Permian Corp. v. U.S.

• Decision Date: 09 September 1981
• Docket Number: No. 80-1817,80-1817
• Citation: 214 U.S.App.D.C. 396,665 F.2d 1214
• Parties: , Fed. Sec. L. Rep. P 98,280, Energy Mgt. P 26,339, 8 Fed. R. Evid. Serv. 1424 The PERMIAN CORPORATION and Occidental Petroleum Corporation, v. UNITED STATES of America, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1214

665 F.2d 1214

214 U.S.App.D.C. 396, Fed. Sec. L. Rep. P 98,280,

Energy Mgt. P 26,339, 8 Fed. R. Evid. Serv. 1424

The PERMIAN CORPORATION and Occidental Petroleum Corporation, v. UNITED STATES of America, Appellant.

No. 80-1817.

United States Court of Appeals District of Columbia Circuit.

Argued May 11, 1981.

Decided Sept. 9, 1981.

On Appeal from the United States District Court for the District of Columbia (D.C. Civil No. 79-2098).

Howard S. Scher, Atty. Dept. of Justice, Washington, D. C., with whom Alice Daniel, Asst. Atty. Gen., Charles F. C. Ruff, U. S. Atty., Anthony J. Steinmeyer, Atty., Dept. of Justice, and Paul G. Wallach, Atty., Dept. of Energy, Washington, D. C., were on the brief for appellant. Frederic D. Cohen, Atty., Dept. of Justice, Washington, D. C., also entered an appearance for appellant.

Robert E. Juceam, New York City, with whom Harvey L. Pitt, Washington, D. C., was on the brief, for appellees, The Permian Corporation, et al.

Daniel J. Popeo, Paul D. Kamenar, Washington, D. C., and Daniel Bensing were on the brief for amicus curiae, Washington Legal Foundation, urging affirmance.

Linda D. Fienberg, Atty., Securities and Exchange Commission, Washington, D. C., entered an appearance for appellee, Securities and Exchange Commission.

Before McGOWAN and MIKVA, Circuit Judges, and JAMESON, ^* Senior United States District Judge for the District of Montana.

Opinion filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

This is an appeal from a permanent injunction barring the Securities and Exchange Commission ("SEC") from providing the United States Department of Energy with access to certain documents obtained from Occidental Petroleum Corporation and its subsidiary The Permian Corporation (denominated collectively as "Occidental"). The district court found that these documents were subject to the attorney-client and work product privileges, and that Occidental's arrangements for delivery of these documents to the SEC did not constitute a waiver of the privileges.

We conclude that the district court's finding of an agreement to preserve the work product privilege was not clearly erroneous. We also find, however, that Occidental waived the attorney-client privilege as to the documents by voluntarily disclosing them to the SEC. Accordingly, we affirm the district court's judgment in part, and we reverse and remand in part.

I. THE FACTUAL CONTEXT

Most of the facts are undisputed. In 1978, Occidental proposed an exchange offer for shares of the Mead Corporation ("Mead"). See Permian Corp. v. United States, Civ. No. 79-2098, mem. op. at 2 (D.D.C. May 15, 1980) (hereinafter cited as Mem. Op.). Mead's management opposed the proposal, and initiated litigation in various courts. Id. at 3-4. Occidental produced millions of documents in response to Mead discovery requests, but sought to preserve claims of privilege and confidentiality at first by painstaking screening and later with the additional protection of a stipulation between Occidental and Mead providing that inadvertent production of a privileged document would not constitute a waiver of the privilege. Shortly thereafter, an order was entered in one of the federal district courts where the takeover litigation was proceeding, requiring both Mead and Occidental to give each other forty-eight hours notice before submitting any potentially confidential document of the opponent to a state or federal regulatory agency, and requiring court permission for the submission if the opponent objected. Id. at 5. ¹

Meanwhile, Occidental was involved with the SEC, which was inquiring into the adequacy of Occidental's registration statement for the proposed exchange offer. Occidental was understandably concerned that the SEC approve the registration statement and permit it to become effective as soon as possible, so that the offer could be made. See 15 U.S.C. §§ 77e, 77h (1976). The SEC began an informal investigation of certain factual issues, including problems raised by counsel for Mead. Mem.Op. at 7-8.

