Atlas Capital Management LP v. Fisker et al

Filing 243

MEMORANDUM ORDER granting in part and denying in part 147 MOTION to Quash MOTION for Protective Order filed by United States/USAO, granting in part and denying in part 122 MOTION to Compel Discovery From The United States Department O f Energy filed by 8888 Investments GmbH, 12BF Global Investments Ltd, Brian Smith, Southwell Partners, PEAK6 Opportunities Fund LLC, Kenneth & Kimberly Roebbelen Revocable Trust of 2001, John S. Lemak, CK Investments LLC, Sandor Ma ster Capital Fund, Atlas Allocation Fund LP, SAML Partners, Pinnacle Family Office Investments L.P., David W. Raisbeck, Dane Andreeff, Atlas Capital Management LP, Hunse Investments L.P., MCP Fisker LLC, ASC Fisker LLC. Signed by Judge Sue L. Robinson on 11/15/2016. (fms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

IN RE: FISKER AUTOMOTIVE HOLDINGS,
INC. SHAREHOLDER LITIGATION

) Civ. No. 13-2100-SLR
)

MEMORANDUM ORDER

At Wilmington this 151h day of November, 2016, having reviewed the papers
submitted in connection with the pending discovery motions, and having heard
argument on the same;
IT IS ORDERED that plaintiffs' motion to compel (D.I. 122) and the United States
Department of Energy's motion to quash and for a protective order (D.I. 147) are both
granted in part and denied in part, as described more fully below:
1. Standard of review. "The deliberative process privilege permits the
government to withhold documents containing 'confidential deliberations of law or
policymaking, reflecting opinions, recommendations or advice."' Red/and Soccer Club,
Inc. v. Department of Army, 55 F.3d 827, 853 (3d Cir. 1995) (citation omitted). The
privilege is intended to encourage "the frank exchange of ideas and opinions" within an
agency, in order to promote the "quality of administrative decisions." Id. at 854. "The
deliberative process privilege does not protect factual information, even if such
information is contained in an otherwise protectable document, as long as the
information is severable." Id. "The party seeking disclosure may overcome the claim of
privilege by showing a sufficient need for the material in the context of the facts or
nature of the case ... or by making a prima facie showing of misconduct."' Id. (citation

omitted).
2. The Third Circuit has explained that a district court must first "decide whether
the communications are in fact privileged," and then "must balance the parties'
interests" in light of "at least the following factors: '(i) the relevance of the evidence
sought to be protected; (ii) the availability of other evidence; (iii) the seriousness.of the
litigation and the issues involved; (iv) the role of the government in the litigation; [and]
(v) the possibility of future timidity by government employees who will be forced to
recognize that their secrets are violable."' Id.
3. Factual background. In late 2008, Fisker Automotive applied for financial
assistance under the United States Department of Energy's ("DOE") ATVM program to
produce luxury hybrid electric cars. On September 18, 2009, DOE issued a $528. 7
million Conditional Commitment Letter which allocated $169.3 million for Fisker
Automotive to complete its first vehicle, the Fisker Karma, and $359 million to complete
a low cost plug-in hybrid tentatively called the Fisker Nina ("ATVM Loan"). Included in
the ATVM Loan were confidential "milestones" that Fisker Automotive was required to
meet or be in default. One milestone was to commence commercial production of its
flagship Fisker Karma by February 2011.
4. In March 2011, Fisker Automotive officials made a confidential presentation to
DOE in which they said that the company had met the Karma production milestone. In
June 2011, however, DOE discovered that Fisker Automotive had in fact not met that
milestone. DOE immediately cut off Fisker Automotive from further draws on the ATVM
Loan. Notwithstanding the above decision, neither DOE nor Fisker Automotive told
anyone about this freeze or the basis for it. Indeed, on October 20, 2011, DOE issued

2

a press release regarding the status of the Fisker Automotive ATVM program:
Two years ago, critics said we shouldn't be investing in American
auto manufacturing because the industry wouldn't survive. They
were wrong then and they're wrong today. From well-established
names like Ford to innovative startups like Tesla and Fisker,
America's auto industry is being reinvented, and the Department's
loan program is helping play an important role ....
With the help of a $529 million loan, Fisker is producing high
performance vehicles with an advanced hybrid electric powertrain
that could significantly improve performance and fuel economy....
Fisker's production schedule was delayed by regulatory issues that
were outside of its control, but the company has successfully raised
more than $650 million in private sector investment to support its
ongoing operations since closing its DOE loan .....
(D.I. 24

~

70)

5. Analysis. Given the kind of documents at issue, I started this exercise with
an understanding that the DOE had appropriately asserted the deliberative process
privilege. I opted, however, to "perform a preliminary in camera review of the
documents in question before balancing the competing interests and exercising [my]
discretion," consistent with the Third Circuit's suggestion in Red/and Soccer Club, Inc.,
55 F.3d at 855. In so doing, I have identified several documents with severable facts
(albeit as described by DOE personnel). 1 More significantly, I have also identified
documents that relate to the facts misrepresented in DOE's October 2011 press
release. 2 I conclude that the latter group of documents are relevant and not likely to be

1

Documents at tabs 12 (pages 127-131 ); 19 (pages 0519-0521, 0536-0540); 20
(pages 0718-0721, 0735-0739, 0761-0764); 70 ("Prod. 04 - 004028); 71 (page 4 of
update briefing)
·

2

Documents at tabs 11 (pages 8-9); 55; 59; 62 (sections captioned "Key
Considerations" and "Detailed Recommendations"); 81 ("Prod 04-005284-87); 95; 111;
113;.146; 151; 155; 160(pages7, 9); 164; 165; 166; 167; 172(bottomofpage3).

3

.,

available from another source, and that the role of the government in this serious
litigation was pivotal. I understand that such disclosures may have a negative impact
on future DOE analyses, but conclude nonetheless that under the circumstances at bar
- the public money at stake, the Congressional hearings, and the fact that Fisker
AutoIT1otive is now a defunct company - the balance of interests favors plaintiffs.
.

'

·' 6. The documents identified in footnotes 1, and 2 shall be produced on or before
November 22, 2016. They shall remain under seal and for attorneys' eyes only until

further order of the court (unless. the parties to this dispute agree otherwise) .

. ·I

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