Appleton Papers, Inc. v. Environmental Protection Agency

In the

United States Court of Appeals

For the Seventh Circuit

No. 12-2273

A PPLETON P APERS, INC.,

Plaintiff-Appellant,

v.

E NVIRONMENTAL P ROTECTION A GENCY, and

U NITED S TATES D EPARTMENT OF

JUSTICE E NVIRONMENT AND

N ATURAL R ESOURCES D IVISION,

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 11-C-318—William C. Griesbach, Chief Judge.

A RGUED O CTOBER 25, 2012—D ECIDED D ECEMBER 26, 2012

Before F LAUM, M ANION, and R OVNER, Circuit Judges.

F LAUM, Circuit Judge. After the government alleged

Appleton Papers Inc. (“API”) and seven other companies

caused $1 billion in contamination in the Fox River near

Green Bay, Wisconsin, the government hired a consultant

that prepared reports on the companies’ responsibility

2 No. 12-2273

for the contamination. API unsuccessfully sought discov-

ery of these reports by challenging a consent decree

between the government and another company.

Determined to see the content, it filed a Freedom of

Information Act (“FOIA”) request seeking the material,

but the government refused under the FOIA exemption

covering attorney work product. API eventually filed

suit in federal district court, and we uphold the

district court’s decision in favor of the government.

Even though the government used portions of its reports

in two consent decrees, that use does not waive work

product immunity for all the related content. API also

misconstrues the privilege by erroneously suggesting

that facts underlying the conclusions are unprotected.

As a result, API’s arguments boil down to a series of

policy justifications that must be left for district courts

in individual litigation instead of a FOIA request, which

is not a substitute for discovery.

I. Background

A. Factual Background

This case originates out of contamination in the Lower

Fox River and Green Bay caused by a handful of paper

companies. The United States issued a unilateral admin-

istrative order under the Comprehensive Environmental

Response, Compensation, and Liability Act (“CERCLA”),

see 42 U.S.C. § 9601 et seq., to API and seven other “poten-

tially related parties” (“PRPs”), alleging that the PRPs

discharged polychlorinated biphenyls (“PCBs”) into the

No. 12-2273 3

site from their facilities. Cleanup of the site is expected

to cost approximately $1 billion.

In preparation for CERCLA litigation, the United States

hired Amendola Engineering, Inc. (“Amendola”), as an

environmental consultant to the Fox River matter.

Amendola prepared a report in 2000 entitled

“Preliminary Estimates of PCB Discharges to the Fox

River 1945 to 1985.” The report estimated the amount

of PCB each PRP discharged into the water. The Environ-

ment and Natural Resource Division of the Department

of Justice (“ENRD”) released a partial copy of the report

to API in 2000. It also released a partial copy of a

revised version in 2001.

The government subsequently cited to the reports and

post-2001 versions, which it had not released, in two

consent decrees with other PRPs in the Fox River mat-

ter. First, the United States’ brief in support of a consent

decree with Fort James Operating Company estimated

Fort James was responsible for 15-20% of the PCB contami-

nation even though the 2000 and 2001 reports estimated

Fort James’s responsibility at 38% and 28% respectively.

The district court in that case entered an order

approving the consent decree over objection by

the Clean Water Action Counsel. See United States v. Fort

James Operating Co., 313 F. Supp. 2d 902 (E.D. Wis. 2004).

Next, the government used the 15-20% estimate again

in its brief in support of a consent decree with Geor-

gia-Pacific Consumer Products (Fort James’s succes-

sor-in-interest). Again the district court entered an order

approving the consent decree relying, in part, on the

4 No. 12-2273

various versions of the Amendola report. API and NCR,

another PRP,1 opposed the order and sought additional

discovery of the documents they seek in this case. The

district court rejected API’s and NCR’s assertions “that

the 15-20% figure has come out of left field.” United

States v. NCR Corp., 10-C-910, Dkt. No. 130 (E.D. Wis. Apr.

4, 2011). The district court noted that the government’s

estimate was consistent with reports other than the

2000 and 2001 Amendola Reports, suggested “NCR and

AP[I] do not seem to appreciate the distinction between

a settlement negotiation and liability at trial,” found

the settlement was fair, and concluded the additional

discovery that API and NCR requested was not required.

Id. at 4-5.

