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United States of America, ) et al v. California Rural Legal ) Assistance

November 14, 2011

UNITED STATES OF AMERICA, ) ET AL., PETITIONERS,
v.
CALIFORNIA RURAL LEGAL ) ASSISTANCE, INC., RESPONDENT.



The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge

MEMORANDUM OPINION

Pending before the Court is the petition of the United States and the Office of the Inspector General of the Legal Services Corporation ("LSC-OIG" or "Inspector General") for summary enforcement of an investigative subpoena issued pursuant to section 6(a)(4) of the Inspector General Act of 1978, 5 U.S.C. app. 3 §§ 1-13.*fn1 Respondent California Rural Legal Assistance, Inc. ("CRLA") and intervenors, CRLA staff attorneys Jeannie Barrett, Alegria de la Cruz, Vanessa Frank Garcia, Phyllis Katz, Teri Scarlet, Arturo Rodriguez, and Kirk Ah-Tye ("attorney-intervenors") resist the subpoena, arguing that much of the information requested is privileged under state and federal law and, in addition, that CRLA is prohibited from disclosing the requested information under the California state professional responsibility code and related state laws. Respondent further argues that the information requested is not relevant to any legitimate lawful purpose and that the subpoena is unduly burdensome and unreasonable.

Upon careful consideration of the pleadings, case law, and the entire record in this case, the Court concludes that the subpoena shall be enforced. As a threshold matter, the Court concludes that California professional responsibility rules do not prohibit disclosure of the requested information and, in addition, that state privileges do not apply to the subpoena. The Court further concludes that the subpoena is enforceable because the information requested is reasonably relevant to a legitimate lawful purpose and because compliance with the subpoena is not unduly burdensome, particularly if conducted in accordance with the proposed data review protocol submitted by petitioners. Finally, the Court concludes that, although respondent and the attorney-intervenors have raised legitimate privacy and confidentiality concerns with respect to the representation of their clients, these concerns may be addressed by the entry of an appropriate protective order. Accordingly, and for the reasons set forth below, it is hereby ORDERED that the petition is GRANTED.

I. BACKGROUND

The Legal Services Corporation ("LSC") is a private, nonprofit corporation established by the Legal Services Corporation Act of 1974 ("LSC Act"), 42 U.S.C. §§ 2996-2996l. LSC is authorized to provide financial assistance in the form of grants to qualified individuals and organizations for the purpose of providing legal assistance to the poor. Id. § 2996e(a)(1)(A). CRLA is a California non-profit corporation, founded in 1966 to provide a wide range of free legal assistance and representation to low-income communities in California. CRLA Opp'n to Petition for Enforcement ("CRLA Opp'n"), Declaration of William G. Hoerger ("Hoerger Decl."), Docket No. 28-2, ¶ 13. In 2006, CRLA received about $6.8 million, representing roughly sixty percent (60%) of its $11.2 million budget, in LSC grants. Hoerger Decl. ¶ 15.

In late 2005, Congress forwarded to LSC-OIG a complaint from a confidential source,*fn2 which alleged that CRLA was not expending its federal grant assistance in accordance with statutory directives. Petition for Summary Enforcement of Subpoena Duces Tecum ("Petition") Exhibit C, Declaration of Laurie Tarantowicz ("Tarantowicz Decl."), Docket No. 1-3, ¶ 4. Among other things, by law LSC must ensure that "grants and contracts are made so as to provide the most economical and effective delivery of legal assistance to persons in both urban and rural areas," 42 U.S.C. § 2996f(a)(3); that grantees refrain from political activity; that no federal funds are used in fee-generating cases; that no federal funds are used to provide legal assistance for or on behalf of an alien, unless certain criteria are met; and that no grants are awarded to private law firms expending 50 percent or more of their resources or time litigating issues "in the broad interests of a majority of the public," id. § 2996f(b)(5). See generally 42 U.S.C. § 2996f; see also Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. 104-134, §§ 501-509, 110 Stat. 1321, 1321-50 to -59 (Apr. 26, 1996) [hereinafter 1996 Appropriations Act]. The complaint received by LSC-OIG alleged principally that CRLA (1) impermissibly focused its resources on broad-based "impact" litigation as opposed to legal services work; (2) impermissibly focused its resources on farm worker and Latino issues to the detriment of other underserved populations; (3) impermissibly solicited clients; (4) impermissibly worked on fee-generating cases; and (5) impermissibly performed significant work on cases without an identifiable client. Petition, Docket No. 1, at 4-5.

