VW Avoids Privilege Waiver in Dieselgate Internal Investigation—Here’s How 1

May you disclose a privileged document to a government-enforcement agency and, later, successfully claim that the privilege precludes disclosure to an adversary in a civil proceeding?  Generally, there is no common-law selective-waiver doctrine, but the SDNY, in In re: Ex Parte Application of financialright GmbH, 2017 WL 2879696 (SDNY June 23, 2017), found no privilege waiver when Volkswagen’s lawyers disclosed privileged information to the Justice Department under a Non-Disclosure Agreement.  You may read the opinion here.

Internal Investigation into Emissions Scandal

Volkswagen’s 2015 emissions scandal—where it inserted software to circumvent U.S. emissions tests—is well known.  VW retained Jones Day, which conducted an extensive factual investigation as part of its representation.  Jones Day analyzed millions of documents and interviewed hundreds of VW employees.

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Privilege Protects OLC Legal Memo Authorizing FBI’s Phone Records Collection

In another privilege-related victory for the Obama Administration, the Court of Appeals for the D.C. Circuit ruled that the deliberative process privilege protects from disclosure an Office of Legal Counsel memorandum authorizing the FBI’s collection of calling records froOLCm telephone companies without a subpoena.  Electronic Frontier Foundation v. Dep’t of Justice, No. 1:11-cv-00939 (D.C. Cir. Jan. 3, 2014).  You may access the opinion here.

Background

The FBI may use “national security letters” to subpoena telephone records that it certifies are connected to an authorized national security investigation.  See 12 U.S.C. § 3414(a)(5)(A).  In 2007, the Office of Inspector General (OIG) issued an investigative report  finding that the FBI used so-called “exigent letters” to obtain phone records without certifying that the requested records were part of an authorized investigation.

During a second OIG investigation, the FBI’s General Counsel sought legal advice about the FBI’s use of exigent letters to obtain phone records without a subpoena.  The OIG’s January 2010 investigative report stated that the OLC’s legal memorandum provided authority for the FBI’s collection of records from telephone-service providers “without legal process or qualifying emergency” and notwithstanding the Electronic Communication Privacy Act.

Electronic Frontier Foundation, a self-described organization providing the “first line of defense” when “freedoms in the networked world come under attack,” sought the OLC Legal Memo through a FOIA request, and filed suit when the Justice Department refused to produce it.  The DOJ asserted, in part, that the deliberative process privilege protected the OLC memo from disclosure.

Deliberative Process Privilege

The deliberative process privilege protects from discovery (and FOIA requests) documents reflecting opinions, recommendations, and deliberations that are part of the governmental agency decision-making process. The privilege protects only documents that are both deliberative—reflecting the back-and-forth of the deliberation process—and predecisional.

Agency legal opinions generally fall within two categories.  One is the “working law,” which includes legal opinions supplying the basis for an agency policy or decision actually adopted. The deliberative process privilege does not apply to working law documents, and courts require agencies to disclose these documents, including binding agency opinions and interpretations that the agency actually applies.

The second category includes agency legal opinions that concern the advisability of an agency policy but stop short of stating or determining that policy. The deliberative process privilege protects these legal memoranda from disclosure because they are part of the give-and-take of the consultative process that the privilege was designed to protect.

Ruling

The court ruled that the OLC legal memo did not fall within the “working law” category because the OLC did not have authority to establish FBI policy.  A legal advisor’s final legal opinion is not equivalent to the agency’s final decision and, here, the OLC’s legal memo simply provided legal advice that the FBI considered but ultimately did not adopt.  Accordingly, the deliberative process privilege protected the OLC legal memo from a FOIA disclosure.

String of Victories

The Electronic Frontier decision represents another victory for the Justice Department in protecting OLC legal opinions from disclosure.  As detailed in this PoP Post, a court ruled on January 7, 2013 that the privilege precluded the New York Times’ attempt to obtain an OLC legal memo allegedly supporting President Obama’s January 2012 recess appointment of Richard Cordray as CFPB Director.   And as described in this PoP Post, in a January 2, 2013 decision, a court ruled that the Justice Department may withhold an OLC legal memo prepared for Attorney General Eric Holder that allegedly provided legal support for a U.S. program targeting terrorists, including U.S. citizens, for assassination.