Hennessey v. USAID ( 1997 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
EDWARD F. HENNESSEY, IV,
Plaintiff-Appellant,
v.
No. 97-1133
UNITED STATES AGENCY FOR
INTERNATIONAL DEVELOPMENT,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of North Carolina, at Charlotte.
Robert D. Potter, Senior District Judge.
(CA-95-479-3-P)
Argued: July 10, 1997
Decided: September 2, 1997
Before WILKINS, LUTTIG, and WILLIAMS, Circuit Judges.
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Reversed and remanded by unpublished per curiam opinion.
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COUNSEL
ARGUED: Robert Walker Fuller, III, ROBINSON, BRADSHAW &
HINSON, P.A., Charlotte, North Carolina, for Appellant. James
Michael Sullivan, Assistant United States Attorney, Charlotte, North
Carolina, for Appellee. ON BRIEF: Lawrence C. Moore, III, ROB-
INSON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina,
for Appellant. Mark T. Calloway, United States Attorney, Charlotte,
North Carolina, for Appellee.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Appellant Edward Hennessey brought this action in district court
against the United States Agency for International Development
(USAID) under the Freedom of Information Act (FOIA), 5 U.S.C.
§ 552, to compel USAID to provide him with a report and related
documents. On the parties' cross motions for summary judgment, the
district court granted summary judgment for USAID, holding that the
requested documents were exempt from disclosure under 5 U.S.C.
§ 552(b)(5) because they fall within the deliberative process and
work-product privileges. Hennessey appeals. For the reasons
explained, we reverse.
I.
The facts giving rise to this dispute began in 1988, when USAID
awarded a $17.6 million construction contract to a company named
Encorp to build an agricultural university in Peshawar, Pakistan. The
project encountered substantial delays which Encorp alleges were
caused by USAID's inept administration of the project. Eventually,
Encorp submitted a claim to USAID seeking reimbursement of those
costs for which it believed USAID was responsible. USAID rejected
many of the assumptions underlying Encorp's claim and, in order to
facilitate a resolution of the dispute and complete the project, officials
at USAID commissioned a third party to conduct an independent
review of the project delays.
To that end, USAID hired the Neilsen-Wurster Group (NWG) to
perform a detailed scheduling analysis, or a "critical path method"
(CPM) report of the project history. The NWG report comprises three
parts. The first part includes the "as-built" data, which is an historical
record of when the various project construction activities took place.
The second part is the methodology, pursuant to which the project
2
was divided into several "windows," or time periods, and events that
affected the project schedule during each window were examined.
The third part is the causation analysis, which synthesizes the rela-
tionships between the various scheduling delays and the ultimate
delay in the completion date. This portion also attributes responsibil-
ity for specific delays between USAID and Encorp.
When USAID commissioned the CPM, an official at the agency
expressed her intention to share a full copy of the report with Encorp
upon its completion. In return, Encorp promised to and did cooperate
with the agency by sharing scheduling software and documents. J.A.
at 312-13, 424, 570-73.
Over two years after USAID committed to provide Encorp with the
final CPM, the agency sent a draft of a substantial portion of the
report to Encorp for its review and comments. J.A. at 563-64. Encorp
declined to comment on the report on the grounds that the draft was
incomplete. J.A. at 522 & 573. USAID subsequently refused to share
the entire final report with Encorp.
After failing to obtain the NWG documents directly from USAID,
Edward Hennessey, acting as an agent for Encorp, brought this action
under FOIA, 5 U.S.C. § 552, to compel USAID to produce the final
NWG report, drafts of the NWG report, and correspondence between
NWG and USAID concerning the report.1 In its final response to this
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1 Specifically, Hennessey sought,
a. All schedules, schedule analyses, draft and final reports, cor-
respondence, memoranda, and other documents prepared in
whole or in part by Nielsen-Wurster Group with respect to
the construction of the Northwest Frontier Province Agricul-
tural University in Peshawar, Pakistan (the "project"); and
b. All schedules, schedule analyses, draft and final reports, cor-
respondence, memoranda, and other documents received
from Nielsen-Wurster Group with respect to the project; and
c. All contracts, agreements, and correspondence establishing
the scope of work and terms of engagement of Nielsen-
Wurster Group with respect to the project.
