WIENER, Circuit Judge:
This case has, since 1984, endured an odyssey through administrative and judicial tribunals, during the course of which it has appeared before us — in one form or another — on four occasions. Petitioner Donald J. Willy now petitions for review from the Department of Labor Administrative Review Board's ("ARB") dismissal of his retaliation claims against his former employers, Coastal Corporation and Coastal States Management (collectively, "Coastal"). Although we grant his petition for review, we reject Willy's challenge to the constitutionality of the ARB under the Appointments Clause of the United States
I. FACTS AND PROCEEDINGS
A. Factual History
Coastal hired Willy as an in-house environmental attorney in 1981. Coastal and its subsidiaries are in the petroleum business, including refining oil, marketing oil and gasoline, and transmitting natural gas by pipeline. After a series of events in 1984, Coastal fired Willy.
1. The Belcher Environmental Audit Report
In early 1984, Albin Smith, President of Belcher Oil Company (a subsidiary of Coastal), asked Coastal's legal department to perform an environmental audit of Belcher's facilities. After Willy examined the on-site reviews performed by fellow attorney Troy Webb and a regulatory analyst, George Pardue, Willy concluded in two preliminary draft reports (collectively, "the Belcher Report" or "the Report") that Belcher was exposed to liability for violating several federal environmental statutes.
Webb and other Coastal employees disagreed with Willy's conclusions. Unbeknownst to Willy, Webb sent a memorandum to Smith, stating that Belcher's problems were less serious than Willy's drafts indicated. Pardue conceded that Willy's conclusion that Belcher was illegally polluting was factually accurate, but also told Smith that the tone of Willy's report was "inflammatory." At the end of March, Willy's supervisor, Clinton Fawcett, asked Willy to revise the Belcher Report and to delete reference to some of Belcher's violations. Willy refused, then discussed the matter with Coastal's general counsel, George Brundrett, who agreed with Fawcett's assessment of the Report. Fawcett ultimately made the changes to the Report himself.
Willy testified that he began "getting the cold shoulder" from Fawcett, Brundrett, Webb, and Pardue after this incident. Fawcett later left Coastal's legal department, and William Dunker, a colleague of Willy's in the environmental legal department, became Willy's supervisor. Dunker revisited the Belcher Report and discussed the incident with Webb, who reiterated his opinion that "the whole thing was overblown" by Willy. Dunker told Brundrett that "the report was inflammatory and drew conclusions that I don't like to draw," then told Willy of his concerns.
2. Corpus Christi Refinery
In late 1983 or early 1984, Willy began performing legal work for the Corpus Christi Refinery ("the Refinery"), another Coastal subsidiary. Early in June 1984, at the request of the manager of the Refinery, Willy called the Texas Department of Water Resources ("TDWR") about a closure bond for the refinery.
Webb considered the Refinery his domain. When he visited it in the summer of 1984, he learned that the TDWR had informed Willy that Coastal might be sued because of the Refinery's financial problems. Webb was upset that Willy had not relayed this information to him and considered that Willy was infringing on what Webb regarded as his "turf."
In September 1984, Dunker, who had learned from Webb about the TDWR phone call, held a meeting in an effort to relieve the tension between Webb and Willy. Dunker had prepared a letter of reprimand for Willy, because Webb had complained that Willy had been saying negative things about him and "backstabbing" him. Dunker decided not to deliver the letter to Willy, however, because what Dunker learned at the meeting did not
At the meeting, which Dunker secretly taped, Willy denied having called the TDWR. Dunker telephoned a Refinery employee, expecting to confirm that Willy had placed the call. The employee stated, however, that he did not recall telling Webb and Pardue that Willy had called the TDWR; that he could recall only that he heard that a TDWR employee, Russell Lewis, had said that there might be a lawsuit. The Refinery employee did confirm that Willy and Webb had made disparaging remarks about each other. Willy and Dunker, and sometimes Webb, then engaged in a lengthy exchange about the antagonism that Willy experienced as a result of the Belcher Report.
Soon after the meeting, Dunker called Lewis at the TDWR, and Lewis confirmed that Willy actually had contacted him. Dunker decided to fire Willy and obtained Brundrett's agreement. Dunker first met with Willy and again secretly taped their conversation. At this meeting, Dunker called Lewis and allowed Willy to question him. After Lewis confirmed that Willy had spoken with him about financial assurances, Dunker severely criticized Willy's breach of trust and asked him to resign. When Willy refused, Dunker orally fired him on the spot. An October 1 written termination notice authored by Brundrett states: "The primary purpose for this termination is the fact that you failed to report certain actions taken by you with respect to the Corpus Christi Refinery environmental matters. When asked if you had taken such action, you unequivocably [sic] denied taking such action."
