U.S. v. Hunton & Williams
| Decision Date | 03 January 1997 |
| Docket Number | Misc. Action No. 95-459 (RMU). |
| Citation | 952 F.Supp. 843 |
| Court | U.S. District Court — District of Columbia |
| Parties | UNITED STATES of America and John Adair, Inspector General of the Resolution Trust Corporation, Petitioners, v. HUNTON & WILLIAMS, Respondent. |
Eric S. Angel, U.S. Department of Justice, Civil Division, Washington, DC, for petitioners.
Stephen L. Braga, Miller, Cassidy, Larroca & Lewin, Washington, DC, for respondent.
Granting Petitioners' Motion to Enforce the Subpoena Duces Tecum and Ordering the Parties to Enter Into a Confidentiality Agreement
This matter comes before the court upon the United States' and the Office of the Inspector General of the Resolution Trust Corporation's (OIG-RTC) motion to enforce a subpoena duces tecum.1 The RTC retained Hunton & Williams (H & W), a private law firm, to provide it with legal services on a number of matters relating to the management of several failed savings and loans (S & L) institutions. The subpoena seeks the production of information pertaining to conflict of interest searches conducted by H & W including, inter alia, a a client list for all H & W attorneys who performed RTC-related work, or in the alternative, the timesheets, with client names redacted, relating to the 40 invoices H & W submitted to the RTC as part of the OIG-RTC's audit, prior to H & W accepting to represent the RTC on a number of matters.
After having considering the parties' submissions and the relevant law, the court concludes that the subpoena, as narrowed, shall be enforced. Specifically, the court concludes that: the OIG-RTC had the authority to issue the subpoena; the information sought by the subpoena is reasonably relevant to the Inspector General's audit of H & W; and finally, that compliance with the subpoena is not unduly burdensome to H & W. Nevertheless, H & W has raised legitimate privacy and confidentiality concerns with respect to the representation of its clients. The parties shall therefore enter into a confidentiality agreement.
Petitioners are the United States of America and the OIG-RTC. Congress created the RTC in response to the S & L crisis of the 1980's. The RTC is the product of the Financial Institutions Reform and Recovery Act of 1989 (FIRREA), Pub.L. 101-73, 103-Stat.1983, which is an amendment to the Federal Home Loan Bank Act (FHLBA). The primary mission of the RTC was to manage and resolve the financial problems of the failed S & L institutions for which conservators or receivers had been appointed beginning January 1, 1989. FIRREA § 501(a), Pub.L. 101-73, 103 Stat. 183, 369 (codified as 12 U.S.C. § 1441a(b)(3)(A)(1) (Supp. V 1993)).2 Pursuant to the Inspector General Act of 1978, Congress established the OIG-RTC as part of the RTC's administrative structure. 5 U.S.C.App. 3 §§ 11(1) and (2) (Supp.V.1993). On December 31, 1995, the RTC's term expired and the majority of its assets, personnel and operations, including those of the OIG-RTC, were transferred to the Federal Deposit Insurance Corporation (FDIC).
The Respondent, H & W, is a private law partnership based in Richmond, Virginia, with a Washington, D.C. office located at 2000 Pennsylvania Avenue, N.W., 9th Floor, Washington, D.C. H & W provided a variety of legal services to the RTC from 1990 to 1995.
Under FIRREA, the RTC was authorized to hire outside contractors, such as private law firms, to assist it in carrying out its duties. 12 U.S.C. § 1441a(b)(11)(A). Beginning in 1990, the RTC retained H & W to provide it with legal services on a number of matters relating to the management of several failed S & L institutions. As of July 1995, H & W has been paid over $2.9 million for such services.3
On March 7, 1994, H & W was informed, by letter, that it had been selected for an audit by the OIG-RTC to determine whether the services it rendered to the RTC between 1991 and 1993 and the costs it charged to the RTC and the FDIC with respect to those services were "reasonable, adequately supported, and within the terms of applicable policies, regulations and agreements."4
The audit was initiated in accordance with a program established by the OIG to review all legal fees and expenses billed to the RTC by outside law firms in order to prevent fraud and abuse. Id.5 A central component of the program is for the RTC to review each firm's conflict of interest policies and the application of such policies to the representation of the RTC.6 The OIG must determine whether: (a) the firm maintained and operated a system to identify actual or potential conflicts of interest; (b) the firm informed the RTC (or the FDIC) of any actual or potential conflict; (c) the firm obtained a waiver from the RTC or the FDIC regarding any conflict or whether it withdrew its representation of the client causing the conflict; and finally, (d) the firm obtained a conditional waiver and complied with the conditions of the conditional waiver. Id.