B. Procedural Background

Unsuccessful in its attempts to get full copies of the

Amendola Reports, API submitted a FOIA request to

ENRD requesting all copies, drafts, and supporting

information related to the 2000 and 2001 Amendola

Reports as well as subsequent versions. The government

provided two documents—what API calls partial copies

of the 2000 and 2001 Amendola Reports, which the gov-

ernment previously released—but withheld 101 docu-

ments under FOIA exemptions. API filed an administra-

1

API apparently has a cost-sharing agreement with NCR.

This explains API’s interest in the Amendola Reports despite

API’s claim that a district court has already absolved it of

responsibility in the Fox River matter.

No. 12-2273 5

tive appeal, to which the government did not respond.

API then filed an appeal in the Eastern District of Wis-

consin.

The government moved for summary judgment, as-

serting the documents were work product subject to

FOIA exemption 5. The district court agreed and granted

the motion. The court rejected API’s argument that

“purely factual material” could be separated from the

protected material. In rejecting this claim, the district

court relied on Rule 26(b)(4)(D) of the Federal Rules of

Civil Procedure, which prevents discovery of the facts in

a nontestifying expert witness’s report. The district

court next rejected API’s argument that “because some

of the results of the consultant experts” were released

in the consent decrees, work product immunity no

longer applied to “all of the underlying technical data

and other materials underlying those results.” The

district court cited Federal Rule of Evidence 502(a)(2).

Under this rule, subject matter waiver occurs only if the

undisclosed material “ought in fairness be considered

together” with the disclosed material. The district court

applied the rule and found that the government’s sub-

missions in the consent decrees were passive and did

not result in waiver. API timely appeals.

II. Discussion

We do not review entries of summary judgment in

FOIA cases de novo. Instead, we “determine whether

the district court had a sufficient factual basis for its

ruling and, if so, whether the court’s decision was clearly

6 No. 12-2273

erroneous.” Enviro Tech Int’l, Inc. v. U.S. EPA, 371 F.3d

370, 373 (7th Cir. 2004). The government bears the burden

of proof because the statute is construed in favor of

disclosure. Patterson v. IRS, 56 F.3d 832, 836 (7th Cir. 1995).

FOIA requires government agencies to disclose their

records to the public. 5 U.S.C. § 552(a). However, sub-

section (b) exempts nine categories of material “that

represent the congressional determination of the types

of information that the Executive Branch must have the

option to keep confidential, if it so chooses.” FTC v. Grolier

Inc., 462 U.S. 19, 23 (1983) (internal quotation marks

and original brackets omitted); see 5 U.S.C. § 552(b).

Specifically, subsection (b)(5) protects “inter-agency and

or intra-agency memorandums or letters which would

not be available by law to a party . . . in litigation with

the agency.” 5 U.S.C. § 552(b)(5). This exemption covers

work product, which prevents “a party [from] dis-

cover[ing] documents and tangible things that are pre-

pared in anticipation of litigation or for trial by or for

another party or its . . . agent.” Fed. R. Civ. P. 26(b)(3)(A);

see Grolier, 462 U.S. at 20 (“It is well established that

[exemption 5] was intended to encompass the attorney

work[ ]product rule.”); see generally Hickman v. Taylor,

329 U.S. 495 (1947) (establishing work product immunity).

In assessing the validity of a work product claim

under exemption 5, we determine whether “the docu-

ments would be ‘routinely’ or ‘normally’ disclosed upon

a showing of relevance.” Grolier, 462 U.S. at 26. In litiga-

tion, Federal Rule of Civil Procedure 26(b)(1) permits a

party to discover information “relevant” to a claim or

No. 12-2273 7

defense. Fed. R. Civ. P. 26(b)(1) (parties “may obtain

discovery regarding any nonprivileged matter that is

relevant to any party’s claim or defense”). But Rule

26(b)(3)(A) protects, as privileged, relevant material that

constitutes work product. Thus, this material is not

“disclosed upon a showing of relevance” and falls

under exemption 5 in FOIA cases. Grolier, 462 U.S. at 26.

Of course, there are ways to overcome the privilege in

an individual case. For instance, a party may overcome

a work product claim by showing “it has substantial

need for the materials to prepare its case and cannot,

without undue hardship, obtain their substantial equiva-

lent by other means.” Fed. R. Civ. P. 26(b)(3)(A)(ii). Addi-

tionally, although a report prepared in anticipa-

tion of litigation is work product, the party must

disclose that report if its author plans to testify at trial.

Fed. R. Civ. P. 26(a)(2)(B). However, we ignore these

case-specific considerations in FOIA cases. NLRB v.

