Whistleblower Digest
PROTECTION OF INFORMATION; PRIVACY; CONFIDENTIALITY
[Last Updated Aug. 25, 2011]
- Admonishments
- Complaint and Investigatory Materials
- Discovery
- Judicial Restraint in Drafting Decision
- Protective Order
- Pseudonyms
- Publication of Decisions
- Public Hearing
- Sealing the Record
- Striking Privileged Information
[ For the issue of whether attorney-client privilege, or the existence of a non-disclosure agreement, are bars to a SOX whistleblower complaint, see Privileges and Non-Disclosure Agreements . ]
Admonishments
ADMINISTRATIVE LAW JUDGE DECISIONS
PRIVILEGED COMMUNICATIONS; ADMONISHMENT TO LIMIT DISCLOSURES TO INFORMATION REASONABLY NECESSARY TO ESTABLISH CLAIM
In Jordan v. Sprint Nextel Corp. , 2006-SOX-41 (ALJ Mar. 14, 2006), the ALJ denied the Respondent's motion for summary decision, which had been based on the theory that the Complainant could not prove any set of facts that would entitle him to relief without recourse to confidential and privileged information and communications resulting from his position as an attorney for the Respondent. Rather, the ALJ found that the Complainant was not precluded from relying on statements or documents covered by the attorney-client privilege in pursuit of his SOX claim. However, the ALJ admonished the Complainant "to take care not to disclose such information beyond that reasonably necessary to establish his claim" and ruled that "at least at this juncture, the parties' pleadings filed in this case must remain sealed." Slip op. at 14. Finally, the ALJ granted the Respondent's motion to certify the issue to the ARB for interlocutory review.
Complaint and Investigatory Materials
DISTRICT COURT FOUND THAT NEITHER SOX NOR OSHA GUIIDELINES PROHIBIT DISCLOSURE OF A WHISTLEBLOWER COMPLAINT AND INFORMATION REGARDING INVESTIGATION OF THE ALLEGATIONS OF THAT COMPLAINT
In Haley v. Merial, Ltd , No. 4:09-CV-94 (N.D.Miss. July 7, 2010), the District Court had previously granted plaintiffs' motion to expedite discovery responses having determined that the plaintiffs' should be allowed to conduct limited written discovery related to their motion for preliminary injunction that was pending before the Court. Before the Court was the plaintiffs' motion to compel discovery responses related to the investigation of an OSHA whistleblower complaint. The defendants' objected to the request primarily arguing that SOX and OSHA guidelines prohibit full disclosure of the requested whistleblower complaint and information regarding investigation of the allegations of that complaint. The defendants further argued that there were policy reasons behind maintaining the confidentiality of whistleblowers that supports nondisclosure of the information and that they would be prejudiced in the OSHA investigation by such interference. The Court found the defendants arguments to be unconvincing reasoning that the defendants failed to point to any authority supporting their claim that SOX prohibits disclosure and "very weak" authority in support of their claim that OSHA guidelines prohibit disclosure. The Court found it to be quite apparent that the OSHA guidelines upon which the defendants relied were designated to ensure that the agency itself complies with the Privacy Act and Freedom of Information Act during its investigation of a whistleblower complaint. With regards to the policy argument, OSHA's guidelines provide that the respondent's copy of the whistleblower complaint may contain redactions of "personal, identifiable information" about third parties.
Discovery
DISCOVERY RULING COMPELING PARTIES TO CONFER REGARDING DISCRETE SEARCH TERMS FOR ESI AND "CONFIDENTIAL" DESIGNATION ON DOCUMENTS
In Trusz v. UBS Realty Investors LLC , No. 3:09 CV 268 (D.Conn Sept. 7, 2010), the plaintiff filed a motion to compel the production of electronically stored information alleging that the defendant's production of over 4 million pages of documents in response to the discovery order was a "document dump." The Court found that the issues raised in the motion largely could have been eliminated had counsel actually conferred with each other about refining search terms. The Court ordered the parties to have an in-person conference "in order to ascertain if there are more discrete search terms, or combinations of search terms, that can applied by defendant, so that the volume of documents produced are substantially less that 1.8 million, with the expectation that as a result, a significantly higher percent of the documents captures by the searches will be relevant." Trusz at 5. Due to the sheer volume of documents, the Court also ordered counsel for the respective parties "to confer further regarding what is the most efficient manner, in terms of costs and time, to review the four million pages produced by defendants to remove the confidential designation." Id . at 9. In the absence of any agreement, the Court ordered the matters to be addressed by a Special Master.