B. Procedural History
1. Complaint to the Department of Labor
In October 1984, Willy filed a complaint with the Department of Labor ("DOL"), alleging that Coastal had violated the whistleblower provisions of several environmental statutes by firing him in retaliation for writing the Belcher Report. Specifically, Willy sued under the Clean Air Act,
The Wage and Hour Division ("WHD") of the DOL investigated Willy's complaint and found in his favor. The WHD ordered reinstatement and damages.
2. Administrative Law Judge's Order of Production
Coastal appealed the WHD's ruling and requested a hearing before a DOL administrative law judge ("ALJ"). Willy sought extensive discovery, including introduction of the Belcher Report. Coastal objected to the production of the Report and other documents related to it based on the attorney-client and work-product privileges. Willy filed a motion to compel production, which the ALJ granted. The ALJ relied on Doe v. A Corp.
3. ALJ's Recommendation of Dismissal
Before Willy could do so, however, the ALJ recommended that Willy's complaint be dismissed in light of our then-recent opinion in Brown & Root, Inc. v. Donovan.
4. Secretary's Reversal of Recommended Dismissal
On appeal to the DOL Secretary, Willy argued that he was terminated in part because he contacted government environmental agencies. The Secretary ultimately rejected the ALJ's recommended dismissal, reasoning that, notwithstanding Brown & Root, Willy did not have an adequate opportunity to prove that he had contacted government agencies and that the Belcher Report constituted protected activity under the Acts. The Secretary also concluded that, contrary to Coastal's arguments, there was nothing in any of the statutes or their legislative histories to indicate that in-house attorneys are excluded from statutory protection. The Secretary further encouraged us to reconsider our holding in Brown & Root in light of the Tenth Circuit's more recent decision in Kansas Gas & Electric Co. v. Brock.
5. Our Refusal to Intervene
On remand, the ALJ again ordered Willy to seek enforcement of the production order and resolution of Coastal's privilege claims in district court. Willy instead petitioned us under the All Writs Act to resolve the discovery dispute. We declined review, reasoning that "intervention at this time to resolve the discovery would . . . interrupt the administrative process" and that "[i]ntervention at this time is . . . unnecessary."
6. ALJ's Hearing on Remand
In a March 1998 hearing on remand before an ALJ, Coastal continued to refuse to produce the Belcher Report, basing its refusal on the attorney-client privilege. The ALJ nevertheless admitted two draft versions of the Report that were in Willy's possession. Based on these drafts, the ALJ found in favor of Willy, reasoning that he was fired both because of Coastal's perception that he had lied about calling the TDWR and for having written the Belcher Report in the first place. Applying a mixed-motive analysis, the ALJ concluded that the animus towards Willy arising from the Belcher Report and Willy's
7. Secretary's Review of ALJ's Rulings
On automatic review, the Secretary agreed with the ALJ's Recommended Decision and Order that Coastal fired Willy in part because he wrote the Belcher Report. The Secretary also affirmed the ALJ's 1987 holding that writing the Belcher Report constituted protected conduct, notwithstanding our decision in Brown & Root. The Secretary concluded that Brown & Root applied to the ERA only and did not purport to interpret environmental whistleblower statutes.
We denied Coastal's interlocutory petition for review of the Secretary's ruling in October 1994, ten years to the month after Willy's original filing. The following July, the DOL Secretary denied reconsideration of his decision. The ALJ then issued a Recommended Decision and Order on Damages, Fees and Costs for $977,513.44 in damages and $68,270 in attorney's fees and expenses. Willy and Coastal both appealed to the Administrative Review Board ("ARB"), which by then had replaced the Secretary in the decision-making process.
In February 2004, the ARB issued its Final Decision and Dismissal Order, which reversed the prior orders of the DOL Secretary and the ALJ on remand. The ARB upheld the ALJ's conclusion that federal law governed the issue of attorney-client privilege, then determined that no exception to the privilege existed to admit the Belcher Report and other related documents. The ARB also concluded that under Texas attorney-client privilege law, the result would prove the same. Willy timely filed his notice of appeal.
