Text

Memorandum and Order (Denying TVAs Motion for Return and Protection of Privileged and Confidential Documents)
	ML21092A076
Person / Time
Site:	EA-20006, EA-20007
Issue date:	04/02/2021
From:	Paul Ryerson; Atomic Safety and Licensing Board Panel
To:	; NRC/OGC, Tennessee Valley Authority
	SECY RAS
References
	20-006-EA, 20-007-EA, ASLBP 21-969-01-EA-BD01, RAS 56042
	Download: ML21092A076 (12)
	v • d • e

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING BOARD Before Administrative Judges:

Paul S. Ryerson, Chairman E. Roy Hawkens Dr. Sue H. Abreu In the Matter of TENNESSEE VALLEY AUTHORITY (Enforcement Action)

Docket Nos. EA-20-006 and EA-20-007 ASLBP No. 21-969-01-EA-BD01 April 2, 2021 MEMORANDUM AND ORDER (Denying TVAs Motion for Return and Protection of Privileged and Confidential Documents)

In this enforcement proceeding, after the Board issued a Protective Order,1 the NRC Staff filed its initial document disclosures.2 Thereafter, the Tennessee Valley Authority (TVA) moved for the return and protection of two documents it claims are privileged and one document it claims is confidential.3 The NRC Staff opposes.4 For the reasons explained below, we deny TVAs motion.

I.

BACKGROUND TVA requests the return of three documents in the NRC Staffs possession:

1 Licensing Board Protective Order (Governing Non-Disclosure of Certain Documents Claimed to be Confidential) (Feb. 8, 2021) (unpublished) [hereinafter Protective Order].

2 NRC Staff Initial Disclosures (Feb. 18, 2021).

3 [TVA] Motion for Return and Protection of Privileged and Confidential Documents (Mar 1, 2021) (non-public) [hereinafter TVA Motion].

4 NRC Staff Answer to the Tennessee Valley Authoritys Motion Regarding Disclosures (Mar.

11, 2021) [hereinafter Staff Answer]. Although the Staff opposes TVAs motion, it made all three documents non-public pending resolution of this motion. Id. at 2.

(1) An August 30, 2018 memorandum entitled Investigation into Harassment and Hostile Work Environment Allegations in Nuclear Licensing Organization Involvement of Beth Wetzel (OGC Memorandum).5 As its title suggests, the OGC Memorandum reports on the conclusions of an internal investigation by TVAs Office of General Counsel (OGC) into Ms.

Wetzels actions as a TVA employee.6 (2) An August 10, 2018 letter from TVA General Counsel Sherry Quirk to TVA Vice President Joseph Shea (Quirk Letter).7 The Quirk Letter communicated a legal conclusion and recommendation about employment action related to Michael McBrearty.8 (3) A June 2019 settlement agreement between the Department of Labor (DOL) and TVA concerning Mr. McBrearty (Settlement Agreement).9 Both the OGC Memorandum and Quirk Letter were sent to the NRC Staff during the course of its investigation when a TVA employee emailed both documents to an NRC special agent on May 23, 2019.10 The DOL sent a copy of the Settlement Agreement to the NRC on July 16, 2019.11 TVA asserts that the OGC Memorandum and Quirk Letter are protected by attorney-client privilege and that the Settlement Agreement contain[s] confidential personnel 5 Email from Deanna L. Fults, TVA, to Scott K. Luina, NRC OI, attach., OGC Memorandum, at PDF 7-9 (Aug. 30, 2018) (ADAMS Accession No. ML21040A247) [hereinafter OGC Memorandum].

6 TVA Motion at 2.

7 Email from Deanna L. Fults, TVA, to Scott K. Luina, NRC OI, attach., Letter from Sherry Quirk, TVA, to Joseph Shea, TVA, at PDF 29-32 (Aug. 10, 2018) (ADAMS Accession No. ML21040A247) [hereinafter Quirk Letter].

