Perez v. Mueller et al

Filing 140

DECISION AND ORDER signed by Magistrate Judge William E. Duffin on 11/22/2016 denying 108 Motion to Compel; granting in part and denying in part 121 Motion to Compel; granting 124 Motion to Seal Document. (cc: all counsel) (djo)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
THOMAS E. PEREZ,
Plaintiff,
v.

Case No. 13-CV-1302

VERONICA MUELLER, et al.,
Defendants.
DECISION AND ORDER ON THE
DEFENDANTS’ MOTIONS TO COMPEL
I.

Procedural History
United States Secretary of Labor Thomas E. Perez filed the present action alleging

that the defendants violated provisions of the Employee Retirement Income Security
Act of 1974 (ERISA) with respect to actions they undertook regarding an employee stock
ownership plan (ESOP) sponsored by Omni Resources, Inc. The Secretary alleges that
the ESOP imprudently purchased company stock for more than the stock’s fair market
value and without a proper valuation of the stock. The defendants involved in the
motions that are the subject of this order are Veronica Mueller, Roger Mueller, and six
trusts, who will be referred to collectively as the Mueller defendants.

This matter was initially assigned to Magistrate Judge William E. Callahan. It
was reassigned to the Honorable Rudolph T. Randa due to the lack of consent to
proceed before a magistrate judge. Judge Randa presided over the case for the next 32
months. The case was reassigned to Judge Pamela Pepper after Judge Randa ceased
presiding over cases due to what would prove to be a terminal illness.
Since at least April of 2016 the parties have been asking the court to resolve
discovery disputes regarding whether certain information sought by the Mueller
defendants from the Department of Labor and its employees is privileged. Judge Randa
granted the Mueller defendants’ initial motion to compel. (ECF No. 95.) That led to the
Secretary filing a “motion to clarify” (ECF No. 100), which motion Judge Randa granted
(ECF No. 112). The Mueller defendants’ promptly sought relief from that order. (ECF
No. 113.)
While the “motion to clarify” was pending, the Mueller defendants filed a
motion to compel Department of Labor employee Charles Visconti to answer certain
questions that he did not answer at his deposition on the basis of various privileges.
(ECF No. 108.) The Mueller defendants also filed a second motion to compel discovery.
(ECF No. 121.)
On September 26, 2016, Judge Pepper (the case by then having been reassigned to
her) denied the Mueller defendants’ motion for relief from Judge Randa’s July 27, 2016

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order. (ECF No. 133.) Judge Pepper further referred the case to this court for resolution
of the pending discovery disputes. (ECF Nos. 108, 121.)
The Mueller defendants seek information and documents that the Secretary
contends are privileged. The Secretary has provided a privilege log with respect to the
documents sought by the Mueller defendants,. (ECF No. 101-1.) The Mueller defendants
have provided the court with a list of objected-to deposition questions to which they
seek answers from Visconti. (ECF No. 109 at 3-10.) Some of the deposition questions are
duplicative of the document requests in that Visconti was asked to state what was
redacted from certain documents.
Although not required in every case, an in camera review of documents “is a
highly appropriate and useful means of dealing with claims of governmental privilege.”
Kerr v. United States Dist. Court for Northern Dist., 426 U.S. 394, 406 (1976). The court
found that the most efficient and expeditious means for resolving the parties’ dispute
was for the court to conduct an in camera review of the allegedly privileged documents.
The Secretary provided the court with copies of all documents identified as
privileged on the most-recent privilege log. The defendants’ motions to compel are now
ready for resolution.
II.

Relevant Privileges
The Secretary asserts that many documents are not subject to disclosure due

