U.S. ex rel. O'Keefe v. McDonnell Douglas Corp.

• Decision Date: 08 April 1998
• Docket Number: No. 97-2261,97-2261
• Parties: 13 IER Cases 990, 42 Cont.Cas.Fed. (CCH) P 77,235 The UNITED STATES of America ex rel. Daniel G. O'KEEFE, Plaintiff--Appellant, v. MCDONNELL DOUGLAS CORPORATION, Defendant--Appellee. The Conference of Chief Justices, Amicus Curiae.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1252

132 F.3d 1252

13 IER Cases 990, 42 Cont.Cas.Fed. (CCH) P 77,235

The UNITED STATES of America ex rel. Daniel G. O'KEEFE Plaintiff--Appellant, v. MCDONNELL DOUGLAS CORPORATION, Defendant--Appellee The Conference of Chief Justices, Amicus Curiae.

No. 97-2261.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 8, 1997.

Decided Jan. 6, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied April

8, 1998. ^*

Douglas Letter, U.S. Dept. of Justice, Washington, DC, argued (John C. Hoyle, on the brief), for appellant.

Robert F. Scoular, Los Angeles, CA, argued (Stephen H. Rovak, Roger K. Heidenreich, Alan M. Posner, Veryl L. Riddle, Thomas C. Walsh, Charles A. Weiss, and David J. Massa, on the brief), for appellee.

Before HANSEN, JOHN R. GIBSON, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

HANSEN, Circuit Judge.

The United States of America appeals the district court's ¹ protective order preventing government attorneys from engaging in ex parte communications with current employees of the defendant, McDonnell Douglas Corporation (McDonnell Douglas). The government also appeals restrictions placed upon its investigation of former employees. We affirm.

I.

This action arose as a qui tam action brought by Daniel O'Keefe under the False Claims Act, 31 U.S.C. §§ 3729-33, alleging mischarging of labor hours by employees of McDonnell Douglas Corporation (McDonnell Douglas) while working on United States military contracts. The United States subsequently intervened in the suit pursuant to 31 U.S.C. § 3730(b)(4) and (c). On behalf of the United States, the Department of Justice (DOJ) began its pretrial investigation. In particular, investigative agents of the DOJ began making ex parte contacts with various present and former lower-level employees of McDonnell Douglas without the consent of McDonnell Douglas's counsel.

McDonnell Douglas brought a motion for a protective order preventing such contacts, arguing that such ex parte contacts were barred by Missouri Supreme Court Rule 4-4.2. Missouri Supreme Court Rule 4-4.2 provides, "[i]n representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so." The official comment explains that where the opposing party is an organization, Rule 4-4.2 bars ex parte communications with "persons having the managerial responsibility on behalf of the organization, and with any other person whose act or omission in connection with that matter may be imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization." This comment was adopted by the Supreme Court of Missouri in State ex rel. Pitts v. Roberts, 857 S.W.2d 200, 202 (Mo.1993) (en banc). The Supreme Court of Missouri's ethical rules have in turn been adopted by the United States District Court for the Eastern District of Missouri. See E.D. Mo. L.R. 12.02 ("The Code of Professional Responsibility adopted by this Court is the Code of Professional Responsibility adopted by the Supreme Court of Missouri, as amended from time to time, except as may otherwise be provided by this Court's Rules of Disciplinary Enforcement.").

The government argues that a protective order was not warranted because the ex parte contacts it engaged in are expressly authorized by 28 C.F.R. § 77.10(a), a rule promulgated by the Attorney General of the United States. This rule provides as follows:

A communication with a current employee of an organization that qualifies as a represented party or represented person shall be considered to be a communication with the organization for purposes of this part only if the employee is a controlling individual. A "controlling individual" is a current high level employee who is known by the government to be participating as a decision maker in the determination of the organization's legal position in the proceeding or investigation of the subject matter.

28 C.F.R. § 77.10(a). The Government argues that section 77.10(a) supersedes the local rules of the Eastern District of Missouri. In the alternative, the government argues that, in light of section 77.10(a), the disputed ex parte contacts by DOJ attorneys were "authorized by law," and thus fell under the express exception to Rule 4-4.2 which states that ex parte contacts are permissible if "authorized by law." McDonnell Douglas responds to both arguments by asserting that the Attorney General lacked the statutory authority to issue 28 C.F.R. § 77.10(a), and that this provision is therefore invalid and of no effect.