8 TVA Motion at 2.

9 TVA Motion, attach. D, [Michael McBrearty] Mutual Settlement Agreement and Release of Claims (June 18, 2019) [hereinafter Settlement Agreement].

10 TVA Motion at 2; Staff Answer at 2-3 & n.8; see Official Transcript of Proceedings, Interview of Deanna Fults at 56, 58, 77-80 (May 23, 2019) (ADAMS Accession No. ML21043A053).

11 TVA Motion at 5.

information not suitable for public dissemination.12 TVA also asserts that disclosure of all three documents violates the terms of the Protective Order.13 II.

DISCUSSION The Protective Order does not govern this dispute. It pertains only to documents that are exchanged through discovery in this proceeding: that is, to documents received solely pursuant to Subpart G and this Protective Order.14 Because all three documents were sent to the NRC in 2019more than a year before TVA even requested a hearing15the Protective Order does not apply. Rather, we apply federal common law16 and applicable Commission regulations.

In our analysis, we assume that both the OGC Memorandum and Quirk Letter were protected by the attorney-client privilege when they were created.17 The issue before the Board is whether, by its actions (or inactions), TVA has waived the privilege. Waiver can occur in one of two ways.

First, the privilege holder may fail to take adequate steps to protect and preserve the privilege.18 For example, a waiver may occur when a party fails to take reasonable measures to 12 TVA Motion at 1; see id. at 13 (citing 10 C.F.R. § 2.390(a)(6)).

13 Id. at 1.

14 Protective Order at 1 n.2.

15 Tennessee Valley Authoritys Answer and Request for Hearing (Nov. 30, 2020) [hereinafter TVA Answer].

16 See Upjohn v. United States, 449 U.S. 383 (1981); Fed. R. Evid. 501.

17 When a corporations lawyers conduct an internal fact investigation that perhaps could have been conducted instead by non-lawyers (such as members of its human resources department),

it might be argued that the lawyers are functioning at least in part as managers, and that all their communications are not necessarily protected by attorney-client privilege. See, e.g., M. Kayla Dunn et al., Its a Privilege, Not a Right: Best Practices for the In-House Lawyer, 10 THE NATL L. REV. 307 (Nov. 2, 2020) (Whether privilege protects an in-house lawyers communications depends on the predominant purpose of the communication.). The NRC Staff has not made that argument.

18 S.E.C. v. Lavin, 111 F.3d 921, 930 (D.C. Cir. 1997).

retrieve documents that are inadvertently disclosed19 or fails to assert a privilege until long after becoming aware of the disclosure.20 Second, a waiver may also occur if the contents of privileged communications are voluntarily put in issue by the holder of the privilege.21 As the Commission recognizes, when a company claims that an internal investigation justifies its actions, [t]he company cannot then use the attorney-client privilege to withhold details of the investigation.22 In other words, the company cannot use the privilege as both a shield and a sword.23 Moreover, disclosure of any significant part of a communication waives the privilege.24 TVA, we conclude, has waived privilege for the OGC Memorandum and Quirk Letter in both ways.

A. Failure to Protect and Preserve Attorney-Client Privilege TVA waived its attorney-client privilege, for both the OGC Memorandum and Quirk Letter, by failing to take reasonable steps to protect and preserve its privilege.

19 See Felman Prod. Inc. v. Indus. Risk Insurers, No. 3:09-0481, 2010 WL 2944777, at *3-4 (S.D. W. Va. July 23, 2010) (stating reasonableness is a factor to consider in evaluating whether inadvertent disclosure results in a waiver of attorney-client privilege; moreover, consistent with Federal Rule of Evidence 502(b), a party who makes an inadvertent release escapes waiver only if it took prompt steps to rectify the error) (citing Victor Stanley, Inc. v. Creative Pipe, Inc.,

250 F.R.D. 251, 259 (D. Md. 2008)).

20 See Baxter Travenol Labs, Inc. v. Abbott Labs, 117 F.R.D. 119, 121 (N.D. Ill. 1987) (holding that a failure to assert a privilege for several months in the face of an opposing partys repeated use of and reliance on the document waives the privilege).

