UNITED STATES OF AMERICA et al v. Ocwen Loan Servicing LLC
MEMORANDUM OPINION AND ORDER - DENYING 178 SEALED MOTION TO COMPEL DISCOVERY FROM RELATORS AND MEMORANDUM IN SUPPORT filed by Ocwen Loan Servicing LLC. Signed by Judge Amos L. Mazzant, III on 7/31/2015. (baf, )
United States District Court
EASTERN DISTRICT OF TEXAS
UNITED STATES OF AMERICA
Ex rel. Michael J. Fisher, Brian Bullock and
Michael Fisher, Individually, and Brian
OCWEN LOAN SERVICING, LLC., ET. AL. §
CASE NO. 4:12-CV-543
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant Ocwen Loan Servicing, LLC’s Motion to Compel
Discovery from Relators (Dkt. #178). After reviewing the relevant pleadings, the Court finds
that the motion should be denied.
On August 20, 2012, Relator Michael J. Fisher (“Fisher” or “Relator”) filed his original
complaint under seal (Dkt. #1). In his original complaint, Fisher claimed that Ocwen Loan
Servicing LLC’s (“Ocwen”) Home Affordable Modification Program (“HAMP”) modifications
violated the federal Truth in Lending Act (“TILA”) because Ocwen did not provide a TILA
notice of rescission in connection with its loan modifications. (See Dkt. #1).
On April 7, 2014, United States Magistrate Judge Don Bush ordered that the complaint
be unsealed and served upon Defendant, after the United States declined to intervene (Dkt. #19).
On August 1, 2014, Relator filed his Amended Complaint (Dkt. #23). On August 6, 2014,
Relator filed his second Amended Complaint (Dkt. #29).
On November 13, 2014, Relators filed their third amended complaint (Dkt. #59). The
third amended complaint incorporated allegations including:
(1) Federal Housing
Administration (“FHA”) violations, (2) Dodd-Frank Act violations, (3) Real Estate Settlement
Procedures Act (“RESPA”) violations, and (4) Texas, New York, and Massachusetts state law
violations (Dkt. #59). It also added a new relator, Brian Bullock (“Bullock” or “Relator”) (Dkt.
On April 17, 2015, Relators filed their Fourth Amended Complaint (Dkt. #126). The
Fourth Amended Complaint added a new defendant, Ocwen Financial Corporation (“Ocwen
Financial”) (Dkt. #126).
On June 29, 2015, Ocwen filed its Motion to Compel Discovery from Relators (Dkt.
#178). On July 2, 2015, the Court ordered an expedited briefing schedule (Dkt. #185). On July
7, 2015, Relators filed their response (Dkt. #192). On July 8, 2015, Ocwen filed its reply (Dkt.
#195). On July 8, 2015, Relators filed their sur-reply (Dkt. #197).1
Ocwen is seeking production of the disclosure statements made under 31 U.S.C. §
3730(b)(2) and other communications made between Relators and the United States
Government.2 (Dkt. #178 at p. 2). Ocwen also seeks the production of the following: (1)
communications with former Homeward and Ocwen employees relating to the claims and
allegations in the Third Amended Complaint, and (2) any witness statements obtained from
current or former Homeward or Ocwen employees. (Dkt. #178 at p. 2). Realtors object to both
requests, claiming attorney-client privilege, common interest privilege, and/or the work product
doctrine. (Dkt. #178 at pp. 2-3).
Relators attached to their sur-reply a motion to strike Ocwen’s reply (Dkt. #195). Although the Court did address
this motion in a subsequent order, Relators should note that this does not comply with Local Rule CV-7, and should
comply with the Local Rules in the future.
Ocwen also subpoenaed the Government to present documents identical to the ones addressed within the present
motion. The Government moved to quash the subpoena and for a protective order (See Dkt. #190). Although the
Court has already addressed and ruled on the Government’s motion, the broader arguments within the Government’s
Motion are addressed herein.
Production of Disclosure Statements
Ocwen asserts that the Court should compel disclosure of the disclosure statements and
correspondence with the Government because they are not protected from disclosure and they
are necessary to Ocwen’s defenses (Dkt. #178 at p. 3). Relators contend that they have provided
Ocwen with the following information: (1) the names of all persons mentioned within the
disclosure statements, (2) all underlying documents used in creating and/or referenced within the
disclosure statements, (3) all underlying documents provided by Relators to the United States
under 31 U.S.C. § 3730(b)(2), and (4) all factual information used to create or referred to within
the statements (Dkt. #192 at p. 1). Relators assert that they are only withholding the actual
disclosure statements because those are protected by attorney-client privilege, common interest
privilege, and the work product doctrine (Dkt. #192 at p. 1).
