U.S. Department of Treasury v. Black

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
U.S. DEPARTMENT OF THE )
TREASURY )
)
Petitioner, )
)
v. ) Case No. 12-mc-100 (EGS)
)
PENSION BENEFIT GUARANTY )
CORPORATION )
)
Interested Party, )
)
v. )
)
DENNIS BLACK, et al., )
)
Respondents )
)
MEMORANDUM OPINION
This miscellaneous action began six years ago when
Petitioner, the United States Department of Treasury
(“Treasury”), moved to quash Dennis Black, Charles Cunningham,
Ken Hollis and the Delphi Salaried Retirees Association’s
(collectively, “Respondents”) subpoena requesting documents
related to Treasury’s involvement in the termination of
Respondents’ pension plan. That subpoena arose from a civil
action that began nine years ago and is currently pending in the
United States District Court for the Eastern District of
Michigan. In the civil action, Respondents allege that the
Pension Benefit Guaranty Corporation illegally terminated
Delphi’s pension plan for its salaried workers, via an agreement
with Delphi and General Motors, because of improper pressure
exerted by Treasury.
In the last four years, the Court has evaluated Treasury’s
various claims of privilege and has conducted in camera review
of hundreds of documents related to multiple rounds of briefing.
Pending before the Court is the Respondents’ renewed motion to
compel the production of 61 documents withheld by Treasury under
a claim of the presidential communications privilege. Upon
consideration of the renewed motion, response and reply thereto,
the relevant case law, and the entire record, and for the
reasons set forth below, the motion is GRANTED in PART and
DENIED in PART.
I. BACKGROUND
A. Statutory Background
In 1974 Congress passed the Employee Retirement Income
Security Act (ERISA) with the goal of safeguarding employees
against the loss of expected retirement benefits. 29 U.S.C. §
1301 et. seq. In passing this law, “Congress wanted to guarantee
that ‘if a worker has been promised a defined pension benefit
upon retirement--and if he has fulfilled whatever conditions are
required to obtain a vested benefit--he actually will receive
it.’” PBGC v. R.A. Gray & Co., 467 U.S. 717, 720 (1984)
(citations omitted). To that end, Title IV of ERISA created the
2
Pension Benefit Guaranty Corporation (“PBGC”) “a mandatory
Government insurance program that protects the pension benefits
of over 30 million private-sector American workers who
participate in plans covered by the Title.” PBGC v. LTV Corp.,
496 U.S. 633, 637 (1990). The PBGC is a “wholly owned Government
corporation within the Department of Labor.” R.A. Gray & Co.,
467 U.S. at 720. The Board of Directors of the corporation
“consists of the Secretary of the Treasury, the Secretary of
Labor, and the Secretary of Commerce.” 29 U.S.C. § 1302(d)(1).
Title IV of ERISA expressly defines the purposes of the
PBGC. These purposes are threefold and are aimed at protecting
pension participants. The first enumerated purpose is to
“encourage the continuation and maintenance of voluntary private
pension plans for the benefit of their participants.” 29 U.S.C.
§ 1302(a)(1). The second purpose is to “provide for the timely
and uninterrupted payment of pension benefits to participants
and beneficiaries.” Id. § 1302(a)(2). The last enumerated
purpose is “to maintain premiums . . . at the lowest level
consistent with carrying out its obligations.” Id. § 1302(a)(3).
As these purposes illustrate, the PBGC is entrusted by Congress,
and by the public through its representatives, with the task of
“ensur[ing] that employees and their beneficiaries would not be
deprived of anticipated retirement benefits by the termination
of pension plans before sufficient funds have been accumulated
3
in the plans.” R.A. Gray & Co., 467 U.S. at 720 (citations
omitted).
Termination cannot be avoided at all costs, however. The
Act recognizes that under certain circumstances a plan must be
terminated in order to “protect the interests of the
participants or to avoid any unreasonable deterioration of the
financial condition of the plan or any unreasonable increase in
the liability of the fund.” 29 U.S.C. § 1342(c)(1); see also LTV
Corp., 496 U.S. at 641 (recognizing some plans must be
terminated to “protect the insurance program from the
unreasonable risk of large losses.”). As the Act explains, ”[the
PBGC] may institute proceedings . . . to terminate a plan
whenever it determines” that inter alia, the “plan has not met
the minimum funding standard required,” “the plan will be unable
to pay benefits when due,” or “the possible long-run loss of the
corporation with respect to the plan may reasonably be expected
to increase unreasonably if the plan is not terminated.” 29
U.S.C. § 1342(a)(1)-(4). If the PBGC has determined that the
plan should be terminated, “it may, upon notice to the plan
administrator,” apply to the appropriate U.S. district court for
a “decree adjudicating that the plan must be terminated in order
to protect the interests of the participants or to avoid any
unreasonable deterioration of the financial condition of the
4
plan or any unreasonable increase in the liability of the fund.”
Id. § 1342(c)(1).
B. Factual Background
Respondents in this miscellaneous action are retired
salaried employees of the Delphi Corporation (“Delphi”), an
automotive supply company, and an association of retired
salaried employees of Delphi. Respondents are also plaintiffs in
Black v. PBGC, Case No. 09-13616, a civil action pending in the
United States District Court for the Eastern District of
Michigan (“civil action”) since 2009. In that civil action,
Respondents alleged that the PBGC violated Title IV of ERISA and
the United States Constitution when it was forced to wrongfully
terminate Respondents’ pension. Respondents’ theory of the case
is that the “termination occurred as the result of politics,
with Treasury having impermissibly pressured the PBGC to
acquiesce in the Plan’s termination as part of Treasury’s
political goals in restructuring the auto industry in general,
and GM in particular.” Renewed Mot. Compel, ECF No. 70 at 10. 1
Treasury is not a part of the civil action.
