IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN by pengxuebo

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									 Case 3:05-cv-00627-L Document 295              Filed 11/19/10     Page 1 of 7 PageID 5291



                       IN THE UNITED STATES DISTRICT COURT
                       FOR THE NORTHERN DISTRICT OF TEXAS
                                 DALLAS DIVISION


JOHN BECKER, et al.,

               Plaintiff,

v.                                                   Civil Action No. 3:05-CV-627-L

TOOLS & METALS, INC. et al.,

               Defendants.
                                             ORDER

       Pursuant to the District Court’s Order of Reference filed August 18, 2010 (Doc. 279),

Lockheed Martin’s Motion to Compel United States to Produce Facts Related to the Criminal

Investigation of TMI and Loftis (Doc. 278), Lockheed Martin’s Unopposed Motion for Leave to

Exceed Page Limit for Its Reply in Support of Motion to Compel (Doc. 287), and United States’

Motion to Strike Reply and Motion to File Surreply (Doc. 289) have been referred to this Court

for determination. For the reasons stated herein, the Court grants the Motion to Compel in part,

grants the Motion for Leave to Exceed the Page Limit, and denies the government’s Motion to

Strike and to File Surreply.

                                        BACKGROUND

       This case stems from a criminal action prosecuted by the United States against Todd

Loftis, the Chief Executive Officer of Defendant Tools and Metals, Inc. (TMI). In December

2005, Loftis pled guilty to conspiracy to defraud the United States based on his role in submitting

inflated TMI subcontractor invoices to general contractor, Lockheed Martin Company

(Lockheed), which in turn submitted the invoices to the government for payment. United States

v. Loftis, No. 4:05-cr-00185-Y at dkt. entry 15. The long-running scheme began to unravel in
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2000, when Plaintiff John Becker, a TMI employee, sent an email to a Lockheed representative

warning that he believed TMI’s inflated invoices were fraudulent. (Doc. 278, Appendix at 98).

In 2002, Becker contacted the government about the scheme, resulting in a three-year

investigation into TMI and Loftis and culminating in Loftis’s 2005 plea. (Id. at 64-65).

       In March 2005, Becker filed this qui tam action against TMI and Lockheed, et al. In his

second amended complaint, he alleged, inter alia, violations of the False Claims Act (FCA)

based on TMI’s and Lockheed’s submission of inflated invoices to the government. (Doc. 101 at

6-9, 12, 14-15). In October 2007, the government intervened in this suit as a plaintiff, alleging

claims against TMI, Lockheed, and some individual defendants for violations of the FCA, breach

of contract, and the like. (Doc. 59).

       In August 2010, Lockheed filed its Motion to Compel, seeking to compel the government

to answer interrogatories, provide deposition witnesses, and respond to its requests for

admissions related to the criminal investigation of TMI and Todd Loftis. (Doc. 278 at 12-13, 15-

16). Specifically, Lockheed requests that the Court:

       C       Order the Government to identify the names of the witnesses that were
               interviewed in the course of the criminal investigation of TMI and Todd Loftis, as
               well as the facts obtained from those witnesses;

       C       Order the Government to identify the number of investigators used in the criminal
               investigation of TMI and Todd Loftis, as well as the number of hours spent
               investigating;

       C       Order the Government to identify the type and nature of investigative tools used
               by the Government in its investigation of TMI and Todd Loftis, such as informal
               requests for documents, searches or seizures of property, offers of immunity,
               subpoenas, and grand jury proceedings;

       C       Order the Government to provide an unqualified admission or denial to Lockheed
               Martin’s requests for admission regarding the existence of grand jury testimony;


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               and

        C      Order that the investigative/law enforcement privilege no longer applies to the
               criminal investigation of TMI and Loftis.

Id. at 21.

        Lockheed asserts that it needs the requested information for two purposes. First, the

information will tend to show its absence of scienter, insofar as it took the government several

years to conclude its investigation of Loftis and TMI, yet Lockheed had far fewer investigatory

tools and resources than did the government and thus could not have discovered TMI’s fraud any

sooner. Second, Lockheed argues that the requested discovery will show that the government

accepted Lockheed’s cost certifications without dispute during the time frame of the

investigation, which tends to prove that Lockheed was not reckless in submitting the inflated

invoices. (Id. at 3-5). Lockheed argues that disclosure of the requested material will not result in

a violation of the attorney work product privilege, as the government claims, because it seeks

only the facts uncovered, not the prosecutor’s underlying mental impressions or theories. (Id. at

12). Further, Lockheed maintains that the law enforcement investigative privilege claimed by the

government does not apply because the criminal investigation ended years ago. (Id. at 13-16).

        On the other hand, the government argues the material sought by Lockheed is irrelevant

and privileged under both the investigative file privilege and the work product privilege. (Doc.

282 at 8-12, 13-15, 19-22). In reply, Lockheed reiterates its prior arguments and also introduces

evidence that it contends supports its claims that the government is refusing to turn over

discoverable information. (Doc. 288). The government also has filed a Motion to Strike New

Arguments Presented in Lockheed’s Reply Brief or, in the Alternative, Leave to File a Surreply,



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arguing that Lockheed’s new arguments should be struck or the government should be permitted

to respond to the purportedly new arguments in a surreply. (Doc. 289).