Judicial Restraint in Drafting Decision
ADMINISTRATIVE LAW JUDGE DECISIONS
CONFIDENTIALITY; JUDICIAL RESTRAINT IN DRAFTING OF DECISION TO AVOID UNNECESSARY DETAIL, EVEN THOUGH PARTIES HAD FAILED TO PROVIDE GROUNDS FOR FORMAL PROTECTIVE ORDER
In Bechtel v. Competitive Technologies, Inc. , 2005-SOX-33 (ALJ Oct. 5, 2005), the parties had filed a pre-hearing joint motion for protective order that applied to many of the parties' documents. The ALJ declined to consider issuance of this order as the parties had failed to explain the need for such action in conformance with the Rules of Practice and Procedure before OALJ, 29 C.F.R. § 18.15, and had declined the ALJ's invitation to file a conforming motion. At the hearing, the ALJ advised the parties that she would consider each document individually on motion to determine whether a protective order was appropriate. Neither party, however, sought a protective order for any exhibit on any grounds during the course of the hearing. In drafting the decision, however, in deference to the joint motion of the parties, the ALJ refrained from including a description of each exhibit.
[Editor's note: In addition to refraining from describing each exhibit, the ALJ appears when quoting some testimony to have omitted certain information that did not impact on disposition of the issues before the ALJ.]
Protective Order
FEDERAL COURT DECISIONS
PROTECTIVE ORDER; NO WAIVER OF ATTORNEY CLIENT PRIVILEGE AND WORK PRODUCT DOCTRINE UNDER SOX
In Robinson v. Morgan Stanley , No. 06-C-5158 (N.D.Ill Mar. 17, 2011), the District Court granted the defendant's motion for a protective order finding that the communications at issue in the discovery dispute were created in preparation of litigation and, therefore, protected under the work product doctrine and attorney client privilege. The court reasoned that this discovery dispute was governed by Upjohn Co. v. United States , 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed2d 584 (1981) because: (1) there were questions as to the legality of certain activities raised by an auditor, the plaintiff; (2) the company, through its legal department, and along with an outside counsel firm, undertook an investigation into the plaintiff's SOX complaint that included interviews with employees; (3) all the communications were intended to be and were kept confidential; and (4) the memo at issue in the discovery dispute was produced at the request of corporate counsel and was clearly designed to allow the attorneys to provide the company with informed legal advice on the subject of the plaintiff's charges.
The court found that the plaintiff failed to provide any insights as to how the circumstances in this case deviate from those in Upjohn , which would prevent it from governing disposition in this case. The court also found that there was no waiver in privilege when the defendants provided a summary of their investigation to plaintiff nor when the defendant's submitted the summary as an exhibit to one of their filing. The court found that these disclosures were nothing more than disclosure of the fact that an investigation was conducted overseen by counsel and that counsel's conclusion was that the plaintiff's charges were unfounded. The Court stated that the summary of the investigation did not reveal the substance of the underlying communications or analysis and thus did not constitute a waiver.
PROTECTIVE ORDER; POLICY OF PROTECTING IDENTITY OF WHISTLEBLOWERS BALANCED AGAINST POLICY OF PERMITTING ROBUST DISCOVERY
In In re Initial Public Offering Securities Litigation , 220 F.R.D. 30 (S.D. N.Y. 2003), the Plaintiffs alleged securities fraud in connection with certain technology stocks that went public in the late 1990s. The Plaintiffs' counsel relied in framing the complaint on information provided by certain unnamed investors who were allegedly required to enter into tie-in agreements and to pay undisclosed compensation to the Defendant investment banks. The Defendants sought in discovery the identity of those investors. The Plaintiffs argued that this information was protected by attorney work product doctrine or by a public policy protecting whistleblowers. The court rejected the work product argument. The public policy argument was grounded in the argument that retaliation would be a concern if the Plaintiffs sources were revealed -- the Plaintiffs pointing to the SOX whistleblower protection provision as evidence of a trend in favor of protecting corporate whistleblowers, and to a Second Circuit decision holding that securities fraud pleading need not reveal the identity of confidential source, Novak v. Kasks , 216 F.3d 300. The court, however, held:
The issue here does not raise the policy concerns addressed in the Sarbanes-Oxley legislation or the Novak rule, both of which encourage whistle-blowers to expose corporate wrongdoing by protecting them from retaliation. Once litigation is pending, the balance of interests changes. While it is important to protect whistle-blowers, it is also important, once the whistle is blown, to allow all parties an equal opportunity to engage in the robust discovery permitted by the Federal Rules.