The district court concluded that section 77.10(a) fell beyond the limits of the Attorney General's statutory authority. Accordingly, it granted the protective order in part, finding that the government's ex parte contacts with current McDonnell Douglas employees violated Missouri Supreme Court Rule 4-4.2 as adopted by the Eastern District of Missouri. It ordered the government to cease such contacts and to provide discovery of information obtained from those contacts already made. The court also imposed conditions on ex parte contacts with former McDonnell Douglas employees. At the government's request, we stayed that portion of the district court's order that requires the government to provide discovery of information obtained from its ex parte contacts.

II.

"It is axiomatic that an administrative agency's power to promulgate legislative regulations is limited to the authority delegated by Congress." Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208, 109 S.Ct. 468, 471, 102 L.Ed.2d 493 (1988); see also Louisiana Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 374, 106 S.Ct. 1890, 1901, 90 L.Ed.2d 369 (1986) ("an agency literally has no power to act ... unless and until Congress confers power upon it."). The government claims that 5 U.S.C. § 301 and various sections of Title 28 of the United States Code grant the Attorney General the authority to promulgate 28 C.F.R. § 77.10(a). We address each assertion in turn.

A. The Housekeeping Statute

The government relies primarily on 5 U.S.C. § 301 (1994). Section 301, better known as the "Housekeeping Statute," was passed in 1789 "to help General Washington get his administration underway by spelling out the authority for executive officials to set up offices and file government documents." H.R.Rep. No. 85-1461(1958), reprinted in 1958 U.S.C.C.A.N. 3352. The current version of the Housekeeping Statute provides as follows:

The head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property.

This section does not authorize withholding information from the public or limiting the availability of records to the public.

5 U.S.C. § 301 (1994).

The government's argument that the Housekeeping Statute authorizes the Attorney General's promulgation of 28 C.F.R. § 77.10(a) contradicts the plain meaning of the statute and the jurisprudence of the Supreme Court. In Chrysler Corp. v. Brown, 441 U.S. 281, 310, 99 S.Ct. 1705, 1721, 60 L.Ed.2d 208 (1979), the Supreme Court examined the Housekeeping Statute and held that it does not provide statutory authority for substantive regulations. After a brief historical analysis of the provision, the Court wrote:

Given this long and relatively uncontroversial history, and the terms of the statute itself, it seems to be simply a grant of authority to the agency to regulate its own affairs.... It is indeed a "housekeeping statute," authorizing what the APA terms "rules of agency organization, procedure or practice" as opposed to "substantive rules."

Id. at 309-10, 99 S.Ct. at 1721-22. In so ruling, the Court noted that Congress had looked carefully at the statute in 1958, that the Special Subcommittee on Government Information had "unanimously agreed that [§ 301] originally was adopted in 1789 to provide for the day-to-day office housekeeping in the Government departments," and that attempts to construe it as something more was "misuse" which "twisted" the statute. Chrysler Corp., 441 U.S. at 310 n. 41, 99 S.Ct. at 1722 n. 41 (quoting H.R.Rep. No. 85-1461 at 7 (1958)) (alterations in original).

In recent years, several agencies have unsuccessfully attempted to find statutory authority for substantive regulations in the Housekeeping Statute. See In re Bankers Trust Co., 61 F.3d 465, 470 (6th Cir.1995) (Federal Reserve Board regulation requiring subpoenaed party to refuse production of confidential FRB information, contrary to Federal Rule of Civil Procedure 34, was not authorized by the Housekeeping Statute and "exceed[ed] the congressional delegation of authority"), cert. dismissed, 517 U.S. 1205, 116 S.Ct. 1711, 134 L.Ed.2d 808 (1996); Exxon Shipping Co. v. United States Dep't of Interior, 34 F.3d 774, 776-78 (9th Cir.1994) (Housekeeping Statute did not authorize regulations allowing agency to withhold deposition testimony of federal employees); In re Cincinnati Radiation Litig., 874 F.Supp. 796, 826-27 (S.D.Ohio 1995) (Housekeeping Statute did not authorize 1953 Defense Department directive on the use of human volunteers in experimental research); McElya v. Sterling Med. Inc., 129 F.R.D. 510, 514 (W.D.Tenn.1990) (Housekeeping Statute did not give Department of Navy authority to create general discovery privilege for persons under its jurisdiction). The government's argument in the case at bar is simply one more attempt to twist this simple administrative statute into an authorization for the promulgation of substantive rules.

The government cites three cases in support of its reading of the Housekeeping Statute. These are Boske v. Comingore, 177 U.S. 459, 20 S.Ct. 701,...