This miscellaneous action began when Treasury moved to
quash a subpoena duces tecum served by the Respondents seeking
1 When citing electronic filings throughout this opinion, the
Court cites to the ECF header page number, not the page number
of the filed document.
5
information related to its claims in the civil action. Treas.
Mot. Quash, ECF No. 1. Specifically, the subpoena sought all
documents and things received by, produced or reviewed by
certain Treasury employees between January 1, 2009 and December
31, 2009 related to “(1) Delphi; (2) the Delphi Pension Plans;
or (3) the release and discharge by the [PBGC] of liens and
claims relating to the Delphi Pension Plans.” Id. at 252–53.
In a Memorandum Opinion dated June 19, 2014, ECF No. 27,
this Court ruled that Treasury had failed to meet its burden
under Federal Rules of Civil Procedure 26 and 45 to quash the
subpoena duces tecum and therefore denied the motion to quash.
Treasury responded to the subpoena by withholding or redacting
1,273 documents under four separate claims of privilege: (1) the
deliberative process privilege; (2) the presidential
communications privilege; (3) the attorney-client privilege; and
(4) the work-product privilege. See generally Mot. Compel, ECF.
No. 30. Although Treasury asserted privilege for over 1,000
documents, Respondents only challenged the claims of privilege
for 866 documents. Treas. Opp’n, ECF No. 35 at 9.
The Court ordered in camera review of all the documents at
issue to better evaluate Treasury’s claims of privilege. See
Minute Entry of July 15, 2016. Ten days later, Treasury
produced, in camera, hard copies of the contested documents
noting that “[i]n preparing its production, Treasury decided not
6
to continue withholding certain documents.” See Notice of
Production, ECF No. 40 at 1. Treasury revoked its claims of
privilege over nearly 640 of the 866 contested documents without
providing any explanation as to why it suddenly withdrew its
claim of privilege over nearly 75% of the documents it
previously claimed were protected from disclosure. See id.
After reviewing the remaining documents in camera, in a
Memorandum Opinion dated December 20, 2016, the Court concluded
that Treasury failed to provide a specific articulation of the
rationale supporting the deliberative process privilege and
ordered Treasury to produce to Respondents all of the documents
over which it asserted solely the deliberative process
privilege. Mem. Op., ECF No. 42 at 6–13. The Court further
ordered Treasury to submit an updated in camera production and
privilege log containing the documents withheld under the other
three privileges. Id. at 13.
Treasury submitted 85 documents in response to the Court’s
Order. See Mem. Op., ECF No. 45 at 3. Relevant to this renewed
motion to compel, Treasury asserted the presidential
communications privilege as the basis for withholding 63
documents from production. Id. at 4. In a Memorandum Opinion
dated April 13, 2017, the Court concluded that the documents
were covered by the presidential communications privilege, but
that Respondents had demonstrated a sufficient need for the
7
documents to overcome the privilege. Id. at 3–11. Accordingly,
the Court ordered production of the 63 documents over which
Treasury had asserted the presidential communications privilege
produced to Respondents. See Order, ECF No. 44 at 1.
Treasury appealed the Court’s Order, and the Court of
Appeals for the District of Columbia Circuit (“D.C. Circuit”)
remanded the case back to this Court. U.S. Dep’t of Treasury v.
Black, No. 17-5142, 2017 WL 6553628, (D.C. Cir. Dec. 8, 2017).
Specifically, the D.C. Circuit remanded the case for this Court
to “account for how the public interests in this case” differ
from prior decisions in which courts have analyzed the
presidential communications privilege, id. at *1, and to
“thoroughly analyze whether [Respondents] demonstrated a need
sufficient to overcome the privilege,” id. at *3.
Respondents have since filed a renewed motion to compel
challenging 61 of the 63 documents over which Treasury claims
the presidential communications privilege. 2 The documents can be
grouped into three categories: (1) Draft memoranda from staffers
to Dr. Lawrence Summers, the Director of the National Economic
Council, Assistant to the President for Economic Policy, and co-
chair of the Presidential Task Force on the Auto Industry (“Auto
2 Respondents no longer seek to compel two documents relating to
drafts of a March 28, 2009 Presidential speech. See Renewed Mot.
Compel, ECF No. 70 at 10 n.2. Accordingly, Respondents’ motion
concerns only 61 documents.
8
Task Force”), providing updates regarding GM and Delphi; (2)
electronic mail conversations among federal employees that
supported Dr. Summers and the Auto Task Force (“Auto Team
members”) concerning advice provided to President Obama
regarding GM, Delphi, and the PBGC; and (3) personal requests
for information by President Obama about the Delphi Salaried
Plan, along with Treasury emails and a memorandum in response.
Renewed Mot. Compel, ECF No. 70 at 28. Treasury filed its
opposition to Respondents’ motion to compel, ECF. No. 74, and
Respondents subsequently filed their reply in support, ECF No.
75. The motion is now ripe for decision.
II. LEGAL STANDARD
The presidential communications privilege is a “presumptive
privilege” necessary to “guarantee the candor of presidential
advisers and to provide ‘a President and those who assist him .
. . with freedom to explore alternatives in the process of
shaping policies and making decisions and to do so in a way many
would be unwilling to express except privately.’” In re Sealed
Case, 121 F.3d 729, 743 (D.C. Cir. 1997) (alterations omitted)
(quoting United States v. Nixon, 418 U.S. 683, 708 (1974)). The
privilege “is rooted in the need for confidentiality to ensure
that presidential decisionmaking is of the highest caliber,
informed by honest advice and full knowledge.” Id. at 750. This
confidentiality is important because it is “what ensures the
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expression of ‘candid, objective, and even blunt or harsh
opinions’ and the comprehensive exploration of all policy
alternatives before a presidential course of action is
selected.” Id. (citation omitted).