The court found that there was no evidence presented establishing that the investors would be subjected to retaliation -- stereotyped and conclusory statements being insufficient to support a finding of good cause to issue a protective order. The court also took into consideration that the potential witnesses had information regarding the central allegations of the case, that the cases raised issues of great import to the public, and that the Defendants had significant interests at stake in the litigation -- both monetary and in regard to the ways securities are underwritten. The court therefore denied the issuance of a protective order, subject to the parties' prior agreement to treat the identity of the customers as confidential.
ADMINISTRATIVE LAW JUDGE DECISIONS
PROTECTIVE ORDER; PERMITTING RESPONDENT TIME TO REVIEW TRANSCRIPT TO FILE DESIGNATION OF CONFIDENTIAL TESTIMONY
In Smith v. Hewlett Packard Co. , 2005-SOX-88 to 92 (ALJ Sept. 28, 2005), the ALJ granted a protective order providing several weeks for the Respondent to review the transcript and designate which portions were confidential and subject to restricted access.
CONFIDENTIALTY; PROTECTIVE ORDER; SPECIFICATION OF EXHIBITS AND TRANSCRIPT LINES TO WHICH THE ORDER APPLIES; NOTICE THAT FOIA APPLIES TO COURT RECORDS
In Williams-Wilson v. NDC Health Corp. , 2005-SOX-97 (ALJ Jan. 31, 2007), the ALJ issued a protective order to protect the confidentiality of particular information related to the Respondent's business practices, financial information, customer and vendor information, wage and salary data, and sales data. The protective order also related to the Complainant's financial information, medical information and other sensitive personal and private information. In the Decision and Order, the ALJ specifically listed which exhibits and which lines of the transcript were covered by the protective order, and reminded the parties that the protective order did not extend to court records and the application of FOIA to those records.
PROTECTIVE ORDER; SEALING PLEADING AND FILINGS POTENTIALLY COVERED BY ATTORNEY-CLIENT PRIVILEGE DURING INTERLOCUTORY APPEAL
In Jordan v. Sprint Nextel Corp. , 2006-SOX-41 (ALJ Mar. 14, 2006), the ALJ granted the Employer's request to certify to the ARB the issue of whether the Complainant was precluded from relying on statements or documents covered by attorney-client privilege in pursuit of his SOX claim. The ALJ had ruled that the Complainant could use such information in prosecuting his SOX case. The ALJ had previously issued a protective order sealing the pleadings and other filings of the parties. The ALJ extended the protective order until such time that the Board ruled on the interlocutory appeal. The ALJ ruled that if the ARB affirmed his ruling, the Respondent would be required to specifically identify statements, documents and/or portions of documents regarding which it asserts are protected by attorney-client privilege. The ALJ noted, however, that if the ARB disagreed with his ruling, the Complainant would be unable to prove his case and the Respondent's reliance on the privilege would be vindicated.
CONFIDENTIALITY OF COMMERCIAL INFORMATION; PROTECTIVE ORDER TO ADDRESS POTENTIAL FOR COMPETITIVE HARM
In McClendon v. Hewlett Packard, Inc. , 2006-SOX-29 (ALJ Oct. 5, 2006), the ALJ granted Respondent's motion for restricted access to the record. Respondent sought to ensure confidentiality of commercial information, stating that disclosure of such materials, while necessary for its defense, may have caused it competitive harm. The ALJ, by way of a protective order, restricted access to any portion of the record marked as confidential. McClendon , slip op. at 4.
PROTECTIVE ORDER; SALARIES AND COMPENSATION OF INDIVIDUAL EMPLOYEES; PERFORMANCE EVALUATIONS OF INDIVIDUAL EMPLOYEES; COMPENSATION POLICIES AND PROCEDURES
In Cantwell v. Northrop Grumman Corp . , 2004-SOX-75 (ALJ Feb. 9, 2005), the Respondent moved for a protective order relating to several categories of information being sought in discovery. The ALJ's order contains a summary of relevant regulatory and caselaw precedent regarding when a DOL ALJ may grant a protective order. In regard to the instant case, the ALJ granted a protective order in regard to (1) the specific salary amounts for individual employees under their compensation and incentive compensation plans (at least for the discovery and pretrial stages) and (2) the performance reviews of individual employees. The ALJ denied a protective order in regard to compensation policies and procedures. The Respondent also sought protection for information related to performance review detailing targets, goals and or strategies. The ALJ accepted that protection of marketing and development plans and strategies was a valid consideration, but rejected secrecy for existing revenues, which are reported.
