Natural Resources Defense Council et al v. Ameren Energy Resources Company LLC et al
Filing
175
OPINION entered by U.S. Magistrate Judge Tom Schanzle-Haskins. Plaintiffs' Motion to Compel Answers to Questions on IPRG's Consideration of Measures to Control Opacity or Particulate Matter Pollution from the Edwards Power Plant 171 is DENIED. See written order. (LB, ilcd)
E-FILED
Monday, 22 January, 2018 04:56:58 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
NATURAL RESOURCES
DEFENSE COUNCIL, INC.;
RESPIRATORY HEALTH
ASSOCIATION; AND
SIERRA CLUB, INC.,
Plaintiffs,
v.
ILLINOIS POWER
RESOURCES
GENERATING, LLC,
Defendant.
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No. 13-cv-1181
OPINION
TOM SCHANZLE-HASKINS, U.S. MAGISTRATE JUDGE:
This matter comes before the Court on Plaintiffs’ Motion to Compel
Answers to Questions on IPRG’s Consideration of Measures to Control
Opacity or Particulate Matter Pollution from the Edwards Power Plant (d/e
171) (Motion). Plaintiffs ask the Court to compel Defendant Illinois Power
Resources Generating, LLC (Illinois Power or IPRG) to answer certain
questions that were posed at the Rule 30(b)(6) deposition of Ted
Lindenbusch. For the reasons set forth below, the Motion is DENIED.
Page 1 of 17
BACKGROUND
The District Court found Illinois Power liable for violations of the
Clean Air Act because the smoke stack emissions from the Edwards Power
Plant (Plant) exceeded the limits on opacity caused by particulate material
(sometimes referred to as PM) in the emissions. Opinion and Order
entered August 23, 2016 (d/e 124), at 49. The matter is set for a trial on
remedies on March 4, 2019. Text Order entered December 14, 2017. The
parties are engaged in discovery for the remedy phase of the matter.
Plaintiffs noticed a Rule 30(b)(6) deposition of Illinois Power. The first
topic of inquiry for the deposition (Topic 1) was:
Steps considered, analyzed, or evaluated (and whether or not
those steps were taken or rejected) that would have the effect
of controlling or otherwise reducing opacity or [particulate
matter] emissions at the Facility, including, by way of example
repairs or other improvements to existing ESPs, installation of
new or supplemental ESPs (a/k/a/ helper ESPs), and/or
installation of a baghouse.
Motion, attached Declaration of Ian Fisher in Support of Motion to Compel
Answers to Questions of IPRG’s Consideration of Measures to Control
Opacity or Particulate Matter Pollution from the Edwards Power Plant
(Fisher Declaration) ¶ 4. The Edwards Plant used electrostatic precipitators
(ESPs) to remove particulate pollution from the smoke stack emissions
from the Edwards Plant. See Motion, at 4.
Page 2 of 17
Illinois Power designated Lindenbusch to be its representative to
testify regarding Topic 1. Lindenbusch has been manager of the Plant
since 2013. Plaintiffs’ counsel questioned Lindenbusch about efforts to
control particulates. As part of these inquiries, Plaintiffs’ counsel asked
about Illinois Power’s capital spending plans (Spending Plans) used in its
regular budgeting process. Plaintiffs asked about a Spending Plan
formulated in 2013 for 2014-2018, one formulated in 2014 for 2015-2019,
one formulated in 2015 for 2016-2020, and one formulated in 2016 for
2017-2021. Fisher Declaration, ¶ 3 and Exhibit A, see Transcript of Rule
30(b)(6) Deposition Ted Lindenbusch dated December 21, 2017 (filed
under seal d/e 173) (Deposition), at 179.
The 2016-2020 Spending Plan included a total of $2.3 million in
capital spending in 2017 and 2018 on upgrades to particulate pollution
controls on Unit 2 of the Edwards Plant and $8.9 million in upgrades to
particulate pollution controls on Unit 3 of the Edwards Plant, all to be
completed in 2017 and 2018. Fisher Declaration, ¶ 13.1 The $2.3 million
upgrade on Unit 2 included an estimate of $200,000 in removal costs.
Deposition, at 128, 135-36. The $8.9 million in upgrades on Unit 3 included
1
The $2.3 million in upgrades on Unit 2 were identified in the 2016-2020 planning budget as 53357EDWe Electrostatic Precip Upg,” and the $8.9 million in the 2016-2020 budget as 53356-ED 3
Electrostatic Pr SPID3149. Deposition, at 135-36; Fisher Declaration, Exhibit B, Illinois Power Five-Year
Capital Spending Planning Budgets (filed under seal d/e 173), at 5.