21 Daryl M. Shapiro, CLI-08-6, 67 NRC 179, 184 (2008) ([I]mplied waiver involves cases where the holder of the privilege placed the report in issue.); see Peterson v. Wallace Computer Servs., Inc., 984 F. Supp. 821, 824-25 (D. Vt. 1997); United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991) (Thus, the privilege may implicitly be waived when [a party] asserts a claim that in fairness requires examination of protected communications.).

22 Shapiro, CLI-08-6, 67 NRC at 184; see Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1162-63 (9th Cir. 1992) (holding that a party that claims that it acted pursuant to the advice of counsel cannot use the privilege to immunize that advice from scrutiny).

23 Shapiro, CLI-08-6, 67 NRC at 184.

24 In re Grand Jury Proceedings, 727 F.2d 1352, 1356 (4th Cir. 1984) (quoting United States v.

Cote, 456 F.2d 142, 145 (8th Cir. 1972)).

First, after a TVA employee disclosed both documents to the NRC in May 2019, others at TVA apparently remained unaware they were in the NRC Staffs possession for half a year (in the case of the OGC Memorandum25) or even longer (in the case of the Quirk Letter26). How, one wonders, could TVA not know that these two documentsboth seemingly critical to explaining what happened to Ms. Wetzel and to Mr. McBreartyhad been produced to the NRC? Did TVA not keep a log of documents it produced? Did TVAs lawyers not review its production to the NRC when preparing TVA employees for, and accompanying them to, interviews with NRC investigators? TVAs seemingly casual approach to handling its documents does not suggest that, even from the start, it was taking all reasonable steps to preserve privilege.

Second, when TVA did become aware that privileged documents had been produced, it still did not take adequate steps to preserve the privilege. This is true for both the OGC Memorandum and the Quirk Letter.

TVA became aware that the NRC Staff had the OGC Memorandum on November 20, 2019, during an interview of TVA attorney John Slater.27 The parties do not agree whether TVA counsel asserted privilege for the OGC Memorandum at that time.28 Regardless, after TVA did 25 Staff Answer at 2-3.

26 Id. at 2, 4; see TVA Motion at 4.

27 Staff Answer at 3 (The [Nov. 20, 2019] interview transcript indicates that [TVA counsel] Mr.

Walsh stated I was not aware that you had this information when the TVA OGC memorandum was raised in the interview, but the transcript does not reflect that Mr. Walsh raised the issue of the document being covered by the attorney-client privilege at Mr. Slaters interview. (footnote omitted)).

28 See Official Transcript of Proceedings, Interview of John E. Slater at 57-58, 106-07, 115-17 (Nov. 20, 2019) (Ex. 39 OI Report) (ADAMS Accession Nos. ML21043A269 and ML21043A291). TVA claims it objected on grounds of attorney-client privilege during the November 2019 interview with Mr. Slater but no such objection appears in the record. See TVA Motion at 3; id., attach. B, Letter from E. Todd Presnell, TVA, to Scott K. Luina, NRC, at 1-2 (Dec. 11, 2019); Staff Answer at 3.

request return of the OGC Memorandum by letter in December 2019,29 and the NRC Staff promptly requested legal justification for doing so,30 TVA never responded.31 Later, during the parties June 2020 pre-decisional enforcement conference, TVAs own counsel repeatedly referenced the OGC Memorandum without any assertion of privilege.32 TVA claims it was not aware the NRC Staff had the Quirk Letter until initial disclosures,33 but again TVAs unfamiliarity with the status of its own documents is surprising. In fact, the Quirk Letter was also discussed during the June 2020 pre-decisional enforcement conference.34 When NRC investigators asked questions about the Quirk Letter, TVA did not object.35 B. Placing the Advice of TVAs Office of General Counsel in Issue TVA has also waived privilege by placing the contents of the OGC Memorandum and Quirk Letter in issue.

