ML19317E366

Responds to Applicant Motion for Protective Order Preventing DOJ from Utilizing Allegedly Privileged Document & Requiring Return of Document.Recommends Motion Be Denied.Certificate of Svc Encl

ML19317E366
Person / Time
Site:	Oconee, Mcguire, McGuire
Issue date:	03/19/1973
From:	Levin M JUSTICE, DEPT. OF
To:	US ATOMIC ENERGY COMMISSION (AEC)
Shared Package
ML19317E360	List: ML19317E359 ML19317E366
References
NUDOCS 7912170567
Download: ML19317E366 (11)

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UNITED STATES OF AMERICA DEFORE THE ATOMIC E 'ERGY C0:0!ISSION In the Matter of ) _

DUKE POWER COMPANY $ Dochet Nos. 50-269A, 50-270A (Oconee Units 1, 2 and 3 1 50-287A, 50-369A McGuire Units 1 cnd 2) T 50-370A ANSUER OF THE DEFARTENT OF JUSTICE TO APPLICANT' S MOTION FOR A PROTECTIVE ORDER

- On December 19, 1973, Applicant filed a metica seek-ing a protective order preventing the Department of Justice from making further use of an allegedly privileged document and requiring the return of all copies of the document thus far circulated by the Department. Furthermore, Applicant moved that the question be referred to the Special Master designcted in Prehearing Order Number 8 fer resolution. Fur-suant to Section 2.730(c), the Department files this answer opposing Applicant's motion in all respects.

I. BACKGROUND The document in question, numbered 19137-19138, was received from Applicant in May, 1973, as part of Applicant's response to hhe First Joint Request for Production of Docu-ments which was filed September 5, 1972. On December 17, 1973, six months after the production of the document, Applicant notified the Department that, document No. 19137-19138 had been 12170 g 7

inadvertantly produced and that this document was one of those listed by Applicant as protected by the attorney-client privilege UntLL this point, the Department was not aware, and could nd; reasonably have been expected to be aware, that the document was subject to any claim of privilege. Applicant has requested that the Department return the document. The Department has refused this request in the belief that (1) the document is not privileged, and (2) if it were, the privilege was waived by Applicant's production of the document and its failure to request the return of the document for over six months.

. II. THE ROLE OF THE SPECIAL MASTER We turn first to Applicant's request that the entire matter be referred to the Special Master for determination.

The Department opposes this request. The Special Master was appointed in order to allow a determination of Applicant's claim that several documents were protected by the attorney-client privilege without revealing to the Board the contents of those documents. However, the document in question is already a matter of public record since it was an attachment to the Department's Answers to Applicant's Interrogatories and Document Production Request, filed November 30, 1973, and served on each of the Board members at that time.1/ Accordingly since the primary reason for utilicing the Special Master has 1/. The Department was not aware, at that time, that the Eocument was subject to any claim of privilege.

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now been rendered moot, no useful purpose can be served by, referring the question to him.

Moreover, even if the Board members have not in fact read the docu=ent, it is unnecessary to do so to resolve this issue. It is the Department's position that even if the~ docu-ments were once privileged, that privilege has been waived by the production of the documents, its subsequent dissemination and the failure of Applicant to promptly request its return.

A decision as to vaiver is unrelated to the task assigned to the Special Master, and it would be inappropriate to refer ,

this matter to him.

Finally, the Department believes that referring this matter to the Special Master uill only result in unnecessary delay in resolving the legal issue involved. 2/

III. THE APPLIC/.BLE CASE LAW A. Recent Rulines in the IBM Cases In support of its motion, Applicant relies on recent decisions in the antityust actions brought by the Department of Justice and Control Data Corporation against the International Business Machines Corporation.1/ The Department 2/ The Department will not repeat here its agruments made Eefore the Special Master that the document is not privileged since that determination is not relevant to the issue of waiver presented here.

3/ Internationa1 Business Machines Corp. v. United States, 471 F.2d, 507 (2d cir., 1973), rev'd en banc 480 F.2d 293 (2d cir.,

19731 petition for cert. filed, 47 U. S. L.W. 3031 and 3033 (June 11,1973T ; also United States v. IBM Corp.,1973-2 Trade Cases 174,632; also Control Data Corp. v. International Business Machines Corp. ,16 Fed. Rules Serv. 2d 1233 (D. Minn. , 1972).

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.m agrees with the Applicant that the Board should follow the recent rulings in the IBM cases in resolving this question.

However, the Departa ent and Applicant do not agree as to the meaning of these cases.

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In the IBM cases, IBM inadvertantly produced to the Control Data Corporation, in a private antitrust action, documents which'it later alleged were protected by the attorney-client privilege. IBM refused to produce these same documents to the Department of Justice in a separate action. The Department thereupon moved to compel the production of these documents. Chief Judge Edelstein ordered production. 4/ '

IBM took an appeal from this order to the United States Court of Appeals for the Second Circuit. A divided three-judge panel vacated the order. 5/ On application by the Department, the court reheard the appeal en,be.nc and reversed the panel's decision on grounds that under the Expediting Act the only .