Upon receipt of the complaint, LSC-OIG launched an investigation pursuant to its powers under the Inspector General Act. The Inspector General Act charges inspectors general with the duty and responsibility "to conduct, supervise, and coordinate audits and investigations relating to the programs and operations of" their respective departments and agencies. 5 U.S.C. app. 3 § 4(a)(1). Inspectors general such as LSC-OIG have broad power to "require by subpoena the production of all information, documents, reports, answers, records, accounts, papers and other data in any medium (including electronically stored information . . . ) and documentary evidence necessary in the performance of the functions assigned by [the Inspector General Act]." Id. § 6(a)(4). Such subpoenas "shall be enforceable by order of any appropriate United States district court." Id.

To aid in its investigation, on March 16, 2006, LSC-OIG served CRLA with an administrative request for information. In this request, LSC-OIG sought specific categories of data from CRLA's computerized "KEMPS" database, including client names, addresses, dates of representation, and "problem codes" (codes indicating the subject matter for which clients sought assistance). Tarantowicz Decl. ¶ 5; see also CRLA Opp'n, Declaration of Karen Smith ("Smith Decl."), Docket No. 28-1, ¶ 18. LSC-OIG also sought several categories of documents:

(1) CRLA's internal written policies, procedures and/or manuals with regard to timekeeping, case handling, document handling, compliance, client intake, and case reporting; (2) client intake logs, personnel records, and work plans for CRLA's Modesto office; (3) CRLA Board meeting agendas and minutes; (4) expense records for CRLA's Stockton and Modesto offices; (5) materials from CRLA-hosted conferences; (6) agendas, minutes, and other reports from CRLA task force activities; and (7) client names, intake sheets, statements of facts, retainer agreements, waivers, and timekeeping records for approximately 36 specific matters. Hoerger Decl. ¶ 47. In response, CRLA turned over approximately 6,000 pages of hard copy documents and several megabytes of data. See Hoerger Decl. ¶¶ 45, 48, 56-60, 63, 66, 72; Smith Decl. ¶ 19. However, CRLA withheld and/or redacted all client names and other client identifying information, asserting attorney-client privilege under federal and California state law, as well as confidentiality obligations under California state law. Hoerger Decl. ¶ 56. In addition, CRLA withheld and/or redacted information that it determined to be privileged as attorney work product under both federal and California state law. Hoerger Decl. ¶ 61.

Using the information it received from CRLA, on September 14, 2006, LSC-OIG provided an interim report on its investigation to the Subcommittee on Commercial and Administrative Law of the House Committee on the Judiciary. See Tarantowicz Decl. ¶ 8. This interim report indicated that LSC-OIG had found "substantial evidence that CRLA violated federal law by: soliciting clients; working a fee-generating case; requesting attorney fees; and associating CRLA with political activities." Id. (citing Petition Exhibit 3, Report, Docket No. 1-6). The interim report also raised "serious concerns" that CRLA may have been engaging in impact litigation to an impermissible extent and conducting litigation without an identifiable client, in violation of congressionally-mandated restrictions. Id. The report concluded, however, that LSC-OIG could not make final determinations with respect to these and other allegations raised in the anonymous complaint without additional information from CRLA. Id.