PROTECTIVE ORDER; MERE FACT THAT COMPLAINANT WORKS FOR A COMPETITOR DOES NOT SUPPORT PROTECTIVE ORDER MOTION WHERE NO EVIDENCE OF ABUSE
In Cantwell v. Northrop Grumman Corp . , 2004-SOX-75 (ALJ Feb. 9, 2005), the ALJ rejected the Respondent's contention in support of its motion for a protective order that the Complainant was working for a competitor and therefore could use confidential information obtained in discovery to compete against them. The ALJ found that there were no facts before her supporting an inference that the Complainant had brought the case for commercial gain or that she had abused the discovery process. Nor had the Complainant or her counsel exhibited any behavior that compromises their ethical duty under the rules of discovery. The ALJ, however, granted the protective order for several categories of information on other grounds.
PROTECTIVE ORDER; SCOPE; NOTICE OF POTENTIAL DISCLOSURE OF PUBLIC RECORDS
In Cantwell v. Northrop Grumman Corp . , 2004-SOX-75 (ALJ Feb. 9, 2005), the ALJ granted a protective order in regard to several categories of information. The ALJ, however, clarified that the protective order was limited in scope: it only applied to the discovery and prehearing phases of the litigation and it did not limit the Complainant from using the information in litigating the claim. The ALJ observed that the Respondent could request confidentiality when such evidence is offered and that certain information could be redacted when feasible. The ALJ warned that confidential information may become part of the public record through the issuance of a decision, pretrial order and trial testimony, although the Respondent may request predisclosure notification pursuant to DOL's FOIA Exemption 4 regulations at 29 C.F.R. § 70.26.
PROTECTIVE ORDER; OALJ RULES INCORPORATE FRCP 26(c) WHICH REQUIRES A CERTIFICATION OF GOOD FAITH EFFORT TO RESOLVE DISPUTE AND GOOD CAUSE; FOIA EXEMPTION 4 REGULATION; BURDEN CANNOT BE IMPOSED ON THE COURT TO IDENTIFY CONFIDENTIAL RECORDS
In Grove v. EMC Corp. , 2006-SOX-99 (ALJ July 27, 2006), the ALJ denied the Respondent's motion for a protective order barring the Complainant from disclosing, either by posting on the Internet or by any other means, confidential information including, but not limited to, any documents filed by the Respondent in the matter before the ALJ and any files containing recordings of telephone conversations between the Complainant and the Respondent's employees. The ALJ noted that the OALJ rule of practice at 29 C.F.R. § 18.15(a) governs protective orders, and that a trial court has broad discretion regarding whether to issue protective orders. The ALJ also noted that the ARB had ruled in USDOL v. HCA Medical Center Hospital, Largo, Florida , ARB No. 97-131, ALJ No. 1994-ARN-1 (ARB June 30, 199), that section 18.15(a) incorporates FRCP 26(c), which requires that a party moving for a protective order certify that it has made a good faith effort to resolve the dispute and that it has good cause for securing the protective order. Because the Respondent had not made a certification that it had attempted to resolve disclosure issues with the Complainant before resorting to the ALJ for relief, the ALJ denied its motion. The ALJ observed additional problems should the Respondent later renew its motion. First, in regard to the showing of good cause, the ALJ noted that the Respondent had alleged that all of the documents submitted to DOL during the investigation and in support of a motion for summary decision were confidential. The ALJ wrote:
However, the motion is not supported by affidavits from company officials or other evidence that identifies either the specific confidential or proprietary information contained in the documents or the harm that EMC would suffer if disclosure is not prohibited. Additionally, it does not appear than EMC, in submitting documents along with its summary decision motion, availed itself of the protection afforded by 29 C.F.R. § 70.26 which allows a party to request that records be designated for non-disclosure as containing confidential commercial information. EMC's motion for summary decision contains dozens of exhibits, many of which are e-mail and letter correspondence that do not appear to contain obvious confidential or proprietary information. It is not an appropriate function for the court to shift through these records in the absence of a properly supported motion and attempt to identify which, if any, contain sensitive information. That burden falls squarely on EMC as the moving party. Since EMC has not supported its motion by a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements, its motion must be denied.
Slip op. at 4. Finally, the ALJ observed that the comprehensive scope of the Respondent's requested protection, which would preclude the Complainant from publicizing any information about the matter on the Internet, potentially raised First Amendment issues not addressed in the Respondent's motion. The ALJ cited several federal district court decisions noting the heavy burden on a movant seeking a prior restraint on publication on a website).