4/ United States v. International Business Machines Corp.,

Civil Actica No. 69 Civ. 200 (S.D.N.Y.). Pretrial Order No. 5 issued September 26, 1972. Judge Edelstein did not write an opinion to acccmpany the order, nor make any findings of fact.

5/ International Eusiness Mzchines Corp. v. United States, E71 F.2 50 7 (2d' Cir. , 1972) , rev'd en banc 480 F.2d 293 (2d Cir., 1973). The majority of the tEFee-judge panel assumed that the production of the privileged docu=ents by IBM to Control Data were protected frem inadvertant waiver by an order of the U. S. District Court in Minnesota.

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appeal was in the Supreme Court. 6/ Accordingly, the panel's

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earlier decision was voided. Nevertheless, Applic ant relies on the earlier decision, now void, to support its position that production of a document does not constitute waiver of the privilege. The Supreme Court refused to stay the effec-tiveness of the Edelstein order pending interlocutory appeals to it by IBM. Since IBM has refused to produce the documents, Judge Edelstein found IEM in civil contempt.

Applicant also relies on a precial order of Judge Neville in the Control Data case to support its position. 7/

There Judge Neville ruled that since reasonable precautions were taken to prevent disclosure of privileged material, there was no waiver. Judge Edelstein was aware of this ruling, but declined to follow it. Moreover, the magnitude of discovery conducted in the CDC case does not compare to that conducted in this proceeding. IBM itself copied or microfilmed some 80 million CDC documents and CDC sent a staff of some 61 persons to IBM offices to inspect and copy documents.

6/ In a 4-2 decision the cour.t ruled that the. Expediting Act, TS U.S.C. 529 required that appellate review of the order be had, if at all, in the Supreme Court. However, the court did state the following at p. 299: " Suffice it is to say that  !

tha record does not establish clearly that all of the documents l for which privilege is now claimed were surrendered in reliance

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on Judge Neville's ruling. Furthermore, we were not persuaded -

that the Government, which agreed to receive the edited listing, therefore agreed to forego the position that the initial sur-render to CDC constituted a waiver." l 7/ See Control Data v. International Business Machines Corp. ,

T6 Fed. Rules Serv. 2d 1233 (D. Minn. , 1972).

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From this morass of legal decisions, one thing is clear: The :delstein crder remains in effect and that order calls for the productica of privileged dccuments uhich were inadvertantly produced to a person not a party to the action.

Moreover, even if IBM shculd achieve a favorable decision on appe.al, Applicant's motion should still be denied. The IEM fact situation is unlike the one here in several significant ways: Document No. 19137-19138 uas produced to a party to the action, not to a third party, and the discovery process here was not protected by any order directed to the inadvertant waiver problem as may have been the case in IBM. The significance of the production of the docu=ent to a party rather than a third person is that the confidentiality of this communication is irreparably breached. There is no feasible way to erase .

the information in this document from the minds of the attorneys who have read it. It is inevitable that the fruits of this knowledge will flavor the subsequent proceedings in this action to a certain but undefinable extent. Furthermore, the docu-i ment has been made a part of a widely disseminated public filing which included all Board members. Thus if the Board members have read or considered the document, its content and thrust s

cannot be erased from their memory either.

B. Other Lower Court Decisions Aside from the IBM cases, the issue of inadvertant waiver has been the subject of only limited lower court scrutiny, presumably because once the documents are disseminated there

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is little that can be done to restore the confidentiality of the communication which is the essence of the privilege. See McCormick on Evidence, p. 187. The case,of United States v.

Kelsev-H;ves Wheel Co., 15 F.R. D. 461 (E. D. Mich. ,1954) closely resembles the current fact situation. There the Department came into possession of about a thousand documents of the Budd Company as the result of a review of voluminous company files in connection with an antitrust inv es tiga tion.

The claim uns, as to some 29 of the documents selected and copied by the Department, that the documents were privileged ,

and the possession by the Department of the documents uns the result of inadvertance. Judge Levin rejected this claim stating at pp. 464-465:

Thus, even if the privilege once attcched to these tuenty-nine documents, it uas lifted then Budd voluntarily made them available to the -

Government. Plaintiff neu knows the contents of the documents and has photostatic copies of them.

As a result of the claimant's own acts, the conte::t in which the rule is intended to serve, the protec-tion of confidential ecmmunications is no lenger present. Since the privilege exists in derega-tion of the overriding interest in full disclosure of all co=petent evidence, where the policy under-lying the rule can no longer be served, it would amount to no mt.e than mechanical obedience to a formula to continue to. recognize it . . . .

i Nor is the result affected by Budd's assertion that the privileged documents were inadvertantly handed over to the Government's representatives; that the mass of documents in its files were so voluminous that it did not know, nor did it have time to discover, that privileged ones were among them.

Applicant made this document available to the Department more than six months ago. The Department noted the

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contents of the document and has already used this document

, in this case. Thus, this once confidential ec==unication, having been widely disseminated, is no longer confidential.

Therefore, the Department agrees with Judge Levin that to prevent full disclosure of this document,where the underlying policy of the privilege can no longer be served would be "no more than mechanical obedience to a formula."

