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HUD OFFICE OF INSPECTOR GENERAL PETITION TO ENFORCE SUBPOENAE AGAINST HAMILTON

Susan Gaffney, v. The Hamilton Securities Group, Inc. and Hamilton Securities Advisory Services, Inc.

United States District Court for the District of Columbia (98-MS-92) (Judge Stanley Sporkin)

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03/03/98 Motion to Enter Order for Summary Enforcement of Administrative Subpoenae, with Motion and Accompanying Motions for a Temporary Restraining Order (TRO) and Preliminary Injunction Be Sealed and Not Disclosed Except to Parties

HUD requested that the Motion for Summary Enforcement and accompanying motions be entered under seal to (1) assist in the preservation of the seal on a related qui tam complaint; (2) protect the confidentiality of a pending law enforcement investigation; and (3) protect The Hamilton Securities Group, Inc. and Hamilton Securities Advisory Services, Inc. (hereinafter "Hamilton") from adverse publicity concerning the investigation. [See Memorandum of Points and Authorities in Support of Motion to Seal Proceedings] [The motion was initially sealed, but later unsealed in its entirety by the Court. See 3/26/98 Petitionerís Motion for Summary Enforcement of Administrative Subpoenae]

03/05/98 Status Hearing before Judge Stanley Sporkin 

03/06/98Order by Judge Sporkin 

The Order granted the Motion for Temporary Restraining Order and Preliminary Injunction with respect to documents. Judge Sporkin appointed Irving Pollack and Larry Storch as Special Masters and ordered the U.S. Department of Housing and Urban Development to pay the fees and expenses of the Special Masters and all those working under their authority. It was further ordered that Hamilton deposit identified original records and backup tapes in response to the August 6 and 22, 1996 subpoena, as modified, and the October 24, 1997 subpoena that are claimed to be privileged. 

03/06/98 Status Hearing before Judge Sporkin

03/10/98 Order by Judge Sporkin

The Order directed that Hamilton move the Court to amend its Order to permit the contingent auction of certain computer storage equipment covered by the Courtís March 3, 1998 Order. 

03/23/98 First Report of the Special Masters

The Special Master reported that he called a meeting of all interested parties immediately following the issuance of the Courtís Order appointing Irving Pollack & Larry Storch as Special Masters. During the meeting the parties discussed the primary locations where the data and documents were being stored. They also discussed the arrangements for backing up electronic data in accordance with the Courtís Order of March 10, 1998. The Special Master released the computers at Hamilton for auction, except for the computers that had not been downloaded. 

03/26/98 Order by Judge Sporkin

The Order directed that all documents filed under seal in the case remain under seal with the exception of the Courtís March 6, 1998 order, which, although filed under seal, will no longer, be under seal. 

03/26/98 Petitionerís Motion for Temporary Restraining Order and for Preliminary Injunction

Susan Gaffney, in her official capacity as the Inspector General of the United States Department of Housing and Urban Development ("HUD") (Petitioner), requested that the Court require Hamilton (Respondent) to deposit all original financial records, "non-HUD business" records, backup tapes, and all other materials demanded by the subpoenae issued to Hamilton with the Court pending the Courtís decision on the merits of the Inspector Generalís Petition for Summary Enforcement of the Subpoenae. HUD submitted a Memorandum of Points and Authorities in Support of Motions for Temporary Restraining Order and Preliminary Injunction with the Motion.

03/26/98 Petitionerís Motion for Summary Enforcement of Administrative Subpoenae

HUD petitioned the Court to issue an Order requiring Hamilton to comply with the administrative subpoenae duces tecum served upon it on August 8, 1996, August 22, 1996, and October 24, 1997 by HUDís Office of Inspector General ("OIG"). HUD requested that Hamilton provide the OIG with various records relating to the Hamilton Entitiesí involvement in HUDís mortgage sales programs and possible conflicts of interest in connection with the Hamilton Entitiesí roles as a financial advisor to HUD. HUD submitted a Memorandum of Points and Authorities in Support of Petition for Summary Enforcement of Subpoenae along with the motion. 