Although entitled to great weight because of the need for
confidentiality, the presidential communications privilege
should be construed as “narrowly as is consistent with ensuring
that the confidentiality of the President’s decisionmaking
process is adequately protected.” Id. at 752. Moreover, assuming
arguendo a former president may assert the privilege, “such a
claim carries much less weight than a claim asserted by the
incumbent himself.” Dellums v. Powell, 561 F.2d 242, 247 (D.C.
Cir. 1977). Ultimately, the application of the privilege
“depends on a weighing of the public interest protected by the
privilege against the public interests that would be served by
disclosure in a particular case.” In re Sealed Case, 121 F.3d
at 743 (citation omitted). In the context of civil discovery, a
court must assess “the public interests at stake in determining
whether the privilege should yield in a particular case, and
must specifically consider the need of the party seeking
privileged evidence.” See id. at 746.
The D.C. Circuit has had several occasions to discuss the
presidential communications privilege in various circumstances.
In Nixon v. Sirica, the D.C. Circuit discussed the application
10
of the privilege in the criminal context. 487 F.2d 700 (D.C.
Cir. 1973). Sirica concerned a subpoena issued by a grand jury
investigating the break-in at the Watergate Hotel for certain
tape recordings of telephone conversations that had taken place
between President Nixon and his advisors. Id. at 704–705. Nixon
refused to produce the tape recordings asserting the
presidential communications privilege. Id. at 705. The D.C.
Circuit explained that the claim of privilege “depend[ed] on a
weighing of the public interest protected by the privilege
against the public interests that would be served by disclosure
in a particular case.” Id. at 716. In weighing those interests,
the Court recognized that there was a great public interest in
preserving “the confidentiality of conversations that take place
in the President’s performance of his official duties” in order
to protect “the effectiveness of the executive decision-making
process.” Id. at 717. The Court held, however, that the
privilege was overcome because of the “showing made by the
Special Prosecutor” in that case. Id. Specifically, the Special
Prosecutor had made a “strong showing that the subpoenaed tapes
contain[ed] evidence” necessary to the carrying out of a vital
function of the grand jury which was to “indict persons when
there is probable cause to believe they have committed crime,
but also to protect persons from prosecution when probable cause
does not exist.” Id. at 717. Accordingly, the Court held the
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district court could order disclosure of portions of the tapes
relevant to the scope of the grand jury investigation. Id. at
721.
The Supreme Court addressed the presidential communications
privilege in the context of a criminal case a year later in
United States v. Nixon, 418 U.S. 683 (1974). Nixon also
concerned a subpoena by a grand jury for several tape recordings
and documents relating to President Nixon’s conversations with
his advisors. Id. at 688. The Court noted that President Nixon
did not place his “claim of privilege on the ground that [the
communications were] military or diplomatic secrets.” Id. at
710. After determining that the public interest at stake was the
“President’s generalized interest in confidentiality” the Court
weighed this “generalized interest” against “the inroads of such
a privilege on the fair administration of criminal justice.” Id.
at 711–12. In weighing these interests, the Court concluded that
although the “interest in preserving confidentiality . . . is
entitled to great respect . . . the allowance of the privilege
to withhold evidence that is demonstrably relevant in a criminal
trial would cut deeply into the guarantee of due process of law
and gravely impair the basic function of the courts.” Id. at
712. Accordingly, the Court remanded the case for the district
court to determine, via in camera review, what relevant and
12
admissible evidence in the tapes would be released to the
Special Prosecutor. Id. at 713–14.
Of most relevance to this case, the D.C. Circuit first
considered the presidential communications privilege in the
civil context in Dellums v. Powell, 561 F.2d 242 (D.C. Cir.
1977). Dellums concerned a subpoena for tapes and transcripts of
White House conversations in connection with claims that
plaintiffs were unconstitutionally detained for protesting
American military involvement in Southeast Asia. 561 F.2d at
244. Although not a party to the case, President Nixon moved to
quash the subpoena under a claim of the presidential
communications privilege arguing that the privilege was absolute
in the civil context. Id. After taking note that President
Nixon’s claim of privilege did not concern “a claim of a need to
protect national security, military or diplomatic secrets,” the
Court “reject[ed] Mr. Nixon’s contention that a formal claim of
privilege based on the generalized interest of presidential
confidentiality, without more, works an absolute bar to
discovery of presidential conversations in civil litigation.”
Id. at 245–46.
Rather than employing an absolute privilege, the Court
again balanced the interests in confidentiality with that of
disclosure. Id. at 247–48. The Court recognized that even in
civil litigation there is “a constitutional value in the need
13
for disclosure in order to provide the kind of enforcement of
constitutional rights that is presented by a civil action for
damages, at least where . . . the action is tantamount to a
charge of civil conspiracy among high officers of government to
deny a class of citizens their constitutional rights.” Id. at
247. It was of “cardinal significance” to the Court that the
“claim of privilege [was] being urged solely by a former
president, and there [was] no assertion of privilege by an
incumbent president.” Id. at 247 (stating the “[a]bsence of
support from the incumbent [president] at least indicates that
‘the risk of impairing necessary confidentiality is
attenuated.’” (citation omitted)). After balancing the interests
in confidentiality against the interests in disclosure, the
Court found that the privilege had to yield to the plaintiffs’
showing of need in the case. Id. at 248–49. Accordingly, the
Court remanded the case for, among other things, in camera
review of the challenged materials by the district court to
determine which materials would be released. Id. at 251.
