United States District Court, W.D. Virginia, Lynchburg Division
S. Ballou United States Magistrate Judge
ERISA action, the Department of Labor ("DOL") seeks
to hold defendants liable for their purported breaches of
fiduciary duties under a failed ESOP. Defendants Gregory
Booth, M.H. Masonry, Inc., and Melvin Hinton
("Defendants") filed a motion to compel the DOL to
produce documents that were withheld from discovery on the
basis of privilege. Dkt. No. 117. The DOL objects on the
grounds that the documents sought are protected from
disclosure by the attorney client privilege, the deliberative
process privilege, the law enforcement privilege, and the
attorney work product doctrine. Dkt. No. 120.1 reviewed the
subject documents in camera and heard oral argument.
The motion to compel is GRANTED in part and
DENIED in part.
facts of this matter have been set out in prior court
opinions, and I will not recite them in detail here. The core
issue underlying this motion is Defendants' statute of
limitations defense, claiming that the DOL had actual
knowledge of the alleged ERISA violations more than three
years before it filed suit on August 28, 2015.
applicable limitations period in this action is three years
"after the earliest date on which the plaintiff had
actual knowledge of the breach or violation." 29 U.S.C.
§ 1113. The Fourth Circuit has not provided a precise
definition of “actual knowledge” in the context
of a suit brought under ERISA. See Browning v.
Tiger's Eye Benefits Consulting, 313 Fed.Appx. 656,
660-61 (4th Cir. 2009). The Browning court
acknowledged that other circuits have come to differing
conclusions regarding what constitutes “actual
knowledge, ” such as the Third and Fifth Circuits'
requirement of “a showing that plaintiffs actually knew
not only of the events that occurred which constitute the
breach or violation but also that those events supported a
claim of breach of fiduciary duty or violation under
ERISA.” See Int'l Union v. Murata Erie N. Am.,
Inc., 980 F.2d 889, 900 (3d Cir. 1992); Maher v.
Strachan Shipping Co., 68 F.3d 951, 954 (5th Cir. 1995).
Conversely, the Sixth, Seventh, and Ninth Circuits have
determined that actual knowledge occurs when a plaintiff has
knowledge of the facts or transaction that constituted the
alleged violation, and “it is not necessary that the
plaintiff also have actual knowledge that the facts establish
a cognizable legal claim under ERISA.” Wright v.
Heyne, 349 F.3d 321, 330 (6th Cir. 2003); see also
Martin v. Consultants & Adm'rs, Inc., 966 F.2d
1078, 1086 (7th Cir. 1992); Meagher v. Int'l Assoc.
of Machinists and Aerospace Workers Pension Plan, 856
F.2d 1418, 1423 (9th Cir. 1988). Meanwhile, the Second
Circuit has held that a plaintiff has actual knowledge
“when he has knowledge of all material facts necessary
to understand that an ERISA fiduciary has breached his or her
duty or otherwise violated the Act.” Caputo v.
Pfizer, Inc., 267 F.3d 181, 193 (2d Cir. 2001).
Browning, the Fourth Circuit declined to define the
phrase, but did note that actual knowledge “depends
largely on the ‘complexity of the underlying factual
transaction, the complexity of the legal claim[, ] and the
egregiousness of the alleged violation.'”
Browning, 313 Fed.Appx. at 661 (quoting
Martin, 966 F.2d at 1086). The Court also found that
“there cannot be actual knowledge of a violation for
purposes of the limitation period unless a plaintiff knows
the ‘essential facts of the transaction or conduct
constituting the violation.'” Id. (quoting Edes
v. Verizon Commc'ns, Inc., 417 F.3d 133, 142 (1st
Defendants' assertion that DOL had actual knowledge of
the ERISA violations more than three years before filing this
suit will be a strongly contested, factually-based issue in
this litigation. Defendants argue that documents withheld
from production by the DOL on the basis of privilege are
relevant to their statute of limitations defense and do not
properly qualify as privileged, or that any applicable
privilege is outweighed by Defendants' substantial need
for the documents. The DOL asserts that all of the documents
sought are properly protected from disclosure by either the
attorney-client privilege, the deliberative process
privilege, the law enforcement privilege, or the work product
doctrine. I first discuss the standard for each of the
privileges asserted and then apply those standards to each
category of documents.
attorney-client privilege is the oldest privilege for
confidential communications known to the common law.
