United States ex rel. Fisher v. Network Software Associates

Citations: 217 F.R.D. 240; 2003 U.S. Dist. LEXIS 14968; 2003 WL 22025393Docket: Civ.A. No. 99-3095 (PLF/JMF)

Court: District Court, District of Columbia; August 28, 2003; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The case involves a referral by Judge Friedman to resolve Defendant Network Virginia’s Motion for Partial Reconsideration and a Joint Motion for Clarification. The court granted both motions. 

In prior rulings, the court denied attorney-client privilege for Document B (NSVA0121207-0121209), determining it was substantively identical to Document A (NSVA 0004051-0004053), which is a client letter and a stock valuation spreadsheet. The court found that neither document contained confidential communications intended for legal advice, leading to the denial of privilege claims.

The background includes a timeline where the relator made document requests starting March 2002, with defendants failing to produce documents by the June deadline, citing the need for a protective order, which was granted in November 2002. Following a motion to compel filed by the relator, the court ordered the defendants to disclose all non-privileged documents in January 2003. However, a dispute arose over the interpretation of this order, with the relator arguing it required production of all non-privileged documents, while the defendant believed it only pertained to documents withheld on attorney-client privilege grounds.

The court clarified that the attorney-client privilege applies to confidential communications between clients and attorneys made for legal advice, but it does not extend to all communications without specificity. The privilege is interpreted strictly, meaning only communications that would reveal the client's original communication are protected.

The attorney-client privilege applies to communications between a client and attorney when the communication is intended for legal advice, legal services, or assistance in legal proceedings. Confidential communication is defined as information that the communicator intended to keep private. A client must reasonably believe that their communication is confidential, and the disclosure of the communication must not reveal any confidential information. 

In examining Document A, a letter and spreadsheet from client Kim Hargis to attorney Larry S. Stern regarding stock valuation, it was concluded that the document is not privileged since it does not contain confidential information and the author did not intend for the content to remain undisclosed. In contrast, Document B, a communication from Stern to client Raoul Socher, must be assessed separately to determine if it reveals any confidential information that Socher intended to keep private. The privilege would only attach to Document B if it discloses confidential client communication, following the strict interpretation of the attorney-client privilege, which affirms that a lawyer's communication is not privileged if it does not disclose client information.

The letter in question reveals the purpose of a client's communication with his attorney, which, if disclosed, would allow the plaintiff to understand why the client sought legal advice. Although the reason for hiring an attorney is not protected by privilege, the communication that discloses the client's intent is privileged. Disclosure would compromise the confidentiality the client intended for the communication with counsel. Therefore, Document B (NSVA0121207-0121209) is protected by attorney-client privilege and should not be disclosed.

Under Rule 26(b) of the Federal Rules of Civil Procedure, discovery is permitted for any non-privileged information relevant to the claims or defenses involved in the case. Relevant information need not be admissible at trial if it is likely to lead to admissible evidence. The relevance of a document is determined by its relationship to the allegations in the lawsuit. However, discovery may be limited if it is deemed unduly burdensome, requiring a balancing of the need for discovery against the burden on the producing party. The party claiming undue burden must provide evidence rather than mere assertions.

In the resolution of pending objections, the court confirms that its focus was solely on documents claimed to be privileged, without addressing other objections raised regarding irrelevancy and burdensomeness. The background indicates that from November 23, 1993, to July 18, 1997, several entities participated in the U.S. Small Business Administration's Section 8(a) Minority Small Business Development Program, which allows certain contracts to be allocated to eligible minority-owned businesses with minimal competition. To qualify for the program, specific criteria must be met.

To qualify as 'socially and economically disadvantaged' under 15 U.S.C. 637, a company must have at least 51% unconditional ownership by one or more disadvantaged individuals, either directly or through publicly traded stock. Additionally, management and daily operations must be controlled by these individuals. 'Socially disadvantaged' individuals are defined as those who face racial or ethnic prejudice, while 'economically disadvantaged' individuals are those unable to compete effectively due to limited capital and credit opportunities. The determination of economic disadvantage considers the individual's assets and net worth.