Occidental made available to the SEC some 1.2 million pages of documents. The sheer bulk of this response impaired its usefulness to the SEC, and SEC staff requested Occidental's permission "to secure the confidential Occidental information directly from Mead which had organized them around its adversarial issues and claims." Id. at 8. The SEC made it clear that processing of the registration statement would be greatly facilitated by access to Occidental documents presifted by Mead; without that access, considerable delay could result. The district court found that "(t)o avoid such delay Occidental's counsel negotiated with the SEC staff and Mead a procedure whereby the Commission would obtain confidential documents directly and expeditiously from Mead." Id. at 9.

The nature of the resulting agreement was disputed in the district court. The record includes four letters from Occidental's counsel, three addressed to SEC staff and one addressed to counsel for Mead. ² The first two letters set forth a scheme for special handling of Occidental documents. Mead was permitted to deliver documents it had received in discovery to the SEC, but Mead was to inform Occidental within forty-eight hours of the identity of any documents delivered. All documents were to be stamped with a restrictive endorsement warning against disclosure by the SEC. ³ The SEC agreed not to

deliver any of the Documents to any person other than a member of the Commission or the Staff or any other government agencies, offices or bodies or to the Congress for a reasonable period of time after notice to Occidental of the Staff's intention to deliver the Documents to such person.

Letter of Sept. 22, 1978, J.A. 168-69; see Letter of October 17, 1978, J.A. 140-43; Mem.Op. at 9.

The other two letters, both from December 1978, suggest a less protective attitude towards the confidentiality of the documents. The district court found, however, that these letters formed part of a negotiation between Occidental and the SEC for a new arrangement that was never completed, and that they did not supersede the earlier agreement. Mem.Op. at 10.

The letters evidencing Occidental's understandings with Mead and the SEC do not explicitly state that the SEC was forbidden to release confidential Occidental information to other government agencies. Counsel for Occidental stated, however, in an affidavit submitted to the district court, that "there was an oral understanding that Occidental would be advised as to governmental requests notwithstanding the letter," and that the terms of Occidental's agreement with the SEC "included (his) preclearance of the language of the stamped legends with the SEC staff." Reply Affidavit of Robert E. Juceam, PP 15, 20, J.A. 152, 154. Occidental argued that this scheme was designed to permit assertion of claims of privilege whenever the SEC attempted to disclose Occidental data received from Mead to any third party. The district court found, "(f)rom all that has been submitted by the parties, including affidavits and declarations, ... that this arrangement was an essential element of the discussions between the SEC staff and Occidental." Mem.Op. at 9.

Mead submitted "somewhat fewer than 1,000 documents" to the SEC between October and December, 1978, when Occidental abandoned its proposed exchange offer. Id. at 10. Among these were the thirty-six documents at issue in the present case, all written by Permian Corporation employees or Permian's outside counsel. Most of them relate to the legality of Permian's pricing practices for crude oil. Id. at 11-13. The district court concluded that seven of these documents were protected in whole or in part by the attorney-client privilege, and that the other twenty-nine were privileged as attorney work product. The United States does not challenge the privileged character of the documents on appeal; it argues only that the privileges in question had been waived. ⁴

It appears that the thirty-six documents were all in the SEC's hands by December 8, 1978, and that Occidental was informed of this fact by December 11. Reply Affidavit of Robert E. Juceam, P 30 n.*, J.A. 165; cf. Mem.Op. at 17. In January 1979, the Department of Energy sought the documents from the SEC for use in an investigation of Permian's compliance with petroleum pricing regulations. Occidental promptly objected, and when the SEC reaffirmed its determination to release the documents to the Department of Energy in August 1979, Occidental commenced the present action. Mem.Op. at 11.

II. DISCUSSION

We turn first to the twenty-nine documents that the district court found to be attorney work product. Appellants' only argument concerning these documents is that the district court's finding that Occidental had not waived the work product privilege was clearly erroneous. Appellants insist that the evidence demonstrates "that Occidental, although it may have preserved its privilege claims vis-a-vis non-governmental entities, clearly and intentionally waived its privilege claims vis-a-vis government agencies." Brief for Appellants United States and Department of Energy at 15-16.

The documentary evidence available concerning Occidental's arrangements with the SEC is ambiguous. Occidental's September 22 letter to the SEC could be construed to permit release of Occidental data to other government agencies without notification to Occidental, ⁵ and that letter is cited in the October 17 letter authorizing Mead to supply documents to the SEC. ⁶ On the other hand, the October 17 letter also speaks more generally of stamps "in accordance with terms and conditions arranged between the (SEC) and Occidental," ⁷ and the stamped legends refer broadly to disclosure by the SEC "to any third-party," see note 3 supra. These letters are not inconsistent with the existence of an oral agreement between Occidental and the SEC, worked out in October, by which the SEC agreed to...