Upjohn Co. v. United States., 449 U.S. 383, 389
(1981). Where the attorney-client privilege applies,
“it affords confidential communications between lawyer
and client complete protection from disclosure.”
Hawkins v. Stables, 148 F.3d 379, 383 (4th Cir.
1998). It applies to individuals and corporations, and to
in-house and outside counsel. See Upjohn, 449 U.S.
at 394. Because the attorney-client privilege “impedes
the full and free discovery of the truth, it must be narrowly
construed and recognized only to the very limited extent that
excluding relevant evidence has a public good transcending
the normally predominant principle of utilizing all rational
means for ascertaining truth.” In re Grand Jury
Subpoena, 341 F.3d 331, 335 (4th Cir. 2003) (internal
quotation marks and citations omitted).
Fourth Circuit applies the “classic test” of the
(1) the asserted holder of the privilege is or sought to
become a client; (2) the person to whom the communication was
made (a) is a member of a bar or court, or his subordinate
and (b) in connection with this communication is acting in
his capacity as a lawyer; (3) the communication relates to a
fact of which the attorney was informed (a) by his client (b)
without the presence of strangers (c) for the purposes of
securing primarily either (i) an opinion on law or (ii) legal
services or (iii) assistance in some legal proceeding, and
not (d) for the purpose of committing a crime or tort; and
(4) the privilege has been (a) claimed (b) and not waived by
Id. at 336. “The burden is on the proponent of
the attorney-client privilege to demonstrate its
applicability. The proponent must establish not only that an
attorney-client relationship existed, but also that the
particular communications at issue are privileged and that
the privilege was not waived.” Id. (citation
omitted). “Any disclosure inconsistent with maintaining
the confidential nature of the attorney-client relationship
waives the privilege.” United States v. Jones,
696 F.2d 1069, 1072 (4th Cir. 1982).
deliberative process privilege protects from disclosure
certain documents that contain “advisory opinions,
recommendations and deliberations” on which
governmental decisions and policies are based. In re
Sealed Case, 121 F.3d 729, 737 (D.C. Cir. 1997)
(citation omitted); NLRB v. Sears, Roebuck &
Co., 421 U.S. 132, 150 (1975) (The privilege rests on
“the policy of protecting the ‘decision making
processes of government agencies, '  and focus[es] on
documents ‘reflecting advisory opinions,
recommendations and deliberations comprising part of a
process by which governmental decisions and policies are
formulated.'”)(citations omitted). The purpose of
the privilege is to protect agency deliberations from public
scrutiny, encouraging “the policy of open, frank
discussion between subordinate and chief concerning
administrative action.” Kaiser Aluminum & Chem.
Corp. v. United States, 141 Ct. Cl. 38, 48 (1958);
see also Sears, Roebuck & Co., 421 U.S.
at 151 (“Manifestly, the ultimate purpose of this
long-recognized privilege is to prevent injury to the quality
of agency decisions.”).
invoke the deliberative process privilege, the government
must show that the documents are both (1) predecisional and
(2) deliberative. See City of Virginia Beach v. Dep't
of Commerce, 995 F.2d 1247, 1254 (4th Cir. 1993) (noting
that “ultimate questions [are] whether the materials
bear on the formulation or exercise of agency policy-oriented
judgment [and] whether disclosure would tend to diminish
candor within an agency”) (citation and internal
quotation marks omitted). Predecisional documents are
“prepared in order to assist an agency decision maker
in arriving at his decision.” Id. (quoting
Renegotiation Bd. v. Grumman Aircraft Eng'g
Corp., 421 U.S. 168, 184 (1975); see also Coastal
States Gas Corp. v. Dep't of Energy, 617 F.2d 854,
868 (D.C. Cir. 1980) (noting that “a document from a
subordinate to a superior official is more likely to be
predecisional, while a document moving in the opposite
direction is more likely to contain instructions to staff
explaining the reasons for a decision already made”).