J.A. at 10 (Plaintiff's Complaint).
3
FOIA action, USAID declared its intention to withhold the requested
records on the grounds that they were deliberative process materials
and confidential work-product which were exempt from disclosure
pursuant to FOIA's so-called "Exemption 5," 5 U.S.C. § 552(b)(5).
Both parties moved for summary judgment, and the district court
granted summary judgment for USAID, holding that there was no
genuine issue that the contested documents were exempted from dis-
closure by both the deliberative process and work-product exceptions.
The district court also conducted an in camera review of the
requested documents and concluded that "any factual materials con-
tained therein is inextricably linked with deliberative and/or work-
product such that it is protected by these privileges." J.A. at 720.
Thus, the district court also refused to order the disclosure of what it
considered to be purely factual portions of the requested materials.
Appellant-Hennessey appeals both rulings.
II.
Although FOIA imposes a broad duty upon government agencies
to disclose requested documents, see 5 U.S.C. § 552(a), that duty is
not without limitation. For example, FOIA exempts from disclosure
"inter-agency or intra-agency memorandums or letters which would
not be available by law to a party other than an agency in litigation
with the agency." 5 U.S.C. § 552(b)(5). This open-ended exemption
incorporates both the deliberative process and work-product privi-
leges. Virginia Beach v. Department of Commerce, 995 F.2d 1247,
1251 (4th Cir. 1993). We examine in turn USAID's claims of deliber-
ative process and work-product privilege, ultimately reviewing the
district court's judgment de novo to determine whether a genuine
issue of material fact exists as to whether the subject documents are
protected by the deliberative process privilege or work product privi-
lege, or whether USAID or Hennessey is entitled to judgment as a
matter of law at this stage of the litigation.2 In undertaking this
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2 Although it would appear, at first blush, that the § 552(b)(5) exemp-
tion would not apply to the documents at issue in this case because they
were prepared by an outside consulting firm (NWG) and therefore do not
seem to be "intra-agency memorandums," the district court below held
4
review, we construe Exemption 5 narrowly, as we are required to do
in order to give full effect to this public disclosure statute. See Ethyl
Corp. v. Environmental Protection Agency, 25 F.3d 1241, 1245 (4th
Cir. 1994).
A.
The deliberative process privilege protects Executive deliberations
from public scrutiny in order to encourage "open[ and] frank discus-
sion between subordinate and chief concerning administrative action."
Environmental Protection Agency v. Mink , 410 U.S. 73, 87 (1973).
The privilege permits the government to withhold certain documents
whose release would reveal "advisory opinions, recommendations and
deliberations comprising part of a process by which governmental
decisions and policies are formulated." In re: Sealed Case, 116 F.3d
550, 557 (D.C. Cir. 1997) (citation omitted). The privilege attaches
only to documents that "reflect[ ] the give-and-take of the consultative
process by revealing the manner in which the agency evaluates possi-
ble alternative policies or outcomes." Virginia Beach v. Dep't of
Commerce, 995 F.2d 1247, 1253 (4th Cir. 1993) (citation and internal
quotation marks omitted). The ultimate issue in evaluating any delib-
erative process privilege claim is "whether the materials bear on the
formulation or exercise of agency policy-oriented judgment . . . [and]
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that the § 552(b)(5) exemption also applies to documents commissioned
by an agency from outside experts for the purposes of informing the
agency's judgment. The district court's interpretation of the statutory
term "intra-agency" is by no means unreasonable, and it has actually gar-
nered the support of a number of our sister circuits, Thurner Heat Treat-
ing Corp. v. NLRB, 839 F.2d 1256 (7th Cir. 1988); CNA Financial Corp.
