light, supra, at 183-84.
Before the current version of Rule 408 became effective on January 2, 1975, evidence of unqualified factual assertions made during compromise negotiations was admissible although admissions of liability or opinions given during these negotia-tions were not. See e.g., Hiram Ricker and Sons v. Students International Meditation Society, 501 F.2d 550 (2nd Cir. 1974).
This rule was often circumvented by couching everything in terms of hypotheticals, a real trap for the unwary. There was a great deal of dissatisfaction with this rule and the discussions that occurred during the course of amending this rule clearly showed that it was Congress ' intention to fully protect all aspects of settlement negotiations in order to further the policy of promoting settlement and discouraging litigation of disputed claims. The legislative history of FRE 408 is set out in Appendix A and reveals that the rule was passed in its present form explicitly to prevent the kind of action which Movants now seek from this Board.
There can be no dispute of the fact that no evidence of the settlement negotiations will be admissible at the hearing in this proceeding. There can also be no dispute that the public policy underlying FRE 408 to encourage settlement and avoid litigation of disputed claims also requires that these matters be immune from discovery. The
question of whether settlement documents in an NRC antitrust proceeding should be discoverable was specifically addressed in the Florida Power & Light Company proceeding, and a request virtually identical to the Movants' motion was rejected in the following language:
The Board sustains Applicants' Objections to Florida Cities' Requests 65 and 66. These requests demand all documents pertaining to settlement negotiations in this case and in the South Dade proceeding. We are persuaded by Applicants' arguments. Applicants' objections, pages 23-25.
Rule 408 of the Federal Rules of Evidence provides that offers of settlement and conduct and statements made in the course of settlement negotiations are not admissible to prove the validity of a claim. Florida Cities' Reference to the clarifying language of Rule 408 does help its position. (footnote referencing last two sentences of Rule 408]. A party is free to discover evidence by other means, and its adversary may not defend against it simply by asserting that it happened to be evidence that was revealed in the course of settlement negotiations. One purpose of this provision is obvious; a party may not seize upon settlement negotiations as a device to defuse damning evidence against it. But the clarification does not justify an unrestrained excursion into Applicants' settlement documents.
Here Florida Cities is not seeking documents which may also happen to be related to settlement talks, it is directly seeking settlement papers.
In making this determination the Board is also guided by the policy stated in 10 CFR 52.759.
This rule encourages settling contested pro-ceedings and requires all parties and Boards to try to carry out the settlement policy. Requiring a carty to produce its settlement documents because they are settlement documents would be inconsistent with this policv. Florida Power & Licht Company (St.
Lucie Plant, Unit No. 2), Docket No. 50-389A, LBP-79-4, 9 NRC 164, 183-84 (1979) (emphasis added).
The situation in the Florida Power & Light case appears to be identical to that in this proceeding, and TUGCO asserts that the reasoning .and decision there should be followed here.
The Board in that case clearly recognized that the policy under-lying FRE 408 requires that settlement documents of the type which Movants seek must be shielded from discovery if the policy of Congress and the Supreme Court is to be carried out. TUGCO urges this Board to continue to follow this policy by adhering to its previous Orders and denying Movants' motion.
It is universally acknowledged that the purpose behind FRE 408 has been the encouragement of free and frank discussions in negotiations leading towards settlement and compromise of disputed claims. See, II "Weinstein's Evidence," S408(01),
page 408-9 through 408-10; and X " Moore's Federal Practice,"
S408.2, page IV168-170. Moreover, The adoption by Rule 408 of the public policy rationale logically leads to an extension of its coverage to all conduct and statements during negotiations. In order to implement settlement of disputes, there must be:
Full and frank disclosure by each party of the position taken by him and the facts on which he relies to sustain his position. . . . It should be assumed that the law has written over the door of every conference room the words 'without prejudice.'
