ML19305E008

Memorandum of Authorities in Support of Settlement Privilege.Documents Prepared in Connection W/Settlement Process Should Be Protected from Discovery Under Work Product Privilege.Certificate of Svc Encl

ML19305E008
Person / Time
Site:	South Texas, Comanche Peak
Issue date:	04/04/1980
From:	Stahl D CENTRAL & SOUTH WEST SERVICES, INC., ISHAM, LINCOLN & BEALE
To:	NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
References
NUDOCS 8004220128
Download: ML19305E008 (10)

Text

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

/E2/)

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING APPEAL BOARD Alan S. Rosenthal, Chairman Michael C. Farrar Thomas S. Moore

)

In the Matter of )

)

HOUSTON LIGHTING & POWER COMPANY, ) Docket Nos. 50-498A et al. ) 50-499A

)

(South'-Texas Project, Units 1 and 2 )

)

TEXAS UTILITIES GENERATING COMPANY, ) Docket Nos. 50-445A et al. ) 50-446A

)

(Comanche Peak Steam Electric , )

Station, Units 1 and 2 )

)

~

CENTRAL AND SOUTH WE$T COMPANIES' MEMORANDUM OF AUTHORITIES IN SUPPORT OF SETTLEMENT PRIVILEGE By order issued

• March 28, 1980 the Appeals Board requested the parties to submit additional authority bearing on whether the courts ought to or do recognize a privilege 1

against discovery of documents related to the settlement i

process. The Central and South West Companies (CSW) hereby submit their response to the Appeal Board's request.

Materials relating to the settlement process are s protected from discovery by the " work product" privilege.

h ,

Thi.s privilege is codified in Rule 26 of the Federal Rules N

i I

8004220

<l /

of Civil Procedure. Subdivision (b) (3) of the Rule states that:

a party may obtain discovery of documents and tangible things otherwise discoverable

. . . and prepared in anticipation of liti-  :

gation or for trial by or for another party or by or for that other party's representative (including his attorney, consultant, surety, indemnitor, insurer or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the prep-aration of his case and that he is unable without undue hardship to obtain the substan-tial equivalent of the materials by other means.

In ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impres-sions, conclusions, opinions, or legal theories  !

of an attorney or other representative of a party concerning the litigation.

It can be seen from the language of the Rule that the work product privilege extends to all the tangible results of a litigant's case preparation. Moreover, the disjunctive reference to materials prepared "in anticipation of liti-gation or for trial" indicates that the privilege encompasses more than just a' litigant's preparation for a formal trial or hearing. Materials prepared in connection with settlement i

discussions, which are an integral part of the litigation l process, are thus clearly within the scope of the privilege.  ;

l The reason for the work product privilege was  !

l explained in Hickman v. Taylor, 329 U.S. 495 (1947), a I leading case on the subject and the basis for Rule 26 (b) (3)

(see note to Subdivision (b) (3) , Notes of Advisory Committee on Rules, Rule 26, Federal Rules of Civil Procedure). As l

l 1

was stated in the opinion, "[p] roper preparation of a .

+

i client's case demands that (an attorney] assemble information, I

sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy 1 without undue and needless interference," 329 U.S. at 511.

The Court reasoned that the threat of unlimited discovery of preparation materials would undermine the quality of prepara-1 tion. Id. The same considerations underlie the privilege as it relates to work product amassed by nonlawyers, and the privilege is not confined to materials prepared by r.ttorneys. See note to subdivision (b) (3) , Notes of Advisory ,

Committee on Rules, Rule 26, Federal Rules of Civil Procedure.

Application of the work product privilege to settle-ment materials is in accordance with the policy underlying the privilege as enunciated in Hickman v. Taylor. The 1

threat of unlimited future disclosure of settlement materials would obviously discourage the candid appraisals necessary to the settlement process and thereby inhibit the parties in their efforts to reach settlement on appropriate issues.

Indeed, in view of the strong public policy favoring settle- l

i ment (as expressed for example in Section 2.759 of the Commission's Rules of Practice), it follows a fortiori that documents prepared solely in connection with settle-ment disccussions should be privileged to at least the same degree as documents reflecting trial tactics or strategy.

-- w

At least three recorded cases interpreting Rule 26 have specifically recognized a work product privilege for documents related to settlement discussions. Two of the cases concerned a federal district court proceeding on a number of consolidated patent and antitrust claims involving several parties. One of the parties to the proceedings, Moulinage et Retorderie de Chavanoz ("Chavanoz"), had been involved in the early 1960's in several lawsuits brought by another firm, the Leesona Corporation. These earlier law-suits were settled in 1964 by an agreement between Chavanoz and Leesona. In the later patent-antitrust litigation, one  ;

of the parties sought discovery of materials prepared by

, Chavanoz's attorneys and others in connection with the 1964 settlement. Duplan Corp. v. Moulinage et Retorderie de Chavanoz, 509 F.2d 730 (4th Cir. 1974), cert. denied 420 U.S. 977 (1975),

was a decision on appeal of a district court order granting discovery of those and other materials. The appeals court held that the materials were work product and remanded the w

case to the district court for consideration whether some of the materials should be produced notwithstanding the privilege.

