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Agility Public Warehousing Company K.S.C.P. v. U.S. Department of Defense

United States District Court, District of Columbia

March 30, 2017

U.S. DEPARTMENT OF DEFENSE, et al., Defendants.


          JOHN D. BATES United States District Judge

         This case arises out of two Touhy[1] requests submitted to the Defense Logistics Agency (DLA), a Department of Defense component, by plaintiffs Agility Public Warehousing and its affiliates (collectively, Agility), government contractors currently embroiled in a long-running defamation case in Pennsylvania brought by Agility's rival, Kuwait & Gulf Link Transport Co. (KGL). DLA and Agility have previously been before the Court in Case No. 14-1064, which resulted in a published opinion on earlier Touhy requests related to the Pennsylvania litigation.[2]See Agility Public Warehousing Co., K.S.C. v. Dep't of Defense, 110 F.Supp.3d 215 (D.D.C. 2015). The parties reached a settlement in that case in which the government agreed to produce certain documents, and to make available for deposition two DLA employees, and the parties voluntarily dismissed that case. Now Agility seeks to depose three more attorneys from DLA: former General Counsel Fred Pribble, chief trial attorney Daniel Poling, and former counsel Noel Woodward. DLA denied these requests, and Agility filed this case shortly afterward challenging the denial under the Administrative Procedure Act (APA). Currently before the Court is [21] the government's motion for summary judgment and [25] plaintiffs' cross-motion for summary judgment on the APA challenge. Agility has also filed [26] and [32] two motions to supplement the administrative record. For the reasons that follow, the government's motion for summary judgment will be granted, and plaintiffs' motion for summary judgment and motions to supplement the record will be denied.

         I. BACKGROUND

         The state court litigation underlying this case arose out of two emails sent to the government in 2011, signed by someone named “Scott Wilson, ” alleging that Agility's rival contractor, KGL, had illicit ties to Iran, which would have rendered KGL ineligible to serve as a government contractor. The emails, known as the Wilson letters, were referred for investigation by DLA attorneys to the Defense Criminal Investigative Service (DCIS), and eventually traced back to Agility. Attached to the Wilson letters were purported KGL internal documents that, according to KGL, had been altered to make it look like KGL was dealing with Iran. KGL filed suit against Agility in 2012 in Pennsylvania, bringing claims for defamation and tortious interference with contractual relationships. In addition to the allegations about the Wilson letters, KGL also alleged that Agility engaged in wide-ranging lobbying efforts at various levels of the federal government to get KGL barred as a federal contractor, and that Agility either stole or attempted to obtain stolen proprietary information from KGL that had again been altered to make it look like KGL was violating U.S. sanctions against Iran. AR [ECF No. 20] 10-33 (KGL's complaint). As a result, KGL claimed that it incurred costs in protecting its reputation by responding to inquiries made by DLA, the GAO, the Army, and Congress about its ties to Iran, and in responding to bid protests lodged against its receipt of other government contracts, including a contract in Kuwait awarded right before the Wilson letters were released. AR 36-37 (same). In its answer, Agility admitted that its employees had sent the Wilson letters, but denied that the letters were defamatory. AR 55.

         Agility's theory of the Pennsylvania case is that the ongoing cooperation between DLA and KGL, both during the investigation of the Wilson letters and the litigation itself, is evidence that KGL did not suffer any damages from the letters. Therefore, in order to address the allegations in the Pennsylvania litigation, Agility has sought both documents and the depositions of various officials from DLA. The first round of requests and denials resulted in Case No. 14-1064. As part of the settlement of that case in 2015, DLA agreed to produce over 1, 000 documents, and to make two of its employees-the ones sought by Agility-available for deposition: Normand Lussier, former Associate General Counsel at DLA responsible for contracting integrity, who leaked the Wilson letters to KGL's counsel, AR 88, 158-59; and Medard Kowalski, [3] the contracting officer who received the Wilson letters and forwarded them to DLA's attorneys, and who was responsible for overseeing KGL's government contract in Kuwait (known as the DDKS contract).

         Lussier and Kowalski both submitted declarations in the Pennsylvania litigation in support of KGL, regarding the steps DLA had taken to investigate the Wilson letters; these declarations were later withdrawn in July 2015, when DLA discovered that each contained at least one material misstatement.[4] AR 225. Poling, chief trial attorney at DLA, also submitted a declaration in the Pennsylvania litigation in 2014, asserting a common interest privilege between DLA and KGL to prevent the disclosure to Agility of communications between KGL and the government. AR 89- 91. The Poling declaration stated that KGL and DLA had a common interest in identifying Scott Wilson, the pseudonymous author of the Wilson letters, as the government was investigating whether the Wilson letters were submitted in good faith or whether the author had violated 18 U.S.C. § 1001 by making false statements to the government. The communications that KGL was attempting to shield from discovery had taken place in furtherance of this shared interest. Id. The state court ultimately rejected this privilege claim because DLA did not have a legal interest in the litigation under state law. See Order on Common Interest Privilege [ECF No. 1-37].

