Director, Office of Thrift Supervision v. Vinson & Elkins, LLP

• Decision Date: 10 October 1997
• Docket Number: No. 96-5341,96-5341
• Citation: 124 F.3d 1304
• Parties: , 39 Fed.R.Serv.3d 134 DIRECTOR, OFFICE OF THRIFT SUPERVISION, Appellant v. VINSON & ELKINS, LLP, et al., Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1304

124 F.3d 1304

326 U.S.App.D.C. 332, 39 Fed.R.Serv.3d 134

DIRECTOR, OFFICE OF THRIFT SUPERVISION, Appellant v. VINSON & ELKINS, LLP, et al., Appellees

No. 96-5341.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 8, 1997.

Decided Oct. 10, 1997.

Appeal from the United States District Court for the District of Columbia (96ms0196).

Kenneth J. Guido, Jr., Special Enforcement Counsel, Office of Thrift Supervision, argued the cause for appellant, with whom Bryan T. Veis, Special Counsel, Washington, DC, was on the briefs.

Charles D. Tetrault argued the cause for appellees, with whom John K. Villa, Mary G. Clark, and J. Andrew Keyes, Washington, DC, were on the brief.

Before: SILBERMAN, ROGERS, and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

Appellant Office of Thrift Supervision (OTS) asked the district court to enforce administrative subpoenas issued to the law firm of Vinson & Elkins and two lawyers of that firm. The district court denied enforcement. We affirm.

I.

Barry Munitz sat on the boards of both the United Savings Association of Texas (Association) and its parent company, United Financial Group. After the Association declared bankruptcy, the Federal Deposit Insurance Corporation interviewed Munitz about his role in the failed savings and loan. C. Michael Buxton and Timothy A. Nelson, two lawyers from Vinson & Elkins, represented Munitz at the interview. Munitz's testimony, which was neither transcribed nor under oath, was recorded only in the notes taken by Buxton, Nelson, and three FDIC lawyers.

Several years later, OTS began formally investigating the Association. ¹ OTS deposed Munitz, this time under oath and with a court reporter. One of OTS' main concerns was the relationship between the Association and its direct and indirect shareholders, including MCO Holdings (later MAXXAM), Federated Development Company, and The Drexel Burnham Lambert Group. Charles Hurwitz was Chairman and CEO of both MCO and Federated, which, combined, owned the largest block of stock in the Association's parent company. OTS suspected that Hurwitz might have pressured the Association to buy "junk bonds" to benefit his own business interests rather than those of the Association. The following interchange took place between OTS and Munitz:

Q: Did Hurwitz ever mention to you that [the Association's] purchase of junk bonds from Drexel was helpful to MCO's relationships with Drexel?

A: No.

Q: Did anyone ever tell you that?

A: No one ever told me that. People have asked me that, but no one has ever told me that.

Before the deposition, OTS obtained notes of Munitz's prior testimony from two of the three FDIC lawyers who had been present at the FDIC interview. The FDIC attorney notes suggest that Munitz may have answered the same question somewhat differently in his FDIC interview:

Hurwitz Motivations--

1. Peer group pressure--"who was going down & who was still alive."

2. Did not want to hurt his reputation among peers and Milken [a former officer of Drexel].

3. Concern about net worth maint. risk--to MAXXAM.

4. [Association] was "ticket to ride" with Drexel.

Because of the purported inconsistency, OTS ordered Buxton, Nelson, and Vinson & Elkins to produce all documents relating to the FDIC interview.

Buxton, Nelson, and Vinson & Elkins moved to quash the administrative subpoena, claiming the protection of both the attorney-client privilege and the work-product doctrine. In accordance with its internal procedures, OTS designated a Regional Enforcement Counsel to rule on the motion to quash. After reviewing the documents in camera, the Regional Enforcement Counsel determined that the majority of the documents were protected, but ordered Vinson & Elkins to produce portions of the notes Buxton and Nelson took of Munitz's testimony during the FDIC interview. Vinson & Elkins declined to produce the notes based on the work-product privilege, and OTS filed a subpoena enforcement action in district court. The district court refused to enforce the subpoena.

Appellant argues that the district court erred in characterizing the interview notes as "opinion work product." In appellant's view, the district court owed deference to the Regional Enforcement Counsel's determinations that the notes were "fact work product" and that OTS had demonstrated sufficient need to obtain them. Appellees counter that, regardless of whether the notes represent facts or opinions, OTS has failed to show sufficient need.

II.

Appellant's basic position is that the district court misapplied administrative law in not deferring to OTS' determination that the notes were only factual work product and that the agency needed the notes. If that were so then we, in turn, would owe no deference to the district court because its error would be one of law. The difficulty with appellant's theory is that it simply is using the wrong model. ² This is not a case in which appellees have challenged agency action. The agency instead has come to court in a subpoena enforcement proceeding. To be sure, even in a subpoena enforcement proceeding the district court is sometimes obliged, in effect, to defer to an agency's determination even if it is only a litigating position. If the dispute turns on the relevance of the information sought by a government agency, we have said that the district court should not reject the agency's position unless it is "obviously wrong," and that the burden, as a practical matter, is on the defendant to meet that test. FTC v. Invention Submission Corp., 965 F.2d 1086, 1089 (D.C.Cir.1992) (relying on United States v. Morton Salt Co., 338 U.S. 632, 70 S.Ct. 357, 94 L.Ed. 401 (1950)). ³ We give the agency a wide berth as to relevance because it need establish only that the information is relevant to its investigation not to a hypothetical adjudication, and as we have explained, the boundary of an investigation need only, indeed can only, be defined in general terms. RTC v. Walde, 18 F.3d 943, 946 (D.C.Cir.1994); Invention Submission Corp., 965 F.2d at 1089. The scope of the investigation, moreover, is very much dependent on the agency's interpretation and administration of its authorizing substantive legislation concerning which the agency may enjoy interpretative deference. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).

This case, however, does not turn on the relevance of the information sought, but rather on the question whether under FED.R.CIV.P. 26(b)(3) the work-product privilege must yield to OTS' "showing of substantial need of the materials in the preparation of [its] case and that [it] is unable, without undue hardship, to obtain the substantial equivalent of the materials by other means." Appellant does not claim that the scope of the work-product privilege is somehow reduced if a government agency seeks information. Therefore, it is not apparent why a district judge should afford a government agency's articulation of its need greater weight than it would a private litigant.

III.

The parties do not dispute that the interview notes are attorney work product, but they argue at length about whether the notes represent facts or opinions. Appellant argues that the notes are merely an historical account of Munitz's testimony; appellees maintain that they also reveal the lawyers' mental impressions and legal theories. A party can discover fact work product upon showing a substantial need for the materials and an undue hardship in acquiring the information any other way. Opinion work product, on the other hand, is virtually undiscoverable. FED.R.CIV.P. 26(b)(3); Upjohn Co. v. United States, 449 U.S. 383, 401-02, 101 S.Ct. 677, 688-89, 66 L.Ed.2d 584 (1981). Appellees argue, and the district court agreed, that a lawyer's interview notes are always opinion work product, undiscoverable without "extraordinary justification." But this proposition goes too far. We recently observed that under certain circumstances purely factual material embedded in attorney notes may not deserve the super-protection afforded to a lawyer's...