United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 11, 2013 Decided July 12, 2013

No. 11-5347

UNITED STATES OF AMERICA AND JEFFREY SCHANZ,

APPELLEES

JEANNIE BARRETT, ET AL.,

APPELLANTS

v.

CALIFORNIA RURAL LEGAL ASSISTANCE, INC.,

APPELLEE

Consolidated with 11-5361, 12-5025

Appeals from the United States District Court

for the District of Columbia

(No. 1:07-mc-00123)

Bernard A. Burk argued the cause for appellants/crossappellees. With him on the briefs were Jack W. Londen, Wendy

M. Garbers, Lisa Wongchenko, John P. Corrado, Martin R.

Glick, Robert D. Hallman, and Philip W. Horton. Brian R.

Matsui entered an appearance.

Alana H. Rotter and Lisa R. Jaskol were on the brief for

amici curiae Los Angeles County Bar Association, et al. in
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support of appellants/cross-appellees. 

Melissa N. Patterson, Attorney, U.S. Department of Justice,

argued the cause for appellees/cross-appellants. With her on the

brief were Stuart F. Delery, Acting Assistant Attorney General,

Ronald C. Machen Jr., U.S. Attorney, and Michael S. Raab,

Attorney.

Before: TATEL and KAVANAUGH, Circuit Judges, and

SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

SENTELLE.

SENTELLE, Senior Circuit Judge: The Inspector General of

the Legal Services Corporation petitioned the district court for

summary enforcement of a subpoena duces tecum to appellant

California Rural Legal Assistance (“CRLA”). After extensive

negotiations and hearings, the court entered an order granting

enforcement of the subpoena duces tecum and entered a

protective order governing disclosure of material discovered by

the subpoena and also establishing a notice requirement. The

CRLA appeals from the enforcement order, and the OIG crossappeals the protective order, specifically objecting to the notice

requirement set forth therein. For the reasons set forth below,

we affirm the district court’s order enforcing the subpoena and

vacate and remand the protective order.

I. BACKGROUND

The Legal Services Corporation Act of 1974 (“LSC Act”)

created the Legal Services Corporation (“LSC”), “a private

nonmembership nonprofit corporation . . . for the purpose of

providing financial support for legal assistance in noncriminal

proceedings or matters to persons financially unable to afford
3

legal assistance.” 42 U.S.C. § 2996b(a). In 1978, Congress

enacted the Inspector General Act, 5 U.S.C. app. 3 § 2, which

created Offices of Inspector General in various federal

departments and agencies “to conduct and supervise audits and

investigations relating to the programs and operations of the

establishments listed” in the Act. In 1988, Congress amended

the Act to add several additional federal establishments,

including the Legal Services Corporation, to those governed by

the Act. The Office of Inspector General of the Corporation

(hereinafter “OIG”) is therefore empowered under the Inspector

General Act to investigate fraud and abuse in the LSC. Id. app.

3 §§ 4 & 8G(a)(2). The Inspector General Act empowers the

OIG, in carrying out its investigative functions, to “require by

subpoena the production of all information, documents, reports,

answers, records, accounts, papers, and other data . . . and

documentary evidence necessary in the performance of [their]

functions.” Id. app. 3 § 6(a)(4). OIG subpoenas are enforceable

by order of a district court. Id.

The LSC provides federal funding grants to state-based,

nonprofit legal service providers. The CRLA is such a nonprofit

grantee, providing free legal assistance to lower income

communities in California. As an LSC grant recipient, the

CRLA is subject to a variety of federal requirements. Further,

as a grant recipient covered by such requirements, it is subject

to investigation by the OIG. In 2005, the OIG received a

complaint from a confidential source alleging that the CRLA

was violating statutory limitations on the use of its LSC grants. 

The OIG undertook investigation of the allegations. On October

17, 2006, the OIG served the CRLA with a subpoena duces

tecum seeking various documents and data in connection with

its investigation. CRLA refused to turn over much of the

information, asserting that it was privileged under federal and

California law and subject to confidentiality obligations under

California law.
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The OIG filed a petition for summary enforcement of the

subpoena in the district court in Washington, DC. Several

CRLA attorneys intervened on behalf of the CRLA. After

extensive briefing and a status hearing, the parties jointly

requested that the district court resolve only “the general issue

of whether, and if so, which California state privileges and

protections apply.” On November 3, 2011, the district court

entered its order, with an accompanying opinion published as

United States v. California Rural Legal Assistance, Inc., 824 F.

