                             UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA



   US AIRLINE PILOTS ASSOCIATION,

                          Plaintiff,

                        v.                                  Civil Action 09-1675 (HHK)

   PENSION BENEFIT GUARANTY
   CORPORATION,

                          Defendant.


                         MEMORANDUM OPINION AND ORDER

       Plaintiff US Airline Pilots Association (“the Association”) brings this action against the

Pension Benefit Guaranty Corporation (“PBGC”), alleging that PBGC has breached its fiduciary

duties as the statutory trustee of a pension plan of which the Association’s members are

beneficiaries. Before the Court is the Association’s motion to compel [#42], which seeks the

production of Nicole Hagan, a PBGC attorney, for deposition regarding an investigation she

conducted into the pension plan’s affairs. Upon consideration of the motion, the opposition

thereto, and the record of this case, the Court concludes that the motion must be granted in part

and denied in part.


                                       I. BACKGROUND

       In 1958, US Airways established a vested, defined-benefit pension plan for its pilots (“the

Plan”). Compl. ¶ 7. The Plan operated without substantial changes until March 31, 2003, when

it was terminated as a result of US Airways’s bankruptcy. See In re US Airways Grp., Inc., 369

F.3d 806, 811 (4th Cir. 2004); In re US Airways Group, Inc., 296 B.R. 734, 748 (Bankr. E.D. Va.
2003). Pursuant to an agreement between PBCG, the pilots’ then-union, and US Airways, PBCG

then became the Plan’s statutory trustee, a role it typically takes on when a pension plan covered

by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.,

terminates without enough assets to pay all of its promised benefits. See Boivin v. US Airways,

Inc., 446 F.3d 148, 150–51 (D.C. Cir. 2006). When serving as a statutory trustee, PBGC “wears

two hats: one as guarantor of ERISA’s insurance program . . . and one as trustee.” Wilmington

Shipping Co. v. New England Life Ins. Co., 496 F.3d 326, 331 (4th Cir. 2007).

       The Association avers that PBGC has breached the fiduciary duties that it owes to the

Plan’s beneficiaries in its capacity as statutory trustee. Compl. ¶¶ 30–52; see 29 U.S.C.

§ 1342(d)(3) (stating that a statutory trustee “shall be subject to the same duties as those of a

trustee” under the bankruptcy code, as described in 11 U.S.C. § 704). Specifically, the

Association avers, PBGC has failed to adequately investigate possible malfeasance by the Plan’s

prior managers that resulted in significant losses in value of the Plan’s assets. See Compl. ¶¶ 27,

30–41. After making some effort to appraise PBGC of these issues, Compl. ¶¶ 25–29, the

Association filed this suit, seeking to force PBCG to fulfill its duties or to have PBCG

supplemented or replaced as trustee of the Plan.


                                          II. ANALYSIS

       The parties’ current dispute centers on a report written by a member of PBCG’s Office of

General Counsel, Nicole Hagan (whom the Association seeks to depose). Hagan was part of a

PBGC team tasked with “investigat[ing] allegations that former fiduciaries of [the Plan] . . .

breached their fiduciary duties with respect to the Plan.” Hagan Decl. [#6-4] ¶ 3. On July 17,



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2009, Hagan received a letter from the Association’s counsel raising specific instances of

possible misconduct by prior Plan fiduciaries that, the Association argued, warranted further

investigation. Hagan Decl. ¶ 7. Accordingly, Hagan commenced an investigation into those

allegations. Hagan Decl. ¶ 8. She documented her findings in a November 24, 2010 report, see

Pl.’s Mot. to Compel Ex. 4 [#42-6] (“Hagan Report”), which PBGC then disclosed to the

Association.

        The Association now seeks to depose Hagan regarding the substance and scope of her

investigation. PBGC, however, argues that Hagan’s investigation is protected by the attorney

work-product doctrine. In order to resolve this dispute, the Court must answer two questions:

was Hagan’s investigation protected by the work-product doctrine? If so, has that protection

been waived? The Court will address each question in turn.

A.      Hagan’s Investigation Was Protected by the Work-Product Privilege

        The work-product doctrine, which was first enunciated in Hickman v. Taylor, 329 U.S.

495 (1947), is based on the Supreme Court’s recognition that “to prepare for litigation, an

attorney must ‘assemble information, sift what he considers to be the relevant from the irrelevant

facts, prepare his legal theories and plan his strategy without undue and needless interference.’”

