Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—D.D.C.: Staples and Office Depot denied discovery of FTC work product, (Jan 22, 2016)

By Edward L. Puzzo, J.D.

Staples and Office Depot failed to show a substantial need for the FTC's work product, produced in dealings with third-parties as part of the FTC investigation into their proposed merger, because they were capable of obtaining the same facts through their own third-party discovery, the federal district court for the District of Columbia has ruled (Federal Trade Commission v. Staples, Inc., January 21, 2016, Sullivan, E.).

In December 2015, after investigating the proposed merger of office supply retailers Staples and Office Depot, the FTC brought an action seeking to enjoin the proposed merger until the agency completed its investigation and administrative proceedings, pursuant to Section 13(b) of the FTC Act. A hearing on the FTC preliminary injunction motion is scheduled for March 21, 2016.

As part of discovery, defendants Staples and Office Depot requested that the FTC produce all factual information collected from third parties during their 2015 investigation into the Staples-Office Depot merger and their earlier 2013 investigation into the Office Depot-Office Max merger. In response, the FTC produced documents, communications, and contact information from third parties the FTC had dealt with during both investigations. However, the FTC withheld 850 documents consisting of attorney interview notes and memos.

Defendants now moved to compel production of all segregable factual information contained in the withheld documents. The FTC maintained that the facts contained in the documents at issue were protected by the attorney work-product doctrine.

Work-product doctrine. The work-product doctrine as codified in Federal Rule of Civil Procedure 26(b)(3), the court explained, is a qualified immunity protecting from discovery documents prepared "in anticipation of litigation," disclosure of which may only be compelled when the requesting party can show a "substantial need," and an inability to obtain equivalent information "without undue hardship".

The party asserting work-protect protection, in this case the FTC, had the initial burden of showing that the communications at issue were prepared "in anticipation of litigation." Here, there was no dispute among the parties that the documents sought by the defendants were produced in anticipation of litigation.

The burden then shifted to the party seeking discovery to demonstrate a "substantial need" and an inability to obtain equivalent information from other sources "without undue hardship." There is a greater level of protection for "opinion" work product as opposed to "fact" work product. Here again, the court noted, both parties treated the documents at issue as fact work product.

Substantial need. Although the defendants did have a legitimate need to gather factual information about third parties in this case, the court stated, a generalized need was not equivalent to substantial need. Substantial need will not be found where alternative means of obtaining work product exist, such as interviews and depositions. The defendants claimed that the FTC's interview notes provided the only source of highly relevant information, but the court rejected this argument. Noting that the defendants were free to interview or depose the same third parties that were interviewed by the FTC, the court stated that the factual information contained in the FTC's interview notes and memoranda was equally available to the defendants through their own discovery.

AB Electrolux distinguished. The court further stated that its ruling in United States v. AB Electrolux (D.D.C., September 25, 2015) was distinguishable, because that case involved third-party communications withheld under an assertion of the work-product doctrine, whereas the present case involved attorney notes and internal memoranda, not third-party communications.

The court concluded that the defendants had not established a substantial need for the FTC's notes and memoranda, nor an undue hardship in conducting their own third-party discovery. Thus, their motion to compel production of the FTC's fact work product must be denied.

The case is Civil Action No. 1:15-cv-02115-EGS.

Attorneys: Tara L. Reinhart for the Federal Trade Commission. Bennett C. Rushkoff, Office of the Attorney General, for the District of Columbia. Andrew L. Goldman (Goldman Ismail Tomaselli Brennan & Baum LLP) and Diane P. Sullivan (Weil, Gotshal & Manges, LLP) for Staples, Inc. Andrea B. Levine (Simpson, Thacher & Bartlett LLP) for Office Depot, Inc.

Companies: Staples, Inc.; Office Depot, Inc.

Cases: AcquisitionsMergers Antitrust DistrictofColumbiaNews