03/30/98 Respondentsí First Request for Production of Documents

04/10/98 Respondentsí Opposition to Petition for Summary Enforcement of Administrative Subpoenae

Hamilton asserted that the enforcement sought by OIG exceeds its legitimate needs and such information is irrelevant to the scope of its investigation. Hamilton further asserted that the OIG, through the petition, continues to press for materials it has already been furnished by Hamilton in a manner that can only be described as harassment. In its opposition, Hamilton responded to the OIGís assertion in the petition that compliance with the subpoenae is not unduly burdensome because Hamilton is now Ďmoribound.í Hamilton stated that the burden is even greater since it can no longer generate business due to the loss of office space and employees, making it even more difficult to respond to the OIG subpoenae. Hamilton raised its concern about the OIGís own failure to make sense of the many documents already produced by Hamilton. Hamilton further asserts that the OIG should not have access to Hamilton information regarding business ventures and prospective business ventures outside of the scope of Hamiltonís contract to serve as advisor for the HUD mortgage sales program. Hamilton requested that the Court deny the Inspector Generalís Petition for Summary Enforcement in its entirety, or in the alternative, require the OIG to advise the Court and Hamilton of the "evidence" developed to date and the focus of its investigations, and if more information is sought, to request it with particularity in conformity with the focus of the investigation. 

04/20/98 Consent Motion for Enlargement of Time and Statement of Points Authorities in Support Thereof

The OIG requested an enlargement of time to reply to Hamiltonís Opposition to Petition for Summary Enforcement of Administrative Subpoenae based on the time period needed to prepare a joint reply by the OIG and the Office of the United States Attorney.

04/20/98 Order by Judge Sporkin

The Order accepted the Special Mastersí report and granted the Special Mastersí request for reimbursement. 

04/21/98 Respondentsí Exception to Recommendation of the Special Masters 

Hamilton challenged the Special Mastersí Recommendation that the OIG be given immediate access to review certain boxes of evidence based on the Special Mastersí belief that Hamilton waived all claims to privilege concerning certain "trash." Hamilton argued that the determinative factor is not the nature of the "trash", but its location. Hamilton argued it had not placed the documents in an area particularly suited for public inspection sufficient to defeat its claim of Fourth Amendment protection, and therefore maintained its reasonable expectation of privacy in the documents. Hamilton did not object to a review of the documents by the Special Masters. However, Hamilton requested that the Special Masters make a determination with respect to the responsiveness to the subpoena before permitting the OIG to review them. 

04/24/98 Petitionerís Response to Respondentsí Exception to the Recommendation of the Special Masters

HUD argued that the determination of the Special Masters concerning the "trash" is an appropriate exercise of the Special Mastersí authority under the Courtís order, and is governed by an agreement made between the Special Masters and Hamiltonís former counsel. HUD stated that the Special Mastersí determination provided Hamilton with no grounds for complaint. 

HUD further argued that the items Hamilton designated as "trash" that the OIG retrieved are either directly responsive to the OIG subpoenae and never should have been discarded, or are business records of Hamilton and its affiliated entities and as such may not be discarded without the approval of the Special Masters. [Reference to refutation of Ludert affidavit]

04/27/98 Second Special Mastersí Report

The report stated that Hamilton had delivered additional records to the Special Masters.  Back-up of electronic data had been substantially completed and the bulk of Hamiltonís computers were sold with the exception of less than twenty computers, which were stored with the Special Masters.  Hamilton reported to the Special Masters that they continue to work on the certification of compliance concerning delivery of all materials to the Special Masters.  The Special Masters directed that all ďtrashĒ items should immediately be made available to the government.  They further directed that if Hamilton preferred not to designate particular documents, tapes, or disks, which on their face concern attorney communication, Hamilton could allow the Special Masters review them.

04/28/98 Petitionerís Reply to Respondentsí Opposition to Petition for Summary Enforcement of Administrative Subpoenae

HUD claimed that Hamiltonís Opposition to Petition for Summary Enforcementis based on a misunderstanding of the role of the courts in enforcing the administrative subpoenae. HUD argued that Hamiltonís Opposition is an attempt to divert attention from the basic issues. HUD claimed that it only requested the production of records it had not received. HUD further argued that the information sought by the subpoenae is reasonably relevant to the Inspector Generalís investigation and not unreasonably broad or burdensome. 

04/28/98 Petitionerís Response to Respondentsí Exception to Recommendation of the Special Masters

HUD argued that, contrary to Hamiltonís contention, the determination of the Co-Special Masters concerning the "trash" is an appropriate exercise of the Special Mastersí authority under the Courtís order. Moreover, HUD argued that the Special Mastersí authority is governed entirely by an agreement between the Co-Special Masters and Hamiltonís former counsel.