v. Donovan, 830 F.2d 1132 (D.C. Cir. 1987), as well as the assent of
three Supreme Court Justices, United States Dep't of Justice v. Julian,
486 U.S. 1, 18 n.1 (1988) (Scalia, J., dissenting). However, because we
reverse the district court's grant of summary judgment, and direct the
district court to enter summary judgment in favor of appellant because
there is no genuine issue that the documents at issue in this case are
either deliberative process materials or work-product, we need not reach
the question of whether these two privileges, if otherwise satisfied,
would apply under § 552(b)(5) to documents produced by an outside
expert.
5
whether disclosure would tend to diminish candor within an agency."
Id. at 1254 (citation and internal quotation marks omitted) (emphasis
in original).
After reviewing the record in this case, the final NWG report itself,
and the circumstances in which the final report was to be used, see
Virginia Beach, 995 F.2d at 1253, we conclude that the final report
is not protected by the deliberative process privilege. From its incep-
tion, the process of producing this report was intended as a coopera-
tive enterprise designed to resolve a dispute between Encorp and
USAID that arose over the Peshawar project. It was clearly contem-
plated by both parties that Encorp would be a co-equal partner in this
effort to develop a chronology and factual account of the events sur-
rounding the delays in the project. The process was never viewed as
a "deliberative" activity exclusively between NWG and USAID.
It is undisputed, for example, that USAID intended to share the
final NWG report with Encorp in order to facilitate completion of the
project and resolve the outstanding differences between the parties. A
USAID contracting officer, who was the Chief of USAID's Pakistan
Office of Contracts and Commodities, committed to Encorp, prior to
commissioning the CPM, that USAID would share a full copy of the
final CPM report with Encorp upon its completion. J.A. at 424. This
official later testified that her purpose in commissioning the NWG
report was to facilitate a discussion of Encorp's claim and "further the
completion of the project." J.A. at 342. In fact, it appears that this
promise to share the final NWG report is why Encorp shared its data
and software with USAID and NWG. See, e.g., J.A. at 424. Further-
more, after USAID hired NWG, but before the final report was avail-
able, a subordinate USAID contracting officer who was involved in
the Peshawar project represented in writing to Encorp that "USAID
is commencing its analysis of the Contract progress delays" and
"hopefully, we will have results for your review and negotiations in
about six weeks." J.A. at 572-73. Appellee does not dispute this testi-
mony, nor does it deny that the aforementioned Chief of USAID's
Pakistan office was the "ultimate decisionmaker" with regard to the
Peshawar project. See J.A. 338. Thus, there is no genuine issue that,
prior to receiving the final NWG report, USAID intended to share that
report with Encorp and committed to do so. Indeed, consistent with
its intent and promise, USAID actually provided Encorp with what it
6
now admits was "a substantial part of the NWG analysis" in draft
form. Appellee's Brief at 24.
Against this backdrop, it is clear, as a matter of law, that these doc-
uments are not protected by the deliberative process privilege. The
agency had the opportunity, if not the prerogative, to shield these
materials from public disclosure through invocation of the delibera-
tive process privilege, but it chose instead to open to the public its
process of preparing this report by making Encorp a participant in that
process in the hope that the agency's dispute with Encorp would be
facilitated thereby. As a consequence, there simply is no intra-agency
"deliberative process" to be protected. And, it goes without saying,
disclosure of the final report to Encorp under such circumstances
would not in any sense chill open and frank communications within
USAID in the future. The agency may invite members of the public
into its "deliberations" as it deems appropriate. Or it may avail itself
of the privilege by keeping its own counsel.