As the NRC Staff points out, during the [June 2020] pre-decisional enforcement conference, counsel for TVA repeatedly referred to the TVA OGC Memorandum and its subject matter, and at no point... did TVA assert a claim of attorney-client privilege for that document.36 For example, TVA counsel stated that Joseph Shea terminated Beth Wetzel because of OGCs recommendation.37 In addition, NRC [S]taff counsel directly questioned 29 TVA Motion at 3-4; see id., attach. B, Letter from E. Todd Presnell, TVA, to Scott K. Luina, NRC (Dec. 11, 2019).

30 Staff Answer at 3. The Staff requested that TVA provide legal authority justifying the demand to return the document. See TVA Motion, attach. C, Letter from Sara Kirkwood, NRC, to E.

Todd Presnell, TVA (Dec. 16, 2019).

31 Staff Answer at 3 & n.12.

32 Id. at 4 (citing TVA PEC Tr. at 83, 89, 92, 113).

33 TVA Motion at 4.

34 Staff Answer at 4 (citing TVA PEC Tr. at 113, 168).

35 Id. at 6.

36 Staff Answer at 4; id. at 7-10; TVA PEC Tr. at 83, 89, 92, 113.

37 TVA PEC Tr. at 83.

TVA representatives about the contents of the Quirk Letter, without any assertion of attorney-client privilege.38 Indeed, TVA relied on the subject matter of the OGC Memorandum and Quirk Letter in its request for a hearing before this Board. For example, TVA claims that:

(1) its employment decisions were supported by independent reviews;39 (2) specifically, Ms. Hendersons complaint was appropriately referred to TVAs [OGC]

for an independent investigation;40 (3) [t]he OGC investigation substantiated many of the Complaints allegations;41 (4) the OGC investigation found that Mr. McBreartys behavior violated three TVA policies;42 (5) Mr. McBrearty was placed on administrative leave [b]ased on the results of this independent [OGC] investigation;43 and (6) TVAs [i.e., OGCs] investigation found wrongdoing by Ms. Wetzel with no connection to protected activity.44 Although the Board rules at this time only that attorney-client privilege has been waived for the two documents addressed in TVAs motion, we are concerned that TVA contemplates deciding whether to more broadly waive the privilege upon completion of discovery.45 As TVA appears to recognize, it may not claim reliance on the advice of counsel as a defense while, at the same time, claiming privilege for that advice. Therefore, TVA may wish to 38 Staff Answer at 4; id. at 7-10; TVA PEC Tr. at 113, 167-68.

39 TVA Answer at 1.

40 Id. at 9.

41 Id.

42 Id.

43 Id.

44 Id. at 18.

45 TVA Motion at 12.

discuss with the NRC Staff a time by which it will decide whether to waive privilege, in order to allow the NRC Staff a reasonable opportunity to take depositions or other discovery concerning the role of TVAs lawyers in the employment decisions that are central to this case.

Of course, TVA need not waive privilege (except insofar as, by its actions, it may have done so already). However, TVA should be aware that, if it does not waive privilege in time for the NRC Staff to take relevant discovery, the Board will entertain motions to exclude from evidence (1) documents withheld as privileged during discovery; and (2) testimony concerning the role of TVAs lawyers in its decision process.

C. The Settlement Agreement Need Not Be Withheld from Public Disclosure TVA claims the Settlement Agreement should be withheld from public disclosure under 10 C.F.R. § 2.390(a)(6), which exempts [p]ersonnel and medical files and similar files, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.46 The NRC Staff asserts it appropriately disclosed the Settlement Agreement after considering its relevan[ce] to disputed issues.47 We agree.

The NRC favors openness and transparency in its adjudicatory proceedings.48 In licensing board proceedings, for example, settlements must be closely scrutinized in the public interest and, if approved, their terms must be embodied in a final order.49 Likewise, 46 10 C.F.R. § 2.390(a)(6).

