United States of America v. Wells Fargo Bank, N.A.

Filing 302

OPINION AND ORDER re: 276 MOTION to Compel the production of documents withheld by Plaintiff filed by Wells Fargo Bank, N.A.: For the foregoing reasons, Wells Fargo's motion to compel is granted in part and denied in pa rt. Specifically, it is denied as to all documents except for Log Entries 1,307-1,310; 1,353-1,354; and 4,412, which must be disclosed to Wells Fargo. Log Entry 18,658, the final version of the letter contained in Log Entry 41,369, and portions of Log Entries 41,369; 41,376; and 41,377 may also have to be disclosed, pending further clarification from the Government. The Government is hereby directed to submit a copy of all the materials that were submitted to the Court for its in camera rev iew to the Sealed Records Department so that they may be made part of the record in this matter. Additionally, the Government shall promptly file on ECF a copy of its letter dated September 14, 2015, accompanying some of the documents submitted to the Court, as the Court sees no basis for the letter itself (which was copied to defense counsel) to be kept under seal. The Clerk of Court is directed to terminate Docket No. 276. (Signed by Judge Jesse M. Furman on 10/21/2015) (tn)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
UNITED STATES OF AMERICA,
:
:
Plaintiff,
:
:
-v:
:
WELLS FARGO BANK, N.A., et al.,
:
:
Defendants.
:
:
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10/22/2015
12-CV-7527 (JMF)
OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:
Wells Fargo Bank, N.A. (“Wells Fargo” or the “Bank”) — one of two defendants in this
civil fraud case brought by the United States, familiarity with which is assumed — moves to
compel the production of certain documents withheld by the Government, mostly on the basis of
the deliberative process privilege. (Docket No. 276; see also Decl. Jennifer M. Wollenberg
Supp. Wells Fargo Bank, N.A.’s Mot. To Compel Produc. Docs. Withheld Pl. (Docket No. 278)
(“Wollenberg Decl.”), Exs. B, C (listing challenged log entries)). 1 Upon review of the parties’
submissions (Docket Nos. 277, 284, 293), and an in camera review of the documents that remain
in dispute, the motion is denied except as set forth below. 2
1

Kurt Lofrano (together with Wells Fargo, “Defendants”), the other defendant in this case,
joins Wells Fargo’s motion with respect to some, but not all, of the requested documents. (See
Wells Fargo Bank, N.A.’s Mem. Law Supp. Mot. To Compel Produc. Docs. Withheld Pl.
(Docket No. 277) (“Wells Fargo Mem.”) 1 n.1).
2

The Government has stated that it will release (and presumably may already have
released) Log Entry Nos. 1,783; 4,436; 4,439; and 13,733. Those log entries are therefore no
longer at issue. To the extent Wells Fargo is challenging the withholding of documents with
respect to which the Court has already upheld the Government’s claims of privilege (see Gov’t’s
Mem. 8 n.3), Wells Fargo’s motion is denied for the reasons previously given. Further, some of
the documents at issue (Log Entry Nos. 1,586; 1,588; 1,589; 1,599; and 2,390) are subject to the
attorney-client privilege. (See Gov’t Mem. 9 n.5; see also Wells Fargo Mem. 13 n.20 (stating

First, Wells Fargo argues that the Government has waived its deliberative process
privilege with respect to the documents at issue because it has “discretionarily released” or
“removed to be produced” thousands of documents that are “similarly situated” or “functionally
equivalent” to the challenged documents. (Wells Fargo Mem. 4-10). Relying on cases
addressing waiver of the attorney-client and work product privileges, Wells Fargo argues that the
Government is not entitled to “the extreme advantage” of being allowed to “determin[e] on its
own which responsive privileged documents it will produce and which ones it will withhold.”
(Wells Fargo Mem. 9-10 (citing Freedman v. Weatherford Int’l Ltd., No. 12-CV-2121 (LAK)
(JCF), 2014 WL 3767034, at *3 (S.D.N.Y. July 25, 2014), and Bristol-Myers Squibb Co. v.
Rhône-Poulenc Rorer, Inc., No. 95-CV-8833 (RPP), 1997 WL 801454, at *3 (S.D.N.Y. Dec. 31,
1997), among other cases). But, as the Government points out in its memorandum of law (Mem.
Law Pl. United States Am. Opp’n Def. Wells Fargo Bank N.A.’s Mot. To Compel Produc. Docs.
Withheld Pl. (Docket No. 284) (“Gov’t Mem.”) 2-5), courts have overwhelmingly (if not
uniformly) held that “the release of a document only waives the deliberative process privilege
for the document that is specifically released, and not for related materials.” Marisol A. v.
Giuliani, No. 95-CV-10533 (RJW), 1998 WL 132810, at *8 (S.D.N.Y. Mar. 23, 1998) (quoting
In re Sealed Case, 121 F.3d 729, 741 (D.C. Cir. 1997)) (internal quotation marks and alterations
omitted) (emphasis added); see, e.g., Lehman Bros. Holdings, Inc. v. United States, No. 10-CV6200 (RMB), 2014 WL 715525, at *2 (S.D.N.Y. Feb. 24, 2014) (rejecting the plaintiff’s