Page 3 of 17
$800,000.00 in removal costs. Id. The 2017-2021 Spending Plan included
a total of $1.1 million of spending in upgrades on Unit 2 and $4.00 for Unit
3. The $4.00 were four $1.00 entries that Lindenbusch described as
placeholder entries. Id. ¶ 18. He put the placeholder sums of $1.00 in
these line items to keep the budget lines in the planning budget for future
consideration. Deposition, at 190-93.
During the course of the Lindenbusch Rule 30(b)(6) deposition,
Lindenbusch refused to answer questions regarding line items that set forth
the $2.3 million and $8.9 million in the 2016-2020 spending plan and the
$1.1 million and $4.00 in 2017-2021 spending plan (Line Items). The
questions included whether the Line Items contemplated installation or
upgrades to various means to reduce particulate pollution and why the
plans changed. The questions asked about consideration of upgrades to
the existing ESPs, installation of additional ESPs, and about adding a
baghouse to the Plant. A baghouse is another means to limit particulate
pollution. See Motion, at 4. Lindenbusch refused to answer most of the
Plaintiffs’ questions regarding the Line Items. He and his counsel asserted
attorney-client and work product privileges. See e.g., Deposition, at 15354.
Page 4 of 17
The Plaintiffs asks the Court overrule Illinois Power’s claims of
privilege and order Illinois Power to provide written answers to the following
questions (Questions) that Lindenbusch refused to answer:
a.
“What about the option of moving a baghouse; what is
the last time that IPRG considered the option of moving a
baghouse to the Edwards plant?” Motion, Exhibit A
Transcript of Rule 30(b)(6) Deposition of Ted
Lindenbusch(Exhibit A), at 30:5-9. “When was that?” Id.
at 32:20.
b.
“When was that step, the complete rebuild of the units
two and three precipitators, last considered by IPRG?”
Id. at 35:13-15.
c.
“Has IPRG ever considered adding specific collection
area to any of the precipitators at the Edwards plant?” Id.
at 36:16-18.
d.
“Since . . . February 10th, 2015; has IPRG received any
proposals to install new equipment that could help to
reduce opacity or PM emissions at Edwards?” Id. at
60:13-17.
e.
[Referring to the $2.3 million and $8.9 million entries in
the Line Items] “And why did you come up with that
concept of the two-year project?” Id. at 135:1-2.
f.
[Referring to the $2.3 million and $8.9 million entries in
the Line Items]: “What accounts for the difference in the
figures for the unit two precipitator upgrade and the unit
three precipitator upgrade on this page of the exhibit?”
Id. at 136:3-6. “What other factors are you aware of?” Id.
at 137:1-2. “What other factors are you aware of besides
the one you just mentioned which is the different size of
the two units?” Id. at 137:8-10. “What would be different
about the scope?” Id. at 137:19-20.
Page 5 of 17
g.
[Referring to the $2.3 million and $8.9 million entries in
the Line Items]: “What kind of work needed to be done to
the unit two precipitator?” Id. at 138:14-15.
h.
“Going back to the numbers that you put into the 2016 to
2020 capital forecast. . . . How did you come up with
these figures? And we can go one unit at a time. So how
did you come up with a total of $2.3 million in capital
spending for 2017 through 2018 for the unit 2 ESP
upgrade?” Id. at 183:3-11. “What was that scope?” Id. at
183:24.
i.
[Referring to the $2.3 million and $8.9 million entries in
the Line Items]: “Why did the scope change?” Id. at
187:5. “How did the scope change?” Id. at 188:13.
j.
“Did the 2016 to 2020 capital forecast for 2017 capital
spending on the ESP unit 2 upgrade, did that include all
the same work that you just described that was done?”
Id. at 190:10-14.
k.
[Referring to the removal costs included in the $8.9
million for Unit 3 in the Line Items]: “So let’s back up to
the $800,000 figure. Same row under 2017 total removal.
What money does that include for work that was not
forecasted at the direction of counsel in anticipation of
this litigation?” Id. at 228:21-229:2.
l.
“Can you tell me anything more about the $200,000
figure for total removal costs in 2017 in the [Line Items
for the $2.3 million for Unit2].” Id. at 231:3-5.
Fisher Declaration, ¶ 22; Motion, at 13-14.
