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U.S. v. LEGAL SERVICES FOR NEW YORK CITY

June 14, 2000

UNITED STATES OF AMERICA, ET AL., PETITIONERS,
V.
LEGAL SERVICES FOR NEW YORK CITY, ET AL., RESPONDENTS.



The opinion of the court was delivered by: Robertson, District Judge.

MEMORANDUM AND ORDER

Before the Court is the petition of the United States and the Office of the Inspector General of the Legal Services Corporation (LSC OIG) for summary enforcement of two administrative subpoenas issued pursuant to section 6(a)(4) of the Inspector General Act of 1978, 5 U.S.C. app. 3 § 1 et seq. (1994). Respondents Legal Services of New York City (LSNY) and Legal Aid Bureau, Inc. (LAB) resist the subpoenas, arguing that, on the particular facts presented, it is unlawful for LSC OIG to demand the production of the names of their clients, and would be unlawful for them to reveal such information. Because only privileged materials may be withheld from a response to the subpoenas; because the attorney-client privilege is not properly invoked by respondents' blanket objection; and because the LSC OIG's proposal to erect an administrative "screen" to safeguard the names is not unreasonable, I have concluded that the subpoenas must be enforced.

Facts

LSC is a non-profit, tax-exempt corporation established by the Legal Services Corporation Act of 1974, 42 U.S.C. § 2996 et seq. (1994) (LSC Act). It makes annual grants to more than 200 legal services and legal aid organizations throughout the United States. In 1999, Congress appropriated $300 million for legal services, of which LSNY was granted $11,314,289, and LAB, $3,208,162.

The Inspector General Act charges inspectors general within federal departments and agencies to conduct, supervise and coordinate audits relating to the operations of their respective departments and agencies. The LSC is a "designated Federal entity" to which the IGA applies, see 5 U.S.C. app. 3 § 8G(a)(2), and LSC OIG has the power to subpoena "all information, documents, reports, answers, records, accounts, papers and other data and documentary evidence necessary to the performance of the functions assigned by the Inspector General Act." Id. If its subpoenas are not complied with, the OIG may seek relief in a federal district court. See id. § 6(a)(4).

Beginning in 1998, a series of OIG audits of LSC grantees revealed inaccuracies in case reporting. Some grantees overstated the number of cases they handled, or included in statistical reports data from "cases" in which no legal services had been provided. In the summer of 1999, the General Accounting Office (GAO) conducted audits of case statistical data provided by five LSC grantees, including LSNY and LAB. GAO concluded that approximately 75,000 of the 221,000 cases reported to LSC by these five grantees were questionable. A House Judiciary subcommittee held hearings on September 29, 1999 on LSC statistical data. A subsequent conference report accompanying the appropriations bill for LSC's FY 2000 appropriations directed LSC OIG to "assess the case service information provided by the grantees, and . . . report to the Committees no later than July 30, 2000, as to its accuracy, as described in the House report." H.Rep. No. 106-479, 145 Cong.Rec. H12230-02, 12308 (Nov. 17, 1999) (Conference Report on H.R. 3194, Consolidated Appropriations Act, 2000).

On January 11, 2000, LSC OIG informed all LSC Executive Directors of its plan to carry out Congress's mandate. Under the plan, LSC OIG would require thirty grantees, selected at random, to submit data in two phases, or "data calls." The first data call required the production of the case number and legal problem codes (e.g, housing, employment) for each case reported by the grantee as closed during 1999. LSNY and LAB both complied with the first data call and provided the requested information to LSC OIG.

It is the second data call that presents the problem of this case. That data call requires the production of the case number and the client name for each case reported as closed during 1999. By letters dated March 14, 2000 and March 15, 2000, respectively, LSNY and LAB informed LSC OIG that they would not comply with this request. They asserted that disclosure of client names would invade the attorney-client privilege and violate ethics rules — that the client names could be linked with the problem codes that had already been produced, thus revealing, outside the attorney-client relationship, the motives behind client decisions to seek legal assistance.

LSC OIG disagreed that the attorney-client privilege applied, or that rules of professional responsibility could act as a bar to its access to client names. Nevertheless, it created a screening procedure designed to assure that nobody within LSC OIG could or would link a client name with its associated legal problem code.*fn1 With this system in place, LSC OIG served subpoenas upon the custodians of records of the two respondents.

On March 29, LSNY objected. LSNY provided no client names, but undertook to provide "unique client identifiers." On March 30, LAB also objected. LAB provided full client names for cases in which it was confident that the information had already been disclosed to a third party, but it stated that, for all other cases, it would provide only the client's first name and a unique client identifier for the last name based on the client's first name, last name and date of birth.

LSC OIG filed the instant petition for enforcement on April 25, 2000.

Analysis

A. Attorney-Client Privilege

The organic LSC Act and the 1996 Omnibus Appropriations Act both contain provisions protecting attorney-client privileged information. See 42 U.S.C. § 2996h(d) ("neither the Corporation nor the Comptroller General shall have access to any reports or records subject to the attorney-client privilege"); § 509(h), Pub.L. No. 104-134, 110 Stat. 1321, 1321-59 (exempting from disclosure materials "subject to the attorney-client privilege"). Respondents submit that these protections apply to the OIG as well; that a person's motivation for seeking ...


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