various “privileges”: attorney-client, government investigative file, government

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deliberative process, work product, and common interest. Relying on the same
privileges, counsel for the Secretary instructed the department’s investigator, Charles
Visconti, not to answer various questions at his deposition.
A. Work Product Protection
“[I]t is essential that a lawyer work with a certain degree of privacy, free from
unnecessary intrusion by opposing parties and their counsel.” Hickman v. Taylor, 329
U.S. 495, 511 (1947). To ensure that an attorney is able to develop his case in a manner
most consistent with notions of justice, an attorney’s work reflected “in interviews,
statements, memoranda, correspondence, briefs, mental impressions, personal beliefs,
and countless other tangible and intangible ways,” all of which have commonly come to
be called “attorney work product,” are privileged against disclosure to an adverse
party. Id.; see also DOI v. Klamath Water Users Protective Ass'n, 532 U.S. 1, 8 (2001) (“Work
product protects ‘mental processes of the attorney.’”) (quoting United States v. Nobles,
422 U.S. 225, 238 (1975)).
The core of attorney work product consists of “the mental impressions,
conclusions, opinions, or legal theories of a party's attorney or other
representative concerning the litigation.” Fed. R. Civ. P. 26(b)(3)(A)(ii).
The opposing party “shouldn't be allowed to take a free ride on the other
party’s research, or get the inside dope on that party’s strategy, or...invite
the [trier of fact] to treat candid internal assessments of a party's legal
vulnerabilities as admissions of guilt.” Mattenson v. Baxter Healthcare Corp.,
438 F.3d 763, 768 (7th Cir. 2006); see Ronald J. Allen et al., “A Positive
Theory of the Attorney-Client Privilege and the Work-Product Doctrine,”
19 J. Legal Stud. 359, 384-86 (1990).
Menasha Corp. v. United States DOJ, 707 F.3d 846, 847 (7th Cir. 2013).
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Only the documents or protected communications are covered under the work
product protection; the underlying facts are not protected. Patrick v. City of Chi., 111 F.
Supp. 3d 909, 915 (N.D. Ill. 2015) (citing Upjohn Co. v. United States, 449 U.S. 383, 395-96
(1981)). However, “disclosure of some documents does not necessarily destroy workproduct protection for other documents of the same character.” Appleton Papers, Inc. v.
EPA, 702 F.3d 1018, 1025 (7th Cir. 2012) (quoting 8 Wright & Miller, Federal Practice &
Procedure, § 2024 and citing cases).
[T]he doctrine is an intensely practical one, grounded in the realities of
litigation in our adversary system. One of those realities is that attorneys
often must rely on the assistance of investigators and other agents in the
compilation of materials in preparation for trial. It is therefore necessary
that the doctrine protect material prepared by agents for the attorney as
well as those prepared by the attorney himself.
Nobles, 422 U.S. at 238-39.
“[A] party may overcome a work product claim by showing ‘it has substantial
need for the materials to prepare its case and cannot, without undue hardship, obtain
their substantial equivalent by other means.’” Appleton Papers, 702 F.3d at 1022 (quoting
Fed. R. Civ. P. 26(b)(3)(A)(ii)). When assessing whether a party has waived work
product protection, a court assesses “whether the ‘specific assertions of privilege are
reasonably consistent with the purposes for which’ the privilege was created.” Appleton
Papers, 702 F.3d at 1025 (quoting In re Sealed Case, 676 F.2d 793, 817, 219 U.S. App. D.C.
195 (D.C. Cir. 1982)). Disclosure of certain sorts of work product is particularly
discouraged. For example, disclosure of witness interviews and related documents is
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disfavored “because it tends to reveal the attorney’s mental processes.” Sandra T.E. v. S.
Berwyn Sch. Dist. 100, 600 F.3d 612, 622 (7th Cir. 2009) (quoting Upjohn, 449 U.S. at 39899). The potential use of the material is also a relevant consideration. For example, the
Court of Appeals for the Seventh Circuit has “been extremely reluctant to allow
discovery of attorney work product simply as impeachment evidence.” Id. (citing
Hauger v. Chi., Rock Island & Pac. R.R. Co., 216 F.2d 501, 508 (7th Cir. 1954)).
B. Attorney-Client Privilege
“[T]he work product doctrine ‘is distinct from and broader than the attorneyclient privilege.’” Appleton Papers, 702 F.3d at 1024 (quoting Nobles, 422 U.S. at 238 n.11).
“To determine if a communication falls within the protection of the attorney-client
privilege, [courts] ask: (1) whether ‘legal advice of any kind [was] sought … from a
professional legal adviser in his capacity as such’; and (2) whether the communication
was ‘relat[ed] to that purpose’ and ‘made in confidence … by the client.’” Sandra T.E.,
600 F.3d at 618 (quoting United States v. Evans, 113 F.3d 1457, 1461 (7th Cir. 1997)). “The
fact that the privilege is invoked to protect communications made by employees of a
governmental entity rather than a private party does not change the analysis.” Id. at 620.
“[T]he attorney-client privilege protects not only the attorney-client relationship in
imminent or ongoing litigation but also the broader attorney-client relationship outside
the litigation context.” Id. at 621.