The D.C. Circuit’s most comprehensive analysis of the
presidential communications privilege was perhaps in In re
Sealed Case, 121 F.3d 729 (D.C. Cir. 1997). In re Sealed Case, a
criminal matter, concerned a grand jury subpoena for documents
pertaining to White House Counsel’s investigation of a former
cabinet member. Id. at 734. After surveying the Nixon cases
14
including Nixon, Dellums, and Sirica, the Court observed that
these cases “all employed a balancing methodology” in which the
“opinions balanced the public interests served by protecting the
President’s confidentiality in a particular context with those
furthered by requiring disclosure.” 121 F.3d at 753. However,
since the Court’s prior precedent established that in the
criminal context the privilege “can be overcome by a sufficient
showing that subpoenaed evidence is needed for a criminal
judicial proceeding” the Court focused on that inquiry. Id.
With regard to the necessity inquiry, the Court determined
that the necessity standard has two components: (1) “each
discrete group of the subpoenaed materials [must] likely
contain[] important evidence;” and (2) “this evidence is not
available with due diligence elsewhere.” Id. at 754. The first
component requires that “the evidence sought must be directly
relevant to issues that are expected to be central to the
trial.” Id. The second component requires the person requesting
the materials to show that “this evidence, or equivalent
evidence, is not [practicably] available from another source.”
Id. at 759. Applying these standards, the Court held that the
party seeking the materials made a sufficient showing of need
for certain documents but not for others and remanded the case
back to the district court. Id. at 763–64.
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III. DISCUSSION
The foregoing cases illustrate the difficulties presented
in evaluating a claim of presidential communications privilege
but provide a concrete framework for a Court to do so. With
these cases in mind, the Court now undertakes the “difficult
business of delineating the scope and operation of the
presidential communications privilege” in this case. See In re
Sealed Case, 121 F.3d at 762. The Court first balances the
public interests at stake by weighing the interest in
maintaining confidentiality of the information over which
Treasury claims privilege with the interest in disclosure under
the particular circumstances of the allegations in this case.
The Court next determines if the Respondents have shown
sufficient need for the materials. For the reasons stated below,
the Court holds that the interests in disclosure in this case
indeed do outweigh the general interest in confidentiality
asserted by Treasury; and Respondents have shown the requisite
need for the majority of the documents they seek.
A. Public interests at stake
1. Public interest in confidentiality
The Court’s first task is to determine the “interests
served by protecting the President’s confidentiality in [this
case’s] particular context.” In re Sealed Case, 121 F.3d at 753.
The Supreme Court has effectively recognized a continuum when
16
analyzing the public interest in maintaining confidentiality in
presidential communications. At one end of that continuum is a
claim of privilege based on a “need to protect military,
diplomatic, or sensitive national security secrets.” See Nixon,
418 U.S. at 706; see also Sirica, 487 F.2d at 716 (noting the
items over which President Nixon asserted the privilege did not
contain military or state secrets). The public interest in
maintaining confidentiality of presidential communications is at
its strongest when the claim of privilege rests on a need to
safeguard this type of information--information which implicates
international and national security interests. See Nixon, 418
U.S. at 706. Indeed, in such cases, it is difficult to imagine
any interest in disclosure which could outweigh the interest in
confidentiality. See id. (stating that such a claim based on
national security interests may be subject to absolute
privilege).
On the other end of the continuum, in which the public
interest in confidentiality is much weaker, is “when the
privilege depends solely on the broad, undifferentiated claim of
public interest in the confidentiality of [presidential]
conversations.” Id. Although claims of the presidential
communications privilege are “constitutionally based, and
entitled to great weight,” Dellums, 561 F.2d at 246,
nevertheless when the privilege is based on a generalized claim
17
of confidentiality “a confrontation with other values arises,”
and a Court must weigh the competing interests of those values.
Nixon, 418 U.S. at 706.
Like in Dellums and Nixon, the privilege asserted by
Treasury “is not premised on a claim of a need to protect
national security, military or diplomatic secrets.” See, e.g.,
Dellums, 561 F.2d at 242. Rather, Treasury’s claim of privilege
is premised on the general “needs of present and future
Presidents to maintain the confidentiality of communications
with their advisors.” See id. Moreover, in contrast with the
highly sensitive information related to national security
interests, the nature of the information Treasury seeks to
withhold is purely commercial. As explained in the declaration
filed by Treasury the “documents . . . as to which the
presidential communications privilege is being asserted consist
of [materials] that relate to the President’s decisions as to
how the United States should address the financial distress of
several of its large automobile corporations and protect the
country from the potential consequences of their bankruptcy.”
Decl. of Jennifer M. O’Connor, ECF No. 35-3 ¶ 7.
It is also significant that in this case the President has
not personally asserted the privilege. See Dellums, 561 F.2d at
247. Several D.C. Circuit cases have considered not only the
nature of the materials claimed under the privilege but also who
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asserts the privilege. In Dellums, for example, the Court found
that it was “of cardinal significance . . . [that] there has
been no assertion of privilege by an incumbent president.” Id.
As the D.C. Circuit has explained, “[a]bsence of support from
the incumbent at least indicates that the risk of impairing
necessary confidentiality is attenuated.” Id. (citations and
internal quotation marks omitted).
In this case, no President--past or present--has invoked
the privilege for these documents, and the incumbent has not
indicated support for this claim of privilege. 3 Rather the
former Deputy Counsel to President Obama invoked the privilege
on “behalf of the Office of the President.” Decl. of Jennifer M.