Publication of Decision
ADMINISTRATIVE LAW JUDGE DECISIONS
CONFIDENTIALITY; PUBLICATION OF DECISION AND ORDER; MOTION TO SEAL
In Smith v. Hewlett Packard Co. , 2005-SOX-88 to 92 (ALJ Feb. 21, 2006), the ALJ issued a Decision and Order, which was posted on the OALJ web site. The Complainant had alleged that he was terminated in retaliation for his attempt to remedy alleged race discrimination within the company. About one week later, on a Friday, the Respondent filed a motion to seal the decision on the ground that it discussed elements of an adverse impact report that should be protected by attorney-client privilege. The following Monday, excerpts of the decision were circulated in a newsletter, the "Daily Labor Report." The Complainant filed an opposition to the motion to seal. The ALJ acknowledged that some non-binding authority provides that adverse impact reports are protected by the attorney-client privilege where they were prepared at the request of counsel for the purpose of rendering legal advice, but found that such authority did not apply to the facts of the instant proceeding. Moreover, the ALJ found that there had been no forced disclosure of the report in the proceedings before him. The report was not offered as an exhibit and was never subjected to an in camera review. The Decision and Order only mirrored the facts of the report as found in the hearing transcripts. Moreover, during the hearing the ALJ had not found that the conversation in which the Complainant had learned of the report was protected by attorney-client privilege. Although an attorney was present at the meeting in which the report was discussed, the meeting had not been called to speak with the attorney, but with the HR staff. The ALJ stated that the Respondent could not claim privilege merely because an attorney attended. The ALJ also weighed the public interest in assessing the Decision and Order, and observed that it had made only vague reference to the report, and concluded that the reference was no more damaging than the fact that a former employee had filed a claim alleging retaliation, and that in some respects the references to the report cast the Respondent in a favorable light. The ALJ concluded that the public's right to know the content of the proceeding outweighed any damage to the Respondent. Finally, the ALJ observed that because the decision had already been published and circulated, "the cat was already out of the bag." Slip op. at 3.
COMMERCIAL INFORMATION; REDACTIONS IN PUBLISHED DECISION
In McClendon v. Hewlett Packard , 2006-SOX-29 (ALJ Oct. 5, 2006), the ALJ had earlier granted the Respondent's unopposed motion for a protective order to ensure confidentiality of commercial information in the record. The Respondent had stated that disclosure of the confidential materials may cause competitive harm but that such information was necessary for its defense in the case. The Respondent filed a declaration of a senior vice-president in support of its motion. The parties later stipulated that once a decision was issued, they would confer and file requests that any confidential portions of the decision be redacted from publication. Consistent with that agreement , the published decision contains redactions under FOIA Exemption 4.
Public Hearing
SOX PROCEEDINGS ARE NOT SECRET
In Nunnally v. XO Communications , No. 07-1323 (W.D.Wa. Jan. 15, 2009), the Plaintiff sued her former employer claiming constructive discharge in violation of public policy under Washington state law. The Defendant argued that, because the Plaintiff could have pursued the claim under SOX, she could not meet the "jeopardy" element of the state public policy law. The court noted that the Plaintiff had filed a SOX complaint alleging many of the same acts that formed the basis of the state complaint, that OSHA had investigated and denied the complaint, and that an appeal had not been taken of this determination. The court found that the Plaintiff failed to take full advantage of the SOX protections, and was not entitled to a second bite at the apple. The court was not persuaded by the Plaintiff's argument that the state law claim sought damages not available under SOX; this did not explain why the available administrative procedure was inadequate for promoting the policy of supporting whistleblowing on the subject of financial improprieties or dishonesty by publicly traded companies. Neither was the court persuaded by the Plaintiff's other arguments as to why the SOX procedure was inadequate to promote the public policy, and specifically rejected the Plaintiff's claim that SOX proceedings are secret: "Proceedings initiated pursuant to the whistle-blower provisions of Sarbanes-Oxley are not secret. Ms. Nunnally has not cited to any statute or regulation that indicates that proceedings before the administrative law judge or the Ninth Circuit would be kept secret." Slip op. at 21.
Pseudonyms
ADMINISTRATIVE REVIEW BOARD DECISIONS
MOTION TO PROCEED ANONYMOUSLY USING PSEUDONYMS
In Jordan v. Sprint Nextel Corp. , ARB No. 06-105, ALJ No. 2006-SOX-41 (ARB June 19, 2008), the ALJ had certified an attorney-client privilege issue for interlocutory review, which the ARB accepted. One of the issues on appeal was whether the ALJ had properly denied the Respondent's motion for a protective order for the parties to proceed anonymously using pseudonyms. The ARB reviewed the applicable law, and the ALJ's findings, and concluded that the Respondent had failed to demonstrate that the case fell within the exception to the general rule that parties to litigation must identify themselves. The ARB recognized that public interest was a factor in determining whether some form of anonymity is warranted in a judicial proceeding, and that SOX served the public interest of protecting investors and building confidence in U.S. securities markets. Thus, the public interest factor in SOX cases is significant. Moreover, the ARB agreed with the ALJ that the Respondent had not explained how disclosure of the parties' names could result in a violation of the attorney-client privilege. The ARB also found the ALJ's analysis of the factors for determining a motion to proceed anonymously to be well-reasoned and cogent - and in particular that the names of the parties were already a matter of public record on the OALJ web site, and that the Respondent had not made any attempt to protect its identity in the investigatory proceedings before OSHA or when the Complainant initially filed his request for a hearing. The ARB also noted the ALJ's observation that "that the fact that Sprint might be embarrassed by the fact that one of its former attorneys sued it under the SOX does not justify anonymity, given the countervailing factors such as the public interest." USDOL/OALJ Reporter at 11 (footnote omitted).