The best hope of a satisfactory compromise lies in the confidence of the participants in the conference that they can speak freely (Tracy, " Admissibility of Statements of Fact Made During Negotiation For Compromise,"
34 Michigan Law Review 524, 529 (1936)]
(emphasis added).
l
As the Advisory Committee stated: An inevitable result (of the existing practice) is to inhibit freedom of communication with respect to compromise even among lawyers. II Weinstein's Evidence, S408 (03) , page 4 08-21 (footnote omitted).
Movants reliance on the case of Oliver v. Committtee for the Re-Election of the President, 66 F.R.D. 553 (D.D.C. 1975) for the proposition that "there is no legally recognized privilege for settlement or compromise negotiations" (motion at page 3) is misplaced. That case involved a suit by Mr. Oliver against President Nixon's Re-election Committee for the Watergate Break-In and Bugging, and Mr. Oliver's attempt to compel Mr. Robert Strauss to testify concerning settlement negotiations in another action growing out of the break-in. The case is clearly distinguishable in that the court did not there announce a ruling on the discoverability of settlement discussions and
- documents which the parties had relied upon in the same proceeding, !
]
but was concerned about settlement discussions and documents in a completely separate case.
1 Movants' reliance on the case of United States v. Reserve Mining Company, 412 F.Supp. 705 (D. Minn. 1971, affirmed and remanded on other grounds, 543 F.2d 1210 (7th Cir. 1977)) is j similarly misplaced. In that case, the defendants were attempting to shield a document which had been produced long before any
( type of settlement negotiations had been entered into, not documents which had been produced during and specifically for settlement negotiations. Since none of the documents for which 4
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TUGCO has asserted the settlement privilege were generated prior I i
to these negotiations, they would not be otherwise discoverable, ,
and the Reserve Mining case has no bearing on the matter now l before the Board.
t Movants selectively quote from the trancript of the June 1, 1979 hearing for support. Putting aside for the moment the fact that " matters of f act" are exactly what " traditional types of {
settlement discussions and negotiations" are all about, a complete reading of the pages quoted in the context of the discussion casts an entirely different light upon the selected passages than the Movants suggest. Such a complete reading shows that the Board was questioning its power to shield discussions and documents relating to settlement in this proceeding from discovery in other proceedings, especially after termination of the Board's f 1 i-jurisdiction, not whether " facts" in this proceeding were l
protected by the Board's previous orders. -
4 The Movants are simply mistaken when they assert that any privilege regarding settlement may be waived when anything is said to a person who is "not a party to the settlement" (motion at page 8, emphasis in original) . This issue was considered
, by a noted commentator and answered as follows:
A few cases have questioned whether a third person may testify that a party disclosed a compromise offer made to his adversary. As a general rule, such testimony should not be allowed, not because it involves hearsay problems, but because it andermines the policy of promoting compromises.
II Weinstein's Evidence, S408(02), page 408-14. ,
(footnote omitted) . l
It should be noted that in the particular instance cited by Movants the third person, Mr. R. T. Sweatman,is the Director of Engineering and Enforcement for the Texas Public Utility Commission. As such, he had a need to know certain matters affecting both this proceeding and proceedings before the Texas Commission. 1/
Movants also assert that the privilege concerning settlement discussion should not be extended beyond the narrow scope of the NRC proceeding. This assertion has also been dealt with and -
was answered by another noted commentator as follows:
Finally, the rule excludes evidence of a compromise between a third person and a party to the pending case arising out of the same incidents that are the subject of the case at bar. Thus, in Hawthorne
- v. Eckerson Comoanv, (77 F.2d 844, 847 (2nd Cir.
1935)J Judge Augustus Hand wrote for the second circuit:
Settlements have always been looked on with favor, and courts have deemed it against public policy to subject a person who has compromised a claim to the hazard of having a settlement proved in a subsequent lawsuit by another person asserting a cause of action arising out of the same transaction.
10 Moore's Federal Practice Section 408.03, page IV-171 (1976).
-1/ It should also be noted that the Board's ruling at the June 1, 1979 prehearing conference directly involved settlement negotiations with a third party, Gulf States Utilities. It would thus appear that the Board has already conclusively ruled on exactly this situation.