Sears, Roebuck & Co., 421 U.S. 132, 149 n.16 (“The ability

of a private litigant to override a privilege claim set up

by the government, with respect to an otherwise

disclosable document, may itself turn on the extent

of the litigant’s need in the context of the facts of his

particular case; or on the nature of the case. However,

it is not sensible to construe the Act to require disclosure

of any document which would be disclosed in the hypo-

thetical litigation in which the private party’s claim is

the most compelling.” (internal citations omitted)). The

requestor is limited to a showing of “relevance” in a

“normal” case. It cannot make fairness arguments

related to a hypothetical case or hypothetical litigant.

8 No. 12-2273

Nor can it assert that it would be entitled to the docu-

ment in litigation with the government—each member of

the public is equally entitled to make a FOIA request.

U.S. Dep’t of Defense v. Fed. Labor Relations Auth., 510 U.S

487, 499 (1994).

These principles underlie the problems with API’s

arguments. Although API agrees the documents are

work product, it argues that the “purely factual mate-

rial” is separable from Amendola’s “opinions.” As a

result, API argues the district court should have

reviewed the documents in camera and separated them.

It also argues that the government waived the privilege

with respect to all of the requested documents because

it used select portions of those documents in its consent

decrees with other PRPs. We conclude that all of the

documents sought are work product, and although

the government waived protection for the specific infor-

mation submitted in the consent decrees, that waiver

does not constitute waiver of all related material.

A. All of the Requested Material Is Protected Work

Product

API seems to agree the documents it seeks are, at least

in part, work product. The district court’s findings,

which are entitled to deference, confirm this. The United

States retained Amendola and other firms in prepara-

tion for the Fox River and other litigation, and

“[t]hese firms have produced draft reports and other

documents for the government’s use in litigation.” The

documents “consist of the technical reports, drafts, data[,]

No. 12-2273 9

and other communications about those reports.” These

findings, which are consistent with the record and API’s

own assertions, fall under Rule 26(b)(3)(A), making

them work product and protected under exemption 5.

API’s first and third arguments on appeal assert that

any “factual” material is separable from “opinions.” In

other words, it believes that factual material underlying

the report’s conclusions is not protected work product.

This argument ignores Rule 26, which protects all “docu-

ments and tangible things that are prepared in anticipa-

tion of litigation.” Fed. R. Civ. P. 26(b)(3)(A). It does,

however, separate “fact” work product and “opinion”

work product. “Fact” work product is discoverable in the

rare case where party makes the “substantial need”

showing discussed above. Fed. R. Civ. P. 26(b)(3)(A)(ii)

(permitting discovery if “the party shows that it has

substantial need for the materials to prepare its case

and cannot, without undue hardship, obtain their sub-

stantial equivalent by other means”); see generally

Eagle Compressors, Inc. v. HEC Liquidating Corp., 206 F.R.D.

474, 478 (N.D. Ill. 2002) (This burden is difficult to meet

and is satisfied only in “rare situations, such as those

involving witness unavailability.”). But even when a

litigant makes the substantial need showing, “opinion”

work product remains protected. Fed. R. Civ. P. 26(b)(3)(B)

(“If the court orders discovery of those materials [for

which a party has a substantial need], it must protect

against disclosure of the mental impressions, conclusions,

opinions, or legal theories of a party’s attorney or other

representative concerning the litigation.”). Thus, al-

though there are differing levels of protection for fact

10 No. 12-2273

and opinion work product, the Federal Rules protect

both types.2 See In re Grand Jury Proceedings, Thursday

Special Grand Jury Sept. Term, 1991, 33 F.3d 342, 348 (4th

Cir. 1994). They require a showing beyond relevance

before they are discoverable, and as such, they are

covered by FOIA exemption 5. See Grolier, 462 U.S. at 26.

Indeed, API did not need to look further than Hickman

to understand the error in its argument. There, the

Court protected the facts the lawyer obtained from inter-

viewing witnesses. Hickman, 329 U.S. at 498.

API also argues that the district court clearly

erred in relying on Rule 26(b)(4)(D), which prohibits

parties from discovering the research of a nontestifying

expert. This rule is simply an application of the work

product rule. The consultant’s work will, by definition,

be work product because the party uses the con-

sultant “in anticipation of litigation.” See Fed. R. Civ.

P. 26(b)(4)(D). The district court did not use the rule as

independent authority to reject API’s claim. Rather, the

district court used it as an illustration. Because the rule

protects “facts known or opinions held by an expert,” the

rule shows that facts and opinions alike are protected

and therefore not separable. See id. (emphases added). API

also cites authority for the proposition that once a party

2

It is possible that all of the documents are “fact” work product

comprised of Amendola’s factual studies. This, however,

would not alter our conclusion. We make the distinction

between fact and opinion work product only to illustrate API’s

error.

