The U.S. District Court for the District of Columbia recently issued the latest ruling in a long-running Freedom of Information Act (“FOIA”) dispute involving materials related to a government-mandated monitorship of the compliance and corporate governance systems of Siemens Aktiengesellschaft (“Siemens”), the German multinational conglomerate.  See 100Reporters LLC v. U.S. Dep’t of Justice, 2018 WL 2976007 (D.D.C. June 13, 2018).  The remarkably detailed opinion reinforces that documents prepared by a monitor, including a monitor’s plans and work product, may be subject to disclosure under FOIA and sheds light on precautions that can be taken to ensure monitorship documents remain protected to the fullest extent possible.

The Court’s Decision

Siemens’ monitorship stems from a Foreign Corrupt Practices Act (“FCPA”) investigation resulting in a 2008 plea agreement.  Under the terms of the agreement, Siemens was required to appoint an independent monitor, reporting to the Department of Justice (“DOJ”), for a term of four years.  Dr. Theodor Waigel (the “Monitor”) was appointed Monitor and tasked with ensuring Siemens implemented an effective system of corporate governance and compliance.  Five years later, in 2013, 100Reporters LLC, an investigative journalism non-profit organization, filed a FOIA request for a broad range of documents related to the monitorship.  Among other things, the FOIA request sought:

  1. documents relating to the Monitor’s evaluation of the effectiveness of Siemen’s anticorruption program;
  2. documents relating to steps taken by the Monitor to confirm compliance by Siemens;
  3. information and records requested by the Monitor that fell within his mandate;
  4. the Monitor’s work plans, reviews, and reports; and
  5. disclosures made by Siemens to the Monitor concerning potential corrupt payments and related books, records and internal control violations.

100Reporters LLC filed a lawsuit in July 2014, seeking to compel production of documents responsive to its request.[1]  DOJ eventually released some responsive information (approximately 500 pages), but withheld approximately 4,300 pages, including the Monitor’s work plans, annual reports and exhibits, presentations to DOJ and the SEC, and correspondence with DOJ, the SEC, and the Siemens board of directors, on FOIA exemption grounds.  DOJ relied on FOIA Exemption 4 (confidential commercial information exemption), Exemption 5 (deliberative process privilege), and Exemptions 6 and 7(C) (exemptions related to privacy interests).  100Reporters contested the application of these exemptions, and the parties filed cross-motions for summary judgment.

Following an in camera review of a sample of the documents, the court determined that while some of the documents appropriately had been withheld, in many cases DOJ had applied the FOIA exemptions too broadly.  In a detailed opinion that closely parsed DOJ’s rationale for withholding each document, the court determined that the following materials are not exempt under FOIA:

  • sections of the Monitor’s annual reports summarizing industry best practices and guidance from relevant FCPA decisions
  • the Monitor’s final work plans
  • parts of exhibits to the Monitor’s annual reports
  • the personal information of Siemens’ executives and the monitorship team.

The court also took issue with DOJ’s redactions, finding that even where documents contained information subject to a FOIA exemption, DOJ had failed to produce non-exempt information within the same documents.  Accordingly, the court ordered DOJ to reexamine its document withholdings and redactions to confirm compliance with the FOIA requirement to release “[a]ny reasonably segregable portion of a record . . . after deletion of the portions which are exempt.”

Implications

The district court’s ruling shows that when a monitor’s work product is requested under FOIA, courts will carefully scrutinize assertions of FOIA exemptions. Companies that retain independent monitors would be prudent to anticipate that the monitor’s work product as well as related documents will be sought under FOIA, and that the monitor’s annual reports, work plans, and exhibits to annual reports ultimately could be subject to disclosure

The two-part lesson for companies that retain a monitor should be clear:  (1) assume that outside third parties will seek to obtain any information shared or generated in connection with the monitorship; and (2) be strategic in determining how information should be shared and submitted in the course of the monitorship.  Companies subject to an independent monitorship often have little leverage to withhold business sensitive, non-privileged information from the monitor.  But in light of the Siemens ruling, companies should work with the monitor to facilitate access to required documents while also protecting business confidential and proprietary information.

For instance, rather than turning over voluminous files to a monitor, which the monitor then may attach as exhibits to a report or maintain as “back-up” for the report’s conclusions, companies would be wise to consider making documents available for the monitor to review and access without actually providing a custodial copy.  This approach would limit the universe of documents that might be disclosed, as it is only documents in the possession of the Government that are subject to FOIA.  Companies also should mark any documents provided to the monitor with restrictive legends, and seek agreement from the monitor that the company will be notified before excerpts of any documents are included in the monitor’s reports.  Obviously, companies must ensure that a monitor has sufficient information to carry out his or her function without unnecessary impediment.  But sophisticated companies also will consider precautions necessary to ensure that their monitorship documents are protected to the fullest possible extent.

[1] 100Reporters LLC v. United States Department of Justice, et al., Civ. No. 14-1264 (RC), 2018 WL 2976007, at *4 (D.D.C. June 13, 2018).

Tags: Compliance, FCPA, FOIA, Monitorship
Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Frederic Levy Frederic Levy

Fred Levy is senior counsel in the firm’s Government Contracts and White Collar Defense and Investigations Practice Groups. He is a leading suspension and debarment lawyer, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous…

Fred Levy is senior counsel in the firm’s Government Contracts and White Collar Defense and Investigations Practice Groups. He is a leading suspension and debarment lawyer, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous high-profile corporations and individuals under investigation by the government in civil and criminal matters, including False Claims Act cases, and in suspension and debarment proceedings to ensure their continued eligibility to participate in federal programs. He has also conducted numerous internal investigations on behalf of corporate clients and advises corporations on voluntary or mandatory disclosures to federal agencies. Fred regularly counsels clients on government contract performance issues, claims and terminations, and litigates matters before the boards of contract appeals and in the Federal Circuit.

Related to his work involving program fraud, Fred counsels clients in the area of contractor “responsibility.” He is involved in the development and implementation of contractor ethics and compliance programs that meet the standards of the Federal Acquisition Regulation, Federal Sentencing Guidelines, and Sarbanes-Oxley, and he regularly conducts ethics and compliance training.

Fred is a principal editor of Guide to the Mandatory Disclosure Rule, and of The Practitioner’s Guide to Suspension and Debarment, 4th Edition. He is a vice-chair of the Debarment and Suspension Committee of the ABA Public Contract Law Section, and a former co-chair of that committee and of the Procurement Fraud Committee. He is a graduate of Columbia College and Columbia Law School.

Read more about Frederic LevyEmail
Show more Show less
Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

Read more about Michael WagnerEmail
Show more Show less