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REICH v. HERCULES

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY


April 5, 1994

ROBERT B. REICH, Secretary of Labor, United States Department of Labor, Petitioner,
v.
HERCULES, INC., Respondent.

Dennis M. Cavanaugh, U.S.M.J. Hon. William G. Bassler

The opinion of the court was delivered by: DENNIS M. CAVANAUGH

REPORT & RECOMMENDATION

DENNIS M. CAVANAUGH, U.S. Magistrate Judge:

 This matter comes before the Court on the petition of Robert B. Reich, Secretary of Labor, United States Department of Labor ("The Secretary"), to enforce an administrative subpoena duces tecum served upon Respondent Hercules, Inc. ("Hercules") pursuant to Section 8(b) of the Occupational Safety and Health Act of 1970, 29 U.S.C. § 657(b) ("OSHA"). The matter was referred to me for the within Report and Recommendation by the Honorable William G. Bassler, pursuant to 28 U.S.C. § 636(b)(1)(B) and (C), Fed.R.Civ.P 72, and New Jersey Local Rule 40A.2. For the reasons discussed below, the undersigned recommends that the Secretary's petition be granted in part and denied in part.

 BACKGROUND

 Hercules is an international corporation which manufactures various products. Hercules maintains a plant in Kenvil, New Jersey, where explosives and smokeless powders are produced. In June 1989, an explosion occurred at the Kenvil Plant. An OSHA investigation resulted in citations being issued against Hercules in November 1989. A stipulated settlement was reached between the parties in October 1991. In March 1993, the Secretary commenced a new inspection, which included a follow-up inspection to see whether Hercules has abated its previous violations.

 In June 1993, the Secretary issued an administrative subpoena to Hercules seeking any safety audits conducted by Hercules with regard to, inter alia, Hercules' storage facilities, machine shops, and glaze barrel operations during the years 1987 through 1992. *fn1" Hercules has opposed this subpoena on the grounds that the materials sought are confidential and privileged. This action resulted. Hercules has turned over the purportedly privileged materials to this Court for in camera review.

 DISCUSSION

 Under Section 8(b) of OSHA, the Secretary has the authority to subpoena witnesses and documents in connection with an agency investigation. While OSHA itself does not provide specific subpoena enforcement standards, an administrative subpoena issued pursuant to an agency investigation is judicially enforceable if three conditions are met: (1) the inquiry is within the scope of the agency's authority; (2) the subpoena is not too indefinite; and (3) the information sought is reasonably relevant to the agency inquiry. United States v. Morton Salt Co., 338 U.S. 632, 652, 94 L. Ed. 401, 70 S. Ct. 357 (1950) (citing Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 90 L. Ed. 614, 66 S. Ct. 494 (1946)). Here, there is no dispute that the Secretary's subpoena satisfies these requirements. Hercules instead claims that the subpoenaed documents are protected by three privileges: the self-critical analysis privilege, the attorney-client privilege, and the attorney work-product doctrine. I will address each argument in turn. *fn2"

 Self-Critical Analysis Privilege

 The privilege of self-critical analysis is designed to encourage parties to engage in candid self-evaluation without fear that such criticism will later be used against them. The privilege finds its roots in the case of Bredice v. Doctors Hospital, Inc., 50 F.R.D. 249 (D.D.C. 1970), aff'd 156 U.S. App. D.C. 199, 479 F.2d 920 (D.C. Cir. 1973), a malpractice action in which the minutes and reports from a hospital medical review committee's investigation of a patient's death were found to be privileged. The court reasoned that confidentiality would facilitate the free flow of information necessary to effectively investigate the matter, that to require disclosure would stifle that free flow of information, and that there was an "overwhelming" public interest in allowing the hospital committee to proceed on a confidential basis. Hercules argues that the materials sought by the Secretary deserve this protection, and to require disclosure would defeat the public's interest in having companies like Hercules voluntarily work to enhance safety in their operations. Although this argument does have some appeal, it does not succeed here.

 While the privilege has been recognized in the context of private litigation, it has regularly been rejected in cases where documents are sought by a governmental agency. See, e.g., Federal Trade Commission v. TRW, Inc., 202 U.S. App. D.C. 207, 628 F.2d 207 (D.C. Cir. 1980); Emerson Electric Co. v. Schlesinger, 609 F.2d 898 (8th Cir. 1979); United States v. Noall, 587 F.2d 123 (2d Cir. 1978), cert. denied 441 U.S. 923, 60 L. Ed. 2d 396, 99 S. Ct. 2031 (1979); Reynolds Metals Co. v. Rumsfeld, 564 F.2d 663 (4th Cir. 1977), cert. denied 435 U.S. 995, 56 L. Ed. 2d 84, 98 S. Ct. 1646 (1978); United States v. Dexter Corp., 132 F.R.D. 8 (D.Conn. 1990). As the Court of Appeals for the District of Columbia noted, "this conclusion makes sense in light of the roots of the privilege in the public interest, and the strong public interest in having administrative investigations proceed expeditiously and without impediment." 628 F.2d at 210; see also U.S. v. Dexter, 132 F.R.D. at 9-10 ("a court should take cognizance, in an action brought by the United States to enforce duly enacted laws, of Congress's role in declaring what is in the public interest. . . . Application of the 'self-critical' privilege in this action would effectively impede the Administrator's ability to enforce the Clean Water Act, and would be contrary to public policy"). Here, the public interest is served by allowing the Secretary to proceed freely in his investigation of potential OSHA violations.