that there are “ample grounds to believe that the Government should not have asserted privilege
over the entirety of these documents,” but without specifying what those grounds are); Wells
Fargo June 26, 2015 Ltr. (Docket No. 238) 8 (same); Wells Fargo Bank N.A.’s Reply Mem.
Supp. Mot. To Compel Produc. Docs. Withheld Pl. (Docket No. 293) (“Wells Fargo Reply”) 3
n.6). The Court therefore need not, and does not, reach the question whether they are also
protected by the deliberative process privilege.

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position, “asserted without citation to authority, that the deliberative process privilege has been
waived by virtue of the Government’s submission of [a] ‘similar’ witness affidavit in” an earlier
case); Gen. Elec. Co. v. Johnson, No. Civ.A.00-2855 (JDB), 2006 WL 2616187, at *17 (D.D.C.
Sept. 12, 2006) (“The concept of subject-matter waiver is almost uniquely a function of the
attorney-client relationship. There is no authority for applying the waiver rule to the deliberative
process privilege.”).
Wells Fargo gives the Court no reason to depart from this general rule, which is
“designed to ensure that agencies do not forego voluntarily disclosing some privileged material
out of the fear that by doing so they are exposing other, more sensitive documents.” Sealed
Case, 121 F.3d at 288. Although Wells Fargo argues that a different result is called for where, as
here, the Government is the plaintiff (Wells Fargo Reply 1 n.2), it does not cite — and the Court
is not aware of — any cases suggesting, let alone holding, that whether selective disclosure of
documents protected by the deliberative process privilege results in a subject matter waiver turns
on which side of the “v.” the Government appears. See Gen. Elec. Co., 2006 WL 2616187, at
*17 (calling the “importing [of] the waiver rule into the realm of the deliberative process
privilege” an “unprecedented action”). 3 The Government’s status as a plaintiff may well bear on
whether the deliberative process privilege is overcome. But there is no reason why the
applicability of subject matter waiver in this context should turn on whether the Government is a
plaintiff or a defendant; concerns about a party using the privilege as “both a sword and a
shield,” which underlie the waiver doctrine with respect to the attorney-client and work product
3

Sikorsky Aircraft Corp. v. United States, 106 Fed. Cl. 571 (2012), the main case on which
Wells Fargo relies (see Wells Fargo Mem. 8-9; Wells Fargo Reply 1 n.3), involved the question
whether the government could claw back documents that had been inadvertently disclosed, not
whether it had waived its deliberative process privilege with respect to one document merely by
producing another. See 106 Fed. Cl. at 580.

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privileges, are equally strong whether the party invoking the privilege is a plaintiff or a
defendant. (Wells Fargo Mem. 9 (quoting Freedman v. Weatherford Int’l Ltd., 12-CV-2121
(LAK) (JCF), 2014 WL 3767034, at *3 (S.D.N.Y. July 25, 2014)). Accordingly, the Court
declines to find a blanket waiver of the deliberative process privilege here.
Next, Wells Fargo argues that the Government has failed to properly invoke the
deliberative process privilege with respect to more than twenty of the documents at issue. (Wells
Fargo Mem. 10-11). See Commodity Futures Trading Comm’n v. Royal Bank of Canada, No.
12-CV-2497 (AKH), 2013 WL 1932120, at *1 (S.D.N.Y. May 8, 2013) (quoting Tigue v. U.S.
Dep’t of Justice, 312 F.3d 70, 76 (2d Cir. 2002)) (stating that, in order to qualify for the
deliberative process privilege, “the information must be inter- or intra-agency, pre-decisional,
and deliberative” (internal quotation marks omitted)). Substantially for the reasons explained in
the Government’s memorandum of law (Gov’t Mem. 11-12), the documents at issue are clearly
deliberative. They all represent “an essential link in a specified consultative process,” In re
Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 643 F. Supp. 2d 439, 442 (S.D.N.Y.
2009) (internal quotation marks omitted), and none of them contains “purely factual material . . .
that is severable without compromising the private remainder of the documents,” Houser v.
Blank, No. 10-CV-3105 (FM), 2013 WL 873793, at *2 (S.D.N.Y. Mar. 11, 2013). (See Decl.
Helen R. Kanovsky (Docket No. 286) (“June 19, 2015 Kanovsky Decl.”); August 19, 2015 Decl.
Helen R Kanovsky (Docket No. 287) (“Aug. 19, 2015 Kanovsky Decl.”)). Accordingly, Wells
Fargo’s arguments about the propriety of the Government’s invocation are rejected.
Wells Fargo maintains that, even if the documents are covered by the deliberative process
privilege, it has demonstrated sufficient need to overcome the privilege with respect to three
categories of documents. (Wells Fargo Mem. 12-15). See Stinson v. City of New York, 304