ADMINISTRATIVE LAW JUDGE DECISIONS
CONFIDENTIALITY; WHETHER USE OF PSEUDONYMS IS WARRANTED TO PROTECT DISCLOSURE OF DISPUTE CONCERNING PRIVILEGED COMMUNICATIONS
In Jordan v. Sprint Nextel Corp. , 2006-SOX-41 (ALJ Jan. 27, 2006), the ALJ denied the Respondent's motion to proceed with the use of pseudonyms. The Respondent's motion was grounded on the proposition that courts had determined that "use of pseudonyms, in addition to sealing proceedings, is necessary to protect the privileged information of clients when their former lawyer brings suit against them, since the very fact of an attorney's suit against his client may indicate the existence of a dispute regarding privileged communications." Slip op. at 3, quoting Respondent's motion. The ALJ analyzed the motion under the factors cited by the court in Femedeer v. Haun , 227 F.3d 1244 (10th Cir. 2000), for determining whether "exceptional circumstances" warrant the use of pseudonyms. First, the ALJ noted that the names were already a matter of public record - that there was no evidence that any steps had been taken to keep the names hidden during the OSHA proceedings, and that upon docketing by OALJ, the names became publicly available on the OALJ website to anyone searching the docket by year, type of case or party name. Second, Sprint's possible embarrassment that one of its former attorneys was suing it for wrongful discharge is not enough to justify use of pseudonyms. Nor had the Respondent shown how disclosure of the parties' names by itself would somehow violate the attorney-client privilege, the ALJ noting that "neither the fact than an attorney-client relationship exists, nor the identity of the client, is typically covered by the attorney-client privilege." Slip op. at 5-6.
Sealing the Record
ADMINISTRATIVE REVIEW BOARD DECISIONS
MOTION TO SEAL RECORD BASED ON ATTORNEY-CLIENT PRIVILEGE
In Koeck v. General Electric Consumer and Industrial , ARB No. 08-068, ALJ No. 2007-SOX-73 (ARB Aug. 28, 2008), the Complainant removed her SOX case to federal court, and the Respondent filed a motion with the ARB seeking to have the administrative record placed under seal, apparently on the ground that it contained privileged attorney-client communications. The ARB rejected the Complainant's argument that it did not have the authority to rule on the motion once the case was removed to federal court, finding that the federal action was de novo, that the administrative record was still in its custody, and that the administrative record was not part of the case pending before the federal district court. Nonetheless, the ARB held that
The Board and the Secretary of Labor have routinely held that that there is no authority permitting the sealing of a record in a whistleblower case because the case file is a government record subject to disclosure pursuant to the Freedom of Information Act, unless the record qualifies for an exemption to such disclosure. Moreover, the Board cannot guarantee confidentiality before it has received a FOIA request to release a document because an agency "'promise of confidentiality [cannot] in and of itself defeat the right of disclosure.'"
USDOL/OALJ Reporter at 3 (footnotes omitted). The Respondent urged the ARB to nonetheless depart from that authority arguing that "although OSHA permits attorneys to rely upon evidence subject to the attorney-client privilege to support their whistleblower complaints against their employers, 'a careful balancing of interests is necessary when such disclosures are made.'" The ARB found, however, that FOIA exemptions are exclusive, and that it was not free to create an exclusion from FOIA for the attorney-client privileged information included in this case record, no matter how compelling the ARB might find the policy arguments for protection. Rather, only once a FOIA request was actually made could a determination be made whether a statutory FOIA exemption applies. The ARB noted that the DOL has FOIA regulations stating how to designate certain information for predisclosure notification.
