Magistrate Judge Nita Stormes’ ruling in BofI Federal Bank v. Erhart suggests that the attorney work product doctrine can protect whistleblowers’ confidential disclosures to government agencies from discovery in civil litigation. A bedrock principle undergirding the SEC Whistleblower Program is that the SEC will not “disclose any information, including information provided by a whistleblower to the Commission, which could reasonably be expected to reveal the identity of a whistleblower.” 5 U.S.C. § 78u-6. While a company would likely encounter substantial hurdles compelling the SEC to produce communications with a whistleblower, the question remained whether a company could use civil litigation to discover confidential disclosures to government agencies.
BofI Federal Bank’s Lawsuit Against Whistleblower Erhart
Charles Matthew Erhart worked for BofI Federal Bank (BofI) as an internal auditor and sued BofI under the Sarbanes-Oxley Act and other whistleblower protection laws. Erhart alleged that BofI terminated his employment in retaliation for disclosing to the bank and federal regulators numerous violations of federal and state law. In particular, Erhart’s whistleblower retaliation complaint alleges that he opposed the bank’s decision to withhold information that was clearly responsive to an SEC subpoena and disclosed improprieties in the CEO’s personal accounts and potential violations of BSA/Know Your Customer rules.
Shortly after Erhart filed his retaliation claim, BofI further retaliated against him by suing him for alleged theft and dissemination of BofI’s confidential, privileged and proprietary information. BofI issued a subpoena to Erhart’s counsel demanding production of documents, including counsel’s communications with the SEC and OCC. Counsel for Erhart asserted that communications with law enforcement are privileged.
SEC Whistleblower Disclosures to Federal Agencies Arguably Protected by the Work Product Doctrine
Judge Stormes rejected the assertion of the law enforcement privilege protection because the whistleblower’s counsel is not a government entity and did not specifically assert the protection of confidential techniques, procedures, investigations, or personnel of law enforcement. But the court agreed with the whistleblower’s counsel that her communications with federal agencies are protected as work product because the select documents she turned over to federal regulators were prepared in anticipation of litigation.
Judge Stormes held:
Work product immunity is meant “to guard against the divulging of attorney’s strategies and legal impressions, it does not protect facts concerning the creation of work product or facts contained within the work product.” Garcia v. City of El Centro, 214 F.R.D. 587, 591 (S.D. Cal. 2003) (emphasis in original) (citations omitted). . . . By sending these communications to law enforcement agencies, Ms. Gillam did not waive work product protection: “[A]ttorney work-product protection is not automatically waived upon disclosure to third parties . . . because ‘the purpose of the work-product rule is . . . to protect it only from the knowledge of opposing counsel and his client.’” California Sportfishing Protection Alliance v. Chico Scrap Metal, Inc., 299 F.R.D. 638, 645 (E.D. Cal. 2014) (citation omitted). Further, “[d]isclosure to [a] person with interest common to that of attorney or client is not inconsistent with intent to invoke work product doctrine’s protection and would not amount to waiver.” Id. (citing In re Doe, 662 F.2d 1073, 1081 (4th Cir.1981)). In the context of work product, common interest is more broadly construed to include disclosure to third parties. Id. (citing U.S. v. Am. Tel. and Tel. Co., 642 F.2d 1285, 1298-99 (D.C.Cir.1980) (finding no waiver because “the disclosure had occurred under a statutory guarantee of confidentiality on the part of the government”)).
Here, Ms. Gillam shared a common interest with the federal regulators to uncover any alleged wrongdoing by BofI. Further, the SEC and OCC regulations provide for confidentiality. While those regulations, on their own, may not be enough to protect the communications from disclosure by Ms. Gillam to BofI in this case, they do show that the agencies will not publicly disclose Ms. Gillam’s work product. Therefore, Ms. Gillam’s communications with law enforcement agencies—with whom she shared a common interest—did not waive her work product claim.
Judge Stormes also found that BofI failed to demonstrate a substantial need for the documents because BofI’s claims focused on Erhart’s public dissemination of BofI’s confidential information, and not his disclosures to regulators.
False Claims Act Qui Tam Relator Disclosure Statements Are Generally Deemed Attorney Work Product
Although there is mixed authority, several courts have ruled that a qui tam relator’s disclosure statement is not discoverable. Those decisions reason that the disclosure statement is opinion work product because the relator and his or her counsel “must engage in a process of selecting and winnowing from the totality of information known to the relator only those facts and evidence that are material to the relator’s legal claims.” United States ex rel. Bagley v. TRW Inc., 212 F.R.D. 554, 555 (C.D.Cal. 2003).
