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United States ex rel Fago

August 30, 2006

UNITED STATES OF AMERICA EX REL. ANNE M. FAGO RELATOR, BRINGING THIS ACTION ON BEHALF OF THE UNITED STATES OF AMERICA, PLAINTIFFS,
v.
M & T MORTGAGE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge

MEMORANDUM OPINION

This case was referred to me for resolution of discovery disputes. Currently pending before me is an in camera review of assertedly work product protected documents submitted by defendant pursuant to my March 31, 2006 order, as well as the following three motions: (1) Plaintiff's Motion (#2) to Compel Production of Testimony and Documents Concerning M&T's Personnel Actions; (2) Plaintiff's Motion (#3) to Compel Supplemental Discovery Responses Concerning 476 New Loans; and (3) defendant's Motion for Payment of Expert Witness Fees. For the reasons stated herein, defendant's assertion of work product protection for the in camera documents will be sustained in part and overruled in part, plaintiff's second motion to compel will be granted in part and denied in part, and plaintiff's third motion to compel and defendant's motion for expert fees will both be denied.

I. BACKGROUND

Relator Anne Fago ("plaintiff" or "Fago") brought this qui tam action on behalf of the United States against her former employer M&T Mortgage Corporation ("M&T") alleging that M&T violated the False Claims Act, 31 U.S.C. § 3729 et seq.*fn1 Amended Complaint ("Am. Compl.") at 2-4. M&T is a "Direct Endorser" of mortgages insured by the Department of Housing and Urban Development ("HUD"). Fago v. M&T Mortgage Corp., 235 F.R.D. 11, 13 (D.D.C. 2006). These government-insured mortgages are typically made to low income, first time home buyers and buyers with spotty credit histories. Am. Compl. at 5. When these government-insured loans go into default, M&T presents a claim for payment of the loan to HUD, HUD pays M&T, and then HUD becomes the owner of the property. Id. at 6. Plaintiff brought this lawsuit alleging that M&T submitted applications to HUD for loan guaranties that contained forgeries, thereby fraudulently causing HUD to guarantee and subsequently pay claims for loans that it otherwise would not have insured. Id. at 3.

II. ANALYSIS

A. In Camera Review

Plaintiff previously moved the Court to compel the production of documents and certain deposition testimony relating to a presentation to HUD that M&T made on June 10, 2004. In particular, plaintiff sought the production of all documents that were created in the course of an internal investigation, conducted by M&T's outside counsel, into plaintiff's allegations and subsequently discussed in the presentation to HUD. See Fago, 235 F.R.D. at 15. M&T refused to produce the requested documents and testimony on the ground that they were protected by the work product doctrine. In moving to compel their production, plaintiff argued that the documents and testimony are not work product and that, even if they are work product, M&T waived work product protection by presenting the findings of its investigation to HUD. Id. at 15. In considering plaintiff's motion, I found that, without viewing the documents in camera, I could not determine whether they were created "because of" litigation or whether work product protection had been waived via the presentation to HUD. Id. at 17.

I have now reviewed the documents in camera and find that some, but not all, constitute work product and that, for the documents that constitute work product, protection was not waived by M&T's presentation to HUD. For the same reasons, work product protection was not waived for the sought-after deposition testimony.

1. Work Product Doctrine

The work product doctrine is designed to balance the need of the adversary system to promote an attorney's preparation against society's general interest in revealing all facts relevant to the resolution of a dispute. In re Sealed Case, 856 F.2d 268, 273 (D.C. Cir. 1988) (citing In re Subpoenas Duces Tecum, 738 F.2d 1367, 1371 (D.C. Cir. 1984)). A lawyers's work product may be reflected in "interviews, statements, memoranda, correspondence, briefs, mental impressions, personal briefs, and countless other tangible and intangible ways." Hickman v. Taylor, 329 U.S. 495, 511 (1947). "Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten [and] [a]n attorney's thoughts, heretofore inviolate, would not be his own." Id. In furtherance of this principle, Rule 26 of the Federal Rules of Civil Procedure protects from disclosure materials prepared by or for a party, its attorney, or its representative in anticipation of litigation and allows for discovery only upon a showing of substantial need and an inability to obtain the substantial equivalent without undue hardship. Fed.