         Based on the information contained in DLA's agreed-upon document production, and the Lussier and Poling declarations, Agility submitted another Touhy request-one of two that are the subject of this case-to the government in July 2015. This request sought to depose Poling and another DLA counsel, Noel Woodward, whom Agility concluded were also involved in the issues underlying the Pennsylvania litigation because they had participated in DLA's response to the Wilson letters. AR 226-27, 244-58. The topics of the deposition included those already agreed to by DLA with respect to Lussier, namely: (1) “standard deposition questions;” (2) questions regarding the Lussier declaration; (3) knowledge of and communications within DLA related to KGL's ties to Iran; (4) KGL's damages as a result of the Wilson letters; (5) DLA's cooperation with KGL in response to the Wilson letters; (6) “any issues raised” by DLA's document production; and (7) issues related to bias, intent, and other means of impeachment. AR 227, 230- 31. Agility also sought to question Poling regarding (8) his 2014 declaration regarding the common interest privilege, (9) his attendance at Lussier's deposition (at which he was acting as agency counsel), [5] and (10) “any subsequent developments relating to this litigation.” AR 227.

         The parties exchanged a series of letters regarding the first new Touhy request between August 2015 and January 2016, with the government contending that the request was premature while the Lussier deposition was ongoing, was not sufficiently specific, and likely implicated privileged information. AR 228-33, 410-11. Agility disputed these arguments several times, in addition to submitting a lengthy response that expanded on its original request. AR 234-59, 394- 95, 412-16. Before the government responded to these letters, Agility submitted a second request in January 2016, this time for the deposition of DLA's then-General Counsel, Fred Pribble, based on testimony and documents indicating that Pribble was aware of and kept informed about the Wilson letters and previous allegations about KGL's ties to Iran. AR 727-30. Agility sought to depose Pribble on the following topics: (1) standard deposition topics; (2) involvement/response to allegations of KGL's ties to Iran, including the Wilson letters; (3) awareness of and/or involvement in DLA's attempts to cooperate with KGL regarding the Wilson letters, and with any other litigation involving Agility; (4) any issues raised by documents produced by KGL or DLA; and (5) questions regarding bias/credibility and other methods of impeachment. Id.

         On February 12, 2016, DLA responded to Agility's letters, finding that Agility's Touhy requests were now ripe because the Lussier deposition had concluded on February 5.[6] DLA again identified problems with the specificity and relevance of Agility's requests, and invited Agility to submit any supplemental information before the agency made its decision on the requests by March 1. AR 551-52. Agility did not respond to this letter, although Agility and DLA did exchange brief letters regarding the Pribble Touhy request, AR 731-33, and DLA issued a denial of Agility's Touhy requests to depose Poling, Woodward, and Pribble on March 4, AR 711-726, 734-36. In a sixteen-page denial letter, the government found that Agility had failed to show that Poling and Woodward had knowledge relevant to material issues in the underlying litigation; that the requested information was relevant to a specific issue of fact in the litigation; and that the testimony would not be cumulative of the information DLA had already provided. DLA also concluded that the breadth of the proposed depositions posed a high risk of exposing information protected by attorney-client privilege, the deliberative-process privilege, law-enforcement privilege, and the work-product doctrine, and that the request was disproportionate and unduly burdensome given the other information that DLA has provided. AR 711-26. DLA denied the request for Pribble's deposition for similar reasons in a separate letter, largely echoing the reasoning of the Poling/Woodward denial letter. AR 734-36. Agility filed the complaint in this case three days later, seeking review under the APA.


         Summary judgment should be granted where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits or declarations, show that there is no genuine dispute of any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). In its motion for summary judgment, Agility seeks review under the APA of DLA's denial of its two Touhy requests seeking depositions of DLA attorneys Poling, Woodward, and Pribble. In addition, Agility has filed two motions seeking to supplement the administrative record or, in the alternative, to introduce extra-record evidence. The Court will consider each issue in turn.