Movants are requesting this Board to ignore this well-settled proposition and to subject the parties to exactly the type of " hazard" which Judge Hand was speaking about. The Board ,
should adhere to its own ruling which is consistent with both Judge Hand and the commentators cited.
The Movants are also disturbed that TUGCO and HL&P have asserted the " settlement privilege" about " matters involving i settlement or possible settlement of this controversy, . .
(Motion at page 9a, emphasis in original) and about " potential matters relating to the settlement of this controversy" (Motion at page 11, emphasis in original) . They are apparently trying to draw some type of distinction between what they would apparently call actual matters for settlement and something else which they would call potential matters for settlement.
TUGCO asserts that this is a distinction without a difference in that all matters are " potential matters for settlement" until the settlement is reached and finalized, when they become the " actual matters of settlement." Again, the same type of assertion was considered by Weinstein, and treated as follows:
Another illustration of this restrictive approach is Maulding v. Louisville and Nashville Railroad Company, (168 F.2d 880 (7th Cir. 1948)] The question concerned a letter to plaintiff from defendant's claims agent, advising him that the railroad had sold an automobile wrecked in a railroad crossing accident and that a draft was enclosed with the amount received, which was "to be credited (to defendant] , when final settlement is made. " The Court held this communication admissible on the issue of damages in the absence of any indication of pending negotiation settlements. Under Rule 408 such evidence should probably be excluded not only because the need for the evidence was low -- the plaintiff had previously testified as to the receipt of the money--
but also because such a letter usually initiates, or at least creates, a better atmosphere for successful comoromise necotiations. . . .
o
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In some instances there have been received resolutions by the Board of Directors of a corporate defendant which admitted the validity of a claim and authorized attempts to compromise. Such resolutions, admissible as independent admissions of fact under prior law, should, in the absence of special circumstances, be protected under Rule 408 as part of the settlement process.
Id.. , 5408(01], page 408 408-13 (emphasis added).
The distinction which Movants are trying to draw exists neither in logic nor in reality, and the protection granted to settlement negotiations must also apply to all those things which create the proper circumstances in which a settlement can take place or that are related to the settlement process if the policy of FRE 408 is to be carried out.
IV. EVEN IF THE SETTLEMENT DISCUSSIONS AND DOCUMENTS WERE DISCOVERABLE, THE MOTION SHOULD BE DENIED DUE TO THE RELIANCE OF THE PARTIES ON THE PREVIOUS BOARD ORDERS Assuming, arguendo, that the Board should decide that these discussions and documents would be discoverable, the retroactive effect of the Movants' motion should nevertheless be denied because of the reliance of the parties on the Board's previous orders of April 16, 1979 and May 7, 1979.
All of the discussions and documents for which TUGCO has
- claimed a privilege were either entered into or developed in direct reliance upon the Board's orders and should not now,.
or at any time in the future, become discoverable.
The disclosure of
- these documents or discussions would eliminate any possibility that this proceeding could be settled short of a full Board hearing. Continuing this proceeding through such a hearing would result in the expenditure of a considerable amount of additional funds which would not be necessary if the proceeding, or major facets thereof, were settled beforehand. The chilling effect on settlement and the associated additional expenditure of funds is exactly the type of irreparable harm which courts have considered when determining whether or not to retroactively change a decision.
Not only has TUGCO relied'on t'he Board's previous orders in generating documents for and participating in settlement negotiations, but TUGCO has also entered into confidentiality agreements consistent with and relying on those rulings. TUGCO should not be required to abrogate such agreements which are normally associated with settlement discussions. If the effect of the Movants' relief would be to relieve them from confidentiality agreements to which they may be a party, then obviously such relief should not be permitted.