No. 12-2273 11

relies on the research of a nontestifying expert, it falls

out of the protection of the Rule and becomes freely

discoverable. True, but this is the same litigation-specific

argument that API relies on throughout its brief. Parties

need only disclose work product in the particular case they

use it. This argument echoes the waiver argument we

reject below—that the government used a portion of the

report in a consent decree does not mean that the

Rule requires disclosure in every case going forward.

B. The Government Did Not Waive Work Product

Immunity

Next, API argues that by using some of the documents

in support of the consent decrees with Fort James and

Georgia-Pacific, the government waived protection for

all of the documents API now seeks. API offers little

support for its implicit premise that disclosure of some

information results in disclosure of all of the material

concerning the same subject. That principle applies

more broadly to the attorney-client privilege, where

disclosure of privileged information can destroy the

privilege. Generally, a party that voluntarily discloses

part of a conversation covered by the attorney-client

privilege waives the privilege as to the portion disclosed

and to all other communications relating to the same

subject matter. Williams & Connolly v. SEC, 662 F.3d 1240,

1244 (D.C. Cir. 2011) (citing In re Sealed Case, 877 F.2d 976,

980-81 (D.C. Cir. 1989)). However, the work product

doctrine is “is distinct from and broader than the attor-

ney-client privilege.” United States v. Nobles, 422 U.S. 225,

12 No. 12-2273

238 n.11 (1974). Work product immunity furthers the

client’s interest in obtaining complete legal advice and

creates “a protected area in which the lawyer can

prepare his case free from adversarial scrutiny.” Hickman,

329 U.S. at 511. It advances the adversarial system

by providing incentives to collect information and thor-

oughly prepare for litigation.

In determining whether the government impliedly

waived work product immunity for the documents API

seeks, we determine whether the “specific assertions

of privilege are reasonably consistent with the purposes

for which” the privilege was created. In re Sealed Case,

676 F.2d 793, 817 (D.C. Cir. 1982). Accordingly, “disclo-

sure of some documents does not necessarily destroy

work-product protection for other documents of the same

character.” 8 Wright & Miller, Federal Practice & Proce-

dure, § 2024; Williams & Connolly, 662 F.3d at 1244; Pittman

v. Frazer, 129 F.3d 983, 988 (8th Cir. 1997); Sealed

Case, 676 F.2d at 818; Duplan Corp. v. Deering Milliken,

Inc., 540 F.2d 1215, 1222 (4th Cir. 1976).

With respect to this case, there is no doubt that the

government waived work product immunity for the

portions of the documents it did use in the two consent

decrees. Those citations “substantially increased the

opportunities for potential adversaries to obtain the

information,” thereby eliminating any interest the gov-

ernment had in keeping the information from API.

Wright & Miller, supra, § 2024; see Brown v. Trigg,

791 F.2d 598, 601 (7th Cir. 1986) (immunity waived by

testifying about material at a previous hearing). But the

No. 12-2273 13

government has already provided API with that infor-

mation.3

In doing so, however, the government did not “expose[]

the enchanted nature” of the information API now

seeks. See Sealed Case, 676 F.2d at 817 (internal quotation

mark omitted). In keeping the material privileged, there

is nothing inconsistent with the immunity’s purpose,

which encourages litigants like the United States to

prepare reports like the Amendola Report. This practice

provides courts with additional information and facil-

itates the truth-seeking process. Ruling as API asks us

could have two deleterious effects that are inconsistent

with the immunity’s purpose. First, it may discourage

the government from settling with PRPs for fear that

in entering consent decrees, it would have to release

all related information to parties it wants to take to

trial. See Metro. Housing Development Corp. v. Village

of Arlington Heights, 616 F.2d 1006, 1013 (7th Cir. 1980)

(“The law generally favors and encourages settlements.”).

3

This explains API’s misplaced reliance on Goodrich Corp. v.

U.S. EPA, 593 F. Supp. 2d 184 (D.D.C. 2009). There, the court

relied on policy considerations and found that the EPA’s

disclosure of a model in a public presentation waived the

right to the underlying report. However, the court noted that

the EPA had already disclosed the “gist” of the information

it sought to exempt from the FOIA request. Id. at 191. More

importantly, Goodrich claimed waiver “for a single document,”

in contrast to what API seeks here—an “open-ended list of

all documents related to a certain subject” of which the

United States has not revealed the “gist.” Cf. id. at 192.