 In addition, courts have distinguished application of the privilege during discovery, where the court has broad discretion under the Federal Rules of Civil Procedure, from situations where enforcement of an administrative subpoena is sought. See FTC v. TRW, supra; U.S. v. Noall, supra. In those cases, the particular administrative agency was granted broad powers of investigation and subpoena by Congress, and those grants were given appropriate deference by the courts. Likewise, Congress here has given the Secretary extremely broad investigatory and subpoena power, see Martin v. Hammermill Paper, 796 F. Supp. 1474, 1475 (S.D.Ala. 1992), and it is not this Court's place to second-guess Congress, id. (citing Chevron USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-43, 866, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984)).

 Therefore, I find that the self-critical analysis privilege cannot protect the materials sought here from disclosure.

 Attorney-Client Privilege

 When legal advice of any kind is sought from an attorney acting in that capacity, communications relating to that purpose, made in confidence by the client, are permanently protected from disclosure by the client or the attorney unless the protection is waived. United States v. Rockwell International, 897 F.2d 1255, 1264 (3d Cir. 1990). The privilege promotes the broad public interest in the observance of law and administration of justice by encouraging full and frank communications between a party seeking informed legal advice and an attorney who can provide that advice. Westinghouse Electric Corp. v. Republic of the Philippines, 951 F.2d 1414, 1423 (3d Cir. 1991) (citations omitted).

 Because the privilege obstructs the truth-finding process, however, it is construed narrowly. Id. "The privilege 'protects only those disclosures -- necessary to obtain informed legal advice -- which might not have been made absent the privilege.'" Id. at 1423-24 (quoting Fisher v. United States, 425 U.S. 391, 403, 48 L. Ed. 2d 39, 96 S. Ct. 1569 (1976)).

 The bulk of the materials submitted by Hercules are not protected by the attorney-client privilege. Most, such as the reviews by Hercules' Nitroglycerin Board ("NGB") and Aerospace Propulsion Standards Board ("APSB"), were made in the regular course of business, for at least two years prior to the accident in 1989, for Hercules' own internal safety reasons. Hercules has submitted affidavits from its outside attorney and two in-house attorneys stating that, after the 1989 accident and OSHA investigation, they informed plant managers that future safety evaluations were to be directed to them and were to be considered confidential and privileged attorney-client communications or attorney work-product. They claim that all post-1989 safety evaluations were done at their behest and under their direction for purposes of litigation and settlement. The attorneys' instructions supposedly were meant to increase candor in the audits. However, the evidence does not support these claims.

 Noticeably absent from Hercules' submissions are any affidavits from Hercules plant managers attesting to these instructions from counsel and how their evaluation procedure changed after 1989. In fact, the affidavit of Hercules' counsel even states that "[a] number of the audits would have been performed routinely by the Kenvil facility notwithstanding the OSHA inspection and not under the attorney client or work product privilege. However, I informed the plant that now because of the pending litigation they must be made confidential." Affidavit of Michael J. Connolly, Esq. at P 7. Here, Hercules seems to be arguing that by merely labelling these materials confidential and privileged, they magically become so. However, as noted above, the attorney-client privilege protects "only those disclosures . . . which might not have been made absent the privilege." Westinghouse, supra, at 1423-24.

 I have reviewed the safety audits and I see no material differences in the reports from year to year. No evidence of intensified inspection procedures or increased candor in reporting is apparent. Indeed, audits performed both pre- and post-1989 state that the auditors were quite pleased with the candor and frankness of the plant's employees and managers. The evidence simply does not support Hercules' claim that the materials at issue are protected attorney-client communications. A different conclusion might be warranted if the NGB and APSB audits were begun solely at the request of Hercules' counsel for the purpose of advising Hercules. But this is not the case, and so the argument must fail.

 One document, however, dated December 4, 1991 and entitled "Attorney Directed Kenvil Plant Inspection," warrants a different conclusion. This document clearly was prepared in confidence for the purpose of obtaining legal advice regarding OSHA compliance. As such, the Secretary may obtain this document only if he has a substantial need for the documents and cannot obtain the substantial equivalent by other means without undue hardship. This burden is not met here. The Secretary, through the NGB and APSB reports, on-site inspections, and interviews with Hercules employees, can obtain the substantial equivalent of information in this document without undue hardship, and therefore it should not be turned over.

 Attorney Work-Product Doctrine

 The attorney work-product doctrine protects from disclosure to an adversary the work-product of an attorney prepared during or in anticipation of litigation. For materials to be eligible under this protection, it must be reasonably clear based on the surrounding facts and the nature of the materials that they were in fact prepared or obtained because of pending or anticipated litigation. In re Grand Jury Proceedings, 604 F.2d 798, 803 (3d Cir. 1979).

 As already discussed, Hercules has failed to show that the materials at issue here were prepared in a fashion other than the ordinary course of business. "The claimant must demonstrate that the communication would not have been made but for the client's need for legal advice or services." First Chicago International v. United Exchange Co., Ltd., 125 F.R.D. 55, 57 (S.D.N.Y. 1989). A party may not shield facts from discovery merely by combining them with an attorney's core work product. Bogosian v. Gulf Oil Corp., 738 F.2d 587, 595 (3d Cir. 1984). Likewise, it follows that an audit regularly performed by a party does not become attorney work-product simply because the party's attorney directs that future audits be turned over to him for his use. One can only imagine the abuses of discovery which would result from such a rule. Again, a different conclusion might result if these audits were begun at the direction of Hercules' attorney. Again, though, that is not the case and, again, Hercules' argument must fail.

 CONCLUSION

 For the reasons discussed above, it is the recommendation of the undersigned that the Secretary's petition be granted, with the exception of the December 4, 1991 document entitled "Attorney Directed Kenvil Plant Inspection."

 Pursuant to Local Rule 40D.5, the parties have ten (10) days from the receipt of this Report and Recommendation to file and serve objections to it.

 Dated: April 5, 1994

 Dennis M. Cavanaugh, U.S.M.J.


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