In a recent Fourth Circuit opinion written by Judge Niemeyer, NLRB v. Interbake Foods, LLC, 637 F.3d 492 (4th Cir. 2011), the Court held that an administrative law judge (“ALJ”) had authority to receive and evaluate evidence under the Federal Rules of Evidence and to rule on claims of privilege made with respect to that evidence. In so ruling, the Court overruled the District Court’s holding by Judge Bennett that “only an Article III court may determine whether subpoenaed documents are protected by the attorney-client or attorney work-product privileges…” NLRB v. Interbake Foods, LLC, No. RDB 09-2081, 2009 U.S. Dist. LEXIS 86826, 2009 WL 3103819 at *4 (D. Md. Sept. 22, 2009).
The dispute revolved around an order requested by the NLRB directing Interbake to produce three subpoenaed documents to the ALJ in order for the ALJ to determine whether the documents were protected by a privilege.
As a preliminary matter, it is worth noting that the Fourth Circuit upheld the the District Court’s decision not to conduct an in camera inspection of the documents at issue because “‘Interbake ha[d] met its burden of establishing that the documents [were] privileged… and the NLRB ha[d] not articulated a good faith basis for doubting Interbake’s claim of privilege.’” NLRB v. Interbake Foods, LLC, 637 F.3d at 494 (quoting NLRB v. Interbake Foods, LLC, No. RDB 09-2081, 2009 U.S. Dist. LEXIS 86826, 2009 WL 3103819 at *4 n.1.) The Fourth Circuit explained that, once a prima facie showing of privilege is made, the opposing party must have a “factual basis sufficient to support a reasonable, good faith belief that in camera inspection may reveal evidence that information in the materials is not privileged” before becoming entitled to such review. Interbake Foods, 637 F.3d at 494 (quoting In re Grand Jury Investigation, 974 F.2d 1068, 1074 (9th Cir. 1992)). Other courts have reached similar conclusions, holding, for example, that challenges to privilege must have a “cogent basis” to justify in camera review. See G.D. v. Monarch Plastic Surgery, 239 F.R.D. 641, 650 (D. Kan. 2007).
Returning to the Fourth Circuit’s discussion of the authority of the ALJ, although the Court held that the ALJ could decide matters of privilege, it also held that an ALJ’s order ruling on evidence could only be enforced by an Article III court. Interbake Foods, 637 F.3d at 499 (“[T]he ALJ has no power to require the production of documents for in camera review or for admission into evidence when a person or party refuses to produce them. That would require Article III power, which the ALJ does not have.”) (emphasis in original). The Court noted the “line of division” between administrative bodies and Article III courts, quoting Interstate Commerce Comm’n v. Brimson, 154 U.S. 447, 485 (1984) (abrogated on other grounds by Bloom v. Illinois, 391 U.S. 194, 198-200 (1968)) as follows:
The inquiry whether a witness before [an agency] is bound to answer a particular question propounded to him, or to produce books, papers, etc., in his possession and called for by that body, is one that cannot be committed to a subordinate administrative or executive tribunal for final determination. Such a body could not, under our system of government, and consistently with due process of law, be invested with authority to compel obedience to its orders by a judgment of fine or imprisonment.
The Fourth Circuit noted that this limitation on the NLRB’s authority emanated from “the Constitution’s separation of powers and due process requirements.” Interbake Foods, 637 F.3d at 497-98. Further, the Fourth Circuit explained that a district court could not “delegate its task of conducting an in camera review to an ALJ.” Id. at 498. The district court can rule on the basis of the privilege log, but “what it cannot do is order production of documents to the ALJ to conduct an in camera review. Rather, the district court must satisfy itself whether, under appropriate legal standards, it should enforce the subpoena and thus overrule [the] claim of privilege.” Id. at 500 (emphasis in original).
This limitation of power is intended to protect against abuse of the subpoena power, in part by guaranteeing a party an opportunity to present defenses against a subpoena. Where an administrative agency seeks enforcement of a subpoena in court, “the respondent is guaranteed an opportunity to contest the subpoena’s validity through any appropriate defense.” Id. at 499 (citing Penfield CO. v. SEC, 330 U.S. 585, 604 (1947) (“‘[a]n administrative subpoena may be contested’”); NLRB v. Cable Car Advertisers, Inc., 319 F. Supp. 2d 991, 996 (N.D. Cal. 2004) (“‘[A] party [to]… a subpoena enforcement proceeding may raise appropriate defenses once in district court.’”)). Further, the right to raise defenses before a district court “includes the right to vindicate claims that a subpoena improperly calls for records protected by the attorney-client or work-product privileges.” Interbake Foods, 637 F.3d at 499. Along those lines, the Fourth Circuit cited NLRB v. Int’l Medication Sys., Ltd., 640 F.2d 1110, 1115-16 (9th Cir. 1981), in which “the district court was required to conduct ‘a full evidentiary hearing’ before enforcing a Board subpoena challenged on privilege grounds.”
As noted by the Fourth Circuit, privilege rulings by an ALJ typically are not enforced by district courts because the parties either comply voluntarily (see e.g. Patrick Cudahy, Inc., 288 N.L.R.B. 968, 968-69 (1988); see also Horizon Corp. v. FTC, No. 76-2031, 1976 U.S. Dist. LEXIS 12222, *2-7 (D.D.C. Nov. 18, 1976)) or because “the ALJ’s rulings are made without the need for inspection of the underlying documents.” Interbake Foods, 637 F.3d at 498 (citing Taylor Lumber and Treating, Inc., 326 N.L.R.B. 1298, 1299-1300 (1998)). However, if enforcement becomes necessary, only the district court can do so. Id.
Finally the Fourth Circuit noted that federal courts would not rubber stamp the enforcement of subpoenas, quoting Justice Frankfurter’s dissent in Penfield, supra:
Instead of authorizing agencies to enforce their subpoenas, Congress has required them to resort to the courts for enforcement. In the discharge of that duty courts act as courts and not as administrative adjuncts. The power of Congress to impose on courts the duty of enforcing obedience to an administrative subpoena was sustained precisely because courts were not to be automata in carrying out the wishes of the administrative. They were discharging judicial power with all of the implications of the judicial function in our constitutional scheme.
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