Accordingly, on October 17, 2006, LSC-OIG served CRLA with a subpoena duces tecum seeking nine categories of documents in connection with its investigation. See generally Petition Exhibit A, Subpoena Duces Tecum, Docket No. 1-1. First, LSC-OIG sought client identifying information contained in CRLA's KEMPS database, including full name, address, telephone number, spouse name, birth date, and citizenship status.*fn3 Tarantowicz Decl. ¶ 10; Hoerger Decl. ¶ 109; Smith Decl. ¶ 17 (describing content of CLIENTSW data table). Second, LSC-OIG requested information relating to the nature and extent of CRLA's representation between January 1, 2003 and October 31, 2005, including "'problem codes,' dates of representation, adverse parties, classification of each undertaking as a case, matter or activity and amount of time spent on each undertaking." Tarantowicz Decl. ¶ 10. Third, LSC-OIG requested unredacted copies of all documents CRLA had provided in response to LSC-OIG's initial administrative request. See Subpoena Duces Tecum ¶ 3. Fourth, LSC-OIG asked for detailed information regarding any work CRLA performed with five specific non-profit organizations, as well as any legislative work performed by CRLA, between January 2003 and the date of the subpoena. Id. ¶ 4. Fifth, LSC-OIG asked for detailed information regarding CRLA's work with two additional organizations at any time between January 1998 and the date of the subpoena. Id. ¶ 5. Sixth and seventh, LSC-OIG requested information regarding all conferences CRLA hosted from January 2003 to the date of the subpoena, including lists of CRLA conference attendees, conference materials, meeting minutes, and summaries. Id. ¶¶ 6-7. Finally, LSC-OIG requested all CRLA Board of Directors meeting packets, as well as all CRLA task force meeting agendas, minutes, summaries and reports from January 2003 to the date of the subpoena. Id. ¶¶ 8-9.

CRLA produced some additional documents in response to LSCOIG's subpoena but again refused to produce much of the information requested. See generally CRLA's Response to Subpoena Duces Tecum, Petition Exhibit B, Docket No. 1-2. Specifically, CRLA asserted that disclosure of client names and/or other client identifying information would invade state and federal attorney-client privilege as well as its attorneys' confidentiality obligations under California law. Although CRLA acknowledged that some of the requested client identifying information was perhaps not privileged, CRLA maintained that in order to identify privileged information it would need to review approximately 39,000 individual hard copy case files, which it claimed was unduly burdensome. CRLA also objected to LSC-OIG's request for client identifying information as overbroad because the information requested was not reasonably relevant to any legitimate lawful purpose. Finally, in addition to withholding client identifying information, CRLA declined to produce other information that it determined to be protected under state and federal attorney work product privilege.

For ease of reference, the following table summarizes LSCOIG's subpoena request, responsive documents produced, documents not produced, and the stated bases for CRLA's objections, as set forth in CRLA's response to the subpoena. See generally Petition Exhibit B.

LSC Request Documents Documents Bases for

Produced Withheld Withholding

Request 1: None (CRLA Client Burdensome; Data fields in provided some identifying overbroad; CLIENTSW table documents in information attorney-client response to including privilege; earlier name, address state administrative & phone, confidentiality request) spouse name, obligations green card number, adverse party name

Request 2: All fields but Ucode and Burdensome; Data fields in Ucode and REASON fields overbroad; TTIME table REASON attorney-client for all privilege; matters state between Jan. confidentiality 1, 2003, and obligations Oct. 31, 2005 Request 3: Copies of All remaining Duplicative; Unredacted client intake documents documents were copies of all forms with properly documents unredacted redacted on previously financial basis of provided information attorney-client privilege and attorney work product privilege

Request 4: Produced some Redacted Attorney-client Matter responsive client privilege; numbers, documents identifying state client names, subject to information confidentiality intake sheets, objections from intake obligations statements of sheets, facts, retainer retainer agreements, agreements, statements of co-counsel fact agreements, timekeeping agreements for work in connection with five organizations and legislative work since Jan. 2003 Request 5: Produced some Redacted Attorney-client Matter responsive client privilege; numbers, documents identifying state client names, subject to information confidentiality intake sheets, objections from intake obligations statements of sheets, facts, retainer retainer agreements, agreements, statements of co-counsel fact agreements, timekeeping agreements for work in connection with two organizations since 1998 Request 6: Produced Lists of documents attendees at subject to conferences general since Jan. objections 2003 Request 7: Produced some Withheld or Attorney work Materials documents redacted some product distributed at subject to documents privilege conferences general since Jan. objections 2003 Request 8: Produced ...


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