04/29/98 Respondentsí Reply to Petitionerís Response to Exception of Recommendation of Special Masters

Hamilton stated that HUD failed to rebut the legal and constitutional principles raised by Hamilton regarding its documents, yet instead asserted that a so-called "trash protocol" should take precedence over Hamiltonís constitutional rights regarding its own property. Hamilton stressed that its position does not impact on the ultimate rights of the OIG to obtain documents responsive to the subpoenae. Hamilton reiterated its position that any documents in question that are responsive to the OIG subpoenae should be ascertained by the Special Masters and produced at the appropriate time. Hamilton refuted the OIGís accusation that Hamilton discarded "original" financial documents and other items it claims are directly responsive to the subpoenae. [ See affidavit of building manager] Hamilton stated that with exception of a few paper documents, such as canceled checks and bills of lading, Hamiltonís financial records, which are currently deposited with the Special Masters, are all in digital form. 

04/30/98 Order by Judge Sporkin

The Order directed Hamilton to designate each particular document claimed to be protected by attorney-client privilege.  The order further directed HUD OIG not to disclose Hamiltonís proprietary information to non-governmental personnel, and to execute a non-disclosure agreement acceptable to the Special Masters restricting disclosure of Hamiltonís proprietary information to non-government personnel. 

05/12/98 Respondentsí Exceptions to Second Report of the Co-Special Masters Irving M. Pollack and Laurence Storch

Hamilton requested that the Court reverse the determination of the Co-Special Masters that "materials which had been designated as Ďtrashí pursuant to arrangements with the respondentsí counsel . . . should be immediately made available to the government [OIG-HUD]." Hamilton requested that the Court order that the Special Masters retain the documents in question in their entirety, without access by the OIG, pending determination of whether the documents are responsive to the OIG subpoenae served on Hamilton.

05/27/98 Respondentsí Response to Order Advising that Pollack and Storch be Appointed as Special Masters

The document is not available at this time.

09/08/98 Third Report of Co-special Masters Irving A. Pollack and Laurence Storch

The report stated that Hamilton personnel and attorneys reviewed documents to determine privilege and relevance claims in the presence of Storch & Brenner pursuant to an agreement between the parties. The Special Masters reported the additional records and data that had been delivered by Hamilton to storage. It was also reported that Hamilton submitted a privilege log of all paper records to the Special Masters that it believes are responsive to the governmentís subpoenae. The Special Masters reported that Hamilton argued that separating responsive and non-privileged data from electronic data would be burdensome, costly, and take more than a year to produce the documents. Hamilton proposed that the government pay for an independent third party to perform the review of the electronic data. The OIG rejected the proposal. The Special Masters took the position that because Hamilton is required to comply with the subpoenae, it is Hamiltonís responsibility to designate privileged and non-privileged documents. The Special Masters continued by stating that without such designation, the data should be made available to the government in its entirety. Finally, the Special Masters reported that they complied with the Office of the U.S. Attorney to provide copies of the documents produced by the Special Masters concerning the investigation into the unauthorized entry onto Hamilton premises on March 6, 1998 and March 7, 1998.

09/21/98 Respondentsí Motion to Unseal Record

Hamilton argued that the OIG did not meet its burden of rebutting the presumption that HUDís interest in privacy or confidentiality of its processes outweighs the presumption in favor of public access to judicial proceedings. HUD argued that (1) the need for public access is substantial in that the OIG is funded by taxpayers; (2) the public has already had significant access to the details despite the sealing order; and (3) mentioning the existence of a qui tam action does not justify sealing the entire record.
Hamilton proposed that redacting any reference to the qui tam from the pleadings that the Court finds deserving of secrecy could protect specific interests. 

09/21/98 Respondentsí Motion for Leave to Conduct Discovery

Hamiltonís Motion for Leave to Conduct Discovery sought to uncover the true motivation behind the OIG subpoenae. Hamilton suggested that the exclusive motivation for the OIG investigation appears to be harassment. Hamilton argued that discovery in enforcement proceedings is permitted in situations where bad faith on the part of the agency seeking enforcement of a subpoena is alleged. 