Essentially, the agency's only response is that it was not contractu-
ally bound with Encorp to share the CPM, and that Encorp therefore
cannot compel the agency to furnish the report. Thus, USAID main-
tains that Encorp's suit is properly brought in the Court of Claims as
a government contract action. Encorp, however, does not contend that
disclosure of the NWG report is required by the terms of an enforce-
able contract with USAID, nor, in holding that the report is not pro-
tected by the deliberative process privilege, do we suggest that such
a contract exists between the parties. Rather, Encorp argues, and we
hold, only that the agency may not assert the deliberative privilege to
protect documents that it intended to produce to the public, promised
to produce to the public, and in fact did, in substantial part, produce
to the public.
That the final NWG documents were never intended to be, and are
not, deliberative materials is also confirmed by our examination of the
documents themselves. With few exceptions, purely factual materials
are not protected by the deliberative process privilege, see Ethyl
Corp., 25 F.3d at 1249 (holding that statistical data were not delibera-
tive process materials). Insofar as we can discern, the final NWG
report is almost entirely factual in nature. The district court concluded
that several portions of the report could not have been produced with-
7
out the exercise of some judgment and are therefore closer to opinion
than fact. For example, it reasoned that the methodology section was
not factual because it involved an assessment of which particular
steps in the construction project had an effect upon overall delays. It
further reasoned that the causation section was not purely factual
because it included "recommendations concerning Encorp's responsi-
bility, if any, for delay in completion of the project to-date." J.A. at
708.3 While it is doubtless true that the process of composing these
portions of the final report may have involved the exercise of some
judgment or discretion, the NWG report must ultimately be regarded
as factual because it is written as an objective and retrospective recita-
tion of historical facts. To illustrate the factual nature of the CPM,
consider one of its typical conclusions: for the first "critical path" in
the time period ranging from November 17, 1988, to April 15, 1989
-- the construction of the library -- Encorp utilized a 35-day mobili-
zation period (instead of the 60 days allowed by contract specifica-
tion), was 16 calendar days late in beginning construction, made
significant out-of-sequence work, and ultimately gained 17 days on
the critical path of 150 projected construction days. A typical entry
from the report's causation analysis, which discusses the period from
April 16, 1989, to September 16, 1990, identifies 37 days of project
delay arising out of Encorp's tardy pouring of concrete footings. To
the extent that any portion of the report expresses an "opinion," it is
simply an opinion regarding what occurred in the past rather than
advisory opinion regarding future agency action. The entire final
NWG report, consequently, is unprotected by the deliberative privi-
lege.
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3 The district court also concluded that the final NWG report includes
"recommendations concerning whether Encorp's claim should be com-
promised." J.A. at 708. After reviewing the record, as well as the final
NWG report itself, we appreciate that the report discusses facts underly-
ing Encorp's claim. We are unable to find any portions of the final
report, however, that constitute "recommendations concerning whether
Encorp's claim should be compromised." At most, the report recites facts
that USAID may find helpful in compromising its claim with Encorp.
The document does not set forth recommendations concerning whether
USAID should compromise that claim, and if so, how it should proceed
to do that.
8
Nor does the final NWG report "bear on the formulation or exer-
cise of agency policy-oriented judgment." Virginia Beach, 995 F.2d
at 1254. The district court concluded that the final NWG report is rel-
evant to the government's "policy" of evaluating and settling
Encorp's claim against USAID. While acknowledging that this is not
the traditional understanding of a governmental"policy," the district
court nevertheless declined "to limit the deliberative process privilege
to cases that only relate to more generalized policy-making decisions
as opposed to decisions made in specific cases . . . because both situa-
tions implicate the concerns that motivate the privilege." J.A. at 711.
This reasoning, taken to its logical conclusion, would shield virtually
all government records from disclosure. From a review of the record,
it is evident that the final report does not bear on a policy-oriented
judgment of the kind contemplated by Exemption 5. The information
included in the report at issue at most informs USAID's decision of
whether to settle Encorp's claim for delays arising out of a garden
variety construction scheduling dispute over an agricultural university
in Peshawar, Pakistan. The resolution of such a minor issue is "essen-
tially technical and facilitative" and therefore not the type of decision
protected by the deliberative privilege. See Petroleum Information
Corp. v. Dep't of Interior, 976 F.2d 1429, 1437 (D.C. Cir. 1992)
(holding that a data file fell outside the deliberative process privilege,
even though creation of the file involved the exercise of discretion in
how to represent data, in part because the file was not used to imple-
ment "a significant policy decision" and was "essentially technical
and facilitative") (emphasis in original). Indeed, to the extent that
such a decision can be regarded as a "policy" at all, which we doubt,
it must be viewed at the very outer limits of that type of decision. It
is not at all the "stuff" of the deliberative process privilege.