47 Id. § 2.709(a)(6)(i)(A).

48 See Pac. Gas and Elec. Co. (Diablo Canyon Nuclear Power Plant, Units 1 & 2), LBP-11-5, 73 NRC 131, 134 (2011) (citing Tenn. Valley Auth. (Bellefonte Nuclear Plant, Units 1 & 2), CLI 26, 72 NRC 474, 478 n.23 (2010)); Changes to Adjudicatory Process, 69 Fed. Reg. 2,182, 2,195 (Jan. 14, 2004) (At the foundation of the Commissions approach are the provisions in Subparts C and G which provide for mandatory disclosure of a wide range of information, documents, and tangible things relevant to the contested matter in the proceeding, and the NRCs provisions for broad public access to documents in [10 C.F.R.] § 2.390.).

49 10 C.F.R. §§ 2.203, 2.338(h)(4)(i).

10 C.F.R. § 2.328 provides that all NRC hearings must be public unless certain national security exemptions apply.50 As the NRC Staff points out,51 disputes involving the NRCs employee protection regulations are routinely adjudicated in open hearings, even though they necessarily disclose a substantial number of details regarding the individuals involved.52 In adjudicatory proceedings such as this, the proper balance between personal privacy and transparency is not the same as when responding to a request under the Freedom of Information Act.53 What constitutes a clearly unwarranted invasion of personal privacy is different. In the context of this case, where TVAs actions concerning Mr. McBrearty are of prime importance and the possibility of bias might be a proper subject for examination if he is called as a witness, we cannot say disclosure of the Settlement Agreement is unwarranted.

In addition, the NRC and DOL have entered into a Memorandum of Understanding (MOU) that requires identification and proper handling of sensitive documents that they exchange.54 The MOU does not supersede the confidentiality obligations of either agency under federal law.55 We find it significant, however, that the NRC Staff represents it advised the 50 See id. §§ 2.328, 2.390.

51 Staff Answer at 13.

52 See, e.g., Tenn. Valley Auth. (Watts Bar Nuclear Plant, Unit 1; Sequoyah Nuclear Plant, Units 1 & 2; Browns Ferry Nuclear Plant, Units 1, 2, & 3), LBP-03-10, 57 NRC 553 (2003).

53 See 5 U.S.C. § 552.

54 Notice of Signing of a Revised Memorandum of Understanding Between the NRC and the Department of Labor (DOL), 63 Fed. Reg. 57,324, 57,325 (Oct. 27, 1998); see Memorandum of Understanding Between NRC and Department of Labor, Employee Protection, 47 Fed. Reg.

54,585 (Dec. 3, 1982); Nuclear Regulatory Commission Enforcement Manual, Rev. 7, Change 7

§ 1.3.14 (Dec. 1, 2020) (ADAMS Accession No. ML20329A339).

55 Revised MOU Between the NRC and the DOL, 63 Fed. Reg. at 57,325 (Every agency agrees to share all information it obtains concerning a particular complaint of discrimination and, to the extent permitted by law, will protect information identified as sensitive that has been supplied to it by the other agency.).

DOL of the NRC Staffs intention to publicly disclose the DOL documents, pursuant to its discovery obligation in this case, and the DOL did not express[] disagreement.56 Although the NRC need not withhold the Settlement Agreement from public disclosure, the scope of discoverable information is broader than the scope of admissible evidence. We do not rule at this time whether the Settlement Agreement would be admissible at the evidentiary hearing.57 III.

ORDER TVAs motion is denied.

It is so ORDERED.

FOR THE ATOMIC SAFETY AND LICENSING BOARD Paul S. Ryerson, Chairman ADMINISTRATIVE JUDGE Rockville, Maryland April 2, 2021 56 NRC Staff Memorandum Responding to Boards March 17, 2021 Order at 1-2 (Mar. 24, 2021). The NRC Staffs memorandum did not make clear whether the DOL did not express[]

disagreement by not responding or by affirmatively agreeing with the NRC Staffs decision to disclose the Settlement Agreement.

57 See Fed. R. Evid. 408 (settlements and settlements negotiations generally not admissible);

ML21092A076

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