09/25/98 Petitionerís Response to Respondentsí Motion to Unseal Record

The HUD OIG stated that it had originally moved the Court to seal the record to 1) assist in the preservation of the seal on a related qui tam complaint; 2) to protect the confidentiality of a pending law enforcement investigation; and 3) to protect Hamilton from adverse publicity concerning the ongoing investigation.  The HUD OIG further stated that since the issues in the case had been briefed without disclosing the content s of the sealed 0qui tam action or impairing the investigation, and Hamilton requested that the case be unsealed, it did not object to unsealing the case.

09/25/98 Petitionerís Response in Opposition to Respondentsí Motion for Leave to Conduct Discovery 

HUD asserted that Hamiltonís Motion for Leave to Conduct Discovery "regarding communications between Ervin & Associates, Inc. and the Office of Inspector General, as well as the circumstances surrounding the issuance of overbroad and repetitious subpoenae" is a vehicle for Hamilton to repeat unsupported accusations and allegations. HUD argued that the motion should be denied because the requested discovery is not necessary to assist the Court to decide the merits of the case. HUD also argued that it has not acted in bad faith. 

09/25/98 Petitionerís Status Report

The HUD OIG reported that the Special Masters immediately proceeded to take steps to acquire possession of relevant records and had gathered most of the relevant materials in accordance with the Courtís orders of March 6, 1998 and March 10, 1998.  However, HUD OIG claimed not to have access to many of the most significant records.  HUD OIG stated that despite attempts to achieve resolution of the issues through negotiations with Hamiltonís counsel and the Special Masters, the parties were unable to resolve the issues with regards to the remaining records. 

HUD OIG requested that the Court rule on Hamiltonís claim for protection of ďproprietary business secretsĒ contained in responsive records.  HUD OIG also requested that the Court vacate its April 29, 1998 order directing government personnel not to disclose Hamiltonís proprietary information to non-governmental personnel, and to execute a non-disclosure agreement acceptable to the Special Masters restricting disclosure of Hamiltonís proprietary information to non-government personnel.  HUD OIG further requested that the Court order the production by Hamilton of computer/electronic records to HUD OIG.  In addition, HUD OIG stated that Hamilton had not adequately complied with the March 6, 1998 Court order to certify compliance.  Finally, HUD OIG informed the Court that it was reviewing the privilege log submitted by Hamilton and may request that the Special Masters or the Court review certain records to determine whether they have been appropriately designated
 

10/01/98 Joint Statement by Petitioner and Respondent Concerning Pending Issues Awaiting Resolution by the Court

Pursuant to the Courtís directive on September 25, 1998, entered at a hearing in C. Austin Fitts v. The United States Department of Housing and Urban Development, Misc. No. 98-262 (SS), HUD and Hamilton submitted a Joint Statement concerning pending issues awaiting resolution by the Court. HUD held the position that five principal issues related to its Petition for Summary Enforcement of Administrative Subpoenae, filed March 3, 1998, were ripe for judicial decision or after any additional briefing that the Court ordered. Hamilton held the position that the matters are not ripe for judicial decision, at least not until there is further briefing of certain issues. 

10/09/98 Order by Judge Sporkin

The Order granted Hamiltonís unopposed request to unseal the record in its entirety.

10/09/98 Respondentsí Reply to Petitionerís Opposition to Motion for Leave to Conduct Discovery

Hamilton responded to HUDís Opposition to Motion for Leave to Conduct Discovery. In its Opposition, HUD argued that Hamiltonís request for discovery should be denied not only because the OIG behavior referenced by Hamilton does not rise to the level of bad faith, but also because discovery is not necessary to assist the Court in deciding on the merits of the case. Hamilton replied by arguing that discovery is necessary to ascertain whether certain statutory obstacles operate to prevent the enforcement of the OIGís subpoenae. Hamilton argued that the OIG subpoenae were issued pursuant to an improper delegation power, the OIGís investigation on the merits of the qui tam renders the subpoena unenforceable because the responsibility is committed to the Attorney General by statute, and the OIGís conduct, even if statutory authority exists, is an abuse of process. 