509 F.2d at 736-37. In the opinion the documents related to the 1964 settlement were simply referred to as " work product i material;" there seems to have been little dispute that I

materials prepared in connection with settlement could  ;

1 constitute work product, 509 F.2d at 732.  :

l l

l l

l l l l

This issue was considered more specifically in a later appeal related to the same district court proceeding, Duplan Corp. v. Deering Milliken, Inc., 540 F.2d 1215 (4th Cir. 1976). This appeal was from a district court order denying discovery of certain documents, among them some of the materials related to the 1964 settlement. The party which had sought discovery of the documents contended that they were not work product because "they were not generated by trial counsel, were not generated for or at his request, and were not a part of or related to any legitimate trial preparation," 540 F.2d at 1218-19 (emphasis added). The Court of Appeals rejected this argument, citing its deter- ,

mination in the earlier appeal that the documents were work i product. 540 F.2d at 1219.

Another case concerning requests for discovery of materials related to settlement is American Optical Corp.

v. Medtronic, Inc., 56 F.R.D. 426 (D. Mass 1972). The litigation involved a dispute over the validity of a patent for cardiac pacemakers held by American Optical. After l i

the patent was issued, American Optical informed Medtronic,  !

Inc., another manufacturer of pacemakers, of American  ;

Optical's belief that its patent was being infringed. In j an attempt to settle the matter, the two firms began nego-tiations which led to a license agreement under which Medtronic  !

agreed to pay royalties to American Optical. Medtronic's i

subsequent refusal to pay royalties led to the litigation.

In the course of the litigation, American Optical sought discovery of four documents ("A," "X," "Y" and "Z") related to the cattlement negotiations. Three of the documents contained notes prepared by an attorney for Medtronic for use during negotiating sessions; the other contained his '

notes of what transpired during one of the sessions. 56 F.R.D. at 429. The court, noting that those documents (and others) were prepared when litigation concerning the patent was a contingency, held that they were work product and denied American Optical's request for discovery. 56 F.R.D.

at 430.

These authorities support the proposition that documents prepared in connection with the settlement process should be protected from discovery under the work product privilege. Consequently the Appeals Board should vacate the Licensing Board's March 7 Order insofar as that Order requires the production of documents prepared soley in connection with settlement.

Respectfully submitted, I M, LINCOLN BEALE r

Attorneys for THE CENTRAL AND SOUTH WEST COMPANIES Suite 325 1120 Connecticut Avenue, N.W.

Washington, D.C. 20036 202/833-9730 One First National Plaza Chicago, Illinois 60603 312/558-7500 April 4, 1980

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of: S S

HOUSTON LIGHTING & POWER S NRC DOCKET NOS. 50-498A COMPANY, THE CITY OF SAN S 50-499A ANTONIO, THE CITY OF AUSTIN,5 and CENTRAL POWER AND LIGHT S COMPANY S (South Texas Project, S Unit Nos. 1 and 2) S S

TEXAS UTILITIES GENERATING S NRC DOCKET NOS. 50-445A COMPANY, et al. S 50-446A (Comanche Peak Steam S Electric Station, S Unit Nos. 1 and 2) S CERTIFICATE OF SERVICE I, David M. Stahl, hereby certify that copies of the foregoing Central and South West Companies' Memorandum of Authorities In Support Of Settlement Privilege were served upon the following listed persons by deposit in the United States mail, first class postage prepaid on this 4th day of April, 1980.

/ h DavidFJ/'Stahl

MAILING LIST

! Marshall E. Millor, Esq. Roy P. Lessy, Jr., Esq.

U.S. Nuclear Regulatory Commission Michael B. Blume, Esq.

Washington, D.C. 20555 U.S. Nuclear Regulatory Comm.

Washington, D.C. 20555 Michael L. Glaser, Esq.

1150 17th Street, N. W. William C. Price Washington, D. C. 20036 Chairman and Chief Executive Officer Sheldon J. Wolfe, Esq. Central Power & Light Co.  !

t U.S. Nuclear Regulatory Commission P. O. Box 2121 Washington, D.C. 20555 Corpus Christi, Texas 78403 -

Atomic Safety and Licensing G. K. Spruce, Gen. Manager i Appeal Board Panel City Public Service Board i U.S. Nuclear Regulatory Commission P. O. Box 1771 Washington, D. C. 20555 San Antonio, Texas 78203 Chase R. Stephens (20) Mr. Perry G. Brittain Docketing and Service Section President >

U.S. Nuclear Regulatory Commission Texas Utilities Generating Co.

Washington, D. C. 20555 2001 Bryan Tower Dallas, Texas 75201 Jerome D. Saltzman ,

Chief, Antitrust and Indemnity Group R. L. Hancock, Director l U.S. Nuclear Regulatory Commission City of Austin Electric Utility l Washington, D.C. 20555 P. O. Box 1088 Austin, Texas 78767 J. Irion Worsham, Esq. l Merlyn D. Sampels, Esq. G. W. Oprea, Jr. l Spencer C. Relyea, Esq. Executive Vice President Worsham, Forsythe & Sampels Houston Lighting & Power Co.