O’Connor, ECF No. 35-3 ¶ 4. This invocation stands on different
ground than the invocations made in other presidential
communications privileges cases which were expressly made either
by a President, past or current, or made on behalf of the
President, rather than one made on behalf of the Office of the
President generally. See, e.g., In re Sealed Case, 121 F.3d at
3 Whether a sitting President “must personally invoke the
privilege” and whether a former President can invoke the
privilege at all remain open questions. See Judicial Watch, Inc.
v. Dep’t of Justice, 365 F.3d 1108, 1114 (D.C. Cir. 2004)
(recognizing whether the president must personally invoke the
privilege is an open question); Dellums, 561 F.2d at 245
(assuming without deciding a former president could invoke the
privilege but stating that such an invocation would be entitled
to less weight).
19
744–46 n.16 (noting former White House Counsel’s affidavit
stated he was specifically directed by the President to invoke
the privilege). If a former President’s invocation is entitled
to less weight than an incumbent, Dellums, 561 F.2d at 245, it
follows that an invocation by the government on behalf of the
Office of the President of a former administration, is similarly
entitled to less weight.
The Court also finds substantial the considerable amount of
time that has passed since these documents were created and the
public nature of these documents. The documents in this case are
intertwined with decisions made regarding the government’s auto
bailout--nearly 10 years ago. As the Supreme Court has
explained, “the expectation of the confidentiality of executive
communications . . . has always been limited and subject to
erosion over time after an administration leaves office.” Nixon
v. Adm’r Of Gen. Servs., 433 U.S. 425, 451 (1977).
Furthermore, the public interest in maintaining
confidentiality is also diminished by the undisputed fact that
there have been public disclosures already made on the subject
of the requested documents. The interest in maintaining the
confidentiality of conversations related to a subject,
“substantially diminishes” when there is public testimony on
that subject. Sirica, 487 F.2d at 715 (stating public testimony
given related to Watergate substantially diminished the
20
President’s interest in maintaining confidentiality of the
conversations related to the subject); cf. Comm. on Oversight &
Gov't Reform, U.S. House of Rep. v. Lynch, 156 F. Supp. 3d 101,
111-12 (D.D.C. 2016) (holding plaintiff’s need for withheld
documents under the deliberative process privilege outweighed
the need for confidentiality in part because the substance of
the documents had already been made public). In this case, there
has been considerable public testimony about Treasury’s
decision-making process for the termination of the pension plan
including testimony before Congress, see, e.g., Testimony, Oral
and Written Statement of Matthew Feldman, Oversight of the
SIGTARP Report Treasury’s Role in the Delphi Pension Bailout:
Hearing Before the H. Subcommittee on Government Operations of
the Committee on Oversight and Government Reform, ECF No. 30-6,
and at least one book written by a former member of Treasury on
the subject. 4
Faced with these facts, Treasury repeatedly argues that the
presidential communications privilege still applies. See, e.g.,
Treas. Opp’n, ECF No. 74 at 11. For example, Treasury argues
that despite the fact that the vast majority of the documents
were not viewed by the President, the privilege “applies fully .
. . to all 61 of the documents.” Id. Treasury’s response to the
4 See Steven Rattner, Overhaul: An Insider’s Account of the Obama
Administration’s Emergency Rescue of the Auto Industry (2010).
21
fact that none of the documents implicate national security
concerns is that “the privilege applies . . . to any
conversation that takes place in the President’s performance of
his official duties.” Id. (citation and alterations omitted).
Treasury’s arguments miss the point. Respondents have no
quarrel with the Court’s holding that the 61 documents
Respondents seek are covered by the presidential communications
privilege. See Mem. Op., ECF No. 45. The issue is the scope of
that privilege under the particular circumstances of this case.
See Black, 2017 WL 6553628 at *2. The Court finds that although
the President at all times maintains a strong interest in the
confidentiality of his or her communications, under these
circumstances--when a broad and undifferentiated claim of
confidentiality is invoked by the government on behalf of the
Office of the President to protect information of a commercial
nature--the strength of the public interest in maintaining the
confidentiality of these documents is not particularly strong.
2. Public interest in disclosure
The Court next must determine the public interest
“furthered by requiring disclosure” under the circumstances of
this case. In re Sealed Case, 121 F.3d at 753. The Supreme Court
has made clear that the interests in disclosure in a civil case
are not on equal footing as the interests in a criminal case.
See Cheney v. United States Dist. Ct., 542 U.S. 367, 384 (2004).
22
“The need for information in the criminal context is much
weightier because our historical commitment to the rule of law .
. . is nowhere more profoundly manifest than in [the Court’s]
view that the twofold aim of criminal justice is that guilt
shall not escape or innocence suffer.” Id. (citations and
internal quotation marks omitted). Therefore the “right to
production of relevant evidence in civil proceedings does not
have the same constitutional dimensions” as in a criminal case.
Id. (citation and internal quotation marks omitted).
Nevertheless, the D.C. Circuit has recognized that, although not
as weighty, “there is also a strong constitutional value in the
need for disclosure in order to provide the kind of enforcement
of constitutional rights that is presented by a civil action for
damages” when “the action is tantamount to a charge of civil
conspiracy . . . to deny a class of citizens their
constitutional rights. Dellums, 561 F.2d at 242; see also
Cheney, 542 U.S. at 385 (recognizing the need for information in
civil cases is “far from negligible”).
Treasury does not address the strength of the public
interest in disclosure under the circumstances of this case but
notes that “[h]ere, the underlying action is a civil case, not a
criminal proceeding.” Treas. Opp’n, ECF No. 74 at 10. It is true
that the Plaintiffs have brought a civil action, but the nature
of the case (i.e., civil or criminal), by itself, does not end a
23
court’s inquiry on the issue. Dellums, 561 F.2d at 245–46
(rejecting the argument that the presidential communications
privilege is absolute in civil litigation).
In Dellums, plaintiffs brought a civil action for damages
alleging that “a policy or plan was devised by the defendants .