United States v. Deloitte LLP, 610 F.3d 129, 134 (D.C. Cir. 2010) (quoting Hickman, 329 U.S. at

511). The doctrine, as codified in the Federal Rules of Civil Procedure, protects “documents and

tangible things that are prepared in anticipation of litigation or for trial by or for another party or

its representative.” FED . R. CIV . P. 26(b)(3)(A). It also protects “intangible work product,” such

as an attorney’s “mental impressions.” Deloitte, 610 F.3d at 136.




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       The threshold question here is thus whether Hagan conducted her investigation “in

anticipation of litigation.” The Court concludes that she did. As PBGC points out, “where an

attorney prepares a document in the course of an active investigation focusing upon specific

events and a specific possible violation by a specific party, it has litigation sufficiently ‘in mind’

for that document to qualify as attorney work product.” Safecard Servs., Inc. v. SEC, 926 F.2d

1197, 1203 (D.C. Cir. 1991). Here, as described in her report, Hagan investigated specific events

(certain transactions and decisions made by the Plan’s prior managers) and specific possible

violations (of fiduciary duties) by specific parties (the prior fiduciaries). See Hagan Report at

1–2. Thus, Hagan’s investigation was undertaken “in anticipation of litigation,” and the work-

product privilege applies to the materials she generated and to her “mental impressions,

conclusions, opinions, or legal theories.” Deloitte, 610 F.3d at 135 (quoting FED . R. CIV . P.

26(b)(3)(B)) (internal quotation marks omitted).1

B.     PBGC Has Waived the Work-Product Privilege as to Hagan’s Investigation

       The Association argues that even if Hagan’s investigation was initially protected, PBGC’s

disclosure of the Hagan Report to the Association served to waive work-product protection not

only for the Report itself but also for the Report’s subject matter, i.e., the investigation. The

Association argues that subject-matter waiver is appropriate here because PBGC has made a

tactical decision to disclose only favorable protected material. PBGC first responds that the

Report’s disclosure could not have waived protection for the investigation discussed therein

because the Report itself was not protected work product. It then argues that it has made no


       1
                The Association does not seriously dispute that Hagan conducted her investigation
in anticipation of litigation; rather, it simply “assumes without admitting” that she did. Pl.’s
Mem. in Supp. of Mot. to Compel [#42-1] (“Pl.’s Mem.”) at 8 n.1.

                                                   4
tactical use of protected material that would justify subject-matter waiver. The Court first

addresses whether the Report itself was protected work product.

       PBGC asserts that the Hagan report was not protected because it “did not contain

privileged information, but rather set forth facts and summarized findings.” Def.’s Opp’n to Pl.’s

Mot. to Compel (“Def.’s Opp’n”) at 6. This position is wholly untenable. The “findings” that

the Report “summarized” were legal conclusions that Hagan reached on the basis of an

investigation that, as discussed above, was conducted in anticipation of litigation. See Hagan

Report at 5–8. As such, they qualify as attorney work product. Safecard Servs., 926 F.2d at

1203. Further, PBGC’s assumption that a document prepared for litigation is not privileged

because it contains only factual material is simply incorrect. See Judicial Watch, Inc. v. Dep’t of

Justice, 432 F.3d 366, 371 (D.C. Cir. 2005) (“The circuit’s case law is clear that ‘[t]he

work-product doctrine simply does not distinguish between factual and deliberative material.’”

(quoting Martin v. Office of Special Counsel, 819 F.2d 1181, 1187 (D.C. Cir. 1987)) (alteration

in original)). Simply put, it is clear that the Hagan Report was privileged.

       The question thus becomes whether PBGC’s disclosure of the Hagan Report served to

waive work-product protection for the subject matter discussed therein: Hagan’s investigation

and findings. Since 2008, subject-matter waiver has been governed by Federal Rule of Evidence

502, which applies to disclosures of information covered by the attorney-client privilege or work-

product protection. Rule 502 provides that a waiver resulting from a disclosure of protected

information in a federal proceeding extends to undisclosed protected material “only if: (1) the

waiver is intentional; (2) the disclosed and undisclosed communications or information concern

the same subject matter; and (3) they ought in fairness to be considered together.” FED . R. EVID .


                                                 5
502(a); see Trs. of Elec. Workers Local No. 26 Pension Trust Fund v. Trust Fund Advisors, Inc.,

266 F.R.D. 1, 10–11 (D.D.C. 2010) (explaining that Rule 502 “modified the scope of any

forfeiture that arises from the disclosure of privileged information”).2 To assess whether Rule

502(a) allows for subject-matter waiver here, the Court must first determine whether PBGC’s

disclosure of the Hagan Report constituted an “intentional” waiver within the meaning of Rule

502(a)(1).