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C. Common Interest Doctrine
Ordinarily, the attorney–client privilege is negated if an outsider, i.e., a person
who is neither an attorney nor the attorney’s client, is included in the communication.
The common interest doctrine is an exception to this rule. United States v. BDO Seidman,
LLP, 492 F.3d 806, 815 (7th Cir. 2007). When the presence of an outsider creates a hole in
a privilege, the common interest doctrine can plug that hole.
“[T]he common interest doctrine only will apply where the parties undertake a
joint effort with respect to a common legal interest, and the doctrine is limited strictly to
those communications made to further an ongoing enterprise.” Id. at 815-16 (citing
Evans, 113 F.3d at 1467). In practice, the common interest doctrine generally operates to
allow the sharing of information between attorneys representing allied clients without
destroying the attorney-client privilege. See Rao v. Bd. of Trs., 2016 U.S. Dist. LEXIS
145298, 9 (N.D. Ill. Oct. 20, 2016) (citing McCullough v. Fraternal Order of Police, 304
F.R.D. 232, 239 (N.D. Ill. 2014)).
Although the common interest doctrine frequently applies to preserve claims of
attorney-client privilege, courts have also found it to serve a similar role in protecting
work product. Tate & Lyle Ams., LLC v. Glatt Air Techniques, Inc., 2015 U.S. Dist. LEXIS
104265, 12-15 (C.D. Ill. July 31, 2015); Whitney v. Tallgrass Beef Co. LLC, 2015 U.S. Dist.
LEXIS 78956 (N.D. Ill. June 18, 2015) (citing Costello v. Poisella, 291 F.R.D. 224, 231 (N.D.
Ill. 2013)); In re United Mine Workers of Am. Employee Benefit Plans Litig., 159 F.R.D. 307,