14 No. 12-2273

Additionally, finding waiver is inconsistent with Hick-

man’s central tenet—by requiring the government to

disclose all material related to documents it used we

would discourage creating drafts and supporting docu-

mentation in the first place. 329 U.S. at 511 (“Were

such materials open to opposing counsel . . . much of what

is now put down in writing would remain unwritten.”).

Although the government no longer has an interest in

withholding the information made public in the consent

decrees, it still has an interest in benefiting from its prepa-

ration of the other information it can use in future litiga-

tion. This interest is at the core of the work product

rule. Therefore, we do not find waiver of the docu-

ments the government has neither used nor released

to API.

This conclusion is consistent with other cases. First, in

Duplan, the Fourth Circuit upheld the district court’s

conclusion that documents related to previously disclosed

material remained protected. 540 F.2d at 1222. It held

that forcing disclosure of related material would create

“harsh results . . . conceivably causing wholesale produc-

tion of all work product documents from . . . a lawsuit

whenever production of any work product document is

considered a waiver.” Id. The waiver exception would

swallow the rule: “The net effect of such a rule would

result in great reluctance to produce any work product

documents for fear that it might waive the immunity as

to all similar documents.” See id. We want to encourage

creating these documents, but we also want to encourage

voluntary disclosure of certain information. API’s argu-

ment would render these goals mutually exclusive.

No. 12-2273 15

Similarly, in Nobles, the defense sought to impeach

prosecution witnesses with an investigatory report its

agent made about those witnesses. 422 U.S. at 228.

The Court rejected the defendant’s argument that the

whole report was protected. It held that the portions

relied upon by the agent were unprotected, but it

“excise[d] all reference to matters not relevant to the

precise statements at issue.” Id. at 228-29. Nobles histori-

cally stands for the earlier proposition that a party

cannot shield the material on which its witnesses rely.

But it also supports the inverse—partial reliance only

“waive[s] the privilege with respect to matters covered”

by the witness. Id. at 239. Undisclosed work product

remains protected.

API seeks to overcome this rule with a series of unavail-

ing policy arguments. For instance, API argues that the

“district court’s holding allows the government an

unfair advantage.” API argues the district court erred by

“allowing the [g]overnment to use the portions of the

consultant’s opinions that it believes are helpful, while

hiding the analysis and the complete opinions from

the public view.” But these sorts of fairness concerns

are not relevant to a FOIA inquiry. We determine

whether the material would normally or routinely be

discoverable in litigation on a showing of relevance,

Grolier, 462 U.S. at 26—not whether interests in a

particular suit or to a particular litigant can override a

privilege in a particular case, Sears, 421 U.S. at 149 n.16.

API cannot make this argument in a FOIA case; it must

make it in actual litigation. Federal Rule of Evidence 502

16 No. 12-2273

governs such situations where a party unfairly dis-

closes only a portion of privileged material. This Rule

“abolishe[d] the dreaded subject-matter waiver, i.e., that

any disclosure of privileged matter worked a forfeiture

of any other privileged information that pertained to the

same subject matter.” Trustees of Elec. Workers Local No. 26

Pension Trust Fund v. Trust Fund Advisors, Inc., 266 F.R.D. 1,

11 (D.D.C. 2010). Instead, waiver occurs only when dis-

closure is (1) intentional, (2) the disclosed and undis-

closed material concern the same subject matter, and

(3) fairness requires considering the material together.

Fed. R. Evid. 502(a). Determining whether the undis-

closed material ought to be considered with the

disclosed material requires a case-specific analysis of

the subject matter and adversaries. See Fed. R. Evid. 502

Advisory Committee Notes. These considerations go

beyond the purview of FOIA requests. See Grolier, 462

U.S. at 26.

API’s real complaint seems to be the district court’s

denial of its discovery request in the Georgia-Pacific

consent decree. Perhaps API should have overcome

the privilege in that matter. But that decision has no

bearing on this case. The district court rejected the

request and approved the consent decree. More impor-

tantly, to the extent API (or another party) fears that

the government will use the newer numbers against it

in future litigation, Rule 26 requires disclosure before

trial. Fed. R. Civ. P. 26(a)(2). FOIA is not a substitute

for discovery.

No. 12-2273 17

III. Conclusion

For the foregoing reasons, we A FFIRM the district

court’s decision.

12-26-12