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F.R.D. 432, 436 (S.D.N.Y. 2015) (discussing the factors used to determine whether the
deliberative process privilege is overcome, including “the relevance of the requested materials to
the requesting party’s case” and the potential for “the chilling of internal candor”) (internal
quotation marks omitted). Based on its in camera review of the documents at issue, the Court
concludes that the first category of requested documents (internal documents and e-mails relating
to draft and proposed rules) (see Wells Fargo Mem. 12; June 19, 2015 Kanovsky Decl. 4-5)), and
most of the second category (an e-mail from one Department of Housing and Urban
Development (“HUD”) employee to another inquiring as to the appropriate steps to take, and an
e-mail chain about areas of focus for an upcoming review of another lender (see Wells Fargo
Mem. 13-14; Aug. 19, 2015 Kanovsky Decl. 4-7)) have little bearing on this case and therefore
need not be produced. With respect to the third category of documents (a draft findings letter
and attachments prepared as part of a review of another lender (Wells Fargo Mem. 14-15; Aug.
19, 2015 Kanovsky Decl. 3)), Wells Fargo’s only argument for disclosure is that it has not
received a final version of the letter at issue. (Wells Fargo Mem. 14-15). As the Government
represents that it has produced the final version (Gov’t Mem. 15), Wells Fargo’s motion as to
those documents is denied as well.
Wells Fargo makes a sufficient showing of need, however, with respect to the draft
indemnification letters and agreements for Wells Fargo included in the second category of
requested documents (Log Entry Nos. 1,307-1,310; 1,353-1,354; and 4,412). The Government
argues that Wells Fargo’s failure to properly self-report problematic loans deprived the
Government of the opportunity to seek indemnification with respect to those loans. (Second Am.
Compl. (Docket No. 77) (“SAC”) ¶¶ 122, 139). It also argues that one of Wells Fargo’s
motivations for not properly self-reporting was to avoid indemnification. (SAC ¶¶ 5, 134).

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Wells Fargo is entitled to challenge those allegations by investigating the types of deficiencies
for which the Government considered requesting indemnification. Further, as Wells Fargo
points out in its memorandum of law, “[d]ocuments specifically related to potential
indemnification on Wells Fargo loans are highly relevant because if HUD already has assessed
one or more of the loans at issue in the Government’s allegations and determined that any noncompliance did not rise to the level of materiality that would affect the eligibility of the loan for
FHA insurance, then the Government cannot establish the necessary elements of its claims.”
(Wells Fargo Mem. 13 n.21). Those documents must therefore be disclosed.
Next, Wells Fargo argues that the Government has waived its work product protection
with respect to “all records of its communications with any former Wells Fargo employees”
because it used notes relating to two particular employees at their depositions. (Wells Fargo
Mem. 15-17). It is well established that work product protection can be waived through the
“selective disclosure of certain material.” The Shinnecock Indian Nation v. Kempthorne, 652 F.
Supp. 2d 345, 363 (E.D.N.Y. 2009). In light of that principle, the Government has already
agreed to produce all notes with respect to the two witnesses for which interview notes were
used. (Gov’t Mem. 16 n.12). But Wells Fargo is not satisfied with that, and argues that notes as
to all former employees must be produced because they all relate to the “same subject matter.”
(Wells Fargo Reply 5-7). Courts have generally held, however, that the disclosure of interview
notes from one witness does not require that notes from other witnesses be disclosed. See, e.g.,
See United States v. Treacy, No. 08-CR-366 (JSR), 2009 WL 812033, at *1 (S.D.N.Y. Mar. 24,
2009); Sickau v. Siegel, Kelleher & Kahn, No. 03-CV-0364 (KS), 2005 WL 6778194, at *4
(W.D.N.Y. July 26, 2005). As those Courts have recognized, the point of the waiver doctrine is
to prevent prejudice to the opposing party, and any potential prejudice caused by the partial