8. Willy's Parallel State Court Action
Concurrent with his administrative proceedings, Willy pursued his claims against Coastal in the state courts of Texas. In 1985, after the ALJ's first recommendation of dismissal, Willy filed a state-law wrongful discharge claim in state court. In it he alleged that Coastal wrongfully terminated him under the Texas public policy exception to the employment-at-will doctrine, viz., that it fired him for refusing to perform an illegal act.
On appeal, we reversed and remanded the matter to the district court with instructions to remand to the state court because removal had been improper.
A. Standard of Review
We must affirm the ARB's decision unless it is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.
B. The Appointments Clause
Willy first contends that the creation of the ARB violates the Appointments Clause of the Constitution.
Article II states:
In April 1996, the DOL Secretary created the ARB. The ARB is composed of three members, each of whom is appointed by the Secretary for terms of two years or less and is subject to removal by the Secretary.
We must first determine whether the ARB members are "principal" or "inferior" officers for purposes of the Appointments Clause. Willy bases his Appointments-Clause challenge on the assumption that an ARB member is an inferior officer of the United States. Willy asserts that ARB members are inferior officers because they make final decisions for the Department of Labor.
Even though we recognize that no specific federal statute creates the ARB, we hold that the Secretary possesses the requisite congressional authority to appoint members to the ARB to issue final agency decisions. As the Secretary points out, other circuits have held that Article II "does not require that a law specifically provide for the appointment of a particular inferior officer. To the contrary, `the Constitution affords Congress substantial discretion to fashion appointments within the specified constraints.'"
The broad language employed by Congress in the Reorganization Plan No. 6 of 1950 and in 5 U.S.C. § 301 vests the Secretary
To support his argument that the Secretary's appointment of ARB members and delegation of final decision-making authority to the ARB is violative of the Appointments Clause, Willy principally relies on three cases, Freytag v. Commissioner,
In Ryder, the Court treated the de facto officer doctrine.
Willy also cites Edmond as support for his aforesaid general propositions, yet he expends little effort to explain Edmond's relevance here. In Edmond, the Court considered (1) whether the Secretary of Transportation has the authority to appoint members of the Coast Guard Court of Criminal Appeals ("CGCCA"), and (2) whether the members of the CGCCA are principal or inferior officers.
Neither does Freytag support Willy. In Freytag, the key issue was whether the Chief Judge of the United States Tax Court was the appropriate repository for the appointment (of "inferior officers") power which, as noted above, is vested only "in the President alone, in the Courts of Law, or in the Heads of Department."
Finally, Willy contends that even if the DOL Secretary possesses the legitimate authority to establish the ARB, the Secretary's final decision is entitled to deference when a conflict exists between it and the ARB. In other words, Willy asserts that because the Secretary is the head of the department, we should afford greater deference to his final decision — this time, in favor of Willy — than to the ARB's final decision. Willy cites Martin v. Occupational Safety and Health Review Commission
In Martin, the Supreme Court treated the issue "to whom should a reviewing court defer when the Secretary of Labor and the Occupational Safety and Health Review Commission furnish reasonable but conflicting interpretations of an ambiguous regulation promulgated by the Secretary under the Occupational Safety and Health Act [(`OSHA')] of 1970. . . ."
That situation is not present here. There is no "split authority" under the whistleblower statutes. The relevant statutes expressly grant rulemaking, enforcement, and adjudicative authority to the Secretary, so no potential for conflict exists. Additionally, no conflicting interpretations of statutes promulgated by the Secretary are at issue here. The difference between the Secretary's and the ARB's final decisions rests in their conflicting interpretations of federal common law or — possibly — Texas state law.
We hold that the language of 29 U.S.C. § 301 and of the Reorganization Plan No. 6 of 1950 is broad enough to allow the Secretary to create the ARB, appoint its members, and delegate decision-making authority to it. We hold that the DOL Secretary's appointment of ARB members and delegation of decision-making authority to them do not violate the Appointments Clause of the Constitution.
C. Attorney-Client Privilege
Having resolved the threshold issue of the violation vel non of the Appointments Clause, we turn to the merits question of the scope of the attorney-client privilege. Willy insists that, in accordance with the DOL Secretary's 1994 opinion, the Belcher Report is admissible despite the attorney-client privilege.
Relying on statutory exceptions to the attorney-client privilege, Supreme Court Standard 503(d)(3), the Model Code of Professional Responsibilities DR 4-101(C)(4), and our decision in Doe v. A Corp.,
The attorney-client privilege is the "oldest of the privileges for confidential communications known to the common law."