This is not the typical deliberative process case where the govern-
ment jealously guards certain documents which embody or incorpo-
rate a subordinate's pre-decisional advice, the disclosure of which
would chill others from offering candid advice to the agency in the
future. Nor is this a case where the disclosure of certain documents
would reveal the manner in which an agency formulates policy and
thus threaten the integrity of future agency decision-making. Rather,
this is a case where the agency asserts a privilege with respect to a
document that is seemingly entirely factual in character and that was
prepared with the expectation that it would be shared with the very
9
party from whom the government now attempts to withhold the docu-
ment. Under such circumstances, summary judgment properly
belongs to the appellants, not to the government agency.
B.
The district court also granted summary judgment for USAID on
the ground that the final NWG report is protected by the work-
product privilege. Documentary evidence qualifies as work-product if
it is prepared "in anticipation of litigation." E.g. National Union Fire
Ins. v. Murray Sheet Metal, 967 F.2d 980, 984 (4th Cir. 1992). That
is, "[t]he document must . . . [have been] prepared because of the
prospect of litigation;" "materials prepared in the ordinary course of
business . . . or for other non-litigation purposes" are not protected.
Id. (emphasis in original). The district court held that there was no
issue that the final NWG report is work-product primarily because
Encorp had threatened USAID with litigation before the agency com-
missioned the report. In this conclusion as well, we believe that the
district court erred.
USAID commissioned the final report with the purpose of sharing
it with Encorp in order to "further the completion of the project" or
"get the project done." J.A. at 342. Furthering completion of the proj-
ect is a non-litigation purpose, and thus, the report was not commis-
sioned "because of the prospect of litigation." The district court
reasoned that neither USAID's commitment to share the report nor its
intention to use the report for non-litigation purposes defeats
USAID's work-product claim because the "potential sharing of infor-
mation to further settlement negotiations in no way precludes the
preparation of the document in anticipation of litigation." J.A. at 716.
The record, however, establishes not merely that USAID intended a
"potential sharing of information" with Encorp, but that USAID
indisputably intended to share the report with Encorp and actually did
share a substantial portion of the report with Encorp. Because sharing
the final report with Encorp is incompatible with withholding it from
Encorp as work-product, the final report simply cannot be considered
work-product.
III.
The foregoing analysis applies only to the final NWG report, and
with respect to the draft report and correspondences we reach a differ-
10
ent conclusion. Although the Chief of USAID's Contracting Office in
Pakistan represented to Encorp its intention to share the final report,
that same official denies promising to furnish Encorp with "all corre-
spondence" or "all written analyses of any kind" concerning the final
report. J.A. at 254. Furthermore, because we do not appear to have the
draft report or related correspondences, we are unable to perform our
own in camera review of those materials in order to determine
whether they are protected by the deliberative process or work-
product privileges. Accordingly, to the extent that there remains a dis-
pute over these documents following our opinion today, that dispute
should be brought anew before the district court for resolution in light
of the foregoing opinion. The district court's judgment with respect
to these agency records is hereby vacated.
CONCLUSION
With respect to disclosure of the final NWG report, the judgment
of the district court is reversed and the case is remanded with instruc-
tions to enter judgment for appellant Hennessey. With respect to any
drafts of the NWG report and any correspondences between USAID
and NWG pertaining thereto, the judgment of the district court is
vacated and the case remanded for such proceedings as may be neces-
sary.
REVERSED AND REMANDED
11