INTERVIEW WITH Former United States Magistrate Judge, District of New Jersey, Ronald Hedges
Former United States Magistrate Judge, District of New Jersey, Ronald Hedges, will be giving perspectives on ESI Production and Presentation and the approach of the court vs. government regulators at the upcoming IQPC eDiscovery for Financial Services and Government Investigations Summit. In this interview, Judge Hedges talks about the scope of an investigation from a judge’s viewpoint.
Amber Scorah: What is the scope of an investigation from a judge’s viewpoint and when does he care?
Judge Hedges: Well, the simple answer to that question, as a general proposition, is a judge doesn’t care because a judge is not going to be involved in, so to say, policing the investigation unless something collateral happens. What I mean by that is, let’s assume that a company is being investigated by the Federal Trade Commission or the like. The only time a court would be involved is if it’s some type of process that’s issued to the organization, for example, a subpoena or whatever, and there’s a resistance to that. Either the agency has to come into court to enforce process or the organization has to come to quash process. Courts don’t get involved in these government investigations absent something like that.
So my first answer would be judges really don’t care, but having said that, the second answer is that judges do get involved in these. There is judicial review to some degree when there are subpoenas and the like, so my answer to you would be that judges get involved when necessary and scope is very broad.
We have seen in the last year or so, several circuit decisions that on the one hand, say there’s a very broad scope of investigations, but on the other hand say there is some kind of limit. The limit really has to do with what the investigation is, how broad it is. Essentially an agency doesn’t get a blank check to get information from an organization just because it wants to–it’s got to have a basis for it. Once the basis is articulated then there can be some limitations imposed on a subpoena or the like because the agency more or less has self limited itself.
So answer number one: judges generally don’t care unless they’re required to, because judges don’t have a roving license to go out and do things; and on the other hand, judges do care when something comes before them and at that point agencies have very broad discretion to get things done.
Subject two, of course, what’s the scope of the investigations and what is being sought and not. Having said that, I would hope nine out of ten cases, or even more than that, there’s some type of discussion going on between counsel to the organization and the agency to try and resolve this. I would almost suggest it might be something along the lines of what, on the civil side, litigation we might call meet and confer. It’s not formal, but obviously counsel for an organization are going to try to talk to the agency that is trying to get information, to make sure all of the appropriate information or limitation of the information being given works.
Amber Scorah: How does protection of attorney-client privilege and work product fit in to an investigation?
Judge Hedges: Let’s back up again to what I mentioned a minute ago. Often, a judge is not involved in this and often there are combinations made (as there should be obviously) between an agency that’s doing an investigation, and a subject of an investigation, an organization. With this caveat—even though there isn’t litigation, if information is sought that is subject to attorney client privilege or work product, or for that matter is confidential in nature, the organization producing the information has to see what, if anything, the effect of production has on what we’ll call for lack of a broader phrase, “privilege.”
Certainly, if an organization in response to a subpoena says, “you know what, I’m not going to fight this government agency, I’m giving them everything, including privileged materials.” That means there’s been a waiver of privilege; could be a waiver of work product, although presumably work product is not going to have attached, until at the earliest when the organization knows of the investigation, because there’s no pending or contemplated litigation at the time. So, talking about privilege, if an organization says, you know what, I’m giving you everything, that is more or less a waiver of privilege and the question becomes the scope of the waiver – whether you’re giving up information that’s only got to do with the investigation or something more, and that may bring into play (and let me stress the word may) the federal rules of evidence.
Rule 502 of the federal rules was enacted several years ago. The purpose of it was to avoid a broad waiver by basically turning information over. The problem is that 502(a), scope of waiver, really works when there’s litigation pending. But some courts have drawn analogies to 502(a) when they’re looking at some subsequent requests to get information, and in addition to that there are some agencies by statute that more or less can extend protection to an organization in turning information over.
So my answer is, here again, this is going to be a very fact-specific issue, it’s going to depend number one on what agency is doing the investigation, and can the agency afford protection if there’s a production? I know, for example, there is one agency that if it’s enacting legislation does not specifically say it can extend protection, but it’s doing it anyway in a regulation. The question is if it’s only a regulation is that enough, and then the question becomes, if an organization turns over information voluntarily, is that a waiver and what’s the scope of that waiver; and those are pretty much unanswered questions, so that’s going to be a very interesting topic to talk about.
Amber Scorah: What about parallel proceedings? Should there be stays, shared information, etc.?
Judge Hedges: Well, let me talk about what a parallel proceeding is as far as I know. Parallel proceeding to me means that there’s an ongoing government investigation, and either contemporaneous with the investigation or shortly after the investigation commenced, there’s a civil case pending (perhaps a class action, perhaps not). When I was on the bench, there were often situations where there were these parallel proceedings that are investigating the importance of what’s being investigated, more or less, so the judge says, we’re trying to get this resolved within an agency give us time. In other words, stay the proceeding while something’s going on. Perhaps a consent agreement is being worked on that is going to be presented.
Then the problem comes there from a case management perspective as a judge—what’s more important: giving the agency and the entity an opportunity to resolve things (and by the way this may be parallel civil or criminal proceedings, at which point you would say, sure let’s stay the case). The other problem is with how long the stay is. At some point a judge is going to say, I’ve stayed this case for you for x period of time and time’s run out. So I think the question is that this is going to be a very discretionary call and it’s going to be case sensitive and fact sensitive call, and I don’t have an answer across the board. But it’s something to think about: when someone is in an investigation and there is some kind of parallel proceeding, what do you ask the court that has jurisdiction over the parallel proceeding to do? So, I’m afraid I didn’t answer your question Amber, I’m probably just creating more questions than I’ve answered by saying anything to you.