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U.S. EX REL. FISHER v. NETWORK SOFTWARE ASSOCIATES

August 28, 2003

UNITED STATES OF AMERICA EX REL., KENNETH FISHER PLAINTIFF,
v.
NETWORK SOFTWARE ASSOCIATES, ET AL., DEFENDANTS



The opinion of the court was delivered by: John Facciola, Magistrate Judge

MEMORANDUM OPINION

This case has been referred to me by Judge Friedman pursuant to LCvR 72.2(a) for the purpose of resolving Defendant Network Virginia's Motion for Partial Reconsideration and the parties' Joint Motion for Clarification. For the reasons set forth below, defendant Network Virginia's motion for partial reconsideration will be granted. Furthermore, the parties' joint motion for clarification will be granted, resolving all pending relevancy and burdensome objections.

BACKGROUND

I. The Attorney-Client Privilege Documents

In my Memorandum Opinion, dated January 29, 2003, I denied the application of the attorney-client privilege for the document labeled NSVA0121207-0121209 (herein referred to as "Document B") because I found it to be "the same document as NSVA 0004051-0004053 [(herein referred to as "Document A")]." Memorandum Opinion, January 29, 2003 at 8. [ Page 2]

Document A is a letter from a client to an attorney regarding the valuation of stock and a spreadsheet as to the stock's value. I denied the attorney-client privilege claims as to these documents because I found that the letter and the spreadsheet did not disclose a communication intended to be confidential. Id. at 4. I then denied the privilege as to Document B because it appeared to convey the same substantive information as Document A, despite its difference in appearance. Defendant has now asked that I re-examine my conclusions.

II. The Relevancy and Burdensome Documents

On approximately March 8, 2002, relator served his first set of requests for production of documents on defendants. Relator's Statement of Points and Authorities in Support of His Motion to Compel Immediate Production of Documents at 3. The following week, relator filed its third amended complaint and served defendants with the amended first requests for production. Id. None of the defendants produced any documents by the June 2002 deadline; instead, defendants cited a need for a protective order. Id. A protective order was subsequently granted on November 17, 2002. However, prior to entering into the protective order, relator filed a motion to compel on July 22, 2002.

In my Memorandum Opinion and Order, dated January 29, 2003, I required defendants to immediately disclose "all documents not protected by the attorney-client privilege. Order, January 29, 2003 at 1. Subsequently, an issue regarding the interpretation of that Order arose. Relator interprets that Order as requiring defendants to "produce all documents they have withheld on grounds other than attorney-client privilege." Joint Motion for Clarification at 2. However, defendant interprets it to include only those documents challenged under the attorney-client privilege, leaving "all remaining issues involving the Motion to Compel and defendant's [ Page 3]

oppositions to that motion" for future resolution. Id. at 3. Both relator and defendant have asked me to clarify the scope of my order, and I shall do so now.

DISCUSSION

III. Legal Standard for the Attorney-Client Privilege

The attorney-client privilege "protects confidential communications made between clients and their attorneys when the communications are for the purpose of securing legal advice or services." Overseas Private Inv. Corp. v. Mandelbam, 1998 WL 647208, at *1 (D.D.C. Aug. 19, 1998). The privilege does not automatically attach to any and all communications between an attorney and a client; it is specific and narrow in scope. See Athridge v. Aetna Casualty and Surety Co., 184 F.R.D. 200, 209 (D.C.C. 1998) (affirming that the District of Columbia Circuit is "one of the Circuits which construe the attorney-client privilege strictly" and noting that "the strict-construction cases reason that a lawyer's communications can be privileged only derivatively-if disclosure of the lawyers' communications would reveal the content of the client's communication to the lawyer"). The privilege attaches to a client's communication with his or her attorney when the "communication was made for the purpose of securing primarily either (i) an opinion of law or (ii) legal services or (iii) assistance in some legal proceedings." Overseas Private Inv. Corp., 1998 WL 647208, at *1 (quoting In Re: Sealed Case, 737 F.2d 94, 98-9 (D.C. Cir. 1984)). The privilege attaches to an attorney's communication with his or her client "only insofar as the attorney's communications disclose the confidential communications from the client." Evans v. Atwood, 177 F.R.D. 1, 4 (D.D.C. 1997) (quoting Brinton v. Dep't of State, 636 F.2d 600, 603-04 (D.C. Cir. 1980)).

Confidential communication in the context of the attorney-client privilege means "the [ Page 4]

information is to be protected if one can say that the person who communicated the information never intended it to be disclosed and, but for its disclosure now, it would never have been known." Evans, 177 F.R.D. at 6. A client engages in confidential communication with an attorney when the client "reasonably believes that no one will learn the contents of the communication." Id. (quoting RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 121 (Proposed Final Draft No. 1, 1996)).

The crucial questions are: (1) whether the communication by the client to its attorney was for the purpose of seeking legal advice or legal representation; (2) whether the client had a reasonable belief that the communication was confidential and intended it to be confidential; and (3) whether the disclosure of this communication would tend to reveal this confidential information. U.S. v. Motorola, Inc. and Nextel Communication, Inc., 1999 WL 552553, at *2 (D.D.C. May 28, 1999).

IV. Document B and the Attorney-Client Privilege

As stated in my Memorandum Opinion of January 29, 2003, Document A is not confidential and is, therefore, not privileged. Document A is a letter and a spreadsheet that transmit information regarding the valuation of stock from Ms. Kim Hargis ("Hargis"), a client, to Mr. Larry S. Stern ("Stern"), her attorney. The substance of both the letter and the spreadsheet explains the valuation of the company's stock as of December 31, 1997. Defendant Network Virginia's Motion for Partial Reconsideration ("D.Mot."). There is nothing in the document suggesting that its author had the intention or expectation that its content never be disclosed. To the contrary, the author was describing an accounting process that was a known fact. [ Page 5]

Document B is a communication between Stern and Mr. Raoul Socher ("Socher"), Stern's client. This document contains no information regarding the value of the stock as of December 31, 1997. I, therefore, now conclude that Document A is substantively different from Document B and must now determine whether the attorney-client privilege applies to it, irrespective of the application of the attorney-client privilege to Document A.