The False Claims Act (“FCA”) authorizes a person to file a civil action alleging a
violation on behalf of the person and the government. See 31 U.S.C. § 3730(b)(1). However,
the FCA requires that the person serve on the government a “written disclosure of substantially
all material evidence and information the person possesses.” 31 U.S.C. § 3730(b)(2). “The
purpose of the written disclosure requirement ‘is to provide the United States with enough
information on the alleged fraud to be able to make a well reasoned decision on whether it
should participate in the filed lawsuit or allow the relator to proceed alone.’” United States ex
rel. Bagley v. TRW, Inc., 212 F.R.D. 554, 555 (C.D. Cal. 2003) (quoting United States ex rel.
Woodard v. Country View Care Ctr., Inc., 797 F.2d 888, 892 (10th Cir. 1986)).
“The FCA is silent as to if the written disclosure is protected from discovery.” U.S. ex
rel. Cericola v. Ben Franklin Bank, No. 99 C 6311, 2003 WL 22071484, at *2 (N.D. Ill. Sept. 4,
2003); see, e.g., United States ex rel. O’Keefe v. McDonnell Douglas Corp., 918 F. Supp. 1338,
1345-46 (E.D. Mo. 1996); United States ex rel. Burns v. A.D. Roe Co., 904 F. Supp. 592, 593-94
(W.D. Ky. 1995); United States ex rel. Stone v. Rockwell Int’l Corp., 144 F.R.D. 396, 398 (D.
Colo. 1992). However, the courts have found that the written disclosure statement may be
protected under the work product doctrine. See, e.g., Bagley, 212 F.R.D. at 559-61; O’Keefe,
918 F. Supp. at 1346; United States ex rel. Robinson v. Northrop Corp., 824 F. Supp. 830, 83839 (N.D. Ill. 1993); Stone, 144 F.R.D. at 400-401.
Federal Rule of Civil Procedure 26(b)(3) states in relevant part:
[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, surety, indemnitor, insurer, or
agent). But…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.
FED. R. CIV. P. 26(b)(3)(A).
“The work-product doctrine provides qualified protection of
documents and tangible items prepared in anticipation of litigation, including ‘a lawyer’s
research, analysis of legal theories, mental impressions, notes, and memoranda of witnesses’
statements.’” Ferko v. Nat’l Ass’n for Stock Car Auto Racing, Inc., 219 F.R.D. 396, 400 (E.D.
Tex. 2003) (quoting Dunn v. State Farm Fire & Cas. Co., 927 F.2d 869, 875 (5th Cir. 1991)).
Rule 26(b)(3) distinguishes between opinion work product, which consists of the “mental
impressions, conclusions, or legal theories of an attorney or other representative of a party,” and
ordinary work product, which consists of the “factual material prepared in anticipation of
litigation or trial.” Bagley, 212 F.R.D. at 559; see, e.g., United States ex. rel. Burroughs v.
DeNardi Corp., 167 F.R.D. 680, 684 (S.D. Cal. 1996); Stone, 144 F.R.D. at 401 (D. Colo. 1992).
“If a party proves that materials merit work-product protection, the party seeking
discovery must prove why those materials should still be produced.” Ferko, 219 F.R.D. at 400.
The party seeking production must establish (1) a substantial need of the privileged materials and
(2) an inability to obtain the information through other means without undue hardship. Id.
However, “[a]bsent a waiver, opinion work product enjoys nearly absolute protection and is
discoverable only in ‘rare and extraordinary circumstances.’” Bagley, 212 F.R.D. at 559 (citing
Burroughs, 167 F.R.D. at 683-684).
The Fifth Circuit has not directly addressed whether FCA disclosure statements constitute
opinion work product or ordinary work product. However, in Bagley, a California district court
found that the disclosure statements exchanged between relators and the government constituted
opinion work product and were subject to absolute privilege. See Bagley, 212 F.R.D. 554 (C.D.
Cal. 2003). The Bagley court found that the disclosure statements constituted opinion work
[t]o meet [the FCA’s disclosure] obligation, the relator and his or her counsel
must engage in a process of selecting and winnowing from the totality of
information known to the relator only those facts and evidence that are material to
the relator’s legal claims. Therefore, the factual narratives in the disclosure
statements reveal “the mental impressions, conclusions, opinions, or legal theories
of” the relator and his or her counsel.
Id. at 564. The Bagley court also found that classifying disclosure statements as opinion work
product fulfilled the purposes of 31 U.S.C. § 3730(b)(2). Id. at 565. However, many courts have
found that disclosure statements constitute ordinary work product, and thus, the material would
remain privileged unless the opposing party could demonstrate a substantial need for the material
and an undue hardship in obtaining the information through alternate means.
Burroughs, 167 F.R.D. 680; Cericola, 2003 WL 22071484; United States ex rel. Yannacopoulos
v. General Dynamics, 231 F.R.D. 378 (N.D. Ill. 2005).