In May 1994, the H & W partner in charge of RTC matters, Mr. Jack Molenkamp, met with independent auditors under contract with the OIG-RTC and their sub-contract attorney, Mr. Greg Garvin. During this meeting, Mr. Molenkamp provided Mr. Garvin with copies of the firm's conflict policy and conflict forms as well as other information regarding the conflict surveys that were performed in 1991.
In June of 1994, Mr. Garvin asked to review the original source material that supported the conflict reports, including copies of the attorney responses to the firm survey data and the data from the computer conflicts search. Id.7 Although Mr. Molenkamp allowed Mr. Garvin to interview the paralegal responsible for conflicts searches, Ms. Judy Bugay, he refused to provide him with the original source material on the grounds that it contained confidential information about the firm's clients and other individuals with whom the firm had "confidential relationships." Id. at 7.
Subsequently, Mr. Ben Bornstein, of the OIG-RTC, personally contacted Mr. Molenkamp and requested a complete list of H & W clients, as well as all of the original source material for the 1991 and 1993 conflict checks. Id. Mr. Molenkamp again refused to provide the requested information without first obtaining client consent because it was his belief that such consent was mandated by Virginia ethical rules. Id.8
In October 1994, Mr. Garvin additionally requested to review random conflicts searches performed by H & W in relation to non-RTC cases, as opposed to only those related to RTC conflicts. Id. at 8. Mr. Molenkamp subsequently pulled several random files, but refused to allow the RTC to perform the random selection of conflicts memoranda itself. The firm also continued to refuse to disclose its client list. By way of a letter dated October 21, 1995, Mr. Molenkamp again advised Mr. Garvin that H & W was unable to comply with the RTC request because the firm was bound by Virginia Disciplinary Rule DR 4-101 which requires lawyers to protect "the confidences and secrets" of clients and a number of Legal Ethics Opinions by the Virginia State Bar that interpret the rule to include the protection of client identity. Id.
Over the next several months the parties attempted to compromise on the level of disclosure, but negotiations ultimately resulted in an impasse. As a result, on November 9, 1996, the OIG-RTC issued a subpoena duces tecum to H & W, requiring the production of:
1. A list of all clients for the law firm of H & W (covering the period December 1, 1990-December 31, 1993)
2. The June 1991 and June 1993 conflicts questionnaires issued to H & W attorneys and the attorney's responses, including draft responses produced by the attorneys and any other firm or contract personnel, issued in connection with RTC and FDIC work performed; and
3. H & W's conflicts memoranda and conflicts alert materials for the following RTC matters:
(a) LDID# 920065087: Chapter 11 Bankruptcy of Great Lakes
(b) LDID# 920009454: Country Club Square Limited Partnership
(c) LDID# 920013911: Richard and Brenda Knopp Matter;
(d) LDID# 920009255: Loan Default by John F. McMahon, Jr.;
(e) LDID# 920034867: NCR Corporation — Litigation (Disaffirmance) (f) LDID# 920058486: Edward J. Sarrazin — Foreclosure.9
H & W responded by offering to provide all of the information requested except for a complete client list (item no. 1). H & W reiterated its position that it could not ethically reveal the names of all of its clients. The OIG-RTC responded by advising H & W that a subpoena duces tecum would be issued requiring the production of the documents.
On December 29, 1995, the OIG-RTC filed the Petition for Summary Enforcement of Administrative Subpoena Duces Tecum. Subsequently, the OIG-RTC voluntarily narrowed the subpoena.10 Paragraph 1 of the subpoena now requires H & W to produce all attorney timesheets to support the 40 invoices submitted by H & W to the RTC as part of the audit or, in the alternative, a client list for those H & W attorneys who were handling RTC/FDIC matters during the period December 1, 1990 through December 31, 1993 (instead of a complete firm client list, as previously requested). Id. The narrowed subpoena allows H & W to redact from the timesheets all information concerning any activities and services rendered to non-RTC/FDIC clients. The timesheets, however, must reveal the identities of these non-RTC/FDIC clients and the time charged to these clients. Id. Paragraph 2 has now been modified to require all information which the firm has located pertaining to the June 1993 conflicts questionnaire and responses thereto. Paragraph 2 also requires H & W to submit an affidavit detailing their efforts to find any of the documents requested. Id. Paragraph 3 of the subpoena remains unchanged. Id. H & W, however, continues to object to...
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