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313 n.4 (D.D.C. 1994); Trans-Western Petroleum, Inc. v. Wolverine Gas and Oil Corp., 2011
U.S. Dist. LEXIS 144744, 2011 WL 6318528, at *4 (D. Utah Dec. 15, 2011). Therefore,
“attorneys facing a common litigation opponent” are permitted to share work product
without fear of waiving the protection. Costello, 291 F.R.D. at 231 (quoting Schachar v.
American Academy of Opthalmology, Inc., 106 F.R.D. 187, 191 (N.D. Ill. 1985)).
D. Deliberative Process Privilege
“The deliberative process privilege rests on the obvious realization that officials
will not communicate candidly among themselves if each remark is a potential item of
discovery and front page news, and its object is to enhance the quality of agency
decisions, by protecting open and frank discussion among those who make them within
the Government.” Klamath Water Users Protective Ass'n, 532 U.S. at 8-9 (internal citation
and quotation marks omitted). “The deliberative-process privilege covers memoranda
and discussions within the Executive Branch leading up to the formulation of an official
position.” United States v. Zingsheim, 384 F.3d 867, 872 (7th Cir. 2004) (citing NLRB v.
Sears, Roebuck & Co., 421 U.S. 132 (1975)). The “privilege exempts ‘all papers which
reflect the agency’s group thinking in the process of working out its policy and
determining what its law shall be.’” King v. IRS, 684 F.2d 517, 519 (7th Cir. 1982)
(quoting Sears, Roebuck & Co., 421 U.S. at 153). The privilege
serves to assure that subordinates within an agency will feel free to
provide the decisionmaker with their uninhibited opinions and
recommendations without fear of later being subject to public ridicule or
criticism; to protect against premature disclosure of proposed policies
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before they have been finally formulated or adopted; and to protect
against confusing the issues and misleading the public by dissemination
of documents suggesting reasons and rationales for a course of action
which were not in fact the ultimate reasons for the agency's action.
Id. (quoting Coastal States Gas Corp. v. DOE, 199 U.S. App. D.C. 272, 617 F.2d 854, 866
(D.C. Cir. 1980)). Although the privilege most commonly applies to inter-agency or
intra-agency communications, under certain circumstances the privilege may cover
communications between government agencies and outside consultants hired by the
agency. Klamath Water Users Protective Ass’n, 532 U.S. at 10.
Like the work product privilege, the deliberative process privilege protects only
documents and communications, not underlying facts, from disclosure. Patrick, 111 F.
Supp. 3d at 915 (citing Upjohn Co., 449 U.S. at 395-96).
E. Investigative File Privilege
The law enforcement privilege, also referred to as the law enforcement
investigatory privilege or the investigative file privilege, is not frequently discussed by
appellate courts. It is an outgrowth of the common law executive privilege and thus
serves a similar “justification rooted in the need to minimize disclosure of documents
whose revelation might impair the necessary functioning of a department of the
executive branch.” Dinler v. City of New York, 607 F.3d 923, 942 fn. 18 (2d Cir. 2010)
(quoting Black v. Sheraton Corp. of Am., 564 F.2d 531, 541-42 (D.C. Cir. 1977)). “The
interests that underlie the privilege are ‘rooted in common sense as well as common
law’ and, like other common law privileges, the law enforcement privilege is subject to
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‘pragmatic adjustment to the needs of sound government.’” Id. (quoting Black, 564 F.2d
at 542).
“The purpose of the privilege … is ‘to prevent disclosure of law enforcement
techniques and procedures, to preserve the confidentiality of sources, to protect witness
and law enforcement personnel, to safeguard the privacy of individuals involved in an
investigation, and otherwise to prevent interference with an investigation.’” Id. at 94041 (quoting In re Dep’t of Investigation, 856 F.2d 481, 484 (2d Cir. 1988)).
The party asserting the privilege bears the burden of showing that the privilege
applies to the documents or information sought. Id. at 944 (citing In re Sealed Case, 856
F.2d 268, 271-72 (D.C. Cir. 1988)).
To meet this burden, the party asserting the law enforcement privilege
must show that the documents contain information that the law
enforcement privilege is intended to protect. Such protected information
includes information pertaining to “law enforcement techniques and
procedures,” information that would undermine “the confidentiality of
sources,” information that would endanger “witness and law enforcement
personnel [or] the privacy of individuals involved in an investigation,”
and information that would “otherwise … interfere[ ] with an
investigation.”
Id. at 944 (quoting Dep’t of Investigation, 856 F.2d at 484). The privilege is not limited to
ongoing investigations; information about past investigations might seriously imperil
an agency’s ability to conduct future investigations. Id. (citing Nat'l Congress for P.R.
Rights ex rel. Perez v. City of N.Y., 194 F.R.D. 88, 95 (S.D.N.Y. 2000)).

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The privilege, however, is not absolute. Dellwood Farms v. Cargill, Inc., 128 F.3d
1122, 1125 (7th Cir. 1997). The interest served by the privilege must be balanced against
the litigant’s interest in disclosure. Id. However, this balancing starts with the scales
weighed against the litigant seeking disclosure. Id. (“[T]here ought to be a pretty strong
presumption against lifting the privilege.”)
III.

Motion to Compel Documents
The court has reviewed in camera the documents that the Secretary alleges are not

subject to disclosure. The court did not review documents listed on the privilege log
that the Secretary states have been already provided to the defendants, identified here
by their Bates stamps: DOL0007063-7064; DOL0007066-7067; DOL0007166-7188;
DOL0009172-9255;

DOL0009261-9291;

DOL0009298-9325;

DOL0009350-9451;

DOL0009456-9541;

DOL0009544-9562;

DOL0009567-9575;

DOL0009578-9604;

DOL0009607-9690;

DOL0009693-9793;

DOL0009796-9840;

DOL0009955-9962;

DOL0009967-9982;

DOL0009984-10187;

DOL0010222-10225;

DOL0010230-10233;

DOL0010235-10277;

DOL0010288-10411;

DOL0010415-10524;

DOL0010613-10614;

DOL0010623-10635;

DOL0011420-11539;

DOL0010731-10749;