Additionally, the common interest privilege is an extension of the attorney-client
privilege and of the work product doctrine. Ferko, 219 F.R.D. at 401. It is “an exception to the
general rule that the  privilege is waived upon disclosure of privileged information with a third
party.” Id. (quoting Katz v. AT&T Corp., 191 F.R.D. 433, 436 (E.D. Pa. 2000)). A number of
courts have held that relators’ disclosure statements are protected by the “common interest” or
“joint prosecution” privilege. See United States v. Medica-Rents Co., 4:01-CV-198-Y, 2002 WL
1483085 (N.D. Tex. June 21, 2002); see also, Burroughs, 167 F.R.D. at 685-686; United States
ex rel. Purcell v. MWI Corp., 209 F.R.D. 21, 26-27 (D.D.C. 2002); United States ex rel.
[Redacted] v. [Redacted], 209 F.R.D. 475, 478, 479 (D. Utah 2001).
The Court finds that the disclosure statements submitted to the Government by Relators
pursuant to 31 U.S.C. § 3730(b)(2) constitute at least ordinary work product for the purposes of
the work product doctrine. Public policy favors the full and frank communication between
Relators and the Government concerning the prosecution of the case, and as such, the
communications must be protected from disclosure. Therefore, protection was not waived when
Relators disclosed the information to the Government as the common-interest doctrine applies.
Additionally, the Court finds that Ocwen has not established both a substantial need for
the documents and an undue hardship in obtaining the documents by other means. Ocwen argues
that it has a substantial need for the disclosure statements so that it can conduct its discovery in
the present case. (Dkt. #178 at p. 6). Ocwen also asserts that forcing it “to compile information
through interrogatories, document requests, and depositions would place an undue burden on
[it].” (Dkt. #178 at p. 7).
The Court does not find Ocwen’s argument to be persuasive.3 Relators assert that they
have produced to Ocwen all the factual documents accompanying the disclosure statements, as
well as the identity of any persons named within the disclosure statements (Dkt. #192 at p. 7).
Additionally, Ocwen has the opportunity to question Relators regarding the information
contained within their allegations and their investigative efforts (Dkt. #192 at p. 7).4 Therefore,
the Court finds that Ocwen has not made the requisite showing needed to compel the production
of the documents protected under the work product doctrine. Ocwen’s motion to compel will be
denied as to the production of the disclosure statements.5
Non-Testifying Consulting Experts
Ocwen also requests that Relators produce any communications with former Homeward
and Ocwen employees relating to the claims and allegations in the Third Amended Complaint,
and any witness statements obtained from current or former Homeward or Ocwen employees.
(Dkt. #178 at p. 2). Relators claim the documents are privileged under the non-testifying
consulting expert privilege (See Dkt. #192 at p. 9-10). Additionally, at the hearing held on July
10, 2015, Ocwen argued that it was challenging Relators’ designation of the ex-employees as
non-testifying consulting experts.
Ocwen asserts that it “is entitled, at the very least, to have the Court review in camera Relators’ disclosure
statements and require production of all non-privileged contents.” (Dkt. #178 at p. 5, n. 4) (citing Cericola, 2003
WL 22071484, at *3 (N.D. Ill. Sept. 4, 2003); Grand ex rel. United States v. Northrop Corp., 811 F. Supp. 333, 337
(S.D. Ohio 1992). As the Court stated during the July 10, 2015 hearing on this motion, Ocwen has not shown that it
has a substantial need for the privileged disclosed statements, and therefore, the Court will not conduct an in camera
Relators assert that Ocwen had scheduled depositions for Relators Fisher and Bullock, but at the time the motion
was filed had given notice that they wanted to postpone the depositions. Relators also assert that Relators have been
deposed in the United States ex rel. Fisher v. Homeward Residential Inc. proceeding (No. 4:12-cv-461 (E.D. Tex.
2012)) (Dkt. #178 at p. 7), however, the Court does not find this persuasive as Relators have not been deposed as to
the claims against Ocwen.
The Court will not address Relators’ claim that the disclosure statement is protected by attorney-client privilege.
However, reported decisions expressly addressing the issue have uniformly concluded that disclosure statements are
not protected by the attorney-client privilege. Bagley, 212 F.R.D. at 558; see, e.g., Burroughs, 167 F.R.D. at 68283; Burns, 904 F. Supp. at 594; Stone, 144 F.R.D. at 399-400.
After reviewing the relevant pleadings, the Court finds that Relators have not made an
improper designation of the non-testifying consulting expert witnesses, and therefore, Ocwen’s
motion will be denied as to the issue of the non-testifying consulting experts.
It is therefore ORDERED that Ocwen Loan Servicing LLC’s Motion to Compel
Discovery from Relators (Dkt. #178) is hereby DENIED.
SIGNED this 31st day of July, 2015.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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