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disclosure of notes relating to a particular witness is cured by the disclosure of the remaining
notes as to that witness. See, e.g., Sickau, 2005 WL 6778194 at *4. That the Government
decided to list all of the interview notes in one privilege log entry rather than separate them into
many entries is beside the point. (See Wells Fargo Reply 5). What matters is the content of the
disclosed and withheld documents, not the way they are presented on the privilege log. 4
The last remaining issue is whether the Government is entitled to withhold on privilege
grounds certain documents that Wells Fargo believes are relevant to the Government’s
invocation of the False Claim Act’s ten-year statute of limitation. (Wells Fargo Mem. 17-23). It
is well established that the attorney-client privilege “may implicitly be waived when [a party]
asserts a claim that in fairness requires examination of protected communications.” United
States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991); see, e.g., Crawford v. Coram Fire Dist.,
No. 12-CV-3850 (DRH) (WDW), 2014 WL 1686203, at *4 (E.D.N.Y. Apr. 29, 2014) (finding
that waiver occurs “when a party puts its own conduct at issue,” and “attempts to use the
privilege both as a shield and a sword by partially disclosing privileged communications or
affirmatively relying on them to support its claim or defense and then shielding the underlying
communications from scrutiny”). The parties disagree on the exact formulation of the test for
implied waiver, but they both acknowledge that whether waiver has occurred here turns on
whether the requested privileged information is “vital” to the Bank’s defense. (Compare Wells
Fargo Mem. 21 (arguing that the Court should apply the test from Hearn v. Rhay, 68 F.R.D. 574

4

The Government has withheld certain e-mails related to the two witnesses’ interviews.
As the interview notes are almost purely factual work product, and the e-mails represent opinion
work product, however, the e-mails do not have to be disclosed. See, e.g., The Shinnecock
Indian Nation, 652 F. Supp. 2d at 364 (holding that the disclosure of factual work product does
not waive the privilege with respect to opinion work product “so long as th[e] higher protection”
given to opinion work product was not also waived).

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(E.D. Wash. 1975), which considers whether “application of the privilege would have denied the
opposing party information vital to his defense”) and Wells Fargo Reply 7-9 (similar), with
Gov’t Mem. 18-22 (criticizing Hearn but arguing that Court may only order disclosure of
information that is “vital”)).
Applying that standard, Wells Fargo argues that the Government should be required to
disclose “documents includ[ing] Program Civil Fraud Remedies Act (‘PFCRA’) referrals and
other communications from HUD to [the Department of Justice] concerning audits, reviews, and
investigations of Wells Fargo.” (Wells Fargo Mem. 18). The Government argues that it should
not be required to disclose such documents because Wells Fargo already has “a wealth” of
information related to the enforcement actions discussed in the confidential documents. (Gov’t
Mem. 20-21). But none of those other documents, which largely involve HUD communications
and judicial documents, discloses communications involving the Department of Justice (“DOJ”);
none of them, therefore, goes directly to what DOJ, as opposed to HUD or other agencies, knew.
Having successfully argued previously that it is DOJ’s knowledge — not HUD’s knowledge —
that is relevant to the statute-of-limitations question, see United States v. Wells Fargo Bank,
N.A., 972 F. Supp. 2d 593, 608-09 (S.D.N.Y. 2013), the Government cannot shield documents
that might reflect DOJ’s knowledge from disclosure on the grounds that it has turned over
documents reflecting the knowledge of other government agencies.
More substantial is the Government’s argument that none of the relevant documents
contains information relevant to the statute-of-limitations question. (Gov’t Mem. 22). The
Government defines the potential universe of relevant documents narrowly, arguing that none of
the withheld documents is relevant because neither the documents themselves nor the related
enforcement action concerns self-reporting. (Id.). The question, however, is not whether the