       Few courts have interpreted Rule 502(a)(1)’s intentional-waiver language, but those that

have appear to presume that a deliberate disclosure constitutes an intentional waiver, at least

absent credible evidence that the disclosing party was unaware of the contents of the disclosed

material. See Seyler v. T-Systems N. Am., Inc., 2011 WL 196920, at *3 (S.D.N.Y. Jan. 21, 2011);

Lerman v. Turner, 2011 WL 62124, at *9–10 (N.D. Ill. Jan. 6, 2011). In fact, the Lerman court

confronted precisely the situation presented here: an attorney hired by the defendant produced an

investigative report, which was then disclosed to the plaintiff and her counsel. See Lerman, 2011

WL 62124, at *1. After the plaintiff sought additional related materials, the defendant argued, as

PBGC does here, that the report could not have waived the privilege for the other materials

because it was never protected in the first place. See id. at *4–6. The Lerman court rejected that

argument and concluded that the undisputedly deliberate disclosure of the report constituted an

intentional waiver. See id. at *9–10.




       2
               The Court notes that the parties’ arguments are directed not at Rule 502 but rather
at the now-outdated waiver standard enunciated in In re Sealed Case, 676 F.2d 793, 817–25
(D.C. Cir. 1982). Even so, because (as discussed below) Rule 502 did not change the substantive
law regarding subject-matter waiver where privileged material is used strategically, the parties’
arguments are still relevant here.

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       The Lerman court’s logic is equally applicable here. It is undisputed that PBGC

deliberately provided a copy of the Hagan Report to the Association, and there is no suggestion

that PBGC was somehow unaware of the Report’s contents. Cf. Seyler, 2011 WL 196920, at *3.

Indeed, there is simply no colorable argument that the Hagan Report was not privileged; PBGC’s

assertion to that effect has no support in law and contradicts PBGC’s own arguments as to the

privilege’s application to Hagan’s investigation. As the party asserting the work-product

privilege, PBGC bears the burden of showing that the privilege applies and has not been waived.

United States v. Philip Morris Inc., 212 F.R.D. 421, 424 (D.D.C. 2002) (citing In re Lindsey, 148

F.3d 1100, 1106 (D.C. Cir. 1998)). It has failed to carry that burden here. Accordingly, the

Court will now turn to the final Rule 502(a) factor: whether the disclosed and undisclosed

materials “ought in fairness to be considered together.” FED . R. EVID . 502(a)(3).

       The Association argues that PBGC is attempting to use the work-product doctrine as both

a sword and a shield by relying on the Hagan Report to show that it has complied with its

fiduciary duties as trustee of the Plan but barring the Association from questioning Hagan as to

the scope and sufficiency of her efforts. Thus, the Association avers, fairness requires that it be

allowed to depose Hagan regarding her investigation. PBGC responds that it has not relied on

the investigation and thus has not placed the sufficiency of the investigation at issue. The

Association has the stronger position.

       Although Rule 502 adjusts the mechanism for subject-matter waiver in cases of both

inadvertent and deliberate disclosure, it “does not alter the substantive law regarding when a

party’s strategic use in litigation of otherwise privileged information obliges that party to waive

the privilege regarding other information concerning the same subject matter.” FED . R. EVID .


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502 advisory committee’s note. Thus, as before the rule’s enactment, subject-matter waiver is

appropriate as a matter of fairness where “the privilege holder seeks to use the disclosed material

for advantage in the litigation but to invoke the privilege to deny its adversary access to

additional materials that could provide an important context for proper understanding of the

privileged materials.” CHARLES A. WRIGHT ET AL., 8 FEDERAL PRACTICE & PROCEDURE

§ 2016.2 (3d ed., 2010 update); see Navajo Nation v. Peabody Holding Co., Inc., 255 F.R.D. 37,

44 (D.D.C. 2009) (“[A] party may not claim privilege over material that they place at issue in

litigation.” (citing Estate of Cornwell v. AFL-CIO, 197 F.R.D. 3, 4 (D.D.C. 2000)).