TUGCO asserts that the case law clearly supports the proposition that if this Board believes it necessary to modify its previous orders, any modification of those orders can be prospective in nature only. See, for example, National Labor Relations Board v. A.P.W. Products Company, where the second circuit said:
Thus, in addition to cases where the function of an administrative order as a future command precludes its retroactive overruling, Arizona Grocerv Company
- v. Atchison, T. & S. F. Ry., 284 U.S. 370, 52 S.C.
183, 76 L.Ed. 348 (1932), there may be some instances where the adverse effects of retroactive overrulings so far outweigh any possible benefits that admini-strative agencies may not properly exercise the
- power in question. National Labor Relations Board v.
A.P.W. Products Company, 316 F.2d 899, 905-906 (2nd Cir. 19 6 3 ) .
Another illustrative case is Pederson v. National Labor Relations Board wherein, in discussing cases which had considered whether or not boards could issue orders with retroactive effect, the second circuit stated:
The rationale of these cases limiting the Board's power to act retroactively is that such retroactive action results in a species of entrapment. Persons who have relied on the Board's stated policy suddenly find themselves penalized for their conduct.
Pederson v. National Labor Relations Board, 234 F.2d 417, 419 (2nd Cir. 1956).
Retroactive reversal by the Board of its prior rulings ,
would be in direct contravention of the policy enunciated by l
the Commission in 10 CFR 52.759, the Congress, and the courts, all encouraging settlement discussions. The establishment of such a precedent would almost inevitably mean that no antitrust proceeding before the Nuclear Regulatory Commission would ever be settled without a full hearing and at a minimum would be incon-sistent with a policy encouraging settlement, since all ability to negotiate free of disclosure of trade-offs, bargaining positions, and related documents would be removed.
. .V. CONCLUSION The protection given to settlement negotiations and the conduct and statements made pursuant thereto by Federal Rule of Evidence No. 408 supports the April 16, 1979 and May 7, 1979 Board Orders regarding the confidentiality of settlement discussions. The Movants have failed to demonstrate that counsel for TUGCO and HL&P have in any way abused the privilege granted by this rule. Movants are unable to point to any reasons whatsos.ver that would allow such discussions to be admissible at the hearing and therefore discoverable now. Since TUGCO will in no way rely upon anything contained in either the settlement discussions or the documents generated pursuant thereto in its case at the hearing, and since all documents for which privilege has been claimed were generated solely for purposes of settlement, the Commission's policy and the policy underlying FRE 408 require that the confidentiality of these discussions and documents be maintained.
Even if FRE 408 was not applicable, the reliance of the parties upon the earlier Board Orders and the irreparable harm they would suffer by a retroactive modification of these orders requires that the Movants ' motion be denied.
Wherefore, TUGCO respectfully requests that this Board deny the Movants' Motion.
s u
Respectfully submitted, 0~ uma m C. Dennis Ahearn Attorney for Texas Utilities Generating Company DEBEVOISE & LIBERMAN 1200 17th Street, N.W.
Washington, D.C. 20036 (202) 857-9800 DATE: March 6, 1980 t
h
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1-i
9
- e APPENDIX A
LEGISLATIVE HISTORY OF FEDERAL RULE OF EVIDENCE 408 The Notes of the Advisory Committee on Proposed Rules clearly sets out the reasons FRE 408 was changed to make admissions of fact durin'g settlement negotiations inadmissible.
As stated by the Committee:
As a matter of general agreement, evidence of an offer to compromise a claim is not receivable in evidence as an admission of, as the case may be , the validity or invalidity of a claim. As with evidence of subsequ'ent remedial measures, dealt with in Rule 407, exclusion may be based on two grounds. . . . (2) A more consistently impressive ground is promotion of the public policy favoring the compromise and settlement of disputes. McCormick SS 76, 251.
. . . The practical value of the common law rule has been greatly diminished by its in-applicability to admissions of fact, even though made in the course of compromise negotiations, unless hypothetical, stated to be 'without prejudice,' or so connected with the offer as to be inseparable from it. McCormick 5 251, pages 540-541. An inevitable effect is to inhibit freedom of communication with respect to compromise, even among lawyers. Another effect is the generation of controversy over whether a given statement falls within or without the protected area. These considera-tions account for the expansion of the rule herewith to include evidence of conduct or statements made in compromise negotiations, as well as the offer or completed compromise itself. For similar provisions, see California Evidence Code SS 1152, 1154.