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document addresses self-reporting directly, but rather whether DOJ’s receipt and review of the
challenged documents and communications made it aware (or should have made it aware) of
Wells Fargo’s alleged self-reporting deficiencies. Applying that standard, the Court concludes
that most of the disputed documents do not have to be disclosed, as they have little or no bearing
on the question of when DOJ learned (or should have learned) about Wells Fargo’s alleged
misconduct. A few documents at issue, however, may call for a different conclusion.
First, Log Entry 18,658 is an e-mail from a HUD attorney to an attorney at DOJ
concerning a proposed PFCRA action. (Wollenberg Decl., Ex. C, at 1). That e-mail attaches a
“HUD OIG report concerning Wells Fargo Bank N.A.” The Government claims that the
document relates to an action filed against Wells Fargo as the successor in interest to Crossland
Mortgage Corporation (Gov’t Mem. 20), but it is not clear from the face of the e-mail which
HUD OIG report the e-mail refers to, and the Government did not submit the attachment itself
for in camera review. If the “HUD OIG report” refers to an audit of Wells Fargo, for example,
then the fact that someone at DOJ received it and the context in which the audit was sent would
be “vital” to Wells Fargo’s ability to test the Government’s statute-of-limitations argument, as
Wells Fargo may be able to argue that the audit either alerted DOJ to Wells Fargo’s alleged
misconduct or should have alerted it to that misconduct. Accordingly, by no later than two
weeks from the date of this Opinion and Order, the Government shall revise its privilege log to
clarify the subject of the “HUD OIG report.” If it was an audit of Wells Fargo, by that same
date, it shall disclose Log Entry 18,658 to Wells Fargo (along with, presumably, the letter sent to
DOJ referenced in the e-mail, unless that letter was previously produced), although it may redact
the entire second paragraph of the e-mail. If it is another type of report, the Government shall,

9

by the same date, advise the Court by letter so that the Court may decide whether the e-mail or
the attachments to the e-mail must be disclosed.
The second log entry that could contain information that must be disclosed to Wells
Fargo is Log Entry 41,369, which is described on the privilege log as an “[a]ttorney work file
relating to [a] PFCRA action against Wells Fargo arising from HUD OIG Audit Report No.
2004-KC-1003.” (Wollenberg Decl., Ex. C., at 3). Notably, the privilege log does not identify
the attorney that created the file or state for which agency that attorney worked. Assuming that
the attorney did not work for DOJ, most of that file is not relevant. But the file contains a draft
letter from Dane Narode, a HUD attorney, to Michael F. Hertz, the Director of the Commercial
Litigation Branch in the Civil Division of DOJ, which contains information that would be highly
relevant to the statute-of-limitations issue if the letter was actually sent. Accordingly, by no later
than two weeks from the date of this Opinion and Order, the Government shall submit a letter
stating whether a final version of that document was ever sent to Hertz or anyone else within
DOJ and, if so, whether it was already disclosed to Defendants. If so, by the same date, the
Government must submit the final version for in camera review. 5
Finally, several of the Log Entries — namely, Log Entries 41,369; 41,376; and 41,377
(Wollenberg Decl., Ex. C, at 3-4) — contain files that were either created by, or in the possession
of, an attorney, but they do not specify whether the attorney worked for DOJ. Because some of
those documents may bear on the statute-of-limitations question if the custodian did in fact work
for DOJ, the above letter shall also state whether any of the files were created by, or were

5

The file also contains letters from Narode to Joyce Branda of the Commercial Litigation
Branch in the Civil Division at DOJ, which could be relevant to the statute-of-limitations issue.
In its letter, the Government shall advise whether those letters were sent to Ms. Branda and, if so,
whether the final versions were disclosed to Defendants.

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otherwise in the possession of, a DOJ attorney. If so, the Court will conduct a further review to
determine whether any portion of those documents must be disclosed.
For the foregoing reasons, Wells Fargo’s motion to compel is granted in part and denied
in part. Specifically, it is denied as to all documents except for Log Entries 1,307-1,310; 1,3531,354; and 4,412, which must be disclosed to Wells Fargo. Log Entry 18,658, the final version
of the letter contained in Log Entry 41,369, and portions of Log Entries 41,369; 41,376; and
41,377 may also have to be disclosed, pending further clarification from the Government.
The Government is hereby directed to submit a copy of all the materials that were
submitted to the Court for its in camera review to the Sealed Records Department so that they
may be made part of the record in this matter. Additionally, the Government shall promptly file
on ECF a copy of its letter dated September 14, 2015, accompanying some of the documents
submitted to the Court, as the Court sees no basis for the letter itself (which was copied to
defense counsel) to be kept under seal.
The Clerk of Court is directed to terminate Docket No. 276.

SO ORDERED.
Date: October 21, 2015
New York, New York

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