10/13/98Respondentsí Response Concerning Protection of Proprietary Information

Hamilton stated that the Court was justified in entering the Protective Order, and that the OIG raised only untimely, hypothetical bases for its objection. Hamilton argued that it is justified in its concerns that its proprietary information not be disclosed considering that the OIG has stated its investigation was initiated in response to a Bivens suit filed by a Hamilton competitor. Hamilton pointed out that the parties were unable to agree on a Protective Order and the one proposed by the OIG made Hamilton subject to unilateral circumvention. Hamilton argued that the unwillingness of the OIG to offer reasonable safeguards for Hamiltonís proprietary interests demonstrates the absolute necessity for maintaining the Courtís current Protective Order. Hamilton furthers states the Courtís current Protective Order is a reasonable balance between the OIGís need to conduct its investigation of HUDís loan sales program and Hamiltonís need to protect its investment in the cutting-edge tools and methodologies that it developed. 

10/14/98 Respondentsí Supplemental Memorandum In Opposition to Petition for Summary Enforcement of Administrative Subpoenae

Hamilton argued that the HUD OIG lacks statutory authority to issue the subpoenae because the Attorney Generalís delegation of investigatory power was not within the statutory authority of the agency.  Hamilton supported the argument by referring to the statute, which expressly forbids the Attorney General from delegating her authority to investigate potential false claims.  Hamilton further argued that the HUD OIG acted without statutory authority in lending its unregulated subpoena power to the Department of Justice.  Hamilton stated that legislative history demonstrates that the subpoenae issued by the HUD OIG in this case are irreconcilable with Congressí intended use of the Inspector General subpoena power.  Hamilton also argued that the HUD OIG is abusing the courtís process by attempting to deny Hamilton the protections Congress afforded to subjects of the false claims investigations (e.g., that the target of a qui tam action be informed of its existence and the general nature of the charges when the government seeks documentary evidence). 

10/21/98 Petitionerís Reply to Respondentsí Response Concerning Protection of Proprietary Information

HUD referred to the Joint Statement of Petitioner and Respondent Concerning Pending Issues Awaiting Resolution by the Court asking for an immediate ruling on the Special Mastersí request that HUD sign a non-disclosure agreement. In the Statement, HUD stated that until the issue was resolved, HUD was unable to continue its review of any of Hamiltonís records in the possession of the Special Masters. HUD pointed out that the non-disclosure agreement does not require Hamilton to identify the claimed "proprietary business secrets", yet would forbid HUD to discuss the unidentified materials with anyone outside of the government. HUD concluded that the way the non-disclosure agreement is drafted; HUD would have no way of knowing what materials are claimed to be proprietary. HUD claimed that it does not want to be in the position of having to defend against allegations that it somehow violated the non-disclosure agreement. HUD argued that it must be able to use the information responsive to its subpoenae in conducting its legitimate investigatory efforts, including witness interviews of non-government personnel and the issuance of subpoenae to third parties for additional information. HUD further argued that the non-disclosure agreement was no longer necessary since HUD is asking only for records determined to be responsive, instead of all records in custody as originally believed to be the case by the Special Masters. HUD concluded by stating that Hamilton should not be permitted to hamper [the] "summary" subpoena enforcement proceeding with further delay caused by its claim of protection for unidentified "proprietary" data. 

11/12/98 Petitionerís Reply to Petition for Summary Enforcement of Administrative Subpoenae

HUD responded to Hamiltonís Supplemental Opposition to the Petition for Summary Enforcement. HUD reiterated that it has not leaked information to the press concerning its investigation. HUD argued that Hamiltonís financial difficulties were not caused by the OIGís investigation, as alleged by Hamilton, but due to Hamiltonís almost exclusive reliance on HUD as a client. In addition, HUD stated that the computer and electronic records the OIG requested had not been previously produced. HUD also stated that Hamiltonís withholding of financial information concerning the Hamilton affiliates or subsidiaries because Hamilton believes the information has no relevance to the investigation is unfounded. HUD claims that it repeatedly stated to Hamilton that it is investigating, among other things, conflicts Hamilton may have had between the work it did for HUD and other private business ventures. HUD further expounded upon its argument that Hamiltonís Initial Certificate of Compliance with the subpoenae was inadequate. With respect to attorney-client privilege, HUD requested that the Court empower the Special Masters to make initial determinations on such matters. Finally, HUD argued that an evidentiary hearing was not necessary because Hamilton had an ample opportunity to present evidence by way of affidavit. 