Applicant also relies on the holding of the court in Connecticut Mutual Life Insuranca Co. v. Shields,18 F.R.D. 448 (S.D.H.Y., 1955) to support its cl'im a that inad-vertant production of a privileged document, without the intent to waive the attorney-client privilege, does not constitute a waiver. The Department believes that this case was incorrectly decided and it is clearly inconsistent uith Judge Edelstein's order and the holding in the Kelsev-Haves Case. ,

1 IV. APPLICANT'S AGENCY RELAT10HSHIP i WITH ITS COUMSEL Applicant's attorneys maintain that they had no authority to waive the privilege and therefore their inad-vertance cannot constitute a waiver; only Applicant can waive the privilege. The Department agrees that only 3

the holder of the privilege or his agents can waive the l privilege.

But this is not relevant to a determination of this issue. What is relevant is that Applicant 's attorneys, l its~ agent, had the explicit authority to produce documents called for in the Joint Docu=ent Request. (Sce Affidavit 8-

l of Toni K. Golden.) If Applicant itself had inadvertantly produced the docu=cnt, the privilege would have been waived regardless of its subj ective intent. Therefore, under established agency principles the production of the docu-ment by Applicant's attorneys also constitute a waiver pf '

the privilege. As Judge Edelstein's order and the Kelsey-Haves cases hold, the subjective intent of the holder of the privilege is not relevant if the document has been produced. Allegations of inadvertance can not prevent a finding of a waiver. For by the act of production, the confidential nature of the document, the preservation of which is the purpose of the privilege, is destrpyed.

CONCLUSION -

More than si;c months ago the Applicant produced Document No. 19137-19138. The document has since been studied by th2 Department und incorporated in a publicly filed pleading in this proceeding. The confidentiality of the document has been irrevocably breached. Applicant has waived any claim of privilege and its motion should be rej ected.

Respectfully submitted,

'  ;)#WN h- h Marit M. Levin Attorney Department of Justice me

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, (".!ITED STATF.S OF AMCEICA BEFO?E THE ATO: IC E"ZRGY CO CIISSION In the !!atter of ) _

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N DUKE POUER COT'PANY ) Dochet Mos. 50-26?A, 50-270A, (Oconea Units 1, 2 and 3 ) 50-287A, 50-369A, McCuire Units 1 and 2) ) 50-370A CERTIFICAm OF SEF.VICE I herchy certifv that cocios of Ans..ar of Justice to Anclicant's ::otion for a Protectiveof_.t.he. Order,.Denartnant dated J a n u a "'/

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on the folle' ine by danosit in the United States nail, first

, class or air nail, this 4th day of January:

Honorable '! alter U. K. Bonnett Chairnan, .atoric Safety and Licensing Doarc Post Office Ec:: l?"

Pinehurst, Merth Carolina 20374 Honorable Jcsech P. Tuhridy Atonic Safety and Licensino Board 4100 Cathedral 1. venue. M. H.

Washington, D. C. 20016.

Honorable John B. Farnakides Atenic Safety and Licensing Board U.S. Atomic Encrcy Con.'ission Nashington, D. C.. 20545 Carl Horn, Escuire i President, Duke Power Comnany 422 South Church Street Charlotte, " orth Carolina 28201 h'illiam H. Grigg, Esquiro Vice Presidentiand General Counsel Duke Power Conc?nu 422 South Church Street Charlotte, north Carolina 2G201 N. L.. Porter, Tscuire Duho Power Cer9any 422 South Church Street Charlotte, North Carolina 28201 '

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Willian Warfield noss, rcquire oa m Georce A. Averv, Escuiro "B~

D Keith "atcon, Scquire oo o - - - "'

Toni K. Colden, "scuiro Wald, !!arkrader & Ross 1320 Nincteenth Street, :!.M.

Washing ton, D. C. 20036 J. O. Tally, Jr., Escuire -

, Tally & Tally Post Office Dra"er 1660 Fayetteville, !! orth Carolina 20302 Troy D. Conner, Esquire Connor & Knotts 1747 Pennsylvania Avenue, ?!.t!.

Washington, D. C. 20026 Joceph Rutberg, Eccuiro Benjamin E. "ocler, Escuire Robert J. "erdisco, 9 squire Antitrust Counsel for AFC Reculatory Staff U.S. Atomic Enercy Ccmrission Washington, D. C. 20545 Mr. Abraham Braitran Chief, Office of Antitruct and Indemnity U.S. Atomic Eneroy Cormicsion Washington, D. C. 20545 David Stover, Esquire

• Tally & Cally -

Suite 307 1300 Connecticut Avenue, N.N.

Washington, D. C. 20036 Atomic Safety and Licensing 3 card Panel U.S. Atomic Energy Comnission Washington, D. C. 20545 Mr. Frank M. Maras Chief, Public Proceedings Branch Office of the yeeretarv of the Connission U.S. Atomic Enerev Conmission Washington, D. C. 20545 Chairman, Atomic Safetv and Licensing Appeals Board U.S. Atomic Energy Commission Washington, D. C. 20545

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MARK !!. LEVIN Attorney, Departnent of Justice

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