Counsel for Illinois Power stated that the answers to the questions
about the Line Items were privileged because counsel directed
Lindenbusch to put those numbers in the Line Items. Counsel stated that
Page 6 of 17
the reasons behind counsel’s decision to insert those numbers were
privileged attorney work product and attorney-client communications. See
e.g., Deposition, at 212-13. Counsel explained that the parties were
engaged in settlement negotiations from November 2015 to May 2016.
The $2.3 million and the $8.9 million were placed in the 2016-2020 budget
as placeholders in the event that settlement was reached. The numbers
were removed once the settlement talks ended without resolution of this
case. Illinois Power Resources Generating, LLC’s Response to Plaintiffs’
Motion to Compel Production of Attorney Work Product and Attorney-Client
Communications (d/e 174) (Response), attached Declaration of Francis X.
Lyons (Lyons Declaration), ¶ 6; Deposition, at 212-14, 218-31. The $2.3
million and the $8.9 million figures came from information that Illinois Power
attorneys directed Illinois Power upper management to obtain and develop
(Research). Illinois Power’s counsel wanted the Research to aid in
settlement negotiations and the remedy phase of the case. Outside
experts developed some of the Research. The experts were retained “for
the sole purpose of developing information to aid with the settlement
negotiations and remedy phase trial.” Lyons Declaration, ¶ 5. Illinois
Power asserts that the information underlying the Line Items is privileged
under both the attorney-client and work product privileges. Illinois Power
Page 7 of 17
also claims that the information provided by the outside consultants is not
discoverable pursuant to Federal Rule of Civil Procedure 26(b)(4)(D).
ANALYSIS
To establish the attorney-client privilege, Illinois Power must show
that the Questions seek (1) a confidential communication; (2) in connection
with the provision of legal services; (3) to an attorney; and (4) in the context
of an attorney-client relationship. United States v. BDO Seidman, LLP, 492
F.3d 806, 815 (7th Cir. 2007). The privilege only extends to “those
communications which ‘reflect the lawyer's thinking [or] are made for the
purpose of eliciting the lawyer's professional advice or other legal
assistance’ fall within the privilege.” Id. (quoting United States v. Frederick,
182 F.3d 496, 500 (7th Cir. 1999)). The privilege further “only protects
disclosure of communications; it does not protect disclosure of the
underlying facts by those who communicated with the attorney.” Upjohn
Co. v. United States, 449 U.S. 383, 395 (1981).
The work product privilege is set forth in Federal Rule of Civil
Procedure 26(b)(3):
(3) Trial Preparation: Materials.
(A) Documents and Tangible Things. Ordinarily, a party may
not discover documents and tangible things that are prepared in
anticipation of litigation or for trial by or for another party or its
representative (including the other party's attorney, consultant,
Page 8 of 17
surety, indemnitor, insurer, or agent). But, subject to Rule
26(b)(4), those materials may be discovered if:
(i) they are otherwise discoverable under Rule 26(b)(1);
and
(ii) the party shows that it has substantial need for the
materials to prepare its case and cannot, without undue
hardship, obtain their substantial equivalent by other
means.
(B) Protection Against Disclosure. If the court orders discovery
of those materials, it must protect against disclosure of the
mental impressions, conclusions, opinions, or legal theories of
a party's attorney or other representative concerning the
litigation.
(C) Previous Statement. Any party or other person may, on
request and without the required showing, obtain the person's
own previous statement about the action or its subject matter. If
the request is refused, the person may move for a court order,
and Rule 37(a)(5) applies to the award of expenses. A previous
statement is either:
(i) a written statement that the person has signed or
otherwise adopted or approved; or
(ii) a contemporaneous stenographic, mechanical,
electrical, or other recording--or a transcription of it--that
recites substantially verbatim the person's oral statement.
Fed. R. Civ. P. 26(b)(3). The work-product privilege “protects documents
prepared by attorneys in anticipation of litigation for the purpose of
analyzing and preparing a client’s case.” Sandra T.E. v. South Berwin
School District 100, 600 F.3d 612, 618 (7th Cir. 2010). The purpose of the
privilege is to “protect an attorney’s mental impressions and opinions
Page 9 of 17
against disclosure and to limit the circumstances in which attorneys may
piggy-back on the research and thinking of their more diligent adversaries.”
United States v. Dean Foods Co., 2010 WL 3980185, at *2 (E.D. Wis.
October 8, 2010). The Supreme Court explained when it adopted this
privilege, that “under ordinary circumstances, forcing an attorney to repeat
or write out all that witnesses have told him and to deliver the account to
his adversary gives rise to dangers of inaccuracy and untrustworthiness.”
Hickman v. Taylor, 329 U.S. 495, 513 (1947).