Each participant in the Section 8(a) program must annually certify compliance with ownership and control requirements, submitting personal financial statements for disadvantaged owners, records of payments made to them, and any other information deemed necessary by the Administration. The relator has filed a suit under the False Claims Act, alleging that defendants made false claims and engaged in deceptive practices to gain access to the Section 8(a) program and government contracts with minimal competition.

The relator seeks documents related to the defendants’ participation in the Section 8(a) program, which occurred between November 23, 1993, and July 18, 1997. Document production will be limited to this timeframe to balance the need for information against the burden on the defendants. A document chart summarizing the requests has been created, categorizing them under various headings for clarity.

The NSA-CA, NetSoft, and NSA-VA headings pertain to the Relator’s Motions to Compel Immediate Production of Documents, with specific requests outlined in associated exhibits. The NSA-CA column includes requests such as the production of documents related to entities using Sec. 8(a) certification for NSA-CA software sales to the U.S. Government, corresponding to request number five. Similarly, the NetSoft column includes requests like documents related to NetSoft's Sec. 8(a) certification, also matching request number five. The NSA-VA column requests documents on NSA-CA’s eligibility for the Sec. 8(a) program, corresponding to request number fourteen.

The first group of requested documents, categorized as Section 8(a) material, is deemed discoverable with a temporal limitation. Documents submitted to governmental agencies must specifically relate to defendants’ participation in the Section 8(a) program. Additionally, any documents provided to third parties must be tied to Section 8(a) eligibility.

The second group, corporate history, includes documents regarding the formation, sale, and operation of defendant companies and related entities. These documents are also discoverable as they reveal corporate histories and ownership distributions, supporting the Relator’s assertion of Ivan Socher’s control over Network California. However, the request for all documents relating to NetSoft’s operation is considered overly broad and thus limited.

The document outlines the discovery requests related to financial history, employee records, and miscellaneous production requests in a legal case. Financial documents requested include accounting and financial statements from November 23, 1993, to July 18, 1997, relevant to the plaintiffs' claims of manipulation involving a Section 8(a) corporation. However, certain documents, such as capital contributions, asset acquisitions, tax returns, and IRS ruling requests, were deemed irrelevant and not required for production. 

For employee records, documents concerning employee benefits, compensation, and work schedules are permitted as they support the relator's claim that minority employees may have been 'phantom' employees. 

Miscellaneous requests include information about a non-party venture, ALLURA, which is considered irrelevant to the case, and details regarding the control exerted by Ivan Socher over Net-Soft, which could be relevant to the claims of misuse of the Section 8(a) corporation. Requests related to the relator's credibility are limited to documents that could impeach him. Communications among defendants concerning the lawsuit may contain admissions of liability and are relevant. 

Objections from defendants citing burdensomeness are dismissed, as they did not provide sufficient explanation or supporting affidavits to substantiate their claims. The court emphasizes that mere boilerplate objections are inadequate for contesting discovery requests.

An Order has been issued alongside the Memorandum Opinion with the following key directives: 

1. The motion to compel production of documents NSVA0121207-0121209 is denied.
2. Defendants are ordered to respond to specific Requests for Production (RFPs) related to Section 8(a) paperwork, corporate history, financial history, employee records, and miscellaneous documents, categorized by the respective entities:
   - **Network California**: RFP Nos. 5-16, 49; 1-3, 22, 23, 51; 17-19, 21, 24-26, 43-48; 20, 27-40; 41, 53.
   - **NetSoft**: RFP Nos. 4-16; 1, 20; 2, 17-19, 21, 32, 33; 22-26, 28-31; 3, 27, 34, 35 (only documents relevant to impeaching the relator's credibility).
   - **Network Virginia**: RFP Nos. 13-24; 1, 2, 6, 11, 12; 7, 25, 26; 3, 4, 10; 27.

3. The obligations apply solely to documents created between November 23, 1993, and July 18, 1997.
4. The Relator's Motion to Compel immediate production of documents by all defendants is denied in all other respects.
5. Network Virginia's Motion for Partial Reconsideration is granted, and the Joint Motion for Clarification by the Relator and Defendants is also granted.

All references to the United States Code pertain to electronic versions in Westlaw or Lexis, specifically 31 U.S. Code § 3729 et seq.