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From Securities Regulation Daily, September 25, 2014

S&P ekes out more discovery from U.S. and Geithner

By Anne Sherry, J.D.

The latest discovery order in the U.S. government’s lawsuit against S&P requires the United States and former Treasury Secretary Timothy Geithner to produce in their entirety certain documents that had previously been redacted. The court, after in camera review, noted that some of the redacted communications actually cut against S&P’s selective-prosecution defense, but said that the rating agency “is entitled to both the good and the bad” (U.S. v. McGraw-Hill Companies, Inc., September 24, 2014, Carter, D.).

Previous orders compelled the government and Geithner, a non-party, to produce discovery relevant to S&P’s defense. Both the U.S. and Geithner produced documents in response to the discovery requests, but with several redactions. S&P moved the court to compel production in unredacted form.

In camera review. The court was persuaded by the reasoning of cases disfavoring unilateral redactions in the presence of a protective order. In camerareviews, in the court’s view, can resolve the concerns that unilateral redactions “do little more than breed suspicion between the parties.” Although S&P objected that such reviews would lead to further delays, the court wrote that the time and effort would be commensurate with the litigation’s importance and the sensitive discovery concerns. It had already accepted submissions for in camera review, but assured that future motions to compel would be heard on an expedited basis.

Government’s production. While the court will tolerate unilateral redactions that protect important and legitimate interests, such redactions are inappropriate if they are meant merely to keep nonresponsive information out of S&P’s hands. The court accordingly ordered the government to produce unredacted versions of all documents that contained redactions solely on the basis of nonresponsiveness, such as “whether an attorney is enjoying the weather in California.” As to documents redacted on the basis of work-product privilege, the court determined that S&P had demonstrated a “substantial need” for the documents that are ordinary work product and a “compelling need” for some of the documents containing opinion work product.

Geithner’s production. Geithner had also redacted purportedly nonresponsive information, including “raw, unpublished materials relating to his recent book.” The court acknowledged that the former Secretary is a private citizen who should be shielded from onerous or invasive discovery demands, but said that “a former executive official cannot, with one hand, withhold information implicated in a case of significant public importance while, on the other, collect money from sales of a tell-all book containing much the same information” and ordered unredacted production of the documents at issue, allowing the government an opportunity to review the materials first to assert any privileges that might attach.

Executive privilege. S&P had also requested that the court order the government to produce privilege logs for relevant documents “where they reflect communications with officials in the Executive Office of the President.” The Supreme Court has made clear that courts should ensure that the invocation of executive privilege is the last resort to avoid the “collision course” that results when the Judicial Branch is forced to balance the need for information in a judicial proceeding with the Executive Branch’s Article II prerogatives. To avoid forcing the Executive to invoke privilege, the court wrote, the parties will employ a methodical approach to discovery of communications to and from the president’s office.

The case is No. 13-0779-DOC.

Attorneys: Anoiel Khorshid, Office of the U.S. Attorney, for the USA. Floyd Abrams (Cahill Gordon and Reindel LLP) and John W. Keker (Keker and Van Nest LLP) for McGraw-Hill Companies, Inc. and Standard and Poors Financial Services LLC.

Companies: McGraw-Hill Companies, Inc.; Standard and Poors Financial Services LLC

MainStory: TopStory CreditRatingAgencies CaliforniaNews

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