. . which led to and instigated the allegedly unlawful arrest
and detention of plaintiffs” during a protest against American
military involvement in Southeast Asia. Id. at 248. In support
of their claim for unconstitutional detention, Plaintiffs sought
information related to the Nixon administration’s conversations
in which the demonstrations were discussed. Id. The defendants
in Dellums argued that, regardless of the necessity or relevance
of the information sought, a claim of the presidential
communications privilege was an absolute bar to discovery in a
civil case. Id. at 246. The D.C. Circuit rejected such a
sweeping interpretation of the privilege and made it clear that
in civil actions in which a plaintiff alleges actions
“tantamount to a charge of civil conspiracy among high officers
of government to deny a class of citizens their constitutional
rights” a government’s claim of privilege could yield to a
sufficient showing of need. 561 F.2d at 245–47.
Plaintiffs in this case have alleged in their civil action
in Michigan that their pension plans were terminated in
violation of ERISA and the United States Constitution because of
24
undue pressure exerted by Treasury to bail out the auto
industry. Renewed Mot. Compel, ECF No. 70 at 26. They have
alleged that Treasury pressured the PBGC to abandon its
statutory duty, and to terminate the pensions so that GM could
receive monetary relief in violation of the Due Process Clause
of the Constitution. Id. at 21. In other words, they allege that
a class of over 20,000 was sold out by the government simply to
bail out the corporate interests of the auto industry.
As the D.C. Circuit has explained “Congress designed ERISA
to safeguard employees against the loss of anticipated
retirement benefits, following decades of service.” Page v.
PBGC, 968 F.2d 1310, 1311 (D.C. Cir. 1992). The PBGC’s role is
“key to the congressional plan” and its function is to “meet the
problem of plans terminated without assets sufficient to cover
vested benefits” and to “provide for the timely and
uninterrupted payment of pension benefits [within specified
dollar limitations] to participants and beneficiaries under
plans [covered by Title IV].” Id. (citing 29 U.S.C. § 1302(a)).
Under these circumstances the Court concludes that the
public interest in disclosure is just as strong as in Dellums.
Like the plaintiffs in Dellums, Respondents in their civil
action have alleged a “civil conspiracy among high officers of
government to deny a class of citizens their constitutional
rights.” See Dellums, 561 F.2d at 247. As stated above, the PBGC
25
sits as a fiduciary of pension plans and is tasked to ensure
that the personal tragedy of pension termination is not
considered lightly. Respondents have alleged an abdication of
that duty for improper reasons, and a conspiracy to cover up
these improper actions at all costs. Balanced against Treasury’s
“broad, undifferentiated claim of public interest” in
confidentiality, see Nixon, 418 U.S. at 707, the Court concludes
that the interest in disclosure in this particular case
sufficiently outweighs the interest in confidentiality.
This conclusion does not mean, of course, that the
privilege must yield to any request for public disclosure
irrespective of the need. The Court only holds that in these
circumstances the proponent of a subpoena may defeat such a
broad claim of privilege with a sufficient showing of need in
the litigation. See Dellums, 561 F.2d at 248 (stating that a
balance in favor of disclosure does not open the door to
production, but “only to consideration whether the claim is
overcome by a showing of other need, here litigat[ion] need.”).
The Court therefore next turns to the issue of necessity.
B. Showing of need
As the D.C. Circuit has instructed, a showing of need in
this case entails two components: (1) Respondents “bear the
burden to demonstrate with ‘specificity’ ‘that each discrete
group of the subpoenaed materials likely contains important
26
evidence’” and (2) ”bear the further burden of demonstrating
that the subpoenaed ‘evidence is not available with due
diligence elsewhere.’” Black, 2017 WL 6553628 at *2 (quoting In
re Sealed Case, 121 F.3d 754–55, 756.) 5 The Court addresses each
issue in turn.
1. Importance of the evidence sought
Under the first component of the need inquiry, “[a] party
seeking to overcome a claim of presidential privilege must
demonstrate . . . that each discrete group of the subpoenaed
materials likely contains important evidence.” In re Sealed
Case, 121 F.3d at 754. This component means “that the evidence
sought must be directly relevant to issues that are expected to
be central to the trial.” Id. Requests for documents that are
“tangentially relevant or would relate to side issues” would not
satisfy this component of the need inquiry; the same holds true
when a “claim that subpoenaed materials will contain such
evidence represents mere speculation.” Id. (citations omitted).
Discovery in this case is limited to Count Four of
Respondents’ complaint; and was defined by the Michigan Court as
follows:
In terms of addressing the scope of discovery for
purposes of entering a scheduling order – [t]he Court’s
5 The parties agree that the standard of need as identified in
Dellums and rearticulated in Black should govern the showing of
need in this case. See Renewed Mot. ECF No. 70 at 23; Treas.
Opp’n, ECF No. 74 at 9–10.
27
initial focus, keeping the above case law in mind, is on
Count 4 and whether termination of the Salaried Plan
would have been appropriate in July 2009 if, as
Plaintiffs contend, Defendants were required under 29
U.S.C. § 1342(c) to file before this court “for a decree
adjudicating that the plan must be terminated in order
to protect the interests of the participants or to avoid
any unreasonable deterioration of the financial
condition of the plan or any unreasonable increase in
the liability of the fund.”
Black v. PBGC, No. 09-cv-13616 (E.D. Mich. Sept. 1, 2011), ECF
No. 193 at 3–4. To that end, the Court allowed the parties to
engage in discovery related to the substantive component of
Count Four--whether the PBGC had met the statutory requirements
for termination under Section 1342(a). Accordingly, discovery is
limited to whether the PBGC terminated the plan because it had
“not met the minimum funding standard,” was “unable to pay
benefits when due,” or “the possible long-run loss of the
corporation with respect to the plan may reasonably be expected
to increase unreasonably if the plan is not terminated.” 29
U.S.C § 1342(a)(1)-(4).