Coastal's assertion of the attorney-client privilege with respect to the Belcher Report in response to Willy's attempt to maintain his personal cause of action against his former client "creates a conflict with another fundamental policy: the availability of a legal forum for the adjudication of rights."
Accordingly, we — and the law — have recognized exceptions to the general rule that an attorney may not disclose his client's confidences. Willy advances three exceptions to the attorney-client privilege under which the Belcher report is admissible. He asserts first that the Report is admissible under the "breach of duty" exception; next, that Coastal waived any attorney-client privilege when it placed the Belcher report at issue in the litigation; and last, that the report is admissible under the crime-fraud exception.
1. Breach of Duty
With respect to Willy's contention that the "breach of duty" exception applies, we conclude that the ARB's rejection of this exception is contrary to law. We therefore vacate and remand.
The Model Code of Professional Responsibilities Disciplinary Rule 4-101(c) also provides the "breach of duty" exception to the general rule.
Willy insists that the ARB incorrectly read into the breach-of-duty exception a requirement that privileged communications only be used defensively. Relying on Siedle v. Putnam Investments, Inc., the ARB held that an attorney may use privileged documents only as a shield and never as a sword. In Siedle, the defendant, Putnam Investments, Inc. ("Putnam") had employed the plaintiff Siedle as in-house counsel. The parties signed a mutual termination agreement, but Siedle continued to maintain a retirement account with Putnam. After it discovered that a clerical error had improperly credited $15,000 to that account, Putnam unilaterally deducted that amount from it. Angry, Siedle told his tale to Pensions & Investments, a weekly trade magazine. Putnam responded, unfavorably to Siedle.
Siedle sued in state court for breach of contract and various other claims. Putnam removed the suit to federal district court on the basis of diversity of citizenship, then moved for a temporary restraining order, a seal order, and a preliminary injunction to keep Siedle from divulging information protected by the attorney-client privilege. When the New York Times learned of the suit, it intervened and urged the district court to lift the seal order. The district court granted the motion, and Putnam appealed.
The First Circuit rejected Siedle's claim that an attorney may use the self-defense exception to introduce privileged information offensively: "We believe that the exception is designed to function only as a shield, not as a sword."
The current DOL Secretary and Coastal — and the ARB—cite Siedle as support for the proposition that the self-defense exception to the attorney-client privilege may be used only as "a shield, and not as a sword," i.e., an attorney may use privileged documents only as a defense against charges brought against him by his client. We recognize that Siedle stands for only this narrow proposition. With all due respect to our sister circuit, however, we conclude that it and the ARB have misinterpreted — and misquoted — the case law on which they rely.
The case law amply demonstrates the narrower proposition that the attorney-client privilege only prohibits a party from simultaneously using confidential information as both a shield and a sword.
In addition, the ARB misinterpreted the holding of Siedle and the law on which that holding relied. First, it is indisputable that the Siedle court based its holding on Massachusetts law, not federal law.
The other case on which the current DOL Secretary, Coastal, and the ARB relied are equally inapposite. Kachmar v. SunGard Data Systems, Inc.
The Kachmar court did not hold that a plaintiff-attorney could never use privileged information offensively, only that the district court must take precautions to safeguard such information by weighing the need to protect it against the attorney's need to maintain his suit. We reject the ARB's conclusion that either Siedle or Kachmar stands for the overbroad proposition that the attorney-client privilege is a per se bar to an attorney's use of privileged information in a claim against his former client or employer.
Doe v. A Corp. is our controlling precedent on the right of an attorney to maintain a suit against his former client or employer when the claim implicates communications allegedly protected by the attorney-client privilege.
We therefore allowed Doe to maintain his suit. The ARB cites Doe for the proposition that the lawyer "was permitted to use information that he acquired during his employment that was not protected by attorney-client privilege." Nowhere did we state this in Doe; and no such rule can be inferred from our Doe opinion. We did not distinguish between information protected by the privilege and information not protected by it. The ARB broadly misinterpreted both our precedent on this issue and that of other circuits as well.
Further, in concluding that Coastal dismissed Willy as an employee because he lied about calling the TDWR, the ARB states that the "self-defense exception is tailored to the singular circumstances of the attorney-client relationship and is limited to a breach of duty a lawyer owes a client, not the broader array of duties an employee owes to an employer, such as promoting harmony with co-workers and dealing honestly with supervisors."