                                     LAW AND ANALYSIS

A. Relevance

       As a preliminary matter, the Court must decide whether Lockheed’s discovery requests

are relevant. Federal Rule of Civil Procedure 26(b)(1) provides that, unless the court orders

otherwise, the parties may obtain discovery regarding any relevant, nonprivileged matter. The

scope of allowable discovery is broad: “Relevant information need not be admissible at the trial

if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

FED . R. CIV . P. 26(b)(1). Relevant information includes “any matter that bears on, or that

reasonably could lead to other matter that could bear on, any issue that is or may be in the case.”

Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978).

       As Lockheed frames it, its defense is that it could not have been aware of TMI’s fraud as

quickly the government alleges it should have been because it took the government years to

discover the fraud even though the government had at its disposal broad investigatory powers not

available to a private corporation. Viewing the scope of the discovery requests in light of this

anticipated defense, the Court concludes that the information Lockheed seeks is reasonably

calculated to lead to the discovery of admissible evidence. Id. The Court next turns to the

government’s arguments that the information Lockheed seeks is protected by the law

enforcement privilege or the work product privilege.




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B.     Investigatory Law Enforcement Privilege

       The government contends that the law enforcement privilege protects not just criminal

investigations but also protects investigative files prepared for civil law enforcement purposes;

and the privilege should extend beyond Loftis’s criminal prosecution because this civil case is

simply a continuation of the criminal case. (Doc. 282 at 14-15). To support this contention, the

government cites numerous cases, none of which are from the Fifth Circuit. (Id. at 14-15).

       The Fifth Circuit, however, recognizes that the qualified law enforcement privilege

protects government files related to an ongoing criminal investigation. See In re United States

Dep’t of Homeland Sec., 459 F.3d 565, 570 (5th Cir. 2006); see also Brown v. Thompson, 430

F.2d 1214, 1215 (5th Cir. 1970) (upholding applicability of the privilege in a civil case where the

documents plaintiffs requested were files from an open homicide investigation). Further, the

privilege lapses after either the close of the criminal investigation or at a “reasonable time

thereafter.” DHS, 459 F.3d at 571. It is clear from the facts of the instant case that the criminal

investigation of TMI and Loftis is no longer ongoing. Loftis pleaded guilty to the charges against

him in December 2005 and was sentenced in March 2006. United States v. Loftis, 4:05-cr-

00185-Y at docs. 15, 28. He did not pursue an appeal or challenge his conviction or sentence in

a section 2255 motion. Moreover, given that Loftis was convicted almost five years ago, a

reasonable time has passed since the completion of the criminal investigation. DHS, 459 F.3d at

571. Accordingly, the law enforcement privilege no longer affords protection to government

information related to its criminal investigation of TMI and Loftis.




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C. Work Product Privilege

       Lockheed contends that the work product doctrine does not shield the government from

its discovery requests because Lockheed seeks only facts related to the criminal investigation of

TMI and Loftis. (Doc. 278 at 15-16). Further, Lockheed maintains, the government waived any

work product privilege when it conducted a garnishment hearing in civil proceedings against

Loftis. The government responds that it did not waive its work product protection by conducting

a garnishment hearing at which only limited subjects related to the criminal investigation were

discussed. (Doc. 282 at 19-24).

       The work product doctrine protects from discovery documents or material things prepared

by an attorney in anticipation of litigation. FED . R. CIV . P. 26(b)(3)(A); In re Grand Jury

Proceedings, 601 F.2d 162, 171 (5th Cir. 1979). The party who asserts work product protection

(in this case, the government), must establish that: (1) the materials sought are documents or

tangible things; (2) the materials sought were prepared in anticipation of litigation or for trial; (3)

the materials were prepared by or for a party’s representative; (4) if the material is opinion work

product, the material contains the mental impressions, conclusions, opinions, or legal theories of

an attorney or other representative party. Securities and Exchange Comm’n v. Brady, 238 F.R.D.

429, 441 (N.D. Tex. 2006).

       In this instance, the government wholly failed to meet its burden to establish that the

requested discovery qualifies for work product protection. It argues only that it did not waive the

presumed privilege at the Loftis garnishment hearing. This failure alone is reason for the Court

to find that the requested information is not privileged. Nonetheless, utilizing the Brady factors,

the Court finds the work product privilege does not apply because the information Lockheed


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seeks is not a “document or tangible thing.” Id.; FED . R. CIV . P. 26(b)(3)(A). Rather, Lockheed

is merely seeking facts – namely interrogatories and requests for admission – and has not

requested the production of documents or other tangible items. The work product privilege,

therefore, does not apply to limit Lockheed’s requested discovery.

       However, Lockheed is not entitled to an admission or denial from the government

regarding the existence of grand jury testimony. Under Federal Rule of Criminal Procedure

6(e)(2)(B), the government may not disclose a matter occurring before the grand jury, and the

Court concludes that whether testimony was presented to the grand jury is such a matter.

Lockheed has not shown that the information it seeks falls under any of the exceptions to Rule

6(e)’s non-disclosure requirements.

                                        CONCLUSION

       Accordingly, Lockheed’s Motion to Compel (Doc. 278) is GRANTED IN PART, but

DENIED to the extent that Lockheed seeks any information regarding the existence of any grand

jury proceedings. Lockheed’s Unopposed Motion for Leave to Exceed Page Limit (Doc. 287) is

GRANTED. The United States’ Motion to Strike Reply and Motion to File Surreply (Doc. 289)

is DENIED because Lockheed did not introduce new arguments in its reply brief, and a surreply

is unnecessary.

       SO ORDERED November 19, 2010.



                                             ________________________________________
                                             RENÉE HARRIS TOLIVER
                                             UNITED STATES MAGISTRATE JUDGE




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