2001 Bryan Tower, Suite 2500 P. O. Box 1700 Dallas, Texas 75201 Houston, Texas 77001 Jon C. Wood, Esq. Michael I. Miller, Esq.

W. Roger Wilson, Esq. James A. Carney, Esq.

Matthews);Nowlin, Macfarlane & Barrett Isham, Lincoln & Beale 1500 Alamo National Building One First National Plaza >

San Antonio, Texas 78205 Chicago, Illinois 60603 Morgan Hunter, Esq.

J. A. Bouknight, Esq. Bill D. St. Clair, Esq.

Bill Franklin, Esq. McGinnin, Lockridge & Kilgore Lowenstein, Newman, Reis, Axelrad Fifth Floor, Texas State

& Toll Bank Building >

1025 Connecticut Avenue, N. W. 900 Congress Avenue Washington,.D. C. 20036 Austin, Texas 78701 R. Gordon Gooch, Esq. Don R. Butler, Esq.

Baker & Botts 1225 Southwest Tower 1701 Pennsylvania Avenue, N. W. Austin, Texas 78701 Washington, D. C. 20006

Jerry L. Harris, Esq. W. S. Robson Richard C. Balough, Esq. Ganoral Manager l City of Austin South Texas Electric P. O. Box 1088 Cooperative, Inc. ,

Austin, Texas 78767 Route 6, Building 102 Victoria Regional Airport  :

Joseph B. Knotts, Jr., Esq. Victoria, Texas 77901 Nicholas S. Reynolds, Esq.

Debevoise & Liberman Robert C. McDiarmid, Esq.

1200 17th Street, N. W. Robert A. Jablon, Esq.

Washington, D. C. 20036 Marc R. Poirier ,

Speigel & McDiarmid Don H. Davidson 2600 Virginia Avenue, N.W.

City Manager Washington, D. C. 20036 City of Austin P. O. Box 1088 Kevin B. Pratt Austin, Texas 78767 Texas Attorney General's Office ,

P. O. Box 12548 Jay Galt, Esq. Austin, Texas 78711 ,

Looney, Nichols, Johnson & Hays t 219 Couch Drive William H. Burchette, Esq.

Oklahoma City, Oklahoma 73102 Frederic H. Ritts, Esq.

Law Offices of Northcutt Ely "

Knoland J. Plucknett Watergate Building Executive Director Washington, D. C. 20037 Committee on Power for the Southwest, Inc. Wheatley & Wolleson 5541 East Skelly Drive 1112 Watergate Office Bldg.

Tulsa, Oklahoma 74135 2600 Virginia Avenue, N.W.

Washington, D. C. 20037 John W. Davidson, Esq. 1 Sawtelle, Goods, Davidson & Tiolo Joseph Rutberg, Esq.

1100 San Antonio Savings Building Antitrust Counsel San Antonio, Texas 78205 Counsel for NRC Staff U.S. NRC Washington, D. C. 20555  ;

Douglas F. John, Esq. Linda L. Aaker, Esq.

Akin, Gump, Hauer & Feld Asst. Attorney General  ;

1333 New Hampshire Avenue, N. W. P. O. Box 12548 Suite 400 Capitol Station Washington, D. C. 20036 Austin, Texas 78711 '

W. N. Woolsey, Esq. Robert M. Rader Dyer and Redford Conner, Moore & Corber 1030 Petroleum Tower 1747 Pennsylvania Ave., N.W.

Corpus Christi, Texas 78474 Washington, D.C. 20006 -

Donald Clements Melvin G. Berger, Esq.

Gulf States Utilities Company Ronald Clark, Esq.

P. O. Box 2951 Antitrust Division, Energy Beaumont, Texas 77704 Section Room 8308 414 lith Street, N.W.

Washington, D.C. 20530 t

Charlos G. Thrash, Jr., Esq. Josaph J. Saunders, Esq.

E. W. Barnett, Esq. Chief, Public Counsel &

Theodore F. Weiss, Esq. Legislative Section "

J. Gregory Copeland, Esq. Antitrust Section 3aker & Botts U.S. Department of Justice 3000 One Shell Plaza P. O. Box 14141 Houston, TX 77002 Washington, D.C. 20044 j Donald A. Kaplan, Chief Robert E. Bathen Robert Fabrikant, Asst. Chief R. W. Beck & Associates Energy Section P. O. Box 6817 Antitrust Division Orlando, Florida 82853 U.S. Department of Justice l Washington, D.C. 20530 Mr. G. Holman King West Texas Utilities Company i Nancy Luque P. O. Box 841 Susan B. Cyphert Abilene, TX 79604 ,

Ronald H. Clark Frederick H. Parmenter John Carney, Esq.

Antitrust Division Weil, Gotshal & Manges Energy Section 767 Fifth Avenue U. S. Department of Justice New York, NY 10022 Room 8413 414 lith Street, N.W.  !

Washington, D.C. 20530 ,

p i

i I

I l

. . . _ _ . -_ .. -_