Because Document B is a letter from an attorney to a client, the privilege attaches only if the "attorney's communications disclose the confidential communication from the client." Evans, 177 F.R.D. at 4; see Mead Data Central, Inc. v. U.S. Dep't of Air Force, 566 F.2d 242 (D.C. Cir. 1977) (affirming a strict interpretation of the attorney-client privilege by stating: "[T]hus the assertion that what the lawyer tells the client is privileged even though it cannot possibly disclose what the client told the lawyer is simply not the law of this Circuit."). Thus, the question remains whether Stern's letter to Socher discloses information that Socher intended to remain confidential. See Evans, 177 F.R.D. at 6 ("[T]he information is to be protected if one can say that the person who communicated the information never intended it to be disclosed and, but for its disclosure now, it would never have been known.") (emphasis added).

As I noted above, the privilege attaches to communications made by an attorney when the purpose of the client's communication was to secure "(i) an opinion of law or (ii) legal services or (iii) assistance in some legal proceedings." Overseas Private Inv. Corp., 1998 WL 647208, at *1. The very first sentence of the letter discloses why a client communicated with his attorney, seeking his advice. If this document were disclosed, plaintiff would learn the purpose of Socher's communication to Stern. While the reason an attorney is retained may not be privileged, communication by an attorney that would "reveal the content of the client's [ Page 6]

communication to the lawyer" is considered privileged. Athridge, 184 F.R.D. at 209. By seeing the letter, one would learn why the client sought the lawyer's advice and thereby learn the nature of the communication that the client intended to be between himself and his counsel. Clearly, disclosure of the letter would reveal a confidential communication that the client never intended to be seen by anyone but his counsel. Evans, 177 F.R.D. at 6.

Therefore, Document B, otherwise known as NSVA0121207-0121209, is protected by the attorney-client privilege and shall not be disclosed.

V. Legal Standard for Relevance and Burdensome Objections

Rule 26(b) states that "parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense in any part. . . ." FED. R. CIV. P. 26(b)(1). The rule indicates, however, that "relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id.

A document or other discoverable material is relevant when the information it contains is "relevant to the claim or defense in any part." Id. Moreover, whether material is relevant is "in turn, a function of the relationship of the data to the . . . central accusations of this [sic] lawsuit." McPeek v. Ashcroft, 212 F.R.D. 33, 34 (D.D.C. 2003). Discovery of relevant materials includes "any matter that bears on, or that reasonably could lead to other matters that could bear on, any issue that is or may be in the case." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978).

However, the discovery of a document may be limited if the document is "unduly burdensome." Wyoming v. U.S. Dep't of Agric., 208 F.R.D. 449, 453 (D.D.C. 2002). To determine the level of burden a document places on the responding party, the court "should [ Page 7]

balance the need for discovery against the burden imposed on the person ordered to produce the documents." Id. at 452. The court entertains the burdensome objection only when the responding party demonstrates how the document is "overly broad, burdensome, or oppressive, by submitting affidavits or offering evidence which reveals the nature of the burden." Athridge, 184 F.R.D. at 191. The responding party cannot "merely state, in conclusory fashion, that the requests are unduly burdensome." Id.

VI. Resolution of Pending Objections

In reviewing the Joint Motion for Clarification, I find defendant's interpretation to be correct. The scope of my order can be inferred from the introductory paragraph, which states, "I herein only address this motion to compel with respect to the documents claimed to be privileged." Memorandum Opinion, January 29, 2003 at 1. In that opinion, I only focused upon those documents challenged under the attorney-client privilege. I did not address any other issues briefed in the relator's motion to compel or defendant's accompanying opposition to that motion. I now address those documents withheld by defendants under the claims of irrrelevancy and burdensomeness.

Background

From November 23, 1993, through July 18, 1997, Network California, Network Federal, NetSoft, and Network Virginia were involved in the U.S. Small Business Administration ("SBA"), Section 8(a) Minority Small Business Development Program ("Section 8(a) Program"). Third Amended Complaint, ¶ 102. This program allows federal agencies and entities to "set aside" certain contracts for the sole benefit of Section 8(a) program participants. Id. ¶ 26. This process allows small, minority-owned businesses to obtain government contracts with little to no [ Page 8]

competition. To qualify as a Section 8(a) program participant, the company must meet three requirements. First, the company must be "socially and economically disadvantaged." 15 U.S.C. § 637(a)(4)(A).*fn1 For a company to be socially and economically disadvantaged, either one or more socially and economically disadvantaged persons must "unconditionally" own at least 51% of the company, or 51% of the publicly traded stock must be "unconditionally owned by one or more socially and economically disadvantaged individuals." 15 U.S.C. § 637(a)(4)(A)(i)-(ii).

Second, the "management and daily business operations" must be controlled by one or more socially and economically disadvantaged individuals." 15 U.S.C. § 637(a)(4)(B). Socially disadvantaged individuals are those individuals who have been "subjected to racial or ethnic prejudice or cultural bias because of their identity as a member [sic] of a group without regard to their individual qualities." 15 U.S.C. § 637(a)(5). Economically disadvantaged individuals are those individuals unable to "compete in the free enterprise system . . . due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged." 15 ...


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