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Camden Vicinage Federal Trade Commission v. Hope Now Modifications

July 5, 2011


The opinion of the court was delivered by: Joel Schneider United States Magistrate Judge


This matter is before the Court on the "Motion to Compel Answer to Interrogatory and Production of Documents" [Doc. No. 128] filed by defendants Kwasnik, Rodio, Kanowitz & Buckley, P.C., and Michael Kwasnik (hereinafter "defendants"). The Court received the Federal Trade Commission's (hereinafter "plaintiff" or "FTC") opposition to defendants' motion [Doc. No. 133], and defendants' reply [Doc. No. 135], and held oral argument. For the following reasons, defendants' motion is DENIED.

I. Background

The Honorable Jerome B. Simandle, U.S.D.J., set forth the pertinent factual and procedural background of the case in his Opinion dated March 10, 2011 [Doc. No. 122]:

This case was initially brought on March 17, 2009 by the FTC against a different set of defendants, who were affiliated with a mortgage modification corporation titled Hope Now Modifications, LLC ("Hope Now Defendants"). [Docket Item 1.] The FTC subsequently submitted an amended complaint, also naming as defendants the Kwasnik Defendants presently at issue. [Docket Item 60.] On July 12, 2010, the Hope Now Defendants entered into a settlement agreement with the FTC and were subsequently terminated from this action. [Docket Item 104.] The FTC has alleged that the Kwasnik Defendants engaged in unfair and deceptive practices in violation of Section 5(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a), and the regulations implementing the Telemarketing and Consumer Fraud Abuse Prevention Act, 16 C.F.R. §§ 310.1-310.9.

Id. at 2. Discovery has proceeded in the case, and defendants filed the present motion seeking to compel two sets of documents:

(1) FTC staff memoranda purportedly containing a crystalized description of the factual basis for plaintiff's claims against defendants, and (2) notes made by FTC personnel during their interview of Salvatore Puglia which took place on June 15, 2009.*fn1

Defendants argue they are only seeking the factual information contained in these documents, and have asked the Court to conduct an in camera review of the documents for the purpose of redacting any non-factual information. In opposition to defendants' motion, plaintiff argues the FTC staff memoranda is covered by the work product doctrine and the deliberative process privilege, and the notes of the Puglia interview are covered by the work product doctrine.*fn2 The Court will address each of defendants' requests in turn.


A. FTC Staff Memoranda

Defendants argue the FTC "should be compelled to [sic] [produce] the 'Memo from staff to the Commission Recommending the Filing of Amended Complaint,'" because, "[i]n addition to the facts contained in the Staff Memo, the Staff Memo should serve to narrow the actual issues that have been buried in the piles upon piles of documents and witnesses that have been thrown at the Kwasnik defendants in the disclosures, responses to document requests, and answers to interrogatories."*fn3 Brief at 16-17. Defendants claim that neither the deliberative process privilege nor the work product doctrine should shield production of the memoranda, as defendants' substantial need for the information contained in the memoranda outweighs plaintiff's interest in protection of same. Id. Plaintiff disputes this contention, and argues, "[t]he Recommendation Memoranda fall squarely within both the deliberative process and attorney work product privileges and the Kwasnik Defendants have failed to demonstrate any reason why such privileges should be cast aside." Opposition at 6.*fn4

The Court concurs with plaintiff's assessment. Documents such as the FTC staff memoranda at issue here have been found to be covered by the work product doctrine. "As the Supreme Court has said...'(w)hatever the outer boundaries of the attorney's work-product rule are, the rule clearly applies to memoranda prepared by an attorney in contemplation of litigation which sets forth the attorney's theory of the case and his litigation strategy.'" Bristol-Meyers Co. v. F.T.C., 598 F.2d 18, 28-29 (D.C. Cir. 1978) (citing NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 154 (1975)).

Further, the deliberative process privilege protects communications that are part of the decision-making process of a governmental agency. Sears, Roebuck, 421 U.S. at 150-152. "[A] party's assertion of the deliberative process privilege requires a two-step review in the district court. First, it must decide whether the communications are in fact privileged. Second, the court must balance the parties' interests." Redland Soccer Club, Inc. v. Department of Army of U.S., 55 F.3d 827, 854 (3d Cir. 1995). The Court finds that the affidavit of plaintiff's General Counsel, Willard K. Tom, establishes that the communications at issue are privileged. After listing the documents that comprise the requested memoranda, Mr. Tom indicates the following:

The documents reflect the thoughts, review, analysis, recommendations, and communications by and among staff at all levels of the FTC relating to decisions to amend a complaint or to accept a settlement. They contain frank discussions and comments by FTC personnel about the legal and policy issues that the FTC has a statutorily-imposed mandate to address and were used by FTC staff attorneys and managers in formulating their own proposals and recommendations. The memoranda reflect the actual formal advice and recommendations to the Commission by the FTC staff members who are most ...

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