II Weinstein's Evidence, page 408 408-8. (emphasis added) .
It is thus clear that the rule as proposed by the Supreme Court was intended to overcome a weakness perceived in the common law rule regarding the confidentiality of settlement negotiations.
The Movants are attempting to use what was perceived as a drawback in the common law, and subsequently changed, in this proceeding , to circumvent the policy now clearly enunciated in FRE 408.
In its consideration of proposed Rule 408 the House Committee on the Judiciary stated:
Under existing federal law evidence of conduct and statements made in compromise negotiations is admissible in subsequent litigation between the parties. The second sentence of Rule 408 as submitted by the Supreme Court proposed to reverse that doctrine in the interest of further promoting non-judicial settlement of disputes.
. . . In light of these considerations, the Committee recast the rule so that admissions of liability or opinions given during compromise negotiations continue inadmissible, but evidence of unqualified factual assertions is admissible.
. . . The Committee intends no modification of current law whereby a party may protect himself from future use of his statements by couching them in hypothetical conditional form. Report of Judiciary Committee, House of Representatives, 93rd Cong., 1st Sess., Federal Rules of Evidence, No.93-650, page 8 (1973); Reprinted in II Weinstein's Evidence, page 408-5.
The House Judiciary Committee had added an amendment to proposed Rule 408 that would have eliminated the protection for admissions of facts during compromise negotiations which the Supreme Court had wished implemented. If the rule had been enacted in the form proposed by the House Committee, the Movants might have had some basis for their current motion. However, in the Report of its consideration of proposed Rule 408, the Senate Committee on the Judiciary stated:
This rule as reported makes evidence of settlement or attempted settlement of a disputed claim inadmissible when offered as an admission of liability or the amount of liability. The purpose of this rule is to encourage. settlements which would be discouraged if such evidence were admissible.
Under present law. in most jurisdictions, statements of fact made during settlement negotia-tions, however, are excepted from this ban and are admissible. The only escape from admissibility of statements of fact made in a settlement negotia-tion is if the declarent or his representative expressly states that the statement is hypothetical in nature or is made without prejudice. Rule 408 as submitted by the Court reversed the traditional rule. It would have brought statements of fact within the ban and made them, as well as an offer of settlement, inadmissible .
The House amended the rule and would continue to make evidence of facts disclosed during compromise negotiations admissible. It thus reverted to the traditional rule. The House Committee Report states that the Committee intends to preserve current law under which a party may protect himself by couching his statements in hypothetical form. The real impact of this amend-ment, however, is to deprive the rule of much of its salutary effect. The exception for factual admissions was believed by the Advisory Committee to hamper free communications between parties and thus to constitute an uniustifiable restraint upon efforts to necotiate settlements
-- the encouracement of which is the purpose of the rule. Further, by protecting hypothetically phrased statements, it constituted a preference for the sophisticated, and a trap for the unwary.
For these reasons, the Committee has deleted the House amendment and restored the rule to the version submitted by the Supreme Court with one additional amendment. This amendment adds a sentence to insure that evidence, such as documents, is not rendered inadmissible merely because it is presented in the course of compromise negotiations if the evidence is otherwise discoverable.
A party should not be able to immunize from admissi-bility documents otherwise discoverable merely by offering them in a compromise negotiation. Report of the Senate Committee on the Judiciary, 93rd Cong. ,
2nd Sess., No. 93-1277, page 10 (1974); Reprinted in Federal Rules of Evidence Rule 408, 28 USCA, page 162. (emphasis supplied) l l
{
_4_
The Senate thus disagreed with the House on the correct form which the proposed rule should take. " he Senate clearly agreed with the Supreme Court that an extension of the prior rule was necessary in order to encourage settlements, and it backed the Supreme Court's desire to make conduct and statements made during the course of negotiations inadmissible.