The Supreme Court, however, also said that the underlying facts,
themselves, are not protected, “Mutual knowledge of all the relevant facts
gathered by both parties is essential to proper litigation. To that end, a
party may compel the other to disgorge whatever facts he has in his
possession.” Hickman, 329 U.S. at 507. The work product privilege,
therefore, extends to any documents prepared by an attorney in
anticipation of litigation that contain statements by individuals that are
responsive to this Interrogatory, or to recitations of statements contained in
those documents.
Rule 26(b)(4)(D) provides, in relevant part:
(D) Expert Employed Only for Trial Preparation. Ordinarily, a
party may not, by interrogatories or deposition, discover facts
known or opinions held by an expert who has been retained or
specially employed by another party in anticipation of litigation
Page 10 of 17
or to prepare for trial and who is not expected to be called as a
witness at trial. But a party may do so only:
....
(ii) on showing exceptional circumstances under which it
is impracticable for the party to obtain facts or opinions on
the same subject by other means.
Fed. R. Civ. P. 26(b)(4)(D).
The Court has carefully reviewed the submissions of the parties. The
Court finds that the Questions sought information contained in the
Research used to establish the Line Items. Some of the questions do not
directly ask about the Line Items, but Lindenbusch’s responses show that
the answer would require revealing information related to the Line Items.
Lindenbusch discussed plans for changes to the particulate pollution
controls before the end of 2015 and after 2016, but would not answer
questions related to that limited period. See Deposition, at 21-30, 3860,64-134, 142-53, 154, 157-83, 189-90, 193-209. Lindenbusch’s
responses indicate that he did not answer because the response would
have disclosed information contained in the Research or some aspect of
counsel’s settlement negotiating strategy.
The Court finds that the Research is protected by the work product
privilege. The Research was developed to assist in the litigation of this
case. The Research, therefore, reflects the thought processes and mental
Page 11 of 17
impression of Illinois Power’s attorneys. The work product privilege
protects the documents containing the Research and recitations of
statements in the documents. Hickman, 329 U.S. at 513. The Questions
effectively asked Lindenbusch to recite information from the Research
documents, and so, sought information protected by work product. Those
portions of the Research prepared by outside experts retained to assist in
litigation, but not testify, is also protected by Rule 26(b)(4)(D).
The Plaintiffs argue that the Research is not covered by the work
product privilege because the Research was not prepared for litigation.
The Plaintiffs argue that Illinois Power used the Research for routine
business purposes. Illinois Power used the Research both to establish the
Line Items and for this litigation. The Line Items were part of Illinois
Power’s routine budgeting process. The Plaintiffs argue that the Research,
therefore, was prepared for a business purpose, not just for this litigation.
The Plaintiffs argue that such dual-purpose documents are not covered by
the work product privilege.
The Court disagrees. “Where a document is prepared because of the
prospect of litigation, analyzing the likely outcome of that litigation, it does
not lose protection because it is also created in order to assist with a
business decision. Caremark, Inc. v. Affiliated Computer Services, Inc.,
Page 12 of 17
195 F.R.D. 610, 614 (N.D. Ill. 2000); see Jaffe Pension Plan v. Household
Int’l, Inc., 237 F.R.C. 176, 182 (N.D. Ill. 2006) (“‘work-product protection
should not be denied to a document that analyzes expected litigation
merely because it is prepared to assist in a business decision.’”) (quoting
United States v. Adlman, 134 F.3d 1194, 1199 (2d Cir. 1998)).
Plaintiffs rely on Valero Energy Corp. v. United States, 569 F.3d 626
(7th Cir. 2009); United States v. Frederick, 182 F.3d 496 (7th Cir. 1999); and
Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577 (7th Cir. 1981), to support their
position “dual purpose” documents are not protected by work product.
These cases do not apply here. In Valero and Frederick, the parties tried
to extend the work product privilege to documents that contained nonattorney work. In Valero and Frederick, the attorney was giving tax
accounting advice and tax preparation services. The Seventh Circuit held
that the accounting work for tax preparation was not privileged because no
accountant-client privilege exists. The Court held that a party could not
transform non-privileged accounting documents into privileged material just
by having an attorney perform those functions,
Accounting advice, even if given by an attorney, is not
privileged.
. . . For starters, the preparation of tax returns is an
accounting, not a legal service, therefore information
transmitted so that it might be used on a tax return is not
Page 13 of 17
privileged. On the other side of the spectrum, communications
about legal questions raised in litigation (or in anticipation of
litigation) are privileged. Of course, there is a grey area
between these two extremes, but to the extent documents are
used for both preparing tax returns and litigation, they are not
protected from the government's grasp.