DOL0011015-11017;

DOL0011093-11096; DOL0011141-11184.
The court rejects the defendants’ arguments that the Secretary waived any
protection by allegedly failing to produce adequate and complete privilege logs earlier
or by not asserting a specific applicable privilege at an earlier time. Finding waiver

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under such circumstances is a severe sanction that requires a showing of bad faith. See
Muro v. Target Corp., 250 F.R.D. 350, 359-60 (N.D. Ill. 2007) (citing Am. Nat'l Bank & Trust
Co. of Chicago v. Equitable Life Assurance Soc'y of U.S., 406 F.3d 867, 879 (7th Cir. 2005)).
The court does not find bad faith and finds that such a sanction would be
disproportionate in light of what allegedly occurred here.
As to the vast majority of documents that the court reviewed, the court finds that
each is privileged or otherwise protected from disclosure for one or more of the reasons
cited by the Secretary. The court will not separately discuss those documents. Only a
handful of documents merit further discussion.
However, the court also notes that the description provided by the Secretary of
one document on the privilege log is incomplete. DOL0011757-11770 is described as an
“Email with two attachments totaling 13 pages discussing a draft voluntary compliance
letter to John Michael Maier” The description should note that this document also
contains a draft letter to Roger L. Mueller and Veronica S. Mueller. Notwithstanding the
incomplete description, the document is still protected as work product.
A. Communications with Bankers Trust
The Secretary asserts that the following documents are covered by the common
interest doctrine:
DOL0012026: August 15, 2013 email from Kevin Long to Usha Smerdon
with Glenn Loos and Neil Brozen cc’d.

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DOL0012025: August 15, 2013 email from Kevin Long to Neil Brozen,
Usha Smerdon, and Glenn Loos.
DOL0012023-12024: August 19, 2013 email from Kevin Long to Glenn Loos
and Usha Smerdon with Lisa Majeski cc’d.
DOL0012014-12016: August 20, 2013 email from Kevin Long to Usha
Smerdon and August 19, 2013 email from Kevin Long to Glenn Loos and
Usha Smerdon with Lisa Majeski cc’d.
DOL0012017-12019: August 20, 2013 email from Kevin Long to Usha
Smerdon and August 19, 2013 email from Kevin Long to Glenn Loos and
Usha Smerdon with Lisa Majeski cc’d. (duplicate of what is contained on
DOL0012014).
DOL0012020-120222: August 20, 2013 email from Kevin Long to Usha
Smerdon with Lisa Majeski cc’d. Also copy of August 20, 2013 email from
Kevin Long to Usha Smerdon that is contained at DOL0012014 and
DOL0012017.
DOL0012027-12028: August 12, 2013 email from Kevin Long to Glenn Loos
and Usha Smerdon with Lisa Majeski cc’d.
The Secretary entered into a common interest agreement with successor trustee
Bankers Trust Company of South Dakota, which became effective on September 18,
2013. (ECF No. 105-15.) As reflected above, the emails were all sent by Kevin Long, an
attorney representing the successor trustee, between August 12, 2013 and August 20,
2013, thus roughly a month before the common interest agreement became effective.
The defendants have not identified any authority suggesting that the common
interest privilege depends upon a pre-existing written agreement. The leading cases
covering the doctrine make no suggestion of such a requirement. See, e.g., BDO Seidman,