       PBGC’s position that it has not relied on the Hagan investigation during this litigation is

untenable. PBGC did precisely that at the hearing on the Association’s first motion for a

preliminary injunction. After describing the Association’s allegations of misconduct, PBGC’s

counsel stated: “PBGC diligently opened an inquiry. Although the allegations are thin, we

opened another inquiry, and that investigation is ongoing. So at each stage PBGC didn’t refuse

[to investigate]; it did what was appropriate under the circumstances.” Prelim. Inj. Hr’g Tr. 31,

Mar. 25, 2010. After a description of the ongoing investigation, the following colloquy occurred:

       THE COURT:              Well, but are you saying that you are doing what the plaintiffs
                               want me to appoint a special trustee to do?

       MR. WILSON:             That’s exactly what we’re doing, Your Honor. We’re
                               investigating. We’ve said so in our papers.

       THE COURT:              So your position would be, if there is a duty of inquiry, you’re
                               inquiring.

       MR. WILSON:             That’s right, Your Honor.




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Prelim. Inj. Hr’g Tr. 32, Mar. 25, 2010. Further, PBGC’s opposition to the Association’s

renewed motion for a preliminary injunction included a copy of the Hagan Report, which PBGC

cited to rebut the Association’s allegations of fiduciary breaches by the Plan’s prior trustees. See

Def.’s Opp’n to Pl.’s Renewed Mot. for Prelim. Inj. [#38] at 29–30. And, as the Association

points out, PBGC’s answer lists as an “affirmative defense” the fact that PBGC is currently

investigating the Association’s allegations of wrongdoing. See Answer at 8.

        In short, throughout this litigation, PBGC has presented the Hagan investigation to this

Court as evidence that PBGC has complied with whatever duty to investigate the Plan’s affairs

that it may, as trustee of the Plan, now have. PBGC’s assertion that it “has never used the scope

or adequacy of its investigation . . . as its defense, but rather argue[d] that USAPA cannot prove

that PBGC owed or breached any duty to investigate . . . under the circumstances of this case” is

incoherent; part of PBGC’s argument that it has not “owed or breached any duty to investigate”

is its assertion that it “if there is a duty of inquiry, [it is] inquiring.” Prelim. Inj. Hr’g Tr. 32,

Mar. 25, 2010. In support of that assertion, PBGC has proffered the Hagan Report; it may not

now use the work-product privilege to “deny its adversary access to additional materials that

could provide an important context for proper understanding of” the Report. WRIGHT ET AL., 8

FEDERAL PRACTICE & PROCEDURE § 2016.2; see id. § 2016.6 (“When a party puts privileged

matter in issue as evidence in a case, it thereby waives the privilege as to all related privileged

matters on the same subject.”).

        Consequently, Rule 502(a) allows the Association to question Hagan regarding

“undisclosed communications or information concern[ing] the same subject matter” as the

Report. FED . R. EVID . 502(a). A review of the Report shows that the “same subject matter”


                                                     9
includes: the scope and methods of the investigation; the documents reviewed; the efforts made

to obtain more documents; the Plan’s investment policy; the US Airways Master Trust’s policies

and procedures; and Hagan’s findings. Thus, questions in the Association’s topics three and five,

which cover the scope, conduct, participants, and conclusions of the investigations in which

Hagan participated, are permissible. See Pl.’s Mot. to Compel Ex. 5 [#42-7] (“Revised Dep.

Notice”) at 6–7. Likewise, questions in topic four, “related to the preparation and substantive

assertions set forth in the October 23, 2009 Declaration of Laura J. Scully,” Revised Dep. Notice

at 6, are permissible, but only insofar as they relate to Scully’s research and findings as described

in the Hagan Report. See Hagan Report at 6 & n.23.

       Conversely, questions in topic nine, which covers “[a]ll facts or information known to

PBGC related to PBGC’s evaluation, valuation or consideration of legal claims the Plan has, had

or may have against third parties,” Revised Dep. Notice at 7–8, do not fall within the scope of the

work product waiver here. The Hagan Report does not address the existence or potential strength

of any legal claims that the Plan may have against any third parties. Although that issue is

related to the Report’s subject matter, it cannot be said to be “the same.” Accordingly, the

Association may not question Hagan about this topic.


                                       III. CONCLUSION

       For the foregoing reasons, the Association’s motion to compel must be granted in part

and denied in part.

       Accordingly, it is this 19th day of April 2011 hereby




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       ORDERED that plaintiff’s motion to compel the production of Nicole Hagan for

deposition [#42] is GRANTED as to topics three, four and five listed in plaintiff’s revised

deposition notice; and it is further

       ORDERED that plaintiff’s motion is DENIED as to topic nine.



                                                    Henry H. Kennedy, Jr.
                                                    United States District Judge




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