Valero Energy, 569 F.3d at 630 (internal citations omitted); accord
Frederick, 182 F.3d at 500-01. The Research in this case was not tax
accounting. The Research was information collected and created to assist
them in negotiating settlement and litigating this case. Valero Energy and
Frederick do not apply.
The Loctite case was a patent infringement case. The plaintiff in
Loctite refused to produce “the data and test results on which Loctite based
its infringement charges.” Loctite Corp., 667 F.2d at 579. The Loctite court
denied work product privilege claims because factual test results and data
are not protected by the work product privilege. Id. at 582; see Hickman,
329 U.S. at 507 (underlying facts in a privileged document are not
protected). The Questions here did not seek underlying technical factual
data on which Illinois Power bases its defenses. The Questions ask when
did Illinois Power last consider certain changes to the Plant’s pollution
control equipment, such as adding a baghouse; and what changes did
Illinois Power consider making that are reflected in the Line Items. Illinois
Power’s counsel has shown that Illinois Power considered the changes
Page 14 of 17
responsive to the Questions as part of its settlement strategy in 2015 and
2016, and the changes were made because settlement was not reached.
The details of settlement strategy are exactly the kind of attorney mental
impressions and opinions that the work product privilege is designed to
protect. The Loctite case does not apply. The information sought by the
Questions is protected attorney work product.2
The Plaintiffs may secure answers to the Questions if the Plaintiffs
show a “substantial need for the materials to prepare [their] case and
cannot, without undue hardship, obtain their substantial equivalent by other
means.” Fed. R. Civ. P. 26(b)(3)(a)(ii).3 The Plaintiffs argue that they need
this information to prove issues relevant to the remedies trial. Plaintiffs
argue they need the information to respond fairly to Illinois Power’s
arguments about technical feasibility of additional pollution controls to stop
future violations:
Plaintiffs need the information to fairly anticipate and prepare to
respond (including through their own experts’ reports) to IPRG
arguments and testimony concerning the relative cost and
technical feasibility of various pollution-control measures.
These include measures IPRG has yet to take, or did not take
in time to avoid the Edwards Plant’s illegal pollution during the
liability period. Technical and other factual information about
IPRG’s consideration of possible pollution controls for opacity
2
The portion of the Research performed by outside experts who will not testify is also protected by Rule
26(b)(4)(D).
3
Any portion of the Research protected by Rule 26(b)(4)(D) may only be discoverable under exceptional
circumstances when the Plaintiffs are unable to obtain opinions on the same subjects by other means.
Page 15 of 17
and particulate matter is directly relevant to the question of
what injunctive relief the Court should order to ensure that the
Edwards Plant does not continue violating its opacity and
particulate-matter limits.
Motion, at 11. The Court disagrees. The Plaintiffs have technical
information about the Plant. See Lyons Declaration, ¶ 8. The Plaintiffs
have their own experts who can analyze this data and provide opinions on
measures to stop future violations. Furthermore, the Plaintiffs will receive
Illinois Power’s expert reports in due course. See Text Order entered
December 14, 2017. The Plaintiffs’ experts will be able to review those
materials, including the basis for their opinions. Plaintiffs’ experts will be
able to respond to Illinois Power expert opinions and the basis for those
opinions.
Plaintiffs also argue that answers to the Questions are relevant to
determining the appropriate civil penalty, if any. Illinois Power’s good faith
efforts to comply with the Clean Air Act is a factor in determining a civil
penalty. See 42 U.S.C. §7413(e)(1). The Plaintiffs argue that the planned
improvements represented by the Line Items are directly relevant to Illinois
Power’s good faith efforts at compliance. The Court disagrees. The Line
Items represent Illinois Power’s strategies for settlement of this action in
2015 and 2016. When the parties did not settle in 2016, the numbers were
removed from the Spending Plans. The Line Items, and the information
Page 16 of 17
underlying them, do not relate to good faith efforts at compliance. The
Plaintiffs have failed to show a need for the Research. Illinois Power’s
claims of privilege are sustained.
THEREFORE, IT IS ORDERED: Plaintiffs’ Motion to Compel
Answers to Questions on IPRG’s Consideration of Measures to Control
Opacity or Particulate Matter Pollution from the Edwards Power Plant (d/e
171) is DENIED.
ENTER: January 22, 2018
s/ Tom Schanzle-Haskins
TOM SCHANZLE-HASKINS
UNITED STATES MAGISTRATE JUDGE
Page 17 of 17
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