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LLP, 492 F.3d at 816. The court finds that the lack of a written common interest
agreement at the time of the disclosure does not bar the application of the doctrine.
There was a common interest between the Secretary and the successor trustee at
the time the documents were disclosed. Although one lawyer represented a trustee and
the other lawyer represented the Department of Labor, the lawyers each represented
clients entrusted with safeguarding the plan’s beneficiaries and ensuring that the
defendants complied with ERISA.
The allegedly privileged communications contain Long’s thoughts and opinions
on the case. As such, they more comfortably fall within the scope of the work product
doctrine than the attorney-client privilege. Whether covered as an attorney-client
communication or work product, the communications are protected nonetheless. Long
shared his work product with an attorney representing a client with a common interest.
The work product was prepared in anticipation of litigation; in fact, Long offers his
opinions on aspects of the case. The fact that Long’s client, the successor trustee, is not a
named party in this action does not negate the work-product protection otherwise
afforded to Long’s work. See Pampered Chef v. Alexanian, 737 F. Supp. 2d 958, 965 n. 5
(N.D. Ill. 2010) (citing cases).
B. Documents Allegedly Protected by the Attorney-Client Privilege and Work
Product Doctrine
DOL0009964-9965 and DOL0009292-9294 include emails from a Department of
Labor investigator to a department attorney. The Secretary asserts that the documents
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are protected from disclosure by the attorney-client privilege. However, legal advice
was not sought in the documents and the statements contained therein are not the sort
of confidential statements made in connection with the provision of legal services that
the privilege exists to protect. Therefore, the documents are not privileged. They shall
be disclosed within 21 days of this order.
The court also finds that portions of other documents are not protected from
disclosure. Within the document identified as DOL0010281-10283, the last four lines on
DOL0010282 (the email header) and all of page DOL0010283 is not protected work
product or a privileged attorney-client communication. These pages shall be disclosed
within 21 days of this order.
Within the document identified as DOL0010607-10611, beginning with the email
header in the middle of DOL0010609 and continuing through DOL0010611, the
document is not protected work product or a privileged attorney-client communication.
These pages shall be disclosed within 21 days of this order.
Within the document identified as DOL0010412-10413, beginning with the email
header on DOL0010413 and continuing to the end, the document is not protected work
product or a privileged attorney-client communication. It shall be disclosed within 21
days of this order.

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IV.

Motion to Compel Deposition Answers
The Mueller defendants asked the court to compel Visconti, an investigator

employed by the Department of Labor, to answer 48 questions that he was instructed
not to answer at his deposition on the basis of various privileges. (ECF No. 109 at 3-10.)
Nine of these questions asked Visconti to provide the portions of documents that had
been redacted. (ECF No. 109, Questions 4, 7, 9, 10, 21, 37, 40, 41, 43.) The documents
referenced in the deposition are not identified by their Bates number. Thus, it is not
possible to confirm if each document referenced at the deposition was encompassed
within the motion to compel. Nonetheless, the court presumes that its decision on the
motion to compel the production of documents moots the motion to compel an answer
with respect to these questions.
As for the remaining 39 questions, the court has reviewed each one and finds
that Visconti properly refused to answer on the basis of the asserted privilege or
protection. Therefore, to the extent the motion is not moot, the Mueller defendants’
motion to compel (ECF No. 108) is denied.
V.

Motion to Restrict Document
The Mueller defendants ask the court to seal the documents labeled as Exhibits

A, B, and H to the Declaration of Douglas A. Rubel in Support of their Second Motion to
Compel Discovery. (ECF No. 124.) The motion is granted as follows. Exhibits B (ECF
No. 125-1) and H (ECF No. 125-2) are restricted to case participants. Exhibit A, which

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purports to be the common interest agreement, was not electronically filed as a part of
ECF Nos. 123, 124, or 125. Therefore, there is nothing actually filed on the docket
requiring restriction. This common interest agreement, however, was previously filed as
ECF No. 105-15.
IT IS THEREFORE ORDERED the Mueller defendants’ motion to compel the
deposition testimony of Charles Visconti (ECF No. 108) is denied. The court declines to
award expenses and attorney’s fees to the Secretary. See Fed. R. Civ. P. 37(a)(5)(B).
IT IS FURTHER ORDERED that the Mueller defendants’ motion to compel the
production of documents (ECF No. 121) is granted in part and denied in part. The court
declines to apportion the reasonable expenses of the motion. See Fed. R. Civ. P.
37(a)(5)(C).
IT IS FURTHER ORDERED that the Mueller defendants’ motion to restrict
documents (ECF No. 124) is granted.
Your attention is directed to 28 U.S.C. ' 636(b)(1)(A) and Fed. R. Civ. P. 72(a)
whereby written objections to any order herein or part thereof may be filed within 14
days of service of this order. Failure to file a timely objection with the district court shall
result in a waiver of a party=s right to appeal.
Dated at Milwaukee, Wisconsin this 22nd day of November, 2016.

_________________________
WILLIAM E. DUFFIN
U.S. Magistrate Judge
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