Deliberative materials are documents that reflect “the
give-and-take of the consultative process by revealing the
manner in which the agency evaluates possible alternative
policies or outcomes.” Id. (citation omitted).
Thus, the privilege protects “recommendations, draft
documents, proposals, suggestions, and other subjective
documents which reflect the personal opinions of the writer
rather than the policy of the agency.” Coastal
States Gas Corp., 617 F.2d at 866 (“Documents
which are protected by the privilege are those which would
inaccurately reflect or prematurely disclose the views of the
agency, suggesting as agency position that which is as yet
only a personal position.”). The privilege does not
protect factual or investigative material, except as
necessary to avoid indirect revelation of the decision-making
process. Pac. Gas & Elec. Co. v. United States,
70 Fed.Cl. 128, 133-134 (2006), modified on
reconsideration, 71 Fed.Cl. 205 (2006) (quoting
Scott Paper Co. v. United States, 943 F.Supp 489,
496 (E.D. Pa. 1996)). “Thus, factual findings and
conclusions, as opposed to opinions and recommendations are
not protected.” Id. (internal quotations
the privilege may be overcome if the moving party
demonstrates that its evidentiary need for the documents
outweighs the harm that disclosure would cause the non-moving
party. Sikorsky Aircraft Corp. v. United States, 106
Fed.Cl. 571, 577 (2012). To determine whether the privilege
should be overcome, the court may consider five factors:
(i) the relevance of the evidence sought to be protected;
(ii) the availability of other evidence; (iii) the
seriousness of the litigation and the issues involved; (iv)
the role of the government in the litigation; and (v) the
possibility of future timidity by government employees who
will be forced to recognize that their secrets are violable.
Dairyland Power Co-op. v. United States, 77 Fed.Cl.
330, 338 (2007) (quoting In re Subpoena Served
Upon Comptroller of Currency, 967 F.2d 630, 634 (D.C.
are three procedural requirements for assertion of the
privilege: 1) the agency head must assert the privilege after
personal consideration; 2) the agency head must state with
particularity the information subject to the privilege; and
3) the agency must aver precise and certain reasons for
preserving the confidentiality of the requested documents.
Dairyland Power Co-op., 77 Fed.Cl. at
336-37. Here, the DOL submitted an affidavit from the Deputy
Assistant Secretary for Program Operations, Timothy D.
Hauser, stating why the documents at issue are protected by
the deliberative process privilege. Dkt. No. 120-1. See
Kaufman v. City of New York, No. 98 Civ. 2648(MJL)(KNF),
1999 WL 239698, at *3 (S.D.N.Y. Apr. 22, 1999) (“The
agency head or his or her authorized designee must invoke the
privilege through an affidavit which states, inter
alia, that he or she has reviewed each of the relevant
documents and provides the reason(s) why preserving
confidentiality-rather than the agency's interest in the
particular action-outweighs the public interest in
disclosure.”). Deputy Assistant Secretary Hauser listed
the documents by Bates number, and affirmed that the
documents contain the internal deliberations of the Employee
Benefits Security Administration (“EBSA”) prior
to the decision to commence legal action, including: the
pre-decision intra-agency deliberations of EBSA;
recommendations, opinions, and advice on legal or policy
matters; and written summaries of factual evidence that
reflect a deliberative process. Dkt. No. 120-1, p. 5. Deputy
Assistant Secretary Hauser, acting under delegated authority,
invoked the deliberative process privilege to “protect
and promote candid discussions within the agency.”
Id. Thus, I find that the procedural requirements
for asserting the deliberative process privilege are met.