Antitrust Law Daily Wrap Up, ANTITRUST—D. Nev.: Energy company waived attorney-client privilege in price fixing action, (May 6, 2016)

By Greg Hammond, J.D.

In an action against an energy company for conspiracy to fix natural gas prices, the energy company has been ordered to produce documents that were previously disclosed to federal agencies. In granting the motion to compel the production of attorney-client privileged documents, the federal district court in Reno concluded that the electric company waived the privilege by disclosing the documents to the federal agencies (In re Western States Wholesale Natural Gas Antitrust Litigation, May 5, 2016, Leen, P.).

The plaintiffs claim that electric utility company Dynegy conspired with others to fix natural gas prices by reporting false or inaccurate information about natural gas transactions between 2000 and 2002. The case was before the district court on the plaintiffs’ motion to compel Dynegy to produce various documents that Dynegy claims are protected by the attorney-client privilege and the qualified work-product privilege. At issue was whether Dynegy waived the two privileges by voluntarily disclosing privileged documents to the federal government.

Attorney-client privilege. The court concluded that Dynegy waived its attorney-client privilege by providing them to the federal agencies that were investigating Dynegy. Specifically, the justification for the privilege ceased to exist when Dynegy and its counsel elected to disclose otherwise privileged attorney-client materials to the government, the court found. Dynegy had the option to quash or modify the subpoena or document requests, but did not choose to do so.

Work-product protection. The motion, however, was denied with regard to work product materials produced to the investigating federal agencies. The court found that Dynegy did not waive its work-product protection by producing its work product to investigating governmental agencies, agreeing with other cases, which held that disclosure to third persons should not result in waiver of the work-product privilege unless it has substantially increased the opportunities for potential adversaries to obtain the materials. In particular, the court concluded that the plaintiffs failed to meet their burden of establishing substantial need for the materials in preparation of their case, or that they are unable to obtain the substantial equivalent of the materials without undue hardship, because Dynegy disclosed the witnesses who were interviewed and produced the documents underlying the investigation.

The case is No. 2:03-cv-01431-RCJ-PAL.

Attorneys: Amy Irene Washburn (Kohner Mann & Kailas SC) for Auila, Inc., Maximum Nursery, Inc. and Multiut Corp. Khai LeQuang (Orrick, Herrington & Sutcliffe, LLP) and Martin M. Loring (Blackwell, Sanders, Peper, Martin) for Aquila, Inc. Mark E. Haddad (Sidley Austin LLP) for Cantera Natural Gas, Inc. and Cantera Resources, Inc.

Companies: Auila, Inc.; Dynegy; Maximum Nursery, Inc.; Multiut Corp.; Aquila, Inc.; Cantera Natural Gas, Inc.; Cantera Resources, Inc.

Cases: Antitrust NevadaNews