R. Civ. P. 26(b)(3).

In order for documents to be protected by the work product doctrine, the proponent must show that the documents were prepared or obtained in anticipation of litigation. Id. "'In anticipation of litigation' contains two related, but nevertheless distinct, concepts. One is temporal. The other is motivational." Jinks-Umstead v. England, 231 F.R.D. 13, 15 (D.D.C. 2005) (quoting Edna Selan Epstein, The Attorney-Client Privilege and the Work Product Doctrine, at 314 (4th ed. 2001)). First, at the time the document was prepared or obtained, there must have been at least "a subjective belief that litigation was a real possibility, and that belief must have been objectively reasonable." EEOC v. Lutheran Soc. Servs., 186 F.3d 959, 968 (D.C. Cir. 1999) (citing In re Sealed Case, 146 F.3d 881, 884 (D.C. Cir. 1998)). Second, the document must have been "prepared or obtained because of the prospect of litigation." Lutheran Soc. Servs., 186 F.3d at 968 (quoting Senate of Puerto Rico v. United State Dep't of Justice, 823 F.2d 574, 586 n.42 (D.C. Cir. 1987)) (emphasis added). The operative question is whether the "documents 'would have been created in essentially similar form irrespective of the litigation.'" Willingham v. Ashcroft, 228 F.R.D. 1, 4 (D.D.C. 2005) (citing United States v. Adlman, 134 F.3d 1194, 1202-03 (2d Cir. 1998)).

In the present case, plaintiff argued that the investigation, and therefore the documents created pursuant to that investigation, was not work product because it was conducted for the business purpose of explaining the situation to HUD. Fago, 235 F.R.D. at 16. On the other hand, M&T asserted that any non-litigation purpose coincidently served by its investigation was purely collateral to the principal purpose of defending plaintiff's lawsuit. Id. In reality, it appears that M&T's investigation had dual purposes: one, to gather information in preparation of this litigation, the other, to reassure HUD and preserve its standing as a direct endorser of government-insured mortgages. Accordingly, the issue in this case is whether the documents surrounding M&T's investigation and referenced in its presentation to HUD were prepared or obtained "because of" the litigation and would not have been created in an "essentially similar form irrespective of the litigation."

2. Are the Documents Work Product?

The documents submitted for in camera review fall into five general categories: (1) attorney notes from interviews with current and former M&T employees; (2) notes and questionnaires from employee exit interviews; (3) internal audits; (4) correspondence from M&T's counsel regarding this litigation; and (5) compilations of information.

The attorney interview notes are classic opinion work product. Specifically, those notes reveal counsel's mental impressions and litigation strategy because they reveal who counsel thought important to interview, what questions counsel thought important to ask, and what information counsel thought important to memorialize. See Hickman, 329 U.S. at 512-13. It is also clear that the interview notes would not have been created and the interviews would not have taken place had it not been for the present litigation. Indeed, all of the interviews took place after the service of plaintiff's complaint on M&T. To the extent that the information obtained in these interviews may have been helpful in M&T's meeting with HUD or to the extent that M&T may have conducted the interviews in a more speedy or thorough manner in order to quickly gather information with which to alleviate any concerns of HUD, that would not alter the application of the work product doctrine because it is clear that these documents would not have been created in essentially similar form irrespective of the litigation.

With regard to the exit interview documents, I find that they were not created in anticipation of litigation. First, they were all created prior to the filing of this lawsuit and almost all were created before plaintiff began working for M&T. Accordingly, there can be no doubt that they were not created in anticipation of the present litigation. Second, the exit interview forms themselves state that they are "strictly for use by the Human Resources Department to assist in evaluating current policies and practices and identifying potential areas for improvement." That statement establishes that they were not prepared because of litigation, but rather to assist the Human Resources Department. To the extent that M&T may be asserting work product protection based on the fact that the exit interview notes and questionnaires may have been gathered as part of its defense of plaintiff's lawsuit, that would be an inappropriate application of the work product doctrine. Specifically, pre-existing documents in M&T's possession are not made privileged merely because they may be useful in this litigation. As the Supreme Court explained in the context of the attorney-client privilege:

This Court and the lower courts have thus uniformly held that pre-existing documents which could have been obtained by court process from the client when he was in possession may also be obtained from the attorney by similar process following transfer by the client in order to obtain more informed legal advice.

Fisher v. United States, 425 U.S. 391, 403-04 (1976). Accordingly, I find that the exit interview notes and questionnaires are not work ...


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