Neither do we find support in the instant record for the ARB's finding that Coastal dismissed Willy solely because of his actions as an employee.
The above-emphasized language from the ARB's final order—that the self-defense exception is limited to a breach of duty a lawyer owes a client—is a strained interpretation of the language of the exception itself. As noted, the Model Rules specifically provide that "[a] lawyer may reveal ... information [relating to representation of a client] to the extent the lawyer reasonably believes necessary ... to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client. . . ."
In sum, neither the current Secretary nor Coastal has directed us to any case that can be stretched to stand for the broad proposition espoused by the ARB, that the attorney-client privilege is a per se bar to retaliation claims under the federal whistleblower statutes, i.e., that the attorney-client privilege mandates exclusion of all documents subject to the privilege. As we observed in Doe, "[a] lawyer ... does not forfeit his rights [as an employee] simply because to prove them he must utilize confidential information,"
One final caveat: We are fully cognizant of the procedural posture of this case, viz., the claim of a former in-house counsel against his former employer before an ALJ only, yet no party has cited any law to us—and we have found none—that allows the party asserting the attorney-client privilege, to refuse to show allegedly privileged documents to a court. Indeed, when a party asserts that documents are privileged, the court must in the first instance inspect and review them to determine the applicability of the privilege. What is not before us is a suit involving a jury and public proceedings, so we leave that possibility for another day. Today,
For the foregoing reasons, we reject Willy's challenge under the Appointments Clause and hold that the DOL Secretary is vested with the authority to appoint the members of the ARB, and to delegate his decision-making authority to them without violating the Appointments Clause of the Constitution. We nevertheless vacate the ARB's ruling that the attorney-client privilege mandates exclusion of the Belcher Report in Willy's action against Coastal, and we remand to the ARB for a review of the merits of the original holding of the ALJ and of the previous Secretary in light of the facts that they had before them when they rendered their final decisions.
PETITION GRANTED; AFFIRMED IN PART; VACATED AND REMANDED IN PART.
Indeed, in Pennsylvania, the Third Circuit rejected a challenge to the composition and appointment of the Department of Health and Human Services Appeals Board. Relevant to our discussion here, the Third Circuit rejected Pennsylvania's argument that Congress provide specifically in the statute for the entity to which the Secretary appoints members. See id. at 805. To do so, the court reasoned, would "defeat the purpose of the relaxed requirements for `inferior officer' appointments": "The convenience afforded by inferior officer appointments would hardly be served if we were to require Congress to account for every potential inferior officer appointment in its statutory grant of authority to the department head." Id.
We have no authority "to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before" us. Church of Scientology, 506 U.S. at 12, 113 S.Ct. 447. If an event occurs that prevents us from granting "any effectual relief whatever" to a prevailing party, the controversy is moot, and the appeal must be dismissed. See id.
The current Secretary argues that "this Court need not be concerned that it can no longer grant meaningful relief to Coastal as a result of" the previous Secretary's order in favor of Willy, which took into account the privileged material (the Belcher Report). The current Secretary notes that we may provide relief by affirming the ARB's dismissal of Willy's complaint and the exclusion of the Belcher Report. That it is within our power to affirm the ARB and exclude the privileged material is "effectual relief," and the controversy is therefore not moot.
In a lengthy dissent to this court's refusal to rehear Douglas en banc, 163 F.3d 223 (5th Cir.1998), Judge Dennis, with whom four other judges agreed, noted that Douglas called into question our decisions in Doe and Jones v. Flagship International, 793 F.2d 714 (5th Cir.1986), in which we allowed an attorney to sue her employer for sex discrimination.
Judge Jolly, as author of the majority opinion in Douglas, responded to Judge Dennis's dissent by stating that Douglas was not meant to overrule either Doe or Jones. Indeed, as Judge Jolly noted, Douglas specifically "recognize[d] as a valid means of revealing confidential information, the exceptions under Rule 1.6 of the Louisiana State bar Articles of Incorporation, Rules of Professional Conduct, LA.REV.STAT. ANN. § 37:219 Ch. 4—App., Art. 16, which permits the disclosure, once disclosure becomes necessary in a legal dispute with the employer-client." 163 F.3d at 238 (on petition for rehearing and suggestion for rehearing en banc) (citing Douglas, 144 F.3d at 376). Accordingly, Douglas does not stand for the broad proposition advanced by Coastal and the Secretary.