A Conference Committee was called to deal with the differences between the Senate and House version of the proposed rules. This Committee specifically addressed the difference between the House and Senate versions of proposed Rule 408 as follows:
The House bill provides that evidence of admissions of liability or opinions given during compromise negotiations is not admissible, but that evidence of facts disclosed during com-promise negotiations is not inadmissible by virtue of having been first disclosed in the compromise negotiations.
The Senate amendment provides that evidence of conduct or statements made in compromise negotiations is not admissible. The Senate amendment also provides that the rule does not require the exclusion of any evidence otherwise discoverable merely because it is a presented in the course of compromise negotia-tions.
3 The House bill was drafted to meet the objection of executive agencies that under the rule as proposed by the Supreme Court, a party could present a f act during compromise negotiations and thereby prevent an opposing party from offering evidence of that fact at trial even though the evidence was obtained from independent cources. The Senate amend-ment expressly precludes this result.
The Conference adopts the Senate amendment.
Conference Report (House Report No. 93-1597),
Reprinted at Congressional Record H-11930 (Daily Ed., December 14, 1974).
a .e .
There can thus be no doubt that the views of the Senate Judiciary Committee and the Supreme Court as to the protection to be given to conduct and statements made in the course of settlement negotiations was accepted by Congress as a whole. It is thus the public policy of this country to encourage settlement of disputed claims by refusing to admit any, evidence of conduct or statements made during the course of settlement negotiations.
d i
f i
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of )
)
EOUSTON LIGHTING AND POWER CO., ) Docket Nos. 50-498A et al. ) 50-499A
)
(South Texas Project, Units )
1 and 2) )
)
TEXAS UTILITIES GENERATING ) Docket Nos. 50-445A COMPANY, _et _al. ) 50-446A (Comanche Peak Steam Electric )
Station, Units 1 and 2) )
CERTIFICATE OF SERVICE I hereby certify that copies of " Texas Utilities Generating Company's Opposition To Joint Motion Of The Department Of Justice And The Nuclear Regulatory Commission To Remove Protecticn Of Settlement Discussions And To Rcquire Production Of Settlement Documents" in the above captionad matters, were served upon the following persons by depesit in the United States mail, first class postage prepaid this 6th day of March,1980, or by hand delivery to those designated by an asterisk.
- Marshall E. Miller, Esq. Mr. Jerome D. Saltzman U.S. Nuclear Regulatory Chief, Antitrust and Commission Indemnity Group Washington, D.C. 20555 Nuclear Reactor Regulation U.S. Nuclear Regulatory
- Michael L. Glaser, Esq. Commission 1150 17th Street, N.W. Washington, D.C. 20555 Washington, D.C. 20036 J. Irion Worsham, Esq.
- Sheldon J. Wolfe, Esq. Merlyn D. Sampels, Esq.
U.S. Nuclear Regulatory Spencer C. Relyea, Esq.
Commission Worsham, Forsythe & Sampels Washington, D.C. 20555 2001 Bryan Tower, Suite 2500 Dallas, Texas 75201 Atomic Safety and Licensing Appeal Board Panel Jon C. Wood, Esq.
U.S. Nuclear Regulatory W. Roger Wilson, Esq.
Commission Matthews, Nowlin, Macfarlane &
Washington, D.C. 20555 Barrett 1500 Alamo National Building Chase R. Stephens ,
San Antonio, Texas 78205 Docketing and Service Branch U.S. Nuclear Regulatory Dick Terrell Brown, Esq.
Commission 800 Milam Building Washington, D.C. 20555 San Antonio, Texas 78205
Charles G. Thrash, Jr., Esq. Don R. Butler, Esq.
E.W. Barnett, Esq. Sneed, Vine, Wilkerson, Theodore F. Weiss, Esq. Selman & Perry J. Gregory Copeland, Esq. P.O. Box 1409 Baker & Botts Austin, Texas 78767 3000 One Shell Plaza Houston, Texas 77002 Jerry L. Harris, Esq.