Supp. 2d 31 (D.D.C. 2011). After reviewing the course of the

litigation and the provisions of federal law governing the

subpoenaed materials, the district court concluded that only

federal and not California state privileges and protections

governed the scope of disclosure compelled under the subpoena. 

Id. at 42. CRLA appeals from the district court’s order denying

the applicability of California professional responsibility

standards.

The district court further entered specific orders establishing

protocols for discovery consistent generally with the agreement

of the parties. At the request of the CRLA, and with the partial

acquiescence of the LSC, the district court entered a protective

order in light of the “legitimate concerns about the privacy of

[CRLA’s] clients’ confidential information.” Id. at 47. The

OIG cross-appeals from the entry of the protective order,

specifically seeking vacation of a provision requiring the OIG to

provide five days’ notice before making disclosure of CRLA’s

client information obtained through the subpoena.

For the reasons set forth below, we affirm the district

court’s order granting the petition for the enforcement of the

subpoena and vacate the notice provision of the protective order.
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II. ANALYSIS

A. Subpoena Enforcement

The core of appellant’s arguments against the enforcement

of the OIG subpoena is the proposition that the confidentiality

of information sought is protected by state law. Appellees

contend that only the federal law of confidentiality and privilege

limits the scope of their power to subpoena information in

furtherance of their investigation.1

 While the parties discuss at

some length the differences in degrees of protection afforded

attorney privileges and confidentiality under California law and

federal law, the details of those differences are ultimately

irrelevant to our decision, and we will not burden the opinion

with the specifics involved. Suffice it to say that the claimed

protection under California law is broader than that afforded

under federal standards as applied by the OIG and ultimately

approved by the district court. The decision of this case rests

not on those specifics, but rather on the general issue submitted

to the district court by the parties. That is, “whether, and if so,

which California state privileges and protections apply.” 

Because the district court determined that the answer to the

“whether” issue is “no,” and because we affirm that holding, the

“if so, which” half of the issue is no longer germane. Federal

law exclusively governs.

The basic background law is clear. The Supreme Court

“has consistently held that federal law governs questions

involving the rights of the United States arising under

nationwide federal programs.” United States v. Kimbell Foods,

1

Although appellants raised other questions in the district

court concerning the reasonableness, burdensomeness, and relevance

of the subpoena, they do not raise those arguments before us, but

accept the district court’s adverse ruling.
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Inc., 440 U.S. 715, 726 (1979). We had occasion to apply this

fundamental principle in a factual and legal context parallel to

the matter before us in Linde Thomson Langworthy Kohn & Van

Dyke, P.C. v. Resolution Trust Corp., 5 F.3d 1508 (D.C. Cir.

1993) (“Linde Thomson”). That case also involved a petition by

a federal agency to enforce a subpoena duces tecum. The

Resolution Trust Corporation issued the subpoena in the course

of an investigation. The subpoena duces tecum was directed to

a law firm and sought information concerning transactions

germane to the investigation of a failed savings and loan. The

district court ordered enforcement of the subpoena. The

recipients of the subpoena appealed, urging that the district court

had erred by not applying state (Missouri) law of privilege. On

appeal, we concluded that a subpoena enforcement proceeding,

such as the one before the Linde Thomson court and the one

before us, “under common sense and precedents in this circuit

and elsewhere . . . rests soundly in federal law, and federal law

of privilege governs any restrictions on the subpoena’s scope.” 

Id. at 1513 (citing FTC v. TRW, Inc., 628 F.2d 207, 210–11

(D.C. Cir. 1980)). We rejected the law firm’s contention that

state law applied to the privileged status of the documents at

issue before us in that case, and we reject CRLA’s similar claim

here. Both the Supreme Court and circuit law are clear on this

point. Federal law and not state law governs.