B. Relator’s Disclosure Statement and Subsequent Communications with the Government are Protected as Work Product, and Even Factual Portions Thereof Are Only Discoverable Upon a Showing of Substantial Need and Undue Hardship.*4 Relator claims that the Government Communications at-issue are protected as work product, noting that “the majority of courts have found that the written disclosure statement provided in compliance with the FCA falls under the work-product doctrine as a document prepared in anticipation of litigation, or have applied the principles of ordinary work product when analyzing whether the disclosure statement is discoverable.” (ECF No. 113 at 4 (quoting Bingham v. Baycare Health System, Case No: 8:14-cv-73-T-23JSS, 2016 WL 1546504, at *4 (M.D. Fla. Apr. 15, 2016) (collecting cases)).) Though Defendants do not explicitly contend that the work product doctrine does not apply to written disclosures, they also do not concede Relator’s position. (See ECF No. 114-1.)This Court agrees with most courts that written disclosures and subsequent communications between the Relator about the litigation should be analyzed under the work product doctrine. See, e.g., United States ex rel. Brown v. Celgene Corporation, Case No. CV 10-3165, 2015 WL 12731923, *8 (C.D. Cal. July 24, 2015) (“Because Relator’s disclosure statement was prepared in anticipation of trial, the Court agrees with the weight of authority that it qualifies as work product.”); Bingham, 2016 WL 1546504, at *4 (collecting cases); United States v. California Institute of Tech., Case No.: CV 18-5964 CAS (RAOx), 2020 WL 13547790, at * (C.D. Cal. Nov. 18, 2020) (“Although courts have taken different approaches in determining the extent to which FCA disclosure statements are fact or opinion work product, most courts agree that the statements are, at a minimum, fact work product.”). By statutory requirement, the Disclosure Statement was prepared in anticipation of litigation, either by Relator or its representative. Therefore it, and the fact of which exhibits Relator included as material evidence, are protected as at least fact work product. See United States ex rel. Calilung v. Ormat Industries, Ltd., 3:14-cv-00325-RCJ-VPC, 2015 WL 13709969, at *4 (D. Nev. Dec. 23, 2015) (“[T]he court observes the culling of certain documents to attach to the disclosure statements—like the selection of facts discussed therein—was done in anticipation of litigation, and likely reflects some analysis and strategizing by relator’s counsel.”). Even when the Government does not intervene, “the relator is proceeding as the Government’s assignee.” United States ex rel. Burns v. Family Practice Associates of San Diego, 162 F.R.D. 624, 626 (S.D. Cal. 1995). Consequently, the subsequent communications between Relator and the Government while litigation is ongoing are likewise protected by the work product doctrine. See, e.g., United States ex rel. Branch Consultants, LLC v. Allstate Ins. Co. (“Branch II”), CIVIL ACTION NO: 06-4091-SSV-SS, 2010 WL 11627441, at *5 (E.D. La. May 12, 2010) (evaluating relator’s communications with the Government other than the disclosure statement under the work product doctrine).. . . In any event, distinguishing between opinion versus fact work product is only necessary when the party seeking disclosure has shown substantial need and undue hardship sufficient to justify the production of fact work product. See, e.g., United States ex rel. Hunt v. Merck-Medco Managed Care, LLC, No. 00-CV-737, 2004 WL 868271, at *3 (E.D. Pa. Apr. 21, 2004) (finding defendant had failed to show substantial need and undue hardship, and therefore denying motion to compel disclosure and for in camera review). Because, as discussed below, this Court finds Defendants have failed to make such a showing, it is unnecessary to parse opinion from fact work product here. Therefore, the Court declines to enter the debate about the extent to which disclosure statements are fact versus opinion work product or to review the Government Communications in camera.
The experienced whistleblower lawyers at Zuckerman Law represent whistleblowers worldwide before the SEC under the Dodd-Frank SEC Whistleblower Program and represent qui tam whistleblowers under the False Claims Act. The firm has a licensed Certified Public Accountant and Certified Fraud Examiner on staff to enhance its ability to investigate and disclose complex financial fraud to the SEC.
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