12/01/98 Respondentsí Supplemental Memorandum (Second) in Opposition to Petition for Summary Enforcement 

Hamilton applied its argument in its first Opposition to Petition for Summary Enforcement of Administrative Subpoenae (stating that the HUD OIG's subpoenae are unenforceable in light of certain provisions of the qui tam statute) to the OIGís Petition for Summary Enforcement. Accordingly, Hamilton requested that the court also deny the Petition for Summary Enforcement on the same grounds. 

12/03/98 Status Hearing before Judge Sporkin

12/09/98 Respondentsí Motion to Quash Subpoena, or in the Alternative for Protection Order

Hamilton reiterated its prior argument that the OIG subpoenae are statutorily impermissible and requested that the court quash the subpoenae or in the alternative render a protective order. Hamilton argued that the OIG investigation was issued pursuant to an unlawful delegation of power. Hamilton also argued that the fact that the OIG is conducting an investigation of the merits of a qui tam suit also renders the subpoenae unauthorized and unenforceable. Finally, Hamilton argued that, even if statutory authority exists, the OIGís conduct constitutes an abuse of process.

12/18/98 Order by Judge Sporkin

Judge Sporkin ordered that the parties pay in equal shares the fees and expenses  of the Special Masters and all those working under the Special Masters' authority for reviewing Hamiltonís assertions of privilege and non-responsiveness.  HUD was ordered to pay for all other work performed by the Special Masters pursuant to this Order; the Court's Order of 4/29/98 is vacated.  The Special Masters were given full authority to ensure compliance with the Order.
 

12/23/98 Petitionerís Motion to Strike Motion to Quash Subpoena, or in the Alternative, for Protection Order

HUD requested that the court strike Hamiltonís Motion to Quash Subpoena, or in the Alternative, for Protection Order. HUD argued that the matter had been briefed fully by the parties and the basic details of the enforcement of the subpoena incorporated in a Court Order dated December 18, 1998. HUD also argued that Hamiltonís Motion to Quash was inappropriately filed within the proceeding of the Petition for Summary Enforcement of Administrative Subpoenae. Moreover, the petition had been briefed fully, argued, and determined. HUD stated that its Motion to Strike is appropriate because Hamiltonís Motion to Quash seeks to raise issues anew and is redundant. 

01/05/99 Order by Judge Sporkin

The Order granted HUDís Motion to Strike Hamiltonís Motion to Quash Subpoena or, in the Alternative, Motion for Protective Order. The Court further ordered that Hamiltonís Motion to Quash Subpoena or, in the Alternative, Motion for Protective Order be stricken from the record on the ground that the motion was found to be redundant.

01/06/99 Respondentsí Opposition to Petitionerís Motion to Strike Respondentsí Motion to Quash Subpoena

Hamilton argued that HUDís Motion to Strike is procedurally flawed because Rule 12(f) of the Federal Rules of Civil Procedure applies only to pleadings, and a motion to quash is not a pleading. Additionally, Hamilton asserted that the HUDís Motion to Strike should fail because the Court did not rule previously on the issue, as suggested by HUD, of whether the subpoenae are unenforceable in light of certain provisions of the qui tam section of the False Claims Act as it relates to the Inspector General Act of 1978. Hamilton stated that Judge Stanley Sporkin clearly indicated at a December 3, 1998 hearing that he would not rule on the particular legal issue at the time. Hamilton argued that presenting the legal issue anew in the Motion to Quash is an appropriate and efficient way to address the unresolved issue. 

02/12/99 Respondentsí Notice of Appeal from Order

02/19/99 United States Court of Appeals # 99-5046 assigned for appeal by Hamilton 

04/16/99 Order by Judge Sporkin

The order permitted the Special Masters to allow Hamilton to take possession of item 209 of the Special Mastersí inventory.

05/07/99 Respondentsí Motion to Seal Attachment B to Respondentsí Exception to Recommendation of the Special Masters Regarding Certain Privileged Documents 

Hamilton requested that the Court review, in camera, Hamiltonís Attachment B to its Exception that contains seventeen (17) documents Hamilton has asserted to be privileged. 