- Steven R. Hunsicker, Esq. Richard C. Balough, Esq.
R.Gordon Gooch, Esq. City of Austin John P. Mathis, Esq. P.O. Box 1088 Baker & Botts Austin, Texas 78767 1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
- Robert Lowenstein, Esq.
J.A. Bouknight, Jr., Esq.
- Roy P. Lessy, Jr., Esq. William J. Franklin, Esq.
Michael B. Blume, Esq. Douglas G. Green, Esq.
Fredric D. Chanania, Esq. Lowenstein, Newman, Reis, Ann P. Hodgdon, Esq. Axelrad and Toll U.S. Nuclear Regulatory 1025 Connecticut Avenue, N.W.
Commis.mion Washington, D.C. 20036 Washington, D.C. 20555 John W. Davidson, Esq.
Roff Hardy Sawtelle, Goode, Davidson &
Chairman and Chief Executive Tioilo officer 1100 San Antonio Savings Bldg.
Central Power and Light Company San Antonio, Texas 78205 P.O. Box 2121 Corpus Christi, Texas 78403 Douglas F. John, Esq.
Akin, Gump, Haver & Feld Mr. Perry G. Brittain 1333 New Hampshire Ave., N.W.
President Suite 400 Texas Utilities Generating Washington, D.C. 20036 Company 2001 Bryan Tower Bill D. St. Clair, Esq.
Dallas, Texas 75201 Morgan Hunter, Esq.
McGinnis, Lockridge & Kilgore R.L. Hancock, Director Fifth Floor, Texas State City of Austin Electric Utility Bank Building P.O. Box 1086 900 Congress Avenue Austin, Texas 78767 Austin, Texas 78701 G.W. Oprea, Jr.
Executive Vice President Houston Lighting & Power ,* David M. Stahl, Esq.
Company Isham, Lincoln & Beale P.O. Box 1700 1050 17th Street, N.W.
Houston, Texas 77001 Suite 701 Washington, D.C. 20036
- Susan B. Cyphert, Esq.
Frederick H. Parmenter, Esq.
David A. Dopsovic, Esq.
Nancy Luque, Esq.
U.S. Department of Justice -
Antitrust Division P.O. Box 14141 Washington, D.C. 20044
o4 Sarah Welling, Esq.
Michael I. Miller, Esq. Kevin B. Pratt, Esq.
- James A. Carney, Esq. Attorney General's Office Isham, Lincoln & Beale State of Texas One First National Plaza P.O. Box 12548 Suite 4200 Austin, Texas 78711 Chicago, Illinois 60603
- Frederick H. Ritts, Esq.
Don H. Davidson William H. Burchette, Esq.
City Manager Northcutt Ely City of Austin Watergate 600 Building P.O. Box 1088 Washington, D.C. 20037 Austin, Texas 78767 W.S. Robson General Manager South Texas Electric Cooperative, Inc. .
Route 6, Building 102 {I- #W "
Victoria Regional Airport C. Dennis Ahearn
. Victoria, Texas 77901
- Robert C. McDiarmid, Esq.
Robert Jablon, Esq.
Marc Poirier, Esq.
2600 Virginia Avenue, N.W.
Washington, D.C. 20037 W.N. Woolsey, Esq.
Dyer and Redford 1030 Petroleum Tower Corpus Christi, Texas 78474 Donald M. Clements Gulf States Utilities Company Post Office Box 2951 Beaumont, Texas 77704 Marc J. Wetterhahn, Esq.
Robert M. Rader, Esq.
Conner, Moore & Corber 1747 Pennsylvania Avenue, N.W.
Washington, D.C. 20006 Mr. William C. Price Central Power & Light Co.
P.O. Box 2121 Corpus Christi, Texas 78403 Mr. G. Holman King West Texas Utilities Co.
P.O. Box 841 Abilene, Texas 79604
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