         A. Denial of Touhy Requests

          Pursuant to 5 U.S.C. § 301, government agencies may promulgate regulations that govern how the agency will respond to third party subpoenas and requests for documents. These regulations are often known as Touhy regulations, after the Supreme Court's decision in United States ex rel. Touhy v. Ragen, 340 U.S. 462, 467-68 (1951), in which the Court held that agency employees could not be held in contempt of court for refusing to respond to a subpoena, if instructed not to respond by a superior. In other words, once agencies have enacted these so-called Touhy regulations (and assuming the regulations are valid), government employees cannot be forced to testify. See, e.g., Bobreski v. EPA, 284 F.Supp.2d 67, 73 (D.D.C. 2003) (briefly explaining the history of Touhy and Touhy regulations). The purpose of such regulations, which typically limit the occasions on which the government will produce documents or agency employees for testimony, is “to conserve governmental resources where the United States is not a party to a suit, and to minimize governmental involvement in controversial matters unrelated to official business.” Boron Oil Co. v. Downie, 873 F.2d 67, 70 (4th Cir. 1989).

         Where an agency refuses to produce the requested documents, a third party state-court litigant's “sole remedy . . . is to file a collateral action in federal court under the APA.” Houston Bus. J., Inc. v. Office of the Comptroller of the Currency, 86 F.3d 1208, 1212 (D.C. Cir. 1996).[7]The government's denial is subject to the APA's familiar “arbitrary and capricious” standard of review, and a court will presume that the agency action is valid unless the requester can demonstrate that “the government has refused production in an arbitrary, capricious, or otherwise unlawful manner.” COMSAT Corp. v. Nat'l Sci. Found., 190 F.3d 269, 277 (4th Cir. 1999); see also Watts v. SEC, 482 F.3d 501, 508 n.* (D.C. Cir. 2007); Houston Bus. J., 86 F.3d at 1212 n.4; Cavanaugh v. Wainstein, Civil Action No. 05-123 (GK), 2007 WL 1601723, at *4 (D.D.C. June 4, 2007); Bobreski, 284 F.Supp.2d at 73-74.

         The Court's review here is thus a narrow one. See Citizens to Preserve Overton Park Inc. v. Volpe, 401 U.S. 402, 416 (1971) (“[T]he [arbitrary and capricious] standard of review is a narrow one.”). “When an agency is not a party to an action, its choice of whether or not to comply with a third-party subpoena is essentially a policy decision about the best use of the agency's resources.” COMSAT, 190 F.3d at 278. A court “must consider whether the [agency] decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment, ” Overton Park, 401 U.S. at 416, but the court may not “substitute its judgment for that of the agency, ” Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983).

         The DOD regulations at issue here provide that “official information should generally be made reasonably available for use in Federal and State courts and by other governmental bodies unless the information is classified, privileged, or otherwise protected from public disclosure.” 32 C.F.R. § 97.4. The regulations direct officials to consider the following “types of factors” in granting or denying a Touhy request: (1) whether the request is unduly burdensome or inappropriate under the applicable court rules; (2) whether disclosure is appropriate under the rules of procedure governing the case in which the request arose; (3) whether the disclosure would violate a statute, executive order, regulation, or directive; (4) whether the disclosure is appropriate or necessary under the relevant substantive law concerning privilege; (5) whether the disclosure would reveal classified information; and (6) whether disclosure would compromise ongoing enforcement proceedings or constitutional rights, reveal the identity of an intelligence source, disclose trade secrets, or otherwise be inappropriate. 32 C.F.R. § 97.6(b).

         Agility raises four main arguments in claiming that the government's denial of its deposition requests was arbitrary and capricious: (1) that the information it seeks is in fact relevant and non-cumulative; (2) that the government's privilege determinations are unsupported by applicable law; (3) that Agility's requests are not disproportionate or unreasonable; and (4) that the government's decision is arbitrary because it is treating Agility and KGL differently.

         1. Relevance/cumulativeness

         The dispute about whether the information Agility has requested is relevant and non-cumulative appears to be the chief point of contention between the parties. The DOD regulations require litigants to identify “with as much specificity as possible, the nature and relevance of the official information sought.” 32 C.F.R. § 97.6(c)(2). One of the government's chief concerns about Agility's requests, as articulated in both the Poling/Woodward denial letter and in the Pribble denial letter, is that Agility asked for a broad range of information but did not detail why much of the information sought was relevant to the issues in the underlying litigation. AR 714-15, 734- 35. Agility, on the other hand, argues that the government is taking a cramped view of what is relevant to the underlying litigation.

         Agility's requested deposition topics fall into roughly two categories: information about events that took place during the litigation, and information about events that ...

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