Despite the Kimbell Foods precedent, and even in the face

of the Linde Thomson application, CRLA insists that properly

interpreted, the OIG investigation of Legal Services Corporation

should be governed by state standards with respect to attorney

client privilege, work product, and any similar privileges or

constitutionality concerns. CRLA’s argument rests on the

principle followed in American Bar Association v. FTC, 430

F.3d 457 (D.C. Cir. 2005). That decision held that “[f]ederal

law may not be interpreted to reach into areas of State

sovereignty unless the language of the federal law compels the
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intrusion.” Id. at 471 (internal quotation marks omitted). CRLA

notes that in American Bar Association we held that we would

construe statutes in which the government sought to regulate in

areas “traditionally the province of the states,” with the guidance

that “if Congress intends to alter the usual constitutional balance

between the States and the Federal Government, it must make its

intention to do so unmistakably clear in the language of the

statute.” Id. at 471–72 (internal quotation marks and citations

omitted). CRLA argues that following that standard of

interpretation in the OIG statute, as applied to investigations of

law firms, we should reach the same result we did in American

Bar Association, that is, that the federal “intrusion” is not

permitted by the statute.

There are two difficulties with CRLA’s proposed method of

interpretation. First, the American Bar Association decision

dealt with the Federal Trade Commission’s attempt to regulate

the practice of law. CRLA draws the present investigatory line

as parallel to the regulatory reach question in the earlier

decision. In fact, it is not parallel. The Legal Services

Corporation and its OIG are not attempting to regulate the

practice of law. This case is not about any such regulation. It

is about the OIG’s performance of its duty under the OIG Act to

“conduct, supervise, and coordinate audits and investigations

relating to the programs and operations of [federal]

establishment[s].” 5 U.S.C. app. 3 § 4(a)(1). The regulation of

the practice of law, as considered in American Bar Association,

is within the traditional sovereignty of the state; investigation

and audit of federal programs are not.

Furthermore, even if the rule of American Bar Association

did apply, it would change nothing. The rule of American Bar

Association does not forbid the interpretation of federal statutes

to preclude federal intrusion into areas of traditional state

sovereignty. Rather, as we made clear above, federal law “may
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not be interpreted to reach into areas of State sovereignty unless

the language of the federal law compels the intrusion.” City of

Abilene v. FCC, 164 F.3d 49, 52 (D.C. Cir. 1999) (quoted in

American Bar Ass’n, 430 F.3d at 471)). CRLA’s difficulty is

that in the present case, the language compels the intrusion. 

True, when “Congress intends to alter the ‘usual constitutional

balance between the States and the Federal Government,’ it must

make its intention to do so ‘unmistakably clear in the language

of the statute.’” American Bar Ass’n, 430 F.3d at 471–72

(quoting Will v. Michigan Dep’t of State Police, 491 U.S. 58, 65

(1989)). But Congress has made abundantly clear its intention

to regulate the federal programs funded through LSC according

to federal and not California standards.

In support of its “clear statement” argument, CRLA

forwards the language of 42 U.S.C. § 2996e(b)(3):

The Corporation shall not . . . interfere with any attorney

in carrying out his professional responsibilities to his

client as established in the Canons of Ethics and the

Code of Professional Responsibility of the American Bar

Association (referred to collectively in this subchapter as

“professional responsibilities”) or abrogate as to

attorneys in programs assisted under this subchapter the

authority of a State or other jurisdiction to enforce the

standards of professional responsibility generally

applicable to attorneys in such jurisdiction. The

Corporation shall ensure that activities under this

subchapter are carried out in a manner consistent with

attorneys’ professional responsibilities.

CRLA argues that the statute’s prohibition on “abrogat[ing] . . . 

the authority of a State or other jurisdiction to enforce the

standards of professional responsibility generally applicable to

attorneys in such jurisdiction” and its command that “[t]he
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Corporation” “ensure that activities under this subchapter are

carried out in a manner consistent with attorneys’ professional

responsibilities” demonstrate that state professional

responsibility and confidentiality rules constrain OIG

subpoenas. But in fact, that statutory language does not purport

to constrain the investigatory authority of the OIG of LSC. The

state is as free to continue its role of attorney supervision as it

ever was. No authority of the state of California or any other

entity is abrogated. The “abrogation” clause forwarded by the

appellant does nothing to render the OIG’s interpretation of its

authority invalid under the plain statement rule.

The weakness of CRLA’s argument becomes even more

evident when the “abrogation” clause is held up to the light of

the language of the rest of the subsection. The initial language

of that subsection is to the effect that “[t]he Corporation shall

not . . . interfere with any attorney in carrying out his

professional responsibilities to his client as established in the

Canons of Ethics and the Code of Professional Responsibility of

the American Bar Association . . . .” We would remind the

appellants that they do not come seeking the protection of the

“Canons of Ethics and the Code of Professional Responsibility

of the American Bar Association,” but rather of the California

state standards. Thus, § 2996e(b)(3) not only does not support

their proposition, but indeed it argues against it.

In the end, we are back to the fundamental principle

recognized by the Supreme Court in Kimbell Foods and applied

by us in the subpoena context in Linde Thomson: “federal law

governs questions involving the rights of the United States

arising under nationwide federal programs.” Kimbell Foods,

440 U.S. at 726.
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B. The Notice Requirement 

Although the district court concluded that OIG’s subpoena

should be enforced, it also found “that [CRLA] and the attorneyintervenors ha[d] nonetheless raised legitimate concerns about

the privacy of their clients’ confidential information” and issued

a protective order to address those concerns. Mem. Op. 33–34,

ECF No. 65, Nov. 14, 2011. OIG argues that the district court

abused its discretion by adding a provision to the proposed

protective order that OIG submitted, requiring OIG to give

CRLA “a minimum of five days’ notice in advance of all

disclosures,” even those “specifically authorized by Section

509(i)” to law enforcement and bar officials. Id. at 36. 

Appellants argue eloquently for the reasonableness and

need for such a notice requirement. But that is not the standard

governing our review. It is well established “that it is the

agencies, not the courts, which should, in the first instance,

establish the procedures for safeguarding confidentiality.” FTC

v. Texaco, Inc., 555 F.2d 862, 884 n.62 (D.C. Cir. 1977). 

Therefore, a district court may substantively alter confidentiality

requirements imposed by an agency’s protective order if it finds

that the agency abused its discretion by not requiring the

additional protections. As we stated in FTC v. Owens-Corning

Fiberglass Corp., 626 F.2d 966, 973 (D.C. Cir. 1980), when the

agency does not abuse its discretion, “we must vacate the

portions of the district court’s order imposing further conditions

on the [agency].” Otherwise put, “court[s] must focus on the

adequacy of the agency’s (and not the district court’s) discretion

regarding what is necessary to protect confidentiality.” U.S.

Int’l Trade Comm’n v. Tenneco West, 822 F.2d 73, 76 (D.C. Cir.

1987).

CRLA argues that the rule of FTC v. Texaco and its progeny

does not govern this case because the OIG had agreed to submit
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to the terms of a protective order, and in so doing abdicated its

normal authority. CRLA’s argument overstates the facts. The

OIG did not agree to give the district court carte blanche and

abide by whatever terms it chose to incorporate in a protective

order. OIG had expressed a willingness to “agree in principle to

the entry of a protective order,” but it conditioned its willingness

on the district court “not limit[ing] Petitioners’ investigation and

[the protective order being] consistent with the applicable

statutes.” Dist. Ct. Docket No. 53, at 4, Mar. 11, 2009.

The OIG submitted a proposed protective order that did not

include any such notice, and it should be evident that it did not

agree to the notice, so there is nothing to take this case out of the

ordinary rule. Again, that rule is that the district court can

enhance the confidentiality requirements imposed by the agency

only if it finds that the agency abused its discretion. Here there

is no such finding, and we therefore must vacate the portion of

the district court’s order imposing the notice requirement.

III. CONCLUSION

For the reasons set forth above, we affirm the judgment of

the district court summarily enforcing the investigative

subpoena issued by the Office of Inspector General of the Legal

Services Corporation. We vacate the order insofar as it added

a five-day notice requirement to the confidentiality terms

otherwise applicable.

So ordered.