MOTION TO SEAL THE RECORD BASED ON ATTORNEY-CLIENT PRIVILEGE
In Jordan v. Sprint Nextel Corp. , ARB No. 06-105, ALJ No. 2006-SOX-41 (ARB June 19, 2008), the ALJ had certified an attorney-client privilege issue for interlocutory review, which the ARB accepted. The ALJ had denied the Respondent's motion that all pleadings, evidence and orders be sealed and all hearings be closed the public, but temporarily sealed the Respondent's motion for a protective order, the Complainant's original complaint, and the Secretary's findings. On appeal, the Respondent moved the ARB to seal the record of the proceedings before it. The ARB found that the Respondent had failed to address ARB precredent that records in whistleblower cases are subject to FOIA, and that even if it was willing to reconsider that precedent, it agreed with the ALJ's well-reasoned denial of the Respondent's motion. The ALJ applied 10th Circuit precedent to the effect that blanket claims that a record must be sealed based on attorney-client privilege are not acceptable - the party making the assertion bears the burden of proving its applicability to specific questions or documents. The ALJ also found that there had already been numerous disclosures of purportedly privileged information when the case was before OSHA. Moreover, the ALJ found that the Complainant and the Respondent did not only have an attorney-client relationship, but also an employee-employer relationship, and that certain communications would not be privileged. Moreover, the ALJ noted that attorney-client privilege applies only to the substance of the communications and not the facts and circumstances surrounding those communications. The ARB, however, provided leave to the Respondent to identify specific statements or documents to which the privilege allegedly applies. If the Respondent did so, the ARB would consider whether it would appropriate to redact certain portions of the record.
ADMINISTRATIVE LAW JUDGE DECISIONS
SEALING OF RECORD; AGREEMENT OF PARTIES ALONE IS INSUFFICIENT; PUBLIC HAS A RIGHT TO ACCESS; FILING OF REDACTED DOCUMENTS FOR PUBLIC FILE
In Newport v. Calpine Corp. , 2007-ERA-7 (ALJ Feb. 12, 2008) -- an ERA whistleblower case -- the ALJ denied the parties' motion for entry of stipulated protective order where it not only covered discovery disclosures, but also materials submitted into the administrative record, such as materials submitted with a dispositive motion, trial evidence, and portions of the trial transcript, and where the proposed order failed to make the showings requisite to permit the sealing of materials in an ALJ hearing or to provide for the submission of redacted documents for the public file.
The ALJ stated the general rule as follows: "[M]aterial a party receives in discovery, and discovery deposition transcripts may be treated as confidential until they become proof offered into the adjudicatory record. Thereafter common law traditions of access to adjudicatory proceedings and the First Amendment complicate matters, as do the Administrative Procedure Act and FOIA."
The ALJ then reviewed the provisions of the APA, FOIA, the First Amendment, the common law relating to public access to court records, and the OALJ rules of practice, and found that litigants are not entitled to a sealing of information merely because the litigation opponent does not challenge a motion for such. Rather, there is a public right of access to materials filed, and the proceedings in, an administrative adjudication.
The ALJ described the procedure parties must follow when seeking to file a document under seal. They must, for example, "specify the type of confidential data the document includes, and for briefs or memoranda (as opposed to evidence), why it was necessary and relevant to include confidential information in the argument at all. A redacted copy must be filed in the public record. If a sealed filing is permitted, both the redacted and unredacted documents shall be retained as part of the adjudicatory record. Each page of the public copy shall be redacted to the least extent necessary to protect the type of confidentiality involved." The ALJ granted the parties the opportunity to amend their proposed order.
CONFIDENTIALITY; MOTION TO SEAL THE RECORD BASED ON ATTORNEY-CLIENT PRIVILEGE
In Jordan v. Sprint Nextel Corp. , 2006-SOX-41 (ALJ Jan. 27, 2006), the Respondent filed a motion to seal the record because the Complainant was an attorney who sought to disclose client confidences in support of his SOX complaint, and the Respondent would "be irremediably harmed by the breach of privilege and confidentiality" if the proceeding was open to the public. The ALJ reviewed the law concerning invocation and application of attorney-client privilege, and questioned whether it was applicable in the instant case to support sealing the entire record. First, the ALJ acknowledged that while there were undoubtedly many privileged communications involving the Complainant during his tenure with the Respondent, a blanket assertion of the privilege did not appear to be warranted based on the record before the ALJ. Second, the ALJ found that there may have already been numerous disclosures of purportedly privileged information while the case was before OSHA; the ALJ, however, refrained from ruling on the Respondent's motion because he did not have before him a complete record of what transpired before OSHA. Finally, the ALJ expressed his skepticism that the privilege would apply to matters involving the Complainant's employment with the Respondent (such as place of employment, work schedule, salary, performance rating, authorization to work at home, etc.). Similarly, the attorney-client privilege applies to the communications , but not the facts and circumstances surrounding those communications (such as dates, times, and places of meetings, the names of individuals whose participated, or the subject of the communications). The ALJ denied the motion for a protective order; however, he temporarily sealed the complaint and the Secretary's findings and ordered the Respondent to file a supplemental brief identifying specific statements and or documents that it contends are covered by the attorney-client privilege.