As stated above, Respondents’ theory of the case is that
the termination of the pension plan “occurred as the result of
politics, with Treasury having impermissibly pressured the PBGC
to acquiesce in the Plan’s termination as part of Treasury’s
political goals in restructuring the auto industry in general,
and GM in particular.” Renewed Mot. Compel, ECF No. 70 at 10.
Therefore, the issues the Respondents expect to be central at
28
trial include whether GM could have reassumed the Salaried Plan
thereby continuing the pension plan and avoiding termination,
and whether Treasury influenced the PBGC to terminate the plan
despite its viability through GM. See id. at 27–28.
Respondents’ discovery request can be grouped into three
categories: (1) Draft memoranda from staffers to Dr. Lawrence
Summers, the Director of the National Economic Council,
Assistant to the President for Economic Policy, and co-chair of
the Auto Task Force; (2) electronic mail conversations among
Auto Team members concerning advice provided to President Obama;
and (3) personal requests for information by President Obama
along with Treasury emails and a memorandum in response.
The first group of documents, “[d]raft memoranda from
staffers to Dr. Lawrence Summers” providing updates regarding GM
and Delphi, comprise the majority (53 of 61) of the withheld
documents. 6 These documents are iterations of 13 memoranda from
Autoteam staffers to Dr. Summers written between the months of
February and August 2009. The memos in this group relate to
Treasury’s impressions on GM and Chrysler restructuring plans,
Treas. Original Priv. Log, ECF No. 35-5 at 140; Delphi’s
6 See Treas. Revised Privilege Log, ECF No. 51-2 Nos. 67, 72, 84,
94, 275, 560, 593, 596, 599, 601, 603, 605, 611, 623, 627, 629,
631, 633, 638, 668, 670, 672, 674, 676, 692, 758, 759, 760, 761,
762, 766, 770, 777, 849, 856, 859, 860, 863, 944, 948, 950, 956,
1006, 1089, 1091, 1094, 1152, 1166, 1168, 1217, 1219, 1221, and
1223.
29
liquidity issues and possible ramifications of Delphi’s
shutdown, id. at 152-54; and plans for GM’s reorganization and
updates on GM negotiations, id. at 178.
The Court finds that Respondents have shown that the
documents requested in this first group likely contain important
evidence. These memoranda cover Treasury’s views on several
topics that are relevant to Respondents’ theory of the case.
Furthermore, Respondents’ discovery efforts have revealed that
at the time the salary plan was terminated it was a “relatively
well-funded plan.” Renewed Mot., ECF No. 70 at 25 (citing Watson
Wyatt Actuarial Certification, ECF No. 19-5 at 2). Respondents
have also discovered the fact that, prior to Treasury’s
proactive involvement, the PBGC was advocating for a
circumstance under which the pension plan remained in effect.
See, e.g., D. Cann. Dep. Tr., ECF No. 11-6, 67:6–14 (stating
PBGC was “cheerleading” for the transfer of the plan). A
critical issue in the Michigan action will be the reason for the
sudden change in strategy. The documents in the first group
which relate to Treasury’s interactions with the PBGC and its
impressions about “Delphi and its pensions liabilities” as well
as Treasury’s “impressions . . . on GM and Chrysler
restructuring plans,” ECF No. 70 at 29, are documents that go to
30
the heart of that issue and are clearly relevant to Respondents’
claim of undue influence by Treasury. 7
The second group consists of four documents which are a
series of email chains from March 28, 2009 to May 28, 2009. 8 The
emails relate to discussions between the Auto Team and Dr.
Summers about GM and Delphi (No. 621); a presidential
announcement regarding GM’s restructuring (Nos. 610 and 776);
and emails relating to the disparity between GM and Toyota’s
labor rates (No. 358). The Court holds that document numbers
610, 621 and 776 in this group likely contain important
evidence. Although not dispositive, the timing of the documents
is important: They were created at a time during which there was
a mediation with important parties including the PBGC, Delphi,
and GM relating to the bankruptcy proceedings. See House Dep.
Tr., ECF No. 11-8, at 143:9–22. Critically, these documents
relate to GM’s restructuring and there is no question that the
resolution of the pension fund was a significant issue related
to GM’s restructuring through the bankruptcy.
7 The Court notes that this conclusion is further supported by
Plaintiff’s ex parte submission. Without discussing the contents
of the submission, it suffices to say that discovery has
revealed that this category of information is relevant to
Respondents’ claims.
8 See Treas. Revised Privilege Log, ECF No. 51-2 Nos. 358, 610,
621, and 776.
31
Document number 358, however, relates to “the cost gap
between GM and Toyota labor rates;” and there is no indication,
other than the timing of these emails, that the evidence is
related to a central issue at trial. Respondents argue that the
timing of these emails, May 26 through 28, is sufficient. Under
that logic, however, Respondents would be entitled to any email
written by the Auto Team or Treasury around that time period
regardless of the email’s relevance to the issues in this case.
The issues regarding “the cost gap between GM and Toyota labor
rates” without some connection to GM’s restructuring or the
pension fund, is the sort of “tangentially relevant” request for
documents that the D.C. Circuit has instructed will not meet the
important evidence prong of the needs test. 9 See In re Sealed
Case, 121 F.3d at 754 (stating “tangentially relevant” documents
or evidence that “would relate to side issues” would not satisfy
the need requirement). Accordingly, the Court finds that only
document numbers 610, 621 and 776 in this group are likely to
contain important evidence.
9 Respondents’ ex parte submission related to this request does
not change the Court’s conclusion. As it pertains to No. 358,
the submission merely repeats the fact that the timing of the
emails coincided with the mediation suggest the emails likely
contain important evidence. The Court disagrees, timing alone
cannot transform documents about “labor rates” to evidence about
the issues central to Respondents’ civil action.