05/07/99 Respondentsí Exception to Recommendation of the Special Masters Regarding Certain Privileged Documents

Hamilton took exception with the Special Mastersí ruling on one category of documents, which involves seventeen (17) of the one hundred forty-six (146) documents considered by the Special Masters. Hamilton claimed that the seventeen (17) documents contain confidential communication between Hamilton and its former counsel in the course of obtaining legal advice solely for the benefit of Hamilton. Hamilton argued that controlling precedent dictates that Hamilton should not be deprived of its legitimate expectation of attorney-client privilege merely because its attorneys also provide legal service to HUD and Hamilton on matters of common interest. Furthermore, Hamilton argued that the advice given to Hamilton by its former attorneys focused on Hamiltonís own business interests, and not on the substantive contractual obligation. In addition, Hamilton argued that the fact that the firm was providing legal advice on some issues responsive to Hamiltonís contracts with HUD does not act as a waiver of the attorney-client privilege existing between Hamilton and its former attorneys. Finally, Hamilton argued that whether or not the OIG believed that the former firm could represent Hamilton in a distinctly confidential capacity without violating the firmís ethical obligations, it had no bearing on Hamiltonís legitimate expectation of confidentiality with its attorneys. Hamilton requested that the Court reverse the Special Mastersí final finding on the seventeen (17) documents and reinstate the Special Mastersí preliminary ruling, or in the alternative, reverse the Special Mastersí final finding as to the seventeen (17) documents and remand the issue to the Special Masters for a ruling consistent with the Circuit Courtís holding in the case of Eureka.

05/21/99 Petitionerís Response in Opposition to the Recommendation of the Special Masters Regarding Certain Documents Claimed to be Privileged

HUD argued that Hamiltonís exception to the recommendation of the Special Masters regarding seventeen (17) documents claimed to be subject to attorney-client privilege be overruled and the recommendation be sustained. HUD argued that the recommendation should be sustained because Hamilton did not meet its burden of demonstrating that its communications with the law firm Holland & Knight were confidential and contained client confidences. Furthermore, HUD argued that Hamilton, by its actions, effectively waived any attorney-client privilege that may have existed.

05/26/99 Recommendation of the Special Masters

The Special Masters filed a recommendation concerning certain documents claimed by Hamilton to be privileged. The Special Masters reviewed the seventeen (17) documents Hamilton claimed to be privileged and attorney work-product a second time. Based on the review, the Special Masters found that Hamilton had still not adequately supported its claim that the documents were protected by a privilege. The Special Masters recommended to the Court that the seventeen (17) documents be provided to the OIG.

05/27/99 Respondentsí Reply Regarding Certain Privileged Documents

Hamilton replied to HUDís Opposition brief regarding certain privileged documents. Hamilton stated that the proposition that no confidential attorney-client privilege could exist between Hamilton and Holland & Knight is flawed, and misses the crucial point that Holland & Knight was not advising Hamilton about substantive work that Hamilton or Holland & Knight were doing for HUD. More specifically, Hamilton argued that Holland & Knightís advice to Hamilton did not involve a fiduciary relationship between Hamilton and HUD. Hamilton stated that the privileged communications occurred after Hamiltonís and HUDís interests diverged. 

06/17/99 Motion Hearing before Judge Sporkin

06/17/99 Respondentsí Memorandum (Supplemental) Regarding Certain Privileged Documents

Hamilton notified the court of an overly broad statement in HUDís previous filings. In previous documents HUD asserted that Holland & Knight, LLP "had a contractual relationship with HUD." Hamiltonís former counsel at Holland & Knight asserted unequivocally that it never provided legal services under a contract with HUD on the loan sale program.

06/25/99 Petitionerís Reply in Response to Memorandum Regarding Certain Privileged Documents

The HUD OIG argued that Hamiltonís exception with regard to seventeen (17) subpoenaed documents should be overruled and the recommendation of the Special Masters should be sustained.  The HUD OIG argued that Hamilton did not carry its burden of demonstrating that its communications with a law firm were confidential and contained client confidences.

07/20/99 Order by Judge Sporkin

Order granting Motion to Seal Attachment B to Respondentsí Exception to Recommendation of the Special Masters Regarding Certain Privileged Documents. It was further ordered that the documents be inspected in camera by the Court until and unless otherwise ordered by the Court.

08/25/99 Certified Copy of Order filed in United States Court of Appeals 

The United States Court of Appeals affirmed the United States District Court judgment denying Hamiltonís Motion to Strike Subpoena and Motion for Protective Order.

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