CONFIDENTIALITY; DESIGNATION OF DOCUMENTS AS COVERED BY FOIA EXEMPTION 4
In Walton v. NOVA Information Systems , 2005-SOX-107 (ALJ Oct. 27, 2005), the Respondent, whose business activities included credit card processing, filed a letter with the presiding ALJ designating several documents filed by the Complainant, including the complaint, as confidential commercial or financial information protected by FOIA Exemption 4, 5 U.S.C. § 552(b)(4), and the DOL regulations at 29 C.F.R. § 70.26. In support, the Respondent averred that information contained in those documents could be useful to a third party seeking to breach the Respondent's security or to use the information for improper purposes. The ALJ noted that no objection was filed to the designation, and that no request for inspection of the OALJ record had been received. The ALJ therefore ordered that the documents identified by the Respondent be placed under seal and designed as confidential commercial information. The ALJ stated that before any such information is disclosed pursuant to a FOIA request or otherwise, DOL will notify the Respondent to permit it to file any objection to disclosure pursuant to 29 C.F.R. § 70.26.
SEALING THE RECORD; BURDEN ON MOVANT; PUBLIC INTEREST
In Thomas v. Pulte Homes, Inc. , 2005-SOX-9 (ALJ Aug. 9, 2005), the Complainant moved to withdraw objections to the OSHA findings after it became clear that she would loose on the issue of the timeliness of the complaint. The Complainant requested that the record be sealed. The ALJ noted that a request for the record to be sealed may be made by requesting a protective order pursuant to 29 C.F.R. §§18.15 and 18.46 or requesting a designation of confidential commercial information pursuant to 29 C.F.R. §70.26.
In regard to the motion for a protective order, the ALJ noted that the movant has the burden of showing good cause by demonstrating a particular need for protection "with specificity" and that the fact that the motion is unopposed is not determinative as the public's need for disclosure may also be involved. The ALJ wrote: "As the whistleblower provision in the Sarbanes-Oxley Act is involved, there is a public interest in the protection of investors, employees, and members of the public by improving the accuracy and reliability of financial disclosures by publicly traded corporations. See generally S. Rep. No. 107-146, 2002 WL 863249 (May 6, 2002)." Slip op. at 2 (footnote omitted).
In the instant case, the ALJ found that the Complainant had failed to identify "a privacy interest or potential harm or embarrassment that could result from disclosure of the record in this case, and Complainant has not referenced any privileged, sensitive, or classified information that is contained in the record."
Similarly, the ALJ found that the Complainant had failed to provide a rationale for the record being designated as containing confidential commercial information under 29 C.F.R. §70.26.
SEALING THE RECORD; MOVANT MUST IDENTIFY FACTS SUPPORTING NEED FOR CONFIDENTIALITY
In Thomas v. Pulte Homes, Inc. , 2005-SOX-9 (ALJ Aug. 9, 2005), the Complainant withdrew her objections to the OSHA determination, admitting that her complaint was not timely filed. The Complainant also requested that the entire record be sealed, but did not support her motion with any supporting information or citation of authority. The ALJ reviewed DOL regulations and caselaw, and determined that without an identification of a privacy interest or potential harm or embarrassment that could result from disclosure of the record, or any privileged, sensitive or classified information contained in the record, the Complainant had not established a need for confidentiality. The fact that the motion was unopposed was not dispositive because of the public interest in SOX whistleblower cases. The ALJ also found that the Complainant had not stated a rationale for treating the record as confidential commercial information under the FOIA regulation at 29 C.F.R. § 70.26.
Striking Privileged Information
COMPLAINT; STRIKING OF INFORMATION CONTAINING PRIVILEGED ATORNEY-CLIENT COMMUNICATIONS
In McClendon v. Hewlett-Packard Co. , 2004 WL 1421395 (D.Idaho June 9, 2005), the district court struck those portions of the Plaintiff's complaint which contained privileged attorney-client communications where the Plaintiff did not have the authority to waive the evidentiary privilege, which could be waived only by the Defendant's management. The court required the Plaintiff to prepare an amended complaint and attempt to reach an agreement with the Defendant regarding the substance of the amended complaint. The court also granted a protective order to prevent further distribution of the Defendant's privileged and proprietary information.
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