32
The third group consists of five documents that are related
to a draft letter from President Obama containing a request to
Dr. Summers regarding the Delphi Salaried plan. 10 The documents
at issue in this group likely relate to a “Draft memorandum
regarding [the PBGC’s] decision to take over the salaried and
hourly pension plans of Delphi.” Treas. Original Privilege Log,
ECF No. 35-5 at 140. These documents relate to the decisions
about the salaried pension fund that are significant to the
claims in the civil action. The Court finds that all the
documents in this category meet the important evidence
component.
In short, with the exception of document number 358, the
email string relating to automotive labor rates, the Court finds
the evidence sought in the three categories are “directly
relevant to issues that are expected to be central to the
trial.” In re Sealed Case, 121 F.3d at 754. And therefore,
those documents meet the first component of the need inquiry.
2. Availability of the evidence elsewhere
Under the second component of the need inquiry a party
challenging the claim of privilege must demonstrate “that [the]
evidence is not available with due diligence elsewhere.” In re
Sealed Case, 121 F.3d at 754. This component “reflects [Supreme
10See Treas. Revised Privilege Log, ECF No. 51-2 Nos. 763, 764,
765, 766, and 767.
33
Court precedent] that privileged presidential communications
should not be treated as just another source of information.”
Id. at 755. To meet this standard, “[e]fforts should first be
made to determine whether sufficient evidence can be obtained
elsewhere, and the subpoena’s proponent should be prepared to
detail these efforts and explain why evidence covered by the
presidential privilege is still needed.” Id.
Respondents argue that these documents are not “just
another source of information” but rather the only source of
information outlined above. Renewed Mot., ECF No. 70 at 39–42.
Respondents point out the fact that they have conducted
discovery from all other key parties in this case and have not
received information that speaks to the issues related to the
subjects in their discovery request. Id. at 39. Respondents also
note that the PBGC interacted with Treasury almost exclusively
through Joe House, the Director of the Department of Insurance
Supervision and Compliance at the PBGC, and Matthew Feldman, a
member of the Auto Team at Treasury. And that Mr. House failed
to recall anything of significance related to Treasury’s
involvement with the PBGC during his deposition in the civil
action. Renewed Mot., ECF No. 70, at 39–40 (citing ECF No. 11 at
19-20 and n.10 (noting approximately 60 instances in Mr. House’s
deposition transcript where he states his inability to recall
events related to Delphi’s plans)). Last, Respondents argue that
34
information related to Treasury’s Auto Team’s determination that
GM could not reassume the pension plans, an issue of critical
importance to its claims, is uniquely in the possession of
Treasury. Renewed Mot., ECF No. 70 at 41–42.
Treasury’s lone response is that Respondents have scheduled
a deposition of Mr. Feldman, a member of the Auto Team, and can
question him about Treasury’s influence into PBGC’s pension
negotiations. Treas. Opp’n, ECF No. 74 at 8–9. Therefore,
Treasury argues, the information is available from another
source. But, as Respondents point out, a deposition almost a
decade after the events that give rise to the claims in this
case is not equivalent to documentary evidence prepared at the
time of the controversy. See Dellums, 561 F.2d at 248.
(affirming district court ruling which noted that a deposition
is “far more inferior to the actual contemporaneous” documentary
evidence related to the allegations).
The Court concludes that Respondents have met their burden
in showing that the evidence they seek is “not available with
due diligence elsewhere.” See In re Sealed Case, 121 F.3d at
755. Respondents have had considerable difficulties obtaining
information related to Treasury’s interactions with the PBGC
vis-à-vis the termination decision. Deposition attempts have
failed to uncover this sort of evidence because the person who
would have this information, Mr. House, simply cannot remember.
35
Respondents have run into similar roadblocks in their attempts
to obtain this sort of information from the other key players in
this case because these parties do not have the information
Respondents seek.
Respondents have made a showing of substantial need for
overcoming the general claim of privilege asserted by Treasury.
The D.C. Circuit has explained that upon a sufficient showing of
need the Court is to review in camera the subpoenaed documents
to “identify and release specific items of evidence that might
reasonably be relevant to” the claims at issue in the case. In
re Sealed Case, 121 F.3d at 762. Therefore, this Court will
order the following documents to be filed for in camera review:
67, 72, 84, 94, 275, 560, 593, 596, 599, 601, 603, 605, 610,
611, 621, 623, 627, 629, 631, 633, 638, 668, 670, 672, 674, 676,
692, 758, 759, 760,761, 762, 763, 764, 765, 766, 767, 770, 776,
777, 849, 856, 859, 860, 863, 944, 948, 950, 956, 1006, 1089,
1091, 1094, 1152, 1166, 1168, 1217, 1219, 1221, and 1223.
Treasury should provide a justification sheet for each document
explaining why the document does not contain evidence that may
be reasonably relevant to the claims in this case.
IV. CONCLUSION
This case calls upon the Court to “strike a balance
between the twin values of transparency and accountability
of the executive branch on the one hand, and on the other
36
hand, protection of . . . the President’s ability to obtain
candid, informed advice.” See Judicial Watch, Inc. v. Dep’t
of Justice, 365 F.3d at 1112. The allegations in the civil
action in this case are grave, and the necessity for the
subpoenaed materials dire. Under these circumstances,
Treasury’s broad, undifferentiated claim of privilege must
yield to the Respondents’ showing of need for the majority
of documents Respondents seek. Accordingly, Respondents’
renewed motion to compel is GRANTED in PART and DENIED in
PART. An appropriate Order accompanies this Memorandum
Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District
October 15, 2018
37