Opinion ID: 654186
Heading Depth: 3
Heading Rank: 1

Heading: Application of State Privilege

Text: 10 We assume at the outset that the Missouri law of attorney-client privilege would insulate some of Linde Thomson's insurance communications from production. 3 The issue for this court in evaluating Linde Thomson's claim that the state privilege applies to this subpoena enforcement proceeding is one of characterization. Federal Rule of Evidence 501 4 mandates the application of state privileges in civil actions or proceedings for which state law supplies the rules of decision and federal privileges for issues or proceedings arising under federal law. See FED.R.EVID. 501. Federal Rule of Evidence 1101(c) states that [t]he rule with respect to privileges applies at all stages of all actions, cases, and proceedings. FED.R.EVID. 1101(c). 11 Linde Thomson argues, pursuant to Rule 1101(c), that an administrative investigation is merely a stage of subsequent litigation. According to this view, Missouri law of privilege controls in this particular subpoena enforcement proceeding, because the ultimate claims pursued by the RTC, as evidenced by its suit filed in the Missouri District Court, sound in state law violations. This argument rests on several assumptions. First, it presumes that a complaint will follow, inevitably, from the issuance of an administrative subpoena. Second, it assumes that the RTC directed its investigation only to the identification of possible state law violations, and that this intent was either manifest or somehow ascertainable. Finally, it equates the administrative investigation with a civil discovery mechanism. We disagree with Linde Thomson's underlying premises, and thus reject its conclusion. 12 Linde Thomson's claim suggests that the sole permissible purpose of RTC investigations is the determination of the existence of legal claims under state law. However, the RTC faces no such limitation. An investigation conducted by the RTC may conceivably neither culminate in litigation, nor be initially designed to inspire it. See FTC v. Texaco, Inc., 555 F.2d 862, 874 (D.C.Cir.) (en banc), cert. denied, 431 U.S. 974, 97 S.Ct. 2939, 53 L.Ed.2d 1072 (1977). We cannot abide by an interpretation of Rule 1101(c) that requires an ex ante determination of what claims, if any, may eventually be pursued by an agency undertaking a broad investigation pursuant to its clear statutory mandate. See 12 U.S.C. Sec. 1821(d)(2)(I) (1989). Although the RTC has now filed a complaint against Linde Thomson that focuses primarily on violations of state law, this complaint followed, rather than anticipated, the subpoena enforcement proceeding below. We look at the inquiry from the perspective of the district court, which proceeded without knowledge of any subsequently issued complaints. As we reasoned in Texaco, in the pre-complaint stage, an investigating agency is under no obligation to propound a narrowly focused theory of a possible future case.... The court [303 U.S.App.D.C. 321] must not lose sight of the fact that the agency is merely exercising its legitimate right to determine the facts, and that a complaint may not, and need not, ever issue. 555 F.2d at 874 (emphasis in original). 13 Unlike a discovery procedure, an administrative investigation is a proceeding distinct from any litigation that may eventually flow from it. See EEOC v. Deer Valley Unified School Dist., 968 F.2d 904, 906 (9th Cir.1992); EEOC v. University of Notre Dame du Lac, 551 F.Supp. 737, 742 (N.D.Ind.1982), rev'd on other grounds, 715 F.2d 331 (7th Cir.1983). In enforcing a subpoena, our role is limited to evaluating whether the subpoena is for a lawful purpose, whether the documents requested are relevant to that purpose, and whether the demand is reasonable. See FTC v. Texaco, 555 F.2d 862, 872 (D.C.Cir.) (en banc) (citing Endicott Johnson v. Perkins, 317 U.S. 501, 509, 63 S.Ct. 339, 343, 87 L.Ed. 424 (1943), and Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 209, 66 S.Ct. 494, 505, 90 L.Ed. 614 (1946)), cert. denied, 431 U.S. 974, 97 S.Ct. 2939, 53 L.Ed.2d 1072 (1977). Resolution of these issues requires interpretation of the scope of subpoena authority under the enabling federal law. The nature of a subpoena enforcement proceeding, under common sense and precedents in this circuit and elsewhere, thus rests soundly in federal law, and federal law of privilege governs any restrictions on the subpoena's scope. 5 See FTC v. TRW, Inc., 628 F.2d 207, 210-11 (D.C.Cir.1980) (applying federal law to evaluate a claimed self-evaluative privilege against compliance with an FTC subpoena); Dole v. Milonas, 889 F.2d 885, 889 n. 6 (9th Cir.1989) (applying federal law to determine scope of attorney-client privilege in proceeding to enforce administrative subpoena under ERISA); United States v. Schoenheinz, 548 F.2d 1389, 1390 (9th Cir.1977) (applying federal law to reject employer-stenographer privilege asserted against IRS subpoena); Colton v. United States, 306 F.2d 633, 636 (2d Cir.1962) (applying federal law to determine scope of attorney-client privilege in IRS investigatory proceeding), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 (1963). We therefore reject Linde Thomson's contention that state law applies